AP Microeconomics: Final
If a typical firm in a perfectly competitive market earns economic profit in the short run, what will most likely happen in the long run? A.Firms will enter the market and cause the price to fall. B.Firms will enter the market and cause the price to rise. C.Firms will exit the market and cause the price to fall. D.Firms will exit the market and the cause price to rise. E.There will be no change in the market because profit is maximized.
A Firms will enter the market and cause the price to fall.
A profit-maximizing firm is currently producing a quantity at which price is less than average variable cost. To maximize profit, the firm will do which of the following in the short run and the long run? A.Shut down in the short run and exit the market in the long run. B.Produce less quantity in the short run and increase its scale of production in the long run. C.Produce more quantity in the short run and increase its scale of production in the long run. D.Continue producing the same quantity in the short run and in the long run. E.Continue producing the same quantity in the short and exit the market in the long run.
A Shut down in the short run and exit the market in the long run.
All of the following cause a rightward shift in the demand schedule for a normal good EXCEPT A a decrease in the price of the good B a decrease in the price of a complementary good C an increase in the price of a substitute good D an increase in consumers' income E an increase in consumers' preference for the good
A. A decrease in the price of the good
For a normal good, the income effect of a price change refers to the change in the consumption of the good that occurs because of the change in A consumers' purchasing power B the demand for a substitute good C the supply of the good D relative price E marginal utility
A. Consumers' purchasing power
The quantity of peanuts supplied increased from 40 tons per week to 60 tons per week when the price of peanuts increased from $4 per ton to $5 per ton. The price elasticity of supply for peanuts over this price range is A elastic B inelastic C unit elastic D perfectly elastic E perfectly inelastic
A. Elastic
If a one-of-a-kind Etruscan vase is offered for sale at an auction, which, if any, of the following correctly shows the supply curve for the vase? A. Graph w/vertical supply B. Graph w/horzintal supply C. Graph with upward sloping to right supply D. Graph with downward sloping to right supply E It is impossible to determine the shape of the supply curve from the given information.
A. Graph w/vertical supply
An effective minimum wage policy in a competitive market will increase unemployment and increase the total earnings of labor only if the demand for labor is A relatively inelastic B relatively elastic C unit elastic D greater than the supply E positively related to the wage rate
A. Relatively inelastic
A change in which of the following will cause a change in the supply of personal computers (PC's) in the short run? A Technology B Demand for PC's C Price of disks, which are a complement to PC's D Price of PC's E Consumers' incomes
A. Technology
To determine whether two goods are complements, one would calculate the A price elasticity of demand B price elasticity of supply C income elasticity of demand D cross-price elasticity of demand E input-price elasticity of supply
D. Cross-price elasticity of demand
Habib withdrew $100,000 from his bank account paying 5% interest to purchase equipment for his construction company. If Habib earns an accounting profit of $10,000 and he has no other opportunity costs, his economic profit will be equal to A.$0 B.$5,000 C.$15,000 D.$105,000 E.$115,000
B $5,000
Number of workers:0,1,2,3,4,5,6 Total productsL0,11,20,27,32,35,36 The table above shows a firm's short-run production function using labor as the only variable input. The marginal product of the third worker is A.5 units B.7 units C.9 units D.20 units E.27 units
B 7 units
A graph shows quantity of output produced on the horizontal axis and shows total variable cost and total cost on the vertical axis. Which of the following is true about the vertical distance between total variable cost and total cost as output increases? A.It decreases. B.It remains constant. C.It increases. D.It decreases and then increases. E.It increases and then decreases.
B It remains constant
Which of the following is true when total product is at its maximum? A.Marginal product is at its maximum. B.Marginal product is equal to zero. C.Marginal product is equal to average product. D.Average product is increasing. E.Average product is equal to zero.
B Marginal product is equal to zero.
The graph above shows per unit cost information for firm X. At what quantity of output do diminishing returns begin for firm X? A.Q1 B.Q2 C.Q3 D.Q4 E.Q5
B Q2
The graph above shows the short-run cost curves for a perfectly competitive firm. Assume that the market price is P0 and the firm is producing at quantity Q0. To maximize profit, the firm should A.increase production to quantity Q3Q3, where average total cost is at its minimum B.increase production to quantity Q2Q2, where price is equal to marginal cost C.increase production to quantity Q1Q1, where average variable cost is at its minimum D.shut down and incur losses equal to fixed costs E.shut down and incur zero losses
B increase production to quantity Q2Q2, where price is equal to marginal cost
Carmen consumes both entertainment and medical care. For Carmen, entertainment is a normal good, and the income elasticity of her demand for medical care is zero. If Carmen's income increases, which of the following will be the immediate impact on her consumption? A Entertainment: Increase; Medical care: Increase B Entertainment Increase Medical care No change C Entertainment No change Medical care Increase D Entertainment Increase Medical care Decrease E Entertainment Decrease Medical care Increase
B. Entertainment Increase, Medical care no change
If the demand for product X is perfectly elastic and the supply of product X decreases, which of the following will occur in the market for X ? A Total revenue will increase. B Total revenue will decrease. C Total revenue will remain the same. D Quantity demanded will exceed quantity supplied. E Quantity supplied will exceed quantity demanded.
