question
Which of the following factors of production would be best be described as human capital?
answer
skills and training that help workers to complete their role in producing a finished product
question
Which of the following would make it possible for a country to consume beyond its individual production possibilities curve?
answer
importing products from other countries at a relatively lower opportunity cost
question
Assume that pizza and stromboli are substitutes. Which of the following best describes the effect on the pizza market if the price of stromboli decreases?
answer
Demand for pizza will shift left
question
An effective price ceiling in the market for tea will most likely result in a/an
answer
shortage of tea
question
On a downward sloping, straight line demand curve, which of the following is always true?
answer
Price elasticity decreases as quality increases
question
If consuming one unit of a good yields 50 utils and consuming two units, which of the following must be true?
answer
The marginal utility of the second unit is 20
question
In the short run, diminishing marginal returns begin when
answer
marginal product of labor begins to fall
question
Economic profit can be calculated as accounting profit plus
answer
Implicit costs
question
If a perfectly competitive firm produces at an output level where price is greater than both marginal cost and average variable cost, in order to maximize profit in the short run, the firm should
answer
produce more
question
Governments often allow some natural monopolies to exist without competition because
answer
natural monopolies experience economies of scale at the allocatively efficient output
question
In the competitive market for jelly beans (a normal good), all of the following are true EXCEPT
answer
A decrease in the price of jelly beans would shift demand to the right
question
The quantity of acrylic paint supplied decreased from 500 tons per week to 400 tons per week when the price of acrylic paint decreased from $20 per ton to $10 per ton. The price elasticity of supply for acrylic paint over this price range is
answer
relatively inelastic
question
The difference between the price at which a producer would be willing to sell a candy bar and the actual market price that she receives from the sale is best known as
answer
producer surplus
question
Johny is currently spending his entire weekly snack budget on 5 bags of candy and 4 juice boxes. At his current level of consumption, Johnny's marginal utility for candy is 5 utils and has marginal utility for juice boxes is 10 utils. In order to maximize his total utility, Johnny should
answer
maintain his current level of consumption if the price of candy is $1 and the price of a juice box is $2
question
A firm experiencing diseconomies of scale will have
answer
a long-run average total cost (ATC) that increases as output increases
question
Which of the following best describes a perfectly competitive market?
answer
a market structure where individual firms have no control over the price that they charge
question
Which of the following best describes the marginal revenue curve as a single-price monopolist increases its output in the short run?
answer
decreasing and below the monopolist's demand curve
question
Which of the following is not true of a monopolistically competitive firm in long-run equilibrium
answer
Price equals average total cost and marginal cost
question
Which of the following is a fundamental aspect of the free market economics system?
answer
The protection of private property rights
question
In 2014, 13 billion bushels of corn were harvested and sold for $3.70 per bushel. The next year, 13 billion bushels of corn were harvested and sold at $3.50 per bushel. Which of the following changes in supply and demand could have caused this change?
answer
Supply increased while demand decreased
question
An early frost delay 20% of the coffee bean corp. If supply and demand for coffee beans are both relatively inelastic, and the frost does not impact the quality of the coffee beans that make it to market, which of the following will most likely occur to the equilibrium price and quantity of coffee bean?
answer
Price will increases, quantity will decrease
question
Which of the following is true if the government enacts a per-unit tax on a product with relatively inelastic demand and relatively elastic supply?
answer
The tax burden will fall more on consumers than on producers
question
Herman spends his entire income on only two goods: bagels and juice. Currently, his MU for bagels is 12, and his MU for juice is 6. If the price for each bagel is $3, and the price for each juice is $1, this Herman should
answer
buy less bagels and more juice
question
If none of a firm's costs are fixed, which of the following must be true as its output increases?
answer
Average total cost equals average variable cost
question
Which of the following accurately differentiates allocative efficiency and productive efficiency on a firm graph?
answer
Allocative efficiency is where P = MC; Productive efficiency is where P = minimum average total cost
question
A firm must be able to separate consumers into different groups based on their elasticity of demand in order to
answer
price discriminate
question
Oligopolistic firms all share this characteristic, which is not typically found in any other market structure.
answer
They are mutually interdependent
question
All of the following are true statements about market structures EXCEPT
answer
Competitive firms are more likely to experience economies of scale than oligopolistic firms
question
All of the following are true about an country's production possibilities curve EXCEPT
answer
An increase in unemployment causes the curve to shift towards the origin
question
Sports cars are a normal good. Which of the following contribute to the downward sloping demand for sports cars?
I. Law of diminishing marginal utility
II. Substitution
III. Income effect
IV. Allocative efficiency
I. Law of diminishing marginal utility
II. Substitution
III. Income effect
IV. Allocative efficiency
answer
I, II, and III only
question
If the demand for health care is very inelastic, an increase in the price of health care will
answer
increase the total revenue of health care providers
question
If only one supplier in a perfectly competitive market received a per-unit subsidy this year, how will this subsidy impact the firm's price and output in the short run?
answer
price will not change; output will increase
question
Why does the marginal cost of producing cookies eventually increases in the short run?
answer
diminishing marginal product
question
Which of the following is always true about the relationship between a firm's ATC and MC curves in the short run?
answer
the MC curve intersects the ATC curve at the minimum point of the ATC curve
question
Assuming all of a firm's cost are explicit, the output level where accounting profit is maximized will always be where
answer
marginal cost equals marginal revenue
question
Which of the following is least likely to increase economic profit in any given market?
answer
Low barriers to entry
question
Which of the following will most likely occur if a perfectly competitive market is replaced by a single-price monopolist?
answer
The deadweight loss will increase
question
SpeedCo and Fast Track are the only two companies providing local 24-hour delivery service. If these firms do not collude and both follow their dominant strategy, according to the payoff matrix above, how much profit will each company earn?
answer
Fast Track: 30, SpeedCo: 30
question
A monopolistically competitive firm is currently in long-run equilibrium. If the output of the firm is 50 units and the price the firm receives for each product is $10, what is the total cost for this firm?
answer
$500
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