# Midterm Test for Economic Thinking

Topics: Costs, Supply and demand, Economics Pages: 24 (2315 words) Published: January 20, 2013
• Question 1
2 out of 2 points
| | | |[pic] |In making a decision about whether to increase its advertising budget the firm management should not consider | | | | | | | | | | | | | | | | | |Answer | | | | | |Selected Answer: | | | | | |[pic]    | | | | | |interest payments on the firm's loan. | | | | | | | | | |

• Question 2
2 out of 2 points
| | | |[pic] |A clinic uses doctors and nurses to serve the maximum number of patients given a limited annual payroll. The clinic currently | | | | | |has 10 doctors and 30 nurses. The last doctor hired can serve 300 additional patients, while the last nurse hired can serve 200 | | | | | |additional patients. If doctors make \$60,000 a year and nurses make \$20,000 a year, the clinic | | | | | |Answer | | | | | |Selected Answer: | | | | | |[pic] d.   | | | | | |could serve more patients with the same payroll by hiring more nurses and fewer doctors. | | | | | | | | | |

• Question 3
2 out of 2 points
| | | |[pic] |A restaurant currently has two cooks and ten waiters. Cooks earn \$10 an hour and waiters earn \$5 an hour. The last cook added 40| | | | | |meals served to total output, while the last waiter added 25 meals served to total output. In order to maximize the number of | | | | | |meals served with a fixed budget, the manager should | | | | | | | | | | | | | | | | | |Answer | | | | | |Selected Answer: | | | | | |[pic] d.  ...