ECON 2302 Exam 2: Chapters 6-11

question

The price of stadium seats at a baseball game increases from $20 to $30 and ticket sales fall from 45,000 per game to 35,000 per game. If other things remained constant, then it appears that the price elasticity of demand is:

answer

inelastic

question

**
Refer to Exhibit 6-2. The graph that best illustrates a perfectly elastic demand curve is.

answer

Graph B

question

**
Refer to Exhibit 6-3. Graph B represents a demand curve that is relatively ___. Total revenue ____ as the price decreases from $10 to $5.

answer

inelastic; decreases

question

Good A has an income elasticity equal to -.8 and a cross price elasticity with respect to Good B go -.75, Then:

answer

Good A is an inferior good and Goods A and B are complements.

question

A tax is imposed on orange juice. Consumers will bear no burden from this tax if the :

answer

demand for orange juice is perfectly elastic, and the supply curve for orange juice is perfectly inelastic.

question

If the short run elasticity of demand for a good was greater than 1, an increase in the price of the good would tend to:

answer

decrease total revenue in the short run and the long run, but by more in the long run.

question

When the number of drilling rigs in operation increases by 20% when the price of oil increases by 50%, then the supply of drilling rigs is:

answer

inelastic

question

The government wanted to tax to raise a great deal of revenue but not burden producers much, it would want to tax an industry with:

answer

elastic supply and inelastic demand

question

The difference between the value of a good to consumers and its price is known as:

answer

consumer surplus

question

**
Refer to Exhibit 7-3. What is the producer surplus of the 10th unit bought/sold.

answer

2.25

question

**
Refer to Exhibit 7-9. The deadweight loss of a tax is area:

answer

c+e

question

Other things being equal, the less elastic demand is:

answer

all of the above:
the lower the deadweight loss is resulting from the imposition of a given tax on a product,
the greater the burden is of the tax borne by consumers,
the greater the tax revenue collected by the government is

question

**
Refer to Exhibit 7-10. The producer surplus after the subsidy is area:

answer

c+d+b+e

question

**
Refer to Exhibit 7-12. When the government buys the surplus, the cost to government (tax payers) after the price floor is area:

answer

c+d+f+g+h+i

question

An externality occurs when

answer

people other than those making the demand and supply decisions share the benefits or the costs of an activity.

question

The reason why national defense is commonly provided by the government, while food is not, is that food:

answer

can easily be withheld from those who refuse to pay for it.

question

Signaling is important because:

answer

it reduced information costs associated with asymmetric information.

question

**
Refer to Exhibit 8-2. The supply curve S social includes the following costs.

answer

private costs and external costs

question

A tax equal to the external costs on firms that emit pollutants would:

answer

provide from with the incentive to decrease the level of activity creating the pollution

question

The optimal quantity of pollution control occurs where:

answer

the marginal social benefit of pollution control just equals the marginal social cost.

question

Which of the following is a rival good that is non excludable?

answer

common resource

question

Which of the following is an example of moral hazard?

answer

an individual drives less cautiously after obtaining automobile insurance.

question

A consumer's switch to another similar good when the price of the preferred good increases is termed as:

answer

substitution effect

question

The amour of added unity that an individual derives from consuming one more unit of good or service is called:

answer

marginal utility

question

The law of diminishing marginal utility states that:

answer

the increase in total utility consuming an additional unit decreases as consumption increases.

question

The total utility form consuming five cups of coffee is 15, 27, 37, 46, and 54 until, respectively. The marginal utility of the fourth cup of coffee is:

answer

question

For Brent, if the marginal utility of sleeping an extra hour, form 8 am to 9 am, is negative:

answer

Brent is better off getting up at 8 am

question

Which of the following occurs when a consumer equilibrium has been achieved?

answer

the ratio of the marginal utility of each good divided by its price is equal across all goods consumed.

question

Popeye receives a marginal utility of 12 utils for the last can of spinach consumed. If the price of the can of spinach is 50 cents per can, then the marginal utility per dollar spend on the last can of spinach is equal to :

answer

24 utils per dollar

question

The law of diminishing marginal utility implies:

answer

that demand curves are downward-sloping.

question

If the marginal utility per dollar spent on Good X exceeds that of Good Y, the utility-macimizing consumer should:

answer

buy less of Good Y and more of Good X

question

**
Refer to Exhibit 10-1. How many hamburgers and milkshakes will be consumed each if the consumer maximizes his utility subject to $11 of income each week?

answer

4 hamburgers and 3 milkshakes

question

Accounting profits are calculated based upon:

answer

actual cash receipts and actual expenditured of cash

question

A firm replaces a machine by hiring 3 hourly production workers instead.

answer

Its fixed costs will fall and its variable costs will rise.

question

When a firm makes zero economic profit, it means that:

answer

the firm is covering the total opportunity costs of its resources.

question

The marginal product of labor can be defined as:

answer

the change in total output divided by the change in labor, other factors of production held constant.

