ECON 202 Ole Miss Hayes, Trachman Final Newest / ECON 202 Ole Miss
Hayes, Trachman Final Exam Preparation
ECON 202 OLE MISS HAYES, TRACHMAN FINAL NEWEST / ECON 202
OLE MISS HAYES, TRACHMAN FINAL EXAM PREPARATION /ECON 202
OLE MISS, TRACHMAN HAYES FINAL PRACTICE EXAM WITH COMPLETE
QUESTIONS AND CORRECT DETAILED ANSWERS |ALREADY GRADED
A+(NEWEST VERSION!)
Suppose you owned a bar in a college town during the pandemic while the
colleges were closed. You decided to shut down for a few months since there were
barely any customers. Which of the following costs would you have incurred?
fixed costs
You own a business in a hurricane-prone area so you are sure to purchase flood
insurance. What type of cost is this to your business?
fixed cost
The video you were asked to watch this week to help explain the law of
diminishing marginal returns used what type of business as an example?
a restaurant
The MC curve intersects which other curves?
AFC; AVC; ATC
1|Page
, ECON 202 Ole Miss Hayes, Trachman Final Newest / ECON 202 Ole Miss
Hayes, Trachman Final Exam Preparation
Recall the economic definition of profit differs from the accounting definition of
profit in that the economic definition includes
opportunity costs
The three criteria a perfectly competitive market must follow are
many buyers, many sellers; homogeneous products; no barriers to entry
A competitive firm maximizes profit by choosing a level of output where the world
price is equal to the firm's
marginal cost
You've been hired as a management consultant to WaffleCo, a maker of generic-
brand frozen waffles. They're each trying to figure out if they should produce a
little more output or a little bit less in order to maximize their profits. The firms all
have typical marginal cost curves: They rise as the firm produces more. Your staff
did all the hard work for you of figuring out the price of the firm's output is $4 per
box and the marginal cost of producing one more unit of output is $2 per box at
its current level of output. However, they forgot to collect data on how much the
firm is actually producing at the moment. Fortunately, that doesn't matter. In your
final report, you need to decide if the firm should produce more, less, or stay at
the current output level. What do you recommend?
produce more
Steve owns a bike store. His total costs are $1.2M per year, his variable costs are
$750,000 and his fixed costs are $450,000 per year. Last year, Steve sold 1200
bikes. What was Steve's average total cost?
2|Page
, ECON 202 Ole Miss Hayes, Trachman Final Newest / ECON 202 Ole Miss
Hayes, Trachman Final Exam Preparation
$1,000
What was Steve's average variable cost?
$625
What was Steve's average fixed cost?
$375
When a firm is at the shutdown point, will it always shut down?
no
When a firm is below the shutdown point, will it always shut down?
yes
In the long run, economic profits are
zero
In the long run, constant supply curves are
horizontal
A firm's marginal cost curve can be represented by the following equation: MC =
5q. The average total cost curve can be represented by ATC= q^2 - q + 2. The price
of the product is $20. Is this firm making a profit or a loss?
3|Page
Hayes, Trachman Final Exam Preparation
ECON 202 OLE MISS HAYES, TRACHMAN FINAL NEWEST / ECON 202
OLE MISS HAYES, TRACHMAN FINAL EXAM PREPARATION /ECON 202
OLE MISS, TRACHMAN HAYES FINAL PRACTICE EXAM WITH COMPLETE
QUESTIONS AND CORRECT DETAILED ANSWERS |ALREADY GRADED
A+(NEWEST VERSION!)
Suppose you owned a bar in a college town during the pandemic while the
colleges were closed. You decided to shut down for a few months since there were
barely any customers. Which of the following costs would you have incurred?
fixed costs
You own a business in a hurricane-prone area so you are sure to purchase flood
insurance. What type of cost is this to your business?
fixed cost
The video you were asked to watch this week to help explain the law of
diminishing marginal returns used what type of business as an example?
a restaurant
The MC curve intersects which other curves?
AFC; AVC; ATC
1|Page
, ECON 202 Ole Miss Hayes, Trachman Final Newest / ECON 202 Ole Miss
Hayes, Trachman Final Exam Preparation
Recall the economic definition of profit differs from the accounting definition of
profit in that the economic definition includes
opportunity costs
The three criteria a perfectly competitive market must follow are
many buyers, many sellers; homogeneous products; no barriers to entry
A competitive firm maximizes profit by choosing a level of output where the world
price is equal to the firm's
marginal cost
You've been hired as a management consultant to WaffleCo, a maker of generic-
brand frozen waffles. They're each trying to figure out if they should produce a
little more output or a little bit less in order to maximize their profits. The firms all
have typical marginal cost curves: They rise as the firm produces more. Your staff
did all the hard work for you of figuring out the price of the firm's output is $4 per
box and the marginal cost of producing one more unit of output is $2 per box at
its current level of output. However, they forgot to collect data on how much the
firm is actually producing at the moment. Fortunately, that doesn't matter. In your
final report, you need to decide if the firm should produce more, less, or stay at
the current output level. What do you recommend?
produce more
Steve owns a bike store. His total costs are $1.2M per year, his variable costs are
$750,000 and his fixed costs are $450,000 per year. Last year, Steve sold 1200
bikes. What was Steve's average total cost?
2|Page
, ECON 202 Ole Miss Hayes, Trachman Final Newest / ECON 202 Ole Miss
Hayes, Trachman Final Exam Preparation
$1,000
What was Steve's average variable cost?
$625
What was Steve's average fixed cost?
$375
When a firm is at the shutdown point, will it always shut down?
no
When a firm is below the shutdown point, will it always shut down?
yes
In the long run, economic profits are
zero
In the long run, constant supply curves are
horizontal
A firm's marginal cost curve can be represented by the following equation: MC =
5q. The average total cost curve can be represented by ATC= q^2 - q + 2. The price
of the product is $20. Is this firm making a profit or a loss?
3|Page
