Exam 6: Firms,the Stock Market,and Corporate Governance

Suppose you have just opened a store to sell espresso machines.Both you and a competing store buy this machine from a manufacturer for $130 each.Your competitor,who has a store of the same size as yours,is currently selling about 10 machines a month at a price of $200 per machine.You expect to sell about 6 machines a month at a price of $220 per machine.If you lower your price,you expect to incur a loss.Which of the following could explain why your competitor is able to profitably sell the machine at a lower price although the cost of purchasing the machine is the same for the both of you?

A firm's short-run average total cost curve is parallel to its short-run average variable cost curve.

The level of output at which all economies of scale have been exhausted is known as

In a diagram showing the average total cost and average variable cost curves,the minimum point of the average total cost is

Gertrude Stork's Chocolate Shoppe normally employs 4 workers.When the Chocolate Shoppe hired a 5th worker the Shoppe's total output decreased.Therefore

If a producer is not able to expand its plant capacity immediately,it is

Table 6-2 Table 6-2 summarises production at the Crunchy Apple Orchard for the month of April 2005. -Refer to Table 6-2.What is the average product of labour when the orchard employs 5 workers?

In economics,what is the difference between the short run and the long run?

The marginal product of labour is defined as

In the short run,why does a production function eventually display diminishing returns to labour?

Figure 6-2 -Refer to Figure 6-2.The curve labelled 'E' is

If a firm is experiencing diseconomies of scale,its long-run average cost curve is increasing.

The production function shows

The formula for total fixed cost is

Maria's Yiros House sells yiros.The cost of ingredients (pita,meat,spices,etc.)to make a yiros is $2.00.Maria pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Maria's average fixed cost per day when she produces 50 yiros using two workers?

Jennifer Borts moves her office from the premises she rents at a local shopping centre to her home.As a result of this move

Figure 6-5 -Refer to Figure 6-5.Curve G approaches curve F because

Figure 6-1 -Refer to Figure 6-1.The average product of the 4th worker

The law of diminishing marginal returns

Explain how the listed events (a-d)would affect the following at Hilton Hotels: i.Marginal cost ii.Average variable cost iii.Average fixed cost iv.Average total cost a.Hilton decides on an across-the-board 5 per cent increase in executive salaries. b.Hilton decides to eliminate all print advertising. c.Hilton signs a new contract with the Culinary Workers Union that requires the company to increase wages for all its kitchen workers. d.The federal government starts to levy a $5 room tax on all hotel rooms.