Reference no: EM133248490

1. Maria's Yiros House sells yiros. The cost of ingredients (pita, meat, spices, etc.) to make a yiro is $2.00. Maria pays her employees $60 per day. She also incurs a fixed cost of $120 per day. Calculate Maria's average fixed cost per day when she produces 50 yiros using two workers?

a. $2.00 b. $2.40 c. $4.40 d. $6.80

2. Suppose that when the price of raspberries increases, Lonnie increases his purchases of papayas. To Lonnie,...

a. raspberries and papayas are complements.

b. raspberries and papayas are inferior goods.

c. raspberries and papayas are normal goods.

d. raspberries and papayas are substitutes.

3. A decrease in the equilibrium price for a product will result

a. when the quantity demanded for the product exceeds the quantity supplied.

b. when there is an increase in supply and a decrease in demand for the product.

c. when there is a decrease in supply and a decrease in demand for the product.

d. when there is a decrease in demand and a decrease in the number of firms producing the product.

4. Diminishing marginal product of labour occurs when adding another unit of labour __________.

a. decreases output

b. changes output by an amount smaller than the output added by the previous unit of labour

c. increases output by an amount larger than the output added by the previous unit of labour

d. decreases output by an amount smaller than the output added by the previous unit of labour

5. Specialising in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except _________.

a. engaging in mutually beneficial trade with other nations

b. producing a combination of goods that lies outside its own production possibility frontier

c. consuming a combination of goods that lies outside its own production possibility frontier

d. increasing the variety of products that it can consume with no increase in resources

6. Some markets have many buyers and sellers but fall into the category of monopolistic competition rather than perfect competition. The most common reason for this is __________.

a. there are high barriers to entering these markets

b. firms in these markets sell identical products

c. firms in these markets make high profits

d. firms in these markets do not sell identical products

7. Mark Frost grows apples in a perfectly competitive market. If we drew a line in a graph that illustrates Mark's total revenue from selling apples, it would be __________.

a. a straight, upward-sloping line

b. a horizontal line

c. a straight, downward-sloping line

d. a curve that is negatively sloped at low levels of output and positively sloped at higher levels of output

8. A decrease in the demand for incandescent light bulbs due to changes in consumer tastes, accompanied by a decrease in the supply of incandescent light bulbs as a result of government restrictions, will result in

a. a decrease in the equilibrium quantity of incandescent light bulbs and no change in the equilibrium price.

b. a decrease in the equilibrium price of incandescent light bulbs and no change in the equilibrium quantity.

c. a decrease in the equilibrium price of incandescent light bulbs; the equilibrium quantity may increase or decrease.

d.a decrease in the equilibrium quantity of incandescent light bulbs; the equilibrium price may increase or decrease.

9. If tolls on a toll road can be raised significantly before commuters will consider using a free alternative, then an increase in tolls will result in _________.

a. a decrease in total revenue b. a decrease in non-toll road usage

c. an increase in total revenue d. an increase in toll road usage

10. If a perfectly competitive firm's price is above its average total cost, the firm ________.

a. is incurring a loss b. should shut down c. is earning a profit d. is breaking even