1) The following is cost information for the Creamy Crisp Donut Company:
Entrepreneur’s potential earnings as a salaried worker = $50,000
Annual lease on building = $22,000
Annual revenue from operations = $380,000
Payments to workers = $120,000
Utilities (electricity, water, disposal) costs = $8,000
Value of entrepreneur’s talent in the next best entrepreneurial activity = $80,000
Entrepreneur’s forgone interest on personal funds used to finance the business = $6,000
Refer to the data. Creamy Crisp:
A.has lower implicit costs, including a normal profit, than its explicit costs.
B.is earning a normal profit but not an economic profit.
C.is earning an economic profit.
D.is suffering an economic loss, when implicit costs are considered.
2) As output increases, total variable cost:
A.increases more rapidly than does total cost.
B.increases continuously at a decreasing rate.
C.increases at a decreasing rate and then at an increasing rate.
D.increases at a constant rate.
3) Critics of industrial regulation say that such regulation:
A.contributes to X-inefficiency.
B.benefits small firms at the expense of large firms.
C.creates insurmountable principal-agent problems.
D.suffers from the free-rider problem.
4)
Refer to the graph above representing the purely competitive market for a product.
When the market is at equilibrium, the total opportunity cost of producing the
equilibrium output level would be represented by the area:
A.b + c
B.b
C.c
D.a + b + c
5) Answer the question on the basis of the following cost data for a firm that is selling
in a purely competitive market.
Refer to the data. At 6 units of output, total fixed cost is ____ and total cost is ____.
A.$25; $50
B.$50; $300
C.$100; $200
D.$150; $300
6) Answer the question on the basis of the following information for Manfred’s Shoe
Shine Parlor. Assume Manfred hires labor, its only variable input, under purely
competitive conditions. Shoe shines are also sold competitively.
Refer to the given data. How many units of output are produced when 2 workers are
employed?
A.4
B.16
C.24
D.10
7) Resource X has many close substitutes, whereas resource Y has no close substitutes.
Other things equal, we would expect:
A.the demand for resource Y to be more elastic than the demand for resource X.
B.resources X and Y to be close substitutes.
C.resource X to be more expensive than resource Y.
D.the demand for resource X to be more elastic than the demand for resource Y.
8) A key difference between import quotas and voluntary export restraints (VERs) is
that the:
A.Domestic government administers the former, whereas the foreign government
administers the latter
B.Foreign government administers the former, whereas the domestic government
administers the latter
C.One is a tax, whereas the other is a quantity limit
D.One raises the price of the imported product involved, whereas the other one does not
9) The principal-agent problem refers to the problem of:
A.Communication between sports and entertainment stars with their agents
B.How to split profits between labor and management
C.The interests of delegates deviating from the interests of the delegators
D.How stockholders of a corporation can elect a board of directors
10) In 2012, the countries with the highest scores on the Environmental Performance
Index were:
A.the United States and Tanzania.
B.Switzerland and Latvia.
C.New Zealand and Sweden.
D.Brazil and Australia.