Micro Exam 2

Pam buys only rings and bangles, and she buys the quantities that maximize her utility. Her marginal utility form the last ring is 20 utils and her marginal utility form her last range is 60 utils. if the price of a bangle is $12, then you are sure that the price of a ring is _________________ a. $4 b. $2 c. $12 d. $6

a. $4

if an increase in the price of a product from $1 to $2 per unit leads to a decrease in quantity demand form 100 to 80 units, then, the price elasticity of demand is a. 1/3 or .333 b. 2 1/3 or 2.33 c. 3 d. 2/3 or .666 e. 2/9 or .222

a. 1/3 or .333

which of the following would explain why accounting profits are greater than economic profit? a. a firm has implicit costs as well as explicit costs b. a firm only has explicit costs c. a firm's net income is greater than its accounting profit d. a firm has only implicit costs

a. a firm has implicit costs as well as explicit costs

in the above exhibit, the demand curve has _________________ price elasticity of demand when moving from b to c compared to moving from g to h a. a higher b. the same c. a lower d. impossible to tel

a. a higher

if Lisa spends her income on veggie burgers and pints of soy milk and the price of veggie burgers is three times the price of soy milk, then when Lisa maximizes her total utility she will buy a. both goods until the marginal utility of veggie burgers is three times the marginal utility of soy milk b. three times as many veggie burgers as pints of soy milk c. three times as many pints of soy milk as veggie burgers d. both goods until the marginal utility of a pint of soy milk is three times the marginal utility of veggie burgers

a. both goods until the marginal utility of veggie burgers is three times the marginal utility of soy milk

if the marginal utility Ida Mae receives form eating chicken wings is negative then a. her total utility from eating chicken wings has fallen b. her total utility form eating chicken wings is negative as well c. ida mae does not like chicken wings d. her total utility has risen, but less from the last chicken wing than form the next to last chicken wing

a. her total utility from eating chicken wings has fallen

if people have more time to adjust to a price change, the price elasticity of demand for that good is likely to a. increase b. decrease c. fall to zero d. reamin unchanged

a. increase

when the price of cigarettes rose by 10 percent, the quantity demanded of cigarettes fells by 8 percent. this indicated the demand for cigarettes is a. inelastic b. elastic c. unit elastic d. perfectly inelastic

a. inelastic

if a small percentage increase in the price of a good brings about a greater percentage reduction in quantity demanded for that good, the demand for that good is a. price elastic b. price inelastic c. unit price elastic d. perfectly price inelastic

a. price elastic

the marginal product of labor can be defined as a. the change in output/the change in labor b. the change in labor/the change in output c. the change in profit/the change in labor d. the change in cost/the change in labor

a. the change in output/the change in labor

to calculate the price elasticity of demand we divide a. the percentage change in quantity demanded by the percentage change in price b. the percentage change in price by the percentage change in quantity demanded c. the change in quantity demanded by the change in price d. the change in price by change in quantity demanded e. none of the above

a. the percentage change in quantity demanded by the percentage change in price

what is Antonio's marginal utility form consuming the fifth beer? a. 13.6 utils b. 4 utils c. 69 utils d. 134 utils

b. 4 utils

the economic model of consumer behavior predicts that a. consumers will try to earn as much income as they can over their lifetimes b. 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 c. consumers will try to accumulate as many goods and services as they can before they die d. consumers divide their time between consumption and leisure activities in order to maximize the well-being of society overall

b. 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

price elasticity of demand is useful because it measures ___________________ responsiveness to changes in _______________ a. producers'; supply b. consumers'; price c. consumers'; demand d. producers'; income

b. consumers'; price

suppose we observe that as the price of apples increases, apple farmers collectively receive less total revenue. what do we know? a. demand is price inelastic b. demand is price elastic c. demand is unit elastic d. demand is perfectly price inelastic

b. demand is price elastic

cash payments for steel used in production would be an example of a. fixed costs b. explicit costs c. implicit costs d. total revenue e. accounting profit

b. explicit costs

if the absolute value of the price elasticity of demand for all DVD movies is 0.8 then the price elasticity of demand for the DVD for "Gravity" should be a. less than 0.8 in absolute value b. greater than 0.8 in absolute value c. equal to 1 in absolute value d. equal to zero

b. greater than 0.8 in absolute value

when a factory is operating in the short-run, a. it has time enough to vary all its inputs b. it has time enough to vary some but not all of its inputs c. it can vary its fixed inputs but cannot say its variable inputs d. none of the above is true

b. it has time enough to vary some but not all of its inputs

marginal utility is a. the change in total utility divided by the price of the last unit of a good or service b. the change in total utility a person receives from consuming an additional unit of a good or service c. the utility from consuming a given quantity of a good or service d. the decrease in total utility form consuming more and more units of a good or service