B. Total revenue will decrease
Kieran owns and operates his own bike shop. In the past week, he received two offers: one to work for a competitor for $50,000 per year and one to sell his bike shop for $100,000. Assume the annual interest rate is 6 percent, and Kieran is indifferent between owning his bike shop or working for the competitor. Kieran currently receives enough annual revenue to cover all explicit costs and has $60,000 left over. There are no additional implicit costs (excluding the items listed above). Under these circumstances, Kieran's economic profit is equal to which of the following? A.−$96,000 B.−$90,000 C.$4,000 D.$10,000 E.$60,000
C $4,000
A competitive profit-maximizing firm is currently producing at an output level at which the marginal revenue is equal to marginal cost. Which of the following changes will NOT affect the profit-maximizing quantity? A.An increase in the price B.An increase in variable costs C.An increase in fixed costs D.An increase in labor productivity E.An increase in the firm's revenues
C An increase in fixed costs
Which of the following is true about economies of scale and increasing returns to scale? A.Economies of scale and increasing returns to scale are the same thing. B.Economies of scale refers to the relationship between inputs and output. Increasing returns to scale refers to the relationship between long-run average total cost and the size of the firm. C.Economies of scale refers to the relationship between long-run average total cost and the size of the firm. Increasing returns to scale refers to the relationship between inputs and output. D.Economies of scale is a long-run concept, while increasing returns to scale is a short-run concept. E.Increasing returns to scale is a long-run concept, while economies of scale is a short-run concept.
C Economies of scale refers to the relationship between long-run average total cost and the size of the firm. Increasing returns to scale refers to the relationship between inputs and output.
Which of the following is ignored when calculating accounting profit? A.Total revenue B.Variable costs C.Implicit costs D.Fixed costs E.Total costs
C Implicit costs
The table below shows the values of different elasticities of demand for good J at the market equilibrium price. Which of the following would result in the greatest rigtward shift of the demand curve for good J. A. a 10% decrease in income b. A 10% increase in the price of good Z c. A 10% increase in the price of good Y d. A 20% increase in the price of good X e. A 50% decrease in the price of good J
C. A 10 % increase in the price of good Y
Suppose that the demand for vegetables is price elastic. If the price of vegetables increases by 5 percent, the quantity of vegetables demanded would A increase by 5 percent B increase by more than 5 percent C increase by less than 5 percent D decrease by more than 5 percent E decrease by less than 5 percent
D. Decrease by more than 5 percent
Assume that the market for beef is perfectly competitive and in equilibrium. Which of the following would most likely result in an increase in both the equilibrium price and the equilibrium quantity of beef? A An increase in the supply of chicken, a substitute good B A decrease in consumers' income, assuming that beef is a normal good C An increase in the supply of potatoes, a complementary good D An increase in the price of corn, an input in the production of beef E An announcement by the medical community that consumption of beef increases the risk of heart disease
C. An increase in the supply of potatoes, a complementary good
The absolute value of the price elasticity of demand for a good increases when A the good has fewer substitutes B the good becomes a necessity C consumers spend greater portion of their budget on the good D the price of an input used to produce the good increases E the good must be purchased immediately
C. Consumers spend greater portion of their budget on the good
Country Z has a downward sloping domestic demand curve and an upward sloping domestic supply curve for widgets. In the absence of trade, the domestic price of widgets is P0. Now the country engages in trade, and the price for widgets, Pw, is below the domestic price, P0. Which of the following will occur? A Country Z will begin exporting widgets. B Consumer surplus will decrease in Country Z. C Domestic producer surplus will decrease in country Z. D Domestic production of widgets in Country Z will increase. E The price of widgets received by domestic producers will increase.
C. Domestic producer surplus will decrease in country Z
The table below shows the values of different elasticities of demand for good J at the market equilibrium price. Which of the following is true about good J a. Good J is a normal good b. Demand for Good J is elastic c. Good J is an inferior good d. Good J is a complement to Good Y e. Good J is a substitute to Good Z
C. Good J is an inferior good
In the rental housing market, what would be the effect of a rent control that was set at the market equilibrium rental price? A It would increase the number of housing units available, creating a surplus. B It would decrease the number of housing units available, creating a shortage. C It would have no impact on the number of housing units available. D It would increase the consumer surplus and decrease the producer surplus. E It would decrease the consumer surplus and increase the producer surplus.
