Microeconomics Finals - Assignment Essays

question

According to the text, the objective of economics is

answer

To understand scarcity

question

According to the text, there are some fundamental regularities of human behavior. One such regularity is

answer

That people behave in ways that make themselves happier

question

By the statement "people have unlimited wants," the author of the text means

answer

People always want more goods and services than they have or can purchase with their income

question

Scarcity

answer

requires people to make choices

question

An economic bad is

answer

An item people would pay to have less of

question

Economics is

answer

concerned with the problem of scarce resources combined with unlimited wants.

question

To say that something is scare means that

answer

Not enough of it is available to satisfy people's wants at a zero price

question

A free good is a good that

answer

Is not scarce

question

When some goods are used to produce other goods, those goods that are used in the production process are called

answer

Factors of production

question

Economists refer to financial capital and physical capital. Financial capital is

answer

The money used to purchase physical capital

question

An economy's resources

answer

are limited in quantity.

question

Choices must be made because of unlimited

answer

Wants

question

According to the text, rational self-interest

answer

Is the term economists use to describe how people make choices

question

The category of economics that contains statements about "what ought to be" is known as

answer

Normative economics

question

Positive economics

answer

deals with what it is

question

Macroeconomics is concerned with

answer

The unemployment rate in the economy

question

What do economists mean when they refer to the forgone opportunities or forgone benefits of the next-best alternative

answer

The highest-valued alternatives that must be forgone when a choice is made

question

In economics, the cost of any item or activity always includes

answer

The sum total of the actual cost involved in the production of the item or activity

question

Which of the following is the best definition of the concept of a tradeoff, as discussed in the text?

answer

Giving up one good or activity in order to obtain some other good or activity

question

A production possibilities curve shows that more of one type of good can be produced only by

answer

Decreasing the quantity of other types of goods that are produced

question

According to the textbook's discussion of the production possibilities curve, a nation cannot produce as much of both defense goods and non defense goods as it wants. Thus, when a nation produces more defense goods, by definition that nation

answer

Must forgo the production of non defense goods, ceteris paribus

question

Which of the following examples best captures the definition of opportunity cost?

answer

Going to the movies instead of studying for your economics cost

question

Economists say that making choices involves comparing

answer

Marginal benefits and marginal costs

question

The production possibility curve illustrates

answer

All of the above

question

An increase in technology will cause the production curve to

answer

Shift to the right, or outward

question

Few of us are jacks-of-all-trades. According to the discussion in the textbook, how do we decide where to devote our energies?

answer

We decide to specialize in those activities that require us to give up the smallest amount of other things

question

Which of the following is the best definition of comparative advantage?

answer

The ability to produce a good or service at a lower opportunity cost than someone else

question

Should a world-class athlete such as golfer Tiger Woods mow his own lawn?

answer

No, because Tiger Woods has a comparative advantage in playing golf

question

Specialization and trade ensure that

answer

We are better off than we would be if we did everything ourselves

question

Which of the following best expresses the rule of specialization?

answer

The individual, firm, or nation will specialize in production of the good or service that has the lowest opportunity cost

question

comparative advantage

answer

the ability to produce a good at a lower opportunity cost than another producer

question

A market economy can develop because

answer

The private property rights exist

question

Private property right means

answer

Ownership of the property

question

Which of the following is the best way to describe the term market as used by economists

answer

A market arises when buyers and sellers exchange a well-defined good or service

question

The law of demand illustrates that

answer

as price decreases, quantity demanded increases

question

All demand curves slope down because

answer

as a price of a good falls, quantity demanded increases

question

Which of the following would NOT shift the demand curve for golf balls?

