question
The term used to describe a change in the ability of a firm to produce a given level of output with a given level of inputs is called __________.
answer
technological change
question
Which costs are affected by the level of output produced?
answer
variable costs
question
If the number of people in a publishing company does not go up or down with the quantity of books it publishes, then how should we categorize the salaries and benefits paid to these employees?
answer
they are part of fixed cost
question
Which of the following is known as the highest-valued alternative that must be given up in order to engage in an activity?
answer
opportunity cost
question
What is the production function?
answer
the relationship between the inputs employed by a firm and the maximum output it can produce with those inputs
question
Which of the following is true?
i. Total cost = fixed cost + variable cost
ii. Total cost = explicit costs + implicit costs
iii. Economic cost = accounting cost + implicit costs
i. Total cost = fixed cost + variable cost
ii. Total cost = explicit costs + implicit costs
iii. Economic cost = accounting cost + implicit costs
answer
i,ii,iii
question
What is the additional output that a firm produces as a result of hiring one more worker called?
answer
marginal product of labor
question
Which of the following refers to the total output produced by a firm divided by the quantity of workers?
answer
average product of labor
question
What do we obtain by dividing the fixed cost by the quantity of output produced?
answer
average fixed cost
question
The following cost measures reach their minimum points when they are equal to the value of marginal cost, except one. Which cost measure is the exception?
answer
average fixed cost
question
What does the term "spreading the overhead" refer to?
answer
reducing average fixed cost by selling more output
question
What happens to the difference between average variable cost and average total cost as the level of output increases?
answer
the difference drecreases
question
Which of the following terms refers to the lowest cost at which a firm is able to produce a given level of output in the long run, when no inputs are fixed?
answer
the long run average cost curve
question
What happens when firms experience economies of scale?
answer
the firms long run average costs fall as output increases
question
when does the law of diminishing returns apply?
answer
in the short run only
question
price elasticity of demand measures
answer
how responsive quantity demanded is to a change in price.
question
If, for a given percentage increase in price, quantity demanded falls by a proportionately smaller percentage, then demand is
answer
relatively inelastic
question
Jonah lives in a small town where there is only one Mexican restaurant. Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant?
answer
demand is likely to e relatively inelastic
question
A demand curve that is horizontal indicates that the commodity
answer
has a large number of substitutes.
question
Which of the following goods would have the most inelastic demand?
answer
bread
question
Suppose a decrease in the supply of bottled water results in a decrease in revenue. This indicates that
answer
the demand for bottled water is elastic in the price range considered.
question
Suppose when Mike's Bakery raised the price of its breads by 10 percent, the quantity demanded fell by 15 percent. What was the effect on sales revenue?
answer
sales revenue decreased
question
income elasticity measures
answer
how a good's quantity demanded responds to change in buyers' incomes.
question
Cross-price elasticity of demand is calculated as the
answer
percentage change in quantity demanded of one good divided by percentage change in price of a different good.
question
If the cross-price elasticity of demand for computers and software is negative, this means the two goods are
answer
complements
question
In September 2006, the Food and Drug Administration recommended that Americans avoid eating bagged raw spinach in the wake of an outbreak of E. coli bacteria. Following this recommendation, the food industry looked at alternatives and many turned to arugula. One Chicago distributor claimed, "The sale of the stuff has gone through the roof." Based on this information,
answer
the cross-price elasticity between arugula and spinach is positive
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