Economics Exam Answers

economics exam answers

Microeconomics Exam Answers

Macroeconomics Exam Answers

 



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1. Which of the following is most likely to be an implicit cost for Company X?
A. forgone rent from the building owned and used by Company X
B. rental payments on IBM equipment
C. payments for raw materials purchased from Company Y
D. transportation costs paid to a nearby trucking firm

 

2. 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.

 

3. Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sold 4,000 units of its output at $300 per unit, its accounting profits were:
A. $100,000 and its economic profits were zero.
B. $200,000 and its economic profits were zero.
C. $100,000 and its economic profits were $100,000.
D. zero and its economic loss was $200,000.

 

4. Which of the following is a short-run adjustment?
A. A local bakery hires two additional bakers.
B. Six new firms enter the plastics industry.
C. The number of farms in the United States declines by 5 percent.
D. BMW constructs a new assembly plant in South Carolina.

 

5. The short run is characterized by:
A. plenty of time for firms to either enter or leave the industry.
B. increasing, but not diminishing returns.
C. fixed plant capacity.
D. zero fixed costs.

 

6. The law of diminishing returns indicates that:
A. as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point.
B. because of economies and diseconomies of scale a competitive firm’s long-run average total cost curve will be U-shaped.
C. the demand for goods produced by purely competitive industries is downsloping.
D. beyond some point the extra utility derived from additional units of a product will yield the consumer smaller and smaller extra amounts of satisfaction.

 

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all non-labor resources are fixed.

 

 

7. Refer to the above data. Diminishing marginal returns become evident with the addition of the:
A. sixth worker.
B. fourth worker.
C. third worker.
D. second worker.

 

8. Refer to the above data. The marginal product of the sixth worker is:
A. 180 units of output.
B. 30 units of output.
C. 15 units of output.
D. negative.

 

 

Econ exam questions
Econ exam questions

9. In the above diagram curves 1, 2, and 3 represent the:
A. average, marginal, and total product curves respectively.
B. marginal, average, and total product curves respectively.
C. total, average, and marginal product curves respectively.
D. total, marginal, and average product curves respectively.

 

 

Macroeconomics Exam Questions
Macroeconomics Exam Questions

10. Refer to the above diagram. At output level Q total variable cost is:
A. 0BEQ.
B. BCDE.
C. 0CDQ.
D. 0AFQ.

 

Answer the question on the basis of the following cost data:

Refer to the above data. The total variable cost of producing 5 units is
Refer to the above data. The total variable cost of producing 5 units is

11. Refer to the above data. The total variable cost of producing 5 units is:
A. $61.
B. $48.
C. $37.
D. $24.

 

12. Refer to the above data. The average total cost of producing 3 units of output is:
A. $14.
B. $12.
C. $13.50.
D. $16.

 

13. Refer to the above data. The marginal cost of producing the sixth unit of output is:
A. $24.
B. $12.
C. $16.
D. $8.

 

MC, ATC, AVC and AFC Curves
MC, ATC, AVC and AFC Curves

14. In the above figure, curves 1, 2, 3, and 4 represent the:

A. ATC, MC, AFC, and AVC curves respectively.
B. MC, AFC, AVC, and ATC curves respectively.
C. MC, ATC, AVC, and AFC curves respectively.
D. ATC, AVC, AFC, and MC curves respectively.

 

15. In the long run:
A. all costs are variable costs.
B. all costs are fixed costs.
C. variable costs equal fixed costs.
D. fixed costs are greater than variable costs.

 

16. In which of the following market structures is there clear-cut mutual interdependence with respect to price-output policies?
A. pure monopoly
B. oligopoly
C. monopolistic competition
D. pure competition

 

17. Which of the following industries most closely approximates pure competition?
A. agriculture
B. farm implements
C. clothing
D. steel

 

18. A purely competitive seller is:
A. both a “price maker” and a “price taker.”
B. neither a “price maker” nor a “price taker.”
C. a “price taker.”
D. a “price maker.”

 

19. The MR = MC rule applies:
A. to firms in all types of industries.
B. only when the firm is a “price taker.”
C. only to monopolies.
D. only to purely competitive firms.

 

20. Assume the XYZ Corporation is producing 20 units of output. It is selling this output in a purely competitive market at $10 per unit. Its total fixed costs are $100 and its average variable cost is $3 at 20 units of output. This corporation:
A. should close down in the short run.
B. is maximizing its profits.
C. is realizing a loss of $60.
D. is realizing an economic profit of $40.

