Micro Final
An increase in human capital causes the demand for labor curve to:
shift to the right
As technology improves, the demand for labor curve:
shifts to the right
As the population increase, the labor supply curve
shifts to the right
As the price of the final product increases, the demand for labor curve
shifts to the right
As the price of the final product increases, the demand for labor curve:
shifts to the right
A firm may opt to pay millions of dollars for celebrity endorsements in order to:
signal to consumers that the advertised product is appealing and likely to be popular
An oligopoly is a market situation with a _________ number of ___________ sellers. Oligopoly may result from ____________ of scale, barriers to entry, and _________ . ____________ mergers involve the merging of one firm with either the supplier of an input or the purchaser of its output. ______________mergers involve the joining of firms selling a similar product.
small interdependent economies mergers Vertical Horizontal
When firms agree to act as a monopoly and set prices they are called
a cartel
All of the following determine the price elasticity of demand except
a change in price of resources used to produce the good
Which of these factors will not cause the demand curve for labor to shift?
a change in the wage
When an employer pays higher wages to compensate workers for unpleasant aspects of their jobs, which of the following is the employer offering?
a compensating differential
When information goods are distributed online the marginal cost of production is
zero
Yesterday, a perfectly competitive producer of construction bricks manufactured and sold 10,000 bricks per day at a market price that was just equal to the minimum average total cost of producing each brick. Today, all the firm;s costs are the same, but the market price of bricks has declined. Assuming that this firm has positive fixed costs, the firm earned ________________ yesterday. To maximize economic profits today, this firm should produce
zero economic profits less than 10,000 bricks if the price exceeds the average variable cost
Your friends asks you to join him in the new Internet business he is setting up as a corporation. If you invest $10,000 in the business, what is the limit to your liability?
$10,000
Mark is selling gourmet apples at a price of $2 per pound. Currently, he sells 100 pounds of apples per week. This week, Mark raises his price to $3, and his sales of apples fall to 75 lbs. Marks initial revenue from apple sales was ______ Mark's new revenue from apple sales is __________ Since Mark's revenue increased when the price of apples rose, the demand for Mark's gourmet apples must be __________
$200 $225 inelastic
At a consumer optimum involving goods A and B, the marginal utility of good A is two times the marginal utility of good B. The price of good B is $4.50. The price of good A is
$9.00
A 9 percent increase in the price of digital apps reduces the amount of tablet devices demanded by 3 percent. The cross price elasticity of demand is negative _______. (Enter your response rounded to two decimal places and include a minus sign if necessary.) The cross price elasticity of demand indicates that tablet devices and digital apps are ______________.
-0.33 complements
If a 20 percent increase in the price of Red Bull energy drinks results in a decrease in the quantity demanded of 25 percent, the price elasticity of demand is:
-1.25
When the price of cell phones decreased from $12 to $10, production decreased from 2,000 to 1,800 units per month The price elasticity of supply is
0.61
If the price of pineapples increases from $3 to $5, and in response that quantity of pineapples purchased decreases from 28 to 20, the price elasticity of demand for pineapples during this period is
0.67
Currently only about ___________ of all U.S. workers are union members.
11%
A firm changes the price of its product and its sales revenues don't change. The absolute value of the price elasticity of demand for its product must be
1.0
A ski rental store raised the price of rental skis from $10 to $20 per day. Correspondingly, sales fell from 2,500 rentals to 1,200 rentals per month. Using average values calculate percentage changes, the absolute value of the price elasticity of demand is In this case, demand is
1.04 elastic
When income is $400 per week, 3 nights dining out are demanded. When income is $600 per week, 5 nights dining out are demanded. The income elasticity of demanded for nights dining out equals
1.25
What percent of union disputes with management involve a strike?
2
The World Trade Organization (WTO) determines that dumping has occurred if:
A product is exported for a lower price than it sells for in a home market
Total utility is at a maximum when marginal utility is zero rises as long as marginal utility is positive falls as long as marginal utility is negative All of the above
All of the above
Which of the following is true? Income elasticity is positive for normal goods where the quantity demanded falls as income falls. B. Income elasticity is negative for inferior goods where the quantity demanded falls as income rises. C. Income elasticity is negative for inferior goods where the quantity demanded rises as income falls. D. Income elasticity is positive for normal goods where the quantity demanded rises as income rises. E. All of the above. If the income elasticity of demand for hot dogs is -1.00, hot dogs are ____________ good and if the income elasticity of demand for lobster is 0.53, lobster is a _____________ good
All of the above an inferior a normal
Which of the following is not a determinant of the degree of price elasticity of demand for an item?
All of the above are determinants of the degree of price elasticity of demand for an item
Which of the following types of firms use the marginal revenue equals marginal cost approach to maximize profits?
Both perfectly competitive and monopolistically competitive
Which of the following would have the most elastic demand?
Coca-Cola
What trade-offs do consumers face when buying a product from a monopolistically competitive firm?
Consumers pay a price greater than marginal cost but also have a wider array of choices
___________________ is the set of rules, guidelines and regulation that monitor and determine appropriate actions for the firm
Corporate governance
__________ price elasticity of demand measures the responsiveness of the amount of one good demanded to another's price changes. For substitutes, the cross price elasticity of demand is _________ . For complements, it is ____________ . Income elasticity of __________ tells you by what percentage the amount of a good demanded will change for a particular percentage change in ____________.
Cross positive negative demanded income
David buys pizza from the campus pizzeria. He calculates his total utility from pizza as follows Slices of Pizza: 0, 1, 2, 3, 4 Total Utility: 0, 12, 17, 20, 22
David experiences increasing marginal utility since his total utility is rising
What is the name given to the sale of a product for a price below its cost of production?
Dumping
Another measure of industry concentration is the:
Herfindahl-hirschman Index
Which of the following is most likely to increase market power?
Horizontal mergers
Suppose that over one range of prices, the absolute value of the price elasticity of demand varies from 15.0 to 2.5, and over another range of prices, the absolute value of the price elasticity of demand varies from 1.5 to 0.75. What can you say about total revenue and the total revenue curve over these two ranges of the demand curve as price falls?
In the first case total revenue rises and in the second case total revenue rises and then falls
Why do economists say labor is a derived demand
Labor demand is derived from the demand for the goods and services workers produce
Which of these is a union mechanism to ration jobs?
Lengthen apprenticeships
Which of the following goods is probably the most highly income elastic?
Private education
Which of the following best describes how the product differentiation of monopolistically competitive firms may benefit consumers?
Product differentiation can locate firms more conveniently to consumers and offer versions of a product or service that better fits their needs
What are copyrights designed to accomplish?
Protect intellectual property rights
The international agreement on intellectual property administered by the WTO is known as ________
TRIPS
Which of the following is the equivalent of the demand curve for labor?
The marginal revenue product curve
Which of these is the equivalent of the demand curve for labor?
The marginal revenue product curve
Which of these is more relevant in determining the wages of baseball players?
The marginal value of baseball games
The value of cross price elasticity of demand between goods X and Y is 0.75, while the cross price elasticity of demand between goods X and Z is -0.75 Which of the following are true?
