Answer the MCQ questions below

1. Suppose that when the price of Reeses Peanut Butter Cups in vending machines at Oswego rose from $1.80 to $2.20, the quantity demanded each week fell from 600 to 400. In this case, the price elasticity of demand equals ____ and demand is _____.

(a) -0.5; inelastic

(b)-2; inelastic

(c)-2; elastic

2. Suppose that you are planning a (post-COVID) wedding, but are not sure how many guests will attend the reception. Which of the following would be a fixed cost associated with the reception?

(a) The payment to the band

(b) The cost of alcohol consumed by guests during the open bar.

(c) The cost of meals

3. If MP is positive, but falling, TP is:

(a) Rising at a decreasing rate

(b) Falling

(c) Not changing

(d) Rising at an increasing rate

4. Under ideal conditions, perfectly competitive markets achieve productive efficiency because, in a long-run equilibrium:

(a) P>MC.

(b) P

(c) Output is produced at minimum long-run average cost

5. The short-run supply curve for a perfectly competitive firm is:

(a) The portion of its MC curve that lies above ATC.

(b) Vertical

(c) The portion of its MC curve that lies above AVC

6. Consider the following Total Cost schedule:

Quantity of Output	Total Cost
0	5
10	30
20	50
30	90
40	160
50	300

In the interval between 40 and 50 units of output, the marginal cost of an additional unit of output is approximately:

(a) 14

(b) 0

(c) 8

8. If constant returns to scale occur, the long-run average cost curve:

A. Is upward sloping

B. Is horizontal

C. Is vertical

9. A firm has total costs of $250 and fixed costs of $50 when 50 units of output are produced. At this level of output, its ATC equals:

A. $1

B. $4

C. $5

10. In the short-run, a perfectly competitive firm will stay in business while experiencing economic losses:

A. If P>ATC

B. If AVC

C. Under no circumstances.

Total revenue for this firm will equal ______ at the profit-maximizing level of output.

A. $0

B. $140

C. $175

12. If MC < ATC, then ATC is:

A. Changing in a direction that cannot be determined

B. Rising

C. Falling

13. Consider the following short-run production function:

# of workers	output
0	0
5	20
10	50
15	70
20	80
25	85

In the interval between 0 and 5 workers, the MP of an additional worker is approximately:

A. 4

B. 20

C. 5

14. Fixed costs _____ and variable costs _____ as output rises.

A. Rise;rise

B. Fall;remain constant

C. Remain constant; fall then rise

D. Remain constant; rise

15. A firm has variable costs of $200 and fixed costs of $50 when 50 units of output are produced. At this level of output, its ATC equals:

a. $250

b. $1

c. $50

d. $5

18. Which of the following is not a sunk cost?

A. An individual pays $300 for a nonrefundable weekend stay at a resort hotel

B. You spend 5 hours reading half of a book, only to discover that you dont enjoy the book

C. A pharmaceutical firm spends $20 million on research on a drug that proves to be hazardous

D. You build a new apartment building in Oswego

19. In the short run, a perfectly competitive firm will stay in business while experiencing economic losses if they:

a. exceeds variable cost

b. exceeds fixed cost

c. exceeds total cost

d. is zero

20. If constant returns to scale occur, the long-run average cost curve:

a. is downward sloping

b. is vertical

c. is upward sloping

d. is horizontal

21. In the bakery industry, which of the following inputs are fixed in the short run?

a. mortgage payments

b. labor

c. the natural gas use in the ovens

d. flour