ECON 1123 Exam 2
Assume that a combination of 10 bottles of wine and 2 cartons of milk lies on a consumer's budget constraint. If the price of one bottle of wine is $10, and one carton of milk is $1, what is the consumer's income? - $102 - $20 - $120 - $100
$102
A firm sells 20 units of a good at a price of $5 per unit. If the average cost of production of the good equals $3 per unit, the firm's revenue is: - $120 - $60 - $40 - $100
$100
John is ready to pay $5 for an extra loaf of bread. Due to an ongoing discount in the store, he gets a loaf for $2. John's consumer surplus from the purchase is - $3 - $2 - $2.50 - $10
$3
John is ready to pay $5 for an extra loaf of bread. Due to an ongoing discount in the store, he gets a loaf for $2. John's consumer surplus from the purchase is ________. - $2 - $2.50 - $3 - $10
$3
A firm sells 30 units of its product at a price of $5 per unit. It incurs a fixed cost of $100 and a variable cost of $20. The firm's profit is: - $30 - $150 - $50 - $100
$30
A surplus occurs in a market when ___________. - supply exceeds demand - demand exceeds supply - the price is lower than the equilibrium price - the marginal cost of production is negligible
supply exceeds demand
Negative values of the price elasticity of demand of a good can be attributed to: - the Law of Demand - the Law of Increasing Marginal Utility - the Law of Diminishing Marginal Rate of Substitution - the Law of Supply
the Law of Demand
Negative values of the price elasticity of demand of a good can be attributed to: - the Law of Diminishing Marginal Rate of Substitution. - the Law of Demand - the Law of Supply. - the Law of Increasing Marginal Utility.
the Law of Demand
A firm has an average total cost of $50. If it sells 20 units of its product at $80 each, what is its profit? - $1,600 - $30 - $1,000 - $600
$600
A firm producing 10 units of output incurs a total cost of $800. When it produces 11 units, the total cost increases to $890. What is the marginal cost of producing the eleventh unit? - $100 - $80 - $10 - $90
$90
When the price of milk is $3 per bottle, Steve purchases 20 bottles of milk. When the price increases to $6, Steve's consumption falls to 15 bottles. Steve's elasticity of demand for milk is: - -0.75 - -0.50 - -0.25 - -0.43
-0.43
When the price of wine is $10 per bottle, Thomas purchases 30 bottles every month. Later, the government introduces a 50% tax on all alcoholic beverages, which is to be completely borne by consumers. This reduces Thomas's consumption to 20 bottles of wine a month. Refer to the scenario above. Thomas's elasticity of demand for wine is: - -0.33 - -0.67 - -0.25 - -1
-1
The total cost of a firm is $50, the average variable cost is $2, and the average fixed cost is $3. How may units of the output does the firm produce? - 10 units - 5 units - 15 units - 18 units
10 units
Assume that a consumer can spend $20 on two goods-pens and pencils. If the price of one pen is $5 and the price of one pencil is $2, which of the following combinations of the two goods represents a point on the consumers budget constraint? - 2 pens and 3 pencils - 2 pens and 5 pencils - 3 pens and 2 pencils - 1 pens and 10 pencils
2 pens and 5 pencils
A firm produced 376 units with 10 workers. When the eleventh worker was hired, the output increased to 398 units. The marginal product of the eleventh worker is: - 22 units - 37.6 units - 36.18 units - 398 units
22 units
A firm produces 200 units of a good when it employs 7 workers. The marginal product of the eighth worker is 46 units. If the eighth worker is hired, the firm's total product will increase to: - 208 units - 228 units - 246 units - 322 units
246 units
A firm earns $600 of total revenue from selling its product at $200 per unit. If the per-unit cost of producing the good is $150, the firm sells _______ units(s) of the good - 2 - 4 - 3 - 1
3
Sharon consumes 10 chocolates when the price of one chocolate is $2. If her elasticity of demand for chocolates is -1, she consumes ________ chocolates when the price increases to $4. - 9 - 6 - 5 - 8
5
Sharon consumes 10 chocolates when the price of one chocolate is $2. If her elasticity of demand for chocolates is -1, she consumes _________ chocolates when the price increases to $4. - 0 - 5 - 8 - 6
5
Which of the following pairs of goods is likely to be considered substitutes? - A Nokia cell phone and a Nokia cell phone charger - A Ford car and public transportation - Coffee and sugar - Printers and printing ink
A Ford car and public transportation
Which of the following statement is true? - A binding price ceiling will always cause the quantity demanded to exceed the quantity supplied. - Equilibrium is attained when prices are not allowed to respond to market pressure. - A government price control will always cause the quantity demanded to exceed the quantity supplied. - A government price control can be used to bring markets into equilibrium.
