Econ-121 Final Study Guide - CH. 9-11

Suppose your marginal utility from consuming the 3rd slice of cake is zero, then your total utility from consuming cake is

maximized.

If an airport decides to expand by building an additional passenger terminal, and in doing so it lowers its average cost per airplane landing, it was previously operating at

minimum efficient scale

Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. Refer to Table 11-7. What is the average total cost of production when the firm produces 120 lanterns?

$14

Diminishing marginal product of labor occurs when adding another unit of labor

changes output by an amount smaller than the output added by the previous unit of labor.

The economic model of consumer behavior predicts that

consumers will choose to buy the combination of goods and services that make them as well off as possible from those combinations that their budgets allow them to buy.

If the marginal utility Ida Mae receives from eating chicken wings is negative then

her total utility from eating chicken wings has fallen

Refer to Figure 11-1. The average product of the 4th worker

is 17.

If the total cost of producing 20 units of output is $1,000 and the average variable cost is $35, what is the firm's average fixed cost at that level of output?

$15

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. Refer to Figure 9-2. If the tariff was replaced by a quota which limited rice imports to 16 million pounds, the amount of revenue received by rice importers would equal

$16 million

Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Under autarky, the consumer surplus is

$195.

Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. Refer to Table 11-7. What is the marginal cost per unit of production when the firm produces 100 lanterns?

$32

Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. The market price falls to $18. What is the value of consumer surplus?

$320

Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. The market price falls to $18. What is the value of consumer surplus?

$320

Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. Refer to Table 11-7. What is the average variable cost per unit of production when the firm produces 90 lanterns?

$5.44

Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. Refer to Table 11-7. What is the average variable cost per unit of production when the firm produces 90 lanterns?

$5.44

Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the domestic quantity supplied?

10 Units

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. Refer to Figure 9-3. Without the quota, the domestic price of peanuts equals the world price which is $2.00 per pound. What is the quantity of peanuts supplied by domestic producers in the absence of a quota?

10 million pounds

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. Refer to Figure 9-3. Without the quota, the domestic price of peanuts equals the world price which is $2.00 per pound. What is the quantity of peanuts supplied by domestic producers in the absence of a quota?

10 million pounds

Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. Refer to Table 11-1. What is the average product of labor when the farm hires 5 workers?

10.8 bushels

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. Refer to Figure 9-2. With the tariff in place, the United States produces

15 million pounds of rice

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. Refer to Figure 9-2. With the tariff in place, the United States produces

15 million pounds of rice.

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. Refer to Figure 9-3. With a quota in place, what is the quantity supplied by domestic producers?

18 million pounds

If four workers can produce 18 chairs a day and five can produce 20 chairs a day, the marginal product of the fifth worker is

2 chairs

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. Refer to Figure 9-3. If there was no quota, how many pounds of peanuts would be imported?

30 million

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. Refer to Figure 9-2. With the tariff in place, the United States consumes

31 million pounds of rice.

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. Refer to Figure 9-3. With a quota in place, what is the quantity consumed in the domestic market?

34 million pounds

Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. Refer to Table 11-1. Diminishing marginal returns sets in when the ________ worker is hired.

3rd

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. Refer to Figure 9-3. If there was no quota, how many pounds of peanuts would domestic consumers purchase?

40 million

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. Refer to Figure 9-2. Without the tariff in place, the United States consumes

42 million pounds of rice

Table 10-6 lists Jay's marginal utilities for burgers and Pepsi. Jay has $7 to spend on these two goods. The price of a burger is $2 and the price of a can of Pepsi is $1. Refer to Table 10-6. If Jay can eat all the burgers he wants for free, how many burgers will he consume?

5 burgers

Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. Refer to Table 11-1. What is the marginal product of the 4th worker?

5 pounds

Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. Refer to Table 11-1. What is the marginal product of the 4th worker?

5 pounds

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units, then the average product of 12 workers is

5 units.

If a consumer receives 22 units of marginal utility for consuming the first can of soda, 20 units from consuming the second, and 15 from the third, the total utility of consuming the three units is

57 utility units

Table 10-2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods. Refer to Table 10-2. What is Keira's marginal utility per dollar spent on the third cup of soup?

6 units of utility

Suppose Barry is maximizing his utility from consuming used paperback novels and audio books. The price of a used novel = $4 and the price of an audio book = $8. If the marginal utility of the last novel was 32 units of utility (utils) what was the marginal utility of the last audio book purchased?

64 utils

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota Refer to Figure 9-3. What is the area of consumer surplus after the imposition of the quota?

A + G + H

Which of the following statements is false?

An explicit cost is a nonmonetary opportunity cost.

Table 10-2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods. Refer to Table 10-2. Holding prices constant, when Keira's income changed from $18 to $23, her utility maximizing bundle changed. Based on your answers to her optimal choices at the two income levels, what type of goods are soup and sandwiches?

Both soup and sandwiches are normal goods.

Table 10-2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods. Refer to Table 10-2. Holding prices constant, when Keira's income changed from $18 to $23, her utility maximizing bundle changed. Based on your answers to her optimal choices at the two income levels, what type of goods are soup and sandwiches?

Both soup and sandwiches are normal goods.

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. Refer to Figure 9-3. What is the area of domestic producer surplus without a quota?

