ECON 201 Final Exam Answers
ECON 201 Final Exam Answers
ECON 201 Final Exam Answers
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A. Steel<br />
B. Soybeans<br />
C. Electricity<br />
D. Retail clothing<br />
Question 6<br />
Firms in an industry will not earn long-run economic profits if:<br />
A. Fixed costs are zero<br />
B. The number of firms in the industry is fixed<br />
C. There is free entry and exit of firms in the industry<br />
D. Production costs for a given level of output are minimized<br />
Question 7<br />
Marginal product is:<br />
A. the increase in total output attributable to the employment of one more worker.<br />
B. the increase in total revenue attributable to the employment of one more worker.<br />
C. the increase in total cost attributable to the employment of one more worker.<br />
D. total product divided by the number of workers employed.<br />
Question 8<br />
The law of diminishing returns indicates that:<br />
A. as extra units of a variable resource are added to a fixed resource, marginal product will<br />
decline beyond some point.<br />
B. because of economies and diseconomies of scale a competitive firm’s long-run average total<br />
cost curve will be U-shaped.<br />
C. the demand for goods produced by purely competitive industries is down sloping.<br />
D. beyond some point the extra utility derived from additional units of a product will yield the<br />
consumer smaller and smaller extra amounts of satisfaction.<br />
Question 9<br />
Which of the following is most likely to be a variable cost?<br />
A. fuel and power payments<br />
B. interest on business loans<br />
C. rental payments on IBM equipment<br />
D. real estate taxes<br />
Question 10<br />
If average total cost is declining, then:
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