Emco Company has an assembly line of fixed size A. Total output is a function of the
number of workers (crew size) as shown in the following schedule:
Determine the following schedules: (a) marginal productivity of labor
(b) average productivity of labor
(c) elasticity of production with respect to labor
When someone contracts to do a task but fails to put full effort into the performance of
an agreement, yet the lack of effort is not independently verifiable, this lack of effort
constitutes a
a. breach of contractual obligations
b. denial of good guarantee
c. loss of reputation
d. moral hazard
For a short-run cost function which of the following statements is (are) not true?
a. The average fixed cost function is monotonically decreasing.
b. The marginal cost function intersects the average fixed cost function where the
average variable cost function is a minimum.
c. The marginal cost function intersects the average variable cost function where the
average variable cost function is a minimum.
d. The marginal cost function intersects the average total cost function where the
average total cost function is a minimum.
e. b and c
When using a multiplicative power function (Y = a X1b1X2b2X3b3) to represent an
economic relationship, estimates of the parameters (a, and the b’s) using linear
regression analysis can be obtained by first applying a ____ transformation to convert
the function to a linear relationship.
a. semilogarithmic
b. double-logarithmic
c. reciprocal
d. polynomial
e. cubic
The net present value of an investment represents
a. an index of the desirability of the investment
b. the expected contribution of that investment to the goal of shareholder wealth
maximization
c. the rate of return expected from the investment
d. a and b only
e. a and c only
Which of the following is not among the functions of contract?
a. to provide incentives for efficient reliance
b. to reduce transaction costs
c. to discourage the development of asymmetric information
d. to provide risk allocation mechanisms
Consider the following linear demand function where QD= quantity demanded, P =
selling price, and Y = disposable income: QD= -36 -2.1P + .24Y The coefficient of P
(i.e., -2.1) indicates that (all other things being held constant):
a. for a one percent increase in price, quantity demanded would decline by 2.1 percent
b. for a one unit increase in price, quantity demanded would decline by 2.1 units
c. for a one percent increase in price, quantity demanded would decline by 2.1 units
d. for a one unit increase in price, quantity demanded would decline by 2.1 percent
e. none of the above
Buyers anticipate that the temporary warehouse seller of unbranded computer
equipment will
a. deliver high quality products consistent with expectations
b. not attempt to establish any warranty enforcement mechanisms
c. offer several prices and qualities
d. produce only one quality
e. none of the above
If two alternative economic models are offered, other things equal, we would
a. tend to pick the one with the lowest R2.
b. select the model that is the most expensive to estimate.
c. pick the model that was the most complex.
d. select the model that gave the most accurate forecasts
e. all of the above
A ____ total cost function implies that marginal costs ____ as output is increased.
a. linear; increase linearly
b. quadratic; increase linearly
c. cubic; increase linearly
d. a and b
e. none of the above
The expected rate of return from a share of stock consists of:
a. a dividend return
b. capital appreciation (or depreciation)
c. interest
d. a and b only
e. a, b, and c
“Conscious parallelism of action” among oligopolistic firms is an example of ____.
a. intense rivalry
b. a formal collusive agreement
c. informal, or tacit, cooperation
d. a cartel
e. none of the above
A dominant strategy differs from a Nash equilibrium strategy in that
a. Nash equilibrium strategy does not assume best reply responses
b. dominant strategy assumes best reply responses
c. only Nash strategy applies to simultaneous games
d. one dominant strategy is sufficient to predict behavior in a multi-person game
e. Nash strategy is often unique
The discount rate utilized in public sector budgeting performs the functions of:
a. allocating funds between the public and private sectors
b. allocating funds between present consumption and investment (i.e., future
consumption)
c. allocating funds between debt and equity securities
d. a and b only
e. none of the above
In a production process, an excessive amount of the variable input relative to the fixed
input is being used to produce the desired output. This statement is true for:
a. stage II
b. stages I and II
c. when Ep = 1
d. stage III
e. none of the above
Barbers give a price discount to kids. According to price discrimination, if barbers use
price discrimination, this implies demand for hair cuts by kids is more elastic.a. True
b. False
Consider an investment with the following payoffs and probabilities:
Let the expected value in this example be 1,300. How do we find the standard
deviation of the investment?
a. σ = √ { (1000-1300)2+ (2000-1300)2}
b. σ = √ { (1000-1300) + (2000-1300) }
c. σ = √ { (.5)(1000-1300)2+ (.5)(2000-1300)2}
d. σ = √ { (.7)(1000-1300) + (.3)(2000-1300) }
e. σ = √ { (.7)(1000-1300)2+ (.3)(2000-1300)2}