Microeconomics Final - GOOD!!!

question

In a firm's planning horizon, the long run refers to

answer

The period during which all of the firm's inputs can be varied

question

The marginal product of labor is the

answer

additional output produced when one more worker is hired

question

If a firm is experiencing diminishing marginal returns to labor, the:

answer

Total output rises more slowly as additional workers are added

question

Which of the following is irrelevant in deciding whether to buy something

answer

sunk cost

question

Samantha has been working for a firm earning annual salary of $90,000. Her annual expenses will include $15,000 for office rent, $3,000 for equipment, $1,000 for supplies, $1,200 for utilities, and $35,000 salary for a book keeper. Cover start-up expenses by cashing $20,000 certificate of deposit on which she earns annual interest of $1,000. No additional expenses: Her EXPLICIT cost will be:

answer

$55,200

question

answer

$91,000

question

A firm's implicit cost are:

answer

Opportunity costs of production that do not involve money outlays

question

Opportunity costs of production that do not involve money outlays

answer

Variable Costs

question

Average total Cost is:

answer

TC/ quantity of output

question

In the short run, costs that arise from resuources the cannot vary in quantity are whereas costs from inputs that can vary in quantity are known as:

answer

fixed cost; variable costs

question

Which of the following formulas is NOT correct:

answer

TVC=TC/Q

question

The change in cost resulting from producing one additional unit of output:

answer

Marginal Cost

question

If the marginal product of labor falls, the marginal cost of output:

answer

Rises

question

The Marginal Cost curve will:

answer

cut both ATC and AVC at their respective minimums

question

The total cost to a firm of producing zero units of output is:

answer

its fixed cost in the short run, zero in the long run

question

In comparing long run and short run costs, which of the following statements refers to output?

answer

long run total cost cannot exceed short run total cost

question

In measuring the sensitivity of demand, the:

answer

price elasticity refers to movements ALONG the demand curve, income and cross-price elasticities refer to shifts of the ENTIRE demand curve

question

If the demand curve is a straight line and has the normal negative slope, then as quantity demanded increases, demand:

answer

becomes more INELASTIC

question

A store noticed when they increased price of milk from $2.50 to $3.00 per gallon, the same amount of milk per week (165 per gallon). Since everything else remained the same then the:

answer

demand for milk is perfectly INELASTIC

question

If demand is elastic, then:

answer

the percentage change in quantity demanded is larger in absolute value than the percentage change in price

question

A public university knows the demand form potential students is elastic. If the university increased tuition revenue, it should:

answer

lower its tuition rate

question

Suppose that the income elasticity of demand for college education is 1.3. This indicates:

answer

college education is a normal good

question

The cross-price elasticity of demand between butter and margarine is most likely:

answer

positive, since the goods are substitutes

question

The price elasticity of supply:

answer

measures the percentage change in quantity supply as a result of a 1% change in price

question

The supply of a good is more price elastic:

answer

the longer the time horizon over which it is measured

question

When the bookstore prices economics books at $15.00 each, they generally sell 70 books a month. If they lower the price to $7.00, sales INCREASE to 90 books. The price elasticity of demand for books is about:

answer

0.34, and an increase in price from $7 to $15 results in an INCREASE in total revenue

question

Judy's income elasticity of demand for football tickets is 1.50. All else equal, this means that if income increases by 20%, she will buy:

answer

30% more tickets

question

There are very few, if any, good substitutes for motor oil. Therefore:

answer

the demand for motor oil would tend to be INELASTIC

question

The midpoint method is used to compute elasticity because it:

answer

gives the same answer regardless of the direction of change

question

If the price elasticity of demand for a good is 4.0, then a 10% INCREASE in price means:

answer

40% DECREASE in quantity demanded

question

For a particular good, a 2% INCREASE in price causes a 12% DECREASE in quantity demanded. Which of the following most likely applicable to this good?:

answer

good is a luxury

question

The case of perfectly elastic demand is illustrated by a demand curve that is:

answer

horizontal

question

When demand is perfectly inelastic, the demand curve will be:

answer

vertical

question

Local pizza restaurant makes such great bread sticks that consumers do not respond to changes in price. If the owner is only interested in increasing revenue, he should:

answer

raise the price of bread sticks

question

A key determinate of the price elasticity of supply is the time period under consideration. Which following statement best explains the fact:

answer

Firms tend to be more responsive to price changes over a long period of time, than over a short period of time.