question

**
Refer to Table 11-1. The marginal product begins to diminish with the addition of the ___ picker.

answer

fourth

question

**
Refer to Table 11-1. The marginal product of labor becomes negative with the addition of the __ picker.

answer

ninth

question

**
Refer to Figure 11-3. The marginal cost curve is the curve labeled:

answer

question

A firm is producing 1,000 units of output for which the average variable cost of production equals to 50 cents. The firm's total fixed costs equal $700. The total cost of producing 1,000 units of output equals:

answer

$1,200

question

**
Defer to Figure 11-4. At output level Q, total costs equals:

answer

area ADQ0

question

When average total costs is decreasing as output expands:

answer

marginal cost must be less than average total cost

question

The region of economics of scale is that in which:

answer

long-run average total cost is falling as output expands

question

The long run:

answer

is a period in which there are no fixed costs

question

**
Refer to Figure 11-6. The region 'z', where the long run ATC rises at the higher levels of output, refers to:

answer

diseconomies of scale

1 of 45

question

answer

inelastic

question

**
Refer to Exhibit 6-2. The graph that best illustrates a perfectly elastic demand curve is.

answer

Graph B

question

**
Refer to Exhibit 6-3. Graph B represents a demand curve that is relatively ___. Total revenue ____ as the price decreases from $10 to $5.

answer

inelastic; decreases

question

Good A has an income elasticity equal to -.8 and a cross price elasticity with respect to Good B go -.75, Then:

answer

Good A is an inferior good and Goods A and B are complements.

question

A tax is imposed on orange juice. Consumers will bear no burden from this tax if the :

answer

demand for orange juice is perfectly elastic, and the supply curve for orange juice is perfectly inelastic.

question

If the short run elasticity of demand for a good was greater than 1, an increase in the price of the good would tend to:

answer

decrease total revenue in the short run and the long run, but by more in the long run.

question

When the number of drilling rigs in operation increases by 20% when the price of oil increases by 50%, then the supply of drilling rigs is:

answer

inelastic

question

The government wanted to tax to raise a great deal of revenue but not burden producers much, it would want to tax an industry with:

answer

elastic supply and inelastic demand

question

The difference between the value of a good to consumers and its price is known as:

answer

consumer surplus

question

**
Refer to Exhibit 7-3. What is the producer surplus of the 10th unit bought/sold.

answer

2.25

question

**
Refer to Exhibit 7-9. The deadweight loss of a tax is area:

answer

c+e

question

Other things being equal, the less elastic demand is:

answer

question

**
Refer to Exhibit 7-10. The producer surplus after the subsidy is area:

answer

c+d+b+e

question

**
Refer to Exhibit 7-12. When the government buys the surplus, the cost to government (tax payers) after the price floor is area:

answer

c+d+f+g+h+i

question

An externality occurs when

answer

people other than those making the demand and supply decisions share the benefits or the costs of an activity.

question

The reason why national defense is commonly provided by the government, while food is not, is that food:

answer

can easily be withheld from those who refuse to pay for it.

question

Signaling is important because:

answer

it reduced information costs associated with asymmetric information.

question

**
Refer to Exhibit 8-2. The supply curve S social includes the following costs.

answer

private costs and external costs

question

A tax equal to the external costs on firms that emit pollutants would:

answer

provide from with the incentive to decrease the level of activity creating the pollution

question

The optimal quantity of pollution control occurs where:

answer

the marginal social benefit of pollution control just equals the marginal social cost.

question

Which of the following is a rival good that is non excludable?

answer

common resource

question

Which of the following is an example of moral hazard?

answer

an individual drives less cautiously after obtaining automobile insurance.

question

A consumer's switch to another similar good when the price of the preferred good increases is termed as:

answer

substitution effect

question

The amour of added unity that an individual derives from consuming one more unit of good or service is called:

answer

marginal utility

question

The law of diminishing marginal utility states that:

answer

the increase in total utility consuming an additional unit decreases as consumption increases.

question

The total utility form consuming five cups of coffee is 15, 27, 37, 46, and 54 until, respectively. The marginal utility of the fourth cup of coffee is:

answer

question

For Brent, if the marginal utility of sleeping an extra hour, form 8 am to 9 am, is negative:

answer

Brent is better off getting up at 8 am

question

Which of the following occurs when a consumer equilibrium has been achieved?

answer

the ratio of the marginal utility of each good divided by its price is equal across all goods consumed.

question

answer

24 utils per dollar

question

The law of diminishing marginal utility implies:

answer

that demand curves are downward-sloping.

question

If the marginal utility per dollar spent on Good X exceeds that of Good Y, the utility-macimizing consumer should:

answer

buy less of Good Y and more of Good X

question

**
Refer to Exhibit 10-1. How many hamburgers and milkshakes will be consumed each if the consumer maximizes his utility subject to $11 of income each week?

answer

4 hamburgers and 3 milkshakes

question

Accounting profits are calculated based upon:

answer

actual cash receipts and actual expenditured of cash

question

A firm replaces a machine by hiring 3 hourly production workers instead.

answer

Its fixed costs will fall and its variable costs will rise.

question

When a firm makes zero economic profit, it means that:

answer

the firm is covering the total opportunity costs of its resources.

question

The marginal product of labor can be defined as:

answer

the change in total output divided by the change in labor, other factors of production held constant.

question

**
Refer to Table 11-1. The marginal product begins to diminish with the addition of the ___ picker.

answer

fourth

question

**
Refer to Table 11-1. The marginal product of labor becomes negative with the addition of the __ picker.

answer

ninth

question

**
Refer to Figure 11-3. The marginal cost curve is the curve labeled:

answer

question

answer

$1,200

question

**
Defer to Figure 11-4. At output level Q, total costs equals:

answer

area ADQ0

question

When average total costs is decreasing as output expands:

answer

marginal cost must be less than average total cost

question

The region of economics of scale is that in which:

answer

long-run average total cost is falling as output expands

question

The long run:

answer

is a period in which there are no fixed costs

question

**
Refer to Figure 11-6. The region 'z', where the long run ATC rises at the higher levels of output, refers to:

answer

diseconomies of scale

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order