Micro Fibal

Refer to the data. The collective willingness of this society to pay for the second unit of this public good is:

$6

Refer to the data. The marginal cost of producing the sixth unit of output is:

$8

Refer to the data. Creamy Crisp's economic profit is:

$94,000

How did Apple overcome consumers' diminishing marginal utility for iPads?

Apple introduced new features to entice previous buyers to purchase new models

Suppose that MUx/Px exceeds MUy/Py. To maximize utility, the consumer who is spending all her money income should buy:

more of X and less of Y

Economics involves marginal analysis because:

most decisions involve changes from the present situation

The price elasticity of demand is generally:

negative, but the minus sign is ignored.

The demand schedule or curve confronted by the individual, purely competitive firm is:

perfectly elastic

Specialization in production is economically beneficial primarily because it:

permits the production of a larger output with fixed amounts of resources

Refer to the data. If product price is $60, the firm will:

produce 6 units and realize a $100 economic profit

The larger the coefficient of price elasticity of demand for a product, the

smaller the resulting price change for an increase in supply.

Refer to the diagram for athletic shoes. If the current output of shoes is Q1, then:

society would consider additional units of shoes to be more valuable than alternative uses of those resources

(Last Word) Fixed costs for a firm are analogous to:

starting out in a hole that represents economic losses if the firm produces nothing.

Refer to the information. For a purely competitive firm, total revenue graphs as a:

straight, upsloping line

A production possibilities curve shows:

the maximum amounts of two goods that can be produced assuming the full use of available resources.

In response to the financial crisis that began in 2007, the government began to bail out banks deemed "too big to fail." Critics of this action argued that this would create the prospect of future bailouts and encourage banks to be fiscally irresponsible in the future. This illustrates:

the moral hazard problem.

(Last Word) Theft and burglary:

can be viewed as attempts to maximize utility, given certain marginal costs and marginal benefits.

Suppose that at 500 units of output marginal revenue is equal to marginal cost. The firm is selling its output at $5 per unit and average total cost at 500 units of output is $6. On the basis of this information, we:

cannot determine whether the firm should produce or shut down in the short run

Which of the following is not a basic characteristic of pure competition?

considerable nonprice competition

A firm reaches a break-even point (normal profit position) where:

total revenue and total cost are equal

The theory of consumer behavior assumes that consumers attempt to maximize:

total utility

From society's perspective, in the presence of a supply-side market failure, the last unit of a good produced typically:

Costs more to produce than it provides benefits

Examples of command economies are:

Cuba and North Korea

Refer to the diagram. At the profit-maximizing output, total profit is:

efbc

The diamond-water paradox arises because:

essential goods may be cheap while nonessential goods may be expensive.

The typical production possibilities curve is:

a downsloping line that is bowed out from the origin

Which of the following is an example of a public good?

a weather warning system

Refer to the diagram. The area that identifies the maximum sum of consumer surplus and producer surplus is:

a+b+c+d

Which of the following is most likely to be a variable cost?

fuel and power payments

Which of the following is not a typical characteristic of a market system?

government ownership of most property resources

Accounting profits are typically:

greater than economic profits because the former do not take implicit costs into account.

An economic hypothesis:

is a possible explanation of cause and effect.

Refer to the diagram. At output level Q average fixed cost:

is measured by both QF and ED

Producer surplus:

is the difference between the minimum prices producers are willing to accept for a product and the higher equilibrium price.

If a purely competitive firm is maximizing economic profit:

it may or may not be maximizing per-unit profit

The use of money contributes to economic efficiency because:

it promotes specialization by overcoming the problems with barter

Refer to the diagram. At the profit-maximizing output, the firm will realize:

an economic profit of ABGH

All of the following could immediately or eventually lead to an inward shift of a nation's production possibilities curve except:

an increase in the average skill level of all occupational groups

Refer to the short-run production and cost data. In Figure A curve (1) is

average product and curve (2) is marginal product

Refer to the data. The price elasticity of demand is relatively elastic:

In the $6-$4 price range

If the price elasticity of demand for a product is unity, a decrease in price will:

increase the quantity demanded, but total revenue will be unchanged.

