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