Micro test 2

Refer to Exhibit 19-3. When price decreases from $5.50 to $4.50, the price elasticity of demand is Select one: a. 0.2. b. 0.5. c. 1.0. d. 2.0. e. 5.0.

5.0.

21-53. Which of the following statements is false? Select one: a. If the MC curve is rising, the AVC curve must be rising. b. If MC is below ATC, ATC must be falling. c. If MC is above AVC, then AVC must be rising. d. If MC is above ATC, then ATC must be rising.

a. If the MC curve is rising, the AVC curve must be rising.

21-44. Refer to Exhibit 21-5. Economies of scale are present between Select one: a. points A and B. b. points A and C. c. points B and C. d. points B and D. e. points C and D.

a. points A and B.

21-23. If the average variable cost curve is falling, Select one: a. the MC curve must be below it. b. marginal cost is greater than average variable cost. c. the MC curve is necessarily falling. d. the MC curve is necessarily horizontal (neither rising nor falling). e. the MC curve is necessarily rising

a. the MC curve must be below it.

. The shorter the period of time consumers have to adjust to price changes, the __________ the __________ elasticity of demand. Select one: a. lower; income b. lower; price c. higher; income d. higher; price

lower; price

Refer to Exhibit 19-3. If price increases from $2.50 to $3.50, total revenue along the demand curve Select one: a. increases to $67.50. b. increases to $87.50. c. remains at $87.50. d. decreases to $67.50.

remains at $87.50.

As the marginal physical product of U.S. workers _________________, the marginal cost of goods produced in the U.S. ______________ and unit costs _____________. This makes American goods ________________ competitive in the global marketplace. rises;falls; fall; less falls; falls; fall; more rises; falls; fall; more rises; falls; fall; more

rises; falls; fall; more

21-41. The law of diminishing marginal returns Select one: a. is a short run concept. b. is a long run concept. c. is both a short run and a long run concept. d. does not hold in the real world.

s a short run concept.

A util is an artificial construct used as a means of measuring the

satisfaction one receives from the consumption of a good

To an economist, utility refers to the

satisfaction that results from the consumption of a good

. Refer to Exhibit 19-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. What is the per-unit tax equal to? Select one: a. $1.00 b. $2.25 c. $0.25 d. $4.00 e. $1.25

$2.25

Refer to Exhibit 19-7. As a producer, if you had a choice, which of the depicted markets would you operate in? Select one: a. (1) b. (2) c. (3) d. (4)

(1)

If Jack bought 21 CDs last year when his income was $30,000 and he buys 23 CDs this year when his income is $35,000, then his income elasticity of demand is ______________ which means that CDs are a(n) ______________ good for Jack. Select one: a. +1.69; normal b. -1.69; inferior c. +0.59; normal d. +0.59; inferior e. -0.44; inferior

+0.59; normal

Refer to Exhibit 21-1. The marginal utility of the third plum is (Chart)

10 utils

Suppose the demand for a particular good is perfectly inelastic and the government decides to impose a tax on the production of this good. Who will pay the greater share of such a tax? Select one: a. The buyers will pay the entire share. b. The sellers will pay the entire share. c. The buyers and the sellers will pay equal shares. d. The sellers will bear the greater share of the tax.

The buyers will pay the entire share.

The quantity supplied of land is constant regardless of price. Suppose a tax is imposed on the rental price of land. Who will pay the greater share of such a tax? Select one: a. The buyers will pay the entire share. b. The sellers will pay the entire share. c. The buyers and the sellers will pay equal shares. d. The buyers will bear the greater share of the tax.

The sellers will pay the entire share.

An inferior good is Select one: a. any good that consumers think is of low quality. b. a good for which the quantity demanded increases as its price decreases. c. a good for which the demand rises as income falls. d. a good for which the demand rises as income rises. e. any good that a producer cannot sell a large quantity of, even at a low price.

a good for which the demand rises as income falls.

A normal good is Select one: a. any good that consumers normally buy. b. any good for which other goods can substitute. c. a good for which the demand rises as income falls. d. a good for which the demand rises as income rises. e. a good for which the quantity demanded rises as its price falls.

a good for which the demand rises as income rises.

If two goods are substitute goods, Select one: a. an increase in the price of one will cause a decrease in the demand for the other. b. an increase in the price of one will cause an increase in the demand for the other. c. the price elasticity of demand for both goods will be greater than 1. d. the price elasticity of demand for both goods will be less than 1.

an increase in the price of one will cause an increase in the demand for the other.

