Microeconomics 2106 Fl19 UNG (TEST 2)

question

The widespread availability of e-mail has likely increased the price elasticity of demand for the services of the U.S. Postal Service.

answer

A- true

question

Andrea and Tessa own a business that provides grooming services. After raising their prices by 10%, the quantity of hours they spend delivering training services fell by 15%. The demand for their services is relatively price inelastic.

answer

B-False

question

Owners of common stock receive fixed dividend payments while owners of preferred stock receive dividend payments that vary with the level of profits.

answer

B-false

question

Bonds are considered securities while stocks are not.

answer

B-False

question

One of the ugly stepsisters argues that she, rather than Cinderella, should go to the ball because she will derive more utility from it than Cinderella. An economist would:

answer

c. point out that making interpersonal utility comparisons is not possible.

question

A steel mill raises the price of steel by 7%, which results in a 20% reduction in the quantity of steel demanded. The demand curve facing this firm is:

answer

A. elastic

question

The Shoe Emporium reduces the price of its shoes by 50% and finds that the quantity demanded for its shoes more than doubles. The demand for shoes from The Shoe Emporium appears to be:

answer

B. elastic

question

The nation's largest cable TV company tested the effect of a price reduction for premium movie channels. It lowered prices from $15 to $10 and found that the number of customers rose by 25%. This means:

answer

D. the demand for premium movie channels is inelastic in this price range.

question

Which of the following is not a major determinant of the price elasticity of demand?

answer

C.quantity of goods available

question

When demand and income move in the same direction, a good is said to be:

answer

A. normal good

question

The price of stadium seats at a baseball game increases from $20 to $30 and ticket sales fall from 45,000 per game to 35,000 per game. If other things remained constant, then it appears that the price elasticity of demand is:
elastic.

answer

B- inelastic.

question

The price of a new electronic toy increases from $16 to $20 and the quantity demanded decreases from 1,000 to 900 per month as a result. Based on this information, the price elasticity of demand is estimated to be equal t0:

answer

B. 0.47

question

Price elasticity of demand is defined as:

answer

D. the percentage change in quantity demanded divided by the percentage change in price.

question

A price cut will increase the total revenue a firm receives if the demand for its product is:

answer

a. elastic

question

Refer to Figure 1. With reference to Graph B, at a price of $10, total revenue equals:

answer

C. $300

question

Refer to Figure 1. Graph A represents a demand curve that is relatively __________. Total revenue __________ as the price decreases from $10 to $5.

answer

C. elastic; increases

question

the definition of cross-elasticity of demand with regard to two products X and Y is:

answer

D. the percentage change in the quantity of X demanded divided by the percentage change in the price
of Y.

question

Chicken and fish are substitutes. Therefore, the cross elasticity of demand between chicken and fish should be:

answer

B. Postive

question

The price of peanut butter increases and as a result the demand for jelly increases. We can conclude that:

answer

A. peanut butter and jelly are substitutes

question

The law of diminishing marginal utility states that:

answer

C. the increase in total utility from consuming an additional unit decreases as consumption increases.

question

The amount of added utility that an individual derives from consuming one more unit of a good or service is called:

answer

B. marginal utility.

question

Jeremy maximizes utility by consuming both iced tea and coffee. Iced tea is priced at $1.50 per bottle and coffee at $2.00 per 16-ounce cup. Which of the following marginal utility pairs is inconsistent with Jeremy's consumer equilibrium at these prices?

answer

B. MU of iced tea = 4; MU of coffee = 3

question

23. A consumer's utility is maximized when:

answer

E. none of the above are generally true.

question

The term______ describes a situation where a ____ causes a reduction in the buying power of invome, even though actual income has not changed.

answer

C. income effect, higher price.

question

In microeconomic terms, the ability of a good or a service to satisfy wants is called:

answer

B. utility

question

Economists are able to determine total utility by:

answer

D. summing up the marginal utilities of each unit consumed.

question

How does the U.S. Bureau of Labor Statistics gather information with regard to the typical consumption choices of Americans?

answer

C. Consumer Expenditure Survey

question

Simone has $36 per week in her entertainment budget. She splits her time between going to the movies and renting video games. Each movie costs $12 while each video game rental costs $6. The measured total utility of each of her activities is shown in the table below. What is Simone's utility maximizing point?

answer

B. 1 movies, 4 video game rentals

question

Saving money is a(n)present______, but the ability to consume more in the future

answer

B. intertemporal choice

question

Refer to the diagram above. What is the significance of the point at the top of the backward bending of the supply curve marked L3?

answer

D. as wages increase over this range, the quantity of hours worked actually decreases.

question

The amount of added utility that an individual derives from consuming one more unit of a good or service is called:

answer

B>marginal utility.

question

When a consumer maximizes utility subject to a limited income, she allocates income across goods
to the point that:

answer

D.the marginal utility per dollar spent is the same for all goods.

question

Proprietorships are business enterprises owned by:

answer

E. either A or C.
A. A single individual
C. Households

question

The form of business organization that makes it easiest to raise large sums of money for capital investment is:

answer

A. a corporation

question

In the event of a corporate bankruptcy, __________ have first priority when it comes to settling claims on the assets of the firm.

