Which of the following measures Economies of scale?

• A) cost-output elasticity
• B) Producer surplus
• C) Slope of Isocost line
• D) Firm's expansion path

In the long run, if a firm is facing higher marginal cost than the average cost; then certainly per unit total cost will:

• A) Remain constant
• B) Rise
• C) Fall
• D) Be at minimum level

The sum over all units produced of the difference between market price of the good and firm’s marginal cost of production is:

• A) Producer surplus.
• B) Marginal revenue.
• C) Maximum profit.
• D) Total revenue.

Economies of scope refer to:

• A) Long run production function.
• B) Multiproducts firm.
• C) Changes in technology.
• D) Single product firm that utilize multiple plants.

In the long run, which of the following is considered a variable cost?

• A) Expenditures for wages.
• B) All of the given options.
• C) Expenditures for raw materials.
• D) Expenditures for capital machinery and equipment.

All of the following are characteristics of perfectly competitive markets EXCEPT:

• A) Firms are price taker.
• B) There are large numbers of firms.
• C) There are no significant barriers on entry and exit of firms.
• D) Firms are not producing homogenous products.

Which of the following is correct?

• A) The short run industry supply curve is the horizontal summation of each firm’s short-run average cost curve.
• B) The short run industry supply curve is the vertical summation of each firm’s short-run average cost curve.
• C) The short run industry supply curve is the vertical summation of each firm’s short-run supply curve.
• D) The short run industry supply curve is the horizontal summation of each firm’s short-run supply curve.

Suppose automobile company is producing cars and trucks. If there are economies of scope, the product transformation curve between cars and trucks will be:

• A) Bowed outward (concave).
• B) A rectangle.
• C) Bowed inward (convex).
• D) A straight line.

In the long run, if a firm is facing higher average cost than the marginal cost; then certainly per unit total cost will:

• A) Fall
• B) Remain constant
• C) Rise
• D) Be at minimum level

When the joint output of a single firm is greater than the output that could be achieved by two different firms each producing a single output is called as:

• A) Diseconomies of scale
• B) Economies of scale
• C) Economies of scope
• D) Diseconomies of scope

Consumer surplus measures:

• A) The benefit that consumers receive from a good or service beyond what they pay.
• B) The extra amount that a consumer must pay to obtain a marginal unit of a good or service.
• C) Gain or loss to consumers from price fixing.
• D) The excess demand that consumers have when a price ceiling holds prices below their equilibrium.

Which of the following costs always increase(s) as output increases?

• A) Average Variable Cost
• B) Average Fixed Cost
• C) Total Variable cost
• D) Fixed Cost

Which of the following measures the degree of economies of scope (SC)?

• A) SC = (C(Q1) + C(Q2) - C(Q1,Q2)) / C(Q1,Q2)
• B) SC = (C(Q1) - C(Q2) - C(Q1,Q2)) / C(Q1,Q2)
• C) SC = (C(Q1) + C(Q2) - C(Q1,Q2)) / C(Q1)
• D) SC = (C(Q1) - C(Q2) - C(Q1,Q2)) / C(Q1)

In a perfectly competitive firm, the profit maximizing output is found where:

• A) MC=MR and MC is decreasing.
• B) Price=MR and MC is constant.
• C) Price=MR and MC is decreasing.
• D) MC=MR and MC is increasing.

Cost-output elasticity can be calculated as:

• A) MC/AC.
• B) (AC)(MC)
• C) (AC)2(MC)
• D) AC/MC

Industry supply curve in short-run is horizontal summation of:

• A) Short-run marginal cost curves.
• B) Short-run average cost curves.
• C) Short-run total cost curves.
• D) Marginal transformation curves.

Ali knows average total cost and average variable cost for a given level of output. Which of the following costs can not be determined from this information?

• A) Fixed cost
• B) Variable cost
• C) Average fixed cost
• D) Marginal Cost

Producer surplus is measured as the:

• A) Area above the supply curve up to the market price.
• B) Area under the demand curve above the supply curve.
• C) Entire area under the supply curve.
• D) Area under the demand curve above market price.

In the long run under perfect competition a firm produces at a point where:

• A) Price is greater than long run average cost
• B) Price is less than long run average cost
• C) Price is greater than long run marginal cost
• D) Price is equal to long run average cost

What happens in a perfectly competitive industry when economic profit is greater than zero?

• A) New firms may enter the industry.
• B) All of the given options.
• C) Firms may move along their LRAC curves to new outputs.
• D) Existing firms may get larger.