What are economies of scale?
a. decreasing average costs as production increases
b. increasing average costs as production increases
c. increasing fixed costs as production increases
d. none of the above
QUESTION 2Jim is haggling with a car dealer over the sale price of a used car. Which of the following would determine the amount of surplus Jim extracts from the purchase?
a. Total difference between the buyer's and seller's valuations of the car
b. The number of customers trying to buy that particular car
c. The number of sellers trying to make Jim a sale
d. All of the above
QUESTION 3Average costs
a. fall at all levels of output
b. are falling when marginal costs are below average costs and rising when marginal costs are above average costs
c. are falling when marginal costs are above average costs and rising when marginal costs are below average costs
d. does not vary with output
QUESTION 4The axiomic view of bargaining is the
a. Strategic view of bargaining
b. Non-strategic view of bargaining
c. All of the above
d. None of the above
QUESTION 5The marginal cost curve:
a. Usually declines initially as output increases and then rises with further increases in output
b. Is equal to the average variable cost curve
c. Usually rises initially as output increases and declines with further increases in output
d. Is always constant
QUESTION 6You are a restaurant owner buying vegetables from a local farmer. You recently found out that another one of the farmer's clients, a competing restaurant has shut down, what would that do to your bargaining power?
a. Increase your bargaining power
b. Decrease your bargaining power
c. Not affect your bargaining power
d. None of the above
QUESTION 7When a firm is experiencing decreasing marginal costs, it could be because
a. The average costs are increasing
b. The firm is going down its learning curve
c. The firm's marginal productivity is increasing
d. Both C and D
QUESTION 8When buying a car from a dealership, to get the best bargain
a. Never stick to the first offer you make
b. Allow room for bargaining
c. Threaten to walk out if the dealer does not accept your offer
d. Quote your highest willingness to pay
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