Microeconomics Midterm 1
Accounting profits equal total revenue minus: A) economic profits. C) total explicit costs. B) total implicit costs. D) total economic costs.
C
C
Which of the following represents a long-run adjustment? A) A supermarket hires four additional clerks. B) A farmer uses an extra dose of fertilizer on his corn crop. C) Unable to meet foreign competition, a U.S. watch manufacturer sells one of its branch plants. D) A steel manufacturer cuts back on its purchases of coke and iron ore.
A nation's production possibilities curve might shift to the left (inward) as a result of: A) the depletion of its soil fertility due to overplanting and overgrazing. B) technological advance. C) investing in more capital goods. D) increases in the size of the labor force.
A
Accounting profits are typically: A) greater than economic profits because the former do not take implicit costs into account. B) greater than economic profits because the former do not take explicit costs into account. C) equal to economic profits because accounting costs include all opportunity costs. D) smaller than economic profits because the former do not take implicit costs into account.
A
Answer the question on the basis of the following demand schedule: Refer to the data. If this demand schedule were graphed, we would find that: A) its slope is constant throughout. B) its slope diminishes as we move northwest up the curve. C) its slope diminishes as we move southeast down the curve. D) the data are inconsistent with the law of demand.
A
Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2 respectively and that the consumer's income is $18. Refer to the data. What quantities of X and Y should be purchased to maximize utility? A) 2 of X and 5 of Y C) 4 of X and 5 of Y B) 2 of X and 6 of Y D) 2 of X and 1 of Y
A
Answer the question on the basis of the given supply and demand data for wheat: Refer to the data. If the price in this market was $4: A) farmers would not be able to sell all their wheat. B) there would be a shortage of wheat. C) the market would clear; quantity demanded would equal quantity supplied. D) buyers would want to purchase more wheat than is currently being supplied.
A
Answer the question using the following data, which show all available techniques for producing 20 units of a particular commodity: Refer to the data. In view of the indicated resource prices, the economically most efficient production technique(s) is (are) technique(s): A) #2 and #4. B) #1 and #3. C) #1. D) #3.
A
Ben is exhausting his money income consuming products A and B in such quantities that MUa/Pa = 5 and MUb/Pb = 8. Ben should purchase: A) more of B and less ofA. B) more of A and less of B. C) more of both A and B. D) less of bothAand B.
A
Given the information and assuming trade occurs between the three states, we can expect: A) money to flow counterclockwise from Michigan to Texas to Washington. B) that money will not be needed to accomplish the desired exchanges. C) that there is no means by which Michigan can obtain lettuce while specializing in the production of autos. D) money to flow clockwise from Michigan to Washington to Texas.
A
If a firm doubles its output in the long run and its unit costs of production decline, we can conclude that: A) economies of scale are being realized. B) technological progress has occurred. C) diseconomies of scale are being encountered. D) the firm is encountering diminishing returns.
A
If products C and D are close substitutes, an increase in the price of C will: A) shift the demand curve of D to the right. B) tend to cause the price of D to fall. C) shift the demand curve of C to the left and the demand curve of D to the right. D) shift the demand curves of both products to the right.
A
In a competitive market economy, firms select the least-cost production technique because: A) to do so will maximize the firms' profits. B) "dollar voting" by consumers mandates such a choice. C) such choices will result in full employment of available resources. D) this will prevent new firms from entering the industry.
A
In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. Refer to the given information. An increase in the price of a product that is a close substitute for X will: A) increase D, increase P, and increase Q. B) increase D, decrease P, and increase Q. C) decrease D, increase P, and decrease Q. D) increase D, increase P, and decrease Q.
A
In the short run it is impossible for an expansion of output to increase: A) average fixed cost. B) marginal cost. C) average total cost. D) average variable cost.
A
Other things equal, which of the following might shift the demand curve for gasoline to the left? A) The development of a low-cost electric automobile. B) The discovery of vast new oil reserves in Montana. C) An increase in the price of train and air transportation. D) A large decline in the price of automobiles.
A
Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. If supply is S1 and demand D0, then A) 0F represents a price that would result in a shortage of AC. B) a surplus of GH would occur. C) 0F represents a price that would result in a surplus of AC. D) at any price above 0G a shortage would occur.
