14. Which of the following is not a property of a firm's cost curves?
(A) Marginal cost must eventually rise as a result of diminishing marginal product.
(B) Average total cost is U-shaped.
(C) Economies of scale will exist when average total cost falls as output rises.
(D) Average total cost will cross marginal cost at the minimum of marginal cost.

15. The long-run supply curve for a competitive industry may be upward sloping if (A) there are barriers to entry. (B) firms that enter the industry are able to do so at lower average total costs than the existing firms in the industry. (C) some resources are available only in limited quantities. (D) accounting profits are positive.

16. A monopolistically competitive firm has the following cost structure: The firm faces the following demand curve:To maximize profit (or minimize losses), the firm will produce (A) 20 units. (B) 30 units. (C) 40 units. (D) 50 units. 

Consider the following information about bread production at Beth's Bakery. 17. Beth pays all her workers the same wage, and labor is her only variable cost. From this information we can conclude that Beth's marginal cost (A) is constant. (B) increases as output increases from 0 to 33, but declines after that. (C) declines as output increases from 0 to 11, but increases after that. (D) declines as output increases from 0 to 33, but increases after that.

18. In the short run, there are 500 identical firms in a competitive market. The firms do not use any resources that are available in limited quantities, and each of them has the following cost structure: Which of the following is a point on the long-run supply curve? (A) P=$10, Q=500. (B) P=$6, Q=1,000. (C) P=$5, Q=500. (D) P=$5, Q=1,500. 

19. Assume that Mary decides to consume $100,000 in the work period. How much money will she have available for consumption in her retirement period? (A) $100,000 (B) $150,000 (C) $165,000 (D) $265,000

20. If the interest rate on savings increases, it is possible that (A) Mary will decrease her savings in the work period. (B) Mary will increase her savings in the work period. (C) Mary will not change her consumption in the work period. (D) All of the above are possible.

21. If the interest rate on savings increases, (A) Mary will decrease her savings in the work period if the income effect is greater than the substitution effect for her. (B) Mary will increase her savings in the work period if the income effect is greater than the substitution effect for her. (C) Mary will increase her savings in the work period if the substitution effect is greater than the income effect for her. (D) Both a and c are correct.

22. In an imaginary economy, consumers buy only sandwiches and magazines. The fixed basket consists of 20 sandwiches and 30 magazines. In 2006, a sandwich cost $4 and a magazine cost $2. In 2007, a sandwich cost $5. The base year is 2006. If the consumer price index in 2007 was 125, then how much did a magazine cost in 2007? (A) $0.83 (B) $2.25 (C) $2.50 (D) $3.00

23. Other things the same, if the government increases transfer payments to households, then the effect of this on the government's budget (A) will make equilibrium interest rate rise and equilibrium investments increase. (B) will make equilibrium interest rate rise and equilibrium investments decrease. (C) will make equilibrium interest rate fall and equilibrium investments increase. (D) will make equilibrium interest rate fall and equilibrium investments decrease.

24. Assume there is a multiplier effect, some crowding out, and no accelerator effect. An increase in government expenditures changes aggregate demand more, (A) the smaller the MPC and the stronger the influence of income on money demand. (B) the smaller the MPC and the weaker the influence of income on money demand. (C) the larger the MPC and the stronger the influence of income on money demand. (D) the larger the MPC and the weaker the influence of income on money demand.

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