question
Total utility is defined as the: D
answer
A) change in marginal utility a person derives from the consumption of a good.
B) change in total utility a person derives from the consumption of a good divided by the price of that good.
C)change in total utility a person derives from the consumption of a good divided by the
change in the consumption of that good.
D) sum of the amounts of satisfaction a person receives from consuming a good.
E) change in total utility a person derives from the consumption of a good.
B) change in total utility a person derives from the consumption of a good divided by the price of that good.
C)change in total utility a person derives from the consumption of a good divided by the
change in the consumption of that good.
D) sum of the amounts of satisfaction a person receives from consuming a good.
E) change in total utility a person derives from the consumption of a good.
question
A util is an artificial construct used as a means of measuring the: B
answer
A) price of a good.
B) satisfaction one receives from the consumption of a good.
C) costs of producing a good.
D) difference between the price and the value of a good.
B) satisfaction one receives from the consumption of a good.
C) costs of producing a good.
D) difference between the price and the value of a good.
question
Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 80, 116, 136, 150, respectively. The marginal utility of the sixth wing is __________ utils: A
answer
A) 14
B) 136
C) 20
D) 22.7
B) 136
C) 20
D) 22.7
question
We would expect the total utility of diamonds to be __________ than the total utility of water and the marginal utility of diamonds to be __________ than the marginal utility of water: D
answer
A) higher; higher
B) lower; lower
C) higher; lower
D) lower; higher
B) lower; lower
C) higher; lower
D) lower; higher
question
Suppose for a consumer the marginal utility (MU) of bread is 20 utils and the MU of milk is 10 utils; the price of bread is $3 and the price of milk is $1. Given this: B
answer
A) more utility per dollar is gained from consuming bread than milk
B) more utility per dollar is gained from consuming milk than bread.
C) the same amount of utility per dollar is gained from consuming milk as bread.
D)the consumer is in consumer equilibrium.
B) more utility per dollar is gained from consuming milk than bread.
C) the same amount of utility per dollar is gained from consuming milk as bread.
D)the consumer is in consumer equilibrium.
question
Refer to Exhibit 21-4. What value goes in blank (D)? : A
answer
A) 102
B) 111
C) 118
D) 25
E) There is not enough information to answer this question.
B) 111
C) 118
D) 25
E) There is not enough information to answer this question.
question
If a person's income falls, his or her budget constraint moves: A
answer
A) inward toward the origin, and its slope changes.
B) outward away from the origin, and its slope remains the same.
C) inward toward the origin, and its slope remains the same.
D) outward away from the origin, and its slope changes.
E)none of the above
B) outward away from the origin, and its slope remains the same.
C) inward toward the origin, and its slope remains the same.
D) outward away from the origin, and its slope changes.
E)none of the above
question
If a firm earns normal profit, then it has generated revenues: A
answer
A) equal to the sum of implicit and explicit costs.
B) greater than total opportunity costs.
C) sufficient to cover explicit costs, but not implicit costs.
D) sufficient to cover implicit costs, but not explicit costs
B) greater than total opportunity costs.
C) sufficient to cover explicit costs, but not implicit costs.
D) sufficient to cover implicit costs, but not explicit costs
question
At 100 units of output, total cost is $40,000 and total variable cost is $34,000. At 100 units of output, what is the value of average total cost, average variable cost, and average fixed cost, respectively?: B
answer
A) $40;$34;$6
B) $400; $340; $60
C) $740; $340; $400
D) $340; $740; $60
E) $400; $340: There is not enough information provided to determine the average fixed cost.
B) $400; $340; $60
C) $740; $340; $400
D) $340; $740; $60
E) $400; $340: There is not enough information provided to determine the average fixed cost.
question
Refer to Exhibit 22-2. What is the average total cost of producing 90 units of output?: C
answer
A) $0.50
B) $1.17
C) $1.07
D) $1.78
E) There is not enough information provided to answer the question
B) $1.17
C) $1.07
D) $1.78
E) There is not enough information provided to answer the question
question
Refer to Exhibit 22-4. Curve C is a(n) __________ cost curve: B
answer
A) marginal
B) average variable
C) average total
D) average fixed
B) average variable
C) average total
D) average fixed
question
If the owner of a firm earns zero economic profit, he or she has earned total revenue equal to his or her: C
answer
A) implicit costs.
B) explicit costs.
C) accounting profit.
D) implicit costs plus explicit costs.
E)none of the above
B) explicit costs.
C) accounting profit.
D) implicit costs plus explicit costs.
E)none of the above
question
If the marginal productivity of labor is falling, it follows that: C
answer
A) the average productivity of labor is rising.
B) marginal cost is falling.
C) marginal cost is rising.
D) average productivity of labor is falling.
E) c and d
B) marginal cost is falling.
C) marginal cost is rising.
D) average productivity of labor is falling.
E) c and d
question
As the marginal physical product of U.S. workers _________________, the marginal cost of goods produced in the U.S. ______________ and unit costs _____________. This makes American goods ________________ competitive in the global marketplace: B
answer
A) rises; falls; fall; less B) falls; falls; fall; more
C) rises; falls; fall;
D) more rises; falls; rise; less
C) rises; falls; fall;
D) more rises; falls; rise; less
question
Which of the following is an example of market coordination?: D
answer
A) Bad weather wipes out half the pineapple crop in Hawaii, the price of pineapples rises, and consumers cut back on their purchases of pineapples.
B) The manager of a grocery store notices that his customers are buying tomato soup about as quickly as he puts it on the shelves, so he orders more tomato soup from the wholesaler.
D) The manager of a grocery store tells her employees to put the sugar-free cereals on the top shelf where adults can find them more easily.
D) a and b
E) a, b, and c
B) The manager of a grocery store notices that his customers are buying tomato soup about as quickly as he puts it on the shelves, so he orders more tomato soup from the wholesaler.
D) The manager of a grocery store tells her employees to put the sugar-free cereals on the top shelf where adults can find them more easily.
D) a and b
E) a, b, and c
question
Perfectly competitive industries are: E
answer
A) difficult to enter because there are already so many producers in the industry.
B) not particularly appealing or attractive to enter because there tend to be so many buyers that it is difficult to deal with them.
C) relatively easy to enter but not so easy to exit from.
D) a and b
E) none of the above
B) not particularly appealing or attractive to enter because there tend to be so many buyers that it is difficult to deal with them.
C) relatively easy to enter but not so easy to exit from.
D) a and b
E) none of the above
question
Refer to Exhibit 23-2. For the firm that faces the demand curve in the exhibit: E
answer
A) marginal revenue is constant.
B) price equals marginal revenue.
C) if the firm maximizes profits, it produces the quantity of output at which price equals marginal cost.
D) a and c
E) a, b, and c
B) price equals marginal revenue.
C) if the firm maximizes profits, it produces the quantity of output at which price equals marginal cost.
D) a and c
E) a, b, and c
question
Refer to Exhibit 23-7. At the profit-maximizing output level, average total cost is: C
answer
A) $2.00.
B) $4.50.
C) $5.00.
D) $6.00.
E) This cannot be determined based on the information provided.
B) $4.50.
C) $5.00.
D) $6.00.
E) This cannot be determined based on the information provided.
question
All firms in an industry sell their product for the same price. This is a result of: B
answer
A) collusion.
B) perfect competition.
C) a government law that specifies all firms must charge the same price.
D) a or b
E) There is not enough information to answer the question.
B) perfect competition.
C) a government law that specifies all firms must charge the same price.
D) a or b
E) There is not enough information to answer the question.
question
Why must profits be zero in long-run competitive equilibrium? A
answer
A) If profits are not zero, firms will enter or exit the industry.
B) If profits are not zero, firms will produce higher-quality goods.
C) If profits are not zero, marginal revenue will rise.
D) If profits are not zero, marginal cost will rise.
B) If profits are not zero, firms will produce higher-quality goods.