A
Refer to the diagram. A government-set price ceiling is best illustrated by: A) price A. B) quantity E. C) price C. D) price B.
A
Refer to the diagram. The decline in price from P1 to P2 will: A) increase total revenue by D - A. B) decrease total revenue by A. C) increase total revenue by B + D. D) increase total revenue by D.
A
The formula for cross elasticity of demand is percentage change in: A) quantity demanded of X/percentage change in price of Y. B) quantity demanded of X/percentage change in price of X. C) quantity demanded of X/percentage change in income. D) price of X/percentage change in quantity demanded of Y.
A
The production possibilities curve illustrates the basic principle that: A) if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced. B) an economy's capacity to produce increases in proportion to its population size. C) an economy will automatically obtain full employment of its resources. D) the production of more of any one good will in time require smaller and smaller sacrifices of other goods.
A
The state legislature has cut Gigantic State University's appropriations. GSU's Board of Regents decides to increase tuition and fees to compensate for the loss of revenue. The board is assuming that the: A) demand for education at GSU is inelastic. B) coefficient of price elasticity of demand for education at GSU is unity. C) coefficient of price elasticity of demand for education at GSU is greater than unity. D) demand for education at GSU is elastic.
A
Which of the following is a capital resource? A) A piece of software used by a firm. B) Silicon (sand) used to make computer chips. C) A corporate bond issued by a computer manufacturer. D) A computer programmer.
A
Which of the following statements concerning the relationships between total product (TP), average product (AP), and marginal product (MP) is not correct? A. AP continues to rise so long as TP is rising. B. MP cuts AP at the maximum AP. C. AP reaches a maximum before TP reaches a maximum. D. TP reaches a maximum when the MP of the variable input becomes zero.
A
If the University Chamber Music Society decides to raise ticket prices to provide more funds to finance concerts, the Society is assuming that the demand for tickets is: A) parallel to the horizontal axis. B) inelastic. C) shifting to the left. D) elastic.
B
"Consumer sovereignty" means that: A) advertising is ineffective because consumers already know what they want. B) buyers determine what will be produced based on their "dollar votes" for the goods and services offered by sellers. C) buyers control the quality of goods and services through regulatory agencies. D) buyers can dictate the prices at which goods and services will be offered.
B
A shift to the right in the demand curve for product A can be most reasonably explained by saying that: A) consumer incomes have declined, and consumers now want to buy less of A at each possible price. B) consumer preferences have changed in favor of A so that they now want to buy more at each possible price. C) the price of A has declined and, as a result, consumers want to purchase more of it. D) the price of A has increased and, as a result, consumers want to purchase less of it.
B
Answer the question on the basis of the accompanying table that shows average total costs (ATC) for a manufacturing firm whose total fixed costs are $10: Refer to the data. The marginal cost of the fourth unit of output is: A) $2. B) $37. C) $16. D) $12.
B
Answer the question on the basis of the following information: Refer to the data. When two workers are employed: A) average product is 10. B) total product is 18. C) total product is 20. D) total product cannot be determined from the information given.
B
Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2 respectively and that the consumer's income is $18. Refer to the data. What level of total utility will the utility-maximizing consumer realize? A) 108 utils. B) 96 utils. C) 72 utils. D) 142 utils.
B
Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina: Refer to the tables. The opportunity cost of the fifth unit of capital goods: A) is lower in North Cantina than in South Cantina. B) is higher in North Cantina than in South Cantina. C) is the same in North Cantina and South Cantina. D) cannot be determined from the information provided.
B
Assume in a competitive market that price is initially below the equilibrium level. We can predict that price will: A) increase, quantity demanded will increase, and quantity supplied will decrease. B) increase, quantity demanded will decrease, and quantity supplied will increase. C) decrease and quantity demanded and quantity supplied will both decrease. D) decrease, quantity demanded will decrease, and quantity supplied will increase.
B
Economists use the term "demand" to refer to A) a particular price-quantity combination on a stable demand curve. B) a schedule of various combinations of market prices and amounts/quantities demanded. C) the total amount spent on a particular commodity over a fixed time period. D) an upsloping line on a graph that relates consumer purchases and product price
B
From society's point of view, the economic function of profits and losses is to: A) promote the equal distribution of real assets and wealth. B) reallocate resources from less desired to more desired uses. C) achieve full employment and price level stability. D) contribute to a more equal distribution of income.
