Micro Economics Morey second midterm

If Good C increase in price by 50% a pound, and this causes the quantity demanded for Good D to increase by 60% what is the cross price elasticity of the two goods and the relationship

1.2 subsitutes

With the consumption of the 6th pepper

2. Marginal utility becomes with the consumption of which pepper?

1000

3. What is the overall net effect of this price decrease on firms total revenue

perfect compliements

Almonzo, hamburger patties and hamburger buns are

economies of scale

As the firm moves from point A towards point B they are expierencing

constant returns to scale

As the firm moves from point B towards Point C they are expierencing

F

Bundle D produces more utility than any other bundle

When the consumption of an additional unit of a good or service provides the person with a smaller increase in satisfaction than previous units

Diminishing Marginal Utility

4

Diminishing marginal utility occurs for all units of the good consumed beyond unit

When ruko, a devise used to stream movies at home, increases prices by 57% total revenue decreases by 55%

Elastic

2000 A, 2000 B, 277.78 C, 384.68 D, 833.33 E, 833.33 F, 384.62 G, 319.1 H

Fill in the blanks

earn a negative profit

Given the current price, this firm will

4 rockets 5 fireworks

How many rockets and fire works to buy for 120. fire works are 12 and rockets are 15. How many of each good couuld she consume

When the game costs $3/gallon I buy 25 gallons a week and drive 500 miles a week. When gas costs $4/gallon I buy 15 gallons and drive 300 miles a week. Using, the mid point method for calculating elasticities, which statement is both correct and most formative?

In this range, the demand for gas is price elastic, and the gas price elasticity of miles driven is negative and elastic

When Bluebox, a DVD rental kiosk, increases its prices by 44% Titan revenue increases by 31%

Inelastic

In the reading skilled workers. Each robot replaces two to five workers. what does this show

Inputs that can substitute for one another and roots now have an absolute advantage over people in the production of a number of things

4 gallons of milk and 8 boxes of cereal

Milk costs $2.50 per gallon and cereal costs $5 per box. Sam spending 50 dollars a week on theses two good. .Given this information provided here, how should sam allocate his income between milk and cereal? Sam should purchase the following, as this is his optimal consumption bundle

Over longer periods of time demand tends to become

More elastic

There are three bundles F, G and M. I strictly prefer M to G, I am indifferent between G to F, and am indferrent between M and F, Is my behavior consistent with rationality in the economic sense of the term?

No

C to B

The subsitution effect is-

Currently charges .67 for an all day ticket, and is used by an average of 513 riders a day. The bus company is not earning a profit but according to their contract with the city they can't cut the number of buses on the road. They must therefore find a way to increase revenues. The bus company is increasing the ticket price to .78. The marketing department studies indicate this price increase would reduce usage to 223 riders per day. Calculate the absolute value of price elasticity of demand for bus tickets using the simple percentage change method to determine if the bus company should increase price or decrease price to increase revenues.

Price elastic of demand is 3.4.Demand is elastic, so decreasing ticket prices will increase revenue

A to C

The income effect is-

If we want to see how attendance at recitation will respond to a change in the difficulty level of the lecture, we should measure_____, which is ____

The lecture-difficulty elasticity of reception attendance, the percentage change in reception attendance divided by the percentage change in lecture difficulty

.9 utils/$

The price of cupcakes is $5 and price of apps is $10. She is currently consuming 18 cupcakes and 9 apps. Call the marginal utility per dollar of apps going from 8 to 9 units of Apps?

yes donna should choose less cupcakes and more apps

To increase total utility without increasing spending should donna change the amount of consumption of either good?

C E

affordable and exhaust her budget

A F G

affordable with money left over

TC/Q

average total cost

Chuck spends all his income on two goods: tacos and milkshakes. His income is $100, the price of tacos is $10 and the price of milkshakes is $2. If the price of each good doubles and chucks income doubles which of the following statements is correct

chucks budget line will be unaffected

Lauren is on the CU soccer team but hates playing soccer. She also hates studying; both are bad for her. Let S equal the number of hours she studies and let P equal the number of hours she plays soccer. Laurens indifference curves for studying and playing soccer are

downward sloping

The long run is best defined as a time period

during which all inputs can be varied

Capacity metre decides to increase bus fare rates from 2 to 2.21. the number of passengers who decode to take the bus in Austin drops from an average of 70,000 riders a day to an average of 61,000 riders a day

