question
If two bundles are on the same indifference curve, then?
A. The consumer derives the same level of utility
B. the consumer derives the same level of ordinal utility from each but not the same level of cardinal utility.
C. no comparison can be made between the two bundles since utility cannot really be measured.
D. the MRS between the two bundles equals one.
A. The consumer derives the same level of utility
B. the consumer derives the same level of ordinal utility from each but not the same level of cardinal utility.
C. no comparison can be made between the two bundles since utility cannot really be measured.
D. the MRS between the two bundles equals one.
answer
A. The consumer derives the same level of utility
question
Consumers allocate their budgets among bundles because?
A. more is not always better
B. bundles are the most efficient way to package goods and services
C. consumers face choices and trade-offs
D. they want to minimize trips to the store
A. more is not always better
B. bundles are the most efficient way to package goods and services
C. consumers face choices and trade-offs
D. they want to minimize trips to the store
answer
C. consumers face choices and trade-offs
question
What is the intuition that an expansion of an individual's budget set represents a gain?
A. More options are preferred to less.
B. Money is the root of all happiness.
C. Information is power
D. Scarcity is avoidable with prosperity.
A. More options are preferred to less.
B. Money is the root of all happiness.
C. Information is power
D. Scarcity is avoidable with prosperity.
answer
A. More options are preferred to less.
question
The consumer is in equilibrium when?
A. MRT = MRS.
B. Px/Py = MUx/MUy.
C. the budget line is tangent to the indifference curve at the bundle chosen.
D. All of the above.
A. MRT = MRS.
B. Px/Py = MUx/MUy.
C. the budget line is tangent to the indifference curve at the bundle chosen.
D. All of the above.
answer
D. All of the above
question
A decrease in the price of a good causes
A. a change in the slope of the budget line.
B. a decrease in the consumption of that good.
C. a leftward shift of the demand curve for that good.
D. a parallel leftward shift of the budget line.
A. a change in the slope of the budget line.
B. a decrease in the consumption of that good.
C. a leftward shift of the demand curve for that good.
D. a parallel leftward shift of the budget line.
answer
A. a change in the slope of the budget line.
question
In the long run, all factors of production are
A. variable
B. fixed
C. materials
D. rented
A. variable
B. fixed
C. materials
D. rented
answer
A. variable
question
average product will fall as long as?
A. marginal product is falling.
B. it exceeds marginal product.
C. it is less than marginal product.
D. the number of workers is increasing.
A. marginal product is falling.
B. it exceeds marginal product.
C. it is less than marginal product.
D. the number of workers is increasing.
answer
B. it exceeds marginal product.
question
With respect to production, the short run is best defined as a time period
A. lasting about six months.
B. lasting about two years.
C. in which all inputs are fixed.
D. in which at least one input is fixed.
A. lasting about six months.
B. lasting about two years.
C. in which all inputs are fixed.
D. in which at least one input is fixed.
answer
D. in which at least one input is fixed.
question
The slope of an isoquant tells us?
A. how much output increases when both inputs are increased.
B. the increase in MPL when capital increases.
C. the decrease in capital necessary to keep output constant when labor increases by one unit.
D. the decrease in capital necessary to keep MPL constant when labor increases by one unit.
A. how much output increases when both inputs are increased.
B. the increase in MPL when capital increases.
C. the decrease in capital necessary to keep output constant when labor increases by one unit.
D. the decrease in capital necessary to keep MPL constant when labor increases by one unit.
answer
C. the decrease in capital necessary to keep output constant when labor increases by one unit.
question
With capital on the vertical axis and labor on the horizontal axis, vertical isoquants imply that
