1. Suppose there is a firm called Sebastian Industries that produces a product known as “Ortizs”. At q=0, the total cost is $200 and then increases by $20 for each additional unit produced. What is the FC? a) $0 b) $50 c)$100 d) $200 e) Not enough information 2. For q=10, what is the ATC? a) $0 b) $15 c) $30 d) $40 e) $55 3. Which of the following is NOT an example of a sunk cost? a) Purchase of a hamburger after starting to eat it b) Purchase of a movie ticket thirty minutes after the film has started c) Purchase of an item on Amazon...fifty days after delivery d) Purchase of a gallon of milk after you start drinking it e) Purchase of a new TV set with the receipt 4. Suppose we have another firm known as Sepanyan Corporation which makes a product known as Yeghias. Suppose the firm’s FC=$8,000 and its TC=$10,000 and its AVC=$5. What is the ATC? a) $25.00 b) $67.50 c) $100.25 d) $200 e) Not enough information 5. Which of the following is true concerning a competitive firm? a) It will produce even when its economic profit is zero b) It prefers not to maximize profits c)t is the only firm in the market d) Its quantity choice will affect the market price e) People’s PED for the firm’s specific product is inelastic

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.1IP

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Question

1. Suppose there is a firm called Sebastian Industries that produces a product known as “Ortizs”. At

q=0, the total cost is $200 and then increases by $20 for each additional unit produced. What is the

FC?

a) $0

b) $50

c)$100

d) $200

e) Not enough information

2. For q=10, what is the ATC?

a) $0

b) $15

c) $30

d) $40

e) $55

3. Which of the following is NOT an example of a sunk cost?

a) Purchase of a hamburger after starting to eat it

b) Purchase of a movie ticket thirty minutes after the film has started

c) Purchase of an item on Amazon...fifty days after delivery

d) Purchase of a gallon of milk after you start drinking it

e) Purchase of a new TV set with the receipt

4. Suppose we have another firm known as Sepanyan Corporation which makes a product known as

Yeghias. Suppose the firm’s FC=$8,000 and its TC=$10,000 and its AVC=$5. What is the ATC?

a) $25.00

b) $67.50

c) $100.25

d) $200

e) Not enough information

5. Which of the following is true concerning a competitive firm?

a) It will produce even when its economic profit is zero

b) It prefers not to maximize profits

c)t is the only firm in the market

d) Its quantity choice will affect the market price

e) People’s PED for the firm’s specific product is inelastic

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