mege econ exam
What is an example of a normative question? A-How do interest rates influence employment? B-How should a society achieve full employment? C-How do unemployment rates differ among nations? D-What are the long-term effects of unemployment?
B
A firm's shutdown point is the quantity and price at which the firm's total revenue just equals its A-Total fixed cost B-Average variable cost C-Total cost D-Marginal cost
B
Wheat is the main input in the production of flour. If the price of wheat increases, all else equal, we would expect the: A-The supply of flour to be unaffected B-The supply of flour to decrease C-The supply of flour to increase D-The demand for flour to decrease
B
Which of the following are characteristics of a sole proprietorship? 1.Single owner 2.Limited liability A-Both 1 and 2 B-Only 1 C-Neither D-Only 2
B
A change from an inefficient mix to an efficient mix of output would be best be represented with a production possibilities frontier (PPF) as a: A-Shift outward of the PPF B-Shift inward of the PPF C-Movement from inside the PPF onto the PPF D-Movement from a point on the PPF to a point inside the PPF
C
An advantage of a partnership over a corporation is that A-A partnership's profits are taxed only once, while retained profits of a corporation are taxed twice B-A partnership's owners usually have limited liability, while the entire wealth of owners of a corporation is at risk C-A partnership's cost of capital is low relative to that of a corporation D-A partnership has a perpetual life, while a corporation dies with its owners
C
Economic profit is maximized by producing at the level of output where A-Total revenue = total cost B-Total revenue = average total cost C-Marginal revenue = marginal cost D-Marginal revenue = total cost
C
"Diminishing marginal returns" refer to a situation in which the A-Marginal cost of the last worker hired is less than the marginal cost of the previous worker hired B-Average product of the last worker hired is less than the average product of the previous worker hired C-Average cost of the last worker hired is less than the average cost of the previous worker hired D-Marginal product of the last worker hired is less than the marginal product of the previous worker hired
D
A market structure in which a small number of firms compete is called A-Perfect competition B-Monopolistic competition C-Monopoly D-Oligopoly
D
A point on a nation's production possibilities frontier indicates A-An undesirable combination of goods and services B-Combinations of output that are unattainable, given the current stock of resources and technology C-Levels of production that will cause both unemployment and inflation D-That resources are fully utilized in producing a given combination of goods and services
D
Compared with competitive markets, monopolies charge ____ prices and produce a _____output A-Higher; higher B-Lower; lower C-Lower; higher D-Higher; lower
D
Jonathan purchased coffee for $5 at Jennifer's coffee shop; however, he was willing to pay $9. Jennifer was willing to accept $3 for the coffee A-A consumer surplus of $12 exists and a producer surplus of $10 exist B-A consumer surplus of $10 exists and a producer surplus of $12 exist C-A consumer surplus of $2 exists and a producer surplus of $4 exist D-A consumer surplus of $4 exists and a producer surplus of $2 exist
D
Suppose one worker produces 8 toys, two workers together produce 20 toys, three workers produce 30 toys and four workers together produce 35 toys. At what point does the diminishing marginal product of labor begin? A-First worker B-Second worker C-Fourth worker D-Third worker
D
Suppose one worker produces 8 toys, two workers together produce 20 toys, three workers produce 30 toys and four workers together produce 35 toys. What is the marginal product of the 2nd worker? A-10 B-8 C-10 D-12
D
The costs incurred even when no output is produced are called A-Variable costs B-External costs C-Marginal costs D-Fixed costs
D
The long run A-Means a long period of time, always longer than a year B-Is always greater than 10 years C-Is the same for different firms D-Is a period of time in which all factors of production can be varied
D
Which market type has characteristics as follows: large numbers of firms, differentiated products? A-Perfect competition B-Monopoly C-Oligopoly D-Monopolistic competition
D
Which of the following is the best example of a public good A-Welfare programs B-Highways C-Mail delivery D-National defense
D
______ occurs when goods and services are produced at their lowest resource cost, while ______ occurs when the mix of goods and services produced is the most desired by society. A-Allocative efficiency; production efficiency B-Production efficiency; social efficiency C-Allocative efficiency; social efficiency D-Production efficiency; allocative efficiency
D
"Diminishing marginal returns" refers to a situation in which the A-Marginal product of the last worker hired is less than the marginal product of the previous worker hired B-Average cost of the last worker hired is less than the average cost of the previous worker hired C-Marginal cost of the last worker hired is less than the marginal cost of the previous worker hired D-Average product of the last worker hired is less than the average product of the previous worker hired
A
A price cut increases total revenue of demand is A-Elastic B-Inelastic C-Unit elastic D-Perfectly inelastic
A
