ECN 601 EXAM 1 | 2025/2026 UPDATE | QUESTIONS
AND ANSWERS | 100% CORRECT!!
A manager invests $20,000 in equipment that would help the company reduce
it's per unit costs from $15 to $12. He expects the equipment to be in use for
the next seven years. After two years, he realizes that if he outsourced the
production, the unit cost would be $7 instead. At this point what should the
senior manager do? Answer - Write off the equipment as sunk cost and allow
for outsourcing since it is cheaper
A buyer values a house at $525,000 and a seller values the same house at
$485,000. If sales tax is 8% and is levied on the seller, then what would be the
lowest price at which the seller would be willing to sell? Answer - $527,000
Which of the following describes a firm? Answer - All of the above
Use the table provided to answer the following question. If hiring the fourth
worker increases total product by 50 units and the price of each unit is $15:
Answer - The firm should hire the fourth worker as MR>MC.
A monopolistically competitive firm will tend to have a more elastic demand
curve than a monopolist because: Answer - Both B and C
A firm sells 1,000 units per week. It charges $70 per unit, the average variable
costs are $25, and the average fixed costs are $65. In the short run, the firm
should: Answer - Continue operating, as the firm is covering all the variable
costs and some of the fixed costs.
AND ANSWERS | 100% CORRECT!!
A manager invests $20,000 in equipment that would help the company reduce
it's per unit costs from $15 to $12. He expects the equipment to be in use for
the next seven years. After two years, he realizes that if he outsourced the
production, the unit cost would be $7 instead. At this point what should the
senior manager do? Answer - Write off the equipment as sunk cost and allow
for outsourcing since it is cheaper
A buyer values a house at $525,000 and a seller values the same house at
$485,000. If sales tax is 8% and is levied on the seller, then what would be the
lowest price at which the seller would be willing to sell? Answer - $527,000
Which of the following describes a firm? Answer - All of the above
Use the table provided to answer the following question. If hiring the fourth
worker increases total product by 50 units and the price of each unit is $15:
Answer - The firm should hire the fourth worker as MR>MC.
A monopolistically competitive firm will tend to have a more elastic demand
curve than a monopolist because: Answer - Both B and C
A firm sells 1,000 units per week. It charges $70 per unit, the average variable
costs are $25, and the average fixed costs are $65. In the short run, the firm
should: Answer - Continue operating, as the firm is covering all the variable
costs and some of the fixed costs.
