Test 2 Microeconomics - Assignment Essays %

question

Economic profit is greater than or equal to accounting profit.

answer

(f) Accounting profit takes into consideration implicit cost (all things the firm is having to pay for like resources used) while economic doesn't take them into consideration.

question

Price elasticity of demand along a linear, downward-sloping demand curve increases as price falls.

answer

(f) Elasticity of demand decrease as price decreases. Since people are less likely to look for substitutes when the price is lower than expected.

question

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

answer

(t) When the floor price is above the equilibrium, then there will be a decrease in quantity demand.

question

For a firm operating in a perfectly competitive industry, marginal revenue and average revenue are equal.

answer

(f) Total revenue divided by each unit doesn't equate to marginal revenue (how much make for one product, opportunity cost changes (law of diminishing returns))

question

If something happens to alter the quantity supplied at any given price, then we move along the fixed supply curve to a new quantity supplied.

answer

(f) If alter quantity supplied at any given price, then would need to create new supply curve.

question

When a tax is imposed on sellers, consumer surplus and producer surplus both decrease.

answer

(t) Since DWL impacts both parties.

question

Individual demand curves are summed horizontally to obtain the market demand curve.

answer

(t) The demand curves will take into consideration all quantity added up so able sell in market overall at that price. (individual demand curves all added together)

question

A price ceiling is a legal minimum on the price at which a good or service can be sold.

answer

(f) price ceiling is a maximum

question

A dairy farmer must be able to calculate sunk costs in order to determine how much revenue the farm receives for the typical gallon of milk.

answer

(*) Typical cost is always above average variable cost. Average variable

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question

Economic profit is greater than or equal to accounting profit.

answer

(f) Accounting profit takes into consideration implicit cost (all things the firm is having to pay for like resources used) while economic doesn't take them into consideration.

question

Price elasticity of demand along a linear, downward-sloping demand curve increases as price falls.

answer

(f) Elasticity of demand decrease as price decreases. Since people are less likely to look for substitutes when the price is lower than expected.

question

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

answer

(t) When the floor price is above the equilibrium, then there will be a decrease in quantity demand.

question

For a firm operating in a perfectly competitive industry, marginal revenue and average revenue are equal.

answer

(f) Total revenue divided by each unit doesn't equate to marginal revenue (how much make for one product, opportunity cost changes (law of diminishing returns))

question

If something happens to alter the quantity supplied at any given price, then we move along the fixed supply curve to a new quantity supplied.

answer

(f) If alter quantity supplied at any given price, then would need to create new supply curve.

question

When a tax is imposed on sellers, consumer surplus and producer surplus both decrease.

answer

(t) Since DWL impacts both parties.

question

Individual demand curves are summed horizontally to obtain the market demand curve.

answer

(t) The demand curves will take into consideration all quantity added up so able sell in market overall at that price. (individual demand curves all added together)

question

A price ceiling is a legal minimum on the price at which a good or service can be sold.

answer

(f) price ceiling is a maximum

question

A dairy farmer must be able to calculate sunk costs in order to determine how much revenue the farm receives for the typical gallon of milk.

answer

(*) Typical cost is always above average variable cost. Average variable

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