The State University raises its tuition for the purpose of increasing revenue so
ID: 1206155 • Letter: T
Question
The State University raises its tuition for the purpose of increasing revenue so that more faculty can be hired. The University is assuming that the demand for education is: A. decreasing. B. relatively elastic. C. relatively inelastic. D. perfectly elastic. 12. Implicit costs are: A. regarded as costs by accountants but not economists. B. payments that a firm makes to other firms or individuals who supply resources. C. "costs" associated with the use of one's own resources. D. costs which very proportionately with output. 13. From an economist's point of view, costs: A. always reflect monetary outlays. B. never reflect money outlays. C. may or may not involve the payment of money. D. consists only of explicit costs. 14. Fixed costs can be described as: A. the cost of producing one more unit of capital such as machinery. B. any cost which does not change or vary with output. C. average cost multiplied by the firm's output. D. usually zero In the short run. 15. Which of the following is most likely to be a fixed costs? A. utilities B. rent or lease payments C. transportation costs D. wages 16. The elasticity of demand for a product is likely to be greater: A. if the product is a necessity rather than a luxury. B. the greater the amount of time available for the purchase decision. C. the smaller the portion of one's income spent buying the product. D. the smaller the number of good substitutes available for the product. 17. A group of firms which produce the same or similar products is: A. a plant. B. an industry. C. a partnership D. a multi-plant firm.Explanation / Answer
11. c. Relatively inelastic because in case of inelastic demand when price rises, quantity demanded also rises.
12. c Implicit cost are cost fo self owned factors of production and these cost are considered only by economists and not by accountants. for example interest for capital contricution by owner.
13. c. Implicit cost are not incurred in terms of money but are included in cost as per economist's perspective.
14. b. Fixed costs remain fixed irrespective of level of output. These costs are not a function of quantity.
15. b rent as it remains fixed irrespective of number of units produced.
16. b. elasticity of time is greater in long run as compared ot short run as it is easier to find substitutes in long run.
17. an industry.
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