 

Answer the question on the basis of the following data confronting a firm:

Marginal Cost, Marginal Revenue, Output
Marginal Cost, Marginal Revenue, Output

 

21. Refer to the above data. This firm is selling its output in a(n):
A. monopolistically competitive market.
B. monopolistic market.
C. purely competitive market.
D. oligopolistic market.

 

22. Refer to the above data. If the firm’s minimum average variable cost is $10, the firm’s profit-maximizing level of output would be:
A. 2.
B. 3.
C. 4.
D. 5.

 

 

The Lowest Price a Purely Competitive Firm Should Produce at is where MC = ATC
The Lowest Price a Purely Competitive Firm Should Produce at is where MC = ATC

23. Refer to the above diagram for a purely competitive producer. The lowest price at which the firm should produce (as opposed to shutting down) is:
A. P1.
B. P2.
C. P3.
D. P4.

 

 

Set MR = MC to Maximize Profits
Set MR = MC to Maximize Profits

24. Refer to the above diagram. To maximize profit or minimize losses this firm will produce:
A. K units at price C.
B. D units at price J.
C. E units at price A.
D. E units at price B.

 

Answer the question on the basis of the following cost data for a firm that is selling in a purely competitive market:

If the market price for the firm's product is $12, the competitive firm will produce:
If the market price for the firm’s product is $12, the competitive firm will produce:

25. Refer to the above data. If the market price for the firm’s product is $12, the competitive firm will produce:
A. 4 units at a loss of $109.
B. 4 units at an economic profit of $31.75.
C. 8 units at a loss of $48.80.
D. zero units at a loss of $100.

 

26. Refer to the above data. If the market price for the firm’s product is $32, the competitive firm will produce:
A. 8 units at an economic profit of $16.
B. 6 units at an economic profit of $7.98.
C. 10 units at an economic profit of $4.
D. 7 units at an economic profit of $41.50.

 

 

Econ Exam Answers
Econ Exam Answers

27. Refer to the above diagram. At P2, this firm will:
A. produce 44 units and realize an economic profit.
B. produce 44 units and earn only a normal profit.
C. produce 68 units and earn only a normal profit.
D. shut down in the short run.

 

28. Refer to the above diagram. At P1, this firm will produce:
A. 47 units and break even.
B. 47 units and realize an economic profit.
C. 66 units and earn only a normal profit.
D. 24 units and earn only a normal profit.

 

Microeconomics Exam Questions

  • Question 1

1 out of 1 points

Which of the following is most likely to be an implicit cost for Company X?Answer
Selected Answer:    forgone rent from the building owned and used by Company X
Correct Answer:    forgone rent from the building owned and used by Company X
  • Question 2

1 out of 1 points

To the economist, total cost includes:Answer
Selected Answer:    explicit and implicit costs, including a normal profit.
Correct Answer:    explicit and implicit costs, including a normal profit.
  • Question 3

1 out of 1 points

Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sold 4,000 units of its output at $300 per unit, its accounting profits were:Answer
Selected Answer:    $200,000 and its economic profits were zero.
Correct Answer:    $200,000 and its economic profits were zero.
  • Question 4

1 out of 1 points

Which of the following is a short-run adjustment?Answer
Selected Answer:    A local bakery hires two additional bakers.
Correct Answer:    A local bakery hires two additional bakers.
  • Question 5

1 out of 1 points

The short run is characterized by:Answer
Selected Answer:    fixed plant capacity.
Correct Answer:    fixed plant capacity.
  • Question 6

0 out of 1 points

The law of diminishing returns indicates that:Answer
Selected Answer:    beyond some point the extra utility derived from additional units of a product will yield the consumer smaller and smaller extra amounts of satisfaction.
Correct Answer:    as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point.

