Microeconomics - Assignment Essays

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a fall in the quantity demanded.

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According to the law of demand, if other relevant factors remain unchanged, then a rise in the price of a commodity will cause

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relatively flat.

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Surveys show that a small increase in the price of organic potatoes will cause most people to switch to other alternatives such as packaged mashed potatoes. This finding suggests that the demand curve for organic potatoes is

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the consumer's income has risen.

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An outward, parallel shift in the budget line indicates that

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the budget line shifts up by 10 dollars, with no change in the slope.

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Suppose that good X is on the horizontal axis and all other goods (measured in dollars) are on the vertical axis in the consumer-choice diagram. If the consumer gains $10 in income, then

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either or both.

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With an increase in income, a consumer can increase the quantity consumed of

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on a higher indifference curve that is tangent to the new budget line

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With an increase in income, we can predict that a consumer will choose a new market basket

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you consume more of when your income rises.

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Economists use the term normal good to refer to goods that

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the good is normal.

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An upward-sloping Engel curve indicates that

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increase by $5

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Demand for a product is given by Q = 100 - P and supply is given by Q = P - 10. If the quantity demanded rises by 10 units at every possible price, then the equilibrium price will

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60 units

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Demand for a product is given by Q = 200 - P and supply is given by Q = 0.5P - 10. If the quantity demanded rises by 10 units at every possible price, then the equilibrium quantity will be

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absolute prices are in terms of currency, relative prices are in terms of another good.

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The difference between an absolute price and a relative price is that:

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income effect.

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When the price of a good rises, the resulting change in quantity demanded due solely to the decline in your income's purchasing power is called the

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A change in consumption due to the fact that you will not buy goods whose marginal value is below the new price.

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Which of the following best describes the substitution effect caused by a price increase?

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one-half.

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The absolute price of beef in Japan is $10.00 per pound and the absolute price of tuna is $5.00 per pound then the relative price of tuna in terms of beef is

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are all equally desirable, providing the consumer with some fixed level of satisfaction.

answer

An indifference curve shows the baskets of goods which

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the marginal value of beer in terms of pizza.

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Facing choices between beer and pizza, the number of pizzas a consumer would be willing to trade for just one beer is called

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would refuse to pay more than 15¢ for a sixth doughnut.

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When Homer has 5 doughnuts, his marginal value is 15¢ per doughnut. We can conclude that Homer

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the set of all baskets that the consumer can afford, given prices and his or her income.

answer

A budget line is constructed to show

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the magnitude of the slope of the budget line.

answer

For the following questions, assume that good X is on the horizontal axis and good Y is on the vertical axis in the consumer-choice diagram. PX denotes the price of good X, PY is the price of good Y, and I is the consumer's income. Unless otherwise stated, the consumer's preferences are assumed to satisfy the standard assumptions.

Refer to Goods X and Y. The relative price of good X in terms of good Y is always equal to

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It would not be affected.

answer

For the following questions, assume that good X is on the horizontal axis and good Y is on the vertical axis in the consumer-choice diagram. PX denotes the price of good X, PY is the price of good Y, and I is the consumer's income. Unless otherwise stated, the consumer's preferences are assumed to satisfy the standard assumptions.

Refer to Goods X and Y. How would a budget line be affected if income and both prices all simultaneously doubled?

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lump together all goods but one into a single good measured in a single unit, like dollars.

answer

In using the composite-good convention in an indifference curve diagram, economists

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consume equal amounts of X and Y.

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A utility maximizing person has a utility function such that their marginal rate of substitution equals the amount of good Y they consume divided by the amount of good X that they consume (i.e. MRS = Y/X). If the prices of goods X and Y are the same, then the person will

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the consumer's income has risen.

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An outward, parallel shift in the budget line indicates that

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as long as the substitution effect outweighs the income effect.

answer

If the substitution and income effects are in opposite directions, the law of demand will hold

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marginal product gives the slope of total product.

answer

The shapes of the total product and marginal product curves are related because

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diminishing marginal returns.

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In the short run, a firm's marginal cost tends to rise as more is produced because of

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both the average cost curve and the average variable cost curve at their bottoms.