B
If the supply of a product decreases and the demand for that product simultaneously increases, then equilibrium: A) price and equilibrium quantity must both decline. B) price must rise, but equilibrium quantity may rise, fall, or remain unchanged. C) price and equilibrium quantity must both increase. D) price must rise and equilibrium quantity must fall.
B
In the diagram, total product will be a maximum at: A) Q1 units of labor. B) Q3 units of labor. C) Q2 units of labor. D) some point that cannot be determined with the above information.
B
Marginal product: A. is always less than average product. B. may initially increase, then diminish, and ultimately become negative. C. diminishes at all levels of production. D. may initially increase, then diminish, but never become negative.
B
Refer to the diagram. A shortage of 160 units would be encountered if price was: A) $1.00. C) $1.10, that is, $1.60 minus $.50. B) $0.50. D) $1.60.
B
Refer to the diagram. At output level Q total variable cost is: A) 0AFQ. B) 0BEQ. C) BCDE. D) 0CDQ.
B
Refer to the diagram. If society is currently producing 9 units of bicycles and 4 units of computers and it now decides to increase computer output to 6, the cost: A) will be 2 units of bicycles. B) will be 4 units of bicycles. C) will be zero because unemployed resources are available. D) of doing so cannot be determined from the information given.
B
Refer to the diagram. The combination of computers and bicycles shown by point G is: A) irrelevant because it is inconsistent with consumer preferences. B) unattainable given currently available resources and technology. C) attainable but too costly. D) attainable but involves unemployment.
B
Refer to the graph. Which one of the following would cause a move from point b on short-run average total cost curve ATC1 to point e on short-run average cost curve ATC2? A) A decrease in the wage rate. B) An increase in the wage rate. C) Diminishing marginal returns. D) Increasing marginal returns.
B
Refer to the table. Over the $8-$6 price range, supply is: A) perfectly inelastic. B) inelastic. C) perfectly elastic. D) elastic.
B
Suppose that an economy is producing on its production possibilities curve but is not producing quantities of each good where the marginal benefit equals the marginal cost for each good. This economy: A) can improve its allocation by lowering the unemployment rate. B) can improve its allocation by producing more of one good and less of the other. C) should not change its production because it cannot improve its allocation by shifting resources. D) can improve its allocation by producing more of both goods.
B
Suppose that as the price of Y falls from $2.00 to $1.90, the quantity of Y demanded increases from 110 to 118. Then the price elasticity of demand is: A) 3.94. B) 1.45. C) 4.00. D) 2.09.
B
Suppose that in 2007, Ford sold 500,000 Mustangs at an average price of $18,800 per car; in 2008, 600,000 Mustangs were sold at an average price of $19,500 per car. These statements: A) constitute an exception to the law of demand in that they suggest an upsloping demand curve. B) suggest that the demand for Mustangs increased between 2007 and 2008. C) suggest that the demand for Mustangs decreased between 2007 and 2008. D) suggest that the supply of Mustangs must have increased between 2007 and 2008.
B
Which of the following generalizations is not correct? A) The larger the number of close substitutes available, the greater will be the price elasticity of demand for a particular product. B) The price elasticity of demand is greater for necessities than it is for luxuries. C) The price elasticity of demand is greater the longer the time period under consideration. D) The larger an item is in one's budget, the greater the price elasticity of demand.
B
Which of the following is correct? A) If demand is inelastic, an increase in price will decrease total revenue. B) If demand is elastic, a decrease in price will increase total revenue. C) If demand is elastic, a decrease in price will decrease total revenue. D) If demand is elastic, an increase in price will increase total revenue.
B
Which of the following is correct? A. When marginal product is falling, total product must be falling. B. Marginal product rises faster than average product and also falls faster than average product. C. When total product is rising, both average product and marginal product must also be rising. D. When marginal product is falling, average product must also be falling.
B
Which of the following most closely relates to the idea of opportunity costs? A) technological change. B) trade-offs. C) economic growth. D) capitalism.
B
Which of the following statements is not correct? A) If the relative change in price is greater than the relative change in the quantity demanded associated with it, demand is inelastic. B) In the range of prices in which demand is elastic, total revenue will diminish as price decreases. C) Demand tends to be elastic at high prices and inelastic at low prices. D) Total revenue will not change if price varies within a range where the elasticity coefficient is unity.
