question
Given a market in equilibrium, if supply goes up then at the original equilibrium price the quantity demanded is...
answer
less than the quantity supplied and a surplus results.
question
Higher costs of producing meatloaf shifts the supply curve of meatloaf ________ and shifts the demand curve for meatloaf ________.
answer
leftward; not at all
question
The equilibrium price will always rise if there is...
answer
an increase in demand combined with a decrease in supply
question
Which statement is true?
a. Demands reflect a decision about which wants to satisfy and a plan to buy the good, while wants are unlimited and involve no specific plan to acquire the good.
b. Demands are unlimited, whereas wants are limited by income.
c. wants require a plan to acquire a good but demands require no such plan.
d. Demands reflect a decision about which wants to satisfy and a plan to buy the good, while wants are unlimited and involve no specific plan to acquire the good.
e. Wants imply a decision about which demands to satisfy, while demands involve no specific plan to acquire the good.
a. Demands reflect a decision about which wants to satisfy and a plan to buy the good, while wants are unlimited and involve no specific plan to acquire the good.
b. Demands are unlimited, whereas wants are limited by income.
c. wants require a plan to acquire a good but demands require no such plan.
d. Demands reflect a decision about which wants to satisfy and a plan to buy the good, while wants are unlimited and involve no specific plan to acquire the good.
e. Wants imply a decision about which demands to satisfy, while demands involve no specific plan to acquire the good.
answer
d. Demands reflect a decision about which wants to satisfy and a plan to buy the good, while wants are unlimited and involve no specific plan to acquire the good.
question
If it is revealed that increased sugar consumption could cause high blood pressure among adults, what happens to the equilibrium price and quantity of sugar?
answer
The equilibrium price falls and the equilibrium quantity decreases.
question
According to the law of supply firms manufacture...
answer
more of a good the higher its price.
question
When will shortage be eliminated?
a. As the price rises, the quantity demanded decreases while the quantity supplied increases.
b. As the price falls, the quantity demanded decreases while the quantity supplied increases.
c. As the price rises, the quantity demanded increases while the quantity supplied decreases.
d. As the price falls, the quantity demanded increases while the quantity supplied decreases.
a. As the price rises, the quantity demanded decreases while the quantity supplied increases.
b. As the price falls, the quantity demanded decreases while the quantity supplied increases.
c. As the price rises, the quantity demanded increases while the quantity supplied decreases.
d. As the price falls, the quantity demanded increases while the quantity supplied decreases.
answer
a. As the price rises, the quantity demanded decreases while the quantity supplied increases.
question
If the price of usb drives increases, the demand curve for usb drives ________ and the quantity of usb drives demanded ________.
answer
does not shift; decreases
question
For normal goods...
answer
demand increases when income increases.
question
There will be shift in the supply of cheeseburgers if there is...
answer
an increase in the price of meat used to produce cheeseburgers.
question
The equilibrium quantity ________ and the equilibrium price ________ when supply diminishes and demand remains the same.
answer
decreases; rise
question
The demand for a good rises when the price of a substitute ________ and or the price of a complement ________.
answer
rises; falls
question
Suppose when there is a 10 percent increase consumers' income , the quantity of sausage bought goes up by 5 percent. Therefore...
answer
sausage is a necessity.
question
The income elasticity is defined as follows: it is the percentage change in ________ divided by the percentage change in ________.
answer
the quantity demanded; income
question
If demand is inelastic...
answer
the price elasticity of demand is less than 1.
question
If a good's demand curve is horizontal then...
answer
its price elasticity of demand equals to infinity.
question
When price decreases by 3 percent and then the quantity demanded increases by 6 percent , the price elasticity of demand is...
answer
2.
question
Suppose that the price elsticity of demand for alphaalpha is less than 1. If alphaalpha farms become more productive, the equilibrium price of alphaalpha will ________ and the total revenue of farmers will ________.
answer
fall; decrease
question
A fall in the price of cucumber from $3.50 to $2.50 per bag increases the quantity demanded from 3,000 to 5,000 bags. The price elasticity of demand is...
answer
1.50
question
The price elasticity of demand is affected by...
answer
neither the units used to measure price nor the units used to measure quantity.
question
If there are more substitutes for a product, the..
answer
larger is its the price elasticity of demand.
question
A shift of the supply curve of paprika increases the price from $10 a bag to $30 a bag and decreases the quantity demanded from 40,000 to 23,000 bags. Thus the...
answer
demand for paprika is inelastic.
question
Suppose that the price elasticity of demand is equal to 1. Then...
answer
a 5 percent increase in price does not change total revenue.
question
Since lettuce and tomato are complementary goods, so their ________ elasticity of demand is ________.
answer
cross; negative
question
With a sales tax the distance between the old and the new supply curve is the...
answer
amount of the sales tax.
question
Controlled rent ________.
answer
set above equilibrium price has no effect
question
The more elastic the demand for a good, the...
answer
less a sales tax raises the price paid by buyers.
question
Suppose the labor market is in equilibrium and wage is $10 per hour. A minimum wage has an impact on employment if it is set at ________.
answer
$12 per hour.
question
Which of the following is a correct?
a. Penalizing either buyers or sellers of an illegal good decreases the quantity bought.
b. Taxing a good at a sufficiently high rate can achieve the same consumption level as prohibition.
c. Penalizing sellers of an illegal good decreases supply and penalizing buyers decreases demand.
d. All of the above are correct statements.
a. Penalizing either buyers or sellers of an illegal good decreases the quantity bought.
b. Taxing a good at a sufficiently high rate can achieve the same consumption level as prohibition.
c. Penalizing sellers of an illegal good decreases supply and penalizing buyers decreases demand.
d. All of the above are correct statements.
answer
d. All of the above are correct statements.
question
A price ceiling that is below the equilibrium price ________ search activity and ________ the use of black markets.
answer
increases; increases
question
Variable Input
answer
An input whose level changes with the level of output
Symbol: V
Symbol: V
question
Fixed Input
answer
An input whose level does not change with the level
of output, i.e. production line machinery.
