ECON 503 FA-12 EMA2 Name:______________________________Assignment One- Due 10/25/12Individual Homework Exercises from Chapter ReadingsChapter 1-(1,5,6,7,14)
Chapter 2-(1,2,7,11,15)
Chapter 3-(3,4,5,9,13)
Additional Practice ProblemsMultiple ChoiceIdentify the choice that best completes the statement or answers the question.Table 13-8 Quantity
of Output | Fixed
Cost | Variable
Cost |
| 0 | $20 | $0 |
| 1 | $20 | $10 |
| 2 | $20 | $40 |
| 3 | $20 | $80 |
| 4 | $20 | $130 |
| 5 | $20 | $200 |
| 6 | $20 | $300 |
____ 1.
Refer to Table 13-8. What is the average fixed cost of producing 5 units of output?
| a. | $4 |
| b. | $5 |
| c. | $40 |
| d. | $44 |
____ 2.
Refer to Table 13-8. What is the average variable cost of producing 5 units of output?
| a. | $4 |
| b. | $5 |
| c. | $40 |
| d. | $44 |
____ 3.
Refer to Table 13-8. What is the marginal cost of producing the fifth unit of output?
| a. | $4 |
| b. | $40 |
| c. | $50 |
| d. | $70 |
____ 4.
Refer to Table 13-8. What is the shape of the marginal cost curve for this firm?
| a. | constant |
| b. | upward-sloping |
| c. | downward-sloping |
| d. | U-shaped |
____ 5. The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good,
| a. | has a low opportunity cost of producing that good, relative to the opportunity costs of other producers. |
| b. | has a comparative advantage in the production of that good. |
| c. | has an absolute advantage in the production of that good. |
| d. | should be the only producer of that good. |
____ 6. A firm has a fixed cost of $500 in its first year of operation. When the firm produces 100 units of output, its total costs are $3,500. When it produces 101 units of output, its total costs are $3,750. What is the marginal cost of producing the 101st unit of output?
| a. | $250 |
| b. | $275 |
| c. | $340.91 |
| d. | $350 |
____ 7. Marginal cost increases as the quantity of output increases. This reflects the property of
| a. | increasing total cost. |
| b. | diminishing total cost. |
| c. | increasing marginal product. |
| d. | diminishing marginal product. |
Table 3-6Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.
| Hours Needed
To Make 1 | Amount Produced
in 40 Hours |
| mixer | toaster | mixers | toasters |
| Maya | 8 | 5 | 5 | 8 |
| Miguel | 20 | 10 | 2 | 4 |
____ 8.
Refer to Table 3-6. The opportunity cost of 1 mixer for Maya is
| a. | 0.625 toasters. |
| b. | 5 hours of labor. |
| c. | 1.6 toasters. |
| d. | 20 hours of labor. |
____ 9.
Refer to Table 3-6. The opportunity cost of 1 mixer for Miguel is
| a. | 1/2 toaster. |
| b. | 1/2 hour of labor. |
| c. | 2 toasters. |
| d. | 8 hours of labor. |
____ 10.
Refer to Table 3-6. The opportunity cost of 1 toaster for Maya is
| a. | 0.625 mixers. |
| b. | 1.6 hours of labor. |
| c. | 1.6 mixers. |
| d. | 8 hours of labor. |
____ 11.
Refer to Table 3-6. The opportunity cost of 1 toaster for Miguel is
| a. | 1/2 mixer. |
| b. | 2 hours of labor. |
| c. | 2 mixers. |
| d. | 20 hours of labor. |
____ 12.
Refer to Table 3-6. Maya has an absolute advantage in the production of
| a. | both goods and a comparative advantage in the production of mixers. |
| b. | both goods and a comparative advantage in the production of toasters. |
| c. | neither good and a comparative advantage in the production of mixers. |
| d. | neither good and a comparative advantage in the production of toasters. |
____ 13.
Refer to Table 3-6. Miguel has an absolute advantage in the production of
| a. | both goods and a comparative advantage in the production of mixers. |
| b. | both goods and a comparative advantage in the production of toasters. |
| c. | neither good and a comparative advantage in the production of mixers. |
| d. | neither good and a comparative advantage in the production of toasters. |
____ 14.
Refer to Table 3-6. Maya should specialize in the production of
| a. | mixers and Miguel should specialize in the production of toasters. |
| b. | toasters and Miguel should specialize in the production of mixers. |
| c. | both goods and Miguel should specialize in the production of neither good. |
| d. | neither good and Miguel should specialize in the production of both goods. |
____ 15.
Refer to Table 3-6. At which of the following prices would both Maya and Miguel gain from trade with each other?
| a. | 4 mixers for 7 toasters |
| b. | 8 mixers for 10 toasters |
| c. | 12 mixers for 18 toasters |
| d. | Maya and Miguel could not both gain from trade with each other at any price. |
____ 16. The term market failure refers to
| a. | a situation in which the market on its own fails to allocate resources efficiently. |
| b. | an unsuccessful advertising campaign which reduces demand for a product. |
| c. | a situation in which competition among firms becomes ruthless. |
| d. | a firm which is forced out of business because of losses. |
____ 17. Thousands of people develop lung cancer from second-hand exposure to cigarette smoke. This is an example of
| a. | a market failure caused by an externality. |
| b. | a market failure caused by market power. |
| c. | a market failure caused by equality. |
| d. | There is no market failure in this case. |