X and Y are substitutes and X and Z are complements
Markets with unequal access to information between buyer and sellers can lead to a situation where only low-quality goods dominate in a given market. This is known as;
adverse selection
The domination of the used-car market by lemons is an example of a market in which the goods left in the market are the undesirable goods. This problem is called ________________
adverse selection
When personal income in the country rises, so do alcohol consumption and traffic fatalities. It can be said that
alcohol is normal good and has a positive income elasticity of demand
In the balance of payments, the difference between the value of the goods a country exports and the value of goods a country imports is called the
balance of trade
A market structure consisting of a monopsonist and a monopolist is known as a
bilateral monopoly
Long-run equilibrium in perfect competition results in:
both productive and allocate efficiency
Long-run equilibrium in perfect competition results in:
both productive and allocative efficiency
In the long run, all firms in a perfectly competitive industry
break even
If the sum of net exports, net income received from abroad, and net transfer payments from abroad yields a negative number, we say that a country's
current account is in deficit
If a firm increases the price of their product in the elastic portion of the demand curve, total revenues will
decrease
If consumers in the United States decrease their demand for Mexican roses, the result will be to ________
decrease the value of the Mexican peso relative to the dollar
As the number of workers increases, the marginal of labor _____________ and the marginal revenue product of labor ______________
decrease, decreases
If the labor demand is unchanged, an increase in the labor supply will _____________ the equilibrium wage and ___________ the number of workers employed
decrease, increase
A DVD store raised the price of its DVDs from $10 to $20. Correspondingly, sales fell from 2,800 units to 1,200 units per month. Using total revenue calculations, we can say that, given this change in price, total revenue _________ In this case, demand is _____________
decreased elastic
Nations that use trade restrictions to pursue global environmental goals
encounter resistance from the WTO
A product has perfectly inelastic demand when the price elasticity of demand is
equal to 0
A product has unit elasticity of demand when the price elasticity of demand is
equal to 1
The balance of trade is:
equal to the difference between exports of goods and imports of goods
The consumer maximizes total utility _____________ the marginal utility of the last dollar spent on one good with the marginal utility per last dollar spent on all other goods. That is the state of consumer ____________. When a consumer optimum has been reached, _____ additional income is available to spend, and total utility is ___________
equating optimum no maximized
One of the first steps in deciding whether to complete your education is to:
evaluate the marginal cost and marginal benefit of that decision
Suppose that consumers have pessimitic expectations about buying a
fall
Suppose that the cross price elasticity of demand between eggs and bacon is -0.10 What would you expect to happen to the sales of bacon if the price of eggs rises by 10 percent? The demand for bacon would _______ The demand for bacon would fall by ______ percent
fall 1.0
If the average total cost curve is above the demand curve, then this firm is:
having economic losses
An oligopoly is a market structure with:
high barriers to entry
Information goods tend to have a _________ initial cost and a ____________ marginal cost
high, very small
Simply Soft Drinks acquire Real Cola. This is a ______________ merger
horizontal
One method used to increase the demand for union labor is to
increase demand for union made goods
The United States has become increasingly interested in negotiating _________________ when discussing international trade agreements
intellectual property rights
Payments made for use of money are known as:
interest
The two primary forms of capital income are:
interest and profits
In determining whether or not to borrow funds, firms compare the rate of return they expect to make on an investment with the
interest rate they must pay to borrow the necessary funds
Along a linear demand curve, the slope _____________ while the price elasticity of demand _____________
is constant changes from one point to another
A monopolistically competitive firm is characterized by the existence of many firms in market, differentiated products and:
low barriers to entry
A monopolistically competitive firm produces where:
marginal revenue equals marginal cost
Consumer optimizing requires that the consumer:
maximize total utility, subject to an income constraint
One would expect that the cross price elasticity of ski poles and skis would be
negative since they are complements
If the price of steak rises, other things constant
people will substitute hamburgers for steak
The ______________ is a measure of responsiveness of the change in quantity demanded of a good to the change in its price
price elasticity of demand
A buyer or seller that is unable to affect the market price is called a
price taker
A numerical limit on the quantity of a good can be imported is known as a
quota
Markets are said to be efficient if the price of the asset:
reflects all information relevant to the value of the asset
Which of the following is the determinant of exchange rates?
relative price levels
In order to reduce the lemons problem, government regulation should be in the form of
social regulation, so as to minimize adverse market spillovers
Workers hired to replace striking union workers are known as
strikebreakers
If the market for used stereos contains only lemons, then the market for used stereos
suffers from an adverse selection problem
Diamonds have a higher price than water because:
the price reflects marginal, not total, utility
The relationship between the present value of given payment in the future and the interest rate is an example of which key principle in economics?
the principle of opportunity cost
If Motorola sells a bond with a face value of $5,000 and interest rate of 5 percent, what is the coupon payment on the bond?
$250
Joe's Campus Grille priced its hamburgers at $2.00, they sold 200 per week. When the price was $3.00, they sold 150 per week. Based on this information, the absolute value of the price elasticity of demand for hamburgers is Based on the above calculation, demand for hamburgers is considered to be ___________
0.71 inelastic
At a price of $15.00 to play 18 holes on a golf course, 140 consumers pay to play a game of golf each day. Increasing the price to $19.50 causes the number of consumers to decline to 100 What is the price elasticity of demand, expressed as a positive number? ______ The demand is ________
1.28 inelastic
Remembering that the price elasticity of demand is evaluated of demand is evaluated in terms of absolute values, which of the following is an example of an elastic demand?
1.5
In a local market, the monthly price of Internet access service decreases from $40 to $30, and total quantity of monthly accounts across all Internet access providers increases 150,000 to 250,000 What is the value price elasticity of demand, expressed as a positive number? _______ The demand is _________
1.75 elastic
At a consumer optimum involving goods X and Y, the marginal utility of good X equals 5 utils. The price of good Y is three times the price of good X. What is the marginal utility of good Y?
15
The marginal utility that an individual would experience if she were to consume the first unit of a digital app is 18 utils, and the marginal utility that she would experience if she were to consume a second unit is 21 utils. If one app is the amount that the individual decides to consume, what is the person's total utility? If one app is the amount that the individual decides to consume, her total utility is __________
18
We observe a 12 percent decrease in units purchased and a 5 percent increase in price. The price elasticity of demand in terms of absolute values is
2.4
A Chinese restaurant finds that when it prices the dinner buffet at $10, the restaurant sells 150 per day. When the price is reduced to $9, the restaurant sells 200 per day. Based on this information, use the average-values formula to find the price elasticity of demand for the dinner buffet. Provide the absolute value of the price elasticity of demand.
2.71
At a price of $40,000, producers of midsized automobiles are willing to manufacture and sell 100,000 cars per month. At a price of $45,000, they are willing to produce and sell 140,000 a month The price elasticity of supply ____ Based on your answer, supply is ________
2.8 elastic
When Jennifer consumes one apple, her total utility is 6 utils. When she consumes two apples, her total utility increases to 10 utils. What is Jennifer's marginal utility from consuming the second apple?
