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Consider the following average total cost (ATC), average variable cost (AVC), and marginal cost (MC) schedule for a perfectly competitive firm
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5 units
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What would happen to the price and quantity of Pepsi when the price of corn syrup, an input used to produce Pepsi, and the price of Coca-Cola, a substitute good, both decrease?
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Price would fall, but the equilibrium quantity of Pepsi may rise, fall, or remain constant depending on the magnitude of the changes
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Joe's Bikes reduced the price of their balloon-tired 'city bikes' from $350 to $250. Joe's noticed that during the week of this bicycle price reduction, bicycle helmet sales increased from normal 10 per week to 20. Assuming that other economic variables did not change, what is the arc cross-price elasticity of demand between 'city bikes' and bicycle helmets?
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-2 which indicates that the two goods are complements
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Taxes4U employs CPA's and tax preparesers for their tax preparing services. At their Gayton Road office, the last CPA hired completed 100 extra filings per week and the last tax preparer hired completed 50 extra filing per week. If CPA's cost $2000 per week and tax-preparers $500 per week, then
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The store would improve productively by hiring more tax preparers and/or fewer CPA's
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Which of the following is the best reason for FirmRest Inc. to consider buying the SolidCoil Spring company and vertically integrating into Bed Spring production?
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FirmRest mattresses use a specialized 'dual tension' spring, which requires specialized investment by a spring producer
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You are a manager of a firm that sells its product in a competitive market at a price of $50. your firms cost function is c(Q)=40+5Q2. Your firms optimal output is:
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5
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You are the manager of a monopoly that faces a demand curve described by P=230-20Q. Your total costs are given by C=5 +30Q. the profit-maximizing price is:
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130
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During spring break, students have an elasticity of demand for a trip to Florida of -3. how much should an airline charge students for a ticket if the marginal cost of a flight is $120?
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180
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Andy's snowboard shop has the production function Q= 10L1/4 K1/4 . Andy currently uses 16 units of labor and 81 units of Capital. As a result,
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Andy's produces 60 units with decreasing returns of scale
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Consider a firm that produces products Q1 and Q2 with a cost function given by C = 100 +Q12 +Q22-3 Q1Q2. Currently, at the firm Q1=3 and Q2=1. Which of the following is true with regard to cost complementarities and economies of scope?
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Cost complementarities exist because the sign on the interaction term (Q1Q2) is negative. Thus , economics of scope also exist for this firm.
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