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Econ2030 Test2 pg1

Econ2030 Test2 pg1 - (gr 2 NM 22 2C2 A I 1 If the firm...

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Unformatted text preview: \(gr. 2 .___ NM 22 2C2 A I ' 1. If the firm Spends $400 to produce 20 units of output and spends $880 to produce 40 units, then the marginal cost of mcreasing production from 20 to 40 units on average is ,. - ». ,. 2 A. $20 2.2.221...- 22c:- .__...- 2,. B. $12. . (2 .. _ ‘ \Z‘EQ {2:21.15 C. $24. 3‘ L» _' Q \ 70-2-3: ,2 ' D. $22, 5 W . A, ®$480. ' 3/2.} . ~ L 00 ”0 2. In general, if the price of a fixed factor of production decreases, P A] A. the profit maximizing level of output falls. B. profits of the firm become larger or losses become smaller. the profit maximizing level of output rises. .marginal costs fall. .. E. price falls. '0 §Inthelongrun - V7452 C/ 7 “2‘: verage costs will be greater than or equal to average costs in the short run. B. marginal costs will be greater than or equal to marginal costs in the short run. %fixed costs will be less than fixed costs in the short run. . fixed costs will be greater than or equal to fixed costs in the short run. E. output will be less than output in the short run. a 4. The reason we observe the law of diminishing marginal returns is that @218 production expands,the firm is forced to hire low quality workers. . firms become less efficient as they produce morefi‘i: workers become fatigued as they are required to produce more. D. equipment breaks down more frequently as production expands. E2 the production facility eventually becomes congested if the firm keeps hiring workers. (@A person’s reservation price for performing a task equals A. the equilibrium wage. B. the minimum wage in effect in that community. the total value of all of the other things the person could be doing during that time. . the value of the mo st attractive alternative activity that the person could be doing during that time. B. the price for which the good produced could be sold. 1 6. In the short run, if the firm experiences an increase in the cost of a fixed factor of production it will most likely Cr 2 A. increase output. ll - U; n.“ raise its price. 2 . . @kcrease output. (PM Q & D. lower its price. - E. leave its output decision unchanged. ...
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