quiz2 with no answers summer2011

quiz2 with no answers summer2011 - Managerial Economics MGE...

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Managerial Economics MGE 302 Summer 2011 Professor: Dr.Hodan Isse quiz2. Student: ________________________________________ID#____________________________ 1. A market failure occurs when a. a market equilibrium is economically inefficient b. a market equilibrium is economically efficient c. perfect competition maximizes the sum of consumer and producer surplus d. crime is not completely eliminated e. involuntary exchanges are not completely eliminated 2. Which of the following statements is FALSE? A. A firm plans in the long run and operates in the short run. B. In the short run, a firm can change some but not all of its inputs. C. In the long run all inputs are variable. D. In the short run all inputs are fixed. 3. Suppose you run a pizza shop and currently have two employees. If you hire a third employee, your output of pizzas per day rises from 55 to 65. If you hire a fourth employee, output rises to 80 per day. A fifth and sixth employee would cause output to rise to 90 and 95 per day, respectively. Pick the correct statement: A. Diminishing returns set in with the hiring of the fourth worker. B. Diminishing returns set in with the hiring of the fifth worker. C. Diminishing returns set in with the hiring of the sixth worker. D. Diminishing returns set have not yet set in because output is still increases.
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4. Sarah and Marisa are the only two baby-sitters available in a small town. Figure 10-14 indicates different combinations of hourly rates charged by the two teenagers, along with their weekly net earnings. If Sarah and Marisa do not collude, then a. in equilibrium, both will charge $4 per hour b. in equilibrium, both will charge $5 per hour c. in equilibrium, Sarah will charge $5 per hour; Marisa will charge $4 per hour d. in equilibrium, Sarah will charge $4 per hour; Marisa will charge $5 per hour e. there is no predictable equilibrium 5. market with a negative externality a. will be regulated by the government b. is an example of a natural monopoly c. will be Pareto efficient, as long as bargaining costs are high enough d. will produce less than the efficient quantity, thereby creating a welfare loss e. will produce more than the efficient quantity, thereby creating a welfare loss
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6. If a firm is producing a given level of output in an economically efficient manner, then it must be the case
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quiz2 with no answers summer2011 - Managerial Economics MGE...

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