ECO 2301 Sec 002 Spring 2015 K. Becker QUIZ #14 Wednesday, April 22nd Solutions 1. Economists assume the central goal of any business is to: A. minimize total costs. B. maximize sales. C. maximize profit. D. maximize market share. 2. Profit is the: A. total revenue minus total cost. B. sum of total revenue and total cost. C. total cost minus total revenue. D. None of these is true. 3. In general, economic profits are: A. greater than accounting profits. B. less than accounting profits. C. the same as accounting profits. D. not comparable to accounting profits. 4. The marginal product curve: A. shows how many extra outputs are created with each additional input. B. typically decreases at low levels of input, but increases as input increases. C. cannot be negative, since total output cannot be negative. D. None of these is true. 5. Assume a company is at a point in production where marginal product is above average product. Which of the following must be true? A. Diminishing marginal product must not have set in yet. B. Marginal product must be rising. C. Average product must be rising. D. All of these are true. 6. Suppose a sandwich shop currently employs four workers and the shop produces 12 sandwiches an hour. A fifth worker gets hired and the shop now produces 15 sandwiches per hour. Which of the following is true? A. The marginal product of the fifth worker is three sandwiches. B. The total product of the sandwich shop is now 27 sandwiches. C. Diminishing marginal product has set in. D. All of these are true. 7. A cigar factory employs 20 workers and produces 1,000 cigars a day. The company reduces the workforce to 19 workers and produces 912 cigars a day. The 20th worker: A. had a marginal product of 88 cigars. B. caused average product to fall. C. must have had a lower marginal product than the 19th worker. D. All of these are true.
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