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exam2b - Introduction to Microeconomics Exam 2 April 2010...

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Introduction to Microeconomics Exam 2 April 2010 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. If long-run average total cost decreases as the quantity of output increases, the firm is experiencing a. fixed costs greatly exceeding variable costs. b. diseconomies of scale. c. economies of scale. d. coordination problems arising from the large size of the firm. ____ 2. David walks Carolyn’s dog once a day for $50 per week. Carolyn values this service at $60 per week, while the opportunity cost of David’s time is $30 per week. The government places a tax of $35 per week on dog walkers. After the tax, what is the loss in total surplus? ____ 3. A tax on the buyers of coffee will ____ 4. Noah drinks Dr. Pepper. He can buy as many cans of Dr. Pepper as he wishes at a price of $0.50 per can. On a particular day, he is willing to pay $0.95 for the first can, $0.80 for the second can, $0.60 for the third can, and $0.40 for the fourth can. Assume Noah is rational in deciding how many cans to buy. His consumer surplus is ____ 5. Which of the following statements is correct? a. Government should tax goods with positive externalities and subsidize goods with negative externalities. b. Government should tax goods with negative externalities and subsidize goods with positive externalities. c. Government should subsidize goods with either positive or negative externalities. d. Government should tax goods with either positive or negative externalities. Table 13-9 Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month. Output (Instructional Modules Fixed Variable Total Average Fixed Average Variable Average Total Marginal
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per Month) Costs Costs Cost Cost Cost Cost Cost 0 $1,080 1 $1,080 $ 400 $1,480 $400 2 $965 $450 3 $1,350 $2,430 4 $1,900 $475 5 $2,500 $216 6 $4,280 $700 7 $4,100 8 $5,400 $135 9 $7,300 10 $10,880 $980 ____
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