question
To economists, scarcity means
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Unlimited wants cannot be satisfied by limited resources
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Ali decides to attend the one-hour review session for microeconomics instead of working his job. His job is paying him $10.00 per hour. Ali's opportunity cost for attending the review session is
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The $10 he could have earned at his job
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Decision making on the margin involves
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Comparing the marginal cost and marginal benefits when making a decision
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To find the opportunity cost of producing one more unit of any product while on the PPF requires
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Dividing the amount of the product forgone by the amount of the product gained
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Producers in the US and in Canada can choose to produce either cheese or steel. The table below shoes the output choices for each of the countries. Based on the chart, how many pounds of cheese does a pound of steel cost in Canada
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2000
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Based on the table above, which country has the comparative advantage in which good?
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Canada has the comparative advantage in Cheese, the US has the comparative advantage in steel.
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As the economy grows
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Its PPF shifts outward
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The below figure shows the PPF for a country. What is the opportunity cost per ton of rice to move from point b to d.
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500 bottles of wine
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In an hour, Jean can bake 6 cakes and wash no cars, or wash 2 cars and bake no cakes. During the same hour, Dan can bake 4 cakes and wash no cars, or bake no cakes and was 4 cars. Dan is splitting the time baking cakes and washing cars. What is the total number of bakes cakes and washed cars in 1 h our by both Jean an Dan under the current circumstances?
answer
8
question
The law of demand refers to how
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The quantity demanded changes when the price of the good changes.
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A change in demand for apples count result from any of the following except
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A change in price of apples
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The table below gives the demand schedule for lattes at the Bottomless Cup. If the price of a latte is $3, then the quantity of lattes demanded is ____________per hour
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60
question
Payments to the factors of production are
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rent, wages, interest, and profit or loss
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Which of the following increases the supply of gasoline?
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A decrease in the price of a resource used to produce gasoline, such a crude oil.
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If the number of companies producing memory chips increases, then the
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supply of memory chips increase
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Using the data in the table below, the equilibrium quantity and equilibrium price for a cellular phone is
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60,000 and $50
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The below figure shows the market for game day t-shirts. If the price of t-shirts is $10 then
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The market is in equilibrium
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The below figure shows the market for game day t-shirts. If the price of t-shirts is $8 then
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There is a shortage and the price of t-shirts will rise
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The below figure shows the market for game day t-shirts. If the price of t-shirts is $12
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There is a surplus and the price of t-shirts will fall
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If a 10% increase decrease in quantity demanded, then demand is
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unit elastic
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If a 10% in income brings about 5 percent decrease in the demand for a good then the
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good is income inelastic.
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If two goods are ___________then an increase in the price of one leads to ____________________ in the quantity demanded for the other.
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complements; a decrease
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Total revenue increases if the price of the good
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rises and demand is inelastic
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A car maker wants to raise the price of model T cars by 15% due to the increased cost of production. Can you help the car maker to figure out by how many cars his sales for model T cars will drop if the price elasticity of demand is 2 and the quantity and the quantity demanded was 200 per day
answer
60
question
Using the elasticity of demand, calculate the price elasticity of demand for Red Bull drink when the price drops from $3 to $2.50 and the quantity demanded rises from 10 cans to 12
answer
1
question
Supposed the price of a box of cereal rises by 40% and the and the price elasticty of demand is 2. What is the percentage change in quantity demanded
answer
80%
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Suppose the price of a box of cereal rises by 10% and the price elasticity of demand is 1.5. Calculate the drop in boxes of cereal sold after the price increase. Assume 200 boxes of cereal were sold daily before the price increased
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30
question
The demand for necessities generally is _____________the demand for luxury goods
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less elastic
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Total revenue increases if the price of a good
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rises and demand is elastic
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A vertical demand curve reflects demand that is
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perfectly inelastic
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A horizontal demand curve reflects demand that is
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perfectly elastic
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If the cross elasticity of demand for beef and pork is positive and you are the producer of the beef and pork producers drop the price of their pork, what will happen to the quantity of beef that you sell.
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It will decrease
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Utility is the
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benefit or satisfaction that a person gets from the consumption of a good or service
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An difference curve shows all combinations of two goods
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among which the consumer is indifferent
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If the price of steak rises, a consumer who has been maximizing his or her utility before will buy less steak because its
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ratio of marginal utility to price is now less than that for other goods.
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An increase to your income will likely to
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shift your budget line outward
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Over production means that
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marginal cost exceeds marginal benefit
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Pollution is an example of ___________externality
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negative production
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When the benefits of producing a good or service spill over to other people, rather than just the buyer, the spillover is referred to as
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an external benefit
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When the production of a good has a marginal external cost (negative externality), which of the following occurs in an unregulated market
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Over production relative to the efficient level will occur
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Suppose a firm pollutes a river when it produces a product. To achieve the efficient amount of output, a government could impose a that equals the __________ of the pollution.
answer
pollution tax, marginal external cost
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The free rider problem exists because
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people can not be excluded from consuming public goods even if they don't pay for them.