answer

A decrease in the price of golf balls

question

Which of the following will cause an increase in the quantity demanded along a downward-sloping demand curve for ice cream cones at Baskin Robbins chain stores

answer

Baskin Robbins advertises that the price of their ice cream cones has been reduced by 25 percent

question

According to the law of supply, if the price of electric ranges decreased, everything else held constant then

answer

The quantity supplied of electric ranges would decrease

question

The supply curve slopes upward because

answer

Suppliers of a good or service are likely to increase the quantity they are willing and able to supply as the price of the good or service increases, everything else held constant

question

In china, the government price ceiling for eggs causes

answer

A shortage of eggs

question

A price ceiling

answer

is a situation where the price is not allowed to increase below a certain level

question

A price floor

answer

is a situation where the price is not allowed to decrease below a certain level

question

A market is in equilibrium when

answer

The demand and supply curves intersect

question

The term consumer sovereignty refers to

answer

The idea that consumers ultimately determine what is produced

question

Competitive firms produce in the manner that ( ) costs and ( ) profits

answer

Minimizes, Maximizes

question

The household spending is called

answer

consumption

question

A sole proprietorship is a business form in which

answer

The owner has unlimited liability for the firm's debts and enjoys unlimited rights to all the profits

question

A partnership is

answer

A business owned by two or more persons who share the firm's profits and losses

question

Which of the following statements is most characteristics of the corporate form of business?

answer

A corporation is a legal entity

question

when the value of imports exceeds the value of exports for a given economy, the economy

answer

Has an intentional trade deficit

question

A trade surplus occurs when

answer

A country's exports exceed its imports

question

Anytime economists refer to the public sector, they are talking about

answer

The government sector

question

A budget surplus is

answer

the excess that results when the government spending is less than revenue

question

Which of the following is true?

answer

Transfer payments are income transferred from a citizen who is earning income to a citizen who may not be earning income

question

The circular flow of income model shows that

answer

Consumers supply resources and demand products

question

a U.S. Export occurs when

answer

Germany buys pontiacs from General Motors

question

United States trade is concentrated with which countries?

answer

Canada, Mexico, and the major industrial powers

question

Which statement is true for the United States?

answer

There are more sole proprietorship than corporations

question

Which of the following constitutes a household?

answer

All of these

question

Consumers often do not know they want something until firm introduces it. This means that

answer

In a market system, consumers ultimately determine what is produced, because they will either purchase the item or not

question

In figure 3-10

answer

Demand has decreased

question

Which of the following is explained by the price elasticity of demand?

answer

The effect of prices changes on quantity demanded

question

When the manager of a local movie theater raises the price of movie tickets from $7.50 to $8.50 total revenue falls. This means that:

answer

The demand for movie tickets is highly elastic

question

Price elasticity of demand is a measure of the:

answer

Degree of consumer responsiveness to changes in price

question

When the elasticity of demand for a particular good is less than 1:

answer

Demand is inelastic

question

If a product has an elastic demand, this means that:

answer

Consumers are relatively sensitive to a change in the price of the product

question

If demand is perfectly inelastic, then:

answer

Quantity demanded does not change when prices changes

question

Assume that the demand curve for a certain good is a vertical line. This vertical demand curve illustrates the idea that:

answer

People will not change the quantity of the good when the price of the good is changed

question

A horizontal demand curve shows that demand for the good is

answer

Perfectly elastic

question

Which of the following is a determinant of price elasticity of demand?

answer

Availability of substitute goods

question

If a product has an inelastic demand, then

answer

There are probably few substitutes for the good

question

( ) Measures the percentage change in quantity demanded caused by a given percentage change in the price of a related good

answer

Cross-price elasticity of demand

question

Since they are often used together, peanut butter and jelly are:

answer

Complements and have a negative cross-price elasticity

question

As the price of movie tickets increases, which of the following is most likely to take place?