4 utils
If Microsoft sells a bond with a face value of $10,000 and agrees to pay $800 of interest per year to the bond purchasers, what is the interest rate paid on the bond?
8%
A change in which of these factors would cause a movement along the supply curve for labor rather than a shift of the labor supply curve?
A change in the wage
Which of these is an information good?
A music video
Labor unions are organizations of ______________ that have the legal right to bargain with ____________ about _____________
Employees, employers, wages and working conditions
Demand tends to be more inelastic at higher prices and more elastic at lower prices
False
The smaller the share of a person's total budget that is spend on a commodity, the greater that person's price elasticity of demand is for that commodity
False
When price increases along the inelastic range of market demand, total revenues will go down
False
Graphically, the marginal utility curve first decrease and then increases When total utility is as its maximum, marginal utility
False is zero
What is relationship between investment and real interest rates, all other things beings equal?
Lower interest rates stimulate investment
In the short run, if marginal cost is decreasing, which of the following statements must be true? In the short run, if the average product is decreasing, which of the following statements must be true?
Marginal product is increasing Average variable cost is increasing
What is name for the additional output that a firm produces as a result of hiring one more worker?
Marginal product of labor
Which of the following best describes the additional revenue associated with selling an additional unit of output?
Marginal revenue
Which of the following formulas is correct?
Marginal revenue product of labor = product price x marginal product of labor
The association formed to lower trade barriers and encourage trade between Canada, the United States and Mexico is known as
NAFTA
The largest active union in the United States is the
National Education Association
Which type of efficiency is achieved by a monopolistically competitive firm in the long run?
Neither allocative nor productive efficiency
What term do economists use to refer to minimum amount that investors must earn on the funds they invest in a firm, expressed as a percentage of the amount invested?
Normal rate of return
Which of the following terms is defined as a market structure in which a small number of interdependent firms compete?
Oligopoly
In the short run, the firm should:
Operate if price > average variable cost
For what type of market structure is the demand curve the same as marginal revenue?
Perfect competition
In perfect competition, the marginal revenue is the same as:
Price
Suppose that Norma is disappointed in the revenue her custom dress shop is bringing in. She is thinking of raising the price of each dress, but she asks you for advice. You decide she should
Raise the price if demand is inelastic
In perfect competition, when a firm is making positive economic profit in the short run, then new firms enter the market causing the market supply curve to ______________ and the market price to __________________
Shift rightward, decrease
The campus pizzeria sells a large pizza for $14. When you buy a second large pizza, however, its price is only $10. How does this relate to marginal utility?
Since marginal utility falls as additional units of the good are consumed, consumers are only willing to purchase more as the price falls
Which of the following arguments is used to justify protectionism?
Tariffs and quotas protect infant industries
Which of the following laws prohibited charging buyer different prices if the results would reduce competition?
The Robinson-Patman Act
Which of the following laws outlawed monopolization?
The Sherman Act
In the United States, how do the average weekly earnings of union workers compare with the earnings of nonunion workers?
The earnings of union workers are higher than the earnings of nonunion workers
Currently, the wage rate is $5 per worker hour, and the price of capital is $10 per machine hour. If the marginal productivity of labor is 6 units per hour and the marginal productivity of capital is 8 units per hour, how should a cost-minimizing firm adjust its input mix, assuming that it does not want to increase output?
The firm should decrease its use of capital and increase its use of labor
Which of the following is a drawback to the infant industry justification for protectionism?
The industries under protection may never become efficient enough to compete with foreign firms
When a competitive market is in equilibrium, what is the economically efficient level of output?
The level of output where marginal benefit is equal to marginal cost
Which of the following statements is true?
The longer any price change persists, the greater the elasticity of demand
The real interest rate is:
The nominal interest rate minus the inflation rate
What happens when network externalities are present?
The usefulness of a product increases with the number of consumers who use it
Which of the following is a characteristic of a perfectly competitive market?
There are large numbers of buyers and sellers
What is the difference between total utility and marginal utility?
Total utility is the total amount of satisfaction derived from consuming a certain amount of a good while marginal utility is the additional satisfaction gained from consuming an additional unit of the good
Which of the following mergers would be the best example of vertical merger?
Toyota acquiring Whitewall Tires
The closer the substitutes for a particular commodity and the more substitutes there are, the greater will be its price elasticity of demand
True
________ is defined as want-satisfying power. It is a characteristic common to all desired goods and services. We arbitrarily measure utility in units called ________. It is important to distinguish between total utility and marginal utility. ________ utility is the total satisfaction derived from the consumption of a given quantity of a good or service. _________ utility is the change in total utility due to a one-unit change in the consumption of the good or service. The principle of diminishing marginal utility tells us that each successive marginal unit of a good consumed adds ________ extra utility.
Utility utils Total Marginal less
Which of these costs are affected by the level of output produced?
Variable costs
For market equilibrium to generate the largest possible surplus and thus be efficient, which of the following conditions must be met?
We must have perfect competition
Let MRP equal the marginal revenue product of labor and W equal the wage rate. When should a firm hire more workers to increase profit?
When MRP > W
When is output lower than the efficient level
When marginal benefit is greater than marginal cost
When is output lower than the efficient level?
When marginal benefit is greater than marginal cost
All possible combinations of two goods are known as
a budget set
The ______________ is charged with overseeing and resolving international trade disputes involving information goods
World Trade Organization
If the marginal rate of substitution of good X for good Y is three, this means that:
You will be willing to give up 3 units of Y to get additional unit of X, holding utility constant
A strategy that is the best for a firm, no matter what strategies other firms use is known as:
a dominant strategy
What is the relationship between real interest rates and investment, other things being equal?
a negative relationship
The move from one point to another along a consumer's demand curve is the result of:
a price change
A share of common stock is:
a pro rata share of ownership in a firm
Other things equal, the greater the U.S. interest rate differential the ______________
greater the demand for U.S. dollars
Minimum efficient scale is the level of output at which:
all economies of scale have been exhausted
Monopoly has social costs because
all of the above
Interest rates:
allocate financial capital to firms
A product produced in foreign country and purchased by residents of the home country is called:
an import
A set of indifference curves that have different levels of utility is known as
an indifference curve map
Laws aimed at promoting competition among firms are known as:
antitrust laws
If the number of people in a publishing company does not go up or down with quantity of books it publishes, then how should we categorize the salaries and benefits paid to these employees?
as a part of fixed cost
A potential buyer of a week-old car might believe that a person who returns a car after only one week could have discovered it was a lemon and may be trying to get rid of it. Alternatively, the seller could have simply changed his or her mind about the car. The fundamental problem described here is what we refer in economics as
asymmetric information
The short run is period of time where ____________ while the long run is a period of time where _______________.
