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The market demand curve
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shows how much all consumers demand at various prices.
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According to the following graphs, what does the curve in the lower graph show?
The price of Y is $15 per unit.
The price of Y is $15 per unit.
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how a consumer's utility-maximizing choices of X changes when the price of X changes
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Alexandra consumes only caviar and champagne, but she does have a limited income of $400. Her current consumption choice is 5 ounces of caviar, at a price of $50 per ounce, and 6 bottles of champagne, at $25 each. The last ounce of caviar added 100 units to Alexandra's total utility, while the last bottle of champagne added 75 units. If Alexandra chooses 4 ounces of caviar and 8 bottles of champagne instead her total utility will:
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increase by 50 units
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The price of Y is $10.
According to the above figure, which of the following are points on the consumer's demand curve for X?
According to the above figure, which of the following are points on the consumer's demand curve for X?
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$3, 120 units
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Along an indifference curve
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none of the above
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Assume that an individual consumes two goods, X and Y. The total utility (assumed measurable) of each good is independent of the rate of consumption of other goods. The prices of X and Y are, respectively, $5 and $10.
Given the above, if the consumer has $65 to spend on X and Y, the utility-maximizing bundle is
Given the above, if the consumer has $65 to spend on X and Y, the utility-maximizing bundle is
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1 X and 6 Y.
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Suppose that utility-maximizing consumers in San Francisco pay three times as much for apples as for peaches. What is the ratio of the marginal utility of apples to the marginal utility of peaches?
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3
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According to the following graphs, what is X 1?
The price of Y is $15 per unit.
The price of Y is $15 per unit.
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none of the above
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The price of X is $20 and the price of Y is $40.
Based on the above graph, at point B,
Based on the above graph, at point B,
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the marginal rate of substitution is 1/2.
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According to the following graph, at what price of Y are Y2 units demanded?
The consumer's income is $1,200.
The consumer's income is $1,200.
answer
$12
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Based on the following graph, at point C,
The consumer's income is $600.
The consumer's income is $600.
answer
MRS is greater than 1.25.
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Assume that an individual consumes two goods, X and Y. The total utility (assumed measurable) of each good is independent of the rate of consumption of other goods. The prices of X and Y are, respectively, $5 and $10.
Given the above, if the consumer buys the third unit of Y,
Given the above, if the consumer buys the third unit of Y,
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the marginal utility per dollar spent on Y is 20.
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An indifference curve is drawn on a graph with good X on the horizontal axis and good Y on the vertical axis. One point on the curve is X = 5, Y = 5. Which of the following points CANNOT also be on the curve?
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X = 6, Y = 6
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The rate at which a consumer is WILLING to substitute one good for another is measured by
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the slope of the tangent to the indifference curve.
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The consumer's income is $800.According to the above figure, what are the prices of goods X and Y?
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PX = $8, PY = $10
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The price of X is $20 and the price of Y is $40.
Based on the above graph, if income is $800, how many units of Y will the consumer choose?
Based on the above graph, if income is $800, how many units of Y will the consumer choose?
answer
8
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Which of the following is NOT a characteristic of a typical indifference curve?
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The curve will shift out if income increases.
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The consumer faces a budget constraint because the market price of X is $3, the market price of Y is $3, and the consumer's budget is $90. In order for this consumer to choose the corner solution at point E, which of the following must occur?
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price of X must rise to $9.
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A utility function
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shows the relation between the amount of goods consumed and a consumer's utility.
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If Mary prefers bananas to plums and plums to peaches, but is indifferent between bananas and oranges, she
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prefers oranges to peaches.
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Use the figure below, which shows a linear demand curve and the associated total revenue curve, to answer the question.
The marginal revenue of the 700th unit is $________ and demand is ________ at this point.
The marginal revenue of the 700th unit is $________ and demand is ________ at this point.
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-20; inelastic
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Refer to the following figure. When quantity demanded is 2,000, what is marginal revenue?
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0
question
To answer the question, refer to the following table showing a demand schedule:
If price falls from $200 to $150, what is the elasticity of demand over this range?
If price falls from $200 to $150, what is the elasticity of demand over this range?
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-1.17
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The cross-price elasticity of demand between goods X and Y
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-both a and c
-is greater than zero if X and Y are substitutes.
-measures the responsiveness of the quantity of X demanded to changes in the price of Y.
-is greater than zero if X and Y are substitutes.
-measures the responsiveness of the quantity of X demanded to changes in the price of Y.
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To answer the question, refer to the following table showing a demand schedule:
As quantity demanded rises from 1,400 to 1,800, what is marginal revenue?
As quantity demanded rises from 1,400 to 1,800, what is marginal revenue?
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-$75
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In the figure above, what is the point price elasticity of demand when price is $40?
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-0.50
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If the quantity of gidgets demanded increases when the price of gadgets decreases
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gidgets and gadgets are complements.
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When marginal revenue is positive,
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demand is elastic.
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The Interior Department recently announced that it will increase the entrance fees at Yellowstone National Park in order to increase park revenues. The Interior Department must believe that
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the percentage increase in fees will be greater than the percentage decrease in the number of park visitors.
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Which of the following will NOT affect the elasticity of demand for a product?