answer

The quantity demanded for DVDs will increase

question

Good whose income elasticity of demand is greater than zero are

answer

Normal goods

question

And inferior good or service is any good or service for which

answer

An increase in income causes a decrease in demand

question

A measure of the responsiveness of quantity supplied to changes in price is known as

answer

Price elasticity of supply

question

Which of the following situations is represented by a nearly horizontal supply curve

answer

Small changes in the price of the good lead to large changes in the quantity supplied of the good

question

Utility is most closely defined as

answer

Satisfaction

question

Do economist, feeling such as peace, serenity, religious devotion, and self-esteem are captured in the concept known as

answer

Utility

question

When attempting to explain why consumer purchases a for automobile is that of a handle on mobile or a contact computer instead of a IBM computer, and economic assert:

answer

That the consumer is making a decision based on what gives him maximum utility

question

When economist describe the theory of consumer choice, they

answer

Assert that consumers decide which goods and services give them the greatest ability within the limited incomes

question

As a consumer eats additional pieces of pizza, total utility will

answer

Keep increasing until dissatisfaction sets in

question

Additional satisfaction that a consumer receives from one more unit of a good or service is known as

answer

Marginal utility

question

_____ Is the lack of satisfaction you did after consuming too much of the same product

answer

Disutility

question

Supposed to out for coffee and donuts at the local donut store. The first doughnut you eat taste incredibly good. The second one also taste pretty good. The third down it seems just OK. With the fourth down that you are turning so much Green. The it donut makes you sick. Your friend, is an economist, describe your experience as the principle of

answer

Diminishing marginal utility

question

...

answer

Increasing

question

Due to the loss of diminishing marginal utility

answer

First unit of a product offers more satisfaction than the last unit of the same product

question

And all you can eat restaurant illustrates the economic principle

answer

That consumers will stop eating when marginal utility zero

question

To decide which of two goods is the better by, a consumer should compare the products

answer

Marginal utility per dollar

question

In an economic theory, the idea of the equimarginal principal, our consumer at equilibrium, means:

answer

To maximize utility, consumers Must allocate their scarce income a month or so as to equate the marginal utilities per dollar of expert denture on the last unit of each of the purchase

question

________Is the understanding the perfect information is not likely to be available, and as a result people make decisions that in hindsight look irrational, but in reality are the rationale results of a brain that is economizing

answer

Bounded rationality

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The study of decision making that assumes people are rational in a broad sense, even if they do not have complete and perfect information is called

answer

Behavioral economics

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The term ____ Refers to the idea that the value people place on money depends on where that money comes from

answer

Mental accounting

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Buyers were persuaded to take a product home to try it out,

answer

Will be reluctant to return the product when payment is due

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Which of the following sentences based on the findings of neuroeconomics is true

answer

Adults have greater activity in the frontal lobe and lower activity in the amygdala then do teenagers

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"As I add more worker to the factory line, the additional output produces by each additional worker seems to decline. Eventually, the workers just get in each others' way." This statement by a factor supervisor refers to:

answer

The law of diminishing marginal returns

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Assume that one laborer produce 6 units of output, two laborers produce 14 units, three laborers 22 units, four laborers 24 units, and five laborers 25 units. Diminishing returns set in when the firms hires:

answer

The fourth laborer

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The law of diminishing returns applies:

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In the short run because some inputs remain fixed

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After hiring a new employee, a manager finds that the total output has increased . When the managers hires another employee however, he realizes that although the total production has increased, the increment is less than the previous case. This is the result of:

answer

Diminishing marginal returns

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Average total cost is calculated by dividing :

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Total cost by total output

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Marginal cost equals:

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change in total cost divided by change in total output

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Which of the following refers the correct relationship between average total cost (ATC) and marginal cost (MC)

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When MC < ATC ;ATC is falling

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Short run refers to a period during which:

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Some factors are fixed while some other are variables

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Fixed cost are costs paid for:

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Resources that do not change with changes in output

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With expansion in the level of output, total fixed cost:

answer

Remains constant

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Why does the law of diminishing return not apply in the long run?