21-56. The long-run average total cost (LRATC) curve shows the Select one: a. lowest average variable cost at which the firm can produce any given level of output. b. lowest unit cost at which the firm can produce any given level of output. c. highest average fixed cost at which the firm can produce any given level of output. d. lowest marginal cost at which the firm can produce any given level of output. e. none of the above

b. lowest unit cost at which the firm can produce any given level of output.

21-63. The "visible hand" is a metaphor used to describe Select one: a. market coordination. b. managerial coordination. c. the separation of ownership from control. d. how price changes motivate individual coordination.

b. managerial coordination.

21-18. As the marginal physical product curve rises, Select one: a. the marginal cost curve rises. b. the marginal cost curve falls. c. the total cost curve rises. d. the total cost curve falls.

b. the marginal cost curve falls.

21-04. Five months ago Wilson opened up a health club. Which of the following is an implicit cost related to the health club? Select one: a. Wilson paid $120 for an outside laundry service to clean the towels used at the club. b. Wilson paid $100 for the pest control exterminator to spray the health club. c. Wilson previously worked as an accountant, earning $3,000 a month. d. Wilson usually eats four hamburgers a day, priced at $3 each.

c. Wilson previously worked as an accountant, earning $3,000 a month.

21-40. The short run is Select one: a. a period of time in which all inputs are fixed. b. a period of time in which all inputs are variable. c. a period of time in which some inputs are fixed. d. always less than a year. e. a and d

c. a period of time in which some inputs are fixed.

21-12. Costs that do not change with output are called __________ costs. Select one: a. marginal b. average c. fixed d. variable

c. fixed

21-51. Accounting profit equals economic profit if __________ equals __________. Select one: a. explicit costs; implicit costs b. total revenue; marginal cost c. implicit costs; zero d. explicit costs; zero e. unit cost; marginal cost

c. implicit costs; zero

Marginal utility is defined as the

change in total utility a person derives from the consumption of a good divided by the change in the quantity of the good consumed

Refer to Exhibit 19-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. As a result, Select one: a. consumers end up paying $6.25 per unit, and producers end up receiving $5.00 per unit, but keeping only $4.00 per unit. b. consumers end up paying $6.25 per unit, and producers end up receiving and keeping $4.00 per unit. c. consumers end up paying $5.00 per unit, and producers end up receiving and keeping $5.00 per unit. d. consumers end up paying $6.25 per unit, and producers end up receiving $6.25 per unit, but keeping only $4.00 per unit. e. none of the above

consumers end up paying $6.25 per unit, and producers end up receiving $6.25 per unit, but keeping only $4.00 per unit.

21-26. The marginal cost curve passes through the __________ curve at its lowest point. Select one: a. average variable cost b. average total cost c. average fixed cost d. a and b e. a, b, and c

d. a and b

21-55. Unit cost refers to Select one: a. average variable cost. b. average fixed cost. c. marginal cost. d. average total cost. e. c or d

d. average total cost.

21-16. "As additional units of a variable input are added to a fixed input, eventually the marginal physical product of the variable input will decline." This is a statement of the Select one: a. law of supply. b. average-marginal rule. c. law of diminishing marginal utility. d. law of diminishing marginal returns.

d. law of diminishing marginal returns.

Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 30, 50, 65, 72, respectively. In this situation we have __________ marginal utility, which is generally __________ in the analysis of consumer choice.

diminishing; assumed

21-29. Refer to Exhibit 21-2. The dollar amounts that go in blanks (C) and (D) are, respectively, Select one: a. $10.00 and $1.00. b. $30.00 and $34.00. c. $3.00 and $4.00. d. $6.67 and $10.00. e. $1.00 and $1.50.

e. $1.00 and $1.50.

