final 1

When the price of wheat increases dramatically relative to the price of corn, profit maximizing grain farmers should plant the same amount of wheat as before.

FALSE

Firms that operate in non-competitive industries that can exercise market power should always be allowed to do what is in their best interest because the benefits of "big business" always outweigh the costs.

False

At the equilibrium price:

Qs = Qd

Zero economic profit for an industry as a whole means that:

Resources in the industry are earning exactly what they are worth

If MC is 8 and the price of the output is 10 and ATC is 8 and MC is increasing as more output is being produced

The profit maximizing producer should increase output

Suppose that the price elasticity of demand is equal to -2. If the price decreases 2 percent, then the quantity demanded will:

increase 4 percent

The individual firm supply curve gets its shape because:

producers make decisions based on marginal costs and marginal revenues

If the price of Snickers bars increases by 2 percent, and the elasticity of supply of Snickers bars is equal to 3, then:

quantity supplied increases 6 percent

Economic decisions are made based on:

relative prices

In a market economy, resources are allocated by:

relative prices

A firm attempting to find the profit-maximizing combination of two outputs should:

set the slope of the PPF equal to the slope of the isorevenue line

A firm attempting to find the profit-maximizing combination of two inputs should:

set the slope of the isoquant equal to the slope of the isocost line

An increase in the minimum wage will cause businesses to:

substitute capital for labor

For many years, the price of most ag commodities steadily fell in real terms because:

technology improvements outpaced demand growth

Rational economic behavior means:

that economic participants are purposeful and consistent in their behavior

The individual firm supply curve is:

the MC curve above the minimum AVC

. If the price of beef increases, then:

the demand curve for chicken will shift right

The law of diminishing marginal utility implies that:

the first unit of a good consumed gives the most satisfaction

The market supply curve is:

the horizontal summation of all individual firm supply curves

The Law of Supply states that:

the price of a good and quantity supplied have a positive relationship

If the price of red roses increases:

there is a movement along the demand curve for red roses

Artificially high price supports for a particular product (imposed by the government for example):

usually makes consumers and the general public worse off

In order to maximize profits, farmers should:

weight the benefits vs. the costs of input use decisions

In a command economy, resources are allocated by:

whoever is in charge

The "invisible hand of free markets":

will help markets gravitate toward equilibrium

Which is always true for standard costs curves?

ATC>AVC

If market forces are allowed to work, surpluses will:

correct themselves by falling prices

If market forces are allowed to work, shortages will:

correct themselves with increasing prices

Capital intensive production agriculture is most likely to occur in:

countries where capital is relatively inexpensive

49. Removing trade barriers and promoting more free trade between countries will:

improve standards of living in all countries involved

If a law were passed that capped gasoline prices at a price well below current market levels:

. shortages would develop and rationing would be necessary

Sustained growth in the Chinese economy over the next several years will benefit which of the following?

A. Oklahoma beef producers B. Oklahoma grain growers C. neither A nor B

The "weight the benefits vs. costs" criteria applies to:

A. deciding on the profit maximizing level of a single output to produce B. deciding on the profit maximizing combination of variable inputs to use C. deciding on the profit maximizing combination of outputs or products to produce

Improvements in production technology:

A. shift the MC curve down and to the right B. shift the supply curve down and to the right

All of the following could shift the demand for hamburger except:

A. the price of hamburger B. the price of sirloin steak C. consumer incomes D. the price of bread A

When very few substitutes are available - the own price elasticity of demand tends to be:

Inelastic

If the price of bananas increases:

There is an decrease in the quantity demanded of bananas

From the standpoint of the final solution (amount of input used and the resulting amount of output produced), setting MRP = MFC results in the same outcome as setting MR = MC.

True

We would expect the demand for gasoline measured over a 5 year period to be more elastic than the demand for gasoline measured over a 3 month time period.

True

When a market is in equilibrium, there is no incentive for market participants to change behavior.

True

Every point along an indifference curve has a constant level of:

Utility

Under what circumstance will MC = MFC:

When using one unit of variable input results in exactly one unit of output

Which of the following causes a "change in demand" for oranges?

a change in income

Technology developed by Monsanto that increases crop yields results in:

a shift in supply

The severe freeze this spring in wheat producing regions will result in:

a shift to the left in the supply of wheat

The law of diminishing marginal returns means that:

additional incremental units of input result in less marginal output.

An economist would advise cattle producers in Oklahoma to

adopt cost reducing technology early

An isoquant is:

all combinations of two inputs that produce the same level of output

A production possibility frontier is:

all combinations of two outputs that can be produced with a fixed level of inputs

The opportunity cost of attending college includes:

all out of pocket costs and the wage that you could be earning if you chose to work instead

If the price of live cattle increases by two percent, and as a result the quantity supplied of live cattle increases by one percent, then the price elasticity of supply of live cattle is:

inelastic

The aggregate demand for most ag products is very inelastic, meaning:

it takes a fairly large price incentive to stimulate much of a consumption change

The demand for air travel tickets purchased the day before a flight is:

less elastic than the demand for tickets bought two weeks in advance