C

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. Refer to Figure 9-2. The loss in domestic consumer surplus as a result of the tariff is equal to the area

C + D + E + F

Following the tariff imposed on Chinese tires, some businesspeople correctly argued that the U.S. tariff would result in

China retaliating by raising tariffs on some U.S. exports.

Which of the following statements explains the difference between diminishing returns and diseconomies of scale?

Diminishing returns apply only to the short run; diseconomies of scale apply only in the long run.

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. Refer to Figure 9-3. What is the area that represents the deadweight loss as a result of the quota?

E + M

Refer to Figure 11-4. What happens to the average fixed cost of production when the firm increases output from 150 to 200?

It falls.

Which of the following statements is false?

Marginal cost will equal average total cost when marginal cost is at its lowest point.

Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. Refer to Table 9-1. Select the statement that accurately interprets the data in the table.

Sandy has a comparative advantage in dog grooming.

Sarita and Gabriel own S&G Bakery. Table 9-2 lists the number of pies and cakes Sarita and Gabriel can each bake in one day. Refer to Table 9-2. Select the statement that accurately interprets the data in the table.

Sarita's opportunity cost for baking cakes is less than Gabriel's

Jill Johnson owns a pizzeria. She currently produces 10,000 pizzas per month at a total cost of $500. If she produced one more pizza her total cost rises to $500.11. What does this tell us about Jill's marginal cost of producing pizzas?

The marginal cost of producing pizzas is rising.

Fancy Footwear manufactures shoes. Figure 11-3 shows Fancy Footwear's marginal product of labor and average product of labor curves in the short run. Refer to Figure 11-3. Which of the following statements correctly describes the curves in the figure?

The marginal product of labor curve is represented by curve B and the average product of labor curve is represented by curve A.

Fancy Footwear manufactures shoes. Figure 11-3 shows Fancy Footwear's marginal product of labor and average product of labor curves in the short run. Refer to Figure 11-3. Which of the following statements correctly describes the curves in the figure?

The marginal product of labor curve is represented by curve B and the average product of labor curve is represented by curve A.

Suppose Renee can increase her total utility from consuming video rentals and books by buying one more book and renting one fewer video. Which of the following is true?

The marginal utility per dollar spent on books exceeds that of video rentals.

Bryce and Tina are artisans who produce homemade candles and soap. Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month. Refer to Table 9-3. Select the statement that accurately interprets the data in the table.

Tina has an absolute advantage in making candles.

Which of the following is likely to occur as the result of the law of diminishing marginal utility?

Wesley enjoyed his second bottle of iced tea less than his first bottle, other things constant.

Which of the following is the best example of a quota?

a limit imposed on the number of sport utility vehicles that the United States can import from Japan

Refer to Figure 11-2. Diminishing returns to labor set in

after L1.

Minimum efficient scale is defined as the level of output at which

all economies of scale are exhausted

The substitution effect of a decrease in the price of movie tickets results in

an increase in the quantity demanded of movie tickets.

Optimal decisions are made

at the margin.

As a consumer consumes more and more of a product in a particular time period, eventually marginal utility

declines

Marginal cost is calculated for a particular increase in output by

dividing the change in total cost by the change in output.

If production displays increasing marginal returns, then

each new worker hired adds more to output than previous hires.

Elegant Settings manufactures stainless steel cutlery. Table 11-8 shows the company's cost data. Refer to Table 11-8. Elegant Settings experiences

economies of scale at an output of 300 or less and diseconomies of scale at an output level above 400

If diminishing marginal returns have already set in for Golden Lark Woodworks, and the marginal product of the 6th carpenter is 8 chairs, then the marginal product of the 7th carpenter is

less than 8 chairs.

A quota

makes domestic producers better off.

If your total satisfaction increases when you consume another unit, your marginal utility must be

positive

The income effect of an increase in the price of salmon

refers to the effect on a consumer's purchasing power which causes the consumer to buy less salmon, holding all other factors constant.

If Marlowe obtains 9 units of utility per dollar spent on apples and 6 units of utility per dollar spent on oranges, then Marlowe

should buy more apples and fewer oranges.

Refer to Figure 11-1. Diminishing marginal productivity sets in after

the 2nd worker is hired.

Absolute advantage is

the ability to produce more of a good or service than competitors when using the same amount of resources.

If Joey Kobayashi experiences diminishing marginal utility from eating hot dogs then

the additional satisfaction he receives from eating another hot dog will be less than the satisfaction he received from his eating his last hot dog.

Marginal utility is

the change in total utility a person receives from consuming an additional unit of a good or service

Refer to Figure 10-1. When the price of hoagies increases from $5.00 to $5.75, quantity demanded decreases from Q1 to Q0. This change in quantity demanded is due to

the income and substitution effects.

A change in the price of a good has two effects on the quantity consumed. What are these effects?

the income effect and the substitution effect

If, as a person consumes more and more of a good, each additional unit adds less satisfaction than the previous unit consumed, we are seeing the workings of

the law of diminishing marginal utility.

Which of the following are implicit costs for a typical firm?

the opportunity cost of capital owned and used by the firm

Avner is maximizing total utility by buying sports magazines and protein supplements. For him to buy more sports magazines

the price of sports magazines has to fall.

Consumers have to make tradeoffs in deciding what to consume because

they are limited by a budget constraint.

If, when you consume another piece of candy, your marginal utility is zero, then

you have maximized your total utility from consuming candy.