question
For MOST firms, economic profit is:
answer
less than accounting profit.
question
Money that must be paid for the use of factors of production such as labor and capital is
an:
an:
answer
explicit cost.
question
The sum of fixed and variable costs is _____ cost.
answer
total
question
If labor is abundant in South Africa but capital is scarce, when South Africa opens to
trade, the price of labor will _____ and the price of capital will _____.
trade, the price of labor will _____ and the price of capital will _____.
answer
rise; fall
question
In economics, the short run is:
answer
enough time to vary output but not plant capacity.
question
The law of diminishing marginal utility indicates that the slope of the marginal utility
curve is generally:
curve is generally:
answer
negative.
question
Chuck spends all of his income on tacos and milkshakes. His income is $100, the price
of tacos is $10, and the price of milkshakes is $2. If the price of each good doubles and
Chuck's income doubles:
of tacos is $10, and the price of milkshakes is $2. If the price of each good doubles and
Chuck's income doubles:
answer
Chuck's budget line will be unaffected.
question
An example of a tariff is a:
answer
tax of 10% of the value of each Honda automobile imported from Japan.
question
In making an "either-or" decision:
answer
choose the activity that results in the greater economic profit.
question
An urbanized country has 100 million workers living on 100 square miles of land. A country that is principally rural has 1 million workers living on 10 square miles of land.
From this information we know that the urbanized country is _____ relative to the rural
country.
From this information we know that the urbanized country is _____ relative to the rural
country.
answer
labor-abundant
question
If marginal cost is GREATER than average total cost:
answer
average total cost is increasing.
question
Kawamura
, a careful utility maximizer, consumes peanut butter and ice cream. Assume
that both peanut butter and ice cream are normal goods and that diminishing marginal
utility applies to both goods. Right after he achieves the utility
-
maximizing level of
consumpt
ion of the two goods, the price of peanut butter falls. After he adjusts to this
event, the marginal utility of peanut butter goes _____ and that of ice cream goes _____.
, a careful utility maximizer, consumes peanut butter and ice cream. Assume
that both peanut butter and ice cream are normal goods and that diminishing marginal
utility applies to both goods. Right after he achieves the utility
-
maximizing level of
consumpt
ion of the two goods, the price of peanut butter falls. After he adjusts to this
event, the marginal utility of peanut butter goes _____ and that of ice cream goes _____.
answer
down; up
question
Bessie
wants to calculate the accounting and economic profits of her cattle farm in
Nebraska. She pays $30,000 per year in overhead, $80,000 in wages, and $20,000 in
insurance. She forgoes $30,000 per year that she could make as a teacher. If her total
revenue e
quals $140,000, that means her accounting profit is _____ and her economic
profit is _____.
wants to calculate the accounting and economic profits of her cattle farm in
Nebraska. She pays $30,000 per year in overhead, $80,000 in wages, and $20,000 in
insurance. She forgoes $30,000 per year that she could make as a teacher. If her total
revenue e
quals $140,000, that means her accounting profit is _____ and her economic
profit is _____.
answer
$10,000;
-
$20,000
-
$20,000
question
Wolfgang really likes both rutabagas
and broccoli. The price of each good is $0.60 per
pound and Wolfgang is maximizing utility. At the point of maximal utility, the marginal
utility of:
and broccoli. The price of each good is $0.60 per
pound and Wolfgang is maximizing utility. At the point of maximal utility, the marginal
utility of:
answer
rutabagas and broccoli is the same.
question
Freddy has eaten three corn dogs at the county fair, and if he eats another, he will get
sick on the roller coaster. Knowing this, and ignoring any impact tha
t price might have
on his decision, we can say that, for the fourth corn dog, the:
sick on the roller coaster. Knowing this, and ignoring any impact tha
t price might have
on his decision, we can say that, for the fourth corn dog, the:
answer
marginal utility is less than zero.
question
"Diminishing marginal returns" means that:
answer
each additional unit of an input will increase output, but by smaller and smaller
amounts as inputs increase.
amounts as inputs increase.
question
Costs that are included in the economic concept of cost but that are NOT explicit costs
are:
are:
answer
implicit costs.
question
You own a deli. Which input of production is MOST likely fixed at your deli?
answer
the dining room
question
An "either
-
or" decision entails:
-
or" decision entails:
answer
a choice between two activities.
question
The long
-
run average cost curve will be upward
-
sloping when the firm has:
-
run average cost curve will be upward
-
sloping when the firm has:
answer
diseconomies of scale.