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There are no fixed factors of production

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If a firm doubles its resources and generates on output level which is more than double, it is said to be experiencing:

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Economies of scale

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If a firm experiences economies of scale,

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The firm can reduce its per unit cost by expanding production

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The term minimum efficient scale means:

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The minimum point of the long-run average-cost curve, or the output level at which the cost per unit of output is the lowest

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In economic theory, we assume that the goal of firm is to:

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Maximize the profit

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Profit is the difference between

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total revenue - total cost

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A firm wishing to maximize profits will produce at the level of output where:

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Marginal revenue exceeds marginal cost by the greatest amount

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Which of the following is true about marginal revenue?

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Marginal revenue equals the change in total revenue divided by the change in quantity

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Which of the following is true about marginal cost ?

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Marginal cost is the change in total cost divided by the change in total output

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The profit of a firm is maximized when:

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marginal revenue is equal to marginal cost

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A profit-maximizing firm will produce the level of output at which:

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Marginal revenue equals marginal cost

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Assume that a firm is producing an output level such that marginal revenue equals marginal cost. One can correctly conclude that the firm is producing a level of output which is:

answer

Equal to the profit maximizing level of output

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If a firm's marginal revenue is greater than its marginal cost, then:

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More output will add more to revenue than to cost

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Suppose that Cheapo Industries, a perfectly competitive firm, currently produces 50 units of imitation ham spread for a total cost of $1,500. The marginal cost of 500th unit is $20, and the marginal revenue of the 500th unit is 15. To maximize profits, Cheapo Industries should:

answer

Produce less than 500 units

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Accounting profit does not include :

answer

opportunity cost

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Accounting profit is called normal profit when:

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Economic profit is equal to zero

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A zero economic profit is not a bad thing because:

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it is a situation in which the owners, or shareholders, of a firm could not do better elsewhere.

question

Many agricultural products, such as wheat, are produced by thousands of different producers that grow essentially the same product. The market structure model that would best characterize such a market is:

answer

Perfect competition

question

Which of the following is true of the model of perfect competition?

answer

An individual firm cannot affect the market price

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The model of perfect competition best applies to markets with:

answer

Many firms selling identical products

question

At the twenty-fifth anniversary of the Woodstock Festival in 1994, there were many vendors who sold tie-dyed t-shirts. No matter where one went, each vendor was selling these t-shirts for $15 a piece. Which market structure model would best characterize such a situation?

answer

Perfect competition

question

Perfect competition describes firm behavior when:

answer

There are many firms producing identical products and entry is easy

question

Which of the following statements concerning perfect competition is NOT true?

answer

The firms produce differentiated products

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If a firm in a perfectly competitive market raises its price:

answer

It will sell nothing

question

The market-demand curve for a product in a perfectly competitive market:

answer

Is downward sloping

question

Suppose Atlas publishing, a perfectly competitive firm, currently produces 2,000 maps per day at a total cost of $1,600. At its current level of output, Atlas is producing where the marginal revenue curve intersects a rising marginal-cost curve. Which of the following can be concluded about Atlas publishing?

answer

It is maximizing profit

question

A perfectly competitive firm maximizes its profit when:

answer

Its marginal revenue is equal to its marginal cost

question

To maximize profits in the short run, a perfectly competitive firm will produce that output at which:

answer

Price equals marginal cost

question

In the short run a firm continues to produce only if it can cover the:

answer

Variable costs

question

The minimum point of the ( ) curve is called the shutdown price

answer

Average -variable-cost

question

A perfectly competitive firm decides to shut down if:

answer

Average revenue falls below the average-variable-cost

question

If a firm in a perfectly competitive market is operating at its profit-maximizing level of output and suddenly faces a reduction in the price it can charge for its product, will the firm suspend operations?

answer

No, as long as the firm earns sufficient revenue to pay all of the variable costs

question

In the short run, certain costs, such as rent on land and equipment, must be paid whether or not any output is produced. These are

answer

The firm's fixed costs

question

Perfect competition provides one model in which there are many firms with no barriers to entry. If perfect competition as a model lies on one extreme, the model that lies on the opposite extreme is:

answer

Monopoly

question

Which of the following is an assumption of the monopoly model?