B
Which of the following will not cause the demand for product K to change? A) A change in the price of close-substitute product J. B) A change in the price of product K. C) A change in consumer tastes for product K. D) An increase in incomes of buyers of product K.
B
A firm can sell as much as it wants at a constant price. Demand is thus: A) relatively inelastic. B) perfectly inelastic. C) perfectly elastic. D) relatively elastic.
C
A leftward shift of a product supply curve might be caused by: A) a decline in the prices of needed inputs. B) an increase in consumer incomes. C) some firms leaving an industry. D) an improvement in the relevant technique of production.
C
Allocative efficiency is concerned with: A) producing every good with the least-cost combination of inputs. B) reducing the concavity of the production possibilities curve. C) producing the combination of goods most desired by society. D) achieving the full employment of all available resources.
C
An increase in consumer desire for strawberries is most likely to: A) reduce the need for strawberry pickers. B) reduce the number of people willing to pick strawberries. C) increase the number of strawberry pickers needed by farmers. D) reduce the supply of strawberries.
C
An increase in the price of product A will: A) cause utility-maximizing consumers to buy more of A. B) increase the marginal utility per dollar spent on A. C) decrease the marginal utility per dollar spent on A. D) not affect the marginal utility per dollar spent on A.
C
Answer the question on the basis of the following information: Refer to the data. The marginal product of the fourth worker: A) is 71/2. B) cannot be calculated from the information given. C) is 5. D) is 7.
C
Answer the question on the basis of the given supply and demand data for wheat: Refer to the data. Equilibrium price will be: A) $1. B) $4. C) $2. D) $3.
C
Assume that the demand curve for product C is downsloping. If the price of C falls from $2.00 to $1.75: A) the demand for C will increase. B) a smaller quantity of C will be demanded. C) a larger quantity of C will be demanded. D) the demand for C will decrease.
C
If an economy is operating on its production possibilities curve for consumer goods and capital goods, this means that: A) resources cannot be reallocated between the two goods. B) it is impossible to produce more consumer goods. C) more consumer goods can only be produced at the cost of fewer capital goods. D) it is impossible to produce more capital goods.
C
If government set a minimum price of $50 in the market, a: A) shortage of 125 units would occur. B) surplus of 125 units would occur. C) surplus of 21 units would occur. D) shortage of 21 units would occur.
C
Most demand curves are relatively elastic in the upper-left portion because the original price: A) and quantity from which the percentage changes in price and quantity are calculated are both large. B) and quantity from which the percentage changes in price and quantity are calculated are both small. C) from which the percentage price change is calculated is large and the original quantity from which the percentage change in quantity is calculated is small. D) from which the percentage price change is calculated is small and the original quantity from which the percentage change in quantity is calculated is large.
C
Other things equal, if the fixed costs of a firm were to increase by $100,000 per year, which of the following would happen? A) Marginal costs and average variable costs would both rise. B) Average fixed costs would rise, but marginal costs would fall. C) Average fixed costs and average total costs would rise. D) Average fixed costs and average variable costs would rise.
C
Refer to the diagram and assume that price increases from $2 to $10. The coefficient of the price elasticity of supply (midpoint formula) relating to this price change is about: A) 2.5 and supply is elastic. B) 5 and supply is elastic. C) .25 and supply is inelastic. D) 1 and supply is unit elastic.
C
Refer to the diagram. A decrease in quantity demanded is depicted by a: A) move from point x to point y. B) shift from D1 to D2. C) move from point y to point x. D) shift from D2 to D1.
C
Refer to the diagram. The highest price that buyers will be willing and able to pay for 100 units of this product is: A) $20. B) $40. C) $60. D) $30.
C
Refer to the diagram. Total revenue at price P1 is indicated by area(s): A) A + C. B) C + D. C) A + B. D) A.
C
Refer to the graph. Diminishing marginal returns are reflected in: A) a move along short-run average total cost curve ATC1 from point b to point a. B) the shift of the short-run average total cost curve from ATC1 to ATC2. C) a move along short-run average total cost curve ATC2 from point e to point f. D) the shift of the short-run average total cost curve from ATC2 to ATC1.