answer

D.bondholders

question

A bond can be:

answer

d. both b and c above
b. a debt obligation of a company
c. a debt obligation of a government or government agency

question

During a severe recession, the government issued food stamps that could only be used to acquire food to a greater number of families. The budget line graph shows food on the horizontal axis and everything else on the vertical axis. The government expects that issuing the food stamps will cause each family's budget constraint line to:

answer

D. shift to the right

question

Which of the following is a method by which a firm can obtain financial resources to invest in capital?

answer

D. all of the above
A. use of retained earnings
B. borrowing from financial intermediaries
C.selling stocks or bonds

question

What do stocks, bonds, securitized mortgage assets and other financial investments all have in common?

answer

C. they can only be purchased in financial markets

question

Why would a large publically traded corporation likely prefer issuing bonds as a way to raise new money as opposed to issuing more shares?

answer

B. more shares will dilute the existing value of the stock, causing its market price to fall

1 of 40

question

The widespread availability of e-mail has likely increased the price elasticity of demand for the services of the U.S. Postal Service.

answer

A- true

question

answer

B-False

question

Owners of common stock receive fixed dividend payments while owners of preferred stock receive dividend payments that vary with the level of profits.

answer

B-false

question

Bonds are considered securities while stocks are not.

answer

B-False

question

One of the ugly stepsisters argues that she, rather than Cinderella, should go to the ball because she will derive more utility from it than Cinderella. An economist would:

answer

c. point out that making interpersonal utility comparisons is not possible.

question

A steel mill raises the price of steel by 7%, which results in a 20% reduction in the quantity of steel demanded. The demand curve facing this firm is:

answer

A. elastic

question

The Shoe Emporium reduces the price of its shoes by 50% and finds that the quantity demanded for its shoes more than doubles. The demand for shoes from The Shoe Emporium appears to be:

answer

B. elastic

question

answer

D. the demand for premium movie channels is inelastic in this price range.

question

Which of the following is not a major determinant of the price elasticity of demand?

answer

C.quantity of goods available

question

When demand and income move in the same direction, a good is said to be:

answer

A. normal good

question

answer

B- inelastic.

question

answer

B. 0.47

question

Price elasticity of demand is defined as:

answer

D. the percentage change in quantity demanded divided by the percentage change in price.

question

A price cut will increase the total revenue a firm receives if the demand for its product is:

answer

a. elastic

question

Refer to Figure 1. With reference to Graph B, at a price of $10, total revenue equals:

answer

C. $300

question

Refer to Figure 1. Graph A represents a demand curve that is relatively __________. Total revenue __________ as the price decreases from $10 to $5.

answer

C. elastic; increases

question

the definition of cross-elasticity of demand with regard to two products X and Y is:

answer

D. the percentage change in the quantity of X demanded divided by the percentage change in the price
of Y.

question

Chicken and fish are substitutes. Therefore, the cross elasticity of demand between chicken and fish should be:

answer

B. Postive

question

The price of peanut butter increases and as a result the demand for jelly increases. We can conclude that:

answer

A. peanut butter and jelly are substitutes

question

The law of diminishing marginal utility states that:

answer

C. the increase in total utility from consuming an additional unit decreases as consumption increases.

question

The amount of added utility that an individual derives from consuming one more unit of a good or service is called:

answer

B. marginal utility.

question

answer

B. MU of iced tea = 4; MU of coffee = 3

question

23. A consumer's utility is maximized when:

answer

E. none of the above are generally true.

question

The term______ describes a situation where a ____ causes a reduction in the buying power of invome, even though actual income has not changed.

answer

C. income effect, higher price.

question

In microeconomic terms, the ability of a good or a service to satisfy wants is called:

answer

B. utility

question

Economists are able to determine total utility by:

answer

D. summing up the marginal utilities of each unit consumed.

question

How does the U.S. Bureau of Labor Statistics gather information with regard to the typical consumption choices of Americans?

answer

C. Consumer Expenditure Survey

question

answer

B. 1 movies, 4 video game rentals

question

Saving money is a(n)present______, but the ability to consume more in the future

answer

B. intertemporal choice

question

Refer to the diagram above. What is the significance of the point at the top of the backward bending of the supply curve marked L3?

answer

D. as wages increase over this range, the quantity of hours worked actually decreases.

question

The amount of added utility that an individual derives from consuming one more unit of a good or service is called:

answer

B>marginal utility.

question

When a consumer maximizes utility subject to a limited income, she allocates income across goods
to the point that:

answer

D.the marginal utility per dollar spent is the same for all goods.

question

Proprietorships are business enterprises owned by:

answer

E. either A or C.
A. A single individual
C. Households

question

The form of business organization that makes it easiest to raise large sums of money for capital investment is:

answer

A. a corporation

question

In the event of a corporate bankruptcy, __________ have first priority when it comes to settling claims on the assets of the firm.

answer

D.bondholders

question

A bond can be:

answer

d. both b and c above
b. a debt obligation of a company
c. a debt obligation of a government or government agency

question

answer

D. shift to the right

question

Which of the following is a method by which a firm can obtain financial resources to invest in capital?

answer

D. all of the above
A. use of retained earnings
B. borrowing from financial intermediaries
C.selling stocks or bonds

question

What do stocks, bonds, securitized mortgage assets and other financial investments all have in common?

answer

C. they can only be purchased in financial markets

question

Why would a large publically traded corporation likely prefer issuing bonds as a way to raise new money as opposed to issuing more shares?

answer

B. more shares will dilute the existing value of the stock, causing its market price to fall

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