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the cost of producing the product
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Refer to the following graph to answer the question:
The price elasticity of demand over the price interval $90 to $110 is
The price elasticity of demand over the price interval $90 to $110 is
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-2.0
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Use the figure below, which shows a linear demand curve and the associated total revenue curve, to answer the question.
Use the figure below, which shows a linear demand curve and the associated total revenue curve, to answer the question.
Use the figure below, which shows a linear demand curve and the associated total revenue curve, to answer the question.
answer
45
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When demand is inelastic,
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buyers are not very responsive to changes in the price of the product.
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Consider the statement: "When the British government tripled university fees for foreign students in Great Britain, about one-half of them left to study in other countries." The implied price elasticity of demand by foreigners for a British education is (in absolute value)
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less than 1.
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In the figure above, what is the interval elasticity of demand over the price range $60 to $80?
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-1.40
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Refer to the following figure. When price is $15 and quantity demanded is 1,000, what is the point elasticity of demand?
answer
-3
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Total revenue increased for a firm operating in the elastic range of its demand curve. Which of the following statements is correct?
answer
-both b and c
-Quantity demanded must have increased.
-The firm must have lowered price.
-Quantity demanded must have increased.
-The firm must have lowered price.
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If the quantity of Harley-Davidson motorcycles demanded decreases by 10% when the price increases by 20%, the price elasticity of demand for Harley-Davidson motorcycles is:
answer
-0.50
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Which of the following would tend to INCREASE the elasticity of demand for good X?
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a new product, Y, which can be used in place of X, is introduced.
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Refer to the following figure. When price is $10 and quantity demanded is 2,000, what is the point elasticity of demand?
answer
-1
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Based on the following table, what is average variable cost when output is 200?
answer
$10.50
question
To answer, refer to the following:
"Ford built 18 vehicles per auto employee in North America last year, while GM could only manage 12." ( The Wall Street Journal)
In comparison with GM, Ford had a higher
"Ford built 18 vehicles per auto employee in North America last year, while GM could only manage 12." ( The Wall Street Journal)
In comparison with GM, Ford had a higher
answer
average product of labor.
question
The capital stock is fixed at 50 units, the price of capital is $30 per unit, and the price of labor is $25 per unit.
Given the above, if the firm produces 20 units of output, what is average fixed cost?
Given the above, if the firm produces 20 units of output, what is average fixed cost?
answer
none of the above
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Short-run average cost is
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none of the above
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In the table below, the capital stock is fixed at 40 units, the price of capital is $15 per unit, and the price of labor is $80 per unit.
If the firm produces 180 units of output, what is total variable cost?
If the firm produces 180 units of output, what is total variable cost?
answer
$1,200
question
A production function measures the relation between
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the quantity of inputs and the quantity of output.
question
Use the following table to answer the question below:
The amount of total output produced from various combinations of labor and capital.
If capital is fixed at three units, how much does the fourth unit of labor add to total output?
The amount of total output produced from various combinations of labor and capital.
If capital is fixed at three units, how much does the fourth unit of labor add to total output?
answer
none of the above
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The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
When the firm uses 40 units of labor, what is marginal cost at this level of output?
When the firm uses 40 units of labor, what is marginal cost at this level of output?
answer
$35
question
Suppose that the firm's only variable input is labor. When 50 workers are used, the average product of labor is 50 and the marginal product of labor is 75. The wage rate is $80 and the total cost of the fixed input is $500. Which of the following is true?
answer
Average variable cost is decreasing.
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Given the table below, what is the marginal cost of the 250th unit of output?
answer
$7.40
question
Use the following table to answer the question below:
The amount of total output produced from various combinations of labor and capital.
Which of the following input combinations can produce the same level of output?
The amount of total output produced from various combinations of labor and capital.
Which of the following input combinations can produce the same level of output?
answer
2 K, 3 L and 4 K, 2 L
question
The capital stock is fixed at 50 units, the price of capital is $30 per unit, and the price of labor is $25 per unit.
Given the above, how much does the 23rd unit of output add to the firm's total cost?
Given the above, how much does the 23rd unit of output add to the firm's total cost?
answer
$75
question
Use the following table to answer the question below:
The amount of total output produced from various combinations of labor and capital.
If the capital stock is fixed at four units and there are three units of labor, what is the average product of labor?
The amount of total output produced from various combinations of labor and capital.
If the capital stock is fixed at four units and there are three units of labor, what is the average product of labor?
answer
none of the above
question
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
What is AVC at its minimum?
What is AVC at its minimum?
answer
$35
question
A short-run cost function assumes that
answer
at least one input is fixed in supply.
question
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
When the firm uses 120 units of labor, what is its marginal cost at this output?
When the firm uses 120 units of labor, what is its marginal cost at this output?
answer
$56
question
Suppose that the firm's only variable input is labor. When 50 workers are used, the average product of labor is 50 and the marginal product of labor is 75. The wage rate is $80 and the total cost of the fixed input is $500.What is average variable cost?
answer
$1.60
question
Fill out the table and answer the question below.
Diminishing returns begin with the
Diminishing returns begin with the
answer
third unit of labor.
question
Suppose that the firm's only variable input is labor. When 50 workers are used, the average product of labor is 50 and the marginal product of labor is 75. The wage rate is $80 and the total cost of the fixed input is $500.What is the marginal cost?
answer
none of the above
question
In the above figure, what is the AVERAGE variable cost of producing 5 units of output?
answer
$12
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