question

The demand curve facing a firm:

answer

indicates the quantity of output that customers will purchase from that firm, at various prices

question

The demand curve facing a firm acts as a constraint by

answer

showing the maximum price that could be charged to sell a specific output level

question

Which of the following determines the maximum price a firm may charge for a particular quantity of output?

answer

the demand curve facing the firm

question

Under the total revenue and total cost approach to profit maximization:

answer

firms choose the output level where TR-TC is greatest

question

The additional revenue received by a firm from selling one more unit of output is known as:

answer

marginal revenue

question

If a firm faces a horizontal demand curve, marginal revenue:

answer

is constant regardless of how much output the firm produces

question

When a firm faces a downward sloping demand curve, its marginal revenue is:

answer

less than price

question

When marginal cost exceeds marginal revenue:

answer

the firm will lower profits by increasing output

question

If a firm chooses to produce output at the point where MR equals MC:

answer

then TR-TC will be maximized if there is a profit

question

What is true only at the output level where price equals average total cost?

answer

profit is zero

question

If a firm's total cost rises as output rises, then:

answer

marginal cost is positive

question

When marginal revenue for a firm is negative:

answer

total revenue will decrease if the firm sells more output

question

For every firm that faces a downward-sloping demand curve for its output:

answer

marginal revenue is less than the price of the last unit sold

question

As long as the marginal revenue curve lies above the horizontal axis:

answer

the total revenue curve must have a positive slope

question

Using a TR-TC graph, a firm maximizes profit by producing the output level where the greatest:

answer

vertical distance occurs between the TR and TC curves, and the TR curve is above the TC curve

question

A firm is indifferent between staying in business and shutting down in the short run when, at the loss-minimizing level of output:

answer

total revenue equals total variable cost

question

In the long run, if a firm's total cost exceeds its total revenue at all output levels, it should:

answer

always exit the industry

question

if a firm's short-run total cost curve lies above its total revenue curve for all output levels, the goal of the firm should be to:

answer

minimize its loss

question

In the short run, if a firm's total variable cost curve lies everywhere above its total revenue curve, the firm should produce:

answer

no output

question

In the short run, if a firm's total variable cost curve lies above its total revenue curve at all possible output levels, the firm's minimum short-run loss:

answer

equals its total fixed cost

question

An economic model can be described as:

answer

An abstract representation of reality

question

In order to eliminate unnecessary details and highlight the essential feautres of an economic model, economists make what kind of assumptions?

answer

Simplifying assumptions

question

Assume that Kellys various possible activities are mutually exclusive, the opportunity cost of one activity equals what?

answer

Value of the next most valuable activity

question

What are two reasons why an economy might operate inside of its production possibilities frontier are?

answer

Recessions and productive inefficiency

question

What happens along a societies production possabilities frontier?

answer

Available resrouces are being used efficiently

question

Assume that U.S agricultural land is used either to raise cotton for clothing or grow wheat. Researchers develop a new wheat hybrid that is more resistant to drought and insects what effect does this have on the production possibilities frontier for cotton and wheat?

answer

Maximum possible production of wheat will rise; maximum production of cotton will not change

question

The concave shape of the production possibilities frontier reflects?

answer

The law of increasing opportunity cost

question

Assume that society is operating on its concave production frontier as more and more of the good on the horizontal axis is produced, what happens?

answer

Larger and larger amounts of good on the vertical axis must be sacrificed

question

A country currently is using all its land to produce wheat and grapes. However the land growing the grapes is being used to produce wheat and the land most suited in growing wheat is producing grapes. Which of the following statements is true?

answer

The country is operating inside its production possibilities frontier

question

Production is productively efficient when?

answer

The maximum possible output is being produced from a given collection of inputs

question

A person who has a comparative advantage if:

answer

She can produce a good with a smaller quantity cost than her co worker

question

Under Market what allocates capitalism resources?

answer

The market and owned privately

question

Which of the following would shift the Demand curve for new college textbooks to the right:

answer

A decrease in the price of new college textbooks

question

The law of supply states that the quanity supplied of a good and

answer

Its price are positevly related

question

Which of the following would not lead to a change in the supply of chocolate ice cream

answer

A change in price of strawberry ice cream

question

A decrease in price of a commoditity results in a(n):

answer

Decrease in quanity supplied

question

Which of the following would NOT cause the demand curve for college football tickets to shift?

answer

An increase in the price of college football tickets

question

An increase in buyer's income:

answer

Increases the demand for a normal good

question

30. In a competitive market when price is below equilibrium level, the price will be driven upward due too?

answer

Technical inefficiency

question

Assume the most typical shapes for the demand and supply in a competitive market suppose that price falls and supply increases. which of the following statements is correct?