A binding price ceiling will always cause the quantity demanded to exceed the quantity supplied.
Which of the following is NOT an example of a market? - A city requires homeowners to pay $500 for putting in a sidewalk on their street - Etsy.com, a Web site where artists, designers, and crafts persons offer items they have made to interested buyers -A cattle auction, where farmers and ranchers bring cattle to be purchased by packing plants - The National Residency Matching Program, where medical residents express their preferences for residencies, hospitals express their preferences for medical residents, and these preferences are used to match residents to residencies
A city requires homeowners to pay $500 for putting in a sidewalk on their street
Which of the following factors is likely to lead to an increase in the quantity demanded of pens? - A rise in the incomes of all consumers - A fall in the price of paper - A fall in the price of pens - A fall in the incomes of all consumers
A fall in the price of pens
Which of the following statements correctly describes a perfectly competitive market? - All participants in a perfectly competitive market are price-takers - In a perfectly competitive market, individual sellers and buyers can influence the market price - Haggling and bargaining is commonly observed in a perfectly competitive market - Buyers in a perfectly competitive market pay different prices according to their individual demand
All participants in a perfectly competitive market are price-takers
If an individual only consumes goods X and Y and is currently maximizing her totalbenefits, which of the following must be true? - The "equal bang for the buck" rule is adhered to. - MBx/Px = MBy/py - All the given choices. - The marginal benefits per dollar spent are the same for both goods.
All the given choices.
Which of the following are necessary ingredients to the buyer's problem? - All the given choices. - Amount of money the consumer has to spend. - Prices of goods and services. - Consumer's tastes and preferences.
All the given choices.
Which of the following is likely to lead to a rightward shift in the supply curve of cotton? - An increase in labor productivity due to training programs - A rise in labor costs due to wage demands by labor unions - An increase in the price of cotton - A decrease in the price of cotton
An increase in labor productivity due to training programs
At a price of $5 per table, the quantity supplied of tables is 500 units whereas the quantity demanded is 660 units. Given this information, which of the following statements is true? - $5 per table is the equilibrium price. - $5 per table is the market clearing price. - At $5 per table, there is a surplus in the market. - At $5 per table, there is a shortage in the market.
At $5 per table, there is a shortage in the market.
At a price of $1 per table, the quantity supplied of tables is 100 units, whereas the quantity demanded is 70 units. Given this information, which of the following statements is true? - The equilibrium price is $1 per table - The market clearing price is $1 per table - At a price of $1 per table, there is a surplus in the market - At a price of $1 per table, there is a shortage in the market
At a price of $1 per table, there is a surplus in the market
At a price of $1 per table, the quantity supplied of tables is 100 units, whereas the quantity demanded is 70 units. Given this information, which of the following statements is true? - At a price of $1 per table, there is a surplus in the market. - At a price of $1 per table, there is a shortage in the market. - The equilibrium price is $1 per table. - The market clearing price is $1 per table.
At a price of $1 per table, there is a surplus in the market.
The automobile market in the United States is often said to be highly competitive. But it is not perfectly competitive. What makes this market not perfectly competitive? - An individual seller can dictate what price a consumer pays for a vehicle. - An individual car buyer can dictate what price he or she pays for a vehicle. - Different car companies make different vehicles with di erent features. - More than three major car companies exist in this market.