C. It would have no impact on the number of housing units available
In a perfectly competitive market, a change in which of the following could cause a shift in the supply curve? A The incomes of consumers B The number of buyers C Technology D The price of the product E Tastes and preferences
C. Technology
A Change in which of the following cause a movement along a given demand curve for a normal good? a. consumer income b. The demand for the good c. The price of the good d. The price of a subsitute good e.the number of buyers
C. The price of the good
The economic concept of total consumer surplus refers to which of the following? A The difference between the quantity of a good or service that people purchase and the amount that they actually consume B The overproduction of goods and services relative to the socially optimal level of output C The sum of the differences between the prices that consumers are willing to pay for a good or service and the price they actually pay D The sum of the differences between the prices that consumers are willing to pay for a good or service and the minimum prices that sellers must receive to offer that quantity E The difference between the quantity demanded and the quantity supplied of a product at a given price
C. The sum of the difference between the prices that consumers are willing to pay for a good or service and the price they actually pay
Which of the following describes how a market will respond when the scarcity of a good increases? A Consumers will increase their demand for the good B Consumers will decrease their demand for the good. C The price of the good will increase. D The price of the good will decrease. E Producers will increase the supply of the good.
C. the price of the good will increase
At a firm's current output level, average fixed cost is $10, average variable cost is $30, average total cost is $40, and marginal cost is $55. Which of the following must be true? A.Average fixed cost, average variable cost, and average total cost are all decreasing. B.Average fixed cost, average variable cost, and average total cost are all increasing. C.Average fixed cost and average total cost are both decreasing, while average variable cost is increasing. D.Average fixed cost is decreasing, and both average variable cost and average total cost are increasing. E.Average fixed cost and average variable cost are both decreasing, while average total cost is increasing.
D Average fixed cost is decreasing, and both average variable cost and average total cost are increasing.
The demand curves X and Y are shown in the graph above. Which of the following offers the most accurate comparison of the price elasticities of demand curves X and Y at a price of $4? A DemandCurve XDemandCurveY Perfectly elasticPerfectly inelastic B DemandCurve XDemandCurveY Perfectly inelasticPerfectly elastic C DemandCurve XDemandCurveY Perfectly inelasticRelatively elastic D DemandCurve XDemandCurve Y Relatively inelasticPerfectly elastic E DemandCurve XDemandCurve Y Relatively elasticRelatively inelastic
D. DemandCurve XDemandCurve Y Relatively inelasticPerfectly elastic
Given the demand curve above, if price decreases from $8 to $4 per unit, total consumer surplus will A increase by $4 B increase by $8 C increase by $12 D increase by $18 E remain constant at $24
D. Increase by $18
Assume that the supply of corn is relatively price inelastic, while the demand for corn is relatively price elastic. If the government imposes a per-unit excise tax on the production of corn, the incidence of the tax will fall A entirely on buyers B more on buyers than on sellers C entirely on sellers D more on sellers than on buyers E equally on both buyers and sellers
D. More on sellers than on buyers
If the government imposes a tariff on imports of cheese, the price and quantity of imported cheese will most likely change in which of the following ways? A Price: Decrease Quantity Decrease B Price: Decrease Quantity:Increase C Price: Increase QuantityNot change D Price: Increase QuantityDecrease E Price: Increase Quantity: Increase
D. Price increase, quantity decrease
Assume that more corn is used to produce ethanol. Simultaneously, more effective control of pests and weeds occurs in farming. Which of the following will definitely occur in the corn market? A The price of corn will increase. B The quantity of corn will decrease. C The price of corn will decrease. D The quantity of corn will increase. E The supply of corn will decrease.
D. The quantity of corn will increase
Given a short-run production function, which of the following is true when total product is increasing at a decreasing rate? A.Average product must be positive and increasing. B.Average product must be negative and decreasing. C.Marginal product must be negative and decreasing. D.Marginal product must be positive and increasing. E.Marginal product must be positive and decreasing.
E Marginal product must be positive and decreasing.
In a comparison of a perfectly competitive firm's short-run equilibrium to its long-run equilibrium, which of the following is true? A.Price must equal marginal cost in the long run, but not necessarily in the short run. B.Economic profit must be positive in the long run, but not necessarily in the short run. C.The firm can set price in the short run, but not necessarily in the long run. D.The firm must produce at minimum average total cost in the short run, but not necessarily in the long run. E.Price equals average total cost in the long run, but not necessarily in the short run.