21-11. Average fixed cost Select one: a. is greater at lower levels of output than at higher levels. b. does not change as output changes. c. exists only in the short run. d. is usually greater at higher levels of output than at lower levels of output. e. a and c

e. a and c

21-37. Average variable cost equals Select one: a. average total cost minus average fixed cost. b. total variable cost divided by the change in output. c. total variable cost divided by output. d. price of the variable input times the quantity of the variable input. e. a and c

e. a and c

21-57. If the government places a $2 tax on each unit of good X that is produced by Firm A, it follows that the tax will not affect __________ cost, but will affect __________ cost. Select one: a. variable; fixed b. fixed; variable c. average fixed; average variable d. marginal; fixed e. b and c

e. b and c

21-25. Which of the following statements is true? Select one: a. In the short run, there are no fixed costs, only variable costs. b. In the short run, there are fixed and variable costs, but in the long run there are only fixed costs. c. In the short run, there are fixed and variable costs, but fixed costs are the only costs a firm is concerned with. d. In the long run, there are no costs, fixed or variable. e. none of the above

e. none of the above

21-45. Refer to Exhibit 21-5. Diseconomies of scale are present between Select one: a. points A and B. b. points A and C. c. points B and C. d. points B and D. e. points C and D.

e. points C and D.

If the percentage change in quantity demanded is greater than the percentage change in price, demand is Select one: a. inelastic. b. unit elastic. c. elastic. d. perfectly inelastic.

elastic.

If for good Z income elasticity is greater than 1, then demand for good Z is income __________, and good Z is a(n) __________ good. Select one: a. inelastic; normal b. inelastic; inferior c. elastic; normal d. elastic; inferior e. unit elastic; normal

elastic; normal

If the price of good X rises and the demand for good X is elastic, then the percentage __________ in quantity demanded is __________ the percentage rise in price, and total revenue __________. Select one: a. fall; greater than; rises b. fall; less than; falls c. fall; equal to; remains constant d. rise; greater than; falls e. fall; greater than; falls

fall; greater than; falls

Vernon spends the following percentages of his budget on the following goods: 23 percent on good A, 11 percent on good B, 1 percent on good C, and 3 percent on good D. For which good is price elasticity of demand the highest, ceteris paribus? Select one: a. good A b. good B c. good C d. good D

good A

Income elasticity of demand for a normal good is always Select one: a. less than zero. b. greater than zero. c. equal to zero. d. less than one.

greater than zero.

If the percentage change in quantity demanded of a good is less than the percentage change in income, then the good is said to be Select one: a. income elastic. b. income inelastic. c. income unit elastic. d. price elastic. e. price inelastic.

income inelastic.

Suppose a consumer is purchasing Coke and pretzels in quantities such that she is achieving consumer equilibrium. Then the price of Coke decreases. The consumer will likely __________ her consumption of Coke and the marginal utility of Coke will __________ while the total utility from Coke will __________.

increase; decrease; increase

When quantity demanded increases, total revenue Select one: a. increases. b. decreases. c. increases, if demand is elastic. d. increases, if demand is inelastic. e. increases, depending on whether price increases as well.

increases, if demand is elastic.

If the percentage change in quantity demanded is less than the percentage change in price, demand is Select one: a. inelastic. b. unit elastic. c. elastic. d. perfectly elastic.

inelastic.

When price = $16, quantity demanded = 200. When price = $14, quantity demanded = 225. When the firm lowered price from $16 to $14, it discovered that demand is __________ and total revenue __________ by ____________, Select one: a. elastic; increased; $3,200 b. elastic; decreased; $3,150 c. inelastic; increased; $50 d. inelastic; decreased; $50 e. inelastic; decreased; $3,150

inelastic; decreased; $50

If for good Z income elasticity is less than 1 but greater than zero, then demand for good Z is income __________, and good Z is a(n) __________ good. Select one: a. inelastic; normal b. inelastic; inferior c. elastic; normal d. elastic; an inferior e. unit elastic; normal

inelastic; normal

A consumer is in equilibrium if he or she derives the same

marginal utility per dollar spent on each good consumed

Which of the following would result in higher price elasticity of good X? Select one: a. more substitutes for good X b. a shorter period of time has passed since the change in the price of good X c. lower costs of labor in the production of good X d. good X is more of a necessity than a luxury

more substitutes for good X

Suppose for a consumer the marginal utility (MU) of bread is 20 utils and the MU of milk is 10 utils; the price of bread is $3 and the price of milk is $1. Given this,

more utility per dollar is gained from consuming milk than bread

If supply is inelastic, it follows that Select one: a. a rise in price will not change quantity supplied. b. a fall in price will not change quantity supplied. c. consumers will pay 100 percent of any tax placed on sellers. d. quantity supplied always changes more than price changes. e. none of the above

none of the above

If a person is receiving greater marginal utility per dollar from consuming one good than another, it follows that he or she is

not maximizing utility

Price elasticity of demand is the ratio of the Select one: a. absolute change in quantity demanded to the absolute change in price. b. absolute change in price to the absolute change in quantity demanded. c. percentage change in quantity demanded to the percentage change in price. d. percentage change in price to the percentage change in quantity demanded.

percentage change in quantity demanded to the percentage change in price.

