ECON 203 Midterm 2 - Assignment Essays

question

Scarcity requires that we

answer

Make choices about what goods and services to produce

question

In the circular flow model, labor is bought and sold in the

answer

resource/factor market

question

The statement that "increases in the tax on gasoline increase the price of gasoline" is an example of a

answer

Positive statement

question

A rational choice is one that

answer

uses the available resources to most effectively satisfy the wants of the person making the choice.

question

Which of the following is a normative statement?

answer

Flood victims should pay for their own rebuilding.

question

Scarcity

answer

is the inability to satisfy all our wants.

question

A statement that "All children should receive free health care" is an example of what kind of statement?

answer

a normative statement

question

Which of the following is a topic studied in macroeconomics?

answer

The effect on economic growth if the government raises taxes

question

In the circular flow model, goods and services are bought and sold in the

answer

product market.

question

Which of the following statements is a positive statement?

answer

Online shopping increased by 50 percent this Christmas season.

question

The figure above shows the production possibilities curve for a country. A combination of 4 million gallons of milk and 4 million gallons of ice cream is

answer

unattainable

question

The production possibilities curve illustrates the

answer

maximum combinations of goods and services that can be produced.

question

When all of the available factors of production are being efficiently employed, the

answer

economy is producing at a point on its PPC.

question

As an economy grows, its PPC

answer

shifts outward

question

In order for Ireland to grow more potatoes, wool production must decrease. This situation is an example of

answer

a tradeoff

question

A recession, during which unemployment increases, will place an economy

answer

inside its production possibilities curve.

question

The figure above shows the production possibilities curve for a country. In order for it to produce at point E, the

answer

country would need to acquire more resources and/or more advanced technology.

question

Which of the following could lead the production possibilities curve to shift inward?

answer

an earthquake that destroys several major factories

question

The figure above shows the production possibilities curve for a country. If the country is producing at point D, then the

answer

resources are not being used efficiently and/or are unemployed.

question

If macaroni and cheese is an inferior good, then a decrease in income results in

answer

an increase in the demand for macaroni and cheese.

question

Computer chips are a normal good. Suppose the economy slips into a recession so that income falls. As a result, the demand for computer chips ________ which causes the price of a computer chip to ________.

answer

decreases; fall

question

Suppose that the equilibrium price and quantity of new houses both increase. Which of the following could be a cause of this change?

answer

More home buyers might have moved into the area.

question

A surplus of cardboard boxes means that

answer

at the current price of a cardboard box, the quantity demanded is less than the quantity supplied.

question

The table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price of a gallon of gasoline is $3.73, then

answer

there is a surplus of gasoline in Tulsa.

question

The "quantity demanded" of any good or service is ________ during a specified time period and at a specified price.

answer

the amount people are willing and able to buy

question

If a 4 percent change in the price of a good leads to a 3 percent change in quantity demanded, the price elasticity of demand equals

answer

0.75

question

Total revenue equals

answer

price × quantity sold.

question

Suppose the current price of barley is $7 per bushel and at that price 100,000 bushels are demanded. If the price of barley rises 14% and quantity demanded decreases by 23% what is the price elasticity of demand for barley?

answer

1.64

question

If the demand for insulin is inelastic, an increase in insulin prices leads to

answer

more total revenue for insulin makers

question

During January of 2007, the average price of regular unleaded gasoline in Oakland, California increased 11.0 percent. If the price elasticity of demand for gasoline was 0.13, the price hike means that the quantity demanded decreased by

answer

1.43 percent.

question

Suppose the New Orleans Saints lowers ticket prices by 13 percent and as a result the quantity of tickets demanded increases by 21 percent. This response means that the price elasticity of demand for Saints tickets is

answer

elastic

question

a price ______ is a legally established maximum price.

answer

ceiling

question

When the percentage change in the quantity demanded is greater than the percentage change in price, then price elasticity of demand is

answer

elastic

question

The price elasticity of demand is a measure of

answer

buyers' responsiveness to changes in the price of a product.