E Price equals average total cost in the long run, but not necessarily in the short run.
If the price elasticity of supply for pickles is 2 and the price of pickles increases by 10 percent, then the quantity supplied of pickles will increases by a. .2% b. 5% c. 8% d. 12% e.20%
E. 20%
An increase in the supply of good X resulted in an increase in the price and quantity of good Y. It can be concluded that good Y is A an inferior good B a luxury good C a normal good D a substitute for good X E a complement for good X
E. A complement for good x
Assume that the current market equilibrium price for milk is $2.80 per gallon and that 5 million gallons are sold per day. If the government sets a price ceiling of $2.00 per gallon, which of the following is true? A The demand for milk will increase. B The supply of milk will decrease. C There will be an excess supply of milk in the market. D More than 5 million gallons of milk will be sold. E Less than 5 million gallons of milk will be sold.
E. Less than 5 million gallons of milk will be sold
Which of the following relationships among the price elasticity of demand, change in price, and change in total revenue is consistent? A Price Elasticity of Demand: Elastic Change in Price: Increase Change in Total Revenue:Increase B Price Elasticity of Demand: Elastic Change in Price: Decrease Change in Total Revenue: Decrease C Price Elasticity of Demand: Unit Elastic Change in Price: Decrease Change in Total Revenue: Decrease D Price Elasticity of Demand: Inelastic Change in Price: Decrease Change in Total Revenue: Increase E Price Elasticity of Demand: Inelastic Change in Price: Decrease Change in Total Revenue: Decrease
E. Price Elasticity of Demand: Inelastic Change in Price: Decrease Change in Total Revenue: Decrease
The diagram above depicts the demand and supply curves for good Y. The perfectly competitive market is initially in equilibrium, but the government decides to institute a price floor program by setting the price of good Y at PF and agrees to purchase all unsold units of good Y from the producers. The cost of this program to the government is represented by which of the following areas? A 0PFJQ2 B 0PFKQ3 C GIKH D Q1IJQ2 E Q1IKQ3
E. Q1IKQ3
Nation Alpha can produce either 3 units of good X or 1 unit of good Y with one hour of labor, whereas nation Beta can produce either 4 units of good X or 2 units of good Y with one hour of labor. Assuming that labor is the only input, which of the following is true? a. beta has an absolute advantage in the production of good x b. alpha has an absolute advantage in the production of good y c.beta has a compartive advantage in the production of good x d.alpha has a comparative advantage in the production of good y e.alpha has both an absolute and comparative advantage in the production of goody y
a. beta has an absolute advantage in the production of good x
A linear production possibilites curve indiciates the following? a. constant opportunity cost bdecreasing opportunity costs c.increasing opportunity costs d.diminishing marginal returns e.labor-intensive production
a. constant opportunity cost
Compared to a market economy, in a command economy, there is greater a. government involvement in the allocation of resources b. protection of private property rights c.reliance on prices for allocating scarce resources d.reliance on private businesses for the allocation of resources and distribution of goods e.consumpiton of consumer goods
a. government involvement in the allocation of resources
Which fo the following would cause the supply of good X to become more elastic a. the ability to easily reallocate inputs to the production of good X b. A short time frame fro making production decisions c. Incrased prices of inputs required to produce good X d. More elastic demand for good X e Greater availability of substitutes for good X
a. the ability to easily reallocate inputs to the production of good X
one shoe one bread Mr.X: 5 hr 1 hr Ms. y 2hr .5 hr According to the data above, if Mr.X and Ms.y have the opportunity to trade, which of the following will be mutually beneficial? a.Ms. y sells shoes to and buys bread from Mr. X b Ms. y sells bread and buys shoes from Mr. X c.Ms. y sells both bread and shoes to MR. X d.Ms. y buys both bread and shoes from Mr.x e. Ms.Y and Mr. X do not trade with each other
a.Ms. y sells shoes to and buys bread from Mr. X
Which of the following is a defining characteristic of a market economy? a.Private ownership of resources b.Equitable distribution of income c.Taxation of personal income d.Reliance on public goods e.Government guided resource allocation
a.Private ownership of resources
Movement along the production possibilities curve shows which of the following? a.The trade-offs society faces b.The total amount of available rsources c.The combination of inputs required for a given output d.The relationship between the price of an input and the quantity demanded e.The decrease in efficiency