question
In economic analysis, the principle of marginal analysis refers to:
answer
the result that the optimal quantity of an
activity is that at which marginal benefit is
equal to marginal cost.
activity is that at which marginal benefit is
equal to marginal cost.
question
Which good is MOST likely to display increasing marginal utility over some range?
answer
paint, because you need enough to paint at least one entire room
question
A tariff _____ the price received by domestic producers and _____ the price paid by domestic consumers.
answer
increases; increases
question
Suppose Cyd knows the a
verage total cost of producing 9 scones is $5, while the
average total cost of producing 10 scones is $5.20. What is the marginal cost of the tenth
scone?
verage total cost of producing 9 scones is $5, while the
average total cost of producing 10 scones is $5.20. What is the marginal cost of the tenth
scone?
answer
$7.00
question
The United States must give up the production of 500
bicycles to produce 20 additional
tractors. The opportunity cost of producing 100 bicycles is _____ tractor(s).
bicycles to produce 20 additional
tractors. The opportunity cost of producing 100 bicycles is _____ tractor(s).
answer
4
question
The amount by which an additional unit of an activity increases total cost is:
answer
marginal cost.
question
Saudi Arabia has a trem
endous comparative advantage in petroleum. Which factor is a
source of this comparative advantage?
endous comparative advantage in petroleum. Which factor is a
source of this comparative advantage?
answer
large reserves of crude oil
question
Krista's dry
-
cleaning business incurs $900 per month in fixed costs. Last month her total
output was 3,000 pounds of clothes. This month her total output fell to 2,700 pounds.
This means her average fixed cost _____ by a little more than _____ cents.
-
cleaning business incurs $900 per month in fixed costs. Last month her total
output was 3,000 pounds of clothes. This month her total output fell to 2,700 pounds.
This means her average fixed cost _____ by a little more than _____ cents.
answer
increased; 3.33
question
Xavier notices that the marginal utility of working with a tutor seems to fall with each
hour the tutor helps him study. If Xavier keeps the tutor until his grade actually begins
to fall, his marginal utility for the last hour of tutoring will be:
hour the tutor helps him study. If Xavier keeps the tutor until his grade actually begins
to fall, his marginal utility for the last hour of tutoring will be:
answer
negative.
question
If two firms are identical in all respects except that one has more of the fixed input
capital than another, the total product curve for the firm with more capital:
capital than another, the total product curve for the firm with more capital:
answer
will lie above the total product curve for the firm with less capital.
question
In the long run, all costs are:
answer
variable.
question
Marginal benefit:
answer
is the addition to total benefit due to undertaking one more unit of an activity.
question
.
Which model states that nations that are abundant in a factor will have a comparative
advantage in a good whose production is intensive in that factor?
Which model states that nations that are abundant in a factor will have a comparative
advantage in a good whose production is intensive in that factor?
answer
the Heckscher
-
Ohlin model
-
Ohlin model
question
Economists identify the satisfaction a person derives from the consumption of goods
and services as:
and services as:
answer
utility.
question
Suppos
e the marginal cost curve in the short run first decreases and then increases. If
marginal cost is increasing, _____ must be _____.
e the marginal cost curve in the short run first decreases and then increases. If
marginal cost is increasing, _____ must be _____.
answer
marginal product; decreasing
question
Both the United States and Canada produce automobiles and their components;
however, each particular model or component is produced in only one of the two
countries. Which factor explains this pattern of production and trade?
however, each particular model or component is produced in only one of the two
countries. Which factor explains this pattern of production and trade?
answer
the role of increasing returns
question
A factor of production whose quantity can be changed in the SHORT run is a(n) _____
factor of production.
factor of production.
answer
variable
question
Ashley Bakery expects its marginal cost curve will eventually slope upward because, as
with most production processes, baking has:
with most production processes, baking has:
answer
diminishing marginal returns.
question
The implicit cost of capital is:
answer
the opportunity cost of capital used by a business.
question
Whenever marginal benefit is less than marginal cost, the decision maker should do
_____ of the activity.
_____ of the activity.
answer
less
question
According to the Heckscher
-
Ohlin
model, Brazil will have a comparative advantage in
oranges if the factors that are _____ in the production of oranges are _____.
-
Ohlin
model, Brazil will have a comparative advantage in
oranges if the factors that are _____ in the production of oranges are _____.
answer
intensive; abundant
question
The larger the output, the more variable input required to produce additional units.
Called the _____ effect, this leads to a _____ average _____ cost as output rises.
Called the _____ effect, this leads to a _____ average _____ cost as output rises.
answer
diminishing returns; higher; variable
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