Final 1 - Assignment Essays

question

If a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars, the marginal utility of the third candy bar is

answer

5 utility units.

question

All of the following products are most likely to have significant network externalities except

answer

Cat food

question

If a consumer always buys goods rationally, then

answer

the marginal utility per dollar spent on all goods will be equal.

question

Most people would prefer to drive a luxury car that has all the options, but more people buy less expensive cars even though they could afford the luxury car because

answer

the marginal utility per dollar spent on the less expensive car is higher than that spent on luxury cars.

question

Figure 10-2 represents the demand for ice cream cones.Refer to Figure 10-2. When the price of ice cream cones increases from $2 to $3, quantity demanded decreases from 4 ice cream cones to 3 ice cream cones. This change in quantity demanded is due to

answer

the income and substitution effects.

question

Figure 10-2 represents the demand for ice cream cones.Refer to Figure 10-2. Which of the following statements is true?

answer

Points a and b are the utility-maximizing quantities of ice cream cones at two different prices of ice cream.

question

The average price of gasoline in your neighborhood is $2.35 per gallon. Your neighbor, Diana tells you that you can "save a lot" by frequenting a gas station 20 miles outside your neighborhood where the price of gasoline is $2.22 per gallon However, she cautions you that there are usually long lines at that station. Is her suggestion beneficial to you?

answer

No, if one factors in the non-monetary opportunity costs (driving time and waiting in line), it could prove more costly to go to the lower-priced gasoline station.

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Which of the following are implicit costs for a typical firm?

answer

opportunity costs of capital owned and used by the firm

question

If the marginal cost curve is below the average variable cost curve, then

answer

average variable cost is decreasing.

question

If a firm doubles the amount of all its inputs and the firm's average cost of production decreases, then production displays

answer

economies of scale.

question

If 11 workers can produce 53 units of output while 12 workers can produce 56 units of output, what is the marginal product of the 12th worker?

answer

question

Refer to Figure 2. The average product of labor declines after L2 because

answer

the marginal product of labor is below the average product of labor.

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Refer to Figure 2 Diminishing returns to labor set in

answer

After L1

question

Adam spent $10,000 on new equipment for his small business, "Adam's Fitness Studio". Membership at his fitness center is very low and at this rate, Adam needs an additional $12,000 per year to keep his studio open. Which of the following is true?

answer

The $10,000 Adam spent on equipment is a fixed cost of business and the $12,000 he'll need to continue operations is a variable cost.

question

At the minimum efficient scale,

answer

any increases in the scale of operation will encounter further economies of scale.

question

A decrease in the price of inputs used to produce flat-panel televisions causes

answer

the average cost curve and the marginal cost curve to shift downwards.

question

If average total cost is $50 and average fixed cost is $15 when output is 20 units, then the firm's total variable cost at that level of output is

answer

$700

question

Refer to Figure 3. If the firm is producing 700 units,

answer

it should cut back its output to maximize profit.

question

A very large number of small sellers who sell identical products imply

answer

the inability of one seller to influence price.

question

An individual seller in perfect competition will not sell at a price lower than the market price because

answer

the seller can sell any quantity she wants at the prevailing market price.

question

If, for the last unit of a good produced by a perfectly competitive firm, MR > MC, then in producing it, the firm

answer

added more to total revenue than it added to total costs.

question

For a perfectly competitive firm, which of the following is not true at profit maximization?

answer

Price is greater than marginal cost.

question

Refer to Figure 4. Suppose the prevailing price is $20 and the firm is currently producing 1,350 units. In the long run equilibrium,

answer

there will be more firms in the industry and total industry output increases.

question

Refer to Figure 12-11. Suppose the prevailing price is $20 and the firm is currently producing 1,350 units. In the long-run equilibrium, the firm represented in the diagram

answer

will reduce its output to 1,100 units.

question

Refer to Figure 12-10. The firm's short-run supply curve is its

answer

marginal cost curve from b and above.

question

Refer to Figure 12-10. At the profit-maximizing output level, the firm earns

answer

a profit of $2,700.

question

The key characteristics of a monopolistically competitive market structure include

answer

sellers selling similar but differentiated products.

question

Refer to Figure 5. The marginal revenue from selling the additional unit Qb instead of Qa equals

answer

the area (H-E).

question

Refer to Figure 13-13. What is the profit-maximizing output level?

answer

Q4 units

question

Refer to Figure 13-13. What is the area that represents the firm's profit?

answer

P4edP2

question

. If the diagram represents a typical firm in the market, what is likely to happen in the long run?

answer

New firms will enter the market causing the demand to decrease for existing firms.

question

Refer to Figure 13-17. What is the allocatively efficient output for the firm represented in the diagram?

answer

Qh units

question

Refer to Figure 13-17. What is the productively efficient output for the firm represented in the diagram?

answer

Qj units

question

According to the law of one price

answer

identical products should sell for the same price everywhere.

question

Arbitrage means

answer

buying a product at a low price and reselling it at a high price.

question

What term refers to the costs in time and other resources that parties incur in the process of agreeing to and carrying out an exchange of goods and services?

answer

transaction costs

question

Many supermarkets provide regular shoppers with "loyalty cards" that the shoppers swipe each time they checkout. By swiping the card, the shopper receives reduced prices on a few goods and the supermarket compiles information on all the shoppers' purchases. Recently, some supermarkets have switched from giving the same price reductions to all shoppers to giving shoppers differing price reductions depending on their shopping history. A manager at one company that uses this approach said: "It comes down to understanding elasticity at a household level."