at least one input is fixed, all inputs are variable
Total revenues are maximized
at the point of unit-elasticity on the demand curve
If the average total cost curve is above the demand curve, then the firm is:
having economic losses
Ryan is deciding between attending Western State University and Eastern State University. He cannot attend both universities simultaneously. Both are fine universities, but the reputation of Western is slightly higher, as is the tuition. Let MU Subscript Upper E and MU Subscript Upper W be Ryan's marginal utilities from attending Eastern and Western State Universities respectively and Upper P Subscript Upper E and Upper P Subscript Upper W be the prices of attending Eastern and Western State Universities. Using the rule of consumer optimum, Ryan will decide to
attend Eastern State University, if MUE/PE exceeds MUw/Pw
The price elasticity of demand for a particular commodity depends upon all of the following except
availability of complementary goods
A group of firms that colludes by agreement to restrict output to increase prices and profits is called a
cartel
An increase in the real interest rate will:
cause a movement along the demand curve for loanable funds
A _________ shop requires union membership before a worker can be employed
closed
An agreement among firms to charge the same price to otherwise not compete is
collusion
Equilibrium in a game in which players cooperate to increase their mutual payoff is called a:
cooperative equilibrium
In the United States, firms organized as _______________ account for most of the revenue generated by firms
corporations
Which of the following types of firms have limited liability
corporations
Interest payments made on bond are known as:
coupon payments
The General Agreement on Tariffs and Trade (GATT) was replaced by the World Trade Organization (WTO) in order to
cover services and intellectual property
A union that is successful in increasing the wage rate will also
create a labor surplus
Jeremy Bentham is credited as being the founder of a modern utilitarianism, which states that the morally right thing to do is to ____________
create the greatest good for the greatest number
If one wanted to know the impact of the falling price of using the Internet on the demand for library services, one would need to compute the
cross price elasticity of demand for library services and price of using the Internet
If movie tickets and DVD rentals are substitute goods, we can conclude that the
cross price elasticity of demand is positive
A DVD store raised the price of its DVDs from $16 to $18. Correspondingly, sales fell from 2,800 units to 1,200 units per month. Using total revenue calculations, we can say that, given this change in price, total revenue ___________ . In this case, demand is ________ .
decreased elastic
According to the law of diminishing marginal utility, as more of any good or service is consumed, the satisfaction received from the consumption of those extra units
decreases
The problem of unauthorized copying of music, computer software, and videos is particularly acute in
developing countries
The monopolistically competitive firm sells a _____________ product and faces a __________________ demand curve
differentiated, downward-sloping
Payments made by a corporation to the shareholders are known as:
dividends
As the wage increases, the demand for labor curve:
does not shift, but the quantity demanded for labor decreases
As the wage increases, the demand for labor curve:
does not shift, but the quantity demanded of labor decreases
The downward sloping part of the long run average total cost curve is where the firm is achieving
economies of scale
A craftsman who makes guitars by hand finds that when he prices his guitars at $1,000, his annual revenue is $6,000. When he prices his guitars at $900, his annual revenue is $6 comma 300. Over this range of guitar prices, does the craftsman face elastic, unit-elastic, or inelastic demand?_________
elastic
A retailer noticed that by lowering its pricing slightly, total revenue increased. What can conclude about the price elasticity of demand within this price range? Demand is _______
elastic
If a 1 percent increase in price elicits a greater than 1 percent increase in the quantity supplied, we say that at the particular price in question on the supply schedule, supply is
elastic
If a 20 percent increase in the price of Red Bull energy drinks results in a decrease in quantity demanded of 25 percent, we say the demand for Red Bull is _____________ in this range.
elastic
If total revenue falls when the market price increases, demand is
elastic
Suppose that the cross price elasticity of demand between movie tickets and popcorn is negative 0.30. What would you expect to happen to the sales of popcorn if the price of movie tickets rises by 30 percent? The demand for popcorn would ______ by __ percent (Enter your response rounded to one decimal place.)
fall 9
Elasticity of demand is greater in the short run than in the long run
false
Unions have been accused of forcing employers to use more labor than necessary or to use labor inefficiently. this practice is known as
featherbedding
A country that allows demand and supply to determine the value of its currency is said to have a ___________
floating currency
The four-firm concentration ratio is the percentage of scales accounted for by the largest:
four firms in the industry
An increase in income in both the United States and the United Kingdom will _________
increase the supply and demand for pounds and have an uncertain effect on the exchange rate
When the marginal product of labor is greater than the average product of labor, then the average product of labor must be:
increasing
A firm sells 2 million units of a good when price is $4.00 and 1.8 million units when price is $4.50. the price elasticity of demand is
inelastic
When the price of cell phones decreased from $18 to $12, production decreased from 2,000 to 1,800 per month You can conclude that the supply of cell phones is price _________
inelastic
The balance of trade ____________
is equal to the difference between the value of exports and imports
A monopolistically competitive firm in a long-run equilibrium produces where:
its demand curve is tangent its average total cost curve
A ____________ occurs when two or more unions fight and strike over which union has control in a particular firm or industry
jurisdictional dispute
Any worker organization that bargains as a collective unit in order to achieve better pay, working conditions or other benefits is known as
labor union
Accounting profits will always be __________ economics profit
larger than
As the change of getting a low-quality good increase, buyer are willing to pay ____________ for a used car and the quantity of high-quality cars will tend to _____________, resulting in so-called
less, fall, thin market
The _______________ the interest rate, the more investment projects firms can profitably undertake, and the _______________ the quantity of loanable funds they will demand
lower, greater
According to the law of diminishing marginal utility, as the consumption of a particular good increases:
marginal utility decreases
When an individual's total utility increases with the consumption of one more unit of an item, it must be true that the person's
marginal utility from consuming this unit is positive
Income elasticity of demand
measures the responsivenesses of quantity demanded to change in income and refers to the horizontal shift of the demand curve
A market with a single buyer of a product or input is known as
monopsony
Based on only the information provided, characterize the demand for the following goods as being more elastic or more inelastic. a. A 45-cent box of salt that you buy once a year: _____________ b. A type of high-powered ski boat that you can rent from any one of a number of rental agencies: __________ . c. A specific brand of bottled water: ___________ d. Automobile insurance in a state that requires autos to be insured but has few insurance companies: ___________ e. A 75-cent guitar pick for the lead guitarist of a major rock band: _____________
more inelastic more elastic more elastic more inelastic more inelastic
The absolute value of the short-run elasticity of demand for bread has been estimated to be 0.15. Its long-run elasticity demand is
more than 0.15
It is very difficult to find goods with perfectly elastic or perfectly inelastic demand. We can, however, find goods that lie near these extremes. Characterize the demand for the following goods as being near perfectly elastic or near perfectly inelastic a. Corn grown and harvested by a small farmer in Iowa ___________ b. Heroin for a drug addict ____________ c. Water for a desert hiker ___________ d. One of several optional textbooks in a pass-fail course _____________
near perfectly elastic demand near perfectly inelastic demand near perfectly inelastic demand near perfectly elastic demand
When the dollar appreciates against the yen ____________
one dollar will buy more yen
Since a monopsonist faces an upward sloping labor supply curve it will be able to hire additional workers
only if it offers a higher wage
Nearly all economies of the world are:
open economies
If the price of Good A rises, other things being constant, then the marginal utility:
per dollar's worth of Good A falls
Price elasticity of demand is defined as the
percentage change in quantity demanded divided by the percentage change in price
In the United States, _______________ pose a threat to the long-term profitability of the entertainment industry
pirated movies and music
Because price and quantity supplied are directly related, we would expect the sign of the price elasticity of supply to be ________
positive
The income elasticity of a normal good is
positive
Suppose that you observe that total utility rises as more of an item is consumed. You can say for sure that marginal utility is _____________ . Marginal utility is also ________________ .
