Set#1:Midterm Exam For Open University Malysia Students...Albrady

26 Questions | Total Attempts: 78

SettingsSettingsSettings
Midterm Quizzes & Trivia

This exam is given to my friends in OUM Bahrain,to the Managerial Economices. The exam purpose is to simulate the real exam, it will show 30 equastions with 60 minutes. I hope from each one write his or her dummy name to see the progress that refluct the level of knowldge.


Questions and Answers
  • 1. 
    Rational behavior and marginal analysis:
    • A. 

      Explain why there is "no free lunch"

    • B. 

      Are part of the economic perspective

    • C. 

      Are relevant in short-term but not long-term analysis

    • D. 

      Explain the "fallacy of composition"

  • 2. 
    In studying economic principles, economists make use of:
    • A. 

      Both the economic perspective and the scientific method

    • B. 

      The economic perspective but not the scientific method

    • C. 

      The scientific method but not the economic perspective

    • D. 

      Neither the scientific method nor the economic perspective

  • 3. 
    Microeconomics:
    • A. 

      Is particularly subject to the "fallacy of composition"

    • B. 

      is concerned with the economy as a whole

    • C. 

      Studies how supply and demand determine prices in individual markets

    • D. 

      Describes the aggregate flows of output and income

  • 4. 
    The two major features of the economic perspective are:
    • A. 

      Rational behavior and marginal analysis

    • B. 

      Normative and positive analysis

    • C. 

      Benefit and cost

    • D. 

      Consumers and producers

  • 5. 
    The price at which there is neither surplus nor shortage is called:
    • A. 

      The adjustment price.

    • B. 

      The equal price.

    • C. 

      The fair price.

    • D. 

      The market-clearing price.

  • 6. 
    Suppose that there has been a decline in the price of cheep. What effect will this have on the market for beef?
    • A. 

      It will decrease demand and decrease supply.

    • B. 

      It will decrease demand and decrease quantity supplied.

    • C. 

      It will decrease quantity demanded and decrease supply.

    • D. 

      It will decrease quantity demanded and decrease quantity supplied.

  • 7. 
    If both the demand curve and supply curve move to the left, we can predict:
    • A. 

      price will fall, but we cannot predict quantity.

    • B. 

      Price will rise, but we cannot predict quantity.

    • C. 

      quantity will rise, but we cannot predict price.

    • D. 

      Quantity will fall, but we cannot predict price.

  • 8. 
    Aabced, Inc. finds that no matter how much it sells, its marginal revenue is always $7.50. This constant marginal revenue tells us that the elasticity of its demand curve is:    
    • A. 

      Infinity or perfectly elastic.

    • B. 

      7.5

    • C. 

      1.

    • D. 

      Zero or Perfectly inelasic

  • 9. 
    Connie Mix is a consultant to Vidget Corp. He tells them that their product, Vidgets, is an inferior good. He would make this claim if he believed that the product had:   
    • A. 

      an income elasticity greater than zero.

    • B. 

      An income elasticity less than zero.

    • C. 

      A price elasticity of supply greater than one.

    • D. 

      A price elasticity of supply less than one.

  • 10. 
    In January of 1999 the U.S. Post Office raised the price of mailing a first class letter from 32 to 33 cents, an increase of about 3%. If the Post Office faces a section of its demand curve that is elastic, one can predict that revenues will:  
    • A. 

      increase by more than 3%.

    • B. 

      increase by 3%.

    • C. 

      increase, but by less than 3%

    • D. 

      Decrease.

  • 11. 
    The following table gives information about the costs and benefits of an activity. Amount Total Cost Marginal Benefit 1 (first) $8 $18 2 (second) 16 14 3 (third) 25 8 4 (fourth) 36 7 5 (fifth) 50 3The total benefit of three units and the marginal cost of the fourth unit are::   
    • A. 

      Total benefit= $9 & MC=7.

    • B. 

      Total benefit=$24 & MC =$9.

    • C. 

      Total benfit=$30 & MC= $36.

    • D. 

      Total benefit=$40 & MC= $11.

  • 12. 
    Refer to the following: S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.  In this market:
    • A. 

      both supply and demand have decreased and equilibrium price has increased

    • B. 

      Demand has increased, supply has decreased, and equilibrium price has decreased

    • C. 

      Both demand and supply have increased and equilibrium price has decreased

    • D. 

      Demand has decreased, supply has increased and equilibrium price has decreased

  • 13. 
    A partial explanation for the inverse relationship between price and quantity demanded is that a:
    • A. 