Different car companies make different vehicles with di erent features.
The automobile market in the United States is often said to be highly competitive. But it is not perfectly competitive. What makes this market not perfectly competitive? - More than three major car companies exist in this market - An individual car buyer can dictate what price he or she pays for a vehicle - An individual seller can dictate what price a consumer pays for a vehicle - Different car companies make different vehicles with different features
Different car companies make different vehicles with different features
A consumer's budget constraint refers to the collection of all possible bundles that___________. - A consumer can purchase with her income. - A consumer finds suitable for possible purchase. - Give the consumer the same degree of satisfaction. - Exactly exhausted a consumer's entire budget.
Exactly exhausted a consumer's entire budget.
Which of the following is NOT a required characteristic of a market? - A collection of economic agents (e.g., buyers and sellers) - Rules and arrangements for trading - Trade or exchange of a good or service - Government setting the price of the good or service
Government setting the price of the good or service
Which of the following statements is true of the concept of willingness to pay? - The willingness to pay for a commodity increases exponentially as the consumption of the commodity increases - The willingness to pay is the lowest price that a buyer is willing to pay for an extra unit of a commodity - The willingness to pay for a commodity increases linearly as the consumption of the commodity increases - If a consumer is consuming 10 units of a commodity and she is ready to pay $2 for the eleventh unit, her willingness to pay for the eleventh unit is $2
If a consumer is consuming 10 units of a commodity and she is ready to pay $2 for the eleventh unit, her willingness to pay for the eleventh unit is $2
Which of the following is an example of specialization? - Import of better technology and machinery from developed countries greatly increased the number of laser printers that a company was manufacturing - Instead of a worker making an entire shoe, the total productivity increased when different workers were allotted different jobs in the production process - The output of workers in a chocolate factory doubled when a new manager was appointed - The cost of production of a light bulb making factory decreased as its capacity increased
Instead of a worker making an entire shoe, the total productivity increased when different workers were allotted different jobs in the production process
Consider the following statement: Given that burgers and fries are complementary goods, if the price of fries decreases the demand for both goods will rise. - It is somewhat inaccurate. The decrease in the price of fries will increase the quantity demanded (not the demand) for fries. It will, however, as the statement claims, increase the demand for burgers. - Yes, the decrease in the price of fries will increase both the demand for fries and the demand forYes, the decrease in the price of fries will increase both the demand for fries and the demand for burgers - It is somewhat inaccurate. The decrease in the price of fries will increase the quantity demanded (not the demand) for burgers. It will, however, as the statement claims, increase the demand for fries. - No, the quantity demanded (not the demand) for both goods are increased as a result of the decrease in the price of fries.
It is somewhat inaccurate. The decrease in the price of fries will increase the quantity demanded (not the demand) for fries. It will, however, as the statement claims, increase the demand for burgers.
Which of the following examples best describes the concept of free entry? - Jack has an old cell phone that he wants to sell. He opens an account on eBay and auctions it off - Pure-circuit Corporation wants to expand its production, so it doubles its annual recruitment - To increase its market share, System Corporation decides to charge a price lower than the market price - The government enters the market to correct any shortage or surplus in the market for gasoline
Jack has an old cell phone that he wants to sell. He opens an account on eBay and auctions it off
Which of the following inputs can be changed in the short run? - Machinery - Land owned - Office Space - Labor employed
Labor employed
An optimizing consumer has to choose between two goods-Good A priced at P_{A} and Good B priced at P_{B}. Given that MB_{A} is the marginal benefit from consuming Good A and MB_{B} is the marginal benefit from consuming Good B, the consumer's well-being will be maximized at the point where: - MB_{A}/P_{A} = MB_{B}/P_{A} - MB_{A}/P_{A} = MB_{B}/P_{B} - MB_{A} = MB_{B} - MB_{A}/P_{B} = MB_{B}/P_{A}
MB_{A}/P_{A} = MB_{B}/P_{B}
Charley spends all of his income on soft drinks and pizza. Suppose he is currently buying these products in amounts such that his marginal benefit from an additional soft drink is $70 and his marginal benefit from an additional slice of pizza is $130. If the price of a soft drink is $3 and the price of a slice of pizza is $5, is Charley maximizing his total benefits? - Yes, there is no other consumption choice that will make his total benefits greater. - No, he should increase his consumption of both goods. - No, he should shift consumption toward soft drinks and away from pizza to maximize total benefits. - No, he should shift consumption toward pizza and away from soft drinks to maximize total benefits.
