Economics Test #1
The difference between a price decrease and an increase in income is that
An increase in income does not affect the slope of the budget line, while a decrease in price does change the slope
If a consumer's income decreases, what will happen to the budget line?
It will shift inward
A situation where a consumer says he does not know his preference ordering for bundles X and Y would violate the property of
completeness
Demand is more inelastic in the short term because consumers
have no time to find available substitutes
The additional cost incurred by using an additional unit of the managerial control variable is defined as the
marginal cost
To maximize profits, a firm should continue to increase production of a good until
marginal revenue equals marginal cost
Graphically, a decrease in advertising will cause the demand curve to
shift leftward
Technological advances will cause the supply curve to
shift to the right
Consumer−consumer rivalry arises because of
the scarcity of goods available
Accounting profits are
total revenue minus total cost
Economic profits are
total revenue minus total opportunity cost
If the price of good X increases, what will happen to the budget line?
It will become steeper
Which is more preferred between a cash gift and an in-kind gift?
A cash gift
Which of the following would not shift the demand for good A?
Drop in price of good A
Which of the following pairs of goods are probably complements?
Hamburgers and ketchup
If good A is an inferior good, an increase in income leads to
a decrease in the demand for good A
An increase in the price of steak will probably lead to
an increase in demand for chicken
The law of demand states that, holding all else constant
as price falls, quantity demanded rises
Because of producer−producer rivalry, the price will tend to
be driven to a lower price
Assume that the price elasticity of demand is −2 for a certain firm's product. If the firm raises price, the firm's managers can expect total revenue to
decrease
The buyer side of the market is known as the
demand side
scarce recourses are ultimately allocated toward the proaction of goods most wanted by society because
firms attempt to maximize profits
Which of the following is an implicit cost to a firm that produces a good or service?
foregone profits of producing a different good or service
If there are few close substitutes for a good, demand tends to be relatively
inelastic
Demand is perfectly elastic when the absolute value of the own price elasticity of demand is
infinite
The additional benefits that arise defined as the
marginal benefit
which of the following are signals to the owners of scarce resources about the best use of those resources?
profits of business
the opportunity cost of receiving $10 in the future as opposed to getting that $10 today is
the foregone interest that could be earned if you had the money today
Changes in the price of good A lead to a change in
the quantity demanded of good A
Managers can get workers to work longer hours
with higher overtime pay in excess of regular hourly pay