Symbol: F
of output, i.e. production line machinery.
Symbol: F
question
Production Function
answer
Defines the maximum amount of output that can just
be produced at different levels of a variable input
holding constant the levels of fixed inputs.
Formula: Q = f(F, V)
be produced at different levels of a variable input
holding constant the levels of fixed inputs.
Formula: Q = f(F, V)
question
Average Product
answer
The amount of output produced per unit of a variable
input
Symbol: AP
Formula: AP= (Q/V)
input
Symbol: AP
Formula: AP= (Q/V)
question
Marginal Product
answer
The additional output produced per an additional unit
of a variable input.
Symbol: MP
Formula: (Change in Q/Change in V)
of a variable input.
Symbol: MP
Formula: (Change in Q/Change in V)
question
Law of Diminishing Returns
answer
States that as you add additional units of a variable
input to your fixed inputs that after some point, the
additions to output start to decline.
input to your fixed inputs that after some point, the
additions to output start to decline.
question
Short-run
answer
A period of time such that only the levels of variable
inputs can change.
inputs can change.
question
Long-run
answer
A period of time such that the levels of both variable
and fixed inputs can change.
and fixed inputs can change.
question
Total Cost
answer
The sum of Fixed and Variable Costs.
Symbol: TC
Formula: TC=FC+VC
Symbol: TC
Formula: TC=FC+VC
question
Fixed Cost
answer
The costs associated with fixed inputs that do not
change with the level of output.
Symbol: FC
change with the level of output.
Symbol: FC
question
Variable Cost
answer
The costs associated with variable inputs that do
change with the level of output.
Symbol: VC
change with the level of output.
Symbol: VC
question
Average Total Cost
answer
The Total Cost per unit of output.
Formula #1:(TC/Q)=(FC/Q)+(VC/Q)
Formula #2: ATC= AFC +AVC
(Symbol of Average: A)
Formula #1:(TC/Q)=(FC/Q)+(VC/Q)
Formula #2: ATC= AFC +AVC
(Symbol of Average: A)
question
Average Fixed Cost
answer
The Fixed Cost per unit of output.
Symbol: AFC
Formula: (FC/Q)
Symbol: AFC
Formula: (FC/Q)
question
Average Variable Cost
answer
The Variable Cost per unit of output.
Symbol: AVC
Formula: (VC/Q)
Symbol: AVC
Formula: (VC/Q)
question
Total Revenue
answer
The product of a good or service's selling price and
the quantity sold.
Symbol: TR
Formula: TR= P x Q
the quantity sold.
Symbol: TR
Formula: TR= P x Q
question
Average Revenue
answer
The Total Revenue per number of units sold.
Formula: (TR/Q)
Formula: (TR/Q)
question
Marginal Revenue
answer
The addition to Total Revenue per additional unit of output sold.
Symbol: MR
Formula: (Change in TR/ Change in Q)
Symbol: MR
Formula: (Change in TR/ Change in Q)
question
Profit
answer
Profit equals the difference between product sales revenue and the costs incurred to produce a product.
Formula: Profit = TR - Tc
Formula: Profit = TR - Tc
question
When the marginal utility per dollar from all goods someone consumes is equal, then the...
answer
consumer's total utility is maximized and consumer's total utility is maximized.
question
Which statement is true? Water...
a. is cheaper than diamonds because it has a higher total utility.
b. has a lower marginal utility than diamonds.
c. is cheaper than diamonds because it has a lower total utility.
d. has a higher marginal utility than diamonds.
a. is cheaper than diamonds because it has a higher total utility.
b. has a lower marginal utility than diamonds.
c. is cheaper than diamonds because it has a lower total utility.
d. has a higher marginal utility than diamonds.
answer
b. has a lower marginal utility than diamonds.
question
Three USB drives' total utility is...
answer
the sum of the marginal utility of the first drive plus the marginal utility of the second drive plus the marginal utility of the third drive.
question
In microeconomics we assume that typical consumers' objectives are to...
answer
maximize their total utility.
question
A statement that is consistent with marginal utility theory...
answer
As Jose consumes more of one good, his marginal utility from consuming more of that good decreases.
question
Suppose that the marginal utility per dollar from sausage is greater than the marginal utility per dollar from milkshake, then to maximize welfare a consumer will buy
answer
more sausage and less milkshake.
question
Adam can buy a USB drive for $2. For the first drive bought he is willing to pay $4, for the second $3, for the third $2 and for the fourth $1. Then Adam's consumer surplus for the USB drives he buys is...
answer
$3
question
Assume diminishing and positive marginal utilities; as consumption increases the total utility from the good must be...
answer
positive and rising at a decreasing rate
question
David consumes pencils and hash browns. The price of hash browns is $1 and the marginal utility from his last portion of hash brown is 5. Let Pp be the price of a pencil and MUp be the marginal utility of pencils. In equilibrium, the ratio MUp/ Pp for David's last pencil must equal...
answer
5.0
question
Suppose that Mark buys two different goods. His marginal utility is defined by...
answer
how much benefit he gets from another unit of each of those goods.
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