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Eco 550 Final Exam 36 Questions with Correct Answers

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ECO 550 Final Exam 36 Questions with Correct Answers
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Question 1
The short-run cost function is:


where all inputs to the production process are variable
relevant to decisions in which one or more inputs to the production process are fixed
not relevant to optimal pricing and production output decisions
crucial in making optimal investment decisions in new production facilities
In a study of banking by asset size over time, we can find which asset sizes are tending to become more prominent.   The size that is becoming more predominant is presumed to be least cost. This is called:
regression to the mean analysis.
breakeven analysis.
survivorship analysis.
engineering cost analysis.
a Willie Sutton analysis.

Which of the following is not
an assumption of the linear breakeven model:

constant selling price per unit
decreasing variable cost per unit
fixed costs are independent of the output level
a single product (or a constant mix of products) is being produced and sold
all costs can be classified as fixed or variable

Question 4
A ____ total cost function implies that marginal costs ____ as output is increased.
linear; increase linearly
quadratic; are constant
cubic; increase linearly
linear; are constant

Long distance telephone service has become a competitive market. The average cost per call is $0.05 a minute, and it’s declining.   The likely reason for the declining price for long distance service is:


Governmental pressure to lower the price
Reduced demand for long distance service
Entry into this industry pushes prices down
Lower price for a barrel of crude oil
Increased cost of providing long distance service

What is the profit maximization point for a firm in a purely competitive environment?


The output where


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