BUAD 351-1

BUAD 351-1 - BUAD 351 - Econornic Analysis for Business...

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k ß L BUAD 351 - Econornic Analysis for Business Decisions PART (i): MULTIPLE CHOICE 1. A price-åking firm's nrarginal revenne is the price of its output. a. Equal to b. Greater than c. Less than '"-'' +: d. Less than or equal to 2. One reason that firms rvill experience increasing retur¡rs to scale is a. The larv of climinishing marginal returns b. The specializatiotr of inputs as scale increases c. There is some fixed input that isn't being taken into consicleration cl. Large firms ma¡' be difficult to manage effectively 3.Which of the follorving staternents is true for a giv'en level of output? a. Long-run âverage total cost rvill ahvays be greater tha¡r or equal to short-rt¡n average total cost b. Long-run average total cost and short-rt¡n average total cost '*ill be equal because the firm rvill t¡se different input conrbinations in each period c. Long-run total cost rvill usualìy be greater than short-run total cost d. Long-nrn a!€rage total cost rvill ahvays be less than or equal to short-run average total cost 4. If the income-consumption path slopes dorvn, [þs¡ a. Both goods are inferior b. Both goods are nornral c. One good is normal ancl the other good is inferior d. We can't tell anything about rvhethèr the goods are nornral or inferior 5. Characteristics of a perfectl¡' competitive market inclucle ) A ó c. Ferv sellers, some rvith a large market share d. All of the above 6. Suppose Julia and Zach are the only consumers of nrilk. Julia's demand for ntilk is clefinecl as Q :12-3p at prices belorv $4 and zero for prices above $1. Zach's clemand for nilk is clefinecl Q:10-2P as at prices belorv $5 ancl zero for prices above $5. If the market price for niilk is $4.50, rnarket clemand is a. The absence of transaction costs b. Ðifferé'ñtiãfètt proclucts fi .r^- 1**a f ìrux> ¡rif't \atctr lI>ç !r¡+e d qd ,¿l I"¡41' f{ srrç ç þr t4 a. Zero b. 1.5 Ce:* n ì -io v' c.[ 3-, Lt-Çe A\
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b ÃIn the absence of externalities, aggregate surplus (Rj/rls ntaxitnizecl u ncler per.fect cornpeti t ion b. Is ¡r.rinimizecl uncler perfect contfetition c. W'e cannot tell 8. A¡r ¿ction creates an externalit.r. if it ,."ri.lrt"i not affect sonìeorle rvith rvhom the clecision-maker has not engagecl i¡r a related market ,,opou"t" tonttont *'ith rvho¡n the clecision-maker has not engagecl in a relatecl market transac- c' Affects only those incri'icruals engaged in the nrarket transaction ," cl. b ancl c lt @. A positive externality is created if a. An action harms someone not im'olved in the market transaction e- b. An action benefits soûreone not invoh'ed in the market transaction l) c. i\either helps nor hurts someoûe not involved i¡r the market transaction d. AandB lq Ð The marginal social cost of procluction is a. The sum of the total cost to the producer and the total external cost b. The sum of the marginal cost to the producer and the total external cost ç. The sum of the total cost to the producer and the marginal external cost
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BUAD 351-1 - BUAD 351 - Econornic Analysis for Business...

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