a.The trade-offs society faces
Which of the following economic system primarily relies on prices for allocating resources and goods? a. Free-market b.traditional c.command d.mixed e.socialism
a.free market
If a hurricane reduced the crab population, the price of crabs and quantity sold would change in which of the following ways? A Price Increase Quantity Increase B Price Increase Quantity Decrease C Price DecreaseQuantity Increase D Price Decrease Quantity Decrease E Price No change Quantity Decrease
b. PriceQuantityIncreaseDecrease
Donuts: 140, 120, 90, 50, 0 Sweet rolls: 0, 10, 20, 30, 40 The above data represents a bakerys daily production possibilites curve for donuts and sweet rolls. Which of the following is true about the PPC? a. THe ppc illustrates deceasing oppurtunity cost b. The ppc illustrates increasing oppurtunity cost c. the ppc illustrates constant opportunity cost d. producing 100 donuts and 10 sweet rolls illustrates efficiency in production e. producing 0 donuts and 40 sweet rolls illustrates inefficiency in prdocution
b. The ppc illustrates increasing oppurtunity cost
A 10 percent increase in the price of a good results in a 4 percent increase in total revenue. From this information, it can be concluded that the demand over this range of prices a. is upward sloping b. Is inelastic c.Has a price elasticity of demand equal to 2.5 d. Has increased by 14% e.Has increased by 40%
b. is inelastic
Which of the following best explains why individuals and societies must make choice when presented with alternatives? a. people possess limited knowledge b. resources are scarce c.people cannot agree on societal goals d.resources are not fully employed e.people are more intrested in their won well-being than soceitys well-being
b. resources are scarce
Levels of cleanup: 0,1,2,3,4,5 Total cost of Cleanup:0,7,37,92,172,272 Total benefit of cleanup:0,45,80,105,125,140 The table above shows the toatl cost and total benefit of cleanign up pollution in a community. Which of the following cleanup levels is socially opitmal? a.1 b.2 c.3 d.4 e.5
b.2
Both amy and brad produce and consume apple pie and ice cream. In one hour, Brad makes five apple pies or ten gallons of ice cream while Amymakes fifteen apple pies or fiteen gallons of ice cream. Based on the above inofrmation, one can directly conclude that a.Brad has an absoulte advantage in making ice cream and will sell ice cream ot amy b.Brad has a comparative advantage in making ice cream and will sell ic cream to amy c. Brad does not have a comparative advantage in making either good and will not trade with amy d.Brad has an absolute advantage in making apple pies but a comparative advantage in making ice cream e. Brads opportunity cost of making ice cream is higher than amys
b.Brad has a comparative advantage in making ice cream and will sell ic cream to amy
The diagram above(total utility and quantity of chocolate) shows sallys utiltiy function for chocolate. Her utility function illustrates the principle of a.Trade-offs when making choices b.Diminishing marginal utiltiy c.income and subsitution effects d.increasing opportunity cost e.constrained utility maximization
b.Diminishing marginal utility
The graphs above show Mary's demand for hamburgers and Mark's demand for hamburgers. Suppose Mary and Mark are the only two consumers in the market. Which of the following is a point on the market demand curve for hamburgers? a. Price 2Quantity12 b.Price 4Quantity7 c.Price6Quantity6 d.Price8Quantity4 e.Price10Quantity8
b.Price 4 Quantity 7
Cost-benefit analysis assumes rational agest do which of the following? a. always make a decision that is best for society b.compare additional cost and additional benefits when making a decision c. consider only what they will lose when making a decision d.consider only what they will gain when making a decision e.always make the same decision
b.compare additional cost and additional benefits when making a decision
THe table below shows the per-unit prices and marginal utility of vide games and comic books that kyle purchased: Video games Comic books Price per unit 25 10 Marginal utiltiy: 50 0 Kyle spent all of his allocated budget on video games and comic books. To maximize his utility, Kyle should have purchased a.more video games and fewer comic books b.fewer video games and more comic books c.fewer of both goods d.equal amounts of booth goods e.more of both goods
b.fewer video games and more comic books
A power company decides to use wind turbines to provide electricity instead of coal. Which basic economic question does this decison anser in a free market? a. what goods or services will be produced b.how will the good and service be produced c.who will consume the good and services d.what economic system should be adopted e.who gets to decide.
