ExtraThe problem of principle agent can be reduced if it is possible to pay the workera) weekly salaryb) a wage based on the number of units producedc) an hourly waged) out of retained earningsThe law of diminishing returns results ina) an eventually rising marginal product curveb) a total product curve that eventually increases at a decreasing ratec) an eventually failing marginal cost curved) a total product curve that rises indefinitely Which of the following is an example of the prinicipal/agent problem?a) A consumer buys a defective good because she does not know the quality of the goodb) A sports agent invests money for a client and the company he invests in goes busy so the athlete doesnt get back the principal on his investmentc) a worker shirks off while his boss is on vacationd) a company continues to produce despite losses because of fixed costs D) increase the quantity of X demanded by less than 4 percent.17. The elasticity of demand:A) is infinitely large for a perfectly inelastic demand curve.B) tends to be inelastic in high-price ranges and elastic in low-price ranges.C) tends to be elastic in high-price ranges and inelastic in low-price ranges.D) is the same at each price-quantity combination on a stable demand curve.18. A perfectly inelastic demand curve:A) has a price elasticity coefficient greater than unity.B) has a price elasticity coefficient of unity throughout.C) graphs as a perfectly vertical line.D) graphs as a perfectly horizontal line.19. The elasticity of demand for a product is likely to be greater:A) if the product is a necessity, rather than a luxury good.B) the greater the amount of time over which buyers adjust to a price change.C) the smaller the proportion of one's income spent on the product.D) the smaller the number of substitute products available,20. Compared to coffee, we would expect the cross elasticity of demand for:A) tea to be negative, but positive for cream. C) both tea and cream to be negative.B) tea to be positive, but negative for cream. D) both tea and cream to be positive.21. Which of the following is a short-run adjustment?A) A local bakery hires two additional bakers.B) Six new firms enter the plastics industry.C) The number of farms in the United States declines by 5 percent.D) BMW constructs a new assembly plant in South Carolina.22. To economists the main difference between the short run and the long run is that:A) the law of diminishing returns applies in the long run, but not in the short run.B) in the long run all resources are variable, while in the short run at least one resource is fixC) fixed costs are more important to decision making in the long run than they are in the shorun.D) in the short run all resources are fixed, while in the long run all resources are variable. 23. If a firm decides to produce no output in the short run, its costs will be:еits marginal costs. B) its fixed plus its variable costs. C) its fixed costs. D) zero.Unit costs024. If average total cost is declining, then:A) marginal cost must be greater than average total cost.B) the average fixed cost curve must lie above the average variable cost curve.C) marginal cost must be less than average total cost.D) total cost must also be decliningQ₁26.Q₂ Q3OutputLong-runATC25. Refer to the above diagram. Constant returns to scale:A) are evident over the entire range of output. C) begin at output Q3.B) occur over the 001 range of output.D) occur only over the Q123 range of output.ReA) begin at output 21.B) occur over the 2123 range of output.Refer to the above diagram. Diseconomies of scale:C) begin at output 23.D) are in evidence at all output levels.27. A luxury good is a good for which of the following is true?A) The price elasticity is 1.B) The income elasticity is greater than 1.C) The income elasticity is less than 0.D) The price elasticity is greater than 1.28. "Consumer surplus" isA) the excess of what would be willingly paid over what is actually paid.B) a ranking of bundles of consumer goods in order of desirability.C) the value of all inventory (in dollars).D) for any given price, is the sum of quantities demanded by all individuals at that price.

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ExtraThe problem of principle agent can be reduced if it is possible to pay the workera) weekly salaryb) a wage based on the number of units producedc) an hourly waged) out of retained earningsThe law of diminishing returns results ina) an eventually rising marginal product curveb) a total product curve that eventually increases at a decreasing ratec) an eventually failing marginal cost curved) a total product curve that rises indefinitely Which of the following is an example of the prinicipal/agent problem?a) A consumer buys a defective good because she does not know the quality of the goodb) A sports agent invests money for a client and the company he invests in goes busy so the athlete doesnt get back the principal on his investmentc) a worker shirks off while his boss is on vacationd) a company continues to produce despite losses because of fixed costs D) increase the quantity of X demanded by less than 4 percent.17. The elasticity of demand:A) is infinitely large for a perfectly inelastic demand curve.B) tends to be inelastic in high-price ranges and elastic in low-price ranges.C) tends to be elastic in high-price ranges and inelastic in low-price ranges.D) is the same at each price-quantity combination on a stable demand curve.18. A perfectly inelastic demand curve:A) has a price elasticity coefficient greater than unity.B) has a price elasticity coefficient of unity throughout.C) graphs as a perfectly vertical line.D) graphs as a perfectly horizontal line.19. The elasticity of demand for a product is likely to be greater:A) if the product is a necessity, rather than a luxury good.B) the greater the amount of time over which buyers adjust to a price change.C) the smaller the proportion of one's income spent on the product.D) the smaller the number of substitute products available,20. Compared to coffee, we would expect the cross elasticity of demand for:A) tea to be negative, but positive for cream. C) both tea and cream to be negative.B) tea to be positive, but negative for cream. D) both tea and cream to be positive.21. Which of the following is a short-run adjustment?A) A local bakery hires two additional bakers.B) Six new firms enter the plastics industry.C) The number of farms in the United States declines by 5 percent.D) BMW constructs a new assembly plant in South Carolina.22. To economists the main difference between the short run and the long run is that:A) the law of diminishing returns applies in the long run, but not in the short run.B) in the long run all resources are variable, while in the short run at least one resource is fixC) fixed costs are more important to decision making in the long run than they are in the shorun.D) in the short run all resources are fixed, while in the long run all resources are variable. 23. If a firm decides to produce no output in the short run, its costs will be:еits marginal costs. B) its fixed plus its variable costs. C) its fixed costs. D) zero.Unit costs024. If average total cost is declining, then:A) marginal cost must be greater than average total cost.B) the average fixed cost curve must lie above the average variable cost curve.C) marginal cost must be less than average total cost.D) total cost must also be decliningQ₁26.Q₂ Q3OutputLong-runATC25. Refer to the above diagram. Constant returns to scale:A) are evident over the entire range of output. C) begin at output Q3.B) occur over the 001 range of output.D) occur only over the Q123 range of output.ReA) begin at output 21.B) occur over the 2123 range of output.Refer to the above diagram. Diseconomies of scale:C) begin at output 23.D) are in evidence at all output levels.27. A luxury good is a good for which of the following is true?A) The price elasticity is 1.B) The income elasticity is greater than 1.C) The income elasticity is less than 0.D) The price elasticity is greater than 1.28. &#34;Consumer surplus&#34; isA) the excess of what would be willingly paid over what is actually paid.B) a ranking of bundles of consumer goods in order of desirability.C) the value of all inventory (in dollars).D) for any given price, is the sum of quantities demanded by all individuals at that price.

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