ECO111 Microeconomics

Class:

Term: Summer2019

Handed out:

Time allowed: 60 minutes

Student Information

NAME: TRẦN TRỌNG NGHĨA ROLL NUMBER: SE04827

ROOM NO: P211 CLASS: ECO111.BL5

FOR TEACHER ONLY

MARK
Signature of Proctor MARKED BY
(NAME AND SIGNATURE)

1. Total revenue equals

a. total output multiplied by price per unit of output.

b. total output divided by profit.

c. (total output multiplied by sales price) - inventory surplus.

d. (total output multiplied by sales price) - inventory shortage.

2. 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

a. diminishing labor.

b. diminishing output.

c. diminishing marginal product.

d. negative marginal product.

3. Assume that a given firm experiences decreasing marginal product of labor with the addition of each
worker regardless of the current output level: average fixed cost will be

a. always rising.

b. always falling.

c. U-shaped.

d. constant.

4. Economies of scale occur when

a. long-run average total costs rise as output increases.

b. long-run average total costs fall as output increases.

c. average fixed costs are falling.

d. average fixed costs are constant.

5. When a firm in a competitive market receives $500 in total revenue, it has a marginal revenue of $10.
What is the average revenue, and how many units were sold?

a. $5 and 100

b. $10 and 50

c. $10 and 100

d. The answer cannot be determined from the information given.

6. If marginal cost exceeds marginal revenue, the firm

a. is most likely to be at a profit-maximizing level of output.

b. should increase the level of production to maximize its profit.

c. must be experiencing losses.

d. may still be earning a profit.

7. As part of an estate settlement Mary received $1 million. She decided to use the money to purchase a
small business in Anywhere, USA. If Mary would have invested the $1 million in a risk-free bond
fund she could have made $100,000 each year. She also quit her job with Lucky.Com Inc. to devote
all of her time to her new business; her salary at Lucky.Com Inc. was $75,000 per year.

At the end of the first year of operating her new business, Mary's accountant reported an accounting
profit of $150,000. What was Mary's economic profit?

a. $25,000 loss

b. $50,000 loss

c. $25,000 profit

d. $150,000 profit
 8. Which of the following statements is correct?

a. A competitive firm is a price maker and a monopoly is a price taker.

b. A competitive firm is a price taker and a monopoly is a price maker.

c. Both competitive firms and monopolies are price takers.

d. Both competitive firms and monopolies are price makers.

9. Competitive firms have

a. downward-sloping demand curves and they can sell as much output as they desire at the market
price.

b. downward-sloping demand curves and they can sell only a limited quantity of output at each
price.

c. horizontal demand curves and they can sell as much output as they desire at the market price.

d. horizontal demand curves and they can sell only a limited quantity of output at each price.

_____ 10. A firm will shut down when

a. it is not earning a profit.

b. price does not equal marginal cost.
c. price is less than average cost.
d. revenue is less than variable costs.
e. revenue is less than total costs.

_____ 11. A perfectly competitive firm will maximize profit when

a. total revenue exceeds total cost.

b. marginal revenue exceeds marginal cost.
c. price equals marginal cost.
d. price equals marginal benefit.
e. marginal benefit exceeds marginal cost.

_____12. The difference between a firm’s average total cost and its average variable cost is its
 a. profit.
b. marginal revenue.
c. average fixed cost.
d. producer surplus
e. excess supply.

______13. A firm's profit is equal to which of the following?

a. the value of its sales

b. marginal revenue minus marginal cost
c. total sales minus wages
d. total revenue minus total cost
e. none of the above

______14. When the quantity of an input can be altered in the short-run, the input is

a. fixed.
b. variable.
c. implicit.
d. explicit.
e. efficient.
 _____15. Which of the following can a firm vary in the long-run?

a. no factors of production
b. all factors of production
c. all but one factor of production
d. only one factor of production
e. more information about the firm is needed to answer this question
____16. When there is a surplus in a market
A. there is downward pressure on price
B. there is upward pressure on price
C. the market could still be in equilibrium
D. there are too many buyers chasing too few goods.

______17. Marginal cost is the change is cost that results from a one unit increase in
A. price
B. cost
C. output
D. revenue

______18. If an increase in the price of gasoline increases the demand for gas/electric hybrid cars, then
A. hybrid cars are an inferior good.
B. gasoline and hybrid cars are complements in consumption.
C. gasoline is an inferior good.
D. gasoline and hybrid cars are substitutes in consumption

______19.The downward slope of a demand curve

A. represents the law of demand
B. shows that as the price of a good rises, consumers increase the quantity they demand
C. indicates how quantity demanded changes when incomes rise and the good is normal
D. indicates how demand changes when incomes rise and the good is normal

______20. Consumer surplus is

A. the quantity of a good consumers get but did not have to pay for
B. the amount a consumer has to pay less the amount the consumer was willing to pay
C. the amount the consumer was willing to pay less the amount the consumer paid
D. the total value of a good to a consumer

______21. A point on the production possibilities frontier reflects an

A. attainable point with full employment of all resources
B. attainable point without full employment of all resources
C. unattainable point with full employment of all resources
D. unattainable point without full employment of all resources

______22. To access Internet services, consumers must use a computer. If computer prices fall, what is the
effect on the
demand for Internet services?
A. The demand for Internet services increases.
B. The demand for Internet services decreases.
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C. The demand for Internet services does not change.
D. The demand for Internet services could increase, decrease, or stay the same depending on other factors

______23. A firm that is a price taker faces a perfectly

A. elastic supply curve
B. inelastic demand curve
C. elastic demand curve
D. inelastic supply curve

______24. An increase in price causes an increase in total revenue when

A. demand is elastic
B. demand is inelastic
C. demand is unit elastic
D. All of the above are possible.

_____25. The long run is a time period that is

A. five years or longer
B. long enough to change the level of labor hired
C. long enough to change the size of the firm’s plant
D. ten years or longer

____26. The word economy comes from the Greek word for
a. "environment."
b. "one who manages a household."
c. "one who participates in a market."
d. "conservation."

_____27. Trade can benefit a family

a. by allowing the family to buy a greater variety of goods and services at a lower cost.
b. by allowing each person to specialize in the activities he or she does best.
c. only if the family is not in economic competition with other families.
d. All of the above are correct.
e. Both a and b are correct.

_____28.If Pizza Hut raises the price of a slice of pizza from $3.00 to $3.25, the quantity demanded decreases
from 1,500 slices per week to 1,300 slices per week. The demand for slices of pizza is ________ and the total
revenue received by
this Pizza Hut ________.
A. elastic; decreases
B. inelastic; decreases
C. elastic; increases
D. inelastic; decreases

______29. Perfectly inelastic demand means that consumers

A. are willing to buy any quantity of the good at a given price, but none at a higher price
B. decrease their consumption as price rises
C. increase their consumption as price rises
D. will buy a certain quantity, regardless of price

_____30. Which of the following would change the quantity supplied for a good or service?
A. a change in the technology used to produce the good or service
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B. a change in the price of inputs used to produce the good or service
C. a change in expectations about the price of the good or service
D. a change in the price of the good or service
E. Only A, B, C
F. Only D

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