elastic

What is the price elasticity of demand here

elastic

ATC is rising when MC is below ATC

false

In lecture, we looked at an example where professor moneys daughter, Fred was paid $1 per mile skied. Feeds only cost was the value of her time, $3 an hour. In order to maximize her profit, Fred will ski up the point where marginal cost equals $3

false

T or F. Assume that OPEC has control over the world price of oil. To maximize their revenues from the sales of oil, they will want to set the price at a point where price elasticity of demand for oil is, in absolute terms, less than one

false

T or F. Basic consumer theory, as we learned in class, assumes that the individual ranks good not bundles

false

T or F. Consider two commodities that are complements: peanut butter and jelly. The jelly price elasticity of demand for peanut butter is likely positive

false

True or false. The standard model of consumer behavior assumes that a consumer wants to do the best she can given her constraints. but economic models of firms typically do not assume this

false

When the price increases, total revenue always increases because of the price effect: producers receive a higher price for the good

false

a key consideration as to whether the price elasticity of supply is elastic or inelastic is whether the good supplied is a luxury item

false

an individuals MRSxy is how much how much x he would give up to get another unit of y, and a firms MRTSik is how much less capital the firm would need to use, holding output constant, if it increased its use of labor by 1 unit

false

indifference curves must be downward sloping. T or F

false

t or f the goal of a competitive firm is to minimize it cost

false

t or f. Consider two commodities: peanut butter and jelly. The jelly price elasticity of demand for peanut butter is likely postitive

false

the VC curve is modeled as a horizontal line

false

Fixed or variable cost: Lease on building

fixed cost

assume that there are only 2 commodities in this economy. If these two commodities are both bad, a consumer in this economy can achieve a maximum level of utility when

he or she consume nothing

false

ic1 shows a preference for ketchup over mustards

false

if the market price is $160 then the firm will shutdown

true

if the price increases to $200 then the firm will produce earn a positive economic profit

experience exit by some firms

in the long run this market will

The amount by which total cost increases when an additional unit is produced

marginal cost

triangleTC/triangleQ

marginal cost

When the consumption of an additional unit of a good or service makes a person worse off

negative marginal utility

a rational consumer will always choose to consume a bundle of commodities that are on her budget line

no

significant barriers to entry

not assumed in perfect competetion

a small number of producers

not assumed in perfect competition

firms selling a similar but differentiated good

not assumed in perfect competition

Goods with straight line indifference curves are

perfect subsittutes

Last week, Michelle spent $30 on caviar. Today, Michelle still spends $30 on caviar even though its price has doubled. What is Michelles price elasticity of demand for caviar. Midpoint formula

1

140

1. Cookie monsters marginal utility from the 4th cookie is

Sylvia annual salary increases from 102,300 to 109,500 and she decides to increase the number of vacation she takes per year from 3 to 4. Calculate her income elastic of demand for vacations and what type of good vacations are and type of elasticity

4.20- normal good income elastic

should consume more brownies and fewer ice cream cones

Assume that at point A, the marginal utility from a brownie is 10 and the marginal utility for an cream cone is 18 This person is?

The price of facial tissues rises from 2.85 per box to 3.15. As a result P&G increases production from 15 million boxes to 25 million boxes of facial tissues

Elastic Supply

When supply is perfectly inelastic, a change in demand has no effect on the price. T o F

False

Point B

If burritos are a Giffen good, a consumer will move from A to ____ as the budget line changes from BL 1 to BL 2

Point D

If feeds income increases the movement from Point A to ___ is consistent with Pepsi being a normal good and Dr. Pepper being an inferior good

T

T or F. Bundle A produces the same utility as Bundle D

true

T or F. Bundle C produces less utlitlity than bundle D

1

The budget set, or budget constraint, below shows the possible combinations of brownies and ice cream cones that can be purchased. Assume that this person has a total of $18 to spend on brownies and ice cream. How much does 1 brownie cost?

When the price of a lady gag concert ticket in Boulder is 100 per seat, the ticket office can sell 10,000 tickets. When the price of a ticket is 150 per seat, they can sell 8000 tickets. Which of the following statements is true

The demand for this ticket is price inelastic and so an increase in the price of the ticket will increase the total revenue of the ticket seller

The fewer the substitutes the blank demand

less elastic

Consider two markets. The initial equillibrium for both markets is the same, P=$1.5 and Q=25.0. When the price is 8.75, quantity supplied of motorcycles 65 and quantity supplied pf pancakes is 105. The demand for both goods is the same. Midpoint calculate elasticity of supply for pancakes- supply in the market for motorcycle?

