When there are diseconomies of scale in production:
a. long-run average total cost declines as output expands.
b. long-run average total cost increases as output expands.
c. marginal cost decreases as output expands.
d. none of the above
QUESTION 2Shane holds wealth worth 10,000 . He considers investing it equally in two gambles one of which has a probability of 0.6 to yield a return of 10 and the other has a probability of 0.4 to yield a return of 20. What will be Shane's total expected return from the two gambles?
a. 1,000
b. 700
c. 500
d. 900
e. 1,100
QUESTION 3Economic models simplify reality and help us to better understand important aspects of it.
Indicate whether the statement is true or false
QUESTION 4According to utility theory, a consumer is in equilibrium when:
a. total income is spent.
b. marginal utility per dollar spent for a good is maximized.
c. total utility per unit of a good is maximized.
d. total utility per dollar spent is equal for all goods.
e. marginal utility per dollar spent is equal for all goods.
QUESTION 5When there are economies of scale in production:
a. long-run average total cost declines as output expands.
b. long-run average total cost increases as output expands.
c. marginal cost increases as output expands.
d. the marginal product of an input diminishes with increased utilization.
QUESTION 6Risk is typically measured:
a. by comparing the size of a firm to other firms operating in the market.
b. by looking at the economic profit that a firm has earned in the past few years.
c. by determining whether the bonds issued by a firm are of high or low value.
d. by comparing how much the stock price fluctuates compared with an average firm.
e. by comparing how much the price of the bond falls whenever the price of a firm's product rises.
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