positive could be rising or falling
If a monopolistically competitive firm's demand curve is above its average total cost curve, then this firm is making
positive economic profit
We should expect the cross price elasticity of butter and margarine to be
positive since they are substitutes
What is the impact of a decrease in interest rates on present value?
present value will rise
In perfect competition, the marginal revenue is the same as:
price
A game where pursuing dominant strategies results in noncooperation that leaves everyone worse off is called a
prisoner's dilemma
the relationship between the inputs used by the firms and the maximum output it can produce is known as the:
production function
Lemon problems are likely to be more in industries that sell
products that have qualities that are difficult for consumers to assess fully
The use of trade barriers to shield domestic companies from foreign competition is called
protectionism
The price elasticity of demand is equal to the percentage change in ____________ divided by the percentage change in ___________ . Price elasticity of demand is calculated in terms of ___________ changes in quantity demanded and in price. Thus, it is expressed as a unitless, dimensionless number that is _____________ of units of measurement. The price elasticity of demand is always __________ , because an increase in price will lead to _____________ in quantity demanded and a decrease in price will lead to ______________ in quantity demanded. One extreme elasticity occurs when a demand curve is vertical. It has ________ price elasticity of demand. It is completely ___________ . Another extreme elasticity occurs when a demand curve is horizontal. It has completely __________ demand. Its price elasticity of demand is ___________ .
quantity demanded price percentage independent of negative a decrease an increase zero inelastic elastic infinite
Consider the figure to the right. Use the basic definition of the price elasticity of demand to explain why the value of the price elasticity of demand is zero for the extremely rare situation of a vertical demand curve. The price elasticity of demand is defined as the percentage change in _____________ divided by the percentage change in _________ . Since the change in quantity demanded is _________for any price change along a vertical demand curve, both the percentage change in quantity demanded and the price elasticity of demand are ________.
quantity demanded price zero zero
Price elasticity of supply is calculated by dividing the percentage change in ___________ by the percentage change in_________ . Usually, price elasticities of supply are __________ long dash higher prices yield _________ quantities supplies Long-run supply curves are _______ elastic than short-run supply curves because the _______ the time allowed, the more resources can flow into or out of an industry when price changes.
quantity supplied price positive greater more longer
Price elasticity of demand is related to total ____________. When demand is elastic, a change in price elicits a change in total revenues in the ___________ direction from the price change. When demand is unit-elastic, a change in price elicits ________ change in total revenues (or in total consumer expenditures). When demand is inelastic, a change in price elicits a change in total revenues in the _______ direction as the price change.
revenues opposite zero same
Some states have passed ___________ laws which make it illegal to require union membership for continued employment
right-to-work
When the real exchange rate decreases, a country's net exports will ___________
rise
If marginal utility is positive, but falling, then total utility:
rises at a decreasing rate
A devoted student of economics spends all of her income on pencils and pads of graph paper. She buys 10 pads and 50 pencils. The price of a pad is $2; the price of a pencil is $0.50. The marginal utility of the 10th pad is 100; the marginal utility of the fiftieth pencil is 400. Has can she maximize utility given her current budget ?
she should buy more pencils and fewer pads
In perfect competition, when a firm is making positive economic profit in the short run, then new firms enter the market causing the market supply curve to _______________ and the market price to ________________
shift rightward, decrease
A recession in the United States will _____________
shift the supply curve of dollars to the left
The financial crisis in the United States that began in 2007 reduced the opportunities for investment bankers, stockbrokers, and other financial workers. Many workers left this industry causing the labor supply curve in this market to:
shift to the left
Some determinants of price elasticity of demand are (1) the existence, number, and quality of ____________ , (2) the _________ of the total budget spent on the good in question, and (3) the length of time allowed for ___________________ .
substitues share adjustment to a change in prices
If a country has an absolute advantage in the production of some good then
that country has the ability to produce more output from given inputs of resources than other producers can
Determinants of the price elasticity of demand include all of the following except
the cost to produce the product
Information goods can achieve significant economies of scale because ______________
the costs are almost all fixed costs
The part of the balance of payments that records a country's exports and imports of goods and services is ____________
the current account
Investors demand shares of stock based on:
the expectation of dividends and /or capital gains
In the broadest sense, game theory studies the decisions of firms in industries where the profits of each firm depend on:
the firm's interactions with other firms
Which of the following is a determinant of the price elasticity of supply?
the length of time allowed for adjustment to changes in the price of the product
If prices rise the quantity supplied will be greater
the longer the time that elapses
The rate at which a consumer is willing to substitute one good for another is called:
the marginal rate of substitution
Shareholders are:
the owners of corporations
Price elasticity of demand is defined as
the percentage change in quantity demanded divided by the percentage change in price
Monopolistically competitive firms have some control over price because:
the products they produce are differentiated
Which of the following is a source of comparative advantage?
the relative abundance of capital and labor
The law of diminishing returns applies in:
the short run
What is the marginal rate of substitution?
the value of the slope of the consumer's indifference curve
When graphing a conventional short-run production function, we place ________________ on the horizontal axis and __________________ on the vertical axis
the variable input, output
In consumer theory, utility is
the want-satisfying power of a good or service
Because the monopolist faces a downward sloping demand curve:
there will be deadweight loss
If marginal utility is negative, then:
total utility falls
Cross price elasticity of demand measures the responsiveness of the amount of an item demanded to the prices of related goods When two goods are substitutes, the cross price elasticity of demand will be
true positive
Income elasticity of demand is defined as the percentage change in the quantity demanded of a product divided by the percentage change in income Income elasticity of demand refers to a __________ the demand curve in response to changes in income, whereas price elasticity of demand refers to a _________ the demand curve in response to price changes
true horizontal shift in; movement along
Simply Soft Drinks acquire Louisiana Sugar Cane Inc. This is a ___________ merger
vertical
An agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is known a
voluntary export restraint
If the marginal utility per dollar's worth of Good A exceeds that of Good B for Mr. Capra, then he:
will substitute Good A for Good B
Suppose that there is asymmetric information in the market for used cars; sellers know the quality of the car that they are selling, but buyers do not. Buyers know that there is a 20 % chance of getting a "lemon", a low quality used car. A high quality used car is worth $20,000, and a low quality used car is worth $10,000. Based on this probability, the most that a buyer would be willing to pay for a used car is $_______ . (Enter your response rounded to the nearest dollar.) At that price, which of the following is true?
$18000 There will only be low quality cars for sale
Prior to the 1997 federal tobacco settlement a pack of cigarettes sold for $2.48. The term of settlement required a decrease in teenage smoking of 60 percent. If the elasticity of cigarette demand for teenagers is about 1.3 then the price of cigarettes should rise to _______________ in order to achieve the target reduction of 60 percent.
