Microeconomics Final

Total costs are a combination of:

fixed costs plus variable costs.

Which event would shift the supply curve for corn to the right?

a decrease in land taxes

_____ is how well resources are used and allocated.

efficiency

As a person consumes more of a particular good or service, the total level of utility derived from that consumption will:

increase at a decreasing rate.

Students who never miss class and study hard generally earn higher grades than those who do not. This is an example of:

incentives

Subsidies on domestically produced sport utility vehicles cause a(n) _____in the supply of _____ sport utility vehicles.

increase; domestic

Assume a good is considered elastic. If the price of the good decreases, then total revenue:

increases

A typical total product curve goes through four stages. What is the correct order for these stages?

increases at an increasing rate, increases at a decreasing rate, reaches a maximum, decreases

_____ costs include the time and money that could have been spent on another highly valued activity.

opportunity

The highest valued alternative that is forgone when you choose an action is called its:

opportunity cost

If the demand for Quilted Northern bath tissue is elastic, then the:

percentage change in quantity demanded is greater than the percentage change in price.

A vertical demand curve represents demand that is:

perfectly inelastic.

Knowing a product's price elasticity of demand allows economists to:

predict the amount by which quantity demanded will change in response to a change in price.

The price of automobiles is rising because more people want to purchase cars. As a result,

quantity supplied increases.

Most economists assume that firms behave _____ and that their objective is _____.

rationally; profit maximization

If sellers expect the price of their product to rise in the future, they are likely to:

restrict their supply in the near term.

The development of solar panels for home installation has improved due to technological advances and subsidies. These factors shift the supply curve to the _____ and result in the equilibrium price of solar panel installations to _____.

right; fall

The law of supply states that as prices _____, the quantity _____.

rise; supplied rises

Which factor would NOT cause the demand curve for green tea to shift to the right?

a change in the price of green tea

Which of these would result in a higher price elasticity?

a longer time period

The study of economics:

is about people making decisions regarding their use of scarce resources.

Suppose that a store sells candy bars for $0.89 for one and $1.50 for two. The marginal cost of the second candy bar is

$0.61.

In the market for Chinese take-out, suppose that the price of Sushi take-out, a substitute, decreases in price. What will happen to the demand for Chinese take-out?

Demand for Chinese take-out will decrease.

Which circumstance would increase the supply of pork sausage?

a decrease in the price of ingredients used to produce sausage

Which event will NOT lead to a decrease in supply?

a decrease in the product price

When economists assume people make rational decisions, it means that:

a rational person will respond to the benefits and costs associated with incentives.

Which event would shift the supply curve for gasoline to the right?

a technological innovation in the oil-drilling industry that dramatically lowers the cost of exploration

Which factor would shift the demand curve for gasoline to the right?

an increase in national income

Which event would shift the supply curve for pipes to the left?

an increase in taxes on pipes

Money that a firm spends on health care for employees is a(n):

explicit cost.

Economic costs are the sum of _____ and _____.

explicit costs; implicit costs

The law of supply states that, if prices:

fall, producers will offer fewer products to the market.

Which of these circumstances would NOT affect the supply of new automobiles?

higher interest rates for new car financing

The calculation for economic profit is total revenue minus:

implicit and explicit costs.

If the cross elasticity of demand between fly rods and reels is -0.8, a decrease in the price of rods would _____ sales of reels because the two goods are _____.

increase; complements

Resources are:

limited, but wants are unlimited.

When economists use the word "additional," they generally mean:

marginal

Most income taxes are:

progressive

A tax in which the percentage of income tax rises as income falls is known as a:

regressive tax.

If the price of used plug-in electric cars is expected to rise in six months, the reaction in the supply of those cars in the market today would likely be a(n):

shift of the supply curve to the left.

Suppose that a major drought causes a 30 percent reduction in the peanut harvest. If there is no change in demand, this event would cause a _____ at the original equilibrium price, and the equilibrium price will therefore _____ and the equilibrium quantity will _____.

shortage; rise; fall

Wheat is the main input in the production of flour. If the price of wheat increases, all else equal, we would expect the:

supply of flour to decrease.

The law of demand states that:

the lower a product's price, the more of that product consumers will purchase during a given period.

Marginal utility is NOT:

the same for all units of a commodity consumed.

Electricity is essential in the production of aluminum. If electricity prices increase:

the supply curve for aluminum shifts leftward.

If the price of a product falls by 15% and the quantity supplied falls by 25%, the elasticity of supply is:

1.67

If the price elasticity of demand is 10, then for every 1% increase in price, there is a:

10% decrease in quantity demanded.

Suppose that the quantity demanded for a product falls by 9% as people's incomes fall by 3%. What is the income elasticity for this good?

3.00

A leather company produces shoes and belts. What will the company do if it expects the price of shoes to rise in the near future?

It will move resources from belt production to shoe production, thereby decreasing the supply of belts.

Suppose the marginal utility for the last pencil you buy is 36 and each costs $1, whereas the marginal utility of the last pad of paper you buy is 300 and costs $2. Are you maximizing utility?

No. You need to buy more paper and fewer pencils.

Marginal analysis would put an emphasis on:

additional costs and benefits.

Mary started out in a consumer equilibrium. Later Mary discovers that her marginal utility per dollar spent on root beer is more than the marginal utility per dollar spent on gasoline. She knows then that the price of:

gasoline must have increased or the price of root beer must have decreased.

A shift to the right of the supply curve could be caused by a(n)

improvement in production technology.

A good is a normal good if:

the demand curve shifts outward if income increases.

According to the law of supply, producers will supply more of their products when:

the price rises

Which event will cause an increase in the supply of yogurt?

an increase in the number of sellers in the yogurt market

In the short run:

at least one cost is fixed.