.870 less elastic than supply in the market for pancakes

If a 20% price increase for Product A causes a 10% decrease in its quanitity demanded, but no change the quantity demanded for Product B, what is the cross price elasticity of these goods and the relationship

0 no relationship

Consume fewer than 7 peppers, you'll be better off

1. Poppy asks if she should consumer 7 peppers. What would be your advice?

$12 12 units

What price will the firm receive for each unit at the profit maximizing level? How many units should this firm produce to maximize profit?

$800

Whats Ralph's fixed cost?

The isocost line in producer theory analogous to which of the following from consumer theory

a budget line

change in total cost divided by change in output

marginal cost

A firms _____ are costs that are incurred even if there is no output. In the short run, these costs ____ as production increases

fixed costs, do not change

which effect causes brandon quantity demanded of a bottle of store brand soda to increase

income effect

likely or unlikely, George is a competitive firm making candies, Inputs are chocolate, c and sugar, s. The constant MRTScs= 3/4. George will use both chocolate and sugar to produce his candies

unlikely

The satisfaction experienced from consuming a good or service

utitlity

invalid

valid or invalid

valid

valid or invalid

Variable input or fixed input: 2 year lease on office and retail space

variable

Variable input or fixed input: beads

variable

Variable input or fixed input: chairs

variable

Variable input or fixed input: computer

variable

Variable input or fixed input: hourly labor

variable

Variable input or fixed input: shipping

variable

Fixed or variable cost: cost of wood used in manufacturing

variable cost

Fixed or variable cost: cost of metal used in manufacturing

variable costs

The marginal rate of transformation of good X for good Y, MRT xy, is the rate at which an individual is willing to substitute the one good for the other

true

True or false: A marginal cost curve will always interest the average total cost curve at the minimum average total cost

true

marginal cost and marginal productivity are inversely related

true

t or f if a competitive firm is maximizing its profits it is producing its level of output at minimum cost

true

to produce 10 deep fried cats effiecntly at minimum cost, one must operate on the iqoquant for 10 deep fried cats

true

B D H

unaffordable?

K is planning a party. Decides to serve sushi and yakitorie. Each sushi is $8 and Yakitore is $2. He has $240 to spend on the party. Gets $80 more, show the new quantity of each sushi and Yakitori... What will Kimiko buy more of?

shishi- 40 Yakitori-160, Only Kimiko knows; we don't have enough information to answer

Contain Yourself, a plastic container company raises the price of its signature "lunchbox" container from 3 to 4 dollars. As result, the quantity sold drops from 20,000 to 15,000

unit eastic

VC/Q

average variable costs

-400

1. If the firm lowers DVD prices from $16 to $14 what is the change in revenue assuming quantity remains the same?

Fixed or variable cost: postage and packaging costs

variable costs

M has a circus act that involves monkeys on unicycles. M has a fixed amount to spend on unicycles and monkeys. The graph below shows his initial budget constraint. The price per unicycle is $120 and per monkey $90. Using the graph below, show what happens to M budget line when the price of uncles increases to 180. What is his new budget. Quantity of unicycles, Quantity of monkeys?

$720, Quantity of unicycles 4, Quantity of monkeys 8

Blake east two bags of generic potato chips each day, not buying any name brand chips. Blakes hourly wage increases from 8 to 15 and he decides to eat one name brand bag and one generic brand each day. Calculate Blakes income elasticity of demand for generic potato chips, type of good? elastic?

-1.10 inferior good none

If when the price of Product E decreases by 9% this causes its quantity demanded to increase by 14% and the quantity demanded for product F to increase by 12% what is the cross price elasticity of demand?

-1.3 complements

diseconomies of scale

As the firm moves from point C toward point D they are experiencing

The sum of all costs that change as output changes divided by the number of produced units

Average variable costs

substitues

Based on graph we can tell that roses and silver bells re

Jim is a stalwart republican, he works a steady job, has a wife and two kids, and lives in the suburbs. He likes the wife and kids. He dislikes Obamacare. Which of the following statements is most likely not correct

For Jim, every state of world without obamas care is preferred to every state with obamacare

false

IC2 and IC2 could belong to the same person

Point F

If Freds income increases, the movement from Point A to ____ is consistent with Dr. Pepper being a normal good and Pepsi being an inferior good

Marcel Duchamp was a famous artist prior to his death and known for his dada artwork including works such as "soft toilet" All the original sculptures and paintings made during his lifetime go on sale

