Microeconomics review - Assignment Essays

question

Explicit costs are
a. not part of opportunity cost
b. the only cost considered in opportunity cost
c. exactly the same as implicit costs
d. actual monetary payments for resources purchased
e. the opportunity costs of using resources owned by the firm

answer

actual monetary payments for resources purchased

question

Opportunity cost usually
Select one:
a. cannot be measured
b. applies to labor but not to capital
c. is involved in calculating economic profit
d. is greater than the cash payment made to a resource
e. is less than the cash payment made to a resource

answer

is involved in calculating economic profit

question

Utility is determined by an individual's
a. income
b. price
c. relative price
d. profit
e. tastes and preferences

answer

tastes and preferences

question

A perfectly competitive firm is a price taker. Therefore, it faces a
a. perfectly elastic supply curve for its output
b. perfectly elastic demand curve for its output
c. perfectly inelastic supply curve for its output
d. perfectly inelastic demand curve for its output
e. unit-elastic demand curve for its output

answer

perfectly elastic supply curve for its output

question

In a cartel,
a. all firms produce the same amount of output and earn the same profit
b. all firms produce the same amount of output but earn different amounts of profit because their costs differ
c. firms produce different amounts of output but earn the same profit
d. firms with higher average cost produce more so that all firms earn the same profit
e. firms with lower average cost often earn higher profits

answer

all firms produce the same amount of output but earn different amounts of profit because their costs differ

question

The practice of charging different prices to different consumers of the same product is called
a. monopolistic pricing
b. unit pricing
c. price discrimination
d. elasticity pricing
e. marginal cost pricing

answer

price discrimination

question

Economies of scale occur where
a. long-run average cost falls as new firms enter the industry
b. short-run average cost falls as new firms enter the industry
c. long-run average cost falls as one firm expands plant size
d. short-run average cost falls as one firm expands plant size
e. long-run average cost rises as one firm expands plant size

answer

long-run average cost falls as one firm expands plant size

question

Marginal utility is the
a. overall satisfaction obtained from consuming a good
b. additional satisfaction obtained from consuming one more unit of a good
c. average satisfaction obtained from consuming a good
d. the change in satisfaction obtained from consuming 1 percent more of a good
e. additional cost of one more unit of a good

answer

additional satisfaction obtained from consuming one more unit of a good

question

When a firm is experiencing diminishing marginal returns, marginal cost is
a. rising
b. falling
c. constant
d. rising at first, then falling

answer

rising

question

Demand is elastic whenever
a. price elasticity has an absolute value of 1
b. price elasticity has an absolute value greater than 1
c. price elasticity has an absolute value less than 1
d. price elasticity is negative
e. consumers respond to a change in price

answer

price elasticity has an absolute value greater than 1

question

Zipco's accounting profit is equal to its
a. total revenue minus opportunity costs
b. total revenue plus opportunity costs
c. total revenue minus imputed costs
d. total revenue minus explicit costs
e. total revenue minus explicit and implicit costs

answer

total revenue minus explicit costs

question

A firm's opportunity costs of using resources provided by the firm's owners are called
a. sunk costs
b. fixed costs
c. explicit costs
d. implicit costs
e. entrepreneurial costs

answer

implicit costs

question

The short run is a period of time
a. less than one year
b. greater than one year
c. during which all resources are variable
d. during which at least one resource is fixed
e. during which at least one resource is variable

answer

during which at least one resource is fixed

question

If the administration raises tuition on our campus in order to increase revenue, it will
a. not be successful if the demand curve slopes downward
b. be successful if demand is elastic
c. be successful if demand is inelastic
d. be successful if supply is elastic
e. be successful if supply is inelastic

answer

be successful if demand is inelastic

question

Price discrimination occurs when a monopolist charges
a. both c and d
b. different prices to different buyers for different products
c. different prices to different groups of buyers, based on differences in the cost of providing the commodity to the buyer
d. different prices to different groups of buyers for reasons unrelated to the cost of providing the commodity to the buyer
e. all buyers the same price for the same product