answer

The quillibirum price will fall, the equillibirum quanity may rise or fall

question

If steel manufactures expected the proce of sttel was going to rise in the future .. what will happen out of the following examples?

answer

Lead to decrease supply for steel

question

If the same dairy product can produce either whole milk or skim milk an increase increase in price of whole milk , results in?

answer

decrease in the supply of skim milk

1 of 77

question

In a firm's planning horizon, the long run refers to

answer

The period during which all of the firm's inputs can be varied

question

The marginal product of labor is the

answer

additional output produced when one more worker is hired

question

If a firm is experiencing diminishing marginal returns to labor, the:

answer

Total output rises more slowly as additional workers are added

question

Which of the following is irrelevant in deciding whether to buy something

answer

sunk cost

question

answer

$55,200

question

answer

$91,000

question

A firm's implicit cost are:

answer

Opportunity costs of production that do not involve money outlays

question

Opportunity costs of production that do not involve money outlays

answer

Variable Costs

question

Average total Cost is:

answer

TC/ quantity of output

question

In the short run, costs that arise from resuources the cannot vary in quantity are whereas costs from inputs that can vary in quantity are known as:

answer

fixed cost; variable costs

question

Which of the following formulas is NOT correct:

answer

TVC=TC/Q

question

The change in cost resulting from producing one additional unit of output:

answer

Marginal Cost

question

If the marginal product of labor falls, the marginal cost of output:

answer

Rises

question

The Marginal Cost curve will:

answer

cut both ATC and AVC at their respective minimums

question

The total cost to a firm of producing zero units of output is:

answer

its fixed cost in the short run, zero in the long run

question

In comparing long run and short run costs, which of the following statements refers to output?

answer

long run total cost cannot exceed short run total cost

question

In measuring the sensitivity of demand, the:

answer

price elasticity refers to movements ALONG the demand curve, income and cross-price elasticities refer to shifts of the ENTIRE demand curve

question

If the demand curve is a straight line and has the normal negative slope, then as quantity demanded increases, demand:

answer

becomes more INELASTIC

question

A store noticed when they increased price of milk from $2.50 to $3.00 per gallon, the same amount of milk per week (165 per gallon). Since everything else remained the same then the:

answer

demand for milk is perfectly INELASTIC

question

If demand is elastic, then:

answer

the percentage change in quantity demanded is larger in absolute value than the percentage change in price

question

A public university knows the demand form potential students is elastic. If the university increased tuition revenue, it should:

answer

lower its tuition rate

question

Suppose that the income elasticity of demand for college education is 1.3. This indicates:

answer

college education is a normal good

question

The cross-price elasticity of demand between butter and margarine is most likely:

answer

positive, since the goods are substitutes

question

The price elasticity of supply:

answer

measures the percentage change in quantity supply as a result of a 1% change in price

question

The supply of a good is more price elastic:

answer

the longer the time horizon over which it is measured

question

answer

0.34, and an increase in price from $7 to $15 results in an INCREASE in total revenue

question

Judy's income elasticity of demand for football tickets is 1.50. All else equal, this means that if income increases by 20%, she will buy:

answer

30% more tickets

question

There are very few, if any, good substitutes for motor oil. Therefore:

answer

the demand for motor oil would tend to be INELASTIC

question

The midpoint method is used to compute elasticity because it:

answer

gives the same answer regardless of the direction of change

question

If the price elasticity of demand for a good is 4.0, then a 10% INCREASE in price means:

answer

40% DECREASE in quantity demanded

question

For a particular good, a 2% INCREASE in price causes a 12% DECREASE in quantity demanded. Which of the following most likely applicable to this good?:

answer

good is a luxury

question

The case of perfectly elastic demand is illustrated by a demand curve that is:

answer

horizontal

question

When demand is perfectly inelastic, the demand curve will be:

answer

vertical

question

Local pizza restaurant makes such great bread sticks that consumers do not respond to changes in price. If the owner is only interested in increasing revenue, he should:

answer

raise the price of bread sticks

question

A key determinate of the price elasticity of supply is the time period under consideration. Which following statement best explains the fact:

answer

Firms tend to be more responsive to price changes over a long period of time, than over a short period of time.

question

The demand curve facing a firm:

answer

indicates the quantity of output that customers will purchase from that firm, at various prices

question

The demand curve facing a firm acts as a constraint by

answer

showing the maximum price that could be charged to sell a specific output level

question

Which of the following determines the maximum price a firm may charge for a particular quantity of output?

