microeconomics test 3

If a consumer receives 22 units of marginal utility for consuming the first can of soda, 20 units from consuming the second, and 15 from the third, the total utility of consuming the three units is A. 57 units B. 35 units C. 15 units D. unknown, as more information is needed to determine the answer

A. 57 units

Following the tariff imposed on Chinese tires, some business people correctly argued that the U.S. tariff would result in A. China retaliating by raising tariffs on some U.S. exports B. China halting the sale of all products in the United States C. U.S. firms never being able to meet the demand for U.S.-produced tires D. the government demanding price cuts from U.S. tire manufactures

A. China retaliating by raising tariffs on some U.S. exports

Twenty-seven countries in Europe have eliminated all tariffs with each other. This group of countries is known as the A. European Union B. United Federation of Europe C. Gruppo Euro D. European Free Trade Association

A. European Union

Linda: Bathing = 60; Grooming = 20 Sandy: Bathing = 50; Grooming = 25 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy each bathe and groom in one week. Refer to table 9-1 and select the statement that accurately interprets the data in the table. A. Linda has absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming B. Sandy has an absolute advantage in dog bathing and Linda has an absolute advantage in dog grooming C. Sandy has an absolute advantage in dog bathing and dog grooming D. Linda has an absolute advantage in dog bathing and dog grooming

A. Linda has absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming

A situation in which a country does not trade with other countries is called A. autarky B. self-actualization C. autonomy D. independence

A. autarky

A firm has successfully adopted a positive technological change when A. it can produce more outputs using the same inputs B. it produces less pollution in its production process C. it can pay its workers less yet increase output D. it sees an increase in workers productivity

A. it can produce more outputs using the same inputs

Suppose your marginal utility from consuming the 3rd slice of cake is zero, then your total utility form consuming cake is A. maximized B. decreasing C. negative D. increasing

A. maximized

The difference between technology and technological change is that A. technology refers to the processes used by firms to transform inputs into outputs whiles technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs. B. Technology is carried out by firms producing physical goods but technological change is an intellectual exercise into seeking ways to improve production C. Technology is product-centered, that is, developing new products with our limited resources while technological change is process-centered in that it focuses on developing new production techniques. D. Technology involves the use of capital equipment while technological change requires the use of brain power

A. technology refers to the processes used by firms to transform inputs into outputs whiles technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs.

Red Stone Creamery currently hires 5 workers. When it added a 6th worker, its output actually fell. Which of the following statements is true? A. the marginal product of the sixth worker must be negative B. the average product of the sixth worker is negative C. the sixth worker is not as skilled as the fifth worker D. the total product becomes negative

A. the marginal product of the sixth worker must be negative

When the price of summer tank tops falls and you buy more of them because they are relatively less expensive, this is called A. the substitution effect B. the income effect C. the deadweight loss effect D. the elasticity effect

A. the substitution effect

Assume that China has a comparative advantage in producing corn and exports corn to Japan. We can conclude that A. China also has an absolute advantage in producing corn relative to Japan B. China has a lower opportunity cost of producing corn relative to Japan C. Japan has an absolute disadvantage in producing corn relative to China D. labor costs are higher for corn producers in Japan than in China

B. China has a lower opportunity cost of producing corn relative to Japan

Refer to table 9-2. Select the statement that accurately interprets the data in the table A. Sarita has a greater opportunity cost than Gabriel for baking cakes B. Sarita's opportunity cost for baking cakes is less than Gabriel's C. Gabriel has a greater opportunity cost than Sarita for baking pies D. Gabriel's opportunity cost for baking cakes and baking pies are both greater than Sarita's

B. Sarita's opportunity cost for baking cakes is less than Gabriel's

When Roxanne, a U.S. citizen, purchases a designer dress from Barneys of New York that was made in Milan, the purchase is A. both U.S. and an Italian export B. a U.S. import and an Italian export C. a U.S. export and an Italian import D. neither an export nor an import for either country

B. a U.S. import and an Italian export

A characteristic of the long run is A. there are fixed inputs B. all inputs can be varied C. plant capacity cannot be increased or decreased D. there are both fixed and variable inputs