answer

different prices to different groups of buyers, based on differences in the cost of providing the commodity to the buyer

question

The golden rule of profit maximization states that any firm maximizes profit by producing where
a. demand is unit elastic, and total revenue is greatest
b. price equals average revenue
c. price equals marginal revenue
d. price equals marginal cost
e. marginal revenue equals marginal cost

answer

marginal revenue equals marginal cost

question

A cartel is
a. a group of oligopolistic firms that engage in formal collusion
b. a group of monopolistically competitive firms which charge the same price
c. usually legal in the United States
d. an agreement among rival firms to set prices independently
e. illegal throughout the world

answer

a group of oligopolistic firms that engage in formal collusion

question

Firms in perfect competition have no control over
a. all of the following
b. where to operate on their average total cost curves
c. what price to charge
d. how many inputs to use
e. how much to produce

answer

what price to charge

question

A variable cost is one that changes
a. in the long run only
b. in the short run only
c. year to year
d. month to month
e. as output changes

answer

as output changes

question

A firm in a perfectly competitive market
a. can raise the price of its product and sell more output
b. can lower the price of its product and sell more output
c. can increase its supply to lower the price
d. can decrease its supply to raise the price
e. accepts the market price for its product

answer

accepts the market price for its product

question

The law of comparative advantage says that

answer

the individual with the lowest opportunity cost of producing a particular good should produce it

question

If there is a shortage in the market for jeans,

answer

the price should begin to rise

question

If all resources are used efficiently to produce goods and services, a nation will find itself producing

answer

somewhere on its production possibilities frontier

question

Which of the following is a characteristic of pure capitalism?

answer

the price system is used to guide resources to their highest-valued uses

question

Opportunity cost is defined

answer

as the value of the best alternative not chosen

question

A tax is said to be progressive if

answer

the proportion of income paid as taxes increases as income increases

question

The division of labor

answer

allows tasks to be performed more efficiently

question

Points outside the production possibilities frontier represent

answer

currently unattainable combinations of outputs

question

You currently subscribe to two magazines and are trying to decide whether you should subscribe to a third. What should determine your decision, if you are rational?

answer

the cost of the third magazine compared to the additional enjoyment you would get from it

question

The slope of a line is defined as the

answer

change in the value of the variable on the vertical axis divided by the change in the value of the variable on the horizontal axis

question

The fact that people have unlimited wants means that

answer

they always want more of at least one good

question

John takes 10 minutes to iron a shirt and 20 minutes to type a paper. Harry takes 10 minutes to iron a shirt and 30 minutes to type a paper. Which of the following statements is correct?

answer

Harry has a comparative advantage in ironing.

question

The economic behavior of individual decision makers and the determination of price and output in specific markets are both studied in

answer

microeconomics

question

Some people have argued that government should provide only those goods that we would truly define as public goods. If so, which of the following should government produce?

answer

National Defense

question

Sugar and honey are viewed as substitutes for each other in many cooking applications. If the price of sugar rises, we would expect

answer

the demand for honey to increase

question

The statement that there is a direct relation between x and y means that

answer

x and y move in the same direction

question

Your opportunity cost of choosing a particular activity

answer

varies, depending on time and circumstances

question

A point outside the production possibilities frontier

answer

cannot be reached using the available technology

question

Because people's wants are unlimited but resources are scarce,

answer

choices must be made

question

The most likely reason why Los Angeles has so much smog is that residents

answer

do not have strong, enforceable property rights to clean air

question

When deciding whether to hire an additional worker, firms need only consider how the additional worker would affect

answer

profit

question

A difference in wages that arises to offset the nonmonetary characteristics of different jobs is known as

answer

a compensating differential.

question

The percentage of families with incomes below the poverty line

answer

is known as the poverty rate.