answer

There are no close substitutes of the good

question

In many cities the market for cab services is monopolized. This monopoly arises because:

answer

Of government restriction of entry

question

Before world war 2, Alcoa controlled the supply of Bauxite in the U.S. Because bauxite is a scarce resource that is vital to the production of aluminum:

answer

Aloca had a monopoly in the U.S. aluminum market

question

When Glaxo-Welcome introduced AZT, an AIDS drug, it was able to enjoy high profits because:

answer

Barriers to entry provided by patents

question

Which of the following refers to a natural monopoly?

answer

A monopoly resulting from economies of scale

question

A firm such as a public utility, which is the sole producer in a market where the government determines prices and standards of service, is known as

answer

Regulated monopoly

question

A monopolist maximizes profits by

answer

Producing a level of output where marginal revenue equals marginal cost

question

One of the popular myths about monopoly is that:

answer

a monopolist can charge any price for his/her good.

question

The ability of a firm to charge different customers different prices is called:

answer

Price discrimination

question

Grocery store coupons, mail-in rebates, senior discounts, and in-state versus out-of-state tuition fees are all examples of:

answer

Price discriminating

1 of 151

question

According to the text, the objective of economics is

answer

To understand scarcity

question

According to the text, there are some fundamental regularities of human behavior. One such regularity is

answer

That people behave in ways that make themselves happier

question

By the statement "people have unlimited wants," the author of the text means

answer

People always want more goods and services than they have or can purchase with their income

question

Scarcity

answer

requires people to make choices

question

An economic bad is

answer

An item people would pay to have less of

question

Economics is

answer

concerned with the problem of scarce resources combined with unlimited wants.

question

To say that something is scare means that

answer

Not enough of it is available to satisfy people's wants at a zero price

question

A free good is a good that

answer

Is not scarce

question

When some goods are used to produce other goods, those goods that are used in the production process are called

answer

Factors of production

question

Economists refer to financial capital and physical capital. Financial capital is

answer

The money used to purchase physical capital

question

An economy's resources

answer

are limited in quantity.

question

Choices must be made because of unlimited

answer

Wants

question

According to the text, rational self-interest

answer

Is the term economists use to describe how people make choices

question

The category of economics that contains statements about "what ought to be" is known as

answer

Normative economics

question

Positive economics

answer

deals with what it is

question

Macroeconomics is concerned with

answer

The unemployment rate in the economy

question

What do economists mean when they refer to the forgone opportunities or forgone benefits of the next-best alternative

answer

The highest-valued alternatives that must be forgone when a choice is made

question

In economics, the cost of any item or activity always includes

answer

The sum total of the actual cost involved in the production of the item or activity

question

Which of the following is the best definition of the concept of a tradeoff, as discussed in the text?

answer

Giving up one good or activity in order to obtain some other good or activity

question

A production possibilities curve shows that more of one type of good can be produced only by

answer

Decreasing the quantity of other types of goods that are produced

question

answer

Must forgo the production of non defense goods, ceteris paribus

question

Which of the following examples best captures the definition of opportunity cost?

answer

Going to the movies instead of studying for your economics cost

question

Economists say that making choices involves comparing

answer

Marginal benefits and marginal costs

question

The production possibility curve illustrates

answer

All of the above

question

An increase in technology will cause the production curve to

answer

Shift to the right, or outward

question

Few of us are jacks-of-all-trades. According to the discussion in the textbook, how do we decide where to devote our energies?

answer

We decide to specialize in those activities that require us to give up the smallest amount of other things

question

Which of the following is the best definition of comparative advantage?

answer

The ability to produce a good or service at a lower opportunity cost than someone else

question

Should a world-class athlete such as golfer Tiger Woods mow his own lawn?

answer

No, because Tiger Woods has a comparative advantage in playing golf

question

Specialization and trade ensure that

answer

We are better off than we would be if we did everything ourselves

question

Which of the following best expresses the rule of specialization?