All of the following will decrease the supply of commercial air travel expect: A-A technology change that makes aircrafts more fuel efficient B-An increase in jet fuel prices C-An increase in the wages of airline pilots D-A decrease in the number of companies that offer commercial air travel
A
An advantage of a partnership over a corporation is that A-A partnership's profits are taxed only once, while retained profits of a corporation are taxed twice B-A partnership's owners usually have limited liability, while the entire wealth of owners of a corporation is at risk C-A partnership's cost of capital is low relative to that of a corporation D-A partnership has a perpetual life, while a corporation dies with its owners
A
Average product of labor is equal to _____ A-Total product divided by the quantity of labor employed B-The quantity of labor employed divided by total product C-Total product multiplied by the quantity of labor employed D-The total product produced
A
Efficiency within economics focuses on: A-How well resources are used and allocated B-The fairness of various policies C-How quickly a task can be completed D-Calculations of opportunity cost
A
Electricity is essential in the production of aluminum. If electricity prices increase: A-The supply curve for aluminum shifts leftward B-The supply curve for aluminum shifts rightward C-Aluminum becomes cheaper because it is a substitute good for electricity D-Aluminum is turned into an inferior good
A
Every point on the frontier of the production possibilities frontier represent: A-Productive efficiency B-Allocative efficiency C-Productive and allocative efficiency D-X-efficiency
A
How large is deadweight loss in equilibrium? A-Zero B-The dollar value of producer surplus minus consumer surplus C-The dollar value of consumer surplus minus producer surplus D-The dollar value of producer surplus plus consumer surplus
A
If a 20 percent increase in the price of a used car results in a 40 percent decrease in the quantity of used cars demanded, then the price elasticity of demand equals A-2.0 B-.05 C-10 D-1
A
If a firm can produce 100 DVDs for $100 or 200 DVDs for $150 what is the marginal cost per DVD of additional 100 DVDs? A-$0.50 B-$50 C-$150 D-$1.00
A
If a small percentage decrease in the price of chocolate causes a larger percentage decrease in the quantity supplied, the A-Supply of chocolate is elastic B-Demand for chocolate is elastic C-Supply of chocolate is inelastic D-Demand for chocolate is inelastic
A
If an increase in income leads to an increase in the demand for opera tickets, then opera concerts are a(n): A-Normal good B-Inferior good C-Superior good D-Substitute good
A
If demand is price elastic, A-A 10 percent decrease in the price leads to an increase in the quantity demanded that exceeds 10 percent B-The price is very sensitive to any shift of the supply curve C-A 10 percent decrease in the price leads to a decrease in the quantity demanded that is less than 10 percent D-A 10 percent increase in the price leads to an increase in the quantity demanded that exceeds 10 percent
A
If the supply for a good is inelastic, that means that when prices increases the A-Quantity supplied will increase by a smaller percentage than the price increased B-Quantity supplied will increase by a greater percentages than the price increased C-Quantity supplied will decrease D-Supply will increase
A
Marginal cost A-Is the additional cost of producing one more of a good or service B-Is the total cost of producing a good or service C-Is the variable cost of producing a good or service D-Is the average cost from producing of a good or service
A
Marginal utility is the A-Change is satisfaction that results from a one-unit increase in the quantity of a good consumed B-Maximum price that a consumer is willing to pay for an additional unit of a good C-Total satisfaction that a person gets from the consumption of all of the units of a good consumed D-Additional cost to a consumer when an additional unit of a good is consumed
A
Specialization in tasks in which one is more proficient coupled with trade: A-Can lead to gains for all parties B-Leads to gains for one party and losses for the other parties C-Leads to losses for all parties D-Works only with government intervention
A
Suppose that a consumer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If the negotiated price is $68, how much is producer surplus? A-$4 B-$11 C-$15 D-$21
A
The budget line identifies A-Affordable bundles B-The satisfaction received from consumption C-Preferred bundles D-The maximum utility which can be achieved from consumption
A
The cost incurred even when no output is produced are called A-Fixed costs B-External costs C-Marginal costs D-Variable costs
A
The demand for ____ is more elastic than the demand for _____. A-Pepsi; all soft beverages B-All personal computers; dell computers C-Food; exotic vacations D-Chewing gum; cars
A
The fact that the fourth plate from the "All You Can Eat Country Buffet" generated more satisfaction than the fifth plate is an example of A-Diminishing marginal utility B-The "paradox of value" C-Diminishing total utility D-Increasing marginal utility
A
The long run A-Is a period of time in which all factors of production can be varied B-Means a long period of time, always longer than a year C-Is the same for different firms D-Is always greater than 10 years
A
The marginal product of labor is equal to the A-Increase in the total product that results from hiring one more worker B-Slope of the marginal product of labor curve C-Total product divided by the total number of workers hired D-None of the answers are correct
