ECO 550 FINAL EXAM PART 1
(BONUS: TWO VERSIONS OF PART 1 POSTED TO MAKE TOTAL OF 50 QUESTIONS FINAL PART 1)
The degree of operating leverage is equal to the ____ change in ____ divided by the ____ change in ____.
percentage; sales; percentage; EBIT
unit; sales; unit; EBIT
percentage; EBIT; percentage; sales
unit; EBIT; unit; sales
In the linear breakeven model, the difference between selling price per unit and variable cost per unit is referred to as:
variable margin per unit
variable cost ratio
contribution margin per unit
target margin per unit
Theoretically, in a long-run cost function:
all inputs are fixed
all inputs are considered variable
some inputs are always fixed
capital and labor are always combined in fixed proportions
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.
engineering cost analysis.
a Willie Sutton analysis.
George Webb Restaurant collects on the average $5 per customer at its breakfast & lunch diner. Its variable cost per customer averages $3, and its annual fixed cost is $40,000. If George Webb wants to make a profit of $20,000 per year at the diner, it will have to serve__________ customers per year.
If price exceeds average costs under pure competition, ____ firms will enter the industry, supply will ____, and price will be driven ____.
more; decrease; down
more; decrease; up
more; increase; down
more; increase; up
The problems of asymmetric information exchange arise ultimately because
one party to the exchange possesses different information than another
one party has more information than another
one party knows nothing
one party cannot independently verify the information of another
information is scarce
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 P = MC
The output where P < MC
The output where P > MC
The output where MR = MC
The output where AVC < P
In the purely competitive case, marginal revenue (MR) is equal to: