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A Market:
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is an institution that brings together buyers and sellers
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The demand curve shows the relationship between:
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price and quantity demanded
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When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the:
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Income effect
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If two goods are complements:
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a decrease in the price of one will increase the demand for the other.
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An increase in the price of product A will:
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increase the demand for substitute product B.
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By an "increase in demand," economists mean that
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the quantity demanded at each price in a set of prices is greater.
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The term "quantity demanded":
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refers to the amount of a product that will be purchased at some specific price.
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The supply curve shows the relationship between:
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price and quantity supplied
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An improvement in production technology will:
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shift the supply curve to the right
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At the point where the demand and supply curves for product intersect:
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the quantity that consumers want to purchase and the amount producers choose to sell are the same.
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If price is above the equilibrium level, competition among sellers to reduce the resulting:
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surplus will increase quantity demanded and decrease quantity supplied.
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The price elasticity of demand measures:
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buyers' responsiveness to a change in the price of a good.
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The basic formula for the price elasticity of demand coefficient is:
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percentage change in quantity demand/percentage change in price.
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The demand for a product is inelastic with respect to price if:
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consumers are largely unresponsive to a per unit price change.
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Which of the following is not characteristic of the demand for a community that is elastic?
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The elasticity coefficient is less than one
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A perfectly inelastic demand schedule:
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can be represented by a line parallel to the vertical axis.
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If the demand for bacon is relatively elastic, a 10 percent decline in the price of bacon will:
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increase the amount demanded by more than 10%
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On which of the following instances will total revenue decline?
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Prices rises and demand is elastic
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If the University Chamber Music Society decides to raise ticket prices to provide more funds to finance concerts, the Society is assuming that the demand for tickets is:
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inelastic
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The elasticity of demand for a product is likely to be greater:
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The greater the amount of time over which buyers adjust to price change
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The main determinant of elasticity of supply is the:
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amount of time the producer has to adjust inputs in response to a price change
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The utility of a good or service
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is the satisfaction or pleasure one gets from consuming it.
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Marginal utility can be:
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positive, negative, or zero
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The law of diminishing marginal utility states that:
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beyond some point, additional units of a product will yield less and less extra satisfaction to a consumer.
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The first Pepsi yields Craig 18 units of utility and the second yields him an additional 12 units of utility. His total utility from three Pepsis is 38 units of utility. The marginal utility of the third Pepsi is:
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8 units of utility
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Marginal utility is the:
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change in total utility obtained by consuming one more unit of a good.
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Where total utility is at a maximum, marginal utility is:
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zero
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Economic cost can best be defined as
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the payment that must be made to obtain and retain the services of a resource
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Which of the following is most likely to be an implicit cost for Company X?
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Forgone rent from the building owned and used by Company X
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An explicit cost is
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a money payment made for resources not owned by the firm itself.
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To economists, the main difference between the short run and the long run is that:
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in the long run all resources are variable, while in the short run at least one resource is fixed
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Marginal cost is the:
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change in total cost that results from producing one more unit of output
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average fixed cost
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declines continually as output increases
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Total Fixed Cost (TFC)
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does not change as total output increases or decreases.
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Economics and diseconomies of scale explain
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why the firm's long-run average total cost curve is U-shaped
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In the long run:
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all costs are variable
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Which of the following is not a source of economies of scale?
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Inelastic resource supply curves
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An increase in the price of product A will:
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increase the demand for substitute product B.
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A leftward shift of a product supply curve might be caused by:
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some firms leaving the industry
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