No, he should shift consumption toward pizza and away from soft drinks to maximize total benefits.
Charley spends all of his income on soft drinks and pizza. Suppose he is currently buying these products in amounts such that his marginal benefit from an additional soft drink is $170 and his marginal benefit from an additional slice of pizza is $30. If the price of a soft drink is $4 and the price of a slice of pizza is $4, is Charley maximizing his total benefits? - No, he should inhcrease his consumption of both goods. - Yes, there is no other consumption choice that will make his total benefits greater. - No, he should shift consumption toward soft drinks and away from pizza to maximize total benefits. - No, he should shift consumption toward pizza and away from soft drinks to maximize total benefits.
No, he should shift consumption toward soft drinks and away from pizza to maximize total benefits.
Does the shape of the market demand curve differ from the shape of an individual demand curve? - No, they both tend to be downward-sloping curves. - No, they both tend to be upward-sloping curves. - Yes, individual demand curves tend to be upward-sloping, while market demand curves are horizontal. - Yes, individual demand curves tend to be downward-sloping, while market demand curves are upward-sloping.
No, they both tend to be downward-sloping curves.
Which of the following factors is likely to lead to an increase in the quantity demanded of pens? - Nokia and Samsung cell phones - Motorcycles and typewriters - Laptops and electric heaters - Pens and writing pads
Pens and writing pads
Which of the following is true of a market? - Goods and services are exchanged at fixed prices in all markets - A market must be under continuous surveillance and government control - A market always requires a specific physical location - Price acts as a selection device for buyers and sellers in every market
Price acts as a selection device for buyers and sellers in every market
Z is a normal good. The equilibrium price and equilibrium quantity of Z in the year 2019 was $25 and 60 units, respectively. In 2020, the equilibrium price of Z had decreased to $15 and the equilibrium quantity had also decreased to 50 units. Other things remaining the same, which of the following could explain this change? - Shift of the demand curve for Z to the right - Shift of the supply curve of Z to the left - Shift of the demand curve for Z to the left - Shift of the supply curve of Z to the right
Shift of the demand curve for Z to the left
Z is a normal good. The equilibrium price and quantity of Z in the year 2019 was $25 and 60 units, respectively. In 2020, the equilibrium price of Z had increased to $35 but the equilibrium quantity had decreased to 50 units. Other things remaining the same, which of the following could explain this change? - Shift of the supply curve of Z to the right - Shift of the demand curve for Z to the left - Shift of the supply curve of Z to the left - Shift of the demand curve for Z to the right
Shift of the supply curve of Z to the left
Z is a normal good. The equilibrium price and equilibrium quantity of Z in the year 2011 was $25 and 60 units, respectively. It was seen that, in 2014, the equilibrium price of Z had decreased to $15, but the equilibrium quantity had increased to 70 units. Other things remaining the same, which of the following could explain this change? - Shift of the supply curve of Z to the right - Shift of the supply curve of Z to the left - Shift of the demand curve for Z to the left - Shift of the demand curve for Z to the right
Shift of the supply curve of Z to the right
Which of the following refers to diminishing marginal returns? - The revenue of a cell phone manufacturer decreased when it increased its product price - The total output of a firm decreased as more workers were hired - The additional output produced in a firm decreased as more workers were hired - The profits of an entrepreneur increased substantially after he fired a few of his employees
The additional output produced in a firm decreased as more workers were hired
Suppose the market for cement is such that the output of all sellers is identical in composition and quality. While there are a large number of buyers and sellers, everyone conducts transactions at a common market price. Which of the following statements is true about the structure of the cement market? - All transactions in the cement market are likely to be involuntary - All participants in the cement market are price-makers - The cement market is government regulated - The cement market is perfectly competitive
The cement market is perfectly competitive