A per-unit tax is placed on the production of good Y. Someone who believes that the producers of the good will end up paying the full tax may be assuming that the good's demand curve is Select one: a. elastic. b. perfectly inelastic. c. inelastic. d. perfectly elastic. e. unit elastic.

perfectly elastic.

If quantity demanded is completely unresponsive to changes in price, demand is Select one: a. inelastic. b. unit elastic. c. elastic. d. perfectly elastic. e. perfectly inelastic.

perfectly inelastic.

Suppose someone believes that if a per-unit tax is placed on the producers of good Y, the consumers of good Y will end up paying the full tax. This person assumes that the demand curve for good Y is Select one: a. elastic. b. perfectly inelastic. c. inelastic. d. perfectly elastic. e. unit elastic.

perfectly inelastic.

Total revenue is defined as Select one: a. price minus quantity sold. b. price multiplied by quantity sold. c. price divided by quantity sold. d. quantity divided by price sold. e. price plus quantity sold.

price multiplied by quantity sold.

Price elasticity of demand is a measure of the responsiveness of quantity demanded to changes in Select one: a. interest rates. b. price. c. supply. d. demand.

price.

If goods A and B have a cross elasticity of demand that is positive, this is evidence that goods A and B are __________ goods. Select one: a. complementary b. substitute c. normal d. inferior

substitute

Total utility is defined as the

sum of the amounts of satisfaction a person receives from consuming a good

Price elasticity of supply is the percentage change in the quantity __________ of a good divided by the percentage change in __________. Select one: a. demanded; the price of the good b. supplied; the price of the good c. demanded; the price of another good d. supplied; the price of another good e. demanded; income

supplied; the price of the good

If the price elasticity of demand for a given product is 7, this means that Select one: a. if price was raised 7 percent, quantity demanded would rise by 7 percent. b. if price was raised 7 percent, quantity demanded would fall by 7 percent. c. if quantity demanded fell by 1 percent, price would fall by 7 percent. d. the percentage change in quantity demanded is 7 times the percentage change in price. e. none of the above

the percentage change in quantity demanded is 7 times the percentage change in price.

When an economist talks about utility, she is talking about

the satisfaction that results from the consumption of a good

The diamond-water paradox is the observation that

those things that have the greatest value in use often have little value in exchange and those things that have little value in use often have the greatest value in exchange.

If the percentage change in quantity demanded is equal to the percentage change in price, demand is Select one: a. inelastic. b. unit elastic. c. elastic. d. perfectly elastic. e. perfectly inelastic.

unit elastic.

Refer to Exhibit 19-7. If the government is contemplating imposing a per-unit tax and it wants the tax to have as small a negative effect on consumers as possible, it should choose a good for which the market is depicted on graph Select one: a. (1). b. (2). c. (3). d. (4).

(2).

Suppose a producer decides that if the price of her product is $32, the quantity supplied will be 1,000 units, and if the price is $35, the quantity supplied will be 1,300. The price elasticity of supply for the good is approximately Select one: a. +1.91. b. -2.91. c. +0.34. d. -0.34. e. +2.91.

+2.91.

Refer to Exhibit 21-3. Linda spends $5 a week on apples and oranges. If the price of both goods is $1 per unit, how many apples and oranges, respectively, does she purchase per week if she wants to maximize her utility? (Chart)

1 and 4

If quantity demanded rises by 10 percent as price falls by 9 percent, the price elasticity of demand equals Select one: a. 0.90. b. 1.11. c. 0.09. d. 0.19.

1.11.

For a certain good, when price rises from $50 to $55, quantity demanded falls from 8,400 to 7,500. The price elasticity of demand here is _____________, making the demand for this good ____________ in the price range between $50 and $55. Select one: a. 1.19; inelastic b. 1.19; elastic c. 1.45; elastic d. 0.84; elastic e. 0.84; inelastic

1.19; elastic

Suppose Will receives 150 utils from consuming one banana and 250 utils from consuming two bananas. What is the marginal utility of the second banana?

