question
The demand curve's usual slope implies that consumers
answer
buy less as price of good increases
question
The price elasticity of demand can be interpreted as the:
answer
A percentage change in the quantity divided by the percentage change in price.
question
As we move down the linear demand curve, demand becomes:
answer
Less elastic.
question
The demand for textbooks is Q=200-P+25U-50P{beer}. Assume that the unemployment rate U is 8 and the price of beer P{beer} is $2. When the average price of a text book is P=$100, the price elasticity of demand is:
answer
-0.5
question
If price is $25 when the price elasticity of demand is -0.5, then the marginal revenue must be:
answer
-$25
question
Indifference curve cannot cross because:
answer
consumers prefer more to less & a single consumption bundle would bring two different level of utility
question
At equilibrium the marginal rate of substitution describes:
answer
the number of units of one good that the consumer is willing to trade for an additional unit of another good, holding utility fixed.
question
John spends his budget on food and clothing each month. His utility function is given by
TU = 100C0.25F0.75. The marginal rate of substitution of clothing for food is:
TU = 100C0.25F0.75. The marginal rate of substitution of clothing for food is:
answer
0.33F/C
question
Points along an indifference curve represent bundles of goods that:
answer
deliver equal utility.
question
Tom spends all his monthly income on pretzels and potato chips. Currently, he is maximizing
his utility; the marginal utility of pretzels is 150, and the marginal utility of potato chips is 125. If
pretzels cost $6 per box, how much do potato chips cost?
his utility; the marginal utility of pretzels is 150, and the marginal utility of potato chips is 125. If
pretzels cost $6 per box, how much do potato chips cost?
answer
$5
question
The marginal product of labour can be illustrated geometrically as the:
answer
slope of the total product curve with respect to labour.
question
. The law of diminishing marginal returns is obvious because, if it didn't hold, it would be
possible to:
possible to:
answer
feed everyone in the world by intensively cultivating one acre of land & manufacture all of the cars in the world using just one of the world's
question
Happiness can be produced with wine and roses according to Q = W1/2R1/4, where W is
bottles of wine and R is bouquets of roses obtained per month. If wine costs $20 per bottle and
roses cost $60 per dozen, what is the optimal combination of wine and roses if your budget is
$360?
bottles of wine and R is bouquets of roses obtained per month. If wine costs $20 per bottle and
roses cost $60 per dozen, what is the optimal combination of wine and roses if your budget is
$360?
answer
W = 12 bottles, R = 2 bouquets.
question
Lines that represent bundles of inputs that cost the same total amount are called:
answer
isocost curves.
question
Down and Out Company operates an executive placement service for those corporate
executives displaced by corporate restructuring. Its monthly total cost of cases is given by
TC = 25Q1/2 + 2,500; the average cost at a caseload of 25 attempted placements per month is:
executives displaced by corporate restructuring. Its monthly total cost of cases is given by
TC = 25Q1/2 + 2,500; the average cost at a caseload of 25 attempted placements per month is:
answer
$105.
question
The weekly total cost of baking pies at Tasty Tortes is given by TC = 0.01Q1.5. Tasty's
marginal cost of producing 10,000 pies a week is:
marginal cost of producing 10,000 pies a week is:
answer
$1.50.
question
Lot's Wife Manufacturing produces rear- view video systems for buses. The firm's cost
function is TC = 2,000 + 120Q. If the systems sell for $145, what is the break- even rate of
production?
function is TC = 2,000 + 120Q. If the systems sell for $145, what is the break- even rate of
production?
answer
80.
question
In the model of perfect competition, there are:
answer
low barriers to entry and no nonprice competition
question
If the perfectly competitive market supply of turkey pepperoni shifts from QS,12 = 250 + 50P
to QS,13 = 400 + 40P, and the market demand is given by QD = +10,000 − 200P, then the change
in equilibrium price from one year to the next will be:
to QS,13 = 400 + 40P, and the market demand is given by QD = +10,000 − 200P, then the change
in equilibrium price from one year to the next will be:
answer
$1.
question
If a representative firm with total cost given by TC = 50 + 2q + 2q^2, operates in a competitive
industry where the short-run market demand and supply curves are given by QD = 1,410 − 40P
and QS = − 390 + 20P, its short-run profit-maximizing level of output is:
industry where the short-run market demand and supply curves are given by QD = 1,410 − 40P
and QS = − 390 + 20P, its short-run profit-maximizing level of output is:
answer
7 units.
question
If a representative firm with long-run total cost given by TC = 2,000 + 20q + 5q2
, operates in
a competitive industry where the market demand is given by QD = 10,000 − 40P, in the long-run
equilibrium there will be:
, operates in
a competitive industry where the market demand is given by QD = 10,000 − 40P, in the long-run
equilibrium there will be:
answer
60 firms.
question
The long run is a time period during which:
answer
all inputs are variable.
question
In the model of monopoly, firms produce a:
answer
differentiated product with considerable control over price
question
For the Mickey Mice Company, the price elasticity of demand is −3, average cost is $15, and
marginal cost is $30. Mickey's profit-maximizing price is:
marginal cost is $30. Mickey's profit-maximizing price is:
answer
$45.00.
question
When producing 10 units, Jean has total variable costs of $100, total fixed costs of $100, and
assets of $100. She wants a return of 10%. What price should she charge?
assets of $100. She wants a return of 10%. What price should she charge?
answer
$21.
question
A producer of fixed proportion goods X and Y (Q = QX = QY) has marginal costs and
revenues of MC = 10Q, MRX = 80 − 15QX, MRY = 120 − 25QY . The producer should produce
how many units?
revenues of MC = 10Q, MRX = 80 − 15QX, MRY = 120 − 25QY . The producer should produce
how many units?
answer
4.
question
In the model of monopolistic competition, there can be short-run:
answer
losses or profits, but there must be neither profits nor losses in long-run
equilibrium.
equilibrium.
question
Managerial Economics
answer
provide a framework for analyzing managerial action that effect performance
question
Price elasticity formula
answer
N=P/Q * dQ/DP
question
If price elasticity=0 then demand curve is?
answer
Vertical
question
If price elasticity=-infinity then demand curve is ?
answer
Horizontal
question
Marginal rate of substitution is represents ?
answer
the number of units that must be given up to receive additional unit of different product.
question
Utility maximization
answer
maxing hes or shes wellbeing during given price.
question
Opportunity cost
answer
resources used for one application can not be used for another
question
Economic Sum
answer
cost of product + cost of sum
question
Explicit costs
answer
ordinary items
question
Implicit Costs
answer
Not expected costs [ forgone value]
question
Short run cost function
answer
period of time which no quantity of inputs is variable and no inputs are variable
question
Long run cost function
answer
all inputs can be varied
question
Perfect contribution
answer
many producers who have no influence on price
question
When MR>MC
answer
Firm increase production
question
When MR<MC
answer
Firm decreases in production
question
Monopoly
answer
one seller has power over price
question
Monospony
answer
One buyer has power over price
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