A. capital and labor are perfect substitutes.
B. capital and labor must be used together in a fixed proportion.
C. capital is not productive.
D. labor is not productive.
A. capital and labor are perfect substitutes.
B. capital and labor must be used together in a fixed proportion.
C. capital is not productive.
D. labor is not productive.
answer
C. capital is not productive.
question
Isocost lines
A. represent the combinations of inputs that have the same marginal cost.
B. represent the combinations of inputs that have the same total cost.
C. are the inverse of the isoquant lines
D. represent supply and demand for inputs at a given cost.
A. represent the combinations of inputs that have the same marginal cost.
B. represent the combinations of inputs that have the same total cost.
C. are the inverse of the isoquant lines
D. represent supply and demand for inputs at a given cost.
answer
B. represent the combinations of inputs that have the same total cost.
question
Economic costs of an input include
A. only implicit costs.
B. only explicit costs.
C. both implicit and explicit costs.
D. whatever management wishes to report to the shareholders.
A. only implicit costs.
B. only explicit costs.
C. both implicit and explicit costs.
D. whatever management wishes to report to the shareholders.
answer
C. both implicit and explicit costs.
question
Isoquant lines represent ________, whereas isocost lines represent ________.
A. technical efficiency; economic efficiency
B. economic efficiency; technical efficiency
C. economic efficiency; marginal costs
D. You Answered input trade-offs; economic trade-offs
A. technical efficiency; economic efficiency
B. economic efficiency; technical efficiency
C. economic efficiency; marginal costs
D. You Answered input trade-offs; economic trade-offs
answer
A. technical efficiency; economic efficiency
question
A firm can minimize cost by
A. picking the bundle of inputs where the lowest isocost line touches the isoquant.
B. picking the bundle of inputs where the isoquant is tangent to the isocost line
C. picking the bundle of inputs where the last dollar spent on one input gives as much extra output as the last dollar spent on any other input.
D. All of the above
A. picking the bundle of inputs where the lowest isocost line touches the isoquant.
B. picking the bundle of inputs where the isoquant is tangent to the isocost line
C. picking the bundle of inputs where the last dollar spent on one input gives as much extra output as the last dollar spent on any other input.
D. All of the above
answer
D. All of the above
question
Learning by doing, which leads to lower costs in the long run, is often
A. increased when new machinery is brought into the production process
B. a function of cumulative output, that is producing more of the good or service.
C. improved through better use of computers in the production process.
D. not very important to most firms.
A. increased when new machinery is brought into the production process
B. a function of cumulative output, that is producing more of the good or service.
C. improved through better use of computers in the production process.
D. not very important to most firms.
answer
B. a function of cumulative output, that is producing more of the good or service
question
The survival principle states that
A. firms must undertake social objectives to survive.
B. the only firms that survive are those that maximize profits.
C. the only firms that survive are those that maximize revenue.
D. managers who fail to maximize profits should be disciplined
A. firms must undertake social objectives to survive.
B. the only firms that survive are those that maximize profits.
C. the only firms that survive are those that maximize revenue.
D. managers who fail to maximize profits should be disciplined
answer
B. the only firms that survive are those that maximize profits.
question
In which governance form do shareholders own the company?
A. You Answered Public sector
B. State-owned enterprise
C. Corporation
D. Non-profit
A. You Answered Public sector
B. State-owned enterprise
C. Corporation
D. Non-profit
answer
C. Corporation
question
Vertical integration
A. is always driven by profitability concerns
B. always results in lower transaction costs.
C. may be undertaken to avoid government regulations.
D. hampers timely delivery of inputs into the production process.
A. is always driven by profitability concerns
B. always results in lower transaction costs.
C. may be undertaken to avoid government regulations.
D. hampers timely delivery of inputs into the production process.
answer
C. may be undertaken to avoid government regulations.
question
Ronald McDonald Houses are an example of
A. altruistic corporate social responsibility.
B. reduction in shareholder value.
C. vertical integration.
D. strategic corporate social responsibility
A. altruistic corporate social responsibility.
B. reduction in shareholder value.
C. vertical integration.
D. strategic corporate social responsibility
answer
D. strategic corporate social responsibility
question
Which entity produces the greatest proportion of U.S. gross domestic product?
A. government
B. non-profit organizations such as hospitals
C. firms
D. universities
A. government
B. non-profit organizations such as hospitals
C. firms
D. universities
answer
C. firms
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