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

if the demand for steak is unit elastic, then a. the percentage change in quantity demanded is 1 percent greater than the percentage change in price b. the percentage change in quantity demanded is equal to the percentage change in price c. the percentage change in quantity demanded is 100 percent greater than the percentage change in price d. quantity demanded does not change with price

b. the percentage change in quantity demanded is equal to the percentage change in price

sally owns a small business that she operates out of a building she owns. given information in the above exhibit, sally's accounting profit is a. $80,000 b. $50,000 c. $65,000 d. $24,000

c. $65,000

the above table indicates the combinations of goods X and Y Sharon can afford each month as well as the marginal utilities that Sharon receives form consuming different amounts of goods X and Y. if the price of X is $2 each and the price of Y is $1 each, what combination of X and Y would maximize Sharon's total utility if her budget is $8 per month? a. 0 units of X, 8 units of Y b. 3 units of X, 2 units of Y c. 2 units of X, 4 units of Y d. 1 unit of X, 6 units of Y

c. 2 units of X, 4 units of Y

Marv Pilson has $50 worth of groceries in a shopping cart at his local Shop n' Save. Assume that the marginal utility per dollar of the liter bottles for soft drink in Marv's cart equals 50. The marginal utility per dollar of the boxes of cereal in Marv's cart equals 20. Marc has only $50 to spend, but has not yet paid for groceries. How can Marv increase his total utility without spending more than $50? a. Marv should substitute his favorite soft drink or the cereal in his cart for generic brands that have lower prices b. Marv should buy more boxes of cereal and fewer bottles of soft drink c. Marv should buy fewer boxes of cereal and more bottles of soft drink d. Marv should buy fewer boxes of cereal and fewer bottles of soft drink

c. Marv should buy fewer boxes of cereal and more bottles of soft drink

if marginal utility of apples is diminishing and is positive, consuming one more apple will cause a. total utility to decrease b. a consumer to get no satisfaction from consuming apples c. a consumer's total utility to increase d. a consumer to go beyond her optimal consumption of apples

c. a consumer's total utility to increase

a firm experiences diminishing marginal returns because a. all inputs are variable b. all inputs are fixed c. at least one input in production is fixed d. people "learn by doing"

c. at least one input in production is fixed

if officials raise tuition on our campus in order to increase revenue, it will a. not be successful if the demand curve slopes downward b. be successful if demand is price elastic c. be successful if demand is price inelastic d. always be successful if the demand curve slopes downward

c. be successful if demand is price inelastic

we can derive the market demand curve for gold earrings a. only if the tastes of all gold earrings consumers are similar b. only if the incomes of all gold earring consumers are similar c. by summing up the quantities demanded of all consumers at each price d. by summing up the prices all consumers are willing-to-pay at each quantity

c. by summing up the quantities demanded of all consumers at each price

Economists assume that firms try to maximize a. total revenue b. costs of production c. economic profits d. accounting profits

c. economic profits

which of the following statements is true? a. if the price of a good is lowered and total revenue decreases, demand is elastic b. if the price of a good is raised and total revenue for not change, demand is perfectly elastic c. if the price of a good is raised and total revenue increases, demand is inelastic d. if the price of a good is lowered and total revenue increases, demand is inelastic

c. if the price of a good is raised and total revenue increases, demand is inelastic

the marginal utility per dollar spent is equal to the ______________ consumed divided by the price of the good a. average utility form the last unit b. total utility of all units c. marginal utility of the last unit d. average utility of all units

c. marginal utility of the last unit

which of the following are implicit costs for a typical firm? a. insurance costs b. electricity costs c. opportunity costs of entrepreneur's savings invested into the business d. cost of labor hired by the firm e. the cost of raw materials

c. opportunity costs of entrepreneur's savings invested into the business

in the above exhibit, the law of diminishing marginal returns is first evident with a. the addition of the first worker b. the addition of the second worker c. the addition of the third worker d. the addition of the sixth worker e. none of the above

c. the addition of the third worker

between points b and c in the above exhibit, price decreases by $1, quantity demanded increases by 10, a. total revenue decreases by $1, and demand is elastic b. total revenue increases by $1, and demand is inelastic c. total revenue increases by $40, and demand is elastic d. total revenue increases by $40, and demand is inelastic

c. total revenue increases by $40, and demand is elastic

economic profit is equal to a. total revenue minus explicit costs b. total revenue minus implicit costs c. total revenue minus explicit and implicit costs d. explicit costs minus total revenue and implicit costs