B. all inputs can be varied

If the price of lattes, a normal good, falls, A. the income and substitution effects offset each other but the price effect leads you to buy more lattes B. both the income and substitution effects lead you to buy more lattes C. the income effect which causes you to increase your latte consumption outweighs the substitution effect which causes you to reduce your lattes consumption, resulting in more latte purchased D. the substitution effect which causes you to increase you latte consumption outweighs the income effect which causes you to reduce your latte consumption, resulting in more latte purchased

B. both the income and substitution effects lead you to buy more lattes

If Marlowe obtains 9 units of utility per dollar spend on apples and 6 units of utility per dollar spend on oranges, then Marlowe A. is maximizing total utility B. should buy more apples and fewer oranges C. should buy more oranges and fewer apples D. should buy fewer oranges and fewer apples

B. should buy more apples and fewer oranges

The law of diminishing marginal returns states A. that at some point, adding more of a fixed input to a given amount of variable inputs will cause that marginal product of the variable input to decline B. that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline C. that in the presence of a fixed factor, at some point average product of labor starts to fall as more and more variable inputs are added D. average total costs of production initially fall and after some point starts to rise at a decreasing rate as output increases

B. that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline

The marginal product of the labor is defined as A. the additional sales revenue that results when one more worker is hired B. the additional output that results when one more worker is hired, holding all other resources constant C. the additional number of works required to produce one more unit of output D. the cost of hiring one more worker

B. the additional output that results when one more worker is hired, holding all other resources constant

when the price of audio books, a normal good, falls, causing your purchasing power to rise, you buy more of them due to A. the substitution effect B. the income effect C. the deadweight loss effect D. the elasticity effect

B. the income effect

The ratio at which a country can trade its exports for imports from other countries is called A. trade barrier B. the terms of trade C. autarky D. a free trade agreement

B. the terms of trade

If Norwegian workers are more productive than Albanian workers, then trade between Norway and Albania A. cannot take place because Norwegian goods and services will be less expensive than Albanian goods and services B. will take place as long as each country has comparative advantage in a good or service that buyers in the country want C. cannot take place until Albanian workers become more productive D. can take place only if Albania has an absolute advantage in producing a good or service Norwegian buyers want

B. will take place as long as each country has comparative advantage in a good or service that buyers in the country want

Table 9-2 Sarita: Pies = 15; Cakes = 25 Gabriel: Pies = 12; Cakes = 16 Sarita and Gabriel own S&G Bakery. Table 9-2 lists the number of pies and cakes Sarita and Gabriel can each bake in one day. Refer to table 9-2 and select the statement that accurately interprets the data in the table. A. Sarita has an absolute advantage in baking cakes and Gabriel has an absolute advantage in baking pies B. Sarita has an absolute advantage in baking pies and Gabriel has an absolute advantage in baking cakes C. Sarita has an absolute advantage in baking pies and cakes D. Gabriel has an absolute advantage in baking pies and cakes

C. Sarita has an absolute advantage in baking pies and cakes

In the long run, which of the following is true? A. total cost = fixed cost + variable cost B. The size of a firm's physical plant can be changed but the firm cannot adopt new technology C. There are no fixed costs D. The firm can vary its explicit costs but not its implicit costs

C. There are no fixed costs

Consumers maximize total utility within their budget constraint by A. buying the cheapest goods they can find B. buying whatever they like the best C. buying the goods with the largest marginal utility per dollar spent D. spending the same dollar amount for each good

C. buying the goods with the largest marginal utility per dollar spent

If total utility increases at a decreasing rate as as consumer consumes more coffee, then marginal utility must A. remain constant B. increase also C. decrease D. be negative

C. decrease

Marginal utility is the A. total satisfaction received from consuming a given number of units of a product B. average satisfaction received from consuming a product C. extra satisfaction received from consuming one more unit of a product D. satisfaction achieved when a consumer has had enough of a product

C. extra satisfaction received from consuming one more unit of a product

A tariff is a tax exposed by a government on A. exports B. services C. imports D. luxury items

C. imports

Improvements in inventory control represent a positive technological change because they allow firms to produce the same output with fewer inputs. In recent years, many firms have adopted an inventory system in which firms accept shipments from suppliers as close as possible to the time they will be needed. Wal-Mart has been a pioneer in using inventory control systems to this in its stores. This type of inventory system is called a _________ inventory system. A. first-in-first-out B. cash-and-carry C. just-in-time D. buy-now-pay-later