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The marginal cost curve crosses

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marginal cost is smaller than average cost.

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If the average cost curve is downward sloping, then

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the firm's short-run marginal cost curve will be upward sloping.

answer

Diminishing marginal returns to labor imply that

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The energy costs of running a factory.

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Which of the following is most likely to be a variable cost in the short run?

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the additional output attributable to the last unit of labor employed.

answer

The marginal product of labor is defined to be

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short-run production function.

answer

The association of each quantity of a variable input, like labor, to its total product is the

question

the ordinary demand curve will show the larger increase in quantity demanded.

answer

Consider the ordinary and compensated demand curves for a normal good. If the price of the good falls, then

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income effects.

answer

A compensated demand curve contains no

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must be given enough additional income to allow him to achieve his original indifference curve.

answer

In order to isolate the substitution effect of a price increase, a consumer

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rises.

answer

Suppose that because of inflation, the absolute price of a gallon of milk increases by 20% and the absolute price of a gallon of gasoline increases by 10%. In this situation, the price of milk relative to the price of gasoline

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risen.

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The price of silver increases from $10 per ounce to $15 per ounce while the price of gold increases from $300 per ounce to $310. In this situation, the price of silver relative to the price of gold has

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change the price of good X in the consumer choice diagram and observe the change in the quantity of good X among the optimum market baskets.

answer

To construct an ordinary demand curve for good X,

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pivots inward.

answer

As the price of good X increases, the budget line

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the Engel curve for this good must be downward sloping.

answer

If the income elasticity of a good is negative, then

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The change in the equilibrium quantity is indeterminate.

answer

If demand rises and supply falls, which of the following must be true?

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The equilibrium price will rise.

answer

If demand rises and supply falls, which of the following must be true?

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the number of computers bought and sold.

answer

A simultaneous increase in both the demand for computers and the supply of computers must increase

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the supply of gasoline must have fallen

answer

Suppose we observe that the price of gasoline has been rising, even though the quantity of gasoline sold has been falling. We can conclude that

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the quantities supplied and demanded are equal

answer

At the equilibrium point of a market,

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the price of gasoline has relatively little effect on drivers' decision to buy gasoline

answer

If the demand curve for gasoline is relatively steep, then

question

average variable cost.

answer

A competitive firm will shut down its operations in the short run
when the market price falls below its

question

average cost.

answer

A competitive firm will exit an industry in the long run when the
market price falls below its

1 of 48

question

a fall in the quantity demanded.

answer

According to the law of demand, if other relevant factors remain unchanged, then a rise in the price of a commodity will cause

question

relatively flat.

answer

question

the consumer's income has risen.

answer

An outward, parallel shift in the budget line indicates that

question

the budget line shifts up by 10 dollars, with no change in the slope.

answer

Suppose that good X is on the horizontal axis and all other goods (measured in dollars) are on the vertical axis in the consumer-choice diagram. If the consumer gains $10 in income, then

question

either or both.

answer

With an increase in income, a consumer can increase the quantity consumed of

question

on a higher indifference curve that is tangent to the new budget line

answer

With an increase in income, we can predict that a consumer will choose a new market basket

question

you consume more of when your income rises.

answer

Economists use the term normal good to refer to goods that

question

the good is normal.

answer

An upward-sloping Engel curve indicates that

question

increase by $5

answer

Demand for a product is given by Q = 100 - P and supply is given by Q = P - 10. If the quantity demanded rises by 10 units at every possible price, then the equilibrium price will

question

60 units

answer

Demand for a product is given by Q = 200 - P and supply is given by Q = 0.5P - 10. If the quantity demanded rises by 10 units at every possible price, then the equilibrium quantity will be

question

absolute prices are in terms of currency, relative prices are in terms of another good.

answer

The difference between an absolute price and a relative price is that:

question

income effect.

answer

When the price of a good rises, the resulting change in quantity demanded due solely to the decline in your income's purchasing power is called the

question

A change in consumption due to the fact that you will not buy goods whose marginal value is below the new price.

