Econ 1001 Final Exam - Assignment Essays

question

A price cut will increase the total revenue a firm receives if the demand for its product is:

answer

Elastic

question

The equation for the demand curve for soda, as a function of the price of soda P and the price of ice cream Pic is Q = 10 - P + 2Pic. What is the relationship between soda and ice cream?

answer

Substitute goods

question

10. The equation for the demand curve for tacos, as a function of the price of tacos P and the price of fries Pf is Q = 48 - 3P + 3Pf . Suppose the price of tacos remains fixed at 4. What is the cross-price elasticity of tacos with respect to fries when the price of fries changes from 2 to 3?

answer

0.07

question

. The equation for the demand curve for tacos, as a function of the price of tacos P and the price of fries Pf is Q = 48 - 3P + 3Pf . What is the relationship between tacos and fries?

answer

Substitute goods

question

2. Scarcity exists because of

answer

unlimited wants and limited resources

question

Which of the following is considered to be a tell-tale signal that the point with the highest total utility has been found?

answer

A. the marginal utility per dollar is the same for both goods

question

The term _________________ refers to the additional utility provided by one additional unit of consumption

answer

marginal utility

question

9. In microeconomic terms, the ability of a good or a service to satisfy wants is called:

answer

utility

question

Economists are able to determine total utility at a given level of consumption by:

answer

summing up the marginal utilities of each unit consumed.

question

The nature of supply indicates that as the price of a good increases:

answer

more of it is produced.

question

. The term "ceteris paribus" means that

answer

all variables except those specified are constant.

question

A demand curve is a graphical illustration of the relationship between price, shown on the vertical axis, and _________________, shown on the horizontal axis.

answer

quantity demanded

question

_____________ refers to the total number of units that are produced at that price

answer

E. quantity supplied

question

The demand curve for a typical good has a(n):

answer

negative slope because some consumers switch to other goods as the price rises

question

The _________ is the only price where quantity demanded is equal to quantity supplied.

answer

Equilibrium price

question

Joe's Barber Shop knows that a 3 percent increase in the price of their haircuts results in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand facing Joe's Barber Shop, in absolute value?

answer

5.0

question

. The demand for a product is unit elastic. At a price of $20, 10 units of a product are sold. If the price is increased to $40, then one would expect sales to equal

answer

5 units

question

As the _______________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left.

answer

high-skill labor or technology

question

A 25 percent decrease in the price of breakfast cereal leads to a 30 percent increase in the quantity of cereal demanded. As a result:

answer

total revenue will increase.

question

A 10 percent increase in the price of soda leads to a 20 percent increase in the quantity of iced tea demanded. It appears that:

answer

D. cross-price elasticity of demand for iced tea is -2.

question

Given that consumers will try to avoid taxes by buying fewer goods, taxes on goods with __________ demand curves will tend to raise more tax revenue for the government than taxes on goods with __________ demand curves.

answer

. inelastic; elastic

question

The equation for the demand curve for flour, as a function of the price of flour P and income I, is Q = 10 - P + I. What kind of good is flour?

answer

C. normal good

question

1. A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production.

answer

c. fixed costs; do not change

question

The term "increasing returns to scale" describes a situation where

answer

s the quantity of output rises the average cost of production falls

question

In the framework of monopolistic competition, advertising works because it causes

answer

a steeper perceived demand curve, as well as a perceived demand curve to shift to the right

question

. Which of the following would most likely create the setting for an oligopoly?

answer

government grants Alex, Trent, and Alyse each a patent for their respective molybdenum based electric car batteries

question

The demand curve as perceived by a monopolistic competitor is

answer

c. downward sloping

question

If the firm is producing at a quantity of output where marginal revenue exceeds marginal cost, then,

answer

each marginal unit adds profit by bringing in more revenue than its cost

question

The US Federal Trade Commission justifies their record of approval of most mergers by asserting that, even though competition is diminished by consolidating two firms into one, mergers actually benefit

answer

competition and consumers by allowing firms to operate more efficiently

question

Antitrust regulations would most likely require one of the following in order to determine whether or not a merger may enhance competition. Which one is it?

answer

. analysis using numerical tools.

