economy management
California State University, Fullerton Form A Economics 315 Department of Economics Second Exam
Dr. Morteza Rahmatian Spring 2014
Name __________________________________ Student ID _________________________________
Part I: Multiple Choice Questions. Please choose the best possible answer. (2.5 Points each)
1. The industry elasticity of demand for gadgets is -2, while the elasticity of demand for an individual gadget manufacturer's product is -2. Based on the Rothschild approach to measuring market power, we conclude that
A. The Herfindahl index for this industry is -2
B. The Herfindahl index for this industry is 2
C. There is little monopoly power in this industry
D. There is significant monopoly power in this industry
2. Which curve(s) does the marginal cost curve intersect at the (their) minimum point?
A. Average total cost curve and average variable cost curve
B. Average total cost curve
C. Average fixed cost curve
D. Average variable cost curve
3. For the cost function TC(Q) = 1000 + 14Q + 9Q2 + 3Q3, what is the marginal cost of producing the fourth unit of output?
A. $295
B. $42
C. $230
D. $116
4. A perfectly competitive firm faces a:
A. Perfectly elastic demand function
B. Demand function with unitary elasticity
C. Perfectly inelastic demand function
D. None of the statements associated with this question are correct
5. Transactions costs refer to
A. Variable costs of labor
B. Costs of exchange unrelated to production costs
C. Fixed costs of capital
D. Economies of scale
6. Economies of scale exist whenever long-run average costs
A. Decrease as output is increased
B. Remain constant as output is increased
C. None of the statements associated with this question are correct
D. Increase as output is increased
7. In the long-run, perfectly competitive firms produce a level of output such that:
A. P = minimum of AC
B. P = MC
C. P = MC and P = minimum of AC
D. None of the
Dr. Morteza Rahmatian Spring 2014
Name __________________________________ Student ID _________________________________
Part I: Multiple Choice Questions. Please choose the best possible answer. (2.5 Points each)
1. The industry elasticity of demand for gadgets is -2, while the elasticity of demand for an individual gadget manufacturer's product is -2. Based on the Rothschild approach to measuring market power, we conclude that
A. The Herfindahl index for this industry is -2
B. The Herfindahl index for this industry is 2
C. There is little monopoly power in this industry
D. There is significant monopoly power in this industry
2. Which curve(s) does the marginal cost curve intersect at the (their) minimum point?
A. Average total cost curve and average variable cost curve
B. Average total cost curve
C. Average fixed cost curve
D. Average variable cost curve
3. For the cost function TC(Q) = 1000 + 14Q + 9Q2 + 3Q3, what is the marginal cost of producing the fourth unit of output?
A. $295
B. $42
C. $230
D. $116
4. A perfectly competitive firm faces a:
A. Perfectly elastic demand function
B. Demand function with unitary elasticity
C. Perfectly inelastic demand function
D. None of the statements associated with this question are correct
5. Transactions costs refer to
A. Variable costs of labor
B. Costs of exchange unrelated to production costs
C. Fixed costs of capital
D. Economies of scale
6. Economies of scale exist whenever long-run average costs
A. Decrease as output is increased
B. Remain constant as output is increased
C. None of the statements associated with this question are correct
D. Increase as output is increased
7. In the long-run, perfectly competitive firms produce a level of output such that:
A. P = minimum of AC
B. P = MC
C. P = MC and P = minimum of AC
D. None of the