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Taranveer-Wk 1-Quiz 1-Man Eco

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QUESTION 1
1.  Variable costs are
a. equal to total costs
b. costs that vary with output
c. not important in decision making
d. costs that do not vary with output
1 points   
QUESTION 2
1.  The illegality of organ sales from willing donors to willing recipients is ineffective
because:
a. It encourages organ sales
b. It discourages wealth creating transactions through the threat of heavy penalty
c. It encourages government intervention
d. None of the above
1 points   
QUESTION 3
1.  Food Fanatics caters meals where their cost of producing an extra meal is $25. Each of their
meals is standard and sells for $20. At this rate what should the company do?
a. Produce more meals and increase their profit
b. Produce fewer meals and increase their profit
c. Not change production
d. None of the above

1 points   
QUESTION 4
1. Harvey’s Hardware is thinking about starting a line of lawnmowers to serve its customer base in
the summer. The lawnmowers would be priced at $100 and Harvey the manager believes that they
would sell 3 units. They have the following estimated costs. Use this information for questions 55-58

Units Produced Labor Cost Total cost


0 0 100
1 50 150
2 100 200
3 200 300
4 350 450

What is the marginal revenue from selling the third unit?


a. $50
b. $0
c. $150
d. $100

1 points   
QUESTION 5
1.  Wealthy professors are more likely to shop at high end stores with shorter wait times at
the cashier than poor students because
a.
The opportunity cost of waiting in a cashier line is higher for professors than for
undergraduate students
b. They like to show off
c. They like wasting money
d. They value the item more than the student
1 points   
QUESTION 6
1.  A consumer values a car at $30,000 and a producer values the same car at $20,000. If a tax is
levied on the seller, what level of tax will result in unconsummated transaction?
a. 40%
b. 25%
c. 0%
d. 60%

1 points   
QUESTION 7
1. A buyer values a house at $525,000 and a seller values the same house at $485,000. If sales tax is
8% and is levied on the seller, then what would be the lowest price that the seller would be willing to
sell at?
a. $500,000
b. $527,000
c. $523,800
d. $525,000

1 points   
QUESTION 8
1.  When taxes are levied on transactions, irrespective of the party they are levied on,
a.
The government can absorb some of the surplus, but also creates a social loss since some
of the wealth creating transactions are discouraged
b. The government can absorb all the producer surplus from the transactions as revenue
c. The government can absorb all of the surplus (producer and consumer)
d. The government can absorb all the consumer surplus from the transactions as revenue
1 points   
QUESTION 9
1. Use the following table to answer questions 44 - 50:

# Units Produced Total Revenue Total Costs


0 0 200
1 600 660
2 780 720
3 840 780
4 890 870
5 910 980

 What is the marginal revenue from producing the fourth unit?


a. 50
b. 20
c. 90
d. 180

1 points   
QUESTION 10
1. Use the following table to answer questions 44 - 50:

# Units Produced Total Revenue Total Costs


0 0 200
1 600 660
2 780 720
3 840 780
4 890 870
5 910 980

How many units should the profit maximizing firm produce?


a. 3
b. 4
c. 1
d. 2

1 points   
QUESTION 11
1.  For a moving company, all of the following are examples of variable costs, except
a. Gasoline costs
b. Truck rents
c. Marketing costs
d. None of the above
1 points   
QUESTION 12
1.  A firm produces 500 units per week. It hires 20 full-time workers (40 hours/week) at an hourly
wage of $15. Raw materials are ordered weekly and they costs $10 for every unit produced.  The
weekly cost of the rent payment for the factory is $2,250. How do the overall costs breakdown?
a. total variable cost is $5,000; total fixed cost is $2,250; total cost is $7,250
b
.
total variable cost is $5,000; total fixed cost is $14,250; total cost is $19.250
c. total variable cost is $12,000; total fixed cost is $7,250; total cost is $19,250
d
.
total variable cost is $17,000; total fixed cost is $2,250; total cost is $19,250

1 points   
QUESTION 13
1. The difference between the minimum price the producer is willing to accept and the price the
producer actually receives for a product is referred to as:
a. consumer surplus.
b. market surplus.
c. producer surplus.
d. market shortage.

