Microeconomics Exam Study Set

In an effort to serve consumers who have become more health conscious, a number of firms have begun developing small electronic devices which allow people to monitor various health conditions. These firms are reacting to which of the three key economic ideas?

Making "how much" decisions involves:

Using marginal analysis, by how many hours should Lydia extend her nail salon's hours of operation? (Refer to table 1-1)

How are the fundamental economic questions answered in a market economy?

An article in the Wall Street Journal in early 2001 noted two developments in the market for laser eye surgery. The 1st development concerned side effects from the surgery, including blurred vision. The 2nd development was that the companies renting eye surgery machinery to doctors had to reduce their charges. In the market for eye surgeries, these 2 developments:

Assume the graphs in this figure represent the demand and supply curves of rice. What happens in the market if buyers expect the price of rice to fall? (Refer to figure 3-7)

The graphs in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (Point A). If the price of oranges, a substitute for apples, decreases and the wages of apple workers increase, how will the equilibrium point change? (Refer to figure 3-8)

The graphs in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (Point A). If there is an increase in the price of fertilizer used on sugar cane and there is a decrease in tastes for sugar sweetened soft drinks, how will the equilibrium point change? (Refer to figure 3-8)

The graphs in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S2 (Point E). Which of the following changes would cause the equilibrium to change to point A? (Refer to figure 3-8)

Jenna runs a small boutique in Capitola. She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more. On the basis of this information, what can you conclude about her price elasticity of demand for wool hand warmers?

The inelastic segment of the demand curve (Refer to figure 6-4):

Which of the following statements about the price elasticity of demand is correct?

Which of the following goods would have the most inelastic demand?

Which of the following statements is true?

Studies show that the income elasticity of demand for wine is approximately 5. What does this mean?

Last year, Sefton purchased 60 lbs of potatoes to feed his family of five when his household income was $30K. This year, his income fell to $20K and Sefton purchased 80 lbs of potatoes. All else constant, Sefton's income elasticity of demand for potatoes is:

In order to prove that Motrin and Ibuprofen are substitutes, one should measure the _____________ and get a _________.

Suppose a 4% increase in price results in a 2% increase in the quantity supplied of a good. Calculate the price elasticity of supply and characterize the product.

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which:

Which is the following is not a result of government price controls?

Suppose the demand curve for a product is vertical and the supply curve is upward doing. If a per unit tax is imposed in the market for this product:

Suppose the market is initially in equilibrium at price P1 and then the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax? (Refer to figure 4-10)

Suppose an excise tax of $1 is imposed on every case of beer sold and sellers are responsible for paying this tax. How would the imposition of the tax be illustrated in a graph?

If a consumer always buys good rationally, then:

When the price of summer tank tops falls and you buy more of them because they are relatively less expensive, this is called:

If the price of lattes, a normal good you enjoy, falls, then:

The demand curve for corn is downward sloping. If the price of corn, an inferior good, falls, then:

The table above shows Lee's marginal utility from consuming ice cream cones and cans of Lime Fizz soda. Select the phrase that completes the following statement. "We can determine the number of ice cream cones and can of Lime Fizz soda Lee should consume to maximize his utility....
(Refer to Table 10-3)

What is Jay's optimal consumption bundle? (Refer to Table 10-6)

Goods with upward sloping demand curves are referred to as

For a demand curve to be upward sloping, the good would have to be an inferior good, and

We can derive the market demand curve for gold earrings

Which of the following demonstrates the endowment effect?

Arnold Kim began blogging about Apple products during his 4th year of medical school. Kim's Website, MacRumors.com, became so successful that he decided to give up his medical career and work full time on his website, despite the nearly $200,000 he had invested in his education. In making his decision, Kim decided to ignore the money and time he spent on his education. Economists would say that Kim made a:

A characteristic of the long run is:

Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon, Goldilocks. She gave up her salary of $40K per year, invested her savings of $30K (which was earning 5% interest) and borrowed $10K from a close friend, agreeing to pay 5% interest per year. In her 1st year, Golda spent $18K to rent a salon, hired a part time assistant for $12K and incurred another $15K in expenses on equipment and hairdressing material. Based on this information, what is the amount of her implicit costs?

The rules of accounting generally require that ___________ costs be used for purposes of keeping a company's financial records and for paying for paying taxes. These costs are sometimes called ________.

Which of the following statements is true?

The curve labeled "F" is (Refer to Figure 11-2)

Short run output is maximized at (Refer to Figure 11-2)

The law of diminishing returns

Which of the following explains why the marginal cost curve has a U shape?

Identify the curves in the diagram (Refer to Figure 11-5)

The vertical difference between curves F and G measures (Refer to Figure 11-5)

Curve G approaches curve F because (Refer to Figure 11-5)

If production displays diseconomies of scale, the long-run average cost curve is

Elegant settings experience (Refer to Table 11-8)

What is the minimum efficient scale of production (Refer to Table 11-8)