100 utils

Refer to Exhibit 21-3. Assume that the price of oranges increases to $2, while the price of apples remains at $1, and Linda allocates $5 of the weekly food budget to purchasing apples and oranges. If Linda wants to maximize her utility, her new consumption bundle will consist of (Chart)

3 apples and 1 orange

Price rises from $10 to $12, and the quantity demanded falls from 200 units to 100 units. What is the price elasticity of demand between these two prices? Select one: a. 0.18 b. 3.67 c. 1.86 d. 0.27

3.67

Refer to Exhibit 21-2. Total utility for the first three oranges is (Chart)

49 utils

Refer to Exhibit 21-3. Linda spends $5 a week on apples and oranges. If the price of both goods is $1 per unit, what is Linda's total utility from consuming the optimal bundle of goods? (Chart)

88

The law of diminishing marginal utility can be stated as follows

B). As the amount of a good consumed increases, the additional satisfaction gained from consuming additional units tends to decrease and D). As the amount of a good consumed increases, the sum of satisfaction received tends to increase but at a diminishing rate

Which of the following statements is false? Select one: a. If the income elasticity of demand for a good is less than 1, the demand for the good is income inelastic. b. If the income elasticity of demand for a good is greater than 1, the demand for the good is income elastic. c. If the income elasticity of demand for a good is equal to 1, the demand for the good is income unit elastic. d. If the income elasticity of demand for a good is less than zero, the good is a normal good. e. A good can be both a normal good and income inelastic.

If the income elasticity of demand for a good is less than zero, the good is a normal good.

Suppose at a price of $4 and at a price of $6, John purchases 40 units of good X. Given this information, we know that Select one: a. John's entire demand curve for good X is perfectly elastic. b. John's demand for good X is inelastic. c. John's demand for good X is perfectly inelastic between the prices of $4 and $6. d. John's demand for good X is perfectly elastic between the prices of $4 and $6. e. John's demand for good X is unit elastic.

John's demand for good X is perfectly inelastic between the prices of $4 and $6.

In order for an individual to achieve consumer equilibrium through the consumption of two goods, A and B, that individual must fulfill the condition

MUA/PA = MUB/PB

Suppose you just finished your third plateful of Thanksgiving dinner and it yielded zero units of additional satisfaction. Should you go back for more?

No way. You could get negative utility from the fourth plateful

Suppose the marginal utility (MU) of paperback books is 40 utils and each costs $5 while the MU of DVD rentals is 20 utils and each rents for $4. If you consume one movie and one book per week, are you attaining consumer equilibrium?

No. You need to buy more books and rent fewer DVDs

If Jack bought 18 CDs last year when his income was $20,000 and he buys 19 CDs this year when his income is $25,000, then for Jack CDs are Select one: a. an inferior good. b. a normal good. c. a substitute good. d. a complementary good. e. there is not enough information to answer this question.

a normal good.

21-31. Refer to Exhibit 21-2. What is the average variable cost of producing 90 units of output? Select one: a. $1.00 b. $1.17 c. $1.59 d. $1.44 e. There is not enough information provided to answer the question.

a. $1.00

21-33. Refer to Situation 21-l. What will Diane's total costs be if she sells 2,500 donuts in her first week and then goes out of business? Select one: a. $20,750 b. $10,950 c. $20,880 d. $30,500

a. $20,750

21-60. Refer to Exhibit 21-13. What dollar amounts go in blanks (K) and (L)? Select one: a. $280; $400 b. $28; $40 c. $260; $360 d. $50; $400 e. There is not enough information to answer this question.

a. $280; $400

21-06. Consider the following information about a business Diane opened last year: price = $10, quantity sold = 25,000; implicit cost = $55,000; explicit cost = $160,000. What was Diane's economic profit? Select one: a. $35,000 b. $195,000 c. -$35,000 d. $90,000 e. There is not enough information provided to answer this question.

a. $35,000

21-62. Refer to Exhibit 21-13. What dollar amounts go in blanks (V) and (W)? Select one: a. $50; $70 b. $12.50; $14 c. $140; $150 d. $82.50; $80 e. There is not enough information to answer this question.

a. $50; $70

21-20. Refer to Exhibit 21-l. The numbers that go in blanks (C) and (D) are, respectively, Select one: a. 25 and 20. b. 20 and 22. c. 25 and 24. d. 22 and 20. e. none of the above

a. 25 and 20.