1 points   
QUESTION 14
1.  All of the following costs are included in the calculation of accounting profit, except
a. Interest payments on borrowed funds
b. Opportunity cost of capital
c. Costs paid to suppliers for product ingredients
d. Depreciation expenses related to investments in buildings and equipment
1 points   
QUESTION 15
1.  You are at a restaurant deciding if you would like some dessert after the meal. The
dinner is over so you do not want anything else but the dessert. The opportunity cost of getting
the dessert would include
a. Nothing, because you are already there
b. Another round of appetizers possibly
c. Anything else you could buy
d. None of the above
1 points   
QUESTION 16
1.  Firm X is producing 1000 units, selling them at $15 each. Variable costs are $3 per unit
and the firm is making an accounting profit of $3000. What is the firm’s fixed costs?
a. $10,000
b. $9,000
c. $11,000
d. $12,000

1 points   
QUESTION 17
1. Use the following table to answer questions 44 - 50:

# Units Produced Total Revenue Total Costs


0 0 200
1 600 660
2 780 720
3 840 780
4 890 870
5 910 980

 What is the average cost per unit for producing 3 units?


a. 110.
b. 260.
c. 70.
d. 200.

1 points   
QUESTION 18
1. Government can intervene in the market through
a. Price floors
b. Price ceilings
c. Taxes
d. All the above
1 points   
QUESTION 19
1. A consumer values a house at $525,000 and a producer values the same house at $485,000. If the
transaction is completed at $510,000, what amount of tax will result in unconsummated transaction?
a. A tax of $18,000
b. A tax of $14,000
c. A tax of $9,000
d. A tax of $15,000

1 points   
QUESTION 20
1. A widget producer is deciding whether to compensate widget makers on a salary basis or a per
unit basis. Given that it is difficult to monitor shirking, which of these pay schedules would provide
stronger performance incentives?
a. Per piece compensation
b. Salary
c. Both of them
d. Neither of them

1 points   
QUESTION 21
1.  A company invested $400,000 in a technology that reduced the overall costs of
production by reducing their cost per unit from $2 to $1.85. Later, a manager has an
opportunity to outsource production to another company at a cost per unit of $1.75. If you are
the manager, you
a. should consider the $400,000 as a sunk cost, not relevant to the decision.
should reduce his effort by ignoring any new developments and letting the production run
b.
as it is.
c. should ignore the $400,000 fixed cost.
d. Both A&C
1 points   
QUESTION 22
1.  Scott used $4,000,000 from his savings account that paid an annual interest of 5% and a
$60,000 loan at an annual interest rate of 5% to purchase a hardware store. After one year,
Scott sold the business for $4,100,000. His economic profits is:
a. None. He runs an economic loss of $103,000
b. $97000
c. $100,000
d. $300,000

1 points   
QUESTION 23
1.  In the long-run, all costs are
a. Variable costs
b. Sunk Costs
c. Fixed costs
d. Marginal Costs
1 points   
QUESTION 24
1.  Taxes cause:
a. Market distortions
b. A reduction in incentives to work
c. A decrease in wealth creating transactions
d. All of the above
1 points   
QUESTION 25
1.  Total costs increase from $1,500 to $1,800 when a firm increases output from 40 to 50 units.
Which of the following are true?
a. VC rise by $0
b. VC rise by $1,800
c. VC rise by $1,500
d. VC rise by $300

1 points   
QUESTION 26
1.  Price ceilings are primarily intended to help
a. No one
b. Government
c. Producers
d. Consumers

1 points   
QUESTION 27
1.  After graduating from college, Jim had two choices. He can either move to Florida, from
Philadelphia, where he can work as an analyst and earn $60,000 or he can stay in Philadelphia
and work in a car dealership earning $59,000. His opportunity cost of moving to Florida
includes
a. The benefits he could have received from playing soccer
b
. $59,000
c. both a and b
d
. none of the above

1 points   
QUESTION 28
1.  Scott used $4,000,000 from his savings account that paid an annual interest of 5% and a
$60,000 loan at an annual interest rate of 5% to purchase a hardware store. After one year,
Scott sold the business for $4,100,000. His accounting profits is:
a. $97,000
b. $300,000
c. $20,000
d. $100,000

1 points   
QUESTION 29
1.  Firm X is producing 1000 units, selling them at $15 each. Variable costs are $3 per unit
and the firm is making an accounting profit of $3000. What is the firm’s total variable costs?
a. $3000
b. $7,000
c. $5,000
d. $1000

