Problem set 3

Problem set 3 - Name Recitation Day Recitation Time Problem...

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Name Recitation Day Recitation Time Problem Set #3 T.A. Joe Craig 1. Economists normally assume that the goal of a firm is to (i) sell as much of their product as possible. (ii) maximize profit. (iii) minimize cost. a. (ii) and (iii) b. (i) and (iii) c. (ii) only d. all of the above 2. XYZ corporation produced 300 units of output but sold only 275 of the units it produced.  The  average cost of production for each unit of output produced was $100.  Each of the 275 units sold  were sold for a price of $95.  Total revenue for the XYZ corporation would be a. $30,000. b. $28,500. c. $26,125. d. -$3,875. 3. Which of the following is an implicit cost? (i) A business owner forgoing an opportunity to earn a large salary working for a Wall  Street brokerage firm. (ii) Interest on debt (iii) Uncollected revenue. a. (ii) and (iii) b. (i) and (iii) c. (i) only d. All of the above. 4. Economic profit is equal to a. total revenue minus the opportunity cost of producing goods and services. b. total revenue minus the accounting cost of producing goods and services. c. total  revenue minus the explicit cost of producing goods and services. d. average revenue minus the average cost of producing the last unit of a good or service. 5. One would expect to observe diminishing marginal product of labor when a. workers are discouraged about the lack of help from other workers. b. crowded office space reduces the productivity of new workers. c. union workers are told to reduce their work effort in preparation for a new round of  collective bargaining talks. d. only new workers are trained in using the most productive capital.
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An example of a fixed cost would be (i) rent paid on the factory. (ii) raw materials supplied at a government regulated price. (iii) machine maintenance. a. (i) only b. (i) and (ii) c. (ii) and (iii) d. all of the above For questions 7 through 10, assume that a given firm experiences decreasing marginal product of labor  with the addition of each worker regardless of the current output level. 7. Average total cost will be a. U-shaped. b. always rising. c. always falling. d. constant. 8. Average fixed cost will be a. U-shaped. b. always rising. c. always falling. d. constant. 9. Average variable cost will be a. U-shaped. b. always rising. c. always falling. d. constant. 10. Marginal cost will be a. U-shaped. b. always rising. c. always falling. d. constant. 11. The average total cost curve is increasing when a. marginal cost is increasing. b.
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This note was uploaded on 05/01/2008 for the course ECON 2010 taught by Professor Mertens,wi during the Fall '07 term at Colorado.

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Problem set 3 - Name Recitation Day Recitation Time Problem...

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