C) If profits are not zero, marginal revenue will rise.
D) If profits are not zero, marginal cost will rise.
question
A constant-cost industry has a long-run (industry) supply curve that is: C
answer
A) upward sloping.
B) downward sloping.
C) horizontal.
D) U-shaped.
B) downward sloping.
C) horizontal.
D) U-shaped.
question
A monopoly mat exist because: B
answer
A) government has refused to grant a public franchise.
B)one firm has the exclusive ownership of a necessary resource.
C) the firm is so large and is currently experiencing such vast diseconomies of scale that it can out-compete all newcomers.
D) a and b
E) a, b, and c
B)one firm has the exclusive ownership of a necessary resource.
C) the firm is so large and is currently experiencing such vast diseconomies of scale that it can out-compete all newcomers.
D) a and b
E) a, b, and c
question
Economic rent is a payment in excess of: C
answer
A) average fixed cost.
B) average variable cost.
C) opportunity cost.
D) explicit cost, but not necessarily implicit cost.
E) none of the above
B) average variable cost.
C) opportunity cost.
D) explicit cost, but not necessarily implicit cost.
E) none of the above
question
If a perfectly competitive firm and a single-price monopolist face the same demand and cost curves, then: A
answer
A) the competitive firm will attain resource-allocative efficiency, but the monopolist will not.
B) the competitive firm will attain resource-allocative efficiency, but the monopolist may or may not, depending upon the demand for its product.
C) the competitive firm will not attain resource-allocative efficiency, but the monopolist will.
D) both the competitive firm and the monopolist will attain resource-allocative efficiency.
E) neither the competitive firm nor the monopolist will attain resource-allocative efficiency.
B) the competitive firm will attain resource-allocative efficiency, but the monopolist may or may not, depending upon the demand for its product.
C) the competitive firm will not attain resource-allocative efficiency, but the monopolist will.
D) both the competitive firm and the monopolist will attain resource-allocative efficiency.
E) neither the competitive firm nor the monopolist will attain resource-allocative efficiency.
question
X-inefficiency refers to: C
answer
A) the tendency for an economy to allocate too many resources to the monopolist.
B) the increase in costs and organizational slack in a monopoly resulting from the lack of competitive pressure.
C) the resources used to regulate the behavior of a monopolist.
D) a and b
E) a and c
B) the increase in costs and organizational slack in a monopoly resulting from the lack of competitive pressure.
C) the resources used to regulate the behavior of a monopolist.
D) a and b
E) a and c
question
A perfectly price-discriminating monopolist is one who: C
answer
A) splits all buyers into two mutually exclusive groups.
B) refuses to sell to certain groups of consumers
C) charges a different price for every unit sold.
D) a and b
E) a and c
B) refuses to sell to certain groups of consumers
C) charges a different price for every unit sold.
D) a and b
E) a and c
question
In general, electric, gas, and water companies are examples of __________ monopolies: C
answer
A) unregulated
B) patent
C) natural
D) government
B) patent
C) natural
D) government
question
One thing a monopoly firm has to do that a perfectly competitive firm does not have to do is: A
answer
A) search for its profit-maximizing price.
B) advertise.
C) minimize its losses.
D) produce the quantity of output at which P = MC.
E) produce a high-quality product.
B) advertise.
C) minimize its losses.
D) produce the quantity of output at which P = MC.
E) produce a high-quality product.
question
Buying low and selling high is often referred to as: C
answer
A) price discrimination.
B) rent seeking.
C) arbitrage.
D) X-inefficiency.
E) capitalization.
B) rent seeking.
C) arbitrage.
D) X-inefficiency.
