Question;Section 1: Multiple-Choice The following graph may help you answer questions 1-3:ATC = Average Total CostAVC = Average Total CostAFC = Average Fixed CostMC = Marginal CostQ = Quantity1. The marginal cost curve first declines and then increases because of:A. initially increasing, later diminishing, marginal returnsB. the increase in the gap between ATC and AVC as quantity increasesC. the drop in ATC as a result of diseconomies of scaleD. constant marginal revenue2. ATC is equal to: XXXXX - AFCB. AVC + AFCC. MC + AFCD. (ATC + AFC) * Q3. The difference between ATC and AVC is equal to:A. marginal costB. total fixed costC. average fixed costD. economic profit per unit4. A profit-maximizing firm should hire an input as long as the:A. Firm can increase its total revenueB. Price of the input doesn't exceed the price of the other inputs used in the firm's productionC. Marginal revenue product of the input is at least as much as the cost of hiring the inputD. Marginal revenue product of the input is greater than the marginal revenue product of other inputs the firm is usingWayne's Jacket Shop sells Wayne's jackets for $20 each. Wayne finds that when he hires different numbers of workers, the corresponding total revenues are as follows:5. Refer to the above table. What is the marginal revenue product of the fourth worker?A. +$400B. +$200C. -$400D. -$2006. The basic explanation for high real wages in the United States and other industrially advanced economies is that the:A. Labor supply has increased more rapidly than labor demandB. Labor demand has increased more rapidly than labor supplyC. Unemployment in these nations has remained relatively consistentD. Inflation rate in these nations has increased faster than the rate of increase in nominal wagesA firm's labor input, total output of labor, and product price schedules are given below. Labor is the only variable input.7. Refer to the above table and information. What is the marginal revenue product of the fifth worker?A. $6B. $7C. $8D. $98. The poultry industry in Canada is realizing economic gains. Which of the following best predicts what will happen in this competitive market?A) Businesses will leave the industry and output will fall.B) Businesses will enter the industry and output will fall.C) Businesses will leave the industry and output will rise.D) Businesses will enter the industry and output will rise.9. The newly developed smart phone platforms such as Windows Phone and Android have increased their consumer market share since 2010. As a result, the previous Symbian and Palm phone platforms and devices have gone out of business. Since then phone manufacturers have switched to the new platforms. This is an example of:A) creative destruction.B) derived demand.C) capital accumulation.D) the difference between normal and economic profits.10. The dollar votes of consumers ultimately determine the composition of output and the allocation of resources in a market economy. This statement best describes the concept of:A) derived demand. B) consumer sovereignty. C) the invisible hand. D) market failure.11. Two major virtues of the market system are that it:A) allocates resources efficiently and allows economic freedom.B) results in an equitable personal distribution of income and always maintains full employment.C) results in price level stability and a fair personal distribution of income.D) eliminates discrimination and minimizes environmental pollution.12. In the past decade, the demand for soft drinks (e.g. artificially sweetened and colored sodas) in a certain high-income area has decreased. This decrease in demand may be explained by which of the following:A) An decrease in the cost of making smartphones. C) consumers expecting soft drink prices to fall.B) An decrease in the price of French fries D) consumer viewing soft drinks as unhealthy (i.e. soft drinks becoming inferior goods).13. If two goods are complements:A) they are consumed independently.B) An increase in the price of one will increase the demand for the other.C) a decrease in the price of one will increase the demand for the other.D) they are necessarily inferior goods.14. From a Nebraska agricultural report in 2011: ?Extended high heat disrupts c o r n pollination? leading to yield reduction?? If the supply of c o r n has decreased, then:A) the demand for c o r n will necessarily increase.B) the equilibrium quantity of c o r n will increase.C) the amount of c o r n that will be available at various prices has decreased.D) the price of c o r n will go down.
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