question

If the largest four firms in an industry account for less than half of market sales, their industry, as measured by the concentration ratio

answer

a. would be considered to be competitive

question

The branch of mathematics that analyzes situations in which players must make decisions and then receive payoffs most often used by economists is

answer

game theory

question

Shopping malls typically lease retail space to a large number of clothing stores. When this group of retailers competes to sell similar but not identical products, they engage in what economists call _______________.

answer

c. monopolistic competition

question

If a perfectly competitive firm raises its price, the quantity demanded of its product ____________.

answer

b. falls to zero

question

In game theory, a Nash equilibrium is

answer

. an outcome in which no player wishes to change her chosen strategy given the strategies chosen by the other players

question

he paradoxical nature of oligopoly can be demonstrated by the fact that, even though the monopoly outcome is best for the oligopolists,

answer

b. they have incentives to increase production above the monopoly outcome.

question

A firm's supply curve for a product reflects the

answer

c. private cost to sellers of producing the product.

question

When a market is characterized by an externality, the government

answer

can correct the market failure in the case of both positive and negative externalities by inducing market participants to internalize the externality, using taxes or subsidie

question

8. Suppose that large-scale pork production has the potential to create ground water pollution. Why might this type of pollution be considered an externality?

answer

The pollution has the potential for creating a health risk for water users in the region surrounding the pork production facility.

question

The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good.

answer

Budget constraint

question

Marginal thinking is best demonstrated by:

answer

measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake`

question

As a person receives more of a good, the _______________ from each additional unit of the good declines.

answer

b.
marginal utility

question

Which of the following would most likely shift the production possibilities curve inward?

answer

a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time

question

In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made.

answer

govermnet

question

In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.

answer

market-oriented economy

question

In the ____________, households work and receive payment from firms

answer

labor market

question

The circular flow diagram of economic activity is a model of the:

answer

flow of goods, services, and payments between households and firms.

question

As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good.

answer

the production possibilities frontier

question

The downward slope of the demand curve again illustrates the pattern that as _____________ rises, ______________ decreases.

answer

price, quantity demanded

question

Any given demand or supply curve is based on the ceteris paribus assumption that

answer

all else is held equal

question

When __________________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right.

answer

costs of production fall

question

___________________ are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling.

answer

Price Floors

question

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ________________.

answer

excess demand

question

A change in price of a good or service typically causes ________________ for that specific good or service.

answer

.
a movement along the curve

question

If the demand curve is perfectly elastic, then an increase in supply will:

answer

Increase the equilibrium quantity but not change the equilibrium price

question

Demand is said to be __________ when the quantity demanded changes at the same proportion as the price.

answer

Unit Elastic

question

Demand is said to be _____________ when the quantity demanded is not very responsive to changes in price.

answer

Inelastic

question

A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production.

answer

fixed costs; do not change,

question

______________ costs include all of the costs of production that increase with the quantity produced.

answer

Variable

question

Diminishing ____________________________ occur when the marginal gain in output diminishes as each additional unit of input is added.

answer

marginal returns

question

The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls.

answer

economies of scale

question

The term "constant returns to scale" describes a situation where

answer

expanding all inputs does not change the average cost of production.

question

The _____________________ curve will always lie below the curve for average cost because average cost includes _____________ in the numerator of the calculation.

answer

average variable cost; fixed costs

question

If a firm's revenues do not cover its average variable costs, then that firm has reached its ________________.

answer

shutdown point

question

A monopolist is able to maximize its profits by

answer

producing output where MR = MC and charging a price along the demand curve.

question

If the North American newsprint paper market has barriers to entry, then

answer

entry will be blocked even if firms are earning high profits.

question

When P > MC in a monopolistically competitive market, that industry will most likely produce _______________ than would be found in a perfectly competitive industry.

answer

a lower quantity of a good and charge a higher price

question

When entry occurs in a monopolistically competitive industry,

answer

the perceived demand and marginal revenue curves for each firm will shift to the left.

question

Which of the following would most likely create the setting for an oligopoly?

answer

government grants Alex, Trent, and Alyse each a patent for their respective molybdenum based electric car batteries

question

Oligopoly firms acting individually may seek to gain profits _______________.

