Exam 2 - Spring 2008

Exam 2 - Spring 2008 - ECON 101-008 Exam #2, Spring 2008...

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ECON 101 - 008 Exam #2, Spring 2008 Bubble your answers on your scantron sheet using your #2 pencil. Each question is worth 3 points. Hence, your maximum score can be 105 points (based on 100 points). MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1. If a producer is not able to expand its plant capacity immediately, it is A) operating in the short run. B) losing money. C) operating in the long run. D) bankrupt. 2. Jayanthi moves her yoga studio from her home to a space she rents in Oakland, California. Holding everything else constant, as a result of this move, A) her economic cost rises. B) her opportunity cost rises. C) her explicit cost falls and her implicit cost rises. D) her implicit cost falls and her explicit cost rises. 3. As a firm hires more labor in the short run, the A) output per worker rises. B) extra output of another worker may rise at first, but eventually must fall. C) costs of production are increasing at a fixed rate per unit of output. D) level of total product stays constant. Figure 10 - 4 4. Refer to Figure 10 - 4. Curve G approaches curve F because A) marginal costs are above average variable costs. B) average fixed costs falls as output rises. C) total costs fall as more and more is produced. D) fixed costs falls as capacity rises. 1
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5. If production displays diseconomies of scale, the long run average cost curve is A) downward - sloping. B) above the long run marginal cost curve. C) upward sloping. D) above the short run average toal cost curve. 6. Which of the following is not a characteristic of a monopolistically competitive market structure? A) Each firm must react to actions of other firms. B) There are no barriers to entry of new firms. C) There is a large number of independently acting small sellers. D) All sellers sell products that are differentiated. 7. The demand for each seller ʹ s product in perfect competition is horizontal at the market price because A) the price is set by the government. B) all the sellers get together and set the price. C) each seller is too small to affect market price. D) all the demanders get together and set the price. 8. Jason, a high - school student mows lawns for families in his neighborhood. The going rate is $12 for each lawn - mowing service. Jason would like to charge $20 because he believes he has more experience mowing lawns than the many other teenagers who also offer the same service. If the market for lawn mowing services is perfectly competitive, what would happen if Jason raised his price? A) He would lose some but not all his customers. B) If Jason raises his price, then all others supplying the same service will also raise their prices. C) If Jason raises his price he would lose all his customers.
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Exam 2 - Spring 2008 - ECON 101-008 Exam #2, Spring 2008...

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