Econ 201 test study guide

In Table 24.1, according to the profit maximization rule, at the profit-maximizing level of output, marginal revenue is

$300

If 10 workers will be hired by a firm at a wage rate of $15 per hour, but the 11th worker will be hired only if the wage rate falls to $14 per hour, then the marginal wage of the 11th worker is

$4 per hour

Refer to Table 25.2. Assume there are only four firms in the pool sweeper industry. What is the Herfindahl-Hirschman index for this industry ?

$4,150

Lashondra is the owner/operator of an interior design firm. Last year she earned $400,000 in total revenue. Her explicit costs were $200,000 (assume that this amount represents the total opportunity cost of these resources). During the year she received offers to work for other design firms. One offer would have paid her $120,000 per year and the other would have paid her $130,000 per year. Lashondra's economic profit is equal to

$70,000

The present discounted value of $100 to be received one year from now, if the interest rate is 2.5 percent, is closest to

$98

Average total cost equals

(fixed costs + variable costs) divided by quantity produced

If a firm hires 12 workers at $9 per hour each and the 13th worker will be hired only if the wage rate falls to $8 per hour, the marginal wage rate must be

-$4

In Table 24.1, using the profit maximization rule, a monopolist will produce

3 units

Refer to Table 19.1. The marginal utility Josh enjoys from the fourth slice of pizza is

5 utils

If the price elasticity of demand is 0.6, then a 10 percent increase in the price of the good will lead to a ____________ in the quantity demanded.

6 percent decrease

Refer to Table 26.2. To maximize profit, Sylvie's Shampoo Company. should produce _______ bottles of shampoo and charge a price of _______ each.

7; $20

In figure 21.4, a firm that produces between 600 and 800 units per period should choose a plant with a short run-average total cost function of

ATC2 or ATC3

If economic profits are earned in a competitive market, then over time

Additional firms will enter the market.

In reference to 22.1, the $600 paid in property taxes counts as

An implicit cost

The marginal revenue product establishes

An upper limit to the wage rate an employer is willing and able to pay.

The price of a stock will decrease, ceteris paribus, for all of the following reasons except

Consumer confidence increases

If the cost efficiency of labor equals 2, then

Each extra dollar spent on wages returns 2 units of additional output.

In monopolistic competition, a firms demand curve is tangent to the ATC curve in the long run because

Entry eliminates economic profit, and exit eliminates losses.

Refer to figure 26.5. Which firm is least likely to engage in advertising?

Firm B only.

The marginal revenue curve is below the demand curve

If a firm must lower its price to sell additional output.

Ceteris paribus, the law of diminishing returns states that beyond some point, the

Marginal physical product of a factor of production diminishes as more of that factor is used.

Total utility is maximized when

Marginal utility is zero.

Which of the following products will have more inelastic demand?

medicines

The concentration ratio for an oligopoly is considered

over 60 percent

Refer to Table 26.1. At the profit-maximizing output and price, Will's Beach Ball Company will earn a ________ economic profit, and __________ the market will occur

positive; entry intro

Sky-High Skywriters raises its price, and the other four firms in the industry raise their prices in response. Coordination in this industry is accomplished by

price leadership

If Lauren's substitution effects outweigh her income effects, her labor supply curve will

slope upward

The refusal to work by unionized labor is an example of

striker

In Figure 20.1, total revenue is maximized at the unit price of

$100

In figure 20.1, at what price is the elasticity of demand unitary?

$100

Suppose Carlos has a 60 percent change of not collecting $100,000 when his rich uncle dies in 10 years. Juanita wants to buy the rights to this possible inheritance from Carlos. How much is the possible inheritance currently worth to Carlos? Assume the interest rate is 9 percent.

$16,896

Suppose a monopolist must pay $10 per hour to attract 10 workers. If the same monopsonist must raise its wage to $11 per hour to attract the 11th worker, what is its marginal factor cost for labor?

$21 per hour

When price exceeds average variable cost but not average total cost, the firm should, in the short run,

Produce at the rate of output where MR = MC.

The purpose of an initial public offering is to

Raise fund for investment and growth by selling shares of the company to the public

The exit of firms from a market, ceteris paribus

Reduces the economic losses of remaining firms in the market.

Which of the following is most likely a fixed cost ?

Rent for the factory

The function of financial intermediaries is to transfer purchasing power from

Savers to dissavers

The labor supply curve will be positively sloped if the substitution effect of wages is

Stranger than the income effect of wages

In Figure 30.2, a minimum wage of $20 will result in a

Surplus of 32 workers.

According to the text, a convincing argument against concentration of market power is that

The exercise of market power results in a higher price.

If a good had a zero price (i.e., the good was free), a rational person would consume

The good until the marginal utility of the last unit was zero.

Marginal revenue is the change in

Total revenue when output is changed.

In Table 19.2, diminishing marginal utility occurs

With all units after the first.

Marginal utility is

change in total utility obtained by consuming one more unit of a good or service.

A price decrease will cause total revenue to fall if

demand is inelastic

If price is below the long-run competitive equilibrium level, there will be

greater demand