b.how will the good and service be produced
An outward shift of a production possibilites curve can be caused by a.planting more profitable farm crop b.improving technology c.using idle resources d.Changing consumer preferences e.increasing the minimum wage
b.improving technology
Based on the production possibilites curve for books and pencils shown above, what is the opportunity cost of producing a book> a. 30 pencils b. 10 pencils c. 3 pencils d. 1/3 of a penicl e.1/10 of a pencil
c. 3 pencils
2. If a 10 percent increase in the price of good X results in a 20 percent decrease in the quantity of good Y demanded, which of the following is true? a. Good X and Good Y are substitute goods, and the cross price elasticity is -2 b Good X and Good y are normal goods, and the income elasticity is +2 c. Good X and Good y are complementary goods, and the cross price elasticity is -2 d.Good X and Good y are substitute goods, and the income elasticity is +2 e. Good X and Good y are complementary goods, and the cross prie elasticity is -.5
c. Good X and Good y are complementary goods, and the cross price elasticity is -2
In the market desribed by the diagram above, the total economic surplus will be maximezed at which fo the following price and quantity combinations? a. P1 and Q3 b. P1 and Q1 c. P2 and Q2 d. P3 and Q3 e. P3 and Q1
c. P2 and Q2
In which of the following cases would government intervention in a makret result in an increase in the quantity sold? a. Setting a price ceiling above the equilibrium price. b. Setting a price ceiling below the equilibrium price c. Setting a price floor above the equilibrium price d. Levying a per-unit tax on producers e. Providing producers of a product with a per-unit subsidy
c. Setting a price floor above the equilibrium price
Assume that the market for a good is in equilibrium at a price of $20 and a quantity of 100 units. After the government imposes a $5 per-unit excise tax on the good, the price that buyers pay for the good increase by $3. Which of the following are possible values for the government tax revenue and deadweight loss in the market? a. Tax revenue is 500, deadweight loss is 300 b. Tax revenue is 500, deadweight loss is 200 c. Tax revenue is 300, deadweight loss is 100 d. Tax revenue is 300, deadweight loss is 0 e. Tax revenue is 200, deadweight loss is 0
c. Tax revenue is 300, deadweight loss is 100
Orens fahter tells oren he can have one dessert after dinner. He can choose from a scoop of ice cream, a slice of apple pie, a cup of chocolate pudding, or a piece of fruit. Oren prefers chocalate pudding ot a piece of fruit, he prefer apple pie to chochalte puddding, and he prefers ice cram to apple pie. If oren chooses a scoop of ice cream. , what is his oppurtunity cost? a. a piece of fruit b. a cup of chocolate pudding c. a slice of apple pie d. a scoop of ice cream e. a piece of fruit, a cup of pudding, and a slice of apple pie.
c. a slice of apple pie
Nation Aga can produce either 3 units of good X or 1 unit of good Y with one hour of labor, while nation Kaza can produce either 4 units of good X or 2 units of good Y with one hour of labor. Assuming that labor is the only input, mutually beneficial exchange can take place between Aga and Kaza if a. Aga exchanges .5 units of good x for 1 unit of good y b. aga exchanges 1.5 units of good x for 1 unit of good y c. aga exchanges 2.5 units of good x for 1 unit of good y d. Kaza exchanges 1 unit of good y for 1 unit of good x e.Kaza exchanges 2 units of good y for 1 unit of good x
c. aga exchanges 2.5 units of good x for 1 unit of good y
An art student spends ll of her income on pencils and drawing pads. The student currently buys 30 pencils at 1 dollar each and 10 pads at 5 dollars each. The marginal utility of the 30th pencils is 100 utils and the marginal uitlity of the 10th pad is 400 utils to maximize utility the student should change her purchases of pencils and pads in which of the following ways? a.keep pencils the same and buy more pads b. buy more fo both goods c. buy more pencils and less pads d. buy less pencils and more pads e.buy less of both goods
c. buy more pencils and less pads
The study of economics exists because people are confronted with the basic problem of a.elasticity b.negative externality c. scarcity d.overabdunace e.monopoly
c. scarcity
Assume the following utility schedule for aaliyah's ice cream consumption. IF she consumes 6 units, what is the value of her total utility from consuming ice cream? quantity consumed:1,2,3,4,5,6 Marginal utility:8,6,4,2,0,-2 a.22 b.20 c.18 d.0 e.-2
c.18
A city is considering building playgrounds in city parks located near residential area. The city planner presented to the twonship the following cost and benefit estimates to help the city council decide how many playfgrounds to build. Number of playgrounds: 1,2,3,4,5,6 Total cost:20,000, 50,000, 80,000, 110,000, 160,000, 170,000 Total benefit: 30,000, 70,000, 105,000, 140,000, 150,000, 165,000 What is the opitmal numerb of playgrounds to maxiize net benefits a.6 b.5 c.4 d.3 e.2
c.4
The marginal utility per dollar spent on the last orange consumed is 75. If the price of an apple is .5, how many apples would Johnny have to consume before he considers purchasing another orange. Number of apples: 2,3,4,5,6,7 Total utility: 130,180,220,250,270,280 a. 2 b.3 c.4 d.5 e.6
c.4
Mickey has a $20 gift card that she is planning to use to download 10 songs and 5 games. The download price for each song $1 and the download price for each game is $2. HEr marginal utiity from the tenxth song is 30, and her marginal utility from the fith game is the 70. Based on this information, which of the following statemnts is true? a. Mickey plan will maximize her utility b.Mickey can incrase utility by buying more songs and fewer gmaes c.Mickey can increase utility by buying more games and ferwer songs. d. since games are twice as expensive as songs, Mickey should buy twice as many songs. e.Since songs are twice as expenise as games, Mickey should buy twice as many games.
c.Mickey can increase utility by buying more games and ferwer songs.