Perfectly inelastic supply

10 workers

Ralph pays his workers $100 each and labor is the only variable cost. At a quantity of 6000 chickens, how many workers does he hire

A C B D E

Rank graph below in terms of elasticity. (where a curve that is more elastic than another curve)

0 half gallons, 6 gallons

Romeo has 24 to spend on milk. The price of half a gallon is $3 and a gallon is 8. The price of a gallon decreases by 4. After the change in price what is romeos optimal comsumption for milk

true

T or F- Mrs at point A is greater than at point B

2

cookie number ____ taste the best to cookie monster

Assume the price elasticity of demand for oil negative if at the current price, the price elasticity of demand for oil is ___ than ___, marginally lowering the price will ___ OPECs total revenue

greater, -1, decrease

Wilma a rational economic agent, consumes only two goods. torrid romance novels and beer. She had just achieved the utility- maximizing solution in her consumption of the two good, then the price torrid novels rises. Adjusting to this event she will consume

not sure

Consider Fred, the skier. Which statement best describes why feeds production of ski miles was not very responsive to the amount she was paid to ski each mile

she values her time highly and her marginal product or labor, while positive, declines rapidly

false

since the firm is still operating the firm must be earning a positive profit

Which effect causes brandon quantity demanded of a bottle of store brand soda to decrease

subsitution effect

Fixed or variable cost: annual salaries of top management

fixed cost

Fixed or variable cost: industrial equipment costs

fixed cost

When the price of Product E decreases 9% this causes its quantity demanded to increase by 14% and the quantity demanded for product F to increase to 12%

-1.3 complements

What is the relationship and cross price elasticity for the following situation- A 20% price increase for Product A causes a 10% decrease in its quantity demanded, but no change in the quantity demanded for Product B

0- no relationship

Laurens salary decreases from 44,000 to 30,000 she decides to reduce the number of outfits she purchases from 20 to 19 calculate her income elasticity of demand for new outfits

0.14 normal good income inelastic

Alana always spends 10% of her income on soft shell crabs. Assume that her income increases by some percentage while the price of soft shell crabs remains constant. What is her income elasticity of demand for soft shell crabs?

1

Becky only eat out at grill and eats out 3 times per month. She receives a raise from $31,900 to $33,500 and decides to eat out 5 times per month. Use the midpoint method to calculate the monthly income elasticity of demand for eating out. What kind of good is this

10.22 units, a normal good and income elastic

Suppose Justin's candy factory currently employs seven workers who produce candy. with these seven workers, the average production of candy is 10 candies per worker. Upon hiring one addition worker, the average production of candy per worker increases to 11 candies. What is the marginal product or labor

18

Jim is stalwart republican he works a steady job has a life and two kids and lives in suburbs. He hates Obama care which of the following is not correct. 1. Jims WTA Obamacare is positive and greater than his income. 2. For Jim, Every state of the world with Obamacare is proffered to every state without Obamacare. 3. Jims wtp to eliminate Obamacare is positive but less than his imcome

2

My dog Sofie likes both French friend and dog biscuits. Sofies willingness to pay for French fries is as follows: she is willing to pay 12 dog biscuits for the first bag of fries, 25 dog biscuits for two bags, 32 biscuits for three bags, and 39 biscuits for four bags. I charge her 10 biscuits for each bag of French fries. How many bags of French fries should she purchase from me?

2

Billy the bulldog has $30 for Dogs res that only sells two goods, puppy chow ($5 a bag and chew toys ($3) The bag can hold unlimited number of chew toys, but at most three bags of chow. Billy will starve unless he buys at least one bag of chow. Bundle set?

2 bag of food, 6 chew toys

Billy the bulldog has a $30 coupon for Dogs R us a store that only sells two goods puppy chow ($5) and chew toys ($3). Billy can only use the coupon once and he must use his organic shopping bag to drag home whatever he buys. The bag can hold an unlimited number of chew toys. but at most 3 bags of show. Billy will starve unless he buys are least one bag of chow. Which is the best bundle

2 bags of food 6 chew toys

With the school semester starting for both high school and college, Papermate chooses to increase production of pens from 38 million to 42 million after global prices of writing instruments increase from 1.9 a package

2.1 a package unit elastic supply

What is the relationship and cross price elasticity for the following situation- Product C increases in price from $3 a pound to $4 a pound. This causes the quantity demanded for product D to increase from 44 units to 85 units

2.2 substitutes

1400

2.What is the change in revenue that results just from the increased quantity at $14?