Is the use of loyalty cards that provide the same price discounts for every shopper a form of price discrimination?

answer

Yes, because those customers who are willing to provide the requested information will receive a lower price.

question

Many supermarkets provide regular shoppers with "loyalty cards" that the shoppers swipe each time they checkout. By swiping the card, the shopper receives reduced prices on a few goods and the supermarket compiles information on all the shoppers' purchases. Recently, some supermarkets have switched from giving the same price reductions to all shoppers to giving shoppers differing price reductions depending on their shopping history. A manager at one company that uses this approach said: "It comes down to understanding elasticity at a household level."

What information do retailers find most helpful that they collect from their loyalty card programs?

answer

frequency and types of goods purchased by consumer and consumer characteristics (e.g. age, race, and gender)

question

Many supermarkets provide regular shoppers with "loyalty cards" that the shoppers swipe each time they checkout. By swiping the card, the shopper receives reduced prices on a few goods and the supermarket compiles information on all the shoppers' purchases. Recently, some supermarkets have switched from giving the same price reductions to all shoppers to giving shoppers differing price reductions depending on their shopping history. A manager at one company that uses this approach said: "It comes down to understanding elasticity at a household level."

How can a retailer make more profit by understanding "elasticity at a household level"?

answer

charge higher prices to those consumers who demonstrate an inelastic demand

question

Which of the following is a result of perfect price discrimination?

answer

zero consumer surplus

question

Which of the following are key results of price discrimination?

answer

Profits increase and consumer surplus decreases

question

The demand for labor is called a derived demand, because

answer

demand for labor is derived from the firm's output choice.

question

What happens as a firm increases the number of workers that it hires?

answer

Both the marginal product of labor and the marginal revenue product of labor decrease.

question

Let MRP equal the marginal revenue product of labor and W equal the wage rate. When should a firm hire more workers to increase profit?

answer

When MRP > W

question

Three workers can produce
100 units of output, and four workers can produce 105
units of output. Suppose the price of the firm's output sells for
$10 per unit. What is the marginal revenue product of the fourth worker?

answer

$50

question

Which of the following factors shifts the labor supply curve?

a change in alternatives available in other labor markets

a change in demographics

a change in population

All of the above.

answer

question

Suppose the wage decreases. What effect will this have on a worker's labor supply?
The substitution effect of a wage .......... causes the worker to supply........ quantity of labor.
The income effect of a wage ........ causes the worker to supply ......... quantity of labor.
If the substitution effect is bigger than the income effect, then the supply curve will slope ............

answer

Decrease, A smaller
Decrease, A larger
Upward

1 of 47

question

If a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars, the marginal utility of the third candy bar is

answer

5 utility units.

question

All of the following products are most likely to have significant network externalities except

answer

Cat food

question

If a consumer always buys goods rationally, then

answer

the marginal utility per dollar spent on all goods will be equal.

question

Most people would prefer to drive a luxury car that has all the options, but more people buy less expensive cars even though they could afford the luxury car because

answer

the marginal utility per dollar spent on the less expensive car is higher than that spent on luxury cars.

question

answer

the income and substitution effects.

question

Figure 10-2 represents the demand for ice cream cones.Refer to Figure 10-2. Which of the following statements is true?

answer

Points a and b are the utility-maximizing quantities of ice cream cones at two different prices of ice cream.

question

answer

No, if one factors in the non-monetary opportunity costs (driving time and waiting in line), it could prove more costly to go to the lower-priced gasoline station.

question

Which of the following are implicit costs for a typical firm?

answer

opportunity costs of capital owned and used by the firm

question

If the marginal cost curve is below the average variable cost curve, then

answer

average variable cost is decreasing.

question

If a firm doubles the amount of all its inputs and the firm's average cost of production decreases, then production displays

answer

economies of scale.

question

If 11 workers can produce 53 units of output while 12 workers can produce 56 units of output, what is the marginal product of the 12th worker?

answer

question

Refer to Figure 2. The average product of labor declines after L2 because

answer

the marginal product of labor is below the average product of labor.