Command economies differ form capitalist economies mainly because of which of the following a. command economies have higher prices for oil b. capatilist economies have higher prices for oil c.command economies have a higher degree of government ownership of resource d.capaitalist economies have a higher degree of government owenrship of resources e.command economies rely on prices to allocate resources
c.command economies have a higher degree of governmnet ownership of resource
Which of the following is an example of a nonrival resource a. national park camping sites that can be reserved by anyone b. farmland that can be used to grow corn or soyebans c.solar energy d.fish in the ocean e. timber in a forst
c.solar energy
At the current prices of good X and Y, the quanttiy demanded of good X is 10 units, and the quantity demadned of good Y is 5 units. The corss-price elasticity of dmeand between goods X and Y is .6. A 10 percent increase in the price of good Y will result in which fo the following? a. A .5 percent decrease in the quantity demanded of good Y. b. A 3 percent increase in the quantity demanded fo good Y c. A 1 percent increase in the quantity demanded of good X d. A 5 percent increase in the quantity demanded of good X e. A 60 percent increase in the quantity demanded of good X
d. A 5 percent increase in the quantity demanded of good X
Which of the following will shift the supply curve for apples to the right? a.An increase in consumers' income b.An increase in the price of apples c.An increase in the wages of apple pickers d. A decrease in the rental price for apple harvesting equipment e. A decrease in the demand for oranges, a substitute in consumption
d. A decrease in the rental price for apple harvesting equipment
Consider the market for arugla, a normal good. Which of the following changes would result in an increase in both the equilibrium price and the equilibrium qunaitty of arugula? a. A decrease in the price of radicchio, a subsitute b. An increase in the price of water irrigation for arugula farms c. An increase in the price of salad dressing, a complement d. An increase in population e. A decrease in consumer income
d. An increase in population
Which of the following explains why the supply curve is upward sloping? a. producers recieve subsidies as they increase production b. At a higher quantity producers are more able to control the market price c. At a lower price, consumers are abkle to buy more of the good d. At a higher price, producers are more able to cover the higher marginal cost associated with incerasing production e. At a higher price, consumrs are able to buy more fo the good.
d. At a higher price, producers are more able to cover the higher marginal cost associated with incerasing production
Which of the following correctly describes the income effect associated iwth the law of demand? a. If the price of a good increases, the demand for that good decreases because the demand for its substitute increases. b. If the price of a good decreases, the demand fro the good increases because the lower price increases the demand for its complement. c. If consumer income increases, the demand curve will shift to the right for an inferior good. d. If the price of a normal good decreases, the purchasing power of a consumers' income increases and therefore consumers will be more willing and able to purchase more of the good e. If consumer income increases, there will be an upward movement along the demand curve for a normal good
d. If the price of a normal good decreases, the purchasing power of a consumers' income increases and therefore consumers will be more willing and able to purchase more of the good
Suppose that Habib has a weekly fixed budget and spends it all on music downloads and snakcs. At his current combination of consumption, the marginal utility of the last dollar spent on music downloads i greater than the marginal utiltiy of the last dollar spent on snacks. Has Habib maximized utility? a.Yes, because he has purchased the maximum possible with his limtied budget b.yes, because he has purchased the two goods in proporttion so that he can get the maximum utility from each c.Yes, becasue changing his current consumptuon combination will reduce his total utility d. No, because he can increase his total utility by purchasing more music downloads and fewer snacks e. No because he can increase his total utility by purchasing fewer music downloads and more snacks.
d. No, because he can increase his total utility by purchasing more music downloads and fewer snacks
Which of the following staements is true about the demand curve above? a. Demand is elastic between quantities 4 and 8 b. Demand is inelastic between quantities 0 and 4 c. The elasticity of demand increase when moving from point X to point Y d. The elasticity of demand decreases when moving from point X to point Y e. Demand is elastic at each given price because the slope is constant and equal to -2.
