Fall 2017/2018 02E/11E/53E/7OE Introduction of Economics for NBS Answer All Ques
ID: 1127707 • Letter: F
Question
Fall 2017/2018 02E/11E/53E/7OE Introduction of Economics for NBS Answer All Questions Final Exam 14 December 2017 Section Il: True or False C 1. The typical total-cost curve is U-shaped 2. A firm will shut down in the short rum f revenue is not suftf variable costs of production. We call this shuting down in the short run and exiting an industry in the long run 4. Firms 3. Suppose a firm is considering producing zero units of output operating in perfectly competive markets produce an output level where marginal revenue equals marginal cost 5. Goods with close substitutes tend to have more elastic demands than do goods without close substitutes 6. The demand for Starbucks cofflee is more elastic than the demand for coffee n general 7. The demand for soap is more elastic than the demand for Dove soap. 8 Necessities tend to have inelastic demands, whereas luxuries tend to have elastic demands. 9. The normal rate of unemployment around which the unemployment rate fuctuates is called the natural rate of unemployment. 10. Because people move into and out of the labor force so often, statistics on unemployment are difficult to interpret 11. Substitution bias occurs because the CPI ignores the possibility of consumer substution toward goods that have become relatively less expensive 12 Economists use the term infation to describe a situation in economy's overall production level is rising 13 Diminishing marginal productivity implies decreasing total product. 14 Fixed costs are those s that remain fixed no matter how long the time horizon is. 15. The shape of the marginal marginal product of her workers. cost curve tels a producer something about the 16. Average total cost and marginal cost express information that is already contained in a firm's total cost. Answers to True or False questions (write your answers clearty) (8 marks) 6. 14 13 15 16.Explanation / Answer
1. False: It will be an half u shaped as it has a TFC curve in it (TC = TFC + TVC)
2. True: Yes, if they are unable to maintain suficenet working capital, they will need to shutdown. they can pay once or twice from taking a loan , but later if still they are unable to continue, then they need to close
3. False: If zero output , it is closed in short run itself, no revenues - then it is difficult to sustain
4. True: It is a charecterstic of perfectly competitive market
5. True: Close substitutes have more demand and more elasticity and for no close substitutes, its the other way around
6. Fasle: It depends on various other factors like geographical location, age group, income group, week day / weekend etc.
7. False: Both are soaps, it is a sub demand category , we cant compare
8. False: Necessaties are more elastic as there are many close competitors where as luxuries are less elastic
9. False: Natural rate of unemployment has various factors like structural , frictional and surplus combination of unemployment attached to it
10. False: We have that probablity calculation for those moving in and moving out people, calcuation is difficult because, it has various micro factors associated to it
11. True: definition is true
12. False: It is used when the price of the products are increasing
13. False: It is increasing input will not increase the level of output after certain point of time
14. True: Fixed costs are those whcih will be same once bough on the date
15. False: It speaks about the product itself
16. True: It expresses the same, but it has several other implications to analyze too.
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