1 points   
QUESTION 30
1. You own a tract of trees and are deciding whether to harvest them now or next year. If you
harvest them now, you can invest the proceeds and get a return of 5% on your investment. What should
you do?
a. Cut down the trees, and sell them
b. Let the trees grow
Let the trees grow as long as their dollar worth increases by more than
c.
5%
d. Let the trees grow as long as their dollar worth increases by less than 5%
User Subba Rao Kalagara
Course Summer 2020 - Managerial Economics (BADM-535-30) - Full Term
Test Quiz 1
Started 5/10/20 5:56 PM
Submitted 5/10/20 7:10 PM
Due Date 5/10/20 11:59 PM
Status Completed
Attempt Score 9.5 out of 10 points  
Time Elapsed 1 hour, 13 minutes
Results All Answers, Submitted Answers, Correct Answers, Feedback, Incorrectly Answered Questions
Displayed
 Question 1
0.5 out of 0.5 points
You are at a restaurant deciding if you would like some dessert after the meal. The
dinner is over so you do not want anything else but the dessert. The opportunity cost of
getting the dessert would include
Selected c. 
Answer:
Anything else you could buy
Answers: a. 
Nothing, because you are already there
b. 
Another round of appetizers possibly
c. 
Anything else you could buy
d. 
None of the above
 Question 2
0.5 out of 0.5 points
A consumer values a car at $30,000 and a producer values the same car at $20,000. What
amount of tax will result in unconsummated transaction?
Selected d. 
Answer: $15,000
Answers: a. 
$4,000
b. 
$9,000
c. 
$2,000
d. 
$15,000
 Question 3
0.5 out of 0.5 points
A manager invests $400,000 in a technology that should reduce the overall costs of
production. The company managed to reduce their cost per unit from $2 to $1.85. This
affects
Selected c. 
Answer:
Both a and b
Answers: a. 
Economic profits
b. 
Accounting profits
c. 
Both a and b
d. 
None of the above
 Question 4
0.5 out of 0.5 points
Wealthy professors are more likely to shop at high end stores with shorter wait times at
the cashier than poor students because
Selected c. 
Answer:
The opportunity cost of waiting in a cashier line is higher for professors
than for undergraduate students
Answers: a. 
They like to show off
b. 
They like wasting money
c. 
The opportunity cost of waiting in a cashier line is higher for professors
than for undergraduate students
d. 
They value the item more than the student
 Question 5
0.5 out of 0.5 points
An example of price floor is
Selected a. 
Answer:
Minimum wages
Answers: a. 
Minimum wages
b. 
Rent controls in New York
c. 
Both a and b
d. 
None of the above
 Question 6
0.5 out of 0.5 points
A company invested $400,000 in a technology that reduced the overall costs of
production by reducing their cost per unit from $2 to $1.85. Later, a manager has an
opportunity to outsource production to another company at a cost per unit of $1.75. If
you are the manager, you
Selected d. 
Answer:
Both A & C
Answers: a. 
should consider the $400,000 as a sunk cost, not relevant to the decision.
b. 
should reduce his effort by ignoring any new developments and letting
the production run as it is.
c. 
should ignore the $400,000 fixed cost.
d. 
Both A & C
 Question 7
0 out of 0.5 points
A business incurs the following costs per unit: Labor  $5/unit; Materials $3/unit and
rent  $5000/month. If the firm produces 1000 units a month, the total variable costs
equals
Selected c. 
Answer:
$13,000
Answers: a. 
$10,000
b. 
$8,000
c. 
$13,000
d. 
$5,000
 Question 8
0.5 out of 0.5 points
Price ceilings are primarily intended to help
Selected a. 
Answer:
Consumers
Answers: a. 
Consumers
b. 
Producers
c. 
Government
d. 
No one
 Question 9
0.5 out of 0.5 points
A consumer values a car at $30,000 and a producer values the same car at $20,000. The
transaction will not take place if a tax is imposed
Selected a. 
Answer: larger than the total surplus
Answers: a. 
larger than the total surplus
b. 
smaller than the buyer surplus
c. 
smaller than the total surplus
d. 
equal to the seller surplus
 Question 10
0.5 out of 0.5 points
Scott used $4,000,000 from his savings account that paid an annual interest of 5% to
purchase a hardware store. After one year, Scott sold the business for $4,100,000. His
economic profits is:
Selected c. 
Answer:
-$100,000
Answers: a. 
$100,000
b. 
$300,000
c. 
-$100,000
d. 
-$200,000
 Question 11