$3.62
A monopolist can sell 30 toys per day for $10.00 each. To sell 31 toys per day, the price must be cut to $9.50. The marginal revenue of the 31st toy is:
$5.50
The manager of a Pittsburgh shop wishes to sell on eBay a used telescope that is in good condition. The manager knows that prospective buyers perceive a 50-50 chance that the telescope is in good condition. If it is, buyers are willing to pay $1 comma 180, but if it is in poor condition, they will pay only $330. What is the average amount a buyer will be willing to pay? Is there a lemons problem? Explain. The average amount that a prospective buyer will be willing to pay is _____ Since the value of a used telescope that is in
$755 good condition exceeds the average amount that a prospective buyer will be willing to pay, there is a lemons problem because only people with telescopes in poor condition will be willing to try to sell them on eBay
Joe's Campus Grille priced its hamburgers at $2.00, they sold 200 per week. When the price was $3.00, they sold 150 per week. Based on this information, the absolute value of the price elasticity of demand for hamburgers is Based on the above calculation, demand for hamburgers is considered to be
0.71 inelastic
We observe a 15 percent decrease in units purchased and a(n) 10 percent increase in price. The price elasticity of demand in terms of absolute values is
1.5
A movie theater finds that when it price tickers at $9, the theater sells 250 per day. When the price is reduced to $8, the theater sells 300 per day. Based on the information, use the average-values formula to find the price elasticity of demand for tickets. Provide the absolute value of the price elasticity of demand.
1.55
The current price of wheat is $1.00 per bushel, and the price elasticity of demand for wheat is known to be 0.50. A bad harvest causes the supply of wheat to decrease and as a result the price of wheat rises by 20%. What will be the percentage change in quantity demanded for wheat and will farm revenues rise or fall?
10% rise
At a consumer optimum involving goods X and Y, the marginal utility of good X equals 2 utils. The price of good Y is six times the price of good X. What is the marginal utility of good Y?
12
Paul's Chair Factory currently employs 50 workers, who produce 800 chairs. If Paul hires a 51st worker, output will rise to 925 What is the average product of the 51st worker?
18.14
Suppose that a company based in Dallas, Texas, confronts only four other rival firms. Its own market share is 32 percent, which ties it with the other largest producer and seller in the industry. The other three firms each have a 12.00 percent market share. What is the value of the Herfindahl-Hirschman index? The value of the Henfindahl-Hirschman index is
2,480.0
An increase of 4 percent in price results in a decrease of 12 percent in quantity demanded. Using averages, the absolute value of the price elasticity of demand is
3
Total Input (Labor): 1, 2, 3, 4, 5, 6, 7, 8 Total Product (Televisions): 12, 25, 39, 50, 60, 58, 54, 48 In the table above, diminishing returns begins with the addition of worker number ___ In the table above, the marginal product becomes negative when the ______ worker is added
4 6
In the figure shown at the right, what is the profit maximizing output and price in the short run?
46, $50
Suppose that a small town has seven burger shops whose respective shares of the local hamburger market are (as percentages of all hamburgers sold): 21 percent, 24 percent, 20 percent, 11 percent, 10 percent, 8 percent, and 6 percent. The four-firm concentration ratio for the hamburger industry in this town is __ percent. (Enter your response as a whole number.) The Herfindahl index for the hamburger industry in this town is ______ . (Enter your response as a whole number.) Suppose the top three sellers combined to form a single firm. The four-firm concentration ratio would be ______ percent. (Enter your response as a whole number.) Suppose the top three sellers combined to form a single firm. The Herfindahl index would be_______ . (Enter your response as a whole number.)
76 1738 94 4546
Suppose that a company based in Dallas, Texas, confronts only four other rival firms. Its own market share is 31 percent, which ties it with the other largest producer and seller in the industry. The other three firms each have a 12.67 percent market share. What is the four-firm concentration ratio for this industry? The four-firm concentration ratio for this industry is
87.3
The key characteristics of a monopolistically competitive industry are: [A] A large number of firms that sell differentiated products that are close substitutes. [B] Firms can easily enter or exit a monopolistically competitive industry. [C] Because monopolistically competitive firms can increase their profits if they can successfully distinguish their products from those of their rivals, they have an incentive to engage in sales promotions and advertising. For each of the examples below, indicate which of the above characteristics (A, B or C) is being illustrated. There are a number of fast-food restaurants in town, and they compete fiercely. Some restaurants cook their hamburgers over open flames. Others fry their hamburgers. In addition, some serve broiled fish sandwiches, while others serve fried fish sandwiches. A few serve ice cream cones for dessert, while others offer frozen ice cream pies. _________ (Enter a single letter: A, B, or C.) There is a vast number of colleges and universities across the country. Each competes for top students. All offer similar courses and programs, but some have better programs in business, while others have stronger programs in the arts and humanities. Still others are academically stronger in the sciences. _________ (Enter a single letter: A, B, or C.)
A A
Given the cost curves in the diagram, what market situation would you expect to occur?
A natural monopoly
The ____________________________ , composed of craft unions, was formed in 1886 under the leadership of Samuel Gompers. Membership increased until after World War I, when the government temporarily stopped protecting labor's right to organize. During the Great Depression, legislation was passed that allowed for collective bargaining. The ________________________Act of 1935 guaranteed workers the right to form unions. The Congress of Industrial Organizations (CIO), composed of ___________ unions, was formed during the Great Depression. The AFL and the CIO merged in 1955. In the United States, union membership as a percentage of the labor force peaked at nearly ____ percent in 1960 and has declined since then to less than_____ percent.
American Federation of Labor National Labor Relations industrial 25 12
______________ regulation applies to specific industries, whereas ______ regulation applies to businesses throughout the economy. Governments commonly regulate the prices and quality of services provided by electric, gas, and other utilities, which traditionally have been considered _______ _ monopolies. Governments also single out various nonmonopolistic industries, such as the financial and transportation industries, for special forms of _______ regulation. Among the common forms of ________ regulation covering all industries are the occupational, health, and safety rules that federal and state governments impose on producers.
Economic social natural economic social
Residents of the nation of Northland can forgo production of digital televisions and utilize all available resources to produce 160 bottles of high-quality wine per hour. Alternatively, they can forgo producing wine and instead produce 40 digital TVs per hour. In the neighboring country of West Coast, residents can forgo production of digital TVs and use all resources to produce 140 bottles of high-quality wine per hour, or they can forgo wine production and produce 70 digital TVs per hour. In both nations, the opportunity costs of producing the two goods are constant. The opportunity cost of producing 1 digital TV in Northland is 4.0 bottles of wine. The opportunity cost of producing 1 digital TV in West Coast is 2.0 bottles of wine. Based on the opportunity costs above, the comparative advantage in producing bottles of wine is held by ______________ ,while __________________________ the comparative advantage in producing digital TVs.
Northland West Coast possesses
A firm will continue to operate in the short run, even at an economic loss, as long as
P is greater than minimum AVC
The perfectly competitive firm in long-run equilibrium produces a level of output such that
P=MC = MR = short run ATC = long run ATC
Recently, Swedish companies have outsourced manufacturing labor previously performed by Swedish workers at $18 per hour to U.S. workers who receive a wage rate of $10 per hour. All of the following will be the effects of Swedish manufacturing-labor outsourcing except
Swedish wages will rise and employment will fall
What does the price elasticity of demand measure?