Which of the following examples best approximates a competitive market? - The market for Jackson Pollock paintings - The market for F-35 fighter planes - The market for soybeans in the United States - The market for Tesla electric cars
The market for soybeans in the United States
Which of the following is NOT an element of a seller's decision-making process in a perfectly competitive market? - The relationship between the inputs and outputs - The cost of the inputs - The price of the output - The number of buyers
The number of buyers
Suppose the prices of a pair of jeans, a shirt, and a tie are $30, $20, and $10 respectively. Which of the following statements is true in this context? - The opportunity cost of buying a pair of jeans is 2 ties. - The opportunity cost of buying a tie is 2 shirts. - The opportunity cost of buying a shirt is 2 ties. - The opportunity cost of buying a tie is 3 pairs of jeans.
The opportunity cost of buying a shirt is 2 ties.
Which of the following statements is true of the long run? - There are no fixed inputs in the long run - Capital cannot be changed in the long run - Labor cannot be changed in the long run - A firm cannot alter its level of output in the long run
There are no fixed inputs in the long run
If the demand and supply curves for a commodity both shift to the left and the shift in demand is less than the shift in supply, then in comparison to the initial equilibrium, the new equilibrium will be characterized by: - a higher price and a lower quantity. - the same price and quantity. - a higher price and quantity. - a lower price and a higher quantity.
a higher price and a lower quantity.
If the demand and supply curves for a commodity shift to the right and the shift in demand is greater than the shift in supply, then in comparison to the initial equilibrium, the new equilibrium will be characterized by: - a lower price and quantity - a lower quantity and a higher price - a higher price and quantity - a higher price and a lower quantity
a higher price and quantity
Assume that the supply curve for a commodity shifts to the left and the demand curve shifts to the right, and the shift in demand is greater than the shift in supply. Then, in comparison to the initial equilibrium, the new equilibrium will be characterized by: - a higher price and quantity. - a lower price and quantity. - a lower price and a higher quantity. - a higher price and a lower quantity.
a higher price and quantity.
If the demand and supply curves for a commodity shift to the right by the same amount, then in comparison to the initial equilibrium, the new equilibrium will be characterized by: - a higher quantity and price - a lower quantity and a higher price - the same quantity and a lower price - a higher quantity and the same price
a higher quantity and the same price
If the demand and supply curves for a commodity shift to the right by the same amount, then in comparison to the initial equilibrium, the new equilibrium will be characterized by: - a higher quantity and price. - a lower quantity and a higher price. - a higher quantity and the same price. - the same quantity and a lower price.
a higher quantity and the same price.
The gasoline market in the United States is often said to be highly competitive. It is not perfectly competitive, but it has features and results that are similar to those of a perfectly competitive market, such as _______. - an individual gas station cannot influence the market price by itself - all of the above - gas stations located near each other tend to charge the same or very similar prices - an individual buyer cannot influence the market price of gasoline by himself
all of the above
The price elasticity of demand for a good is likely to be less elastic __________. - all of the above. - the lower the budget share spent on the good. - the shorter the available time during which consumers can adjust. - the smaller the number of close substitutes for the good.
all of the above.
In a perfectly competitive market, ______. - there is no provision for the protection of property rights - all sellers sell an identical good or a service - there is only one seller and many buyers - all exchanges take place involuntarily
all sellers sell an identical good or a service
Other things remaining same, a right shift in the demand curve will lead to: - a decrease in the equilibrium price and an increase in the equilibrium quantity. - an increase in the equilibrium price and a decrease in the equilibrium quantity. - a decrease in the equilibrium price and the equilibrium quantity. - an increase in the equilibrium price and the equilibrium quantity.
an increase in the equilibrium price and the equilibrium quantity.