Cu pays me 100 a week. Skiing 15 a trip, journals 10 to publish papers they always accept them. It takes me 8 hours to do a ski trip and 4 hours to write a paper. I have 40 hours a week to allocate to writing and skiing and can spend my whole 100 on these actives. how many times might she ski

3

Sylvia annual salary increases from $100,000 to 109,500. Sylvia decides to increase the number of vacations she takes from 3 to 4. Use midpoint method to calculate her income elasticity of demand for vacations, the good is?

3.15 units, a normal good and income elastic

In anticipation of a major hurricane hitting the Gulf Coast, the quantity gasoline of sales rises from 360 million gallons to 375. Based on this information, what is the percent change in gasoline sales. Use midpoint formula

4.1%

Becky eats at grill 3 times per year. She receives a raise from 33,200 to 33500 and decides to eat out at grill 5 times per year. Calculate her income elasticity of demand for eating at grill? type of good? elastic?

55.58 normal good income elastic

Fixed or variable cost: interest on current debt

fixed cost

Fixed or variable cost: regulatory compliance costs

fixed cost

Miles number one favorite thing to play with are legos but they are expensive. Miles utility will increase by 100 units if he purchases a new set of legos and it will cost him $50. Miles second favorite thing to play with are firetrucks. Firetrucks cost $20 and each new firetruck improves his utility by 80 units. Miles third favorite toy are trains. If miles buys only one toy, which should he buy to maximize his utility?

Fire trucks

Fabian wants to get exactly 70% on the final. Fabian produces the exam score using two inputs: hours of study time and milligrams of a drug that helps him concentrate. Most true answer

His isoquant for producing 70% result identifies all those combinations of study hours and milligrams of dogs that will get him a score of 70%

burritos, down

If a consumer goes from BL 1 to BL2 then the price of _____ has gone _____

Ingrid when she is in Sweden and not skiing for CU consumes only pickled herring and Aquavit. She is indifferent to the amount of picketed herring she eats, bit the more the better for Aquavit. Consider her indifference curves with Aquavit on the vertical axis and herring on the horizontal axis

Ingrids indifference curves are flat

suppose alice consumes only wine and cheese. Alices income increases, the price of wine decreases, and the price of cheese increases. Consider Alices budget line with wine on the vertical axis and cheese on the horizontal axis. What will happen to the slow of Alices budget line?

It becomes steeper

Statement to best describe how competitive firm chooses the input combination it will use to produce, in the long run, its chosen level of output

It is determine by the state of technical knowledge for producing its output and the constraints imposed on the firm by input markets

Consider two commodities A and B that are both bad, with A on the vertical axis and B on the horizontal axis. Higher indifferences curves.

Less utility than do lower indifference curves

In general which condition shows consumer is maximizing his or her utility regarding spending on two goods?

MUx/Pricex=MUy/Pricey

The extra satisfaction a person obtains from consuming one more unit of a good or service

Marginal utility

6

Marginal utility is negative for all units of the good costumed beyond unit

false

T or F- For any set of 2 goods, everyone has 3 different indifference curves

true

T or F- IC2 and IC3 could belong to different people

false

T or F- all indifference curves for a person cross at least one other indifference curve for that person

true

T or F- different people have differently shaped indifference curves

true

T or F- each person has an infinite number of indifference curves

F

T or F. Bundle A produces the same ultitly as bundle C

F

T or F. Bundle A produces the same utility as B

When Cinema Supreme decreases ticket prices by 19% total revenue does not change

Unit Elastic

6

Utility is maximized when ____ units of the good are consumed

705

What is the cookie monsters total utility when he eats 6 cookies

281.3

What is the total utility at the optimal consumption

In the theory of the firm we use isoquants. Breaking down the term we have quant as in quantity and iso as in one meaning every point on an isoquant corresponds to the same quaintity. The concept in consumer theory that analogies the concept of an isoquant in production theory is

an indifference curve

Price taking behavior

assumed in perfect competition

total cost divided by quantity of output

average total cost

T or F. Costs that are small and unimportant with little impact on profits are called marginal costs

false

T or F. If the demand curve is horizontal, the price elasticity of demand is zero

false

T or F: average fixed costs is always higher than average variable cost

false

T or F: the ATC crosses the MC at TC= FC+ VC+MC the lowest point on the MC

false

T or F: the ATC is increasing whenever the MC is increasing

false

The short run elasticity of supply is larger than the long run elasticity of supply because changes in equilibrium will adjust elasticity accordingly