21-54. Which of the following statements is true? Select one: a. The marginal cost curve has an upward-sloping portion to it because of the law of diminishing marginal returns. b. The marginal cost curve cuts the ATC curve at its highest point. c. When marginal cost is rising, so must average total cost be rising. d. A decline in marginal cost causes the MPP (of the variable input) to decline. e. none of the above

a. The marginal cost curve has an upward-sloping portion to it because of the law of diminishing marginal returns.

21-24. In the long run, Select one: a. all costs are variable costs. b. all costs are fixed costs. c. there are no variable costs. d. b and c

a. all costs are variable costs.

21-36. If inputs are increased by 10 percent and output increases by 20 percent, then __________ are said to exist. Select one: a. economies of scale b. constant returns to scale c. diseconomies of scale d. diminishing marginal returns

a. economies of scale

21-08. If a firm earns normal profit, then it has generated revenues Select one: a. equal to the sum of implicit and explicit costs. b. greater than total opportunity costs. c. sufficient to cover explicit costs, but not implicit costs. d. sufficient to cover implicit costs, but not explicit costs.

a. equal to the sum of implicit and explicit costs.

21-01. A cost that is incurred when an actual monetary payment is made is a(n) __________ cost. Select one: a. explicit b. implicit c. positive d. expressed

a. explicit

21-27. Economies of scale are said to exist when inputs are increased by some percentage and output increases by a(n) __________ percentage, causing unit costs to __________. Select one: a. greater; fall b. smaller; fall c. greater; rise d. smaller; rise e. equal; fall

a. greater; fall

21-52. As long as there are __________ costs, __________ profit will be greater than __________ profit. Select one: a. implicit; accounting; economic b. explicit; accounting; economic c. implicit; economic; accounting d. explicit; economic; accounting

a. implicit; accounting; economic

21-22. The average-marginal rule states that if the marginal magnitude is Select one: a. less than the average magnitude, the average magnitude falls. b. greater than the average magnitude, the average magnitude falls. c. rising, the average magnitude is necessarily above it. d. falling, the average magnitude is necessarily below it. e. c and d

a. less than the average magnitude, the average magnitude falls.

21-42. Refer to Exhibit 21-4. Curve A is a(n) __________ cost curve. Select one: a. marginal b. average variable c. average total d. average fixed

a. marginal

21-19. The change in output that results from changing a variable input by one unit, holding all other inputs fixed, is called the marginal __________ product of the variable input. Select one: a. physical b. value c. average d. explicit

a. physical

21-30. Refer to Exhibit 21-2. What is the average total cost of producing 120 units of output? Select one: a. $0.67 b. $1.83 c. $1.07 d. $12.50 e. There is not enough information provided to answer the question.

b. $1.83

21-13. At 100 units of output, total cost is $22,000 and total variable cost is $14,000. At 100 units of output, what is the value of average total cost, average variable cost, and average fixed cost, respectively? Select one: a. $22; $14; $8 b. $220; $140; $80 c. $740; $340; $400 d. $340; $740; $60 e. $400; $340: There is not enough information provided to determine the average fixed cost.

b. $220; $140; $80

21-50. If explicit costs equal $40,000, implicit costs equal $95,000, and accounting profit equals $23,000, it follows that total revenue equals __________ and economic profit equals __________. Select one: a. $75,000; $17,000 b. $63,000; -$72,000 c. $68,000; $25,000 d. $22,000; -$68,000 e. There is not enough information given to answer this question.

b. $63,000; -$72,000

21-10. Which of the following statements is true? Select one: a. The short run is always somewhere between six and twelve months. b. In the short run, changes in output can only be brought about by a change in the quantity of variable inputs. c. The long run is any period of time over one year. d. In the short run, there are variable costs but no fixed costs. e. b and d

b. In the short run, changes in output can only be brought about by a change in the quantity of variable inputs.

21-43. Refer to Exhibit 21-4. Curve C is a(n) __________ cost curve. Select one: a. marginal b. average variable c. average total d. average fixed

b. average variable

21-09. A fixed input is an input whose quantity Select one: a. can be changed as output changes in the short run. b. cannot be changed as output changes in the short run. c. cannot be changed as output changes in the long run. d. a and c e. b and c

b. cannot be changed as output changes in the short run.

