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17

Economics

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17. A firm’s total cost is $10,957 when it produces a quantity of 50. Rounded to the nearest dollar, what is the firm’s average total cost at this quantity?

a. 413

b. 250

c. 219

d.187

e. none of the above

18. Wendy sells motor homes in the retail market. She buys the motor homes from the manufacturer for a cost that does not vary with the number she purchases. She can sell six per week at $20,000 each. If she limits sales to five, she can charge $21,000 each. She will sell six per week if the cost of buying each motor home from the manufacturer is no more than

a. $20,000

b. $10,000

c.$15,000

d. $21,000

e.$30,000

19. Suppose the price elasticity of demand for a product is infinite. This means that:

a. if you increase the price 1%, revenues will increase.

b. if you increase the price 1%, revenues will stay the same.

c. if you increase the price 1%, revenues will fall to zero.

d. if you increase the price 1%, profit will increase.

e. none of the above

20. Which of these would cause a leftward shift of the demand for tongue piercings?

a. a tongue ring fad

b. discovery that tongue piercings can lead to infections

c. lower price of tongue rings

d. higher incomes among young people

e. higher wages for tongue piercers

21. In a market-based economic system, the use of scarce resources

a. occurs in an essentially random manner.

b. is determined primarily by consumer demand.

c. does not respond to changes in preferences.

d. is fixed by the appropriate government agency.

e. depends entirely on the whims of wealthy capitalists.

22. The U.S. and China produce guns and rice. The country with the lowest opportunity cost of guns (in terms of rice) will

a. import guns.

b. have an absolute advantage in guns.

c. export rice.

d. have a comparative advantage in rice.

e. have a comparative advantage in guns.