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A public good is defined as a good or service
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that is nonrival and nonexcludable
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A firm uses capital and labor to produce gadgets. If the firms profit maximizing combination of capital and labor is 2 and 3 respectively and each machine costs $50 an hour and each worker $20 an hour. What is the firms production costs in an hour
answer
160
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To maximize profits, firms produce an output where marginal product of labor per dollar equals the marginal product of capital per dollar. Assume that the cost of labor is $20 an hours and its marginal product is $40. What should the marginal product of capital be if we assume the cost of capital of $40 an hour?
answer
80
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The marginal product of labor is the change in
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total output from employing one more workers
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Theresa runs a factory that makes lie detectors in Detroit, Michigan. This month, Theresa's 34 workers produced 690 lie detectors. Suppose Theresa adds one more worker and as a result, her factory output increases to 700. Theresa's marginal product of labor from the last worker hired equals
answer
10
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Sarah runs a factory that makes dolls in Phoenix, AZ. Sarah's 3 works produced 90 dolls per day. Suppose Jill adds one more workers and as a result, her factory's production increases to 100. Sarah noticed that the last worker added only 10 dolls, but the 3rd worker added 20 dolls. What do economists call this?
answer
Law of diminishing marginal returns
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Marie owns a factory and she wants to maximize her profit at 90 units by choosing a combination or machines and workers that minimize her production cost. What do economist call this?
answer
Economic efficiency
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Kathleen owns a firm and made 20,000 economic profit and 30,000 accounting profit last year. She is paid 15,000 in wages and $18,000 in rent last year. What is Kathleen's implicit cost?
answer
10,000
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Pie Pizzeria pays 1000 rent each month and the least will expire in two years. In the short run, Pie Pizzeria' rent does not change as its production increases. What hind of cost is the rent?
answer
Fixed cost
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Marie owns a factory and her total cost was 20,000 for production of 500 units. Her total revenue was 40,000 and her explicit cost was 15,000. What was her average total cost last year?
answer
40
question
Kathleen owns a firm, but she rents the building, In the short-run, Kathleens rent does not change as her production increases She noticed her total cost changed from 20,000 to 20,100 when her production increased from 100 units to 101 units. What do economists call Kathleens cost of producing one additional unit?
answer
Marginal cost
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When a firms long-run average total cost falls as the its plant increases, the firm is experiencing
answer
economies of scale
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When a firm increases its input factors by 100% and its output increase by 100%, The firm is experiencing
answer
constant returns to scale
question
As output increases, economies of scale occur when the
answer
long-run average cost decreases
question
Valaries owns a firm and she is paid 15,000 in wages and 20,000 in rent for production of 500 units of goods. Her rent does not change as her output increases, but her labor cost does. What is Valarie's average variable cost
answer
30
question
Total cost in the short run includes
answer
fixed and variable costs
question
All costs are __________in the long run
answer
variable
question
In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit
answer
only perfect competition
question
A firm in perfect competition is a price taker because
answer
many other firms produce identical products
question
A perfect competitive firm can
answer
sell all of its output at the prevailing market price
question
For or a perfectly competitive firm, profit maximization occurs when output is such that
answer
MR = MC
question
Choose the profit maximizing output for a perfectly competitive firm
answer
10
question
A monopolist can make an economic profit in the long run because
answer
barriers to entry
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A monopoly
answer
B & C
question
The key idea behind price discrimination is to convert consumer surplus into
answer
economic profit
question
economic profit is equal to
answer
P> ATC
question
Which of the following is always true when a single-price monopolist maximized its profit
answer
MR = MC
question
When company maximizes its profit, it produces_______pillows per hour and charges___________.
answer
3,000/$70
question
Economic profit is equal to
answer
AR>AC
question
An industry with a large number of firms, differentiated products, and free entry and exit is called
answer
monopolistic competition
question
The absence of barriers to entry in monopolistic competition means that in the long run firms
answer
make zero economic profit
question
Firms in monopolistic competition determine the profit maximizing level of output by producing
answer
where marginal revenue = equals marginal cost.
question
A characteristic common in both oligopoly and monopolistic competition is:
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each firm faces a downward sloping demand curve
question
The tool that economist use to analyze the mutual interdependence of oligopolies is:
answer
game theory
question
The prisoner's dilemma is an example of
answer
game theory
question
The equilibrium in the prisoner's dilemma
answer
is a Nash equilibrium
question
When a market has barriers to entry
answer
then in the long run it might be possible for the firms to make a positive economic profit
question
In oligopoly there are
answer
few firms and barriers to entry
question
Long run economic profits are most likely to be earned in
answer
monopoly and oligopoly
question
When oligopolies seek to operate as a single price monopoly, the firms produce at the point where
answer
MR=MC
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