answer

The individual, firm, or nation will specialize in production of the good or service that has the lowest opportunity cost

question

comparative advantage

answer

the ability to produce a good at a lower opportunity cost than another producer

question

A market economy can develop because

answer

The private property rights exist

question

Private property right means

answer

Ownership of the property

question

Which of the following is the best way to describe the term market as used by economists

answer

A market arises when buyers and sellers exchange a well-defined good or service

question

The law of demand illustrates that

answer

as price decreases, quantity demanded increases

question

All demand curves slope down because

answer

as a price of a good falls, quantity demanded increases

question

Which of the following would NOT shift the demand curve for golf balls?

answer

A decrease in the price of golf balls

question

Which of the following will cause an increase in the quantity demanded along a downward-sloping demand curve for ice cream cones at Baskin Robbins chain stores

answer

Baskin Robbins advertises that the price of their ice cream cones has been reduced by 25 percent

question

According to the law of supply, if the price of electric ranges decreased, everything else held constant then

answer

The quantity supplied of electric ranges would decrease

question

The supply curve slopes upward because

answer

Suppliers of a good or service are likely to increase the quantity they are willing and able to supply as the price of the good or service increases, everything else held constant

question

In china, the government price ceiling for eggs causes

answer

A shortage of eggs

question

A price ceiling

answer

is a situation where the price is not allowed to increase below a certain level

question

A price floor

answer

is a situation where the price is not allowed to decrease below a certain level

question

A market is in equilibrium when

answer

The demand and supply curves intersect

question

The term consumer sovereignty refers to

answer

The idea that consumers ultimately determine what is produced

question

Competitive firms produce in the manner that ( ) costs and ( ) profits

answer

Minimizes, Maximizes

question

The household spending is called

answer

consumption

question

A sole proprietorship is a business form in which

answer

The owner has unlimited liability for the firm's debts and enjoys unlimited rights to all the profits

question

A partnership is

answer

A business owned by two or more persons who share the firm's profits and losses

question

Which of the following statements is most characteristics of the corporate form of business?

answer

A corporation is a legal entity

question

when the value of imports exceeds the value of exports for a given economy, the economy

answer

Has an intentional trade deficit

question

A trade surplus occurs when

answer

A country's exports exceed its imports

question

Anytime economists refer to the public sector, they are talking about

answer

The government sector

question

A budget surplus is

answer

the excess that results when the government spending is less than revenue

question

Which of the following is true?

answer

Transfer payments are income transferred from a citizen who is earning income to a citizen who may not be earning income

question

The circular flow of income model shows that

answer

Consumers supply resources and demand products

question

a U.S. Export occurs when

answer

Germany buys pontiacs from General Motors

question

United States trade is concentrated with which countries?

answer

Canada, Mexico, and the major industrial powers

question

Which statement is true for the United States?

answer

There are more sole proprietorship than corporations

question

Which of the following constitutes a household?

answer

All of these

question

Consumers often do not know they want something until firm introduces it. This means that

answer

In a market system, consumers ultimately determine what is produced, because they will either purchase the item or not

question

In figure 3-10

answer

Demand has decreased

question

Which of the following is explained by the price elasticity of demand?

answer

The effect of prices changes on quantity demanded

question

When the manager of a local movie theater raises the price of movie tickets from $7.50 to $8.50 total revenue falls. This means that:

answer

The demand for movie tickets is highly elastic

question

Price elasticity of demand is a measure of the:

answer

Degree of consumer responsiveness to changes in price

question

When the elasticity of demand for a particular good is less than 1:

answer

Demand is inelastic

question

If a product has an elastic demand, this means that:

answer

Consumers are relatively sensitive to a change in the price of the product

question

If demand is perfectly inelastic, then:

answer

Quantity demanded does not change when prices changes

question

Assume that the demand curve for a certain good is a vertical line. This vertical demand curve illustrates the idea that:

answer

People will not change the quantity of the good when the price of the good is changed

question

A horizontal demand curve shows that demand for the good is

answer

Perfectly elastic

question

Which of the following is a determinant of price elasticity of demand?

