Econ Final - Ch. 4-6

A firm sells 20 units of a good at a price of $5 per unit. If the average cost of production of the good equals $3 per unit, the firm's revenue is:

$100

The total cost of a firm is $50, the average variable cost is $2, and the average fixed cost is $3. How may units of the output does the firm produce?

10 units

Assume that a consumer can spend $20 on two goods, pens and pencils. If the price of one pen is $5 and the price of one pencil is $2, which of the following combinations of the two goods represents a point on the consumers budget constraint?

2 pens and 5 pencils

A firm produced 376 units with 10 workers. When the eleventh worker was hired, the output increased to 398 units. The marginal product of the eleventh worker is:

22 units

A firm produces 200 units of a good when it employs 7 workers. The marginal product of the eighth worker is 46 units. If the eighth worker is hired, the firm's total product will increase to:

246 units

A firm earns $600 of total revenue from selling its product at $200 per unit. If the per-unit cost of producing the good is $150, the firm sells _______ units(s) of the good

3

In a perfectly competitive market, situations of surplus or shortage of a good:

are self-corrected due to the competitive nature of the market

If the marginal cost of a perfectly competitive firm producing a good is $50 and the market price of the good is $100, the firm should:

increase its output

A firm producing 10 units of output incurs a total cost of $800. When it produces 11 units, the total cost increases to $890. What is the marginal cost of producing the eleventh unit?

$90

When the price of a good increases by 300%, the quantity supplied of the good increases from 200 units to 900 units. The price elasticity of supply of the good is:

1.17

Which of the following inputs can be changed in the short run?

Labor employed

A firm has an average total cost of $50. If it sells 20 units of its product at $80 each, what is its profit?

$600

Assume that a combination of 10 bottles of wine and 2 cartons of milk lies on a consumer's budget constraint. If the price of one bottle of wine is $10, and one carton of milk is $1, what is the consumer's income?

$102

John is ready to pay $5 for an extra loaf of bread. Due to an ongoing discount in the store, he gets a loaf for $2. John's consumer surplus from the purchase is

$3

Refer to the figure above. What is the market-wide consumer surplus when the market price of wine is $18?

$3,000

A firm sells 30 units of its product at a price of $5 per unit. It incurs a fixed cost of $100 and a variable cost of $20. The firm's profit is:

$30

Refer to the figure above. What is the loss in the market-wide consumer surplus when the price of wine changes from $9 to $18

$57,000

Refer to the figure above. What is the market-wide consumer surplus when the market price of wine is $9?

$60,000

When the price of milk is $3 per bottle, Steve purchases 20 bottles of milk. When the price increases to $6, Steve's consumption falls to 15 bottles. Steve's elasticity of demand for milk is:

-0.25

When the price of wine is $10 per bottle, Thomas purchases 30 bottles every month. Later, the government introduces a 50% tax on all alcoholic beverages, which is to be completely borne by consumers. This reduces Thomas's consumption to 20 bottles of wine a month. Refer to the scenario above. Thomas's elasticity of demand for wine is:

-0.67

Sharon consumes 10 chocolates when the price of one chocolate is $2. If her elasticity of demand for chocolates is -1, she consumes _________ chocolates when the price increases to $4.

0

Refer to the table above. What is the market demand for wine when the price is $3?

50 units

Refer to the table above. What is the market demand for wine when the price is $1?

76 units

Which of the following pairs of goods is likely to be considered substitutes?

A Ford car and public transportation

Which of the following is NOT an example of a market?

A city requires homeowners to pay $500 for putting in a sidewalk on their street

Which of the following factors is likely to lead to an increase in the quantity demanded of pens?

A fall in price of writing pads

Which of the following will lead to a change in the opportunity cost of buying a pen and a pencil?

A twofold increase in the price of pens and a threefold increase in the price of pencils

Which of the following is likely to lead to a rightward shift in the supply curve of cotton?

An increase in labor productivity due to training programs

Which of the following statements correctly describes a perfectly competitive market?

All participants in a perfectly competitive market are price-takers

At a price of $5 per table, the quantity supplied of tables is 500 units whereas the quantity demanded is 660 units. Given this information, which of the following statements is true?

At $5 per table, there is a shortage in the market.

At a price of $1 per table, the quantity supplied of tables is 100 units, whereas the quantity demanded is 70 units. Given this information, which of the following statements is true?

At a price of $1 per table, there is a surplus in the market

Which of the following is NOT a direct determining factor of consumers' purchase decisions?

Cost of factor inputs

The automobile market in the United States is often said to be highly competitive. But it is not perfectly competitive. What makes this market not perfectly competitive?

Different car companies make different vehicles with different features

Which of the following statements is true of the concept of willingness to pay?

If a consumer is consuming 10 units of a commodity and she is ready to pay $2 for the eleventh unit, her willingness to pay for the eleventh unit is $2

Which of the following is an example of specialization?

Instead of a worker making an entire shoe, the total productivity increased when different workers were allotted different jobs in the production process

Which of the following examples best describes the concept of free entry?

Jack has an old cell phone that he wants to sell. He opens an account on eBay and auctions it off

An optimizing consumer has to choose between two goods Good A priced at PAand Good B priced at PB. Given that MBA is the marginal benefit from consuming Good A and MBB is the marginal benefit from consuming Good B, the consumer's well-being will be maximized at the point where:

MB_{A}/P_{A} = MB_{B}/P_{B

Z is a normal good. The equilibrium price and equilibrium quantity of Z in the year 2019 was $25 and 60 units, respectively. In 2020, the equilibrium price of Z had decreased to $15 and the equilibrium quantity had also decreased to 50 units. Other things remaining the same, which of the following could explain this change?