E) capitalization.
question
perfectly competitive firm charges a price equal to __________ while the monopolistic competitor firm charges a price __________: E
answer
A) marginal revenue, equal to marginal cost
B) marginal cost, greater than marginal cost
C) marginal revenue, greater than marginal revenue
D) average fixed cost, greater than average total cost
E) b and c
B) marginal cost, greater than marginal cost
C) marginal revenue, greater than marginal revenue
D) average fixed cost, greater than average total cost
E) b and c
question
In what industry structure is the interdependence of firms a key characteristic?: D
answer
A) perfect competition
B) monopolistic
C) competition oligopoly
D) monopoly
B) monopolistic
C) competition oligopoly
D) monopoly
question
Total industry sales are $800 million. The four largest firms have sales of $220 million,
$126 million, $98 million, and $42 million. The industry's four-firm concentration ratio is: A
$126 million, $98 million, and $42 million. The industry's four-firm concentration ratio is: A
answer
A) 0.61.
B) 0.48.
C) 0.39.
D) 0.58
B) 0.48.
C) 0.39.
D) 0.58
question
If the firms of an industry form a cartel, their goal is to: B
answer
A) collectively increase output and thereby earn higher profits.
B) cut back on output and raise the price of their product to earn higher profits.
C) maintain a constant level of output, but increase price to earn higher profits.
D) maintain a constant price level, but increase output to earn higher profits
B) cut back on output and raise the price of their product to earn higher profits.
C) maintain a constant level of output, but increase price to earn higher profits.
D) maintain a constant price level, but increase output to earn higher profits
question
If you were to rank the four market structures in terms of lowest concentration ratio to highest concentration ratio, which of the following rankings would be correct?: C
answer
A) oligopoly, monopoly, perfect competition, monopolistic competition
B) monopoly, oligopoly, monopolistic competition, perfect competition
C) perfect competition, monopolistic competition, oligopoly, monopoly
D) monopolistic competition, perfect competition, oligopoly, monopoly
E) monopolistic competition, oligopoly, perfect competition, monopoly
B) monopoly, oligopoly, monopolistic competition, perfect competition
C) perfect competition, monopolistic competition, oligopoly, monopoly
D) monopolistic competition, perfect competition, oligopoly, monopoly
E) monopolistic competition, oligopoly, perfect competition, monopoly
question
monopolistic competitive firm will most likely earn a normal profit in the long run because of: C
answer
A) product differentiation.
B) many buyers and sellers.
C) easy entry and exit.
D) b and c
B) many buyers and sellers.
C) easy entry and exit.
D) b and c
question
Some monopolistic competitive firms may earn positive economic profits in the long run because of: A
answer
A) product differentiation.
B) many buyers and sellers.
C) easy entry and exit.
D) b and c
E) all of the above
B) many buyers and sellers.
C) easy entry and exit.
D) b and c
E) all of the above
question
Refer to Exhibit 25-3. Profits of this profit maximizing monopolistic competitor is represented by the area: C
answer
A) 0P4DQ3.
B) P5P3CE.
C) P3P1AC.
D)0Q1 times P2P4.
E) 0Q1 times P2P5
B) P5P3CE.
C) P3P1AC.
D)0Q1 times P2P4.
E) 0Q1 times P2P5
question
A monopolist is a _______________ and a monopolistic competitive firm is: D
answer
A) price searcher; also a price searcher.
B) price taker; a price searcher.
C) price taker; also a price taker.
D) price searcher; a price taker.
B) price taker; a price searcher.
C) price taker; also a price taker.
D) price searcher; a price taker.
question
In an oligopoly market, unlike in other market structures, firms: B
answer
A) face a downward-sloping demand curve.
B) can produce a homogeneous product or a differentiated product.
C) use advertising.
D) face low barriers to entry and exit.
B) can produce a homogeneous product or a differentiated product.
C) use advertising.
D) face low barriers to entry and exit.
question
If two firms that form a cartel agreement are in a prisoner's dilemma game, then: D
answer
A) both firms will have an incentive to break the agreement.
B) only one firm will have an incentive to break the agreement.
C) both firms will be better off if they hold to the agreement than if they break it.
D) a and c
E) b and c
B) only one firm will have an incentive to break the agreement.
C) both firms will be better off if they hold to the agreement than if they break it.
D) a and c
E) b and c
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