In a marketplace, prices_________. - optimize using total value - are a marginal optimization - are a trade-off - are a before and after comparisons
are a trade-off
In a perfectly competitive market, situations of surplus or shortage of a good: - can exist simultaneously - are permanent phenomena - exist till the government or any ruling authority intervenes - are self-corrected due to the competitive nature of the market
are self-corrected due to the competitive nature of the market
In a perfectly competitive market, situations of surplus or shortage of a good: - are permanent phenomena. - are self-corrected due to the competitive nature of the market. - exist till the government or any ruling authority intervenes. - can exist simultaneously.
are self-corrected due to the competitive nature of the market.
If a consumer purchases any combination of goods and services on his ________, he will exhaust his income completely. - demand schedule - indifference curve - demand function - budget constraint
budget constraint
A price ceiling imposed by the government: - can create situations of excess demand - helps in establishing equilibrium in case of shortage or surplus. - involves pricing a commodity above the market price. - is a tax that increases the market price of a good.
can create situations of excess demand
A buyer is said to be a price taker if she: - can purchase any amount of a good at a fixed price provided she has the money to pay for it. - can bargain over the prices of the goods she consumes. - can purchase some amount of a good at a fixed price provided she has the money to pay for it. - ignores the prices of related goods and considers only the price of the goods she is purchasing. - always pays less than the market-determined price for the goods she is consuming.
can purchase any amount of a good at a fixed price provided she has the money to pay for it.
In a perfectly competitive market, sellers _________ and buyers _________. - are able to charge more than the market price; are able to pay less than the market price. - cannot charge more than the market price; cannot pay less than the market price. - cannot charge more than the market price; are able to pay less than the market price. - are able to charge more than the market price; cannot pay less than the market price.
cannot charge more than the market price; cannot pay less than the market price.
The demand curve for most goods is normally ______. - upward sloping - parallel to the y-axis - parallel to the x-axis - downward sloping
downward sloping
Market demand is derived by __________. - fixing the quantity and adding up their prices that each buyer pays. - dividing each buyer's demand by the total number of consumers in the market.fixing the price and adding up the quantities that each buyer demands. - fixing the price and adding up the quantities that each buyer demands. - adding up both the prices each buyer pays and the quantities that each buyer demands
fixing the price and adding up the quantities that each buyer demands.
A good is said to have a relatively elastic demand if the value of price elasticity is: - between 0.5 and 1. - between 0 and 0.5. - greater than 1. - equal to 0.
greater than 1.
The buyers of a good will want to purchase it as long as their willingness to pay for the good is ______. - greater than or equal to the price - less than the price - greater to zero - equal to zero
greater than or equal to the price
The buyers of a good will want to purchase it as long as their willingness to pay for the good is__________. - greater than or equal to the price - greater than zero - less than the price - equal to zero
greater than or equal to the price
While making a purchase decision using marginal thinking, a buyer should buy the good that yields the: - highest marginal benefit per dollar spent. - lowest marginal benefit per dollar spent. - highest average benefit plus marginal benefit per dollar spent. - lowest average benefit plus marginal benefit per dollar spent.
highest marginal benefit per dollar spent.
In a perfectly competitive market, because an individual seller tends to sell only a fraction of the total amount of the good produced: - he can independently determine the market price - he can charge prices above the equilibrium price - his individual choices do not affect market outcomes - he always earns positive profit
his individual choices do not affect market outcomes
The demand curve shows ___________. - the possible bundles of goods that can be purchased with a consumer's - how the quantity demanded responds to changes in consumers' - how the quantity demanded responds to changes in the price of the good. - what goods you like compared to other goods and services.
how the quantity demanded responds to changes in the price of the good.