question

Refer to Figure 2 Diminishing returns to labor set in

answer

After L1

question

answer

The $10,000 Adam spent on equipment is a fixed cost of business and the $12,000 he'll need to continue operations is a variable cost.

question

At the minimum efficient scale,

answer

any increases in the scale of operation will encounter further economies of scale.

question

A decrease in the price of inputs used to produce flat-panel televisions causes

answer

the average cost curve and the marginal cost curve to shift downwards.

question

If average total cost is $50 and average fixed cost is $15 when output is 20 units, then the firm's total variable cost at that level of output is

answer

$700

question

Refer to Figure 3. If the firm is producing 700 units,

answer

it should cut back its output to maximize profit.

question

A very large number of small sellers who sell identical products imply

answer

the inability of one seller to influence price.

question

An individual seller in perfect competition will not sell at a price lower than the market price because

answer

the seller can sell any quantity she wants at the prevailing market price.

question

If, for the last unit of a good produced by a perfectly competitive firm, MR > MC, then in producing it, the firm

answer

added more to total revenue than it added to total costs.

question

For a perfectly competitive firm, which of the following is not true at profit maximization?

answer

Price is greater than marginal cost.

question

Refer to Figure 4. Suppose the prevailing price is $20 and the firm is currently producing 1,350 units. In the long run equilibrium,

answer

there will be more firms in the industry and total industry output increases.

question

Refer to Figure 12-11. Suppose the prevailing price is $20 and the firm is currently producing 1,350 units. In the long-run equilibrium, the firm represented in the diagram

answer

will reduce its output to 1,100 units.

question

Refer to Figure 12-10. The firm's short-run supply curve is its

answer

marginal cost curve from b and above.

question

Refer to Figure 12-10. At the profit-maximizing output level, the firm earns

answer

a profit of $2,700.

question

The key characteristics of a monopolistically competitive market structure include

answer

sellers selling similar but differentiated products.

question

Refer to Figure 5. The marginal revenue from selling the additional unit Qb instead of Qa equals

answer

the area (H-E).

question

Refer to Figure 13-13. What is the profit-maximizing output level?

answer

Q4 units

question

Refer to Figure 13-13. What is the area that represents the firm's profit?

answer

P4edP2

question

. If the diagram represents a typical firm in the market, what is likely to happen in the long run?

answer

New firms will enter the market causing the demand to decrease for existing firms.

question

Refer to Figure 13-17. What is the allocatively efficient output for the firm represented in the diagram?

answer

Qh units

question

Refer to Figure 13-17. What is the productively efficient output for the firm represented in the diagram?

answer

Qj units

question

According to the law of one price

answer

identical products should sell for the same price everywhere.

question

Arbitrage means

answer

buying a product at a low price and reselling it at a high price.

question

What term refers to the costs in time and other resources that parties incur in the process of agreeing to and carrying out an exchange of goods and services?

answer

transaction costs

question

answer

Yes, because those customers who are willing to provide the requested information will receive a lower price.

question

Many supermarkets provide regular shoppers with "loyalty cards" that the shoppers swipe each time they checkout. By swiping the card, the shopper receives reduced prices on a few goods and the supermarket compiles information on all the shoppers' purchases. Recently, some supermarkets have switched from giving the same price reductions to all shoppers to giving shoppers differing price reductions depending on their shopping history. A manager at one company that uses this approach said: "It comes down to understanding elasticity at a household level."

What information do retailers find most helpful that they collect from their loyalty card programs?

answer

frequency and types of goods purchased by consumer and consumer characteristics (e.g. age, race, and gender)

question

Many supermarkets provide regular shoppers with "loyalty cards" that the shoppers swipe each time they checkout. By swiping the card, the shopper receives reduced prices on a few goods and the supermarket compiles information on all the shoppers' purchases. Recently, some supermarkets have switched from giving the same price reductions to all shoppers to giving shoppers differing price reductions depending on their shopping history. A manager at one company that uses this approach said: "It comes down to understanding elasticity at a household level."

How can a retailer make more profit by understanding "elasticity at a household level"?

answer

charge higher prices to those consumers who demonstrate an inelastic demand

question

Which of the following is a result of perfect price discrimination?

answer

zero consumer surplus

question

Which of the following are key results of price discrimination?

answer

Profits increase and consumer surplus decreases

question

The demand for labor is called a derived demand, because

answer

demand for labor is derived from the firm's output choice.

question

What happens as a firm increases the number of workers that it hires?

answer

Both the marginal product of labor and the marginal revenue product of labor decrease.

question

Let MRP equal the marginal revenue product of labor and W equal the wage rate. When should a firm hire more workers to increase profit?

answer

When MRP > W

question

answer

$50

question

Which of the following factors shifts the labor supply curve?

a change in alternatives available in other labor markets

a change in demographics

a change in population

All of the above.

answer

question

answer

Decrease, A smaller
Decrease, A larger
Upward

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