answer

Availability of substitute goods

question

If a product has an inelastic demand, then

answer

There are probably few substitutes for the good

question

( ) Measures the percentage change in quantity demanded caused by a given percentage change in the price of a related good

answer

Cross-price elasticity of demand

question

Since they are often used together, peanut butter and jelly are:

answer

Complements and have a negative cross-price elasticity

question

As the price of movie tickets increases, which of the following is most likely to take place?

answer

The quantity demanded for DVDs will increase

question

Good whose income elasticity of demand is greater than zero are

answer

Normal goods

question

And inferior good or service is any good or service for which

answer

An increase in income causes a decrease in demand

question

A measure of the responsiveness of quantity supplied to changes in price is known as

answer

Price elasticity of supply

question

Which of the following situations is represented by a nearly horizontal supply curve

answer

Small changes in the price of the good lead to large changes in the quantity supplied of the good

question

Utility is most closely defined as

answer

Satisfaction

question

Do economist, feeling such as peace, serenity, religious devotion, and self-esteem are captured in the concept known as

answer

Utility

question

When attempting to explain why consumer purchases a for automobile is that of a handle on mobile or a contact computer instead of a IBM computer, and economic assert:

answer

That the consumer is making a decision based on what gives him maximum utility

question

When economist describe the theory of consumer choice, they

answer

Assert that consumers decide which goods and services give them the greatest ability within the limited incomes

question

As a consumer eats additional pieces of pizza, total utility will

answer

Keep increasing until dissatisfaction sets in

question

Additional satisfaction that a consumer receives from one more unit of a good or service is known as

answer

Marginal utility

question

_____ Is the lack of satisfaction you did after consuming too much of the same product

answer

Disutility

question

answer

Diminishing marginal utility

question

...

answer

Increasing

question

Due to the loss of diminishing marginal utility

answer

First unit of a product offers more satisfaction than the last unit of the same product

question

And all you can eat restaurant illustrates the economic principle

answer

That consumers will stop eating when marginal utility zero

question

To decide which of two goods is the better by, a consumer should compare the products

answer

Marginal utility per dollar

question

In an economic theory, the idea of the equimarginal principal, our consumer at equilibrium, means:

answer

To maximize utility, consumers Must allocate their scarce income a month or so as to equate the marginal utilities per dollar of expert denture on the last unit of each of the purchase

question

answer

Bounded rationality

question

The study of decision making that assumes people are rational in a broad sense, even if they do not have complete and perfect information is called

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Behavioral economics

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The term ____ Refers to the idea that the value people place on money depends on where that money comes from

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Mental accounting

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Buyers were persuaded to take a product home to try it out,

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Will be reluctant to return the product when payment is due

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Which of the following sentences based on the findings of neuroeconomics is true

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Adults have greater activity in the frontal lobe and lower activity in the amygdala then do teenagers

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The law of diminishing marginal returns

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The fourth laborer

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The law of diminishing returns applies:

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In the short run because some inputs remain fixed

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Diminishing marginal returns

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Average total cost is calculated by dividing :

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Total cost by total output

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Marginal cost equals:

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change in total cost divided by change in total output

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Which of the following refers the correct relationship between average total cost (ATC) and marginal cost (MC)

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When MC < ATC ;ATC is falling

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Short run refers to a period during which:

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Some factors are fixed while some other are variables

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Fixed cost are costs paid for:

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Resources that do not change with changes in output

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With expansion in the level of output, total fixed cost:

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Remains constant

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Why does the law of diminishing return not apply in the long run?