Microeconomics Exam Answers

  • Question 7

1 out of 1 points

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all non-labor resources are fixed.Refer to the above data. Diminishing marginal returns become evident with the addition of the:Answer
Selected Answer:    third worker.
Correct Answer:    third worker.
  • Question 8

1 out of 1 points

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all non-labor resources are fixed.Refer to the above data. The marginal product of the sixth worker is:Answer
Selected Answer:    15 units of output.
Correct Answer:    15 units of output.
  • Question 9

1 out of 1 points

In the above diagram curves 1, 2, and 3 represent the:Answer
Selected Answer:    marginal, average, and total product curves respectively.
Correct Answer:    marginal, average, and total product curves respectively.
  • Question 10

1 out of 1 points

Refer to the above diagram. At output level Q total variable cost is:Answer
Selected Answer:    0BEQ.
Correct Answer:    0BEQ.
  • Question 11

1 out of 1 points

Answer the question on the basis of the following cost data:Refer to the above data. The total variable cost of producing 5 units is:Answer
Selected Answer:    $37.
Correct Answer:    $37.
  • Question 12

1 out of 1 points

Answer the question on the basis of the following cost data:Refer to the above data. The average total cost of producing 3 units of output is:Answer
Selected Answer:    $16.
Correct Answer:    $16.
  • Question 13

1 out of 1 points

Answer the question on the basis of the following cost data:Refer to the above data. The marginal cost of producing the sixth unit of output is:Answer
Selected Answer:    $8.
Correct Answer:    $8.
  • Question 14

1 out of 1 points

In the above figure, curves 1, 2, 3, and 4 represent the:
Answer
Selected Answer:    MC, ATC, AVC, and AFC curves respectively.
Correct Answer:    MC, ATC, AVC, and AFC curves respectively.
  • Question 15

1 out of 1 points

In the long run:Answer
Selected Answer:    all costs are variable costs.
Correct Answer:    all costs are variable costs.
  • Question 16

1 out of 1 points

In which of the following market structures is there clear-cut mutual interdependence with respect to price-output policies?Answer
Selected Answer:    oligopoly
Correct Answer:    oligopoly
  • Question 17

0 out of 1 points

Which of the following industries most closely approximates pure competition?Answer
Selected Answer:    clothing
Correct Answer:    agriculture
  • Question 18

1 out of 1 points

A purely competitive seller is:Answer
Selected Answer:    a “price taker.”
Correct Answer:    a “price taker.”
  • Question 19

1 out of 1 points

The MR = MC rule applies:Answer
Selected Answer:    to firms in all types of industries.
Correct Answer:    to firms in all types of industries.
  • Question 20

1 out of 1 points

Assume the XYZ Corporation is producing 20 units of output. It is selling this output in a purely competitive market at $10 per unit. Its total fixed costs are $100 and its average variable cost is $3 at 20 units of output. This corporation:Answer
Selected Answer:    is realizing an economic profit of $40.
Correct Answer:    is realizing an economic profit of $40.
  • Question 21

1 out of 1 points

Answer the question on the basis of the following data confronting a firm:Refer to the above data. This firm is selling its output in a(n):Answer
Selected Answer:    purely competitive market.
Correct Answer:    purely competitive market.
  • Question 22

1 out of 1 points

Answer the question on the basis of the following data confronting a firm:Refer to the above data. If the firm’s minimum average variable cost is $10, the firm’s profit-maximizing level of output would be:Answer
Selected Answer:    3.
Correct Answer:    3.
  • Question 23

0 out of 1 points

Refer to the above diagram for a purely competitive producer. The lowest price at which the firm should produce (as opposed to shutting down) is:Answer
Selected Answer:    P3.
Correct Answer:    P2.
  • Question 24

1 out of 1 points

Refer to the above diagram. To maximize profit or minimize losses this firm will produce:Answer
Selected Answer:    E units at price A.
Correct Answer:    E units at price A.
  • Question 25

0 out of 1 points

Answer the question on the basis of the following cost data for a firm that is selling in a purely competitive market:Refer to the above data. If the market price for the firm’s product is $12, the competitive firm will produce:Answer
Selected Answer:    4 units at a loss of $109.
Correct Answer:    zero units at a loss of $100.
  • Question 26

1 out of 1 points

Answer the question on the basis of the following cost data for a firm that is selling in a purely competitive market:Refer to the above data. If the market price for the firm’s product is $32, the competitive firm will produce:Answer
Selected Answer:    8 units at an economic profit of $16.
Correct Answer:    8 units at an economic profit of $16.
  • Question 27

1 out of 1 points

Refer to the above diagram. At P2, this firm will:Answer
Selected Answer:    produce 44 units and earn only a normal profit.
Correct Answer:    produce 44 units and earn only a normal profit.
  • Question 28

1 out of 1 points

Refer to the above diagram. At P1, this firm will produce:Answer
Selected Answer:    47 units and realize an economic profit.
Correct Answer:    47 units and realize an economic profit.

 

economics exam answers

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