If the marginal cost of a perfectly competitive firm producing a good is $50 and the market price of the good is $100, the firm should: - try to decrease the market price - try to increase the market price - decrease its output - increase its output
increase its output
Helium is lighter than air and thus can be used to make party balloons float. Helium is also an inert gas that is vital for many industrial applications (such as medical imaging technology) that require achieving super low temperatures. This relatively new industrial application for helium has caused the demand for helium to ____. This has resulted in a/an ____ in the price of party balloons since helium is a/an _____ for these balloons. - decrease: decrease: substitute - decrease: increase: substitute - increase: decrease: input - increase: increase: input
increase: increase: input
Willingness to pay: - is the lowest price that a buyer is willing and able to pay for a unit of good - is equal to the price of the highest-priced goods in a consumption bundle - is the highest price that a buyer is willing and able to pay for a unit of good - is equal to the price of the lowest-priced goods in a consumption bundle
is the highest price that a buyer is willing and able to pay for a unit of good
Two goods are said to be complements when a fall in the price of one good ______. - leads to a leftward shift in the demand for the other good - leads to a fall in the price of the other good - does not affect the demand for the other good - leads to a rightward shift in the demand for the other good
leads to a rightward shift in the demand for the other good
In a perfectly competitive market, if one seller chooses to charge a price for its good that is slightly higher than the market price, then it will _________. - All of the above are equally likely. - see no change in its number of customers. - see a small decrease in its number of customers.see a small decrease in its number of customers. - lose all or almost all of its customers.
lose all or almost all of its customers.
Assume that a seller in a perfectly competitive market charges more than the equilibrium price. It is likely that this seller will _______. - increase his profit - increase his sales - lose only a few buyers - lose almost all of his buyers
lose almost all of his buyers
A seller's willingness to accept is the same as his ________ cost of production. - total - fixed - average - marginal
marginal
If quantity of tea is measured on the horizontal axis and quantity of coffee is measured on the vertical axis, an increase in the price of coffee will cause the budget constraint to: - pivot leftward along the horizontal axis. - pivot rightward along the horizontal axis. - pivot rightward along the vertical axis. - pivot leftward along the vertical axis.
pivot leftward along the vertical axis.
If the price of the good measured along the vertical axis increases without a change in the price of the good measured along the horizontal axis, the consumer's budget constraint: - shifts to the left. - shifts to the right. - pivots leftward without a change in the intercept on the horizontal axis. - pivots rightward without a change in the intercept on the horizontal axis.
pivots leftward without a change in the intercept on the horizontal axis.
The percentage change in the quantity demanded of a good due to a percentage change in its price is referred to as the: - price multiplier. - price elasticity of demand. - consumer surplus. - shadow price of the good.
price elasticity of demand.
A surplus occurs in a market when: - demand exceeds supply - price is lower than the equilibrium price - price is higher than the equilibrium price - the marginal cost of production is negligible
price is higher than the equilibrium price
At the competitive equilibrium, the ______. - demand curve is tangential to the supply curve - quantity demanded exceeds the quantity supplied of a good - quantity supplied exceeds the quantity demanded of a good - quantity demanded is equal to the quantity supplied of a good
quantity demanded is equal to the quantity supplied of a good
Suppose a new off-campus university apartment complex could rent its rooms on the open market for $900 a month. If, instead, the university chooses to cap the price of rooms to $500 a month for students, the result would be that ____________. - quantity supplied would exceed the quantity demanded, resulting in a surplus. - quantity demanded would exceed the quantity supplied, resulting in a shortage. - quantity demanded would exceed the quantity supplied, resulting in a surplus. - quantity supplied would exceed the quantity demanded, resulting in a shortage.
quantity demanded would exceed the quantity supplied, resulting in a shortage.