c. total revenue minus explicit and implicit costs

which of the following best describes the concept of utility? a. utility is the total number of units a consumer buys b. utility measures usefulness of goods, such as tools or food, and so goods such as artwork or attractive landscaping by definition have no utility c. utility measures the satisfaction, or pleasure, that people receive form consuming a good or service d. all of the above are correct

c. utility measures the satisfaction, or pleasure, that people receive form consuming a good or service

if the price elasticity of demand for insulin is zero, then the demand curve for insulin is a. horizontal b. downward sloping c. vertical d. curvilinear

c. vertical

given the above information, sally's economic profit is a. $80,000 b. $50,000 c. $65,000 d. $24,000

d. $24,000

suppose the marginal utilities of the first three cans of soda are 100, 80, and 60, respectively. the total utility from consuming 2 cans is a. 20 units b. 90 utils c. 80 utils d. 180 utils e. there is not enough information

d. 180 utils

which is likely to have the smallest price elasticity of demand? a. automobiles b. houses c. yachts d. chewing gum

d. chewing gum

which of the following is most likely to be a fixed resource for Speedy's Word Processing Company? a. paper b. ink c. electricity d. copiers

d. copiers

the price elasticity of demand for broccoli is estimated to be 1.5 (in absolute value). this means that a 20 percent increase in the price of broccoli, ceteris paribus, will cause the quantity demanded of broccoli to a. decrease by 5 percent b. decrease by 13.33 percent c. decrease by 75 percent d. decrease by 30 percent

d. decrease by 30 percent

Jennifer Borts moves her office from the premises she used to rent from the mall to a carriage house she owns in the back of her house. How do her costs change? a. explicit and implicit costs rise b. explicit costs rise; implicit costs fall c. explicit and implicit costs fall d. explicit cost fall; implicit costs rises

d. explicit cost fall; implicit costs rises

suppose bob leaves his $50,000 a year job as a financial advisor to P.E.T.S. and starts his own business selling spot remover for Dalmatians. In the first year his accounting profit is $70,000. Used on this level of success, Bob should a. return to his old job because his economic profit is negative b. return to his old job because his economic profit is smaller than his accounting profit c. return to his old job because his economic profit is less than his old salary d. stay with his new firm because his economic profit is positive e. stay with his new firm because his accounting profit is positive

d. stay with his new firm because his economic profit is positive

in the above exhibit, negative marginal returns occur with a. the addition of the third worker b. the addition o the fourth worker c. the addition of the fifth worker d. the addition of the sixth worker

d. the addition of the sixth worker

the restriction that a consumer's total expenditures on goods and services purchased cannot exceed the income available is referred to as a. maximizing behavior b. economizing behavior c. the price constraint d. the budget constraint

d. the budget constraint

the demand for cell phones is inelastic, then a. the percentage change in quantity demanded is greater than the percentage change in price b. the percentage change in quantity demanded is equal to the percentage change in price c. the quantity demanded does not change with price d. the percentage change in quantity demanded is less than the percentage change in price

d. the percentage change in quantity demanded is less than the percentage change in price

if Paul decides to buy a $60 ticket to a Cirque du Soleil show rather than a $45 ticket for a Blue Man Group performance, we can conclude a. the utility per dollar spent on Cirque du Soleil is lower than the utility per dollar spent on Blue Man Group b. Paul's demand for a ticket to see Cirque due Soleil is more elastic than his demand to see Blue Man Group c. Paul is not making a rational choice d. the utility per dollar spend on Cirque du Soleil is higher than the utility per dollar spend on Blue Man Group

d. the utility per dollar spend on Cirque du Soleil is higher than the utility per dollar spend on Blue Man Group

the slope of the demand curve is -0.1 or -1/10 then a. demand is inelastic b. demand is elastic c. demand is unit elastic d. we don't know whether demand is elastic, inelastic, or unit elastic

d. we don't know whether demand is elastic, inelastic, or unit elastic

diminishing marginal returns occur in production a. when the long-run average cost declines as output increases b. when the marginal satisfaction form that good eventually diminishes as a person consumes more of a good c. if marginal product is positive, total product rises d. when the marginal product of the variable input eventually diminishes as units of a variable input are added to a given amount of fixed inputs

d. when the marginal product of the variable input eventually diminishes as units of a variable input are added to a given amount of fixed inputs

which of the following is a long-run adjustment? a. a new economics professor is hired on campus b. GM increased its orders for steel c. Sentry Insurance cuts back its hiring of new graduates d. Texaco buys more crude oil to refine into gasoline e. Toyota builds a new automobile plant in Kentucky

e. Toyota builds a new automobile plant in Kentucky