C
Refer to the short-run production and cost data. The curves of Figures A and B suggest that: A) marginal cost and marginal product reach their minimum points at the same output. B) AVC cuts MC at the latter's minimum point. C) marginal cost reaches a minimum where marginal product is at its maximum. D) marginal product and marginal cost reach their maximum points at the same output.
C
Studies of the minimum wage suggest that the price elasticity of demand for teenage workers is relatively inelastic. This means that: A) the cross elasticity of demand between teenage and adult workers is positive and very large. B) an increase in the minimum wage would decrease the total incomes of teenage workers as a group. C) an increase in the minimum wage would increase the total incomes of teenage workers as a group. D) the unemployment effect of an increase in the minimum wage would be relatively large.
C
The economizing problem is one of deciding how to make the best use of: A) unlimited resources to satisfy limited wants. B) virtually unlimited resources to satisfy virtually unlimited wants. C) limited resources to satisfy limited wants. D) limited resources to satisfy virtually unlimited wants.
D
Suppose that the total revenue curve is derived from a particular linear demand curve. That demand curve must be: A) elastic for price increases that reduce quantity demanded from 8 units to 7 units. B) inelastic for price increases that reduce quantity demanded from 4 units to 3 units. C) inelastic for price declines that increase quantity demanded from 6 units to 7 units. D) elastic for price declines that increase quantity demanded from 6 units to 7 units.
C
The Sunshine Corporation finds that its costs are $40 when it produces no output. Its total variable costs (TVC) change with output as shown in the accompanying table. Use this information to answer the following question. Refer to the info. The average total cost of 3 units of output is: A) $65. B) $21.67. C) $35. D) $40.
C
The Sunshine Corporation finds that its costs are $40 when it produces no output. Its total variable costs (TVC) change with output as shown in the accompanying table. Use this information to answer the following question. Refer to the info. the marginal cost of the third unit of output is: Refer to the information. The marginal cost of the third unit of output is: A) $25. B) $20. C) $15. D) $105.
C
When the price of a product falls, the purchasing power of our money income rises and thus permits consumers to purchase more of the product. This statement describes: A) the substitution effect. C) the income effect. B) the rationing function of prices. D) an inferior good.
C
Which of the following constitues an implicit cost to the Johnston Manufacturing Company? A) Economic profits resulting from current production. B) Rent paid for the use of equipment owned by the Schultz Machinery Company. C) Use of savings to pay operating expenses instead of generating interest income. D) Payments of wages to its office workers.
C
Which of the following is a distinguishing feature of a command system? A) Heavy reliance on markets. B) Private ownership of all capital. C) Central planning. D) Widespread dispersion of economic power.
C
Which of the following is correct? A. When AP is rising MC is falling, and when AP is falling MC is rising. B. When MP is rising MC is rising, and when MP is falling MC is falling. C. When MP is rising MC is falling, and when MP is falling MC is rising. D. There is no relationship between MP and MC.
C
Which of the following is not a typical characteristic of a market system? A) Freedom of enterprise. B) Private property. C) Government ownership of most property resources. D) Competition in product and resource markets.
C
With a downsloping demand curve and an upsloping supply curve for a product, a decrease in resource prices will: A) increase equilibrium price and decrease equilibrium quantity. B) decrease equilibrium price and quantity. C) decrease equilibrium price and increase equilibrium quantity. D) increase equilibrium price and quantity.
C
A consumer is maximizing her utility with a particular money income when: A) MUa = MUb = MUc = . . . = MUn. B) the total utility derived from each product consumed is the same. C) Pa = Pb = Pc = . . . = Pn. D) MUa/Pa = MUb/Pb = MUc/Pc = . . . = MUn/Pn.
D
Alex sees that his neighbors' lawns all need mowing. He offers to provide the service in exchange for a wage of $20 per hour. Some neighbors accept Alex's offer and others refuse. Economists would describe Alex's behavior as: A) greedy because he is asking for a high wage that some of his neighbors can't afford to pay. B) irrational because some neighbors refused his offer. C) selfish because he is asking for a wage that is higher than others might charge. D) rational self-interest because he is attempting to increase his own income by identifying and satisfying someone else's wants.
D
An effective ceiling price will: A) result in a product surplus. B) clear the market. C) induce new firms to enter the industry. D) result in a product shortage.
