Economics for business

Q1) Which business do you think would have the highest fixed cost as a fraction of total cost?

C) a major motion picture studio that produces action adventure movies.

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Q2) The marginal cost curve:

B) intersects the average variable cost and average cost curves from below at their minimum points.

E) may first decline, then rise

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Q3) A CEO of a firm decides to enlarge the firm’s size by merging with other existing firms and building new branches, what do you think is the economic reason behind such a decision?

C) bigger firm can spread fixed costs over a larger level of output.

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Q4) In perfect competition, a firm maximizes profit in the short run by deciding

B) how much output to produce

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Q5) Perfectly competitive firms are price takers because

C) Perfectly competitive firms are price takers because
D) there are many good substitutes for each firm’s product

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Q6) If a worker's daily wage is £75. How many workers this firm should hire in order to maximize its profit?

A) 4

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Q7)When price is less than marginal cost, a profit-maximizing producer in perfect competition will

C) decrease production

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Q8) There are four consumers in a local market. We find out that their willingness to pay for a new smartphone and list them in the above table. Suppose the market price for the smart phone is €600. Please calculate the total consumer surplus in € for th

4500

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Q9) If a worker's daily wage is £60, what would be this firm's maximum profit for a day?

159

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Q10) What is the total surplus if the current price of this good is 7

14

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Q11) What is the total surplus if the current price of this good is 4.5

20.25

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Q12) Given the price line, point C represents the output level the firm would choose to maximize profits.

False

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Q13) The price of US oil has turned negative for the first time in history in April 2021. The price of a barrel of West Texas Intermediate (WTI), the benchmark for US oil, fell as low as minus $37.63 a barrel. This has to be only a short-term supply decis

False

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Q14) Suppose the UK government just announced that all the taxis and buses in the country have to electric vehicles. If we can assume all electric car makers in the world are producing identical products and they are in perfect competition. In the short r

True

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Q15) Suppose the UK government just announced that all the taxis and buses in the country have to electric vehicles. If we can assume all electric car makers in the world are producing identical products and they are in perfect competition. In the long ru

False

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Economics for business

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