false

A major state university in Colorado might raise tuition by 12%. An economics professor at this university asked his students. Due to the increase in tuition, how many of you will leave the university? 30 students out of 300 said they would leave if tuition were raise by 12%. Based on this information, and assuming the students in this class are representative of all the students in the university, the price elasticity of demand for education at the university is

inelastic

Econimoist working for the United States have determined that the elasticity of demand for gasoline is 0.5

inelastic

Bright ideas increase its production of light bulbs by 15% after a 400% increase in the price of fluorescent bulbs

inelastic supply

average total cost, marginal cost, average variable cost

label lines

Paul owns a tim hortons, a famous donut and coffee franchise. He is willing to sell as many maple glazed donuts as customers want at a price of 1 each but he refuses to sell any donuts for any price lower than 1

perfectly elastic supply

seth produces and sells widgets. The competitive market price is $10. It is the short run and he has fixed costs. Seth has two short run options: produce nothing or produce and sell 1,000 widgets. If he produces 1,000 widget his average variable cost is $7 and his average fixed cost is $4. What should set do

produce and sell 1,00 widgets even though his profits will be negative

George is on the Cu football team and has 60 hours a week to study practice football and visit mom. He likes to price and study. Mom makes him visit 30 hours a week. The football program requires that for every hour he studies he has to practice two hours. Even though George likes practicing he likes studying twice as much George will

study 10 hours and practice 20 hours

One thing that distinguishes the short run and the long run is

the existence of at least one fixed input

Bubba did not do well on the first midterm cause she did not study. She studied a lot for this midterm. She hopes that

the study time elasticity of her exam score is positive and highly elastic

picture one of Edwards indifference curves for diet cokes, d, and chocolate bars c. Note that my MRSdc=how many units of c I would be willing to give up for to get another unit of d. At my current consumption levels. My wtp for Diet coke in terms of chocolate bars is 3. THEREFORE, my MRSdc= 3, and the slope of my inference curve at my current level of consumption is -3

the therefore follows

Why does the total cost curve get steeper as output increases

there are diminishing returns to labor

what happens to a competitive firm when the quantity where marginal revenue= marginal cost

they will maximize their profit

what happens to a competitive firm when the quantity where price equals marginal cost

they will maximize their profit by producing

T or F- A wife floor sweeper and broom would have a positive cross price elasticity of demand

true

T or F. Assuming the model (theory) of consumer behavior taught in class and in the book, and assuming all commodities are goods, reducing an individuals budget set will always make the individual worse off

true

T or F. Elasticity is a way of measuring responsiveness

true

T or F. If the demand curve is vertical, demand is not responsive at all to a price change

true

T or F. Marginal cost is the change in a firms total cost due to a one unit change in output

true

T or F. There are no fixed costs, then the firms average cost curve and it average variable cost curve are the same

true

T or F. There can be many kinds of elasticity of demand on the factors that affect the quantity demanded

true

T or F: ATC= (FC+VC)/Q

true

T or F: All costs are either fixed or variable

true

T or F: The ATC is always greater than or equal to AVS

true

T or F: the marginal product or labor in the production good x expressed in percentage terms is the same thing as the labor elascity of production good x

true

T or F: when fixed costs are positive, the average fixed cost curve id downward sloping

true

T or F:MC referes to the change in total cost associated with the production of another unit

true

T or false. Consider the statement "the slope of an indifference curve for goods A and B indicates the rate at which the individual subsitutes good A for Good B. The slope of a budget line for goods A and B indicates the rate at which the market substitutes good A for Good B

true

A firms______ are costs that increases as quantity produced increases. These costs often show _____ illustrated by the increasingly steeper slope of the total cost curve

variable costs; diminishing marginal returns

Variable input or fixed input: upper management salaries

variable input

it will increase

what is going to happen to the price of this profit

2 birthday parties, diminishing marginal returns to labor

what is the marginal product or the 4th unit of labor and what does this production function demonstrate

C to D

what points demonstrate constant return to scale

D to F

what points demonstrate diseconomies of scale

A to C

what points demonstrate economies of scale

U3

which is the highest level of utility that diva can achieve with her budget

Total revenue < total variable costs

which of the following best explains why this price will cause the firm to shut down instead of continuing to operate at a loss

can a competitive firm produce its profit maximizing level of output and not be maximizing its profits

yes

For firms in perfectly competitive markets, long run economic profits are____ because firms will ____ this market if profits are less than that and ____ this market if profits are greater than that

zero, exit, enter