question

Chuck owns a factory that produces leather footballs. His total fixed cost equaled $86,000 last year. His total cost equaled $286,000 last year. Hence Chuck's

answer

total variable cost equaled $200,000.

question

Average total cost is equal to

answer

Answer A and answer B are correct.

question

The cost that a firm pays in money to hire a resource is referred to as a ________ cost.

answer

explicit

question

The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table. Based on the table, the marginal cost of producing the fourth gallon of ice cream is

answer

question

Which of the following is an explicit cost in Jim's business venture?

answer

the wages Jim pays his workers

question

The cost that does not change as output changes is

answer

fixed cost

question

Frank owns a hotdog stand. His variable costs for producing different quantity of hotdogs is displayed above. What is is average variable cost if he produces 30 hotdogs?

answer

$2.03

question

An insurance agent rents a building and has a three-year lease. An increase in the rent for the building increases the agent's

answer

total fixed cost and average fixed cost.

question

The primary goal of a firm is to

answer

maximize profit.

question

Marginal cost equals

answer

the change in total cost divided by the change in output.

question

Using the figure above, what is the profit that the firm can earn?

answer

$1200

question

The above figure shows a perfectly competitive firm. If the market price is $15, the firm

answer

is earning an economic profit.

question

A firm maximizes its profit by producing an amount of output where

answer

marginal revenue equals marginal cost.

question

Using the figure above, what is the total revenue?

answer

$5600

question

If a firms average total cost curve is never below the demand curve, can the firm make a positive economic profit?

answer

question

Using the figure above, what is the optimal price?

answer

$28

question

Marginal revenue is

answer

the change in total revenue from a one-unit increase in the quantity sold.

question

For a perfectly competitive firm, marginal revenue is

answer

equal to the price.

question

Using the figure above, what is the optimal quantity?

answer

200

question

A perfectly competitive firm

answer

sells homogenous products

question

Using the figure above, what is the total cost?

answer

M x B

question

To maximize its profit, a perfectly competitive firm sets quantity produced (Q) where ________ and a monopolist sets quantity produced (Q) where ________.

answer

MR = MC; MR = MC

question

The good produced by a monopoly

answer

has no close substitutes.

question

Suppose the Busy Bee Caf is the monopoly producer of hamburgers in Hugo, Oklahoma. The above figure represents the demand, marginal revenue, and marginal cost curves for this establishment. How many hamburgers will Busy Bee Caf make and sell per hour?

answer

20 hamburgers

question

Using the figure above, what is the total revenue?

answer

M x A

question

A major characteristic of monopoly is

answer

a single seller of a product.

question

Using the figure above, what is the quantity that would lead to a maximization of profit (Q*)?

answer

question

Suppose the Busy Bee Caf is the monopoly producer of hamburgers in Hugo, Oklahoma. The above figure represents the demand, marginal revenue, and marginal cost curves for this establishment. What price will the Busy Bee charge to maximize its profit?

answer

$3.00 for a hamburger

question

Using the figure above, what is the price that would lead to a maximization of profit (P*)?

answer

question

Collusion occurs when

answer

firms work together to maximize joint profits.

question

Suppose MCI and AT&T can each charge either 3¢ or 4¢ a minute for a long distance call. The above table illustrates the payoffs, in millions of dollars, from each of the four possible outcomes that could occur. If MCI charges 4¢ a minute and AT&T charges 4¢ a minute, then MCI's profit will be ________ million and AT&T's profit will be ________ million.

answer

$320; $320

question

Monopolistic competition is identified by

answer

many firms producing a slightly differentiated product.

question

The only two firms in a market are trying to decide what price to charge. The payoff matrix for this game is shown above. The payoffs are thousands of dollars of economic profit. If Firm A will sets its price at $10 what profit will Firm B likely earn?

answer

$40,000

question

Suppose a monopolist can sell 3 units of a good at $20 per unit. If the monopolist want to increases the quantity it sells to 4 units it would have to reduce the price to $18 per unit. What is the marginal revenue of the fourth unit?