Broadly defined, competition involves:

independently acting buyers and sellers and freedom to enter or leave markets.

Production costs to an economist:

reflect opportunity costs.

Command systems are also known as:

Communism

Refer to the diagram. With MB1 and MC1, society's optimal amount of pollution abatement is:

Q1

Refer to the data. For Plan D marginal costs and marginal benefits are:

$28,000 and $12,000 respectively.

Refer to the diagram. Diseconomies of scale:

begin at output Q3.

Refer to the information. The average fixed cost of 3 units of output is:

$13.33

Refer to the diagrams in which figures (a) and (b) show demand curves reflecting the prices Alvin and Elmer are willing to pay for a public good, rather than do without it. The collective willingness to pay for the first unit of this public good is:

$18

Refer to the table. If each of the 100 firms in the industry is maximizing its profit and earning only a normal profit, each must have a total cost of:

$18,000

Refer to the data. At the profit-maximizing output, the firm's total revenue is:

$48

Refer to the diagram and assume that price increases from $2 to $10. The coefficient of price elasticity of demand (midpoint formula) relating to this change in price is about:

.25 and demand is inelastic

Refer to the tables. If North Cantina is producing at production alternative B, the opportunity cost of the eleventh unit of consumer goods will be:

1/8 of a unit of capital goods

Refer to the data. How many units of the two products will the rational consumer purchase?

2 of L and 3 of M

Refer to the data. If the consumer has money income of $52 and the prices of J and K are $8 and $4 respectively, the consumer will maximize her utility by purchasing:

4 units of J and 5 units of K

Refer to the data. The marginal cost curve would intersect the average variable cost curve at about:

4 units of output

Refer to the data. If the market price for this firm's product is $32, the competitive firm will produce:

8 units at an economic profit of $16

Refer to the data. If the market price for this firm's product is $87, it will produce:

9 units at an economic profit of $281.97

Refer to the data. What level of total utility will the utility-maximizing consumer realize?

96 utils

Which of the following best expresses the law of diminishing returns?

As successive amounts of one resource (labor) are added to fixed amounts of other resources (capital), beyond some point the resulting extra or marginal output will decline

Refer to the diagram. Between prices of $5.70 and $6.30:

D1 is more elastic than D2

Society's marginal cost of pollution abatement curve slopes upward because of the law of diminishing marginal utility

False

Which of the following is correct?

If the demand for a product is inelastic, a change in price will cause total revenue to change in the same direction

(Consider This) Brinley is the hottest new pop singer, but his agent discovers that Internet sales of Brinley's music have been poor due to Internet piracy, but concerts are regularly sold out and merchandise (such as T-shirts) sells well. If Brinley wants to enhance profits, economists would most likely recommend that he:

Keeps prices of downloads low and raises prices for concerts and merchandise

A consumer is maximizing her utility with a particular money income when:

MUa/Pa= MUb/Pb= MUc/Pc= ... = MUn/Pn

If ones person'a consumption of a good does not preclude another's consumption, the food is said to be:

Non rival in consumption

Which of the following statements is correct?

Noncash gift-giving creates a value loss, but cash gifts do not

Refer to the diagram for a purely competitive producer. The lowest price at which the firm should produce (as opposed to shutting down) is:

P2

Refer to the diagram. This firm will earn only a normal profit if product price is:

P3

Refer to the diagrams for two separate product markets. Assume that society's optimal level of output in each market is Q0 and that government purposely shifts the market supply curve from S to S1 in diagram (a) on the left and from S to S2 in diagram (b) on the right. The shift of the supply curve from S to S2 in diagram (b) might be caused by a per-unit:

Subsidy paid to the producers of this product

Susie buys two goods: rounds of golf and massages. Suppose that the price of a round of golf is $20 and the price of a massage is $30. In a typical week, Susie will play two rounds of golf, getting 20 units of satisfaction from the second round. She normally buys three massages each week, with the third giving her 30 units of satisfaction. If she were to buy a fourth massage in a week, it would give her 20 units of satisfaction. If the price of massages is reduced to $15, which of the following outcomes might we expect to occur?