A
The most important goal of the firm is to A-Maximize its profit B-Maximize its sales volume C-Minimize its costs D-Minimize its revenues
A
The principle of increasing marginal cost implies that the A-Additional cost of producing one more of a good or service increases as more is produced B-Additional cost of producing one more of a good or service decreases as more is produced C-Total cost from producing more of a good or service decreases as more is produced D-Total cost from producing more of a good or service remains the same as more is produced
A
The principle of increasing marginal cost implies that the A-Additional cost of producing one more of a good or service increases as more is produced B-Additional cost of producing one more of a good or service decreases as more is produced C-Total cost from producing more of a good or service decreases as more is produced D-Total cost of producing more of a good or service remains the same as more is produced
A
The producer surplus from a good is equal to the A-Price of the good minus its opportunity cost of production B-Opportunity cost of producing the good minus its price C-Maximum amount a consumer is willing to pay for the good minus the price that actually must be paid D-Actual price of the good minus the maximum amount a consumer is willing to pay for the good
A
The profit maximizing condition for a perfectly competitive firm is A-TR = TC B-P = MC C-MR = P D-P = ATC
A
The profits of a partnership are A-Taxed as personal income B-Taxed as capital gains indexed for inflation C-Exempt from taxation D-Subject to a corporate tax
A
The short run is a period of time in which A-The quantities of some resources the firm uses are fixed B-Prices and wages are fixed C-Nothing the firm does can be altered D-The amount of output is fixed
A
To say that turnips are inferior goods means that the income elasticity A-Is negative B-Is definitely between 0 and 1 C-Is definitely greater than 1 D-Is positive but could be great than or less then or equal to 1
A
When the supply curve shifts out (to the right) and the demand curve shifts out (to the right), the equilibrium quantity will: A-Increase B-Decrease C-Be indeterminate D-There is not enough information to tell
A
Which of the following is not a determinant of demand? A-History of the product B-Tastes and preferences C-Prices of related goods D-Income
A
Which of the following statements is true for any marginal and average? A-When the marginal is greater than the average, the average rises B-When the marginal is equal to the average, the average falls C-When the marginal is less than the average, the average rises D-When the marginal is rising, the average is rising
A
Which of these is the best example of a framing bias? A-Airlines that offer low airfare but charge fees for checked bags or seat assignments B-Stores that advertise a low prices for a product but do not have any left in stock C-Hotels that offer discounts only if you are members of certain clubs or organizations D-Restaurants that add an automatic 18% gratuity for large groups
A
Which one of the following characteristics is likely to make the demand for a good more inelastic? A-The time frame the consumer has to buy the good is relatively short B-The good accounts for a large portion of the consumer's income C-The good is a luxury D-The good has many substitutes
A
Which type of firm has no control over the price of its product? A-A perfectly competitive firm B-A monopolistically competitive firm C-An oligopolist D-An unregulated monopolist
A
If you were not studying economics, you could be doing one of the following: sleeping in (which you value at $5), playing cards with your friends (which you value at $10), or working (you would have earned an extra $8). The opportunity cost of studying economics is therefore: A-$23 B-$10 C-$8 D-$5
B
Increasing opportunity costs occur along the PPF because: A-Of unemployment in the economy B-Not all resources are equally well suited to produce all goods C-Resources lack specialization D-Of inequities in the distribution of income
B
Suppose that a customer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If the negotiated price is $68, how much is consumer surplus? A-$4 B-$11 C-$15 D-$21
B
Suppose the U.S. must give up the production of 1 gallon of paint to produce 1 pair of shoes. Mexico must give up 2 gallons of paint to produce 1 pair of shoes. According to the principle of comparative advantage: A-There are no benefits to specialization and trade B-Mexico should specialize in producing paint, the U.S. in producing shoes C-Mexico should specialize in producing shoes, the U.S. in producing paint D-The U.S. should produce both it has an absolute advantage in both products
B
Suppose the market price is $5. The producer who sells the first unit of output has a willingness-to-sell equal to $1; the producer who sells the second unit of output has willingness-to-sell equal to $2; and the producer who sells the third unit of output has a willingness-to-sell equal to $4. Total producer surplus is: A-$7 B-$8 C-$4 D-$5
B
The _____ shows the combination of two goods that are possible for a society to produce at full employment A-Full employment B-Production possibilities frontier C-Goods and service frontier D-Maximal productivity curve
B
The marginal product of labor is equal to the A-None of the answers are correct B-Increase in the total product that results from hiring one more worker C-Slope of the marginal product of labor curve D-Total product divided by the total number of workers hired