21-35. If inputs are increased by 10 percent and output increases by 10 percent, then __________ are said to exist. Select one: a. economies of scale b. constant returns to scale c. diseconomies of scale d. diminishing marginal returns

b. constant returns to scale

21-17. A rising marginal cost curve is a reflection of a Select one: a. rising marginal physical product curve. b. falling marginal physical product curve. c. falling average fixed cost curve. d. rising average variable cost curve.

b. falling marginal physical product curve.

21-02. A cost of resources used in production for which no actual monetary payment is made is a(n) __________ cost. Select one: a. tacit b. implicit c. covert d. explicit

b. implicit

21-65. The __________ hand is the metaphor used to refer to market coordination, whereas the __________ hand is the metaphor used to refer to managerial coordination. Select one: a. visible; fast b. invisible; visible c. fast; lazy d. lazy; fast e. none of the above

b. invisible; visible

21-32. Refer to Exhibit 21-2. What is the average variable cost of producing 120 units of output? Select one: a. $0.67 b. $1.17 c. $1.00 d. $1.44 e. There is not enough information provided to answer the question

c. $1.00

21-59. Refer to Exhibit 21-13. What dollar amounts go in blanks (G) and (H)? Select one: a. $100; $30 b. $400; $50 c. $200; $30 d. $40; $20 e. There is not enough information to answer this question.

c. $200; $30

21-14. Which of these statements is false? Select one: a. There are no fixed costs in the long run. b. Total costs are equal to total fixed costs plus total variable costs. c. In the short run, all inputs are fixed inputs. d. A fixed cost is a cost that does not change as output changes.

c. In the short run, all inputs are fixed inputs.

21-34. Refer to Situation 21-l. What will Diane's approximate average fixed costs be if she sells 36,500 donuts in one year? Select one: a. $0.30 b. $0.088 c. $0.138 d. $0.55

d. $0.55

21-47. Refer to Exhibit 21-7. The average total cost of producing 4 units of output is Select one: a. $11.25. b. $5.00. c. $3.50. d. $27.50. e. There is not enough information to answer this question.

d. $27.50.

21-49. Refer to Exhibit 21-7. The marginal cost of producing the seventh unit of output is Select one: a. $85.00. b. $12.14. c. $21.00. d. $5.00.

d. $5.00.

1-48. Refer to Exhibit 21-7. The average fixed cost of producing 5 units of output is Select one: a. $16.25. b. $4.00. c. $11.15. d. $6.00. e. There is not enough information to answer this question.

d. $6.00.

21-46. Refer to Exhibit 21-7. The total variable cost of producing 3 units is Select one: a. $31.00. b. $51.00. c. $17.00. d. $60.00. e. There is not enough information to answer this question.

d. $60.00.

21-58. Refer to Exhibit 21-13. What dollar amounts go in blanks (C) and (D)? Select one: a. $100; $50 b. $25; $68 c. $200; $200 d. $66.67; $50 e. There is not enough information to answer this question.

d. $66.67; $50

21-07. Consider the following information about a business Diane opened last year: price = $10, quantity sold = 25,000; implicit cost = $55,000; explicit cost = $160,000. What was Diane's accounting profit? Select one: a. $35,000 b. $195,000 c. -$35,000 d. $90,000 e. There is not enough information provided to answer this question

d. $90,000

21-61. Refer to Exhibit 21-13. What dollar amounts go in blanks (P) and (Q)? Select one: a. $120; $125 b. $10; 95 c. $30; $80 d. $93.33; $82.50 e. There is not enough information to answer this question.

d. $93.33; $82.50

21-39. If the "minimum efficient scale" in an industry is at 25 percent of market sales, what is the maximum number of efficient firms the economy can support in this industry? Select one: a. 75 b. 25 c. 10 d. 4

d. 4

21-03. Which of the following statements is true? Select one: a. Costs are always explicit, never implicit. b. Costs are always implicit, never explicit. c. George runs a stationery shop; he paid Frank $5,000 for the carpet he installed in the shop. The $5,000 for carpet is an implicit cost. d. An implicit cost is a cost that represents the value of resources used in production for which no actual monetary payment is made. e. none of the above

d. An implicit cost is a cost that represents the value of resources used in production for which no actual monetary payment is made.

21-38. Minimum efficient scale refers to the Select one: a. smallest plant size a firm can utilize and still maintain production. b. lowest point on a given SRATC curve. c. output level at which the LRATC curve touches each SRATC curve. d. lowest output level at which average total costs are minimized.

d. lowest output level at which average total costs are minimized.

