BBUS 1006.

FINAL EXAM

- MC QUESTIONS

April, 2016

Use the following information to answer questions 1 - 6
Consider an economy that produces only food and clothing. Its production possibilities boundary shown below.

1. When the economy is at point A, the use of resources is
A.
B.
C.
D.
E.

inefficient
efficient
unattainable
very good
None of the above

2. At point B, this economy is producing

A.
B.
C.
D.
E.

3 tonnes of closing per year and 4 tonnes of food per year

3 tonnes of closing per year and 3 tonnes of food per year
4 tonnes of closing per year and 4 tonnes of food per year
3,000 tonnes of closing per year and 4,000 tonnes of food per year
None of the above

3. Along this production possibilities boundary, the opportunity cost of producing clothing

A. is negative.
B. is a minimum at C.
C. lower at points B and C than at A.
D. is positive and rises as the production of clothes increases.
E. cannot be measured in terms of food forgone.

BBUS 1006.

FINAL EXAM

- MC QUESTIONS

April, 2016

4. How would it be possible for the economy to produce at point E?
A. By guaranteeing a job for everyone
B. By Adverse technological shock
C. By Technological progress and/or capital accumulation
D. By Increasing production of consumption goods
E. It will never possible
5. When the economy is at point A, the opportunity cost of Producing one more tonne of food is?
A. 3 tonnes of food
B. 3 tonne of clothing
C. 4 tonnes of food
D. 2 tonnes of food
E. 1 tonne of clothing
6. When the economy is producing 5 tonnes of food, the opportunity cost of Producing four tonnes of clothing is?
A. 3 tonnes of food
B. 3 tonnes of clothing
C. 4 tonnes of food
D. 2 tonnes of food
E. 1 tonnes of clothing

Use the following information to answer questions 7 - 16

Consider the figure below, which describes the hypothetical demand and supply per tuna in Canada

7. Suppose the price of a can of tuna is $2. At that price, the quantity supplied is_______ million
cans and the quantity demanded is _________ million cans. At this price, there is a__________ of _______
million cans.
A. 6, 4, shortage, 10
B. 10, 4, surplus, 6
C. 10, 4, shortage, 6
D. 4, 10, surplus, 6
E. 4, 10, shortage, 6

BBUS 1006.

FINAL EXAM

- MC QUESTIONS

April, 2016

8. The price elasticity of supply when the price $4 is:
A. 1.00.
B. 2.00.
C. 3.00.
D. 0.50.
E. None of the above.
9.

The price elasticity of demand when the price $3.25 is:

A. 0.77.
B. 1.54
C. 0.38
D. 2.60
E. None of the above

10. The consumer surplus generated by consuming the 4 millionth can of tuna is
A. $0.50.
B. $2.00.
C. $3.50
D. $1.50.
E. None of the above
11. When the market price is $3.25, the consumer surplus equals
A. $0.25
B. $1,250,000
C. $3,250,000
D. $3,125,000
E. None of the above
12. When the market price is $3.25, the economic surplus equals
A. 5 million cans
B. $13,125,000
C. $0.75
D. $3,250,000
E. None of the above
13. The economic surplus generated by consuming and producing the 2 millionth can of tuna is
A. $3.00
B. $4.00
C. $1.00
D. $2 millions
E. None of the above
14. When the market is at its equilibrium point, the economic surplus equals
A. 6 million cans
B. $3.00
C. $18,000,000
D. $13,500,000
E. None of the above

BBUS 1006.

FINAL EXAM

- MC QUESTIONS

April, 2016

15. Assume that the government sets a price ceiling at $4.00 per can. In this situation, how many cans
are sold in the market
A. 2 millions.
B. 8 millions.
C. 6 millions.
D. 0
E. None of the above
16. The city government sets a price ceiling at $2.00. In this situation, if all cans of tuna were sold on
the black market, then price in the black market for a can of tuna is
A. $4.00.
B. $3.50
C. the same as equilibrium price.
D. $4.50
E. None of the above
Use the following information to answer questions 17 - 20
The following table gives the total cost structure for one ABC Furniture, one of many identical firms
in a perfect competitive industry. Complete the table and answer the following questions
Quantity
(Output)

TC

72

144

192

12

252

16

360

20

500

Total
Variable
Cost ($)

Average
Total Cost
($)

Average
Variable
Cost ($)

Marginal
Cost ($)

17. The average total cost when the firm produces 20 units is
A. $500.00
B. $21.40
C. $0.05
D. $22.50
E. None of the above
18. The total revenue at the break even point is
A. $252.00
B. $0.00
C. $320.00
D. $180
E. None of the above

BBUS 1006.

FINAL EXAM

- MC QUESTIONS

April, 2016

19. When the firm decides to shutdown temporarily, it is having an economic loss of
A. $120
B. $0.00
C. $72.0
D. $15
E. None of the above
20. When the price is $31.00 the economic profit is
A. $136.00
B. $0.00
C. $496.00
D. $3,100
E. None of the above

Use the following information to answer questions 21 - 25
Toms is one of the 80 similar ice cream stands along the beach. The figure shows Toms cost

21. If the output is 400 cones per day and the market price is $3. Then the Marginal revenue is
A. The same of the total cost
B. The same as the ATC
C. equal to AVC
D. $2
E. None of the above
22. If the market price is $4. Then the economic profit is
A. $4
B. $400
C. $1,600
D. $800
E. None of the above

BBUS 1006.

FINAL EXAM

- MC QUESTIONS

April, 2016

23. If the market price is $5. Then the profit-maximizing output will be
A. 1,000 cones per day
B. 800 cones per day
C. 800 cones per week
D. 400 cones per day
E. None of the above
24. The firm decides to shutdown temporarily, when the price per cone is approximately
A. $1
B. $2
C. $3
D. $0.10
E. None of the above
25. The firm decides to shutdown temporarily when its economic profit is approximately
A. $0
B. -$200
C. -$400
D. -$600
E. -$800
Use the following information to answer questions 26 - 28
The figure below illustrates some curves regarding the carrot cakes sold by First Cup, the only seller
of this cakes in an isolated community. On the graph, draw First Cups marginal revenue curve and
answer the following questions

26. The marginal revenue when the output is 8 cakes per hour is
A. $10
B. $4
C. $32
D. 0
E. None of the above

BBUS 1006.

FINAL EXAM

- MC QUESTIONS

April, 2016

27. The First cups maximizing price for the carrot cakes is
A. $6
B. $4
C. $5
D. $8
E. None of the above
28. The First cups economic profit due to the selling of carrot cakes is
A. $10 per hour
B. $4 per hour
C. $32 per hour
D. 0 per hour
E. None of the above

Use the following information to answer questions 29 - 30
The Table gives the demand, and total cost curves of X-ment company, which is the only company
producing cement in its area. Complete the previous table and answer the following questions
Quantity
(Thousands
of cubic
yards)

Price
($)

Total Cost
($)

$5,000

$7,500

$4,500

$8,500

$4,000

$10,000

$3,500

$12,000

$3,000

$14,500

$2,500

$17,500

Total
Revenue
($)

Marginal
Revenue
($)

Marginal
Cost ($)

29. The marginal revenue when the output is 5,500 cubic yards
A. cannot be computed
B. $0
C. -$5,000
D. $5,000
E. None of the above
30. The profit maximizing output of this company is
A. 3,500 cubic yards
B. 4,000 cubic yards
C. 2,500 cubic yards
D. 6,000 cubic yards
E. None of the above