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ECO550 Final Part 1 Latest 2017 (Score 100%)

Question 10 out of 4 pointsEvidence from empirical studies of long-run cost-output relationships lends support to the:a. existence of a non-linear cubic total cost functionb. hypothesis that marginal costs first decrease, then gradually increase over the normal operating range of the firmc. hypothesis that total costs increase quadratically over the ranges of output examinedd. hypothesis that total costs increase linearly over some considerable range of output examinede. none of the aboveQuestion 20 out of 4 pointsThe short-run cost function is:a. where all inputs to the production process are variableb. relevant to decisions in which one or more inputs to the production process are fixedc. not relevant to optimal pricing and production output decisionsd. crucial in making optimal investment decisions in new production facilitiese. none of the aboveQuestion 30 out of 4 pointsWhich of the following is not an assumption of the linear breakeven model:a. constant selling price per unitb. decreasing variable cost per unitc. fixed costs are independent of the output leveld. a single product (or a constant mix of products) is being produced and solde. all costs can be classified as fixed or variableQuestion 44 out of 4 pointsA ____ total cost function implies that marginal costs ____ as output is increased.a. linear; increase linearlyb. quadratic; increase linearlyc. cubic; increase linearlyd. a and be. none of the aboveQuestion 54 out of 4 pointsBreak-even analysis usually assumes all of the following except:a. in the short run, there is no distinction between variable and fixed costs. b. revenue and cost curves are straight-lines throughout the analysis.c. there appears to be perfect competition since the price is considered to remain the same re-gardless of quantity.d. the straight-line cost curve implies that marginal cost is constant.e. both c and dQuestion 64 out of 4 pointsIn the linear breakeven model, the breakeven sales volume (in dollars) can be found by multiplying the breakeven sales volume (in units) by:a. one minus the variable cost ratiob. contribution margin per unitc. selling price per unitd. standard deviation of unit salese. none of the aboveQuestion 74 out of 4 pointsThe main difference between perfect competition and monopolistic competition is:a. the number of sellers in the market.b. the ease of exit from the market.c. the difference in the firm's profits in the long run.d. the degree of product differentiation.e. Whether it is the short run or the long runQuestion 84 out of 4 pointsExperience goods are products or servicesa. that the customer already knowsb. whose performance is highly unusualc. whose quality is undetectable when purchasedd. not likely to cause repeat purchasese. all of the aboveQuestion 94 out of 4 pointsUncertainty includes all of the following except ____.a. unknown effects of deliberate actionsb. incomplete information as to the type of competitorc. random disturbancesd. unverifiable claimse. accidents due to weather hazardsQuestion 104 out of 4 pointsUnder asymmetric information,a. you never get what you pay forb. you sometimes get cheatedc. you always get cheatedd. at best you get what you pay fore. sellers make profits in excess of competitive returnsQuestion 114 out of 4 pointsA "search good" is:a. One that depends on how the product behaves over timeb. A product whose quality is only found out over time by finding how durable it isc. Like a peach that can be examined for flawsd. Like a used car, since it is easy to determine its inherent qualitye. None of the aboveQuestion 124 out of 4 pointsIf price exceeds average costs under pure competition, ____ firms will enter the industry, supply will ____, and price will be driven ____.a. more; decrease; downb. more; decrease; upc. more; increase; downd. more; increase; upe. none of the aboveQuestion 134 out of 4 pointsThe price for used cars is well below the price of new cars of the same general quality. This is an example of:a. The Degree of Operating Leverageb. A Lemon's Marketc. Redeployment Assetsd. Cyclical Competitione. The Unemployment RateQuestion 144 out of 4 pointsThe demand curve facing the firm in ____ is the same as the industry demand curve.a. pure competition b. monopolistic competition c. oligopoly d. pure monopoly e. none of the aboveQuestion 154 out of 4 pointsDeclining cost industriesa. have upward rising AC curves. b. have upward rising demand curves. c. have -shaped total costs. d. have diseconomies of scale. e. have marginal cost curves below their average cost curveQuestion 164 out of 4 pointsIn natural monopoly, AC continuously declines due to economies in distribution or in production, which tends to found in industries which face increasing returns to scale. If price were set equal to marginal cost, then:a. price would equal average cost.b. price would exceed average cost.c. price would be below average cost.d. price would be at the profit maximizing level for natural monopolye. all of the aboveQuestion 174 out of 4 pointsThe practice by telephone companies of charging lower long-distance rates at night than during the day is an example of:a. inverted block pricingb. second-degree price discriminationc. peak-load pricingd. first-degree price discriminatione. none of the aboveQuestion 184 out of 4 pointsIn the electric power industry, residential customers have relatively ____ demand for electricity compared with large industrial users. But contrary to price discrimination, large industrial users generally are charged ____ rates.a. similar, similar b. elastic, lower c. elastic, higher d. inelastic, lowere. inelastic, higherQuestion 194 out of 4 points____ as practiced by public utilities is designed to encourage greater usage and therefore spread the fixed costs of the utility's plant over a larger number of units of output.a. Peak load pricingb. Inverted block pricingc. Block pricingd. First degree price discriminatione. None of the aboveQuestion 204 out of 4 points“Conscious parallelism of action” among oligopolistic firms is an example of ____.a. intense rivalryb. a formal collusive agreementc. informal, or tacit, cooperationd. a cartele. none of the aboveQuestion 214 out of 4 pointsBarometric price leadership exists whena. one firm in the industry initiates a price change and the others follow it as a signal of changes in cost or demand in the industry.b. one firm imposes its best price on the rest of the industry.c. all firms agree to change prices simultaneously.d. one company forms a price umbrella for all others.e. the firms are all colludingQuestion 224 out of 4 pointsIf a cartel seeks to maximize profits, the market share (or quota) for each firm should be set at a level such that the ____ of all firms is identical.a. average total costb. average profitc. marginal profitd. marginal coste. marginal revenueQuestion 234 out of 4 pointsA(n) ____ is characterized by a relatively small number of firms producing a product.a. monopolyb. syndicatec. cooperatived. oligopolye. none of the aboveQuestion 244 out of 4 pointsIn a kinked demand market, whenever one firm decides to lower its price,a. other firms will automatically follow.b. none of the other firms will follow.c. one half of the firms follow and one half of the firms don't follow the price cut.d. other firms all decide to exit the industrye. all of the other firms raise their prices.Question 254 out of 4 pointsIn the Cournot duopoly model, each of the two firms, in determining its profit-maximizing price-output level, assumes that the other firm's ____ will not change.a. priceb. outputc. marketing strategyd. inventorye. none of the above

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