Mirco Midterm
The table above shows the amount of labor inputs necessary to produce given levels of output. If the cost of a unit of labor is $20 and total fixed cost is $100, the average total cost of producing 20 units of output is
$7
A professor hires two aides, assigning them the tasks of reading student papers and of typing lecture notes on a computer. One of the aides, Ben, can read 1 page of a student paper per minute or type 50 words of lecture notes per minute, and the other aide, Ann, can read 3 pages of a student paper per minute or type 60 words of lecture notes per minute.
Ann has a comparative advantage in reading student papers, and Ben has a comparative advantage in typing lecture notes.
Which of the following is always true of the relationship between average and marginal costs?
Average variable costs are increasing when marginal costs are higher than average variable costs.
The table above shows the amount of labor required to produce a unit of corn and a unit of shoes in Brazil and Spain. If both countries have equal numbers of workers, what pattern of international trade between Brazil and Spain is most likely to emerge?
Brazil will export corn and import shoes.
Economic profit can be calculated as accounting profit minus which of the following?
Implicit costs
The absolute value of the price elasticity of demand for a good increases when
consumers spend greater portion of their budget on the good
To determine whether two goods are complements, one would calculate the
cross-price elasticity of demand
Assume that people like onions on their hamburgers. If the supply of hamburgers decreases, the demand for onions will most likely
decrease because hamburgers and onions are complements
If a firm's long-run average total cost increases as output increases, the firm is experiencing
diseconomies of scale
The long-run average cost curve will be sloping downward if a firm experiences
economies of scale
According to the diagram, what is the dollar amount of the unit tax?
$1.00
The table below is partially filled in with the different types of costs for a firm. Based on the information in the table, what is the marginal cost of producing the second unit?
$50
Bruce is a talented writer and graphic artist who enjoys both types of work equally. Instead of earning $45,000 as a writer, Bruce now earns $25,000 in accounting profits as a graphic artist using the same computer equipment he would have used as a writer. What is Bruce's economic profit from choosing to work as a graphic artist?
-$20,000
The table provided shows the total benefits and costs of studying at the library. If the student is rational, the optimal number of hours to spend at the library is
3
The average total cost to the firm of producing 2 units of output is
95.00
Which of the following must be true if at the tenth unit of output, marginal cost (MC) is $130 and average total cost (ATC) is $150 ?
ATC of producing the ninth unit is higher than $150.
If bologna is an inferior good, which of the following must be true?
An increase in consumer income will decrease the demand of bologna.
Which of the following will cause the supply curve for shoes to shift to the right?
An increase in the number of firms producing shoes
Command economies differ from capitalist economies mainly because of which of the following?
Command economies have higher degree of government ownership of resources.
A linear production possibilities curve indicates which of the following?
Constant opportunity costs
In which of the following situations is a good NOT scarce?
Consumer give up nothing to obtain more of the good.
According to the information in the table above, which of the following statements is true if both countries have the same number of workers?
Country A has an absolute advantage in manufactured goods but a comparative advantage in service goods.
The table above shows the opportunity costs of producing apples and oranges in Countries X and Y. Which of the following can be concluded based on the data given in the table?
Country X has a comparative advantage in producing apples.
Dana and Robin produce smoothies and pizza. In one hour Dana can make 20 smoothies or 10 pizzas. In one hour Robin can make 18 smoothies or 6 pizzas. Which of the following statements is true?
Dana has a comparative advantage in making pizzas, and Robin has a comparative advantage in making smoothies.
Which of the following best defines opportunity cost?
It is the amount of one product that must be given up in order to produce an additional unit of another product.
Which of the following indicates the presence of economies of scale as the quantity of output increases?
Long-run average total cost decreases.
Assume that the fixed cost is $50. Based on the cost and output data in the table above, what is the marginal cost when the firm increases its output from three to four units and the average total cost of producing 4 units?
Marginal Cost : $25, ATC : $35
Assume that a firm uses only one variable input. If a firm is experiencing diminishing returns, which of the following is true as more of the variable input is used?
Marginal cost will increase.
If the market depicted in the diagram above is initially in equilibrium, which of the following will result from the government's setting a price ceiling at P3?
Market price will be unaffected.
If the government eliminates an effective minimum wage in a competitive labor market, which of the following is true?
Minimum wage workers will experience a decrease in hourly pay
A country produces computers and rice. If resources are fully employed and there is technological progress only in the production of rice, the opportunity costs of producing computers and rice will change in which of the following ways?
Opportunity cost of computers increase and opportunity cost of rice decrease
The fundamental difference between a market economy and a command economy lies in which of the following?
Property rights and protection of private property
Which of the following is necessary in a well-functioning capitalist economy but not in a command economy?
Protection of property rights
If resources were perfectly substitutable in all activities, which of the following would be true?
The production possibilities curve would be a straight line.
The diagram above depicts demand and supply curves in a city's rental housing market. If a price ceiling of $1,000 is imposed on the market, which of the following will occur?
The quantity of rental housing demanded will increase.
Movement along a production possibilities curve shows which of the following?
The trade-offs society faces
Which of the following will occur if the government imposes a price ceiling below the equilibrium price of a good?
There will be a shortage in the market.
The chart below shows the number of resource units the countries Gamma and Omega must use to produce one unit of food or one unit of clothing. Which of the following statements is true according to the chart above?
Trade should take place, with Gamma specializing in food production and Omega specializing in clothing production.
Which of the following best describes the law of demand?
When the price of a good decreases, its quantity demanded increases.
Technological advances will lead to
a decrease in average total costs
Improvements in technology for producing all goods must result in
an outward shift in the production possibilities curve
If the increase in the price of one good decreases the demand for another, then the two goods are
complementary goods
A farmer in Country A can harvest 20 bushels of wheat or 10 bushels of corn in a day, while a farmer in Country B can harvest 8 bushels of wheat or 8 bushels of corn in a day. If Country A and Country B specialize and trade, Country A will
export wheat and import corn
An opportunity cost is entailed in which of the following situations? i. A student decides to attend college full-time. ii. A family uses its $20,000 savings to purchase an automobile. iii. A farmer decides to grow more wheat and less corn.
i, ii, iii
The opportunity cost of owning a business is equal to which of the following? i. The economic profits earned in the business ii. The accounting profits earned in the business iii. The profits that could be earned in another business using the same amount of resources
iii only
In the short run, a decrease in production costs of a product will shift
only the supply curve to the right
If a 5 percent wage increase in a particular labor market results in a 10 percent decrease in employment, the demand for labor is
relatively elastic
For an inferior good, an increase in consumer income will cause
the demand curve to shift to the left
An outward shift in the production possibilities curve of an economy can be caused be an increase in
the labor force
The cross-price elasticity of demand between good X and good Z measures the percentage change in the quantity demanded of good X in response to a percentage change in
the price of good Z