21-15. The change in total cost that results from a change in output is __________ cost. Select one: a. average fixed b. average variable c. average total d. marginal

d. marginal

21-28. Diseconomies of scale are said to exist when inputs are increased by some percentage and output increases by a(n) __________ percentage, causing unit costs to __________. Select one: a. greater; fall b. smaller; fall c. greater; rise d. smaller; rise e. equal; fall

d. smaller; rise

21-05. Economic profit is the difference between total revenue and Select one: a. explicit costs. b. implicit costs. c. sunk costs. d. the sum of explicit and implicit costs.

d. the sum of explicit and implicit costs.

21-64. Economists Alchian and Demsetz suggest that firms are formed when Select one: a. the sum of what individuals can produce alone is greater than what they can produce as a team. b. someone wants to earn profits. c. someone comes up with the idea that customers will buy a new product. d. the sum of what individuals can produce as a team is greater than the sum of what they can produce alone.

d. the sum of what individuals can produce as a team is greater than the sum of what they can produce alone.

21-21. If labor is the variable input, then marginal cost equals Select one: a. MPP divided by the wage rate. b. average variable (labor) costs divided by MPP. c. average variable (labor) costs multiplied by MPP. d. the wage rate divided by MPP. e. the wage rate multiplied by MPP.

d. the wage rate divided by MPP.

Joe is currently in consumer equilibrium by consuming cheese and crackers, such that the last cracker consumed yielded 8 utils and the last piece of cheese consumed yielded 12 utils. Assume the price of crackers is two cents per cracker and the price of cheese is three cents per piece. If the price of crackers increases to four cents, Joe should __________ his consumption of crackers and his marginal utility from crackers will __________ and also __________ his consumption of cheese and his marginal utility from cheese will __________.

decrease; increase; increase; decrease

For a straight-line, downward-sloping demand curve, price elasticity of demand Select one: a. increases as we move down and along the curve from higher to lower prices. b. decreases as we move down and along the curve from higher to lower prices. c. remains constant along the entire demand curvE. d. a or b depending on the actual slope of the demand curve

decreases as we move down and along the curve from higher to lower prices.

Refer to Exhibit 19-3. If price decreases from $1.50 to $0.50, total revenue along the demand curve Select one: a. increases to $67.50. b. increases to $87.50. c. remains at $87.50. d. decreases to $67.50. e. decreases to $27.50.

decreases to $27.50.

Cross elasticity of demand is the percentage change in the quantity __________ of a good divided by the percentage change in __________. Select one: a. demanded; the price of the good b. supplied; the price of the good c. demanded; the price of another good d. supplied; the price of another good e. demanded; income

demanded; the price of another good

Cross elasticity of demand measures the responsiveness of changes in the quantity __________ of one good to changes in __________. Select one: a. demanded; the price of the same good b. demanded; income c. demanded; the price of another good d. supplied; the price of the same good e. none of the above

demanded; the price of another good

If the price of good X falls and the demand for good X is unit elastic, then the percentage rise in quantity demanded is __________ the percentage fall in price, and total revenue __________. Select one: a. greater than; rises b. less than; falls c. equal to; remains constant d. greater than; falls e. less than; rises

equal to; remains constant

The longer the period of time allowed for the ___________ of a good to adjust to a change in the price of the good, the ___________ the price elasticity of supply will be. This statement assumes that the quantity supplied __________ be altered with time. Select one: a. producer; higher; can b. consumer; higher; can c. producer; lower; can d. producer; lower; cannot

producer; higher; can

If the cross elasticity of demand for two goods is negative, Select one: a. one of the goods is necessarily a normal good, and the other good is necessarily an inferior good. b. both goods are normal goods. c. the goods are substitutes. d. the goods are complements.

the goods are complements.

The fewer substitutes for a good, Select one: a. the lower its income elasticity of demand. b. the higher its income elasticity of demand. c. the lower its price elasticity of demand. d. the higher its price elasticity of demand

the lower its price elasticity of demand.

Suppose you are eating slices of pizza and after consuming the first slice you receive 14 utils of total utility, after the second you receive 22 utils of total utility, and after the third 25 utils of total utility. Then

your total utility is 25 utils, and the marginal utility of the third slice is 3 utils