answer

Which of the following best describes the substitution effect caused by a price increase?

question

one-half.

answer

The absolute price of beef in Japan is $10.00 per pound and the absolute price of tuna is $5.00 per pound then the relative price of tuna in terms of beef is

question

are all equally desirable, providing the consumer with some fixed level of satisfaction.

answer

An indifference curve shows the baskets of goods which

question

the marginal value of beer in terms of pizza.

answer

Facing choices between beer and pizza, the number of pizzas a consumer would be willing to trade for just one beer is called

question

would refuse to pay more than 15¢ for a sixth doughnut.

answer

When Homer has 5 doughnuts, his marginal value is 15¢ per doughnut. We can conclude that Homer

question

the set of all baskets that the consumer can afford, given prices and his or her income.

answer

A budget line is constructed to show

question

the magnitude of the slope of the budget line.

answer

question

It would not be affected.

answer

For the following questions, assume that good X is on the horizontal axis and good Y is on the vertical axis in the consumer-choice diagram. PX denotes the price of good X, PY is the price of good Y, and I is the consumer's income. Unless otherwise stated, the consumer's preferences are assumed to satisfy the standard assumptions.

Refer to Goods X and Y. How would a budget line be affected if income and both prices all simultaneously doubled?

question

lump together all goods but one into a single good measured in a single unit, like dollars.

answer

In using the composite-good convention in an indifference curve diagram, economists

question

consume equal amounts of X and Y.

answer

question

the consumer's income has risen.

answer

An outward, parallel shift in the budget line indicates that

question

as long as the substitution effect outweighs the income effect.

answer

If the substitution and income effects are in opposite directions, the law of demand will hold

question

marginal product gives the slope of total product.

answer

The shapes of the total product and marginal product curves are related because

question

diminishing marginal returns.

answer

In the short run, a firm's marginal cost tends to rise as more is produced because of

question

both the average cost curve and the average variable cost curve at their bottoms.

answer

The marginal cost curve crosses

question

marginal cost is smaller than average cost.

answer

If the average cost curve is downward sloping, then

question

the firm's short-run marginal cost curve will be upward sloping.

answer

Diminishing marginal returns to labor imply that

question

The energy costs of running a factory.

answer

Which of the following is most likely to be a variable cost in the short run?

question

the additional output attributable to the last unit of labor employed.

answer

The marginal product of labor is defined to be

question

short-run production function.

answer

The association of each quantity of a variable input, like labor, to its total product is the

question

the ordinary demand curve will show the larger increase in quantity demanded.

answer

Consider the ordinary and compensated demand curves for a normal good. If the price of the good falls, then

question

income effects.

answer

A compensated demand curve contains no

question

must be given enough additional income to allow him to achieve his original indifference curve.

answer

In order to isolate the substitution effect of a price increase, a consumer

question

rises.

answer

question

risen.

answer

question

change the price of good X in the consumer choice diagram and observe the change in the quantity of good X among the optimum market baskets.

answer

To construct an ordinary demand curve for good X,

question

pivots inward.

answer

As the price of good X increases, the budget line

question

the Engel curve for this good must be downward sloping.

answer

If the income elasticity of a good is negative, then

question

The change in the equilibrium quantity is indeterminate.

answer

If demand rises and supply falls, which of the following must be true?

question

The equilibrium price will rise.

answer

If demand rises and supply falls, which of the following must be true?

question

the number of computers bought and sold.

answer

A simultaneous increase in both the demand for computers and the supply of computers must increase

question

the supply of gasoline must have fallen

answer

Suppose we observe that the price of gasoline has been rising, even though the quantity of gasoline sold has been falling. We can conclude that

question

the quantities supplied and demanded are equal

answer

At the equilibrium point of a market,

question

the price of gasoline has relatively little effect on drivers' decision to buy gasoline

answer

If the demand curve for gasoline is relatively steep, then

question

average variable cost.

answer

A competitive firm will shut down its operations in the short run
when the market price falls below its

question

average cost.

answer

A competitive firm will exit an industry in the long run when the
market price falls below its

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