Econ Exam 2

Table 21.2 Output (units per day) 0 10 20 30 Total cost (dollars per day) $40 $54 $62 $80 At 20 units of output in Table 21.2, the average variable cost is Select one: a. $1.10 per unit. b. $2.00 per unit. c. $3.10 per unit. d. $1.75 per unit.

$1.10

Table 21.2 Output (units per day) 0 10 20 30 Total cost (dollars per day) $40 $54 $62 $80 Average fixed cost at 20 units of output in Table 21.2 is Select one: a. $2.50. b. $1.00. c. $2.00. d. $4.00.

$2

See Figure 19.1. Lu's consumer surplus is equal to Select one: a. $500. b. $100. c. $300. d. $200.

$500

Which of the following is not a determinant of demand? Select one: a. The cost of the factor inputs. b. The price of other goods. c. Desire for the good. d. Income of the consumer.

the cost of the factor inputs

Table 21.1 Units of Labor Units of Output 0 0 1 15 2 35 3 45 4 52 What is the marginal physical product of the second unit of labor in Table 21.1? Select one: a. 20. b. 17. c. 35. d. 5.

20

Refer to Figure 22.3 for a perfectly competitive firm. At a market price of $23, total profits are maximized at an output of Select one: a. 25. b. 39. c. 31. d. 13.

39

Table 21.2 Output (units per day) 0 10 20 30 Total cost (dollars per day) $40 $54 $62 $80 At 10 units of output in Table 21.2, the total fixed cost is Select one: a. $44. b. $14. c. $54. d. $40.

40

Josh is eating pizza at his favorite Italian restaurant. Below is his utility from this consumption: Table 19.1 Slice of Pizza Total Utility Marginal Utility First slice 20 20 Second slice 39 19 Third slice - 15 Fourth slice 59 - Refer to Table 19.1. The marginal utility Josh enjoys from the fourth slice of pizza is Select one: a. 0 units. b. 54 units. c. 20 units. d. 5 units.

5 units

Josh is eating pizza at his favorite Italian restaurant. Below is his utility from this consumption:Table 19.1 Slice of Pizza Total Utility Marginal Utility First slice 20 20 Second slice 39 19 Third slice - 15 Fourth slice 59 - Refer to Table 19.1. What is Josh's total utility after consuming the third slice of pizza? Select one: a. 54 units. b. 5 units. c. 20 units. d. 0 units.

54 units

The marginal cost curve intersects the minimum of which of the following cost curves? Select one: a. AFC. b. ATC. c. MPP. d. TC.

ATC

Adam is the owner/operator of a flower shop. Last year he earned $250,000 in total revenue. His explicit costs were $175,000 paid to his employees and suppliers (assume that this amount represents the total opportunity cost of these resources). During the year he received three offers to work for other flower shops with the highest offer being $75,000 per year. Which of the following is true about Adam's accounting and economic profit? Select one: a. Accounting profit = $75,000; economic profit = $0. b. Accounting profit = $0; economic profit = negative $75,000. c. Accounting profit = $175,000; economic profit = $75,000. d. Accounting profit = $75,000; economic profit = negative $100,000.

Accounting profit = $75,000; economic profit = $0

A perfectly competitive firm should expand output when Select one: a. P > ATC. b. P <MC. c. P > MC. d. P <ATC.

P > MC

If a product has a high marginal utility, then Select one: a. Consumers will also have a low total utility. b. Consumers will not purchase any more of the good. c. The demand curve will be downward-sloping. d. A consumer is willing to pay a high price for it.

a consumer is willing to pay a high price for it

When the average total cost curve is rising, the marginal cost curve will be Select one: a. Below the average fixed cost curve. b. Falling with greater output. c. Above the average total cost curve. d. Below the average total cost curve.

above the average total cost curve.

Which of the following statements about the relationship between economic costs and accounting costs is true? Select one: a. Accounting costs are always greater than economic costs. b. Accounting costs are equal to or greater than economic costs. c. Accounting costs are always less than or equal to economic costs. d. Accounting costs must always equal economic costs.

accounting costs are always less than or equal or economic costs.

Assuming an entrepreneur does not pay herself, the $1,000 she could earn as an employee elsewhere is considered Select one: a. A fixed cost. b. An implicit cost. c. An explicit cost. d. A variable cost.

an implicit cost

Implicit costs Select one: a. Include only payments to labor. b. Are the sum of actual monetary payments made for resources used to produce a good. c. Are the value of resources used, for which no monetary payment is made. d. Include the value of all resources used to produce a good.

are the value of resources used, for which no monetary payment is made.

