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(ECON110)2008_s_final_ECON110_106.pdf
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1. In the long run,
A) any firm can enter the industry.

B) any firm can enter the industry if there is no barrier to entry.

C) any firm can enter the industry only if existing firms earn economic profit.

D) any firm can enter the industry only if it is a perfectly competitive industry.




Questions 2 to 4 The following figure shows the marginal cost, average fixed, variable and total costs for a firm:


2. In the above figure,
A) curve A is the marginal cost and curve B is the average variable cost.

B) curve A is the average variable cost and curve B is the average total cost.

C) curve A is the average variable cost and curve D is the average fixed cost.

D) curve A is the marginal cost and curve B is the average total cost



3. In the above figure, what is roughly the minimum efficient scale?
A) Around 25.

B) Around 35.

C) Around 40.

D) Around 12.



4. In the above figure, what is roughly the shutdown price?
A) Around 6.

B) Around 8.

C) Around 12.

D) None of the above.




5. Melissa has an income of $240 a month to spend on tennis lessons and concert tickets. The price of a tennis lesson is $20, and the price of a concert ticket is $40. If the price of a tennis lesson rises to $30, her budget line, with tennis lessons on the horizontal axis,
A) shifts rightward with no change in its slope.

B) shifts leftward with no change in its slope.

C) becomes flatter.

D) becomes steeper.



Questions 6 to 8:



6. Jane spends her monthly dining-out budget of $300.00 on either steak or lobster dinners. Using the above figure, what is the opportunity cost of a lobster dinner in terms of steak dinners?
A) 0.5 steak dinners per lobster dinner

B) 2.0 steak dinners per lobster dinner

C) 5.0 steak dinners per lobster dinner

D) 10.0 steak dinners per lobster dinner




7. The above figure shows Jane's budget line and two of her indifference curves where the higher indifference curve gives her a higher payoff. Which of the following happens if the price of a lobster dinner falls?
A) Jane will consume fewer steaks than before.
B) Jane will consume fewer steaks than before if the income effect is stronger.
C) Jane will consume more steaks than before if the income effect is stronger.
D) Jane will consume more steaks than before if the substitution effect is stronger.



8. The above figure shows Jane's budget line and two of her indifference curves. Jane's marginal rate of substitution is
A) the rate at which she would give up lobster dinners for one steak dinner and consider herself just as well off.

B) equal to the ratio of the price of a steak dinner to the price of a lobster dinner when she is at her best affordable point.

C) equal to 2 lobster dinners per steak dinner at her best affordable point.

D) Both answers A and B are correct.