A firm is said to be a price taker if it: - can affect the market price of goods by changing its supply - sells as much of any good as it wants at the prevailing market price - consults the government before fixing the price of its goods and services - is not free to enter a new market or exit from an existing market
sells as much of any good as it wants at the prevailing market price
An expected increase in the market price of oil in the coming year is likely to __________ in the current year. - shift the supply curve of oil to the right - shift the supply curve of oil to the left - cause no changes in the demand and supply curves of oil - shift the demand curve for oil to the left
shift the supply curve of oil to the left
Increases in the marginal product of labor can be attributed to: - specialization of workers - depreciation of capital - congestion and thus better use of work space - diminishing returns to workers
specialization of workers
The market demand is the ________ of the individual demand of all the potential buyers. - sum - square of the sum - square root of the sum - product
sum
The quantity demanded of a good is___________. - the amount of the good that buyers are willing to purchase at a given market price - the amount of the good that sellers are willing to supply at a given market price - determined independently of the market price of the good - always determined by government intervention
the amount of the good that buyers are willing to purchase at a given market price
The quantity supplied of a good is _______. - inversely related to the price of the good - determined irrespective of the market price - always equal to the quantity demanded of the good - the amount of the good that sellers are ready to supply at a given price
the amount of the good that sellers are ready to supply at a given price
When the marginal cost curve lies below the average cost curve, - the average cost curve slopes downward - the marginal cost curve is horizontal - the average cost curve slopes upward - the marginal cost curve is vertical
the average cost curve slopes downward
If the price of a good increases, - the budget constraint shifts to the left - the consumer surplus increases - the budget constraint shifts to the right - the consumer surplus decreases
the consumer surplus decreases
Utility measures ____________. - how responsive a consumer is to changes in prices or income. - the number of goods or services that consumers can buy with a given level of income. - a consumer's preference for good A compared to good B. - the happiness or satisfaction that comes from consuming a good.
the happiness or satisfaction that comes from consuming a good.
A seller who is a price-taker charges ______. - a price above the market price - a price below the market price - the market price - different prices to different buyers
the market price
The supply curve represents ___________. - the minimum price buyers are willing to pay to buy an extra unit of a good. - the minimum price sellers are willing to accept to sell an extra unit of a good - the maximum price buyers are willing to pay to buy an extra unit of a good. - the maximum price sellers are willing to accept to sell an extra unit of a good.
the minimum price sellers are willing to accept to sell an extra unit of a good
If a good has a price elasticity of demand equal to 0, ___________. - the quantity demanded is completely unaffected by a change in its price - the smallest increase in its price causes consumers to stop consuming it completely - the percentage change in quantity demanded for the good will be greater than the percentage change in its price - the demand curve of the good is upward sloping
the quantity demanded is completely unaffected by a change in its price
The Law of Demand states that _______. - the demand for a commodity is directly related to consumers' income, all other things remaining constant - the quantity demanded of a commodity is the same for all consumers in a perfectly competitive market - the quantity demanded of a commodity varies inversely with the price of the commodity, all other things remaining constant - the demand for a commodity always equals the supply of the commodity
the quantity demanded of a commodity varies inversely with the price of the commodity, all other things remaining constant
A production function establishes the relationship between: - the market price of a good and the sales revenue generated - the quantity of output produced and the firm's profit - the quantity of inputs used and the quantity of output produced - the market price of a good and the quantity of output supplied
the quantity of inputs used and the quantity of output produced
The Law of Supply states that ______. - supply creates its own demand - the quantity supplied of a good rises when the price rises, all other things remaining constant - at the equilibrium price, there is always some excess supply in the market - the quantity supplied of a good will always equal the quantity of the good demanded
the quantity supplied of a good rises when the price rises, all other things remaining constant
The general rule for benefit maximization suggests that in personal equilibrium: - the ratio of total benefits to income should be identical across all goods. - the ratio of marginal benefits to price should be identical across all goods. - the ratio of marginal benefits to income should be identical across all goods. - the ratio of total benefits to price should be identical across all goods.
the ratio of marginal benefits to price should be identical across all goods.
Elasticity is: - the ratio of the percentage change in two variables - the sum of the percentage change in two variables - the difference of the percentage change in two variables - the product of the percentage change in two variables
the ratio of the percentage change in two variables