answer

the demand curve facing the firm

question

Under the total revenue and total cost approach to profit maximization:

answer

firms choose the output level where TR-TC is greatest

question

The additional revenue received by a firm from selling one more unit of output is known as:

answer

marginal revenue

question

If a firm faces a horizontal demand curve, marginal revenue:

answer

is constant regardless of how much output the firm produces

question

When a firm faces a downward sloping demand curve, its marginal revenue is:

answer

less than price

question

When marginal cost exceeds marginal revenue:

answer

the firm will lower profits by increasing output

question

If a firm chooses to produce output at the point where MR equals MC:

answer

then TR-TC will be maximized if there is a profit

question

What is true only at the output level where price equals average total cost?

answer

profit is zero

question

If a firm's total cost rises as output rises, then:

answer

marginal cost is positive

question

When marginal revenue for a firm is negative:

answer

total revenue will decrease if the firm sells more output

question

For every firm that faces a downward-sloping demand curve for its output:

answer

marginal revenue is less than the price of the last unit sold

question

As long as the marginal revenue curve lies above the horizontal axis:

answer

the total revenue curve must have a positive slope

question

Using a TR-TC graph, a firm maximizes profit by producing the output level where the greatest:

answer

vertical distance occurs between the TR and TC curves, and the TR curve is above the TC curve

question

A firm is indifferent between staying in business and shutting down in the short run when, at the loss-minimizing level of output:

answer

total revenue equals total variable cost

question

In the long run, if a firm's total cost exceeds its total revenue at all output levels, it should:

answer

always exit the industry

question

if a firm's short-run total cost curve lies above its total revenue curve for all output levels, the goal of the firm should be to:

answer

minimize its loss

question

In the short run, if a firm's total variable cost curve lies everywhere above its total revenue curve, the firm should produce:

answer

no output

question

In the short run, if a firm's total variable cost curve lies above its total revenue curve at all possible output levels, the firm's minimum short-run loss:

answer

equals its total fixed cost

question

An economic model can be described as:

answer

An abstract representation of reality

question

In order to eliminate unnecessary details and highlight the essential feautres of an economic model, economists make what kind of assumptions?

answer

Simplifying assumptions

question

Assume that Kellys various possible activities are mutually exclusive, the opportunity cost of one activity equals what?

answer

Value of the next most valuable activity

question

What are two reasons why an economy might operate inside of its production possibilities frontier are?

answer

Recessions and productive inefficiency

question

What happens along a societies production possabilities frontier?

answer

Available resrouces are being used efficiently

question

answer

Maximum possible production of wheat will rise; maximum production of cotton will not change

question

The concave shape of the production possibilities frontier reflects?

answer

The law of increasing opportunity cost

question

Assume that society is operating on its concave production frontier as more and more of the good on the horizontal axis is produced, what happens?

answer

Larger and larger amounts of good on the vertical axis must be sacrificed

question

answer

The country is operating inside its production possibilities frontier

question

Production is productively efficient when?

answer

The maximum possible output is being produced from a given collection of inputs

question

A person who has a comparative advantage if:

answer

She can produce a good with a smaller quantity cost than her co worker

question

Under Market what allocates capitalism resources?

answer

The market and owned privately

question

Which of the following would shift the Demand curve for new college textbooks to the right:

answer

A decrease in the price of new college textbooks

question

The law of supply states that the quanity supplied of a good and

answer

Its price are positevly related

question

Which of the following would not lead to a change in the supply of chocolate ice cream

answer

A change in price of strawberry ice cream

question

A decrease in price of a commoditity results in a(n):

answer

Decrease in quanity supplied

question

Which of the following would NOT cause the demand curve for college football tickets to shift?

answer

An increase in the price of college football tickets

question

An increase in buyer's income:

answer

Increases the demand for a normal good

question

30. In a competitive market when price is below equilibrium level, the price will be driven upward due too?

answer

Technical inefficiency

question

Assume the most typical shapes for the demand and supply in a competitive market suppose that price falls and supply increases. which of the following statements is correct?

answer

The quillibirum price will fall, the equillibirum quanity may rise or fall

question

If steel manufactures expected the proce of sttel was going to rise in the future .. what will happen out of the following examples?

answer

Lead to decrease supply for steel

question

If the same dairy product can produce either whole milk or skim milk an increase increase in price of whole milk , results in?

answer

decrease in the supply of skim milk

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