question

If the value of the marginal product of labor exceeds the wage, then the firm could

answer

increase profit by hiring additional labor.

question

Value of marginal product is defined as the additional

answer

revenue earned from hiring one more factor of production.

question

Which term do economists use to refer to a difference in wages that arises from nonmonetary characteristics of different jobs?

answer

compensating differentials

question

The accumulation of investments in people, such as education and on-the-job training, is known as

answer

human capital

question

Which of the following would not be considered human capital?

answer

none of the above would be considered human capital

question

A compensating differential refers to differences in

answer

nonmonetary characteristics of jobs.

question

The term "compensating differential" refers to

answer

d. a wage difference that arises from nonmonetary characteristics of different jobs.

question

The poverty rate is a measure of the percentage of people whose incomes fall below

answer

an absolute level of income.

question

Factory workers who work the day shift earn less per hour than similarly-skilled factory workers who work the night shift. The difference in pay is attributed to

answer

a compensating differential.

question

By definition, there is discrimination when the marketplace offers different opportunities to similar individuals who differ only by

answer

race, ethnic group, sex, age, or other personal characteristics.

question

Labor-market discrimination is evident when

answer

wages of individuals differ on the basis of some recognizable attribute that is unrelated to productivity.

question

Why would a wage differential due to discrimination be unlikely to persist in a competitive labor market?

answer

There is a cost advantage for firms that do not discriminate.

question

The factors of production are best defined as the

answer

inputs used to produce goods and services.

question

The belief that education makes a person more productive and thereby raises his or her wage is referred to as the

answer

human-capital view of education.

question

Typically, as a firm hires additional workers, the marginal product of labor

answer

decreases, and the value of the marginal product of labor decreases.

question

Diminishing marginal product occurs when

answer

the marginal product of an input decreases as the quantity of the input increases.

question

Other things equal, a particular job will likely pay a higher wage if it involves

answer

danger to the worker.

1 of 60

question

answer

actual monetary payments for resources purchased

question

answer

is involved in calculating economic profit

question

Utility is determined by an individual's
a. income
b. price
c. relative price
d. profit
e. tastes and preferences

answer

tastes and preferences

question

answer

perfectly elastic supply curve for its output

question

answer

all firms produce the same amount of output but earn different amounts of profit because their costs differ

question

answer

price discrimination

question

answer

long-run average cost falls as one firm expands plant size

question

answer

additional satisfaction obtained from consuming one more unit of a good

question

When a firm is experiencing diminishing marginal returns, marginal cost is
a. rising
b. falling
c. constant
d. rising at first, then falling

answer

rising

question

answer

price elasticity has an absolute value greater than 1

question

answer

total revenue minus explicit costs

question

A firm's opportunity costs of using resources provided by the firm's owners are called
a. sunk costs
b. fixed costs
c. explicit costs
d. implicit costs
e. entrepreneurial costs

answer

implicit costs

question

answer

during which at least one resource is fixed

question

answer

be successful if demand is inelastic

question

answer

different prices to different groups of buyers, based on differences in the cost of providing the commodity to the buyer

question

answer

marginal revenue equals marginal cost

question

answer

a group of oligopolistic firms that engage in formal collusion

question

answer

what price to charge

question

A variable cost is one that changes
a. in the long run only
b. in the short run only
c. year to year
d. month to month
e. as output changes

answer

as output changes

question

answer

accepts the market price for its product

question

The law of comparative advantage says that

answer

the individual with the lowest opportunity cost of producing a particular good should produce it

question

If there is a shortage in the market for jeans,

answer

the price should begin to rise

question

If all resources are used efficiently to produce goods and services, a nation will find itself producing

answer

somewhere on its production possibilities frontier

question

Which of the following is a characteristic of pure capitalism?