C. just-in-time

If the opportunity cost of production for two goods is different between two countries, then A. trade cannot benefit either country B. only one country can be made better off by trade C. mutually beneficial trade is possible D. trade will only benefit both countries if one can lower its opportunity costs

C. mutually beneficial trade is possible

If a producer is not able to expand its plant capacity immediately, it is A. bankrupt B. operating in the long-run C. operating in the short-run D. losing money

C. operating in the short-run

A firm increased its production and sales because the firm's manager rearranged the layout of his factory floor. This is an example of A. investment in human capital B. economies of scale C. positive technological change D. inspired management

C. positive technological change

Most people would prefer to drive a luxury car that has all the options, but more people buy less expensive cars even though they could afford the luxury car because A. car buyers are irrational B. the total utility of less expensive cars is greater than that of luxury cars C. the marginal utility per dollar spent on the less expensive car is higher than that spent on luxury cars D. luxury cars cost a lot more than non-luxury cars

C. the marginal utility per dollar spent on the less expensive car is higher than that spent on luxury cars

Consumer have to make tradeoffs in deciding what to consume because A. not all goods give them the same amount of satisfaction B. the price of goods vary C. they are limited by a budge constraint D. there are not enough of all goods produced

C. they are limited by a budge constraint

Workers in industries protected by tariffs and quotas are likely to support these restrictions because A. they do not want to offend their employers who want them B. politicians lobby to convince workers the restrictions will make them better off C. they believe the restrictions will protect their jobs D. they dont understand that the restrictions will threaten their jobs

C. they believe the restrictions will protect their jobs

Which of the following is an example of a long-run adjustment? A. Your university offers Saturday morning classes next fall. B. Ford Motor Company lays off 2,000 assembly line workers. C. A soybean farmer turns on the irrigation system after a month long dry spell D. Wal-Mart builds another Supercenter

D. Wal-Mart builds another Supercenter

A "stockout" occurs when A. brokers run out of shares of stock to sell of a particular company B. a disruption due to a power outage, ect., causes temporary production shutdown C. a company hold too many goods in inventories D. a firm loses sales because goods consumers want are not available

D. a firm loses sales because goods consumers want are not available

Whenever a buyer and a seller agree to trade, A. the agreement is made based on absolute advantage B. they must have identical opportunity costs in producing their respective products C. one part will always be worse off D. both must believe they will be made better off

D. both must believe they will be made better off

________ is the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors A. Absolute advantage B. specialization C. Autarky D. comparative advantage

D. comparative advantage

Which of the following is not a source of technological advancement for a producer? A. better trained workers B. more efficient physical capital C. higher skill level of mangers D. outsourcing some aspect of production

D. outsourcing some aspect of production

If your total satisfaction increases when you consume another unit, your marginal unity must be A. increasing B. decreasing C. negative D. postive

D. postive

If we have information about workers' marginal products, then total and average product can be found by A. dividing marginal costs by the number of workers B. multiplying the average marginal product times the number of workers C. summing the marginal values to find the total and multiplying it times the number of workers to get the average D. summing the marginal values to find the total and dividing it by the number of workers to get the average

D. summing the marginal values to find the total and dividing it by the number of workers to get the average

A firm's cost of production is determined by all of the following except A. the technology used to produce its output B. the productivity of its workers C. the cost of raw material used in production D. the amount of corporate taxes it must pay on its profit

D. the amount of corporate taxes it must pay on its profit

If, as a person consumes more and more of a good, each additional unit adds less satisfaction than the previous unit consumed, we are seeing the workings of A. the law of demand B. the law of supply C. the law of increasing marginal opportunity cost D. the law of diminishing marginal utility

D. the law of diminishing marginal utility

The satisfaction a person receives from consuming goods and services is called A. contentment B. psychic income C. wealth D. utility

D. utility

Consider a downward-slopping demand curve. When the price of an inferior good increases, the income and substitution effects A. work in the same direction to increase quantity demanded B. work in the same direction to decrease quantity demanded C. work in the opposite directions, and quantity demanded increases D. work in the opposite directions, and quantity demanded decreases

D. work in the opposite directions, and quantity demanded decreases