answer

by expanding levels of output and cutting prices

question

Normal good

answer

a product whose demand rises when income rises, and vice versa

question

Inferior good

answer

a product whose demand falls when income rises, and vice versa

question

Game Theory

answer

A branch of mathematics concerned with predicting bargaining outcomes. Games such as Prisoner's Dilemma and chicken have been used to analyze various sorts of international interactions.

question

Prisoner's dilemma

answer

a scenario in which the gains from cooperation are larger than the rewards from pursuing self-interest

1 of 74

question

A price cut will increase the total revenue a firm receives if the demand for its product is:

answer

Elastic

question

The equation for the demand curve for soda, as a function of the price of soda P and the price of ice cream Pic is Q = 10 - P + 2Pic. What is the relationship between soda and ice cream?

answer

Substitute goods

question

answer

0.07

question

. The equation for the demand curve for tacos, as a function of the price of tacos P and the price of fries Pf is Q = 48 - 3P + 3Pf . What is the relationship between tacos and fries?

answer

Substitute goods

question

2. Scarcity exists because of

answer

unlimited wants and limited resources

question

Which of the following is considered to be a tell-tale signal that the point with the highest total utility has been found?

answer

A. the marginal utility per dollar is the same for both goods

question

The term _________________ refers to the additional utility provided by one additional unit of consumption

answer

marginal utility

question

9. In microeconomic terms, the ability of a good or a service to satisfy wants is called:

answer

utility

question

Economists are able to determine total utility at a given level of consumption by:

answer

summing up the marginal utilities of each unit consumed.

question

The nature of supply indicates that as the price of a good increases:

answer

more of it is produced.

question

. The term "ceteris paribus" means that

answer

all variables except those specified are constant.

question

A demand curve is a graphical illustration of the relationship between price, shown on the vertical axis, and _________________, shown on the horizontal axis.

answer

quantity demanded

question

_____________ refers to the total number of units that are produced at that price

answer

E. quantity supplied

question

The demand curve for a typical good has a(n):

answer

negative slope because some consumers switch to other goods as the price rises

question

The _________ is the only price where quantity demanded is equal to quantity supplied.

answer

Equilibrium price

question

answer

5.0

question

. The demand for a product is unit elastic. At a price of $20, 10 units of a product are sold. If the price is increased to $40, then one would expect sales to equal

answer

5 units

question

As the _______________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left.

answer

high-skill labor or technology

question

A 25 percent decrease in the price of breakfast cereal leads to a 30 percent increase in the quantity of cereal demanded. As a result:

answer

total revenue will increase.

question

A 10 percent increase in the price of soda leads to a 20 percent increase in the quantity of iced tea demanded. It appears that:

answer

D. cross-price elasticity of demand for iced tea is -2.

question

answer

. inelastic; elastic

question

The equation for the demand curve for flour, as a function of the price of flour P and income I, is Q = 10 - P + I. What kind of good is flour?

answer

C. normal good

question

1. A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production.

answer

c. fixed costs; do not change

question

The term "increasing returns to scale" describes a situation where

answer

s the quantity of output rises the average cost of production falls

question

In the framework of monopolistic competition, advertising works because it causes

answer

a steeper perceived demand curve, as well as a perceived demand curve to shift to the right

question

. Which of the following would most likely create the setting for an oligopoly?

answer

government grants Alex, Trent, and Alyse each a patent for their respective molybdenum based electric car batteries

question

The demand curve as perceived by a monopolistic competitor is

answer

c. downward sloping

question

If the firm is producing at a quantity of output where marginal revenue exceeds marginal cost, then,

answer

each marginal unit adds profit by bringing in more revenue than its cost

question

answer

competition and consumers by allowing firms to operate more efficiently

question

Antitrust regulations would most likely require one of the following in order to determine whether or not a merger may enhance competition. Which one is it?

answer

. analysis using numerical tools.

question

If the largest four firms in an industry account for less than half of market sales, their industry, as measured by the concentration ratio

answer

a. would be considered to be competitive

question

The branch of mathematics that analyzes situations in which players must make decisions and then receive payoffs most often used by economists is

answer

game theory

question

answer

c. monopolistic competition

question

If a perfectly competitive firm raises its price, the quantity demanded of its product ____________.