For the perfectly competitive firm, the marginal revenue is always Select one: a. Decreasing. b. Constant, equal to price. c. Increasing. d. Equal to average total cost.

constant, equal to price

When technology improves, the firm's marginal cost curve shifts Select one: a. Downward, and supply decreases. b. Downward, and supply increases. c. Upward, and supply increases. d. Upward, and supply decreases.

downward, and supply increases

Sam's surf shop has total costs of $2,000 when it is not producing any surfboards. This means that Select one: a. The shop is very inefficient in its production. b. Variable costs are $2000. c. Fixed costs are $2,000. d. Fixed costs are zero.

fixed costs are $2000

The demand curve confronting a competitive firm is Select one: a. Downward-sloping, as is market demand. b. Horizontal, while market demand is downward-sloping. c. Downward-sloping, while market demand is flat. d. Horizontal, as is market demand.

horizontal, while market demand is downward-sloping

The decision to enter or exit an industry is known as the Select one: a. Investment decision. b. Profit maximization decision. c. Production decision. d. Output decision.

investment decision

Profit Select one: a. Is the difference between total revenue and total cost. b. Must be reported to Wall Street quarterly. c. Is always a number greater than zero. d. Is the difference between variable costs and fixed costs.

is the difference between total revenue and total costs.

The marginal cost curve Select one: a. Is the short-run supply curve for a competitive firm at prices above the AVC curve. b. Slopes downward to the right as output increases. c. Is the long-run supply curve for a competitive firm at prices below the AVC curve. d. Is not affected by changes in the price of variable inputs.

is the short-run supply curve for a competitive firm at prices above the AVC curve

The perfectly competitive market structure includes all of the following except Select one: a. Many firms. b. Large advertising budgets. c. Low entry barriers. d. Identical products.

large advertising budgets

The marginal utility from a good declines as more of it is consumed in a given period. This is the definition of the Select one: a. Total revenue rule. b. Law of diminishing marginal utility. c. Law of demand. d. Law of diminishing total utility.

law of diminishing marginal utility

Economic profit is Select one: a. Less than accounting profit by the amount of explicit cost. b. Greater than accounting profit by the amount of implicit cost. c. Greater than accounting profit by the amount of explicit cost. d. Less than accounting profit by the amount of implicit cost.

less than accounting profit by the amount of implicit cost

Short-run profits are maximized at the rate of output where Select one: a. Marginal revenue is zero. b. Average total costs are minimized. c. Total revenue is maximized. d. Marginal revenue is equal to marginal cost.

marginal revenue is equal to marginal cost

A consumer maximizes total utility from a given amount of income when the Select one: a. Total utility obtained from each product is the same. b. Amount spent for each product is the same. c. Marginal utility of the last unit of each good is the same. d. Marginal utility per dollar obtained from the last unit of each good is the same.

marginal utility per dollar obtained from the last unit of each good is the same

A catfish farmer will shut down production when Select one: a. The best he can do is break even. b. Total revenue falls below total costs. c. Price falls below minimum AVC. d. He is losing money.

price falls below minimum AVC

Rosa is willing to pay $200 for the iPhone, but the actual price is $400. This means Select one: a. The iPhone is overpriced. b. Rosa will buy this product but will not receive any consumer surplus. c. Rosa will enjoy a consumer surplus of $200 if she buys the iPhone. d. Rosa will not buy an iPhone.

rosa will not buy an iphone

Price discrimination occurs when Select one: a. Minorities pay a higher price for a product than everyone else. b. Sellers charge two separate prices for the same product to separate consumers. c. Sellers charge one price to all consumers but not wholesalers. d. Sellers charge a higher price than is reasonable.

sellers change two separate prices for the same products to separate consumers.

Which of these examples is an example of price discrimination? Select one: a. Cereal manufacturers put discount coupons inside their cereal boxes. b. Seniors pay one price at the movie theater and adults pay more. c. Wholesale prices differ from retail prices. d. Goods are marked down on sale.

seniors pay one price at the movie theater and adults pay more.

In economics, the long run is considered to be Select one: a. One year. b. The time period when all costs are explicit. c. The time period when all costs are variable. d. More than two years.

the time period when all costs are variable