The responsiveness of quantity demanded to change in the price of a good
Suppose that until recently, U.S. firms that produce digital apps had been utilizing only the labor of qualified U.S. workers at a wage rate of $32 per hour. Now, however, these firms are outsourcing to Russia, where qualified workers are available at a dollar wage rate of $12 per hour. Evaluate the effects of this new U.S. app-labor outsourcing initiative on U.S. and Russian employment levels and wages.
Wages and employment in the U.S. will decline; wages and employment in Russia will increase
Explain why, in economic terms, the total income of union membership is maximized when marginal revenue is zero.
When marginal revenue is zero, the price elasticity of demand is equal to unity and no additional revenues can be earned by altering the quantity of labor
The main international institution created to improve trade among nations was the General Agreement on Tariffs and Trade (GATT). The last round of trade talks under the GATT led to the creation of the ______________________ . _________________________ agreements among numerous nations of the world have established more than 475 bilateral and _____________ blocs, which grant special trade privileges such as reduced tariff barriers and quota exemptions to member nations.
World Trade Organization Regional trade regional trade
Characterize each of the following as a positive-sum game (P), a zero-sum game (Z), or a negative-sum game (N). You play a card game in your dorm room with three other students. Each player brings $5 to the game to bet on the outcome, winner take all. _____ A thousand people buy $1 lottery tickets with a single payoff of $800. ____ Two nations exchange goods in a mutually beneficial transaction. _____
Z N P
What is the cross-price elasticity of demand for two goods that are unrelated?
Zero
If the income elasticity of SUV's greater than 1, what is the good considered?
a luxury
Asymmetric information refers to a situation in which
a producer has product information that the consumer lacks
Under the U.S. Constitution, from an economic standpoint the United States is essentially a regional free trade bloc. No U.S. state government can establish a tariff on goods manufactured in another U.S. state. Recently, the U.S. government placed a 55 percent anti-dumping duty on cement imported from Mexico. a. Major Mexican cement firms have responded by buying U.S. cement manufacturing operations in Texas and other states. A few of the Mexican firms have periodically transported some of the resources used to produce cement to those U.S. operations, manufactured cement, and sold the cement to customers throughout the United States. The Mexican firms are engaging in b. Some critics of this Mexican practice have suggested that cement sold in the United States by Mexican-owned operations in the United States should be subjected to rules of origin. Rules of origin may
a. trade deflection b. protect against trade deflections; it may also pose as serious threat to gains from trade made possible by regional trade agreements
When unions set wage rates _______ market clearing prices, they face the problem of _______________ a restricted number of jobs to workers who desire to earn the higher wages. Unions may pursue any one of three goals: (1) to employ ______ union members, (2) to maximize total _________ of the union's members, or (3) to __________ wages for certain, usually high-seniority, workers. Unions can increase the wage rate of members by engaging in practices that shift the union labor supply curve __________ or shift the demand curve for union labor _________ (or both).
above rationing all income maximize inward outward
The government regulates monopolies because
all of the above
Which of the following statements is true? Firms should hire workers until the last worker adds as much to cost as the worker does to revenue Firms should hire each workers up to the point where the worker's marginal revenue product equals the wage rate Firms should hire each worker so long as the additional revenue earned by the worker exceeds the wage rate
all of the above
An increase in the price of a substitute for iPads will lead to _________________ in the quantity demanded of iPads so the cross-price elasticity of demand will be _____________
an increase, positive
The income elasticity for peanut butter is -3. This defines peanut butter as what type of good?
an inferior good
Short-run average profits or losses are determined by comparing ________ total costs with ________ at the profit-maximizing rate of output. In the short run, the perfectly competitive firm can make economic profits or economic losses. The perfectly competitive firm's short-run ________ price equals the firm's minimum average total cost, which is at the point at which the ___________ cost curve intersects the average total cost curve. The perfectly competitive firm's short-run shutdown price equals the firm's minimum average variable cost, which is at the point at which the marginal cost curve intersects the average variable cost curve. The firm will continue production at a price that exceeds average variable costs because revenues exceed total __________ costs of producing. At the short-run break-even price, the firm is making ________ economic profits, which means that it is just making ___________ rate of return for industries with similar risks. The firm's short-run supply curve is the portion of its ________ cost curve at and above its minimum average _______ cost. The industry short-run supply curve is a horizontal _________ of the individual firms' marginal cost curves at and above their respective minimum average _________ costs.
average price break-even marginal variable zero a normal marginal variable summation variable
A consumer maximizes total utility when:
choosing more of one good and less of another no longer increases utility
If the cross-price elasticity of demand between two products is -3.0, then the two products are:
complements
Personal computers and computer display monitors are:
complements
The capture hypothesis holds that regulatory agencies will eventually be captured by industry special interests because ___________ individually are not greatly influenced by regulation, whereas regulated ________ are directly affected According to the share-the-gains, share-the-pains theory of regulation, regulators must take into account the interests of three groups: the ____________, _____________ and _______________ Regulation has benefits that are difficult to quantify in dollars. The costs of regulation include direct ____________ expenditures on regulatory agencies and _________ explicit and implicit opportunity costs of complying
consumers firms industry; legislators; consumer government firms
If total product is increasing at a decreasing rate, then marginal product is
decreasing
Total revenue will increase when
demand is inelastic and price rises
If the supply of Good B is perfectly elastic and price falls the quantity supplied will
fall to zero
Total costs equal total ________ costs plus total __________ costs. ____________ total costs equal total costs divided by out (_____ = TC/Q) Average __________ costs equal total variable costs divided by output (AVC = TVC/Q) Average ________ costs equal total fixed costs divided by output (AFC = TFC/Q) ____________ costs equals the change in _________ cost divided by the change in output (____ = triangle _______/ triangle Q, where the Greek letter triangle, delta, means "change in") The marginal cost curve intersects the ____________ point of the average total cost curve and the ____________ point of the average variable cost curve.
fixed variable average ATC variable AVC fixed AFC Marginal total MC; TC minimum minimum
The more substitutes that exist for a particular product, the ______________ the price elasticity of demand
greater
The marginal revenue curve for a perfectly competitive firm is _______ while the marginal revenue curve of the monopolist is ____________
horizontal, downward sloping
On the graph, where do economies of scale exist?
in the range of outputs from A to B
If the price elasticity of supply is 0.4, then a 20% increase in price will _____________ the quantity supplied by _________________ %
increase 8.0
Explain how the following events would affect the demand for labor A. a new education program administered by the company increases labor's marginal product the demand for labor would __________ B. the firm completes a new plant with a larger workspace and new machinery that workers can utilize and that does not substitute for the functions provided by workers' labor the demand for labor would __________
increase increase
A software company in Idaho uses programmers (labor) and computers (capital) to produce apps for mobile devices. The firm estimates that when it comes to labor, MPLabor = 10 apps per day while PLabor =$ 150 per day. And when it comes to capital, MPCapital = 6 apps per day while PCapital = $ 200 per day. If this company wants to maximize its profits, it should
increase labor while decreasing capital
A perfectly inelastic supply curve
indicates the quantity supplied does not respond to a change in price
A retailer noticed that by lowering its price slightly, total revenue decreased. What can you conclude about the price elasticity of demand within this price range? Demand is _________
inelastic
At current prices of a highly addictive drug the demand for the drug is highly price:
inelastic
If the price of elasticity of demand is 0.33 then demand is _______________ over that price range.
