Modules 50-52 Econ (14-16 Modules)

The optimal consumption rule states that total utility is maximized when all income is spent and a. MU/P is equal for all goods b. MU is equal for all goods c. P/MU is equal for all goods d. MU is high as possible for all goods e. The amount spent on each good is equal

a. MU/P is equal for all goods

Which of the following is the best definition of accounting profit? Accounting profit equals total revenue minus depreciation and total a. explicit cost only b. implicit cost only c. explicit cost plus implicit cost d. opportunity cost e. explicit cost plus opportunity cost

a. explicit cost only

Which of the following is considered when calculating economic profit but not accounting profit? a. implicit cost b. explicit cost c. total revenue d. marginal cost e. All of the above are considered when calculating accounting profit.

a. implicit cost

Assume there are two goods, good X and good Y. Good X costs $5 and good Y costs $10. If your income is $200, which of the following combinations of good X and good Y is on your budget line? a. 0 units of good X and 18 units of good Y b. 0 units of good X and 20 units of goodY c. 20 units of good X and 0 units of goodY d. 10 units of good X and 12 units of goodY e. all of the above

b. 0 units of good X and 20 units of good Y

Which of the following is true regarding equity and efficiency in competitive markets? a. Competitive markets ensure equity and efficiency b. There is often trade-off between equity and efficiency c. There is no generally agreement about the level of equity and efficiency of the market. d. None of the above

b. There is often a trade-off between equity and efficiency

A consumer is spending all of her income and receiving 100 utils from the last unit of good A and 80 utils from the last unit of good B. If the price of good A is $2 and the price of good B is $1, to maximize total utility the consumer should buy a. more of good A b. more of good B c. less of good B d. more of both goods e. less of both goods

b. more of good B

You sell T-shirts at your school's football games. Each shirt costs $5 to make and sells for $10. Each game lasts two hours and you sell 100 shirts per game. You could always be earning $8 per hour at your other job. Which of the following is correct? Your accounting profit from selling shirts at a game is a. $1,000 and your economic profit is $500 b. $500 and your economic profit is $1,000 c. $500 and your economic profit is $484 d. $484 and your economic profit is $500 e. $500 and your economic profit is also $500

c. $500 and your economic profit is $484

At market equilibrium in a competitive market, which of the following is necessarily true? I. Consumer surplus is maximized II. Producer surplus is maximized III. Total surplus is maximized a. I only b. II only c. III only d. I and II only e. I, II, III

c. III only

An excise tax will be paid mainly by producers when a. it is imposed on producers b. it is imposed on consumers c. the price elasticity of supply is low and the price elasticity of demand is high d. the price elasticity of supply is high and the price elasticity of demand is low e. the price elasticity of supply is perfectly elastic

c. the price elasticity of supply is low and the price elasticity of demand is high

An excise tax imposed on sellers in a market will result in which of the following? I. an upward shift of the supply curve II. a downward shift of the demand curve III. deadweight loss a. I only b. II only c. III only d. I and III only e. I, II, and III

d. I and III only

Generally, each successive unit of a good consumed will cause marginal utility to a. increase at an increasing rate b. increase at a decreasing rate c. increase at a constant rate d. decrease e. either increase or decrease

d. decrease

The optimal consumption bundle is always represented by a point a. inside the consumer's budget line b. outside the consumer's budget line c. at the highest point on the consumer's budget line d. on the consumer's budget line e. at the horizontal intercept of the consumer's budget line

d. on the consumer's budget line

Which of the following is an example of an implicit cost of going out for lunch? a. the amount of the tip you leave the waiter b. the total bill you charge to your credit card c. the cost of gas to drive to the restaurant d. the value of the time you spent eating lunch e. all of the above

d. the value of the time you spent eating lunch

When a competitive market is in equilibrium, total surplus can increase by I. reallocating consumption among customers II. reallocating sales among sellers III. changing quantity traded a. I only b. II only c. III only d. I, II, III e. None of the above

e. None of the above

Which of the following is an implicit cost of attending college? a. tuition b. books c. laptop computer d. lab fees e. forgone salary

e. forgone salary