If you were not studying economics, you could be doing one of the following: sleeping in (which you value at $5), playing cards with your friends (which you value at $10), or working (you would have earned an extra $8). The opportunity cost of studying economics is therefore:

$10

At 500 units of output, total cost is $50,000 and variable cost is $5,000. What does fixed cost equal at 500 units?

$45000

Jeremy's level of satisfaction from consuming the first cookie was 25 utils. The second cookie increased the level of satisfaction by 20 utils. Jeremy's total level of satisfaction after three cookies was 60. Thus, the marginal utility for the third cookie is:

15

Which question is NOT an example involving marginal analysis? Should a university offer another section of a class? Should a restaurant stay open another hour? Should K-Mart rebrand all its stores to using the Sears name? Should Boeing hire another assembly-line worker?

Should K-Mart rebrand all its stores to using the Sears name?

Which question would be considered a normative question? How much does an entry into an obstacle course race cost? How many people participated in obstacle course racing last year? When and where are the major obstacle races held? Should obstacle races be regulated to ensure the safety of its participants?

Should obstacle races be regulated to ensure the safety of its participants?

One of the most important ingredients in bubble tea is the tapioca pearls that are added to the tea. If the price of tapioca flour increases, what will happen to the supply of bubble tea, all else being equal?

The supply of bubble tea will decrease.

Astrid currently consumes only milk and honey. She drinks four quarts of milk priced at $3 per quart and gets 30 utils for the last quart. She consumes thirteen jars of honey at a price of $0.75 per jar and gets 7.5 utils for the last jar. Is Astrid maximizing her utility?

Yes

Which factor would shift the supply of skateboards to the right?

a large reduction in the price of wheels used to produce skateboards

Which circumstance will NOT decrease the supply of commercial air travel? an increase in the wages of airline pilots a decrease in the number of companies that offer commercial air travel an increase in jet fuel prices a technology change that makes aircrafts more fuel efficient

a technology change that makes aircrafts more fuel efficient

Suppose Mike has three hours of time to spend so he ranks the following activities in order of priority: (1) see a movie, (2) attend a ball game, (3) study economics. Assume that each activity takes three hours. What is Mike's opportunity cost of seeing the movie?

attending a ball game

Marginal cost (MC) will equal average total cost (ATC) at the point where the:

average total cost is the lowest.

Marginal product is defined as the:

change in output from hiring an extra worker.

Economics is a social science that involves the study of how individuals, firms, and societies:

choose among alternatives to satisfy their unlimited wants.

Marginal utility:

declines with each additional unit consumed.

Tax burdens are higher on consumers when:

demand is inelastic and supply is elastic.

If a product's price rises by 6% and its quantity demanded falls by 8%, then we can say that demand for this product is:

elastic

_____ is the fairness of various issues and policies.

equity

Suppose that the price of pork rises. We would expect that the supply of beef will:

fall because farmers will shift resources from beef production to pork production.

A decrease in demand causes the equilibrium price to _____ and the equilibrium quantity to _____.

fall; fall

Suppose the price elasticity of demand is 3.0 and the price elasticity of supply is 0.08. The burden of an excise tax:

falls primarily on producers.

The fundamental reason why supply curves slope upward is:

increasing costs

Opportunity costs:

influence all economic decisions.

Marginal utility:

is the change in total satisfaction derived from consuming one more unit of a good.

If a firm has $10,000 in variable costs and no fixed costs, then the time period is referred to as the:

long run

The change in total costs arising from the production of additional output is:

marginal cost

You will take the day off work if:

marginal costs are less than marginal benefits.

As an individual consumes slices of pizza, the _____ is the amount of satisfaction that he receives from each additional piece of pizza.

marginal utility

When quantity demanded in a market equals quantity supplied, then the:

market is in equilibrium.

The supply curve represents the _____ price at which a firm is willing to _____.

minimum; sell various quantities of a good

Suppose the MU/P for bottled water is greater than the MU/P for bags of chips. To maximize total utility, the consumer should buy:

more bottled water and fewer bags of chips.

Which item is NOT a determinant of supply?

national income

If soda and potato chips are complements, then their cross elasticity of demand is:

negative

There is a(n) _____ relationship between price and quantity demanded.

negative

If the demand for iPhones rises as incomes increase, then the iPhone is a(n) _____ good.

normal

If the income elasticity of demand for tea is 0.50, tea is a:

normal good

If television sellers expect the prices of televisions to fall in the future, we are likely to see the:

supply of televisions increase.

An increase in the cost of coffee beans that are used to make coffee will cause the _____ for coffee to shift _____.

supply; left

The law of diminishing marginal utility states:

that as a consumer consumes more of a given product, the added utility from consuming an additional unit declines.

A consumer is in equilibrium when:

the addition to total utility per dollar is the same for every commodity.

Which curve is NOT bowl-shaped?

the average fixed cost curve

Tim woke up this morning with a stomachache and decided to skip class in order to get more rest. What is the opportunity cost of Tim's decision to sleep in?

the value of attending the class he decided to miss

When the supply of citrus products decreases:

the whole supply curve shifts upward and to the left.

One practical reason that economists use percentages to measure elasticity is:

to be able to compare characteristics of unrelated products.

If the percentage change in quantity demanded is equal to the percentage change in price, then demand is:

unitary elastic

Scarcity is BEST defined as when:

unlimited wants exceed limited resources.

When economists refer to _____, they are referring to a hypothetical measure of consumer satisfaction.

utility

Because of scarcity:

we face tradeoffs in nearly every choice we make.

Thinking at the margin involves:

weighing the impact of one additional activity.

A surplus exists:

when quantity supplied exceeds the quantity demanded.