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There are no fixed factors of production

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If a firm doubles its resources and generates on output level which is more than double, it is said to be experiencing:

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Economies of scale

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If a firm experiences economies of scale,

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The firm can reduce its per unit cost by expanding production

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The term minimum efficient scale means:

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The minimum point of the long-run average-cost curve, or the output level at which the cost per unit of output is the lowest

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In economic theory, we assume that the goal of firm is to:

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Maximize the profit

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Profit is the difference between

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total revenue - total cost

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A firm wishing to maximize profits will produce at the level of output where:

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Marginal revenue exceeds marginal cost by the greatest amount

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Which of the following is true about marginal revenue?

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Marginal revenue equals the change in total revenue divided by the change in quantity

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Which of the following is true about marginal cost ?

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Marginal cost is the change in total cost divided by the change in total output

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The profit of a firm is maximized when:

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marginal revenue is equal to marginal cost

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A profit-maximizing firm will produce the level of output at which:

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Marginal revenue equals marginal cost

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Assume that a firm is producing an output level such that marginal revenue equals marginal cost. One can correctly conclude that the firm is producing a level of output which is:

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Equal to the profit maximizing level of output

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If a firm's marginal revenue is greater than its marginal cost, then:

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More output will add more to revenue than to cost

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Produce less than 500 units

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Accounting profit does not include :

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opportunity cost

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Accounting profit is called normal profit when:

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Economic profit is equal to zero

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A zero economic profit is not a bad thing because:

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it is a situation in which the owners, or shareholders, of a firm could not do better elsewhere.

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Perfect competition

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Which of the following is true of the model of perfect competition?

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An individual firm cannot affect the market price

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The model of perfect competition best applies to markets with:

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Many firms selling identical products

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Perfect competition

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Perfect competition describes firm behavior when:

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There are many firms producing identical products and entry is easy

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Which of the following statements concerning perfect competition is NOT true?

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The firms produce differentiated products

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If a firm in a perfectly competitive market raises its price:

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It will sell nothing

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The market-demand curve for a product in a perfectly competitive market:

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Is downward sloping

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It is maximizing profit

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A perfectly competitive firm maximizes its profit when:

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Its marginal revenue is equal to its marginal cost

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To maximize profits in the short run, a perfectly competitive firm will produce that output at which:

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Price equals marginal cost

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In the short run a firm continues to produce only if it can cover the:

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Variable costs

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The minimum point of the ( ) curve is called the shutdown price

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Average -variable-cost

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A perfectly competitive firm decides to shut down if:

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Average revenue falls below the average-variable-cost

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No, as long as the firm earns sufficient revenue to pay all of the variable costs

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In the short run, certain costs, such as rent on land and equipment, must be paid whether or not any output is produced. These are

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The firm's fixed costs

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Perfect competition provides one model in which there are many firms with no barriers to entry. If perfect competition as a model lies on one extreme, the model that lies on the opposite extreme is:

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Monopoly

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Which of the following is an assumption of the monopoly model?

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There are no close substitutes of the good

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In many cities the market for cab services is monopolized. This monopoly arises because:

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Of government restriction of entry

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Before world war 2, Alcoa controlled the supply of Bauxite in the U.S. Because bauxite is a scarce resource that is vital to the production of aluminum:

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Aloca had a monopoly in the U.S. aluminum market

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When Glaxo-Welcome introduced AZT, an AIDS drug, it was able to enjoy high profits because:

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Barriers to entry provided by patents

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Which of the following refers to a natural monopoly?

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A monopoly resulting from economies of scale

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A firm such as a public utility, which is the sole producer in a market where the government determines prices and standards of service, is known as

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Regulated monopoly

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A monopolist maximizes profits by

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Producing a level of output where marginal revenue equals marginal cost

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One of the popular myths about monopoly is that:

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a monopolist can charge any price for his/her good.

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The ability of a firm to charge different customers different prices is called:

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Price discrimination

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Grocery store coupons, mail-in rebates, senior discounts, and in-state versus out-of-state tuition fees are all examples of:

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Price discriminating

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