answer

the price system is used to guide resources to their highest-valued uses

question

Opportunity cost is defined

answer

as the value of the best alternative not chosen

question

A tax is said to be progressive if

answer

the proportion of income paid as taxes increases as income increases

question

The division of labor

answer

allows tasks to be performed more efficiently

question

Points outside the production possibilities frontier represent

answer

currently unattainable combinations of outputs

question

You currently subscribe to two magazines and are trying to decide whether you should subscribe to a third. What should determine your decision, if you are rational?

answer

the cost of the third magazine compared to the additional enjoyment you would get from it

question

The slope of a line is defined as the

answer

change in the value of the variable on the vertical axis divided by the change in the value of the variable on the horizontal axis

question

The fact that people have unlimited wants means that

answer

they always want more of at least one good

question

John takes 10 minutes to iron a shirt and 20 minutes to type a paper. Harry takes 10 minutes to iron a shirt and 30 minutes to type a paper. Which of the following statements is correct?

answer

Harry has a comparative advantage in ironing.

question

The economic behavior of individual decision makers and the determination of price and output in specific markets are both studied in

answer

microeconomics

question

Some people have argued that government should provide only those goods that we would truly define as public goods. If so, which of the following should government produce?

answer

National Defense

question

Sugar and honey are viewed as substitutes for each other in many cooking applications. If the price of sugar rises, we would expect

answer

the demand for honey to increase

question

The statement that there is a direct relation between x and y means that

answer

x and y move in the same direction

question

Your opportunity cost of choosing a particular activity

answer

varies, depending on time and circumstances

question

A point outside the production possibilities frontier

answer

cannot be reached using the available technology

question

Because people's wants are unlimited but resources are scarce,

answer

choices must be made

question

The most likely reason why Los Angeles has so much smog is that residents

answer

do not have strong, enforceable property rights to clean air

question

When deciding whether to hire an additional worker, firms need only consider how the additional worker would affect

answer

profit

question

A difference in wages that arises to offset the nonmonetary characteristics of different jobs is known as

answer

a compensating differential.

question

The percentage of families with incomes below the poverty line

answer

is known as the poverty rate.

question

If the value of the marginal product of labor exceeds the wage, then the firm could

answer

increase profit by hiring additional labor.

question

Value of marginal product is defined as the additional

answer

revenue earned from hiring one more factor of production.

question

Which term do economists use to refer to a difference in wages that arises from nonmonetary characteristics of different jobs?

answer

compensating differentials

question

The accumulation of investments in people, such as education and on-the-job training, is known as

answer

human capital

question

Which of the following would not be considered human capital?

answer

none of the above would be considered human capital

question

A compensating differential refers to differences in

answer

nonmonetary characteristics of jobs.

question

The term "compensating differential" refers to

answer

d. a wage difference that arises from nonmonetary characteristics of different jobs.

question

The poverty rate is a measure of the percentage of people whose incomes fall below

answer

an absolute level of income.

question

Factory workers who work the day shift earn less per hour than similarly-skilled factory workers who work the night shift. The difference in pay is attributed to

answer

a compensating differential.

question

By definition, there is discrimination when the marketplace offers different opportunities to similar individuals who differ only by

answer

race, ethnic group, sex, age, or other personal characteristics.

question

Labor-market discrimination is evident when

answer

wages of individuals differ on the basis of some recognizable attribute that is unrelated to productivity.

question

Why would a wage differential due to discrimination be unlikely to persist in a competitive labor market?

answer

There is a cost advantage for firms that do not discriminate.

question

The factors of production are best defined as the

answer

inputs used to produce goods and services.

question

The belief that education makes a person more productive and thereby raises his or her wage is referred to as the

answer

human-capital view of education.

question

Typically, as a firm hires additional workers, the marginal product of labor

answer

decreases, and the value of the marginal product of labor decreases.

question

Diminishing marginal product occurs when

answer

the marginal product of an input decreases as the quantity of the input increases.

question

Other things equal, a particular job will likely pay a higher wage if it involves

answer

danger to the worker.

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