Susie would buy more massages and fewer rounds of golf, as predicted by the substitution effect

Refer to the information. Average fixed cost:

TFC/Q

Which of the following conditions does not need to occur for a market to achieve allocative efficiency?

The total revenue received by producers equals the total cost of production.

The moral hazard problem is the tendency of some parties to a contract to alter their behavior as a result of the contract in ways that are costly to the other party

True

If consumer desire for product X increase, all of the following will occur except:

a decrease in the quantity of resources employed in industry X

Graphically, producer surplus is measured as the area:

above the supply curve and below the actual price.

(Last Word) In a cap-and-trade program:

assigns a property right to polluting the atmosphere.

The law of increasing opportunity costs is reflected in a production possibilities curve that is:

bowed out from the origin

The price of elasticity of demand coefficient measures:

buyer responsiveness to price changes

Which of the following is a labor resource?

computer programmer

In contrast to American firms, Japanese firms frequently make lifetime employment commitments to their workers and agree not to lay them off when product demand is weak. Other things being equal, we would expect Japanese firms to :

continue to produce in the short run at lower prices than would American firms

People enjoy outdoor holiday lighting displays and would be willing to pay to see these displays but can't be made to pay. Because those who put up lights are unable to charge others to view them, they don't put up as many lights as people would like. This is an example of a:

demand-side market failure

The marginal cost to society of reducing pollution rises with increases in pollution abatement because of the law of:

diminishing returns

As the firm in the diagram expands from plant size #1 to plant size #3, it experiences:

economies of scale

Refer to the diagram. If actual production and consumption occur at Q2:

efficiency is achieved.

Prashanth decides to buy a $75 ticket to a particular New York professional hockey game rather than a $50 ticket for a particular Broadway play. We can conclude that Prashanth:

has a higher "marginal utility-to-price ratio" for the hockey game than for the play

Refer to the diagram, where variable inputs of labor are being added to a constant amount of property resources. The total output of this firm will cease to expand:

if a labor force in excess of Q3 is employed

The main function of the entrepreneur is to:

innovat3e

(Consider This) Unlike newspaper dispensing devices, soft drinks dispensing machines do not permit people to take more than one can or bottle with each payment. The reason is that the:

marginal utility of extra soft drink cans or bottles declines slowly, particularly because they are storable and can be consumed later

A positive statement is one that is:

objective and is based on facts.

Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase. What is this a reflection of?

purposeful behavior

noncash gifts:

reduce recipient utility relative to a cash gift because noncash gifts often fail to match recipient preferences.

(Consider This) An otherwise unprofitable motel located on a largely abandoned roadway might be able to stay open for several years by:

reducing or eliminating its annual maintenance expenses

The demand schedules for such products as eggs, bread, and electricity tend to be:

relatively price inelastic

Refer to the diagram. At P4, this firm will:

shut down in the short run

Normal profit is:

the return to the entrepreneur when economic profits are zero.

Refer to the graph. A decrease in fixed costs is shown by:

the shift of the short-run average total cost curve from ATC2 to ATC1

Refer to the diagram. This firm's average fixed costs are:

the vertical distance between AVC and ATC

Refer to the data. Diminishing returns begin to occur with the hiring of the _________ unit of labor.

third

A purely competitive firm should produce in the short run if its total revenue is sufficient to cover its:

total variable costs

The amount of calendar time associated with the long run:

varies from industry to industry

The diagram suggests that:

when marginal product lies above average product, average product is rising.