answer

$12

question

A supply curve

answer

Both answers B and C are correct.

question

demand schedule

answer

list of the quantities demanded at each different price when all other influences on buying plans remain the same

question

Consumers regard Dell computers and Apple computers as substitutes. If the price of a Dell computer decreases, the

answer

demand for Apple computers decreases.

question

The law of supply states that, other things constent,

answer

if the price of a good increases, the quantity supplied increases.

question

As population increases,

answer

the PPC shifts outward.

question

answer

$60,000

question

If a few oil-producing countries in the Middle East decide to jointly limit the production of oil,

answer

they are forming a cartel.

question

The only two firms in a market are trying to decide what price to charge. The payoff matrix for this game is shown above. The payoffs are thousands of dollars of economic profit. If Firm A sets its price at $20 what price will Firm B likely charge?

answer

$10

1 of 76

question

Scarcity requires that we

answer

Make choices about what goods and services to produce

question

In the circular flow model, labor is bought and sold in the

answer

resource/factor market

question

The statement that "increases in the tax on gasoline increase the price of gasoline" is an example of a

answer

Positive statement

question

A rational choice is one that

answer

uses the available resources to most effectively satisfy the wants of the person making the choice.

question

Which of the following is a normative statement?

answer

Flood victims should pay for their own rebuilding.

question

Scarcity

answer

is the inability to satisfy all our wants.

question

A statement that "All children should receive free health care" is an example of what kind of statement?

answer

a normative statement

question

Which of the following is a topic studied in macroeconomics?

answer

The effect on economic growth if the government raises taxes

question

In the circular flow model, goods and services are bought and sold in the

answer

product market.

question

Which of the following statements is a positive statement?

answer

Online shopping increased by 50 percent this Christmas season.

question

The figure above shows the production possibilities curve for a country. A combination of 4 million gallons of milk and 4 million gallons of ice cream is

answer

unattainable

question

The production possibilities curve illustrates the

answer

maximum combinations of goods and services that can be produced.

question

When all of the available factors of production are being efficiently employed, the

answer

economy is producing at a point on its PPC.

question

As an economy grows, its PPC

answer

shifts outward

question

In order for Ireland to grow more potatoes, wool production must decrease. This situation is an example of

answer

a tradeoff

question

A recession, during which unemployment increases, will place an economy

answer

inside its production possibilities curve.

question

The figure above shows the production possibilities curve for a country. In order for it to produce at point E, the

answer

country would need to acquire more resources and/or more advanced technology.

question

Which of the following could lead the production possibilities curve to shift inward?

answer

an earthquake that destroys several major factories

question

The figure above shows the production possibilities curve for a country. If the country is producing at point D, then the

answer

resources are not being used efficiently and/or are unemployed.

question

If macaroni and cheese is an inferior good, then a decrease in income results in

answer

an increase in the demand for macaroni and cheese.

question

answer

decreases; fall

question

Suppose that the equilibrium price and quantity of new houses both increase. Which of the following could be a cause of this change?

answer

More home buyers might have moved into the area.

question

A surplus of cardboard boxes means that

answer

at the current price of a cardboard box, the quantity demanded is less than the quantity supplied.

question

The table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price of a gallon of gasoline is $3.73, then

answer

there is a surplus of gasoline in Tulsa.

question

The "quantity demanded" of any good or service is ________ during a specified time period and at a specified price.

answer

the amount people are willing and able to buy

question

If a 4 percent change in the price of a good leads to a 3 percent change in quantity demanded, the price elasticity of demand equals

answer

0.75

question

Total revenue equals

answer

price × quantity sold.

question

answer

1.64

question

If the demand for insulin is inelastic, an increase in insulin prices leads to

answer

more total revenue for insulin makers

question

answer

1.43 percent.

question

answer

elastic

question

a price ______ is a legally established maximum price.

