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Unformatted text preview: Econ 002 Exam # 2 Student: ___________________________________________________________________________ 1. A rational seller will sell another unit if A. the profit earned from the sale of the next unit is greater than the profit earned on the sale of the last unit. B. the cost of making the next unit is less than the revenue gained by selling the next unit. C. the quantity demanded of the seller's output is greater than zero. D. the price that could be charged is greater than the equilibrium price. E. All of the above must be true to justify selling an additional unit. Melissa is trying to decide how to divide her time between her jobs as a night-receptionist in the dormitory, which pays $9/hr for as many hours as she chooses to work, and typing papers for the students. She makes $2 for every paper she types. Melissa is indifferent between the two tasks, and the number of papers she can type depends on how many hours she types a day, as shown in the table below: 2. If we plot Melissa's reservation price per page on the vertical axis and the number of paper typed each day on the horizontal axis, we will have Melissa's_______ curve of typing service. A. marginal product B. marginal profit C. marginal utility D. demand E. supply 1 3. A profit-maximizing firm's primary goal is to maximize A. the difference between total revenues and total explicit costs. B. the ratio of total revenues to total costs. C. the difference between total implicit costs and total revenues. D. its total revenue in the short run. E. the difference between total revenues and total explicit and implicit costs. 4. Which of the following firms best represents a price taker? A. Microsoft B. General Motors C. The local Taco Bell D. A corn farmer in Iowa E. The Gap 5. If the firm spends $200 to produce 17 units of output and spends $455 to produce 34 units, then the marginal cost of increasing production from 17 to 34 units is A. $13.38. B. $15. C. $7.50. D. $11.76. E. $255. 6. In the short run, if a firm chooses to operate and produce output, it must be the case that A. it earns a profit. B. total revenues are greater than or equal to the total cost of fixed and variable factors of production. C. total revenues are greater than or equal to the cost of fixed factors of production. D. total revenues are greater than or equal to the cost of variable factors of production. E. it avoids a loss. 7. The shutdown condition for a firm is where A. total revenues are less than the total cost of fixed and variable factors of production. B. total revenues are less than the cost of variable factors of production. C. total revenues are less than the cost of fixed factors of production. D. profits are negative....
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This note was uploaded on 03/30/2008 for the course ECON 002 taught by Professor Mcleod,markpehlivan,ayseozg during the Summer '08 term at Penn State.
- Summer '08