      Lower price shifts the supply curve to the left

    • B. 

      Higher price shifts the demand curve to the left

    • C. 

      Lower price shifts the demand curve to the right

    • D. 

      Higher price reduces the real incomes of buyers

  • 14. 
    Suppose the production of VCRs can be represented by the following production function: q = L0.4K0.4 Which of the following statements is (are) TRUE?
    • A. 

      Capital and labor can be substituted for one another.

    • B. 

      The marginal productivity of labor falls as labor increases in the short-run.

    • C. 

      The production function has decreasing returns to scale.

    • D. 

      All of the above are true.

  • 15. 
    "Returns to scale" is a concept that operates
    • A. 

      In both the long-run and the short-run.

    • B. 

      In either the long-run or the short-run but never both.

    • C. 

      Only in the long-run.

    • D. 

      Only in the short-run.

  • 16. 
    If a firm can produce 90 units with 6 workers and the average product for the 7th worker is 14, then the marginal product is
    • A. 

      10

    • B. 

      7

    • C. 

      98

    • D. 

      8

  • 17. 
    If a firm doubles all inputs and output more than doubles, there are
    • A. 

      Decreasing returns to scale.

    • B. 

      Increasing returns to the variable factor.

    • C. 

      Increasing returns to scale.

    • D. 

      Constant returns to scale.

  • 18. 
    Consider the following production function:Q = A L a K b If the firm has increasing returns to scale, then which of the following answers correctly reflects that?
    • A. 

      A = 0.6 and B = 0.33

    • B. 

      A = 0.59 and B = 0.69

    • C. 

      A = 0.4 and B = 0.3

    • D. 

      A = 0.2 and B = 0.5

  • 19. 
    If a firm pays cash to buy a building to use for office space for its workers, the monthly opportunity cost of the building is best measured as          
    • A. 

      The rent the firm could earn if it rented the building to another firm.

    • B. 

      The price the firm paid divided by twelve.

    • C. 

      The monthly mortgage payment the firm would have had to pay.

    • D. 

      Zero.

  • 20. 
    Suppose the total cost of producing T-shirts can be represented as TC = 50 + 2q. Which of the following statements is TRUE at all levels of production?  
    • A. 

      MC > AFC.

    • B. 

      MC = AC.

    • C. 

      MC = AVC.

    • D. 

      All of the above.

  • 21. 
    Suppose the short-run production function is q = 10 * L. If the wage rate is $10 per unit of labor, then MC=  
    • A. 

      Q.

    • B. 

      q/10.

    • C. 

      1.

    • D. 

      10/q.

  • 22. 
    If a production function is represented as q = LαKβ, the long-run average cost curve will be horizontal as long as   
    • A. 

      L = K

    • B. 

      α + β = 0

    • C. 

      Q > 0

    • D. 

      α + β = 1

  • 23. 
    The WXY Corporation has fixed costs of $50. Its total variable costs (TVC) vary with output as shown in the following table. Output TVC 1 $   0 2    70 3   110 4   160 5   220 Refer to the table. The average total cost of 4 units of output is:
    • A. 

      $27.50

    • B. 

      $40.00

    • C. 

      $52.50

    • D. 

      $210.00

  • 24. 
    Use the following diagram of a firm's long-run average total cost curve to answer the next question. Which of the following best explains the shape of the curve from B to C?
    • A. 

      Labor's marginal product is decreasing

    • B. 

      The law of diminishing returns

    • C. 

      Wages increase as the firm uses more labor

    • D. 

      Managing and coordinating a firm becomes increasingly costly as firm size increases

  • 25. 
    Answer the next question on the basis of the following short-run production data for a small firm. Number ofWorkers Units ofOutput 0   0 1 12 2 26 3 48 4 60 5 70 6 78 Refer to the data. Average product is at a maximum when:
    • A. 

      2 workers are hired

    • B. 

      3 workers are hired

    • C. 

      4 workers are hired

    • D. 

      5 workers are hired

  • 26. 
    OptionalSuppose that a business incurred implicit costs of $300,000 and explicit costs of $1,300,000 over the past year. If the firm sold 70,000 units at $20 per unit, its accounting:
    • A. 

      Profits were $400,000 and its economic profits were $100,000

    • B. 

      Losses were $200,000 and its economic profits were $100,000

    • C. 

      Profits were $100,000 and its economic profits were zero

    • D. 

      Profits were $100,000 and its economic losses were $200,000