D
An effective price floor will: A) clear the market. B) force some firms in this industry to go out of business. C) result in a product shortage. D) result in a product surplus.
D
Assume product A is an input in the production of product B. In turn, product B is a complement to product C. We can expect a decrease in the price of A to: A) decrease the supply of B and decrease the demand for C. B) decrease the supply of B and increase the demand for C. C) increase the supply of B and decrease the demand for C. D) increase the supply of B and increase the demand for C
D
Because the marginal product of a variable resource at first increases and then decreases as the output of the firm is increased: A) average fixed cost will rise beyond the point of diminishing returns. B) average total cost at first increases and then diminishes. C) total variable cost at first increases at an increasing rate and then increases at a decreasing rate. D) total cost at first increases at a decreasing rate and then increases at an increasing rate.
D
Cross elasticity of demand measures how sensitive purchases of a specific product are to changes in: A) the general price level. C) income. B) the price of that same product. D) the price of some other product.
D
Economies and diseconomies of scale explain: A) why the firm's short-run marginal cost curve cuts the short-run average variable cost curve at its minimum point. B) the profit-maximizing level of production. C) the distinction between fixed and variable costs. D) why the firm's long-run average total cost curve is U-shaped.
D
If competitive industry Y is incurring substantial losses, output will: A) expand as resources move toward industry Y. B) contract as resources move toward industry Y. C) expand as resources move away from industry Y. D) contract as resources move away from industry Y.
D
Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. If the initial demand and supply curves are D0 and S0, equilibrium price and quantity will be: A) 0F and 0A, respectively. B) 0G and 0B, respectively. C) 0E and 0B, respectively. D) 0F and 0C, respectively.
D
Refer to the diagram. For output level Q, per unit costs of C are: A) attainable and imply that resources are being combined efficiently. B) unattainable and imply the inefficient use of resources. C) unattainable, given resource prices and the current state of technology. D) attainable, but imply the inefficient use of resources.
D
Refer to the short-run production and cost data. In Figure A curve (1) is: A) total product and curve (2) is marginal product. B) marginal product and curve (2) is average product. C) total product and curve (2) is average product. D) average product and curve (2) is marginal product.
D
Suppose that a 10 percent increase in the price of normal good Y causes a 20 percent increase in the quantity demanded of normal good X. The coefficient of cross elasticity of demand is: A) positive and therefore these goods are complements. B) negative and therefore these goods are substitutes. C) negative and therefore these goods are complements. D) positive and therefore these goods are substitutes.
D
The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Refer to the data. Creamy Crisp's implicit costs, including a normal profit, are: A) $94,000. B) $150,000. C) $156,000. D) $136,000.
D
The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Refer to the data. Creamy Crisp's total economic costs are: A) $150,000. B) $94,000. C) $156,000. D) $286,000.
D
The larger the positive cross elasticity coefficient of demand between products X and Y, the: A) smaller the price elasticity of demand for both products. B) the less sensitive purchases of each are to increases in income. C) stronger their complementariness. D) greater their substitutability.
D
The law of diminishing marginal utility states that: A) total utility is maximized when consumers obtain the same amount of utility per unit of each product consumed. B) price must be lowered to induce firms to supply more of a product. C) it will take larger and larger amounts of resources beyond some point to produce successive units of a product. D) beyond some point, additional units of a product will yield less and less extra satisfaction to a consumer.
D
The law of diminishing returns describes the: A. relationship between total costs and total revenues. B. profit-maximizing position of a firm. C. relationship between resource inputs and product outputs in the long run. D.relationship between resource inputs and product outputs in the short run.
D
Utility refers to the: A) usefulness of a product. B) relative scarcity of a product. C) rate of decline in a product demand curve. D) satisfaction that a consumer derives from a good or service.
D
When a consumer shifts purchases from product X to product Y, the marginal utility of: A) both X and Y rises. B) both X and Y falls. C) X rises and the marginal utility of Y falls. D) X falls and the marginal utility of Y rises.
D
Which of the following is a distinguishing feature of laissez-faire capitalism? A) Central planning. B) A circular flow of goods, resources, and money. C) Public ownership of all capital. D) Minimal government intervention.
D
Answer the question on the basis of the following demand and supply data: Refer to the data. The supply of this product is inelastic in the $6-$5 price range. (True or False)
FALSE