# FINANCE

34) Refer to the above figure. The curve reflects

A) the law of diminishing marginal product in labor.

B) the law of increasing marginal product in labor.

C) the law of diminishing marginal product in capital.

D) the law of increasing marginal product in capital.

35) Which of the following is correct?

A) TC = TFC + TVC

B) TC = TFC – TVC

C) TC = TFC * TVC

D) TC = TFC / TVC8

36) Suppose that a firm is currently producing 1,000 units of output. At this level of

output, AVC is \$1 per unit, and TFC is \$500. What is the firm’s TC?

A) \$1,500

B) \$1,000

C) \$501

D) \$499

37) Suppose that a firm is currently producing 500 units of output.

At this level of output, TVC = \$1,000 and TFC = \$2,500. What is the firms ATC?

A) \$2

B) \$5

C) \$7

D) \$10

38) Suppose that when the level of output for the firm increases from 100 to 110 units, its

variable costs increase from \$500 to \$700. What is the firm’s marginal cost?

A) \$5

B) \$7

C) \$20

D) \$200

39) Which one of the following statements is FALSE?

A) TC = TFC + TVC

B) ATC = AFC + AVC

C) AFC = TFC divided by Q

D) MC = TC divided by Q

40/ We are in the short run. When output is 100 units, the firm’s total fixed cost is \$500.

What will this firm’s total fixed cost be if output doubles to 200 units?

A) \$1,000

B) \$500

C) \$250

D) Can’t tell from the information provided

41) Refer to the above table. At an output of 4 units, average variable costs are

A) \$16.

B) \$22.

C) \$38.50.

D) \$44.9

42) Refer to the above table. At an output of 3 units, average variable costs are

A) \$42.

B) \$30.

C) \$44.

D) \$14.

43) Refer to the above table. At an output of 2 units, average total costs are

A) \$61.

B) \$122.

C) \$16.

D) \$45.

44) In the above figure, if this firm produces output level Q2, it has average variable costs

of

A) OF.

B) OE.

C) OB.

D) OD.

45) In the above figure, if this firm produces output level Q2, it has average total costs of

A) OF.

B) OE.

C) OC.

D) OD.

46) Refer to the above table. What are total fixed costs at an output of 2 units?

A) \$50

B) \$100

C) \$150

D) \$20010

47) Refer to the above table. What are total variable costs at an output of 2 units?

A) \$50

B) \$100

C) \$150

D) \$200

48/ When the price of shirts emblazoned with a college logo is \$10, consumers buy 150 per

week. When the price declines to \$9, consumers purchase 200 per week. Based on this

information, calculate the price elasticity of demand for logo-emblazoned shirts.

49/ In a local market, the monthly price of Internet access service decreases from \$20 to

\$10, and the total quantity of monthly accounts across all Internet access providers

increases from 100,000

to 200,000. What is the price elasticity of demand? Is demand elastic, unit-elastic, or

inelastic?

50/The Short run price elasticity of demand for tires is 0.9. If an increase in the price of

petroleum (used in producing tires) causes the market prices of tires to rise from \$50 to

\$60, by what percentage would you expect the quantity of tires demanded to change?

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