MicroEconomics

QUIZ NO. 2

Multiple Choice— Select the option that best completes the sentence or provides the answer to the question.

Along a country’s production possibilities curve

The prices of the goods that are produced are identical
There are no idle resources
The costs of production of the goods that are produced are identical
Resources are equally well equipped for the production of any good

Which of the following is true for a long-run equilibrium in a competitive industry?

min(AVC) = P
min(ATC) = P
min(MC) = P
At least one firm makes positive economic profit

Which of the following is an example of a normative economic statement?

The MICEX index reached over 2000 in June 2008.
The Russian budget deficit has reached alarming levels due to crisis.
10% of the population in Russia lives below poverty level.
Moscow had a budget surplus in 2007.

By the term “demand curve” economists mean the curve describing the relationship between price and quantity demanded. The focus on price means that

Economists believe price is the only factor that influences quantity demanded.
Price is the only factor that influences quantity demanded.
Economists are assuming that other influences on quantity demanded are constant so that the effect of price can be isolated.
The model's predictive power is of little value.

A firm increases the number of hours its workers are employed from 7,000 to 8,000, and output increases from 140,000 bushels to 155,000 bushels. The marginal product of an extra hour is

5
10
15
100

Vasya is an accountant. He receives $200 per hour doing tax returns. He can type 12,000 characters per hour into spreadsheets. He can hire an assistant who types 3,000 characters per hour into spreadsheets. Which of the following statements is true?

Vasya should not hire an assistant because the assistant can't type as fast as he.
Vasya should hire the assistant as long as he pays the assistant less than $200 per hour.
Vasya should hire the assistant as long as he pays the assistant less than $100 per hour.
Vasya should hire the assistant as long as he pays the assistant less than $50 per hour.

Which of the following is NOT a defining feature of perfect competition?

Heterogeneous product
Identical technology
Perfect information
No barriers to entry

An individual competitive firm's short-run supply function is (over the relevant range of prices):

Its AVC schedule
Its ATC schedule
Its AFC schedule
Its MC schedule

Which of the following best describes a technology with increasing returns to scale?

Q(L, K) = 2L + 2K
Q(2L, K) = Q(L, 2K)
Q(2L, 2K) = Q(L, K)
Q(2L, 2K) = 4Q(L, K)

Which of the following will NOT entail an outward shift of the production possibilities curve?

An upgrading of the quality of a nation's human resources
An increase in the quantity of a society's labour force
The improvement of a society's technological knowledge
The reduction of unemployment

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