inelastic
The ______ industry argument against free trade contends that new industries should be ____________ against world competition so that they can become technologically efficient in the long run. Unrestricted foreign trade may allow foreign governments to subsidize exports or foreign producers to engage in _____________, or selling products in other countries below their cost of production. Critics claim that to the extent that foreign export subsidies and ___________ create more instability in domestic production, they may impair our well-being.
infant protected dumping dumping
A perfectly competitive firm's short-run supply curve is
its marginal cost curve at and above intersection with the AVC curve
The ______ run is often called the planning horizon. The ________ - run average cost curve is the planning curve. It is found by drawing a curve tangent to points on a series of _____-run average cost curves, each corresponding to a different plant size. The firm can experience economies of scale, diseconomies of scale, or constant returns to scale, all according to whether the long-run average cost curve slopes ________, slopes __________, or is _____________, respectively. Economies of scale refer to what happens to average cost when all factors of production are increased. We observe of scale for number of reasons, including specialization, improved productive equipment, and the _____________ factor, because large-scale firms require proportionately less input per unit of output. The firm may experience _______________ of scale primarily because of limits of the efficient functioning of management. The minimum efficient scale occurs at the ___________ rate of output at which long-run average costs are ___________
long long short downward upward horizontal dimensional diseconomies lowest minimized
Monopoly tends to result in a ________ quantity being sold, because the price is _______ than it would be in an ideal perfectly competitive industry in which the cost curves were essentially the same as the monopolist's. Provided that monopolization of a previously perfectly competitive market does not affect that market's _______ structure, the price that consumers pay for the monolist's product is ________ than the marginal cost of producing that item.
lower higher cost greater
Suppose that Norma is disappointed in the revenue her custom dress shop is bringing in. She is thinking of raising the price of each dress, but she asks you for advice. You decide she should
lower the price if demand is elastic
Price discrimination is the sale of a given product at ______ than one price with the price differences being __________ to differences in marginal cost. Three conditions are necessary for price discrimination: (1) The firm must face a _________ -sloping demand curve, (2) the firm must be able to identify buyers with predictably different price _________ of demand, and (3) _________ of the product or service must be preventable. Price ____________ should not be confused with price ________________ , the latter of which occurs when differences in price reflect differences in marginal cost.
more unrelated downward elasticities resale discrimination differentiation
Explain what happens to the elasticity of demand for labor in a given industry after each of the following events a. A new manufacturing technique makes capital easier to substitute for labor the elasticity of demand for labor becomes ____________ b. There is an increase in the number of substitutes for the final product that labor produces the elasticity of demand for labor becomes ____________ c. after a drop in the prices of capital inputs, labor accounts for a larger portion of a firm's factor costs the elasticity of demand for labor becomes ________________
more elastic more elastic more elastic
Based on only the information provided, characterize the demand for the following goods as being more elastic or more inelastic. a. A 45-cent box of salt that you buy once a year: ____________ b. A type of high-powered ski boat that you can rent from any one of a number of rental agencies: __________ c. A specific brand of bottled water: _________________ d. Automobile insurance in a state that requires autos to be insured but has few insurance companies: _________________ e. A 75-cent guitar pick for the lead guitarist of a major rock band: _____________
more inelastic more elastic more elastic more inelastic more inelastic
When you compute a price elasticity of demand the answer is always
negative
If marginal utility is ___________ then total utility must be ____________
negative declining
Economists avoid confusion over units in the computation of elasticity by using:
percentage changes
The price elasticity of supply always has a:
positive value
The technological relationship between output and inputs is called the ____________ function. It relates ________ per time period to several inputs, such as capital and labor. After some rate of output, the firm generally experiences diminishing marginal _____________. The law of diminishing marginal product states that if all factors of production are held constant except one, equal increments in that one variable factor will eventually yield ___________ increments in ___________.
production output product decreasing output
The price of demand is equal to the percentage in __________________ divided by the percentage change in _________. Price elasticity of demand is calculated in terms of ____________ changes in quantity demanded and in price. Thus, it is expressed as a unitless, dimensionless number that is ________________________ units of measurement. The price elasticity of demand is always _____________, because an increase in price will lead to a _____________ in quantity demanded and a decrease in price will lead to _______________ in quantity demanded. One extreme elasticity occurs when a demand curve is vertical. It has ______ price elasticity of demand. It is completely __________. Another extreme elasticity occurs when a demand curve is horizontal. It has completely __________ demand. Its price elasticity of demand is _________.
quantity demanded price percentage independent of negative a decrease an increase zero inelastic elastic infinite
Price elasticity of demand is related to total ___________ When demand is elastic, a change in price elicits a change in total revenues in the _____________ direction from the price change. When demand is unit-elastic, a change in price elicits ________ changes in total revenues (or in total consumer expenditures) When demand is inelastic, a change in price elicits a change in total revenues in the ___________ direction as the price change
revenues opposite zero same
After monitoring your daily consumption patterns, you determine that your daily consumption of bottled water is 1 and your daily consumption of ice pops is 3 when the prices per unit ar $0.75 and $1.30, respectively. When the price of bottled water rises, you __ As the price of bottled water rises to $1.00, and more ice pops and less bottled water are consumed, the marginal utility of bottled water _______ and the marginal utility of ice pops ________
rises, falls
Recently, the Writers Guild of America (WGA), which represents TV and film screenwriters, called for a strike, and most screenwriters stopped working. Nevertheless, writers for certain TV soap operas, such as The Young and the Restless, which have had shrinking audiences for years, draw small numbers of viewers for repeat shows long dash and rarely sell on DVDs long dash opted to drop their WGA memberships. They continued working during the strike. The WGA posted on its Web site a phone number for union members to report "strike-breaking activities and 'scab writing ' " to the union's 12-person Strike Rules Compliance Committee because
strikebreakers diminish the collective bargaining power of a union by replacing union employees
which of the following statements explains why the marginal cost pricing rule results in an economic loss for a natural monopoly?
the ATC curve is downward sloping; therefore marginal cost is lower than average total cost
If a country has a comparative advantage in the production of some good then
the country can produce the good at a lower opportunity cost compared to other producers
Explains the impact of each of the following events on the market for union labor a. Union-produced TV and radio commercials convince consumers to buy domestically manufactured clothing instead of imported clothing b. The union sponsors periodic training programs that instruct union laborers about the most efficient us of machinery and tools
the demand for union workers will rise, increasing union wages and employment the demand for union workers will rise, increasing union wages and employment
Featherbedding refers to
the requirement that unneeded workers be retained on a job
The primary purpose of economic regulation is
to control the price that regulated enterprise are allowed to charge