1- A firm’s costs are related in the following way. Select one: a. ATC cuts average variable cost (AVC) at the minimum point of AVC. b. MC cuts total cost

1- A firm’s costs are related in the following way. Select one: a. ATC cuts average variable cost (AVC) at the minimum point of AVC. b. MC cuts total cost at the minimum point of total cost. c. AVC cuts ATC at the minimum point of ATC. d. MC cuts ATC at the minimum point of ATC. e. average total cost (ATC) cuts marginal cost (MC) at the minimum point of MC. 2- A production function Select one: a. is an economic relationship between revenue and cost. b. shows the maximum level of output for a given set of inputs. c. always shows increasing returns to labour. d. shows the relationship between input prices and amount of input used. 3- Consumer surplus is defined as Select one: a. the excess of quantity supplied over quantity demanded at market prices above equilibrium. b. the excess of quantity demanded over quantity supplied at market prices below equilibrium. c. the difference between marginal revenue and marginal cost, summed over all units of output produced. d. the difference between the maximum amount consumers would be willing to pay and the actual amount paid for all units of a product consumed. 4- If consumers are willing to purchase a fixed quantity of a product regardless of the price, the demand is Select one: a. elastic. b. perfectly elastic. c. inelastic d. perfectly inelastic. 5- If the price of X goes from $1.50 per dozen to $2.50 per dozen, and suppliers are willing to increase the amount that they offer for sale in the market from 9,000 to 11,000 units, then the elasticity of supply for product X is Select one: a. 0.8 b. 0.10 c. 0.4 d. 4.0

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