5. Suppose after a 3% decrease in the price of a good, the quantity demanded for
ID: 1138485 • Letter: 5
Question
5.
Suppose after a 3% decrease in the price of a good, the quantity demanded for the good increases by 2%. Then which of the following is true?
A. The price elasticity of demand is |E| = 0.67.
B. The price elasticity of demand is |E| = 1.5.
C. Total revenue decreases by 1%.
D. Only A and C.
E. Only B and C.
6.
Assume that the short run marginal product curve is a smooth inverted U-shaped curve, when labor input increases, the corresponding total product curve has a(an)
A. U-shape because it will be concave first and then convex later.
B. reverse S-shape because it will be convex first and concave later.
C. S-shape because it will be convex first and concave later.
D. S-shape because it will be concave first and convex later.
E. reverse S-shape because it will be concave first and convex later.
7.
Suppose a car wash that has 3 workers is able to wash 120 cars per day. When it adds one more worker, it is able to wash 152 cars per day in total. The average product of labor for the first four workers is AP =
cars
Please enter a whole number, with no decimal point.
8.
For the same car wash (as in Question 7), the marginal product (per day) of the fourth worker is MP =
cars
Please enter a whole number, with no decimal point.
9.
Suppose for a firm, when Q = 200, the AFC = 1.30. And when Q = 100, TC = 500. Then when Q = 100, the AVC =
$
Please enter 1 digit after the decimal point.
10.
Suppose both the MC and AVC curves are U-shaped, at the output level where MC = AVC,
A. AP is at the maximum.
B. MC is downward sloping.
C. AVC is at the minimum.
D. only A and B.
E. only A and C.
11.
Which of the following is an implicit cost?
A. A manager’s salary.
B. Payments to IBM for computers.
C. Income forgone while going to college.
D. Only A and B.
E. Only B and C.
12.
Based on the numerical example in Exhibit 6.2 in 6-2b (or p. 120 in the physical textbook), when labor input L = 4, which of the following is true?
A. AP = 9.
B. AP = 6.
C. AP = 10.5.
D. AP = 7.5.
E. None of the above.
13.
Based on Question 6 in Study Questions and Problems (or on p.132 in the physical textbook), when Q = 3, TVC =
$
Please enter a whole number, with no decimal point.
17.
Assume that wage W is constant, then which of the following is most likely to be true?
A. When the AP is increasing, the AVC must be decreasing.
B. When the MP is increasing, the MC must be increasing.
C. When the AP is decreasing, the MP must be decreasing.
D. Only A and C.
E. Only B and C.
18.
The upward-sloping segment of the LRAC curve corresponds to
A. economies of scale.
B. decreasing returns to scale.
C. decreasing average fixed cost.
D. Only A and B.
E. Only A and C.
19.
Assume that the Cool Cappuccino Coffee House produces 100 coffee drinks a night. If the Coffee House doubles both labor and capital, the firm would have to produce how many coffee drinks a night in order to experience economies of scale?
A. 200
B. 250
C. 300
D. Only A and B.
E. Only B and C.
20.
Assume that the LRAC is U-shaped, then which of the following is true?
A. Every short-run ATC (SRATC) is tagent to the LRAC at the minimum of the SRATC.
B. Every SRATC is tagent to the LRAC, but not necessarily at the minimum of the SRATC.
C. In the long run, a firm should not produce at the output level where SRATC = LRAC.
D. Only A and C.
E. Only B and C.
5.
Suppose after a 3% decrease in the price of a good, the quantity demanded for the good increases by 2%. Then which of the following is true?
A. The price elasticity of demand is |E| = 0.67.
B. The price elasticity of demand is |E| = 1.5.
C. Total revenue decreases by 1%.
D. Only A and C.
E. Only B and C.
6.
Assume that the short run marginal product curve is a smooth inverted U-shaped curve, when labor input increases, the corresponding total product curve has a(an)
A. U-shape because it will be concave first and then convex later.
B. reverse S-shape because it will be convex first and concave later.
C. S-shape because it will be convex first and concave later.
D. S-shape because it will be concave first and convex later.
E. reverse S-shape because it will be concave first and convex later.
7.
Suppose a car wash that has 3 workers is able to wash 120 cars per day. When it adds one more worker, it is able to wash 152 cars per day in total. The average product of labor for the first four workers is AP =
cars
Please enter a whole number, with no decimal point.
8.
For the same car wash (as in Question 7), the marginal product (per day) of the fourth worker is MP =
cars
Please enter a whole number, with no decimal point.
9.
Suppose for a firm, when Q = 200, the AFC = 1.30. And when Q = 100, TC = 500. Then when Q = 100, the AVC =
$
Please enter 1 digit after the decimal point.
10.
Suppose both the MC and AVC curves are U-shaped, at the output level where MC = AVC,
A. AP is at the maximum.
B. MC is downward sloping.
C. AVC is at the minimum.
D. only A and B.
E. only A and C.
11.
Which of the following is an implicit cost?
A. A manager’s salary.
B. Payments to IBM for computers.
C. Income forgone while going to college.
D. Only A and B.
E. Only B and C.
12.
Based on the numerical example in Exhibit 6.2 in 6-2b (or p. 120 in the physical textbook), when labor input L = 4, which of the following is true?
A. AP = 9.
B. AP = 6.
C. AP = 10.5.
D. AP = 7.5.
E. None of the above.
13.
Based on Question 6 in Study Questions and Problems (or on p.132 in the physical textbook), when Q = 3, TVC =
$
Please enter a whole number, with no decimal point.
17.
Assume that wage W is constant, then which of the following is most likely to be true?
A. When the AP is increasing, the AVC must be decreasing.
B. When the MP is increasing, the MC must be increasing.
C. When the AP is decreasing, the MP must be decreasing.
D. Only A and C.
E. Only B and C.
18.
The upward-sloping segment of the LRAC curve corresponds to
A. economies of scale.
B. decreasing returns to scale.
C. decreasing average fixed cost.
D. Only A and B.
E. Only A and C.
19.
Assume that the Cool Cappuccino Coffee House produces 100 coffee drinks a night. If the Coffee House doubles both labor and capital, the firm would have to produce how many coffee drinks a night in order to experience economies of scale?
A. 200
B. 250
C. 300
D. Only A and B.
E. Only B and C.
20.
Assume that the LRAC is U-shaped, then which of the following is true?
A. Every short-run ATC (SRATC) is tagent to the LRAC at the minimum of the SRATC.
B. Every SRATC is tagent to the LRAC, but not necessarily at the minimum of the SRATC.
C. In the long run, a firm should not produce at the output level where SRATC = LRAC.
D. Only A and C.
E. Only B and C.
Explanation / Answer
Q5. Answer is A. The price elasticity of demand is E 0.67 (i.e. 2% /3%) Q6. Answer is D. S shape because it wil be concave first and convex later. Q7. AP = 38 cars Explanation: Average product = total product / number of cars = 152 /4 = 38 Q8 MP = 32 cars Q9. Answer is AVC = 2.40 per unit Explanation: TFC = 200*1.30 = 260 TC at 100 units = 500 TVC at 100 = 500 -260 = 240 AVC at 100 = 240/100 = 2.40 Q10. Answer is AVC is minimum. Q11. Answer is C. Income foregone while going to college Q12 and 13 Questions not available Q17. Only A and C Q18. Answer is B. decreasing returns to scale. Q19. Answer is E Only B and C. Q20. Answer is B. Every SRATC is tangent to LRAC, but not necessarily at the minimum of SRATC.
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