B
The owners will shut down a perfectly competitive firm if the price of its good falls below its minimum A-Average total cost B-Average variable cost C-Wage rate D-Average marginal cost
B
The reason that the law of demand exists is that A-Specialization to an increase in a person's standard of living B-People substitute cheaper products for more expensive products C-People always follow the law of the land D-A higher price never reduces demand enough to lower producer's profits
B
Suppose Mike has three hours of time to spend and he sets the following activities in order of priority: (1) seeing a movie; (2) attend a ball game; (3) Study economics. Assume that each activity takes three hours. What is Mike's opportunity cost of seeing a movie? A- Attending a ball game and studying economics B-Studying economics C-Attend a ball game D-Either attending a ball game or studying economics
C
Suppose that in Japan one worker can produce either four cars or five tons of grain per year. What is the opportunity cost of producing one car in Japan? A-0.4 tons of grain B-0.8 tons of grain C-1.25 tons of grain D-2.5 tons of grain
C
The profits of a partnership are A-Subject to a corporate tax B-Taxed as capital gains indexed for inflation C-Taxed as personal income D-Exempt from taxation
C
The short run is a period of time in which A-Prices and wages are fixed B-Nothing the firm does can be altered C-The quantities of some resources the firm uses are fixed D-The amount of output is fixed
C
There is a(n)_____ relationship between price and quantity demanded A-Indeterminate B-Positive C-Negative D-indeterminate , positive, and negative
C
When society produces the mix of goods and services that are most desired and produces them at the lowest cost possible: A-Production efficiency is achieved B-Allocative efficiency is achieved C-Production and allocative efficiency are achieved D-Inefficiency occurs
C
Which is an example of capital in the production process of an amusement park? A-The electricity used at the park B-The mechanics who maintain the equipment C-A roller coaster D-The ticket-taker
C
Which market type has characteristics as follows: one firm, good or service produced has no close substitutes, barriers to entry prevent new firms from entering into the industry? A-Monopolistic competition B-Perfect competition C-Monopoly D-Oligopoly
C
Which of the following is true for any monopolist? A-Price equal marginal revenue B-Price is always less than marginal revenue C-Price is always greater than marginal revenue D-Price always equals the average total cost (ATC)
C
Which of the following statements is true for any marginal and average? A-When the marginal is equal to the average, the average falls B-When the marginal is less than the average, the average rises C-When the marginal is greater than the average, the average rises D-When the marginal is rising, the average is rising
C
Which of the following will not cause an increase in demand? A-An increase in the price of a substitute good B-A decrease in the price of a complementary good C-A decrease in the product's price D-An increase in the number of buyers in the market
C
Which of the following would create an external benefit? A-Livestock in your neighbor's backyard B-Cigar smoke C-Restoration of a run-down home D-A slow car on a busy thoroughfare
C
Willingness-to-pay is A-The price a consumer pays for a good or services B-The price that all the consumers in a market pay for a good or service C-The highest value that a consumer believes a good or service is worth? D-The highest value that a producer believes consumers will pay for his product
C
______ combine land, labor, and capital to produce goods and services and assume the risks associated with running businesses. A-Economists B-Capital marketers C-Entrepreneurs D-Financiers
C
Average product of labor is equal to _____ A-The quality of labor employed divided by total product B-Total product multiplied by the quantity of labor employed C-The total product produced D-Total product divided by the quantity of labor employed
D
Butter is a substitute for margarine. If the price of margarine drops, we would expect to see: A-The price of butter rise and the quantity of butter traded fall B-The price of butter fall and the quantity of butter traded rise C-Both the price of butter and the quantity of butter traded rise D-Both the price of butter and the quantity of butter traded fall
D
If bagels and donuts are substitutes goods, then which of the following is likely to occur if the price of bagels is reduced? A-The demand curve for bagels will shift to the left B-There will be a leftward movement along the bagel demand curve C-The demand curve for donuts will shift to the right D-The demand curve for the donuts will shift to the left
D
If one person consumes a public good A-Others are excluded from enjoying it B-The amounts available to others are diminished C-He or she must pay for it D-Others cannot be excluded from enjoying it
D
If the demand for iPhones rises as incomes increase, then the iPhone is a(n) _____ good. A-Inferior good B-Abnormal good C-Supply good D-Normal good
D
If the supply curve shifts rightward and the demand curve also shifts rightward and if demand grows relatively less than supply then A-Price will rise and quantity will fall B-Price will fall and quantity will rise C-Price will be indeterminate and quantity will fall D-Price will be indeterminate and quantity will rise
D
