question
The demand curve for a good is horizontal when it is
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a perfectly price elastic good
question
Lemonade, a good with many close substitutes, should have an own price elasticity that is
answer
relatively elastic.
question
The elasticity of variable G with respect to variable S is defined as
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the percentage change in variable G that results from a given percentage change in variable S.
question
The demand for which of the following commodities is likely to be most price inelastic?
answer
food
question
Demand tends to be
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more inelastic in the short term than in the long term.
question
If there are few close substitutes for a good, demand tends to be relatively
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inelastic
question
If the own price elasticity of demand is infinite in absolute value, then
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the demand curve is horizontal.
question
We would expect the demand for jeans to be
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more elastic than the demand for clothing.
question
Suppose that your friend owns a coffee shop and seeks your advice on changing the price of coffee to increase revenue. If you know that demand for coffee is relatively elastic, what advice will you give your friend?
answer
to decrease the price
question
The demand for which of the following commodities is likely to be most inelastic?
answer
beverages
question
It is profitable to hire labor so long as the
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VMPL is greater than or equal to wage.
question
The inputs that a manager uses to alter production are referred to as
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variable factors.
question
Sunk costs are those costs that
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are forever lost after they have been paid.
question
Which of the following statements is incorrect?
answer
Fixed costs are always greater than sunk costs.
question
Economies of scope exist when
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C(Q1) + C(Q2) > C(Q1, Q2).
question
Firm managers should use inputs at levels where the
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marginal benefit equals marginal cost and value marginal product of labor equals wage
question
The average product of labor depends on how many units of
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labor and capital are used.
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The marginal product of an input is defined as the change in
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total output attributable to the last unit of an input.
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total output attributable to the last unit of an input.
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the marginal cost of producing one output is reduced when the output of another product is increased.
question
Fixed costs exist only in
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the short run.
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Economies of scale exist whenever long-run average costs
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decrease as output is increased.
question
In order to minimize the cost of producing a given level of output, a firm manager should use more inputs when
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that input's price falls.
question
Which of the following is not a means of acquiring product and process innovations?
answer
mass production of the existing product
question
As the usage of an input increases, marginal product
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initially increases then begins to decline.
question
Suppose the long-run average cost curve is U-shaped. When LRAC is in the increasing stage, there exist:
answer
diseconomies of scale
question
Normal good
answer
More income, buy more & less income, buy less
question
Inferior good
answer
More income, buy less, & less income, buy more
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