Managerial Economics and Globalization

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ECO 550: Managerial Economics and Globalization
Assignment 3

Instructor: Dr. A. A. Boakye Due By: 08/08/2011

Candidate’s Name-Andre Stevenson

INSTRUCTIONS: Answer ALL the questions in PART I and PART II

Part 1 (40 points)

1. The WXY Corporation has fixed costs of $50. Its total variable costs (TVC) vary with output as shown in the following table.

Refer to the table. The average total cost of 4 units of output is
A. $27.50
B. $40.00
C. $52.50
D. $210.00

2. to scale as it increases its output over any reasonable range. If it increases all its inputs by 10%, its Suppose a particular firm exhibits constant returns
A. total cost will increase by less than 10%
B. average total cost will increase by 10%
C. output will increase by 10%
D. long run average cost curve will shift to the right by 10%

3. The distinguishing feature of the short run is that:
A. at least one input is fixed
B. output is fixed
C. input prices are variable
D. technology is variable

4. If marginal product is positive but falling
A. marginal cost must also be falling
B. average product must be falling
C. total product is increasing at a decreasing rate
D. total product is falling

5. Which one of the following short-run cost curves would not be affected by an increase in the wage paid to a firm's labor?
A. Average variable cost
B. Average fixed cost
C. Average total cost
D. Marginal cost

6. To the economist, total cost includes:
A. explicit and implicit costs, including a normal profit.
B. neither implicit nor explicit costs.
C. implicit, but not explicit, costs.
D. explicit, but not implicit, costs.

7. The long run is characterized by:
A. the relevance of the law of diminishing returns.
B. at least one fixed input.
C. insufficient time for firms to enter or leave the industry.
D. the ability of the firm to change its plant…...

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