question
As one moves along the budget line
answer
income and prices are held constant, but quantities change.
question
A util is
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A hypothetical unit of satisfaction
question
With each additional unit consumed, Marginal Utility will
answer
decrease
question
After Rachel bought a magazine subscription, she does not enjoy the articles in the magazine. However, she dutifully reads the entire magazine ever month because she already payed for the subscription. What psychological factor associated with behavioral economics explains Rachels behavior?
answer
The sunk cost fallacy
question
People contribute to disaster relief even when they do not know anyone who was personally affected by the disaster. What psychological factor associated with behavioral economics explains this behavior?
answer
Altruism
question
The characteristic of a corporation that most encourages investors to invest large amounts of money in it is
answer
limited liability
question
Money that is real cost to the company but that is not actually paid at the time a machine wears down
answer
implicit cost
question
As output increases, average total cost and average variable cost get closer to each other because:
answer
average fixed cost decreases
question
Calvin runs a transportation service. His van can carry four people in addition to himself. He pays $50 in insurance per month. Assuming he has a full van, it costs him $2.50 per student per round trip. Which statements are correct?
I. Calvins average variable cost will be $15
II. Calvins marginal cost is constant at $2.50
III. Calvins average variable cost is constant at $2.50
I. Calvins average variable cost will be $15
II. Calvins marginal cost is constant at $2.50
III. Calvins average variable cost is constant at $2.50
answer
2 and 3
question
Specialization of labor and management typically supports:
answer
Economies of scale
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On a graph of the long run average total cost curve, constant returns to scale are shown as:
answer
constant average costs as output expands
question
The perfectly competitive market structure assumes:
answer
1. Ease of entry and exit
2. Identical products
3. Zero economic profit in the long run
2. Identical products
3. Zero economic profit in the long run
question
Kellog, General Mills, Post, and Quaker Oats dominate the cereal market. This industry has consistently displayed profits in the long run and is difficult to enter due to brand recognition. What market structure does the cereal industry represent?
answer
Oligopoly
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The demand curve for an individual perfectly competitive firm is:
answer
Perfectly elastic
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In a competitive market, price is always equal to
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marginal revenue
question
If the market price is $18, John makes
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a normal profit or zero economic dollars
question
A natural monopoly could possibly arise when
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there are large economies of scale relative to the industry's market
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Which is NOT a significant barrier to entry?
answer
Opportunity cost
question
Which type of price discrimination results in the monopolist obtaining the entire consumer surplus?
answer
First degree price discrimination
question
At movie theaters, lower prices are charged for matinees than for evening shows of the same film. The customers attending the matinees have
answer
Higher elasticities of demand than customers attending the evening show
question
The demand curve faced by a firm in monopolistic competition is:
answer
less elastic than the demand curve for a competitive firm
question
An oligopoly differs from a monopoly that an oligopolist:
answer
must consider the behavior of its rivals when it makes decisions.
question
The stability of a cartel is improved if
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the participating members have similar cost structures
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