0.5 out of 0.5 points
An individual’s value for a good or service is the
Selected b. 
Answer: The amount of money he or she is willing to pay for it
Answers: a. 
The amount of money he or she used to pay for a good
b. 
The amount of money he or she is willing to pay for it
c. 
The amount of money he or she has to spend on goods
d. 
None of the above
 Question 12
0.5 out of 0.5 points
Opportunity cost of an activity
Selected a. 
Answer:
May include both monetary costs and foregone incomes
Answers: a. 
May include both monetary costs and foregone incomes
b. 
Is known with certainty
c. 
Is included in accounting costs
d. 
Does not include monetary costs
 Question 13
0.5 out of 0.5 points
Technological advancement creates unemployment in firms that shut down or labor that is laid
off. Wealth in this case is
Selected b. 
Answer: Created, since the dislocated labor and resources are absorbed by new firms
created through the technological innovation, moving them to higher value use
Answers: a. 
Destroyed, since firms are shutting down and production of certain goods and
services decreasing
b. 
Created, since the dislocated labor and resources are absorbed by new firms
created through the technological innovation, moving them to higher value use
c. 
Destroyed, since technological progress is leading to higher unemployment
d. 
None of the above
 Question 14
0.5 out of 0.5 points
The difference between the maximum price the consumer is willing to pay and the price the
consumer actually pays for a product is referred to as:
Selected d. 
Answer: consumer surplus.
Answers: a. 
market surplus.
b. 
market shortage.
c. 
producer surplus.
d. 
consumer surplus.
 Question 15
0.5 out of 0.5 points
A consumer values a car at $30,000 and a producer values the same car at $20,000. If the
transaction is completed at $24,000, the transaction will generate:
Selected b. 
Answer: $6,000 worth of buyer surplus and $4,000 of seller surplus
Answers: a. 
$6,000 worth of buyer surplus and unknown amount of seller surplus
b. 
$6,000 worth of buyer surplus and $4,000 of seller surplus
c. 
No surplus
d. 
$4,000 worth of seller surplus and unknown amount of buyer surplus
 Question 16
0.5 out of 0.5 points
Total surplus or gains created from trade equal
Selected b. 
Answer: The summation of seller and buyer surplus
Answers: a. 
Seller surplus
b. 
The summation of seller and buyer surplus
c. 
Buyer surplus
d. 
Profits earned by a firm
 Question 17
0.5 out of 0.5 points
A manager invests $400,000 in a technology that should reduce the overall costs of
production. The company managed to reduce their cost per unit from $2 to $1.85. All
else equal, if the firm continues its production in the same economic environment, the
firms accounting profits should
Selected d. 
Answer:
increase
Answers: a. 
stay the same
b. 
does not affect profits
c. 
decrease
d. 
increase
 Question 18
0.5 out of 0.5 points
A retailer X that is operating at a loss gets bought out by a larger chain of department stores,
which shuts down the brand, using its assets for their own brand,
Selected b. 
Answer: Wealth is created since the resources were of lesser value under the X brand
and are now worth more
Answers: a. 
Wealth is destroyed since the company shut down
b. 
Wealth is created since the resources were of lesser value under the X brand
and are now worth more
c. 
Wealth is neither created nor destroyed since the total amount of resources stay
the same
d. 
None of the above
 Question 19
0.5 out of 0.5 points
The Indian government constructs houses for the homeless, to move them out of the
slums. Soon as these houses are constructed, the homeless, rent them out and moved to
another slum. Where could the policy have gone wrong?
Selected d. 
Answer:
Both A & B
Answers: a. 
The policy would have been much more effective had the poor been given
the cash equivalent of the house, to allocate effectively by themselves.
b. 
The government did not allocate the funds to their highest use, as per the
needs of the homeless.
c. 
The government failed to run the policy effectively.
d. 
Both A & B
 Question 20
0.5 out of 0.5 points
Government can intervene in the market through
Selected d. 
Answer:
All the above
Answers: a. 
Price floors
b. 
Price ceilings
c. 
Taxes
d. 
All the above

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