answer

ceiling

question

When the percentage change in the quantity demanded is greater than the percentage change in price, then price elasticity of demand is

answer

elastic

question

The price elasticity of demand is a measure of

answer

buyers' responsiveness to changes in the price of a product.

question

Chuck owns a factory that produces leather footballs. His total fixed cost equaled $86,000 last year. His total cost equaled $286,000 last year. Hence Chuck's

answer

total variable cost equaled $200,000.

question

Average total cost is equal to

answer

Answer A and answer B are correct.

question

The cost that a firm pays in money to hire a resource is referred to as a ________ cost.

answer

explicit

question

The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table. Based on the table, the marginal cost of producing the fourth gallon of ice cream is

answer

question

Which of the following is an explicit cost in Jim's business venture?

answer

the wages Jim pays his workers

question

The cost that does not change as output changes is

answer

fixed cost

question

Frank owns a hotdog stand. His variable costs for producing different quantity of hotdogs is displayed above. What is is average variable cost if he produces 30 hotdogs?

answer

$2.03

question

An insurance agent rents a building and has a three-year lease. An increase in the rent for the building increases the agent's

answer

total fixed cost and average fixed cost.

question

The primary goal of a firm is to

answer

maximize profit.

question

Marginal cost equals

answer

the change in total cost divided by the change in output.

question

Using the figure above, what is the profit that the firm can earn?

answer

$1200

question

The above figure shows a perfectly competitive firm. If the market price is $15, the firm

answer

is earning an economic profit.

question

A firm maximizes its profit by producing an amount of output where

answer

marginal revenue equals marginal cost.

question

Using the figure above, what is the total revenue?

answer

$5600

question

If a firms average total cost curve is never below the demand curve, can the firm make a positive economic profit?

answer

question

Using the figure above, what is the optimal price?

answer

$28

question

Marginal revenue is

answer

the change in total revenue from a one-unit increase in the quantity sold.

question

For a perfectly competitive firm, marginal revenue is

answer

equal to the price.

question

Using the figure above, what is the optimal quantity?

answer

200

question

A perfectly competitive firm

answer

sells homogenous products

question

Using the figure above, what is the total cost?

answer

M x B

question

To maximize its profit, a perfectly competitive firm sets quantity produced (Q) where ________ and a monopolist sets quantity produced (Q) where ________.

answer

MR = MC; MR = MC

question

The good produced by a monopoly

answer

has no close substitutes.

question

answer

20 hamburgers

question

Using the figure above, what is the total revenue?

answer

M x A

question

A major characteristic of monopoly is

answer

a single seller of a product.

question

Using the figure above, what is the quantity that would lead to a maximization of profit (Q*)?

answer

question

Suppose the Busy Bee Caf is the monopoly producer of hamburgers in Hugo, Oklahoma. The above figure represents the demand, marginal revenue, and marginal cost curves for this establishment. What price will the Busy Bee charge to maximize its profit?

answer

$3.00 for a hamburger

question

Using the figure above, what is the price that would lead to a maximization of profit (P*)?

answer

question

Collusion occurs when

answer

firms work together to maximize joint profits.

question

answer

$320; $320

question

Monopolistic competition is identified by

answer

many firms producing a slightly differentiated product.

question

answer

$40,000

question

answer

$12

question

A supply curve

answer

Both answers B and C are correct.

question

demand schedule

answer

list of the quantities demanded at each different price when all other influences on buying plans remain the same

question

Consumers regard Dell computers and Apple computers as substitutes. If the price of a Dell computer decreases, the

answer

demand for Apple computers decreases.

question

The law of supply states that, other things constent,

answer

if the price of a good increases, the quantity supplied increases.

question

As population increases,

answer

the PPC shifts outward.

question

answer

$60,000

question

If a few oil-producing countries in the Middle East decide to jointly limit the production of oil,

answer

they are forming a cartel.

question

The only two firms in a market are trying to decide what price to charge. The payoff matrix for this game is shown above. The payoffs are thousands of dollars of economic profit. If Firm A sets its price at $20 what price will Firm B likely charge?

answer

$10

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