Shift of the demand curve for Z to the left

Z is a normal good. The equilibrium price and quantity of Z in the year 2019 was $25 and 60 units, respectively. In 2020, the equilibrium price of Z had increased to $35 but the equilibrium quantity had decreased to 50 units. Other things remaining the same, which of the following could explain this change?

Shift of the supply curve of Z to the left

Z is a normal good. The equilibrium price and equilibrium quantity of Z in the year 2011 was $25 and 60 units, respectively. It was seen that, in 2014, the equilibrium price of Z had decreased to $15, but the equilibrium quantity had increased to 70 units. Other things remaining the same, which of the following could explain this change?

Shift of the supply curve of Z to the right

Which of the following refers to diminishing marginal returns?

The additional output produced in a firm decreased as more workers were hired

Which of the following situations depicts diseconomies of scale?

The average total cost of a firm increases from $50 to $55 when it increases its production from 10 units to 20 units

Which of the following examples best approximates a competitive market?

The market for soybeans in the United States

Which of the following is NOT an element of a seller's decision-making process in a perfectly competitive market?

The number of buyers

Suppose the prices of a pair of jeans, a shirt, and a tie are $30, $20, and $10 respectively. Which of the following statements is true in this context?

The opportunity cost of buying a shirt is 2 ties

Which of the following statements is true of the long run?

There are no fixed inputs in the long run

If the demand and supply curves for a commodity both shift to the left and the shift in demand is less than the shift in supply, then in comparison to the initial equilibrium, the new equilibrium will be characterized by:

a higher price and a lower quantity.

If the demand and supply curves for a commodity shift to the right and the shift in demand is greater than the shift in supply, then in comparison to the initial equilibrium, the new equilibrium will be characterized by:

a higher price and quantity

Assume that the supply curve for a commodity shifts to the left and the demand curve shifts to the right, and the shift in demand is greater than the shift in supply. Then, in comparison to the initial equilibrium, the new equilibrium will be characterized by:

a higher price and quantity.

If the demand and supply curves for a commodity shift to the right by the same amount, then in comparison to the initial equilibrium, the new equilibrium will be characterized by:

a higher quantity and the same price

In a marketplace, prices_________.

act as incentives that allow for the efficient allocation of resources

Other things remaining same, a right shift in the demand curve will lead to:

an increase in the equilibrium price and the equilibrium quantity.

An optimizing consumer makes her purchase decisions based on:

benefits per dollar spent at the margin.

A price ceiling imposed by the government:

can create situations of excess demand

If the price of a good increases,

consumer surplus decreases

The buyers of a good will want to purchase it as long as their willingness to pay for the good is ______.

greater than or equal to the price

The buyers of a good will want to purchase it as long as their willingness to pay for the good is__________.

greater than or equal to the price

The long-run average cost curve connects the lower part of the short-run cost curves because:

in the long run, firms have more flexibility to change input combinations

While making a purchase decision using marginal thinking, a buyer should buy the good that yields the:

highest marginal benefit per dollar spent

In a perfectly competitive market, because an individual seller tends to sell only a fraction of the total amount of the good produced:

his individual choices do not affect market outcomes

If the percentage change in the quantity supplied of a good is less than the percentage change in price of the good, the good is said to have a(n):

inelastic supply

Two goods are said to be complements when a fall in the price of one good ______.

leads to a rightward shift in the demand for the other good

Assume that a seller in a perfectly competitive market charges more than the equilibrium price. It is likely that this seller will _______.

lose almost all of his buyers

A seller's willingness to accept is the same as his ________ cost of production.

marginal

If quantity of tea is measured on the horizontal axis and quantity of coffee is measured on the vertical axis, an increase in the price of coffee will cause the budget constraint to:

pivot leftward along the vertical axis

If quantity of milk is measured on the horizontal axis and quantity of juice is measured on the vertical axis, a decrease in the price of milk will cause the budget constraint to:

pivot rightward along the horizontal axis.

A surplus occurs in a market when:

price is higher than the equilibrium price

At the competitive equilibrium, the ______.

quantity demanded is equal to the quantity supplied of a good

Increases in the marginal product of labor can be attributed to:

specialization of workers

A firm is said to be a price taker if it:

sells as much of any good as it wants at the prevailing market price

An expected increase in the market price of oil in the coming year is likely to __________ in the current year.

shift the supply curve of oil to the left

The market demand is the ________ of the individual demand of all the potential buyers.

sum

A surplus occurs in a market when ___________.

supply exceeds demand

Negative values of the price elasticity of demand of a good can be attributed to:

the Law of Demand

The quantity demanded of a good is___________.

the amount of the good that buyers are willing to purchase at a given market price

The quantity supplied of a good is _______.

the amount of the good that sellers are ready to supply at a given price

When the marginal cost curve lies below the average cost curve,

the average cost curve slopes downward

Willingness to pay:

the highest price that a buyer is willing and able to pay for an extra unit of a good

In a perfectly competitive market:

the long-run market price is equal to the minimum average cost of the industry because of free entry and exit of firms

Assume that an individual spends his income on sweaters and shirts. If the price of a sweater increases:

the opportunity cost of buying sweaters increases.

The slope of a budget constraint represents:

the opportunity cost of one good in terms of another

The Law of Demand states that _______.

the quantity demanded of a commodity varies inversely with the price of the commodity, all other things remaining constant

A production function establishes the relationship between:

the quantity of inputs used and the quantity of output produced

The Law of Supply states that ______.

the quantity supplied of a good rises when the price rises, all other things remaining constant

The general rule for benefit maximization suggests that in personal equilibrium:

the ratio of marginal benefits to price should be identical across all goods

Elasticity is:

the ratio of the percentage change in two variables.