answer

b. falls to zero

question

In game theory, a Nash equilibrium is

answer

. an outcome in which no player wishes to change her chosen strategy given the strategies chosen by the other players

question

he paradoxical nature of oligopoly can be demonstrated by the fact that, even though the monopoly outcome is best for the oligopolists,

answer

b. they have incentives to increase production above the monopoly outcome.

question

A firm's supply curve for a product reflects the

answer

c. private cost to sellers of producing the product.

question

When a market is characterized by an externality, the government

answer

can correct the market failure in the case of both positive and negative externalities by inducing market participants to internalize the externality, using taxes or subsidie

question

8. Suppose that large-scale pork production has the potential to create ground water pollution. Why might this type of pollution be considered an externality?

answer

The pollution has the potential for creating a health risk for water users in the region surrounding the pork production facility.

question

The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good.

answer

Budget constraint

question

Marginal thinking is best demonstrated by:

answer

measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake`

question

As a person receives more of a good, the _______________ from each additional unit of the good declines.

answer

b.
marginal utility

question

Which of the following would most likely shift the production possibilities curve inward?

answer

a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time

question

In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made.

answer

govermnet

question

In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.

answer

market-oriented economy

question

In the ____________, households work and receive payment from firms

answer

labor market

question

The circular flow diagram of economic activity is a model of the:

answer

flow of goods, services, and payments between households and firms.

question

As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good.

answer

the production possibilities frontier

question

The downward slope of the demand curve again illustrates the pattern that as _____________ rises, ______________ decreases.

answer

price, quantity demanded

question

Any given demand or supply curve is based on the ceteris paribus assumption that

answer

all else is held equal

question

When __________________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right.

answer

costs of production fall

question

___________________ are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling.

answer

Price Floors

question

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ________________.

answer

excess demand

question

A change in price of a good or service typically causes ________________ for that specific good or service.

answer

.
a movement along the curve

question

If the demand curve is perfectly elastic, then an increase in supply will:

answer

Increase the equilibrium quantity but not change the equilibrium price

question

Demand is said to be __________ when the quantity demanded changes at the same proportion as the price.

answer

Unit Elastic

question

Demand is said to be _____________ when the quantity demanded is not very responsive to changes in price.

answer

Inelastic

question

A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production.

answer

fixed costs; do not change,

question

______________ costs include all of the costs of production that increase with the quantity produced.

answer

Variable

question

Diminishing ____________________________ occur when the marginal gain in output diminishes as each additional unit of input is added.

answer

marginal returns

question

The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls.

answer

economies of scale

question

The term "constant returns to scale" describes a situation where

answer

expanding all inputs does not change the average cost of production.

question

The _____________________ curve will always lie below the curve for average cost because average cost includes _____________ in the numerator of the calculation.

answer

average variable cost; fixed costs

question

If a firm's revenues do not cover its average variable costs, then that firm has reached its ________________.

answer

shutdown point

question

A monopolist is able to maximize its profits by

answer

producing output where MR = MC and charging a price along the demand curve.

question

If the North American newsprint paper market has barriers to entry, then

answer

entry will be blocked even if firms are earning high profits.

question

When P > MC in a monopolistically competitive market, that industry will most likely produce _______________ than would be found in a perfectly competitive industry.

answer

a lower quantity of a good and charge a higher price

question

When entry occurs in a monopolistically competitive industry,

answer

the perceived demand and marginal revenue curves for each firm will shift to the left.

question

Which of the following would most likely create the setting for an oligopoly?

answer

government grants Alex, Trent, and Alyse each a patent for their respective molybdenum based electric car batteries

question

Oligopoly firms acting individually may seek to gain profits _______________.

answer

by expanding levels of output and cutting prices

question

Normal good

answer

a product whose demand rises when income rises, and vice versa

question

Inferior good

answer

a product whose demand falls when income rises, and vice versa

question

Game Theory

answer

A branch of mathematics concerned with predicting bargaining outcomes. Games such as Prisoner's Dilemma and chicken have been used to analyze various sorts of international interactions.

question

Prisoner's dilemma

answer

a scenario in which the gains from cooperation are larger than the rewards from pursuing self-interest

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