d. The elasticity of demand decrases when moving rfom point X to point Y
Quantity of apples:1,2,3,4,5,6 Total benefit:10,18,24,28,30,31 The table above shows the total benefit Tony gets from eating different quantites of apples. If apples cost $3 each, how many should he buy to maximize consumer surplus> a.1 b.2 c.3 d.4 e.5
d.4
If the price of an apple is .5, the marginal utiltiy per dollar spent on the 5th apple is: Number of apples: 2,3,4,5,6,7 Total utility: 130,180,220,250,270,280 a.20 b.30 c.40 d.60 e.100
d.60
Good X:0, 20, 40,60,80,100 Good Y: 100, 95, 85, 65, 35,0 The table above shows thee maximum possible output combinations of good X and good Y that microland can produce by using all of its available to resoures andd technology. As the produciton of good X increases, what happens to the opportunity cost of producing good X ? a. it decreases, because the production of good Y decrases by greater amounts b.It decreases, because the production of good Y icnrases by smaller amounts c.It remains constant, becasue the production of good X increases by the same amount d.It increases, becasue the prodcution of good y decreases by greater amounts e.It increases, because the production of good y increases by smaller amounts
d.It increases, becasue the prodcution of good y decreases by greater amounts
Which of the following is an example of a scarce factor of production? a. money b.food c.flour d.airplanes. e.established knowledge
d.airplanes
Which of the following will enable the economy to reach point F(outside ppc) on diagram above> a. reallocating currently available resources from apple production to production of oranges b.reallocating curerently available resources from orange production to production of apples c. fully allocating currently available and unemployed resources efficiently d.creating or discovering new resources e. becoming a mixed economy
d.creating or discovering new resources
Becasue of conflict and instability in Country Y, millions of its citizens emigrate to country x. Which of the following best explains what will happen to country xs production possibilites curve? a. its ppc will not change, but consumption of goods will decrease b. it will move to a point insdie its ppc, indicating slower growth c. it will move to a point on its ppc at which it produces only consumer goods d.its ppc will shift outward over time e. its ppc will shift inward overtime
d.its ppc will shift outward over time
If Nation X produces coffee at a higher opportunity cost than Nation Y, which of the following is true? a.nation X must have an absolute advantage in producing coffee. b. nation x must have a comparative advantage in producing coffee c.nation y must have an absolute advantage in producing cofee d.nation y must have a comparative advantage in producing coffee. e.there is insufficient information to determine absolute and comparative advantage.
d.nation y must have a comparative advantage in producing coffee.
Which fo the following will occur as a result of a decrease in the prices of inputs used to produce a good? a. The price of the good would invrease as the quantity supplied decreased. b. The quantity supplied would incerase as the price of the good decrsed. c. The quantity supplied would increase as the price of the good incresed. d. The price of the good would increase for any. given quantity supplied e. The quantity supplied would increase at each possible price for the good.
e. The quantity supplied would increase at each possible price for the good.
Marginal naalysis suggests that an individal will consume one additional unit of a good if the a. sunk cost can be removed b.total benefit is less than the total cost c.total benefit is greater than the total cost d.additional benefit is less than the additional ocst e.additional benefit is greater than the additional cost
e.additional benefit is greater than the additional cost
Which of the folowing best describes how a consumer maximiezes total utility from the consumption of a bundle of goods and services? a. By choosing the quanitty of each good such that the quantity demanded of each good id equal to the quantity supplied b. by choosing the quantity of each good such that the marginal utility of each good is equal to zero c.by choosing the quantity of each good such that the price is equal to the marginal revenue d.by choosing the quantitty of each good susch taht the price is equal to the marginal revenue e.by choosing the combination of goods such that the marginal utiltiy per dollar spent on the alst unit of each is good is equal.
e.by choosing the combination of goods such that the marginal utiltiy per dollar spent on the alst unit of each is good is equal.
Country. OC of 1 ton of Apples. OC of 1 ton of Oranges x 1 ton of oranges 1 ton of apples y: 2 tons of oranges. .5 tons of apples The the table above shows the opportuntiy costs of producing apples and oragnes in countries x and y. whcih of the follwoing can be conluded based on the data given in the table? a.country y has an absolute advantage in producing both goods b.country y has a comparitive advantage in producing both goods c.country x has an absolute advantage in producing both goods d.country x has a comparative advantage in producing orangges e.country x has a comparative advantege in producing apples
e.country x has a comparative advantege in producing apples
Individual private property rights provide people incentives to a.Meet societal goals rather than pursue their self-intrest b.produce goods and services regardless of makret demand c.Achieve equitable distribution of goods and services through competivie markets d.Focus only on benefits without regard to costs e.produce goods and services that are valued in market
e.produce goods and services that are valued in market
The marginal benefit of consuming a good is a. the change in average utility that results from consuming one more unit of the good b.the same as the total benefit c.equal to the marginal cost d.the change in the total expenditures as a result of buying one more unit of the good e.the maximum amount a consumer is willing to pay for one more unit of the good
e.the maximum amount a consumer is willing to pay for one more unit of the good
