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midterm 1 with answers - Micro Principles Midterm 1...

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Micro Principles Midterm 1 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. Multiple choice questions 1-5 are worth 1 point each ____ 1. Trade is based on a. absolute advantage. b. comparative advantage. c. production costs. d. relative dollar prices. ____ 2. Which of the following is true? ____ 3. For each good produced in a market economy, demand and supply determine ____ 4. When adding another unit of labor leads to an increase in output that is smaller than increases in output that resulted from adding previous units of labor, we have the property of ____ 5. The amount by which total cost rises when the firm produces one additional unit of output is called a. average cost. b. marginal cost. c. fixed cost. d. variable cost. Multiple choice questions 6 through 20 are worth 2 points each ____ 6. When marginal cost exceeds average total cost, ____ 7. The Wheeler Wheat Farm sells wheat to a grain broker in Seattle, Washington. Since the market for wheat is generally considered to be competitive, the Wheeler Wheat Farm maximizes its profit by choosing ____
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