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Practice Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Dolores used to work as a high school teacher for $40,000 per year but quit in order to start her own catering business. To buy the necessary equipment, she withdrew $20,000 from her savings, (which paid 3 percent interest) and borrowed $30,000 from her uncle, whom she pays 3 percent interest per year. Last year she paid $25,000 for ingredients and had revenue of $60,000. She asked Louis the accountant and Greg the economist to calculate her profit for her. a. Louis says her profit is $34,100 and Greg says her profit is $6,500. b. Louis says her profit is $34,100 and Greg says she lost $6,500. c. Louis says her profit is $35,000 and Greg says she lost $5,000. d. Louis says her profit is $33,500 and Greg says her profit is 33,500. ____ 2. Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA). Johnny's cumulative GPA will fall even further next semester if he performs worse than (i) his cumulative GPA. (ii) he ever performed before. (iii) he did last semester. a. (i) and (ii) b. (i) and (iii) c. (ii) and (iii) d. All of the above are correct. ____ 3. Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA). Johnny's cumulative GPA will be better next semester if he (i) performs better than he did last semester. (ii) performs better than his cumulative GPA. (iii) gives an average performance. a. (ii) only b. (iii) only c. (i) and (ii) d. (ii) and (iii) Figure 13-5 ____ 4. Refer to Figure 13-5 . Which of the following can be inferred from the figure above? (i) Marginal cost is increasing at all levels of output. (ii) Marginal product is increasing at low levels of output. (iii) Marginal product is decreasing at high levels of output. a. (i) and (ii) b. (ii) and (iii) c. (i) and (iii) d. (ii) only Figure 13-6 The curves below reflect information about the cost structure of a firm. ____ 5. Refer to Figure 13-6 . Curve A is U-shaped because of a. diminishing marginal product. b. increasing marginal product. c. the fact that increasing marginal product follows decreasing marginal product. d. the fact that decreasing marginal product follows increasing marginal product. ____ 6. Refer to Figure 13-6 . Which of the curves is most likely to represent average fixed cost? a. A b. B c. C d. D ____ 7. Consider the following information about bread production at Beth's Bakery: Worker Marginal Product 1 5 2 7 3 10 4 11 5 8 6 6 7 4 Beth pays all her workers the same wage and labor is her only variable cost. From this information we can conclude that Beth's marginal cost a. declines as output increases from 0 to 33, but increases after that.... View Full Document

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