EC

If a paper mill shuts down its operations for three months so that it produces nothing, its __________________ will be reduced to zero?

variable costs

In economics, the demand for a good refers to the amount of the good that people:

will buy at various prices.

The marginal utility of two goods changes ______________.

with the quantities consumed

If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that:

Goods X and Y are complement goods.

Which of the following is a labor resource?

a computer programmer

In terms of microeconomic analysis, what is the function of "utils"?

a measurement of utility

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is:

a shift of the demand curve for beef to the left

Any given demand or supply curve is based on the ceteris paribus assumption that ___________________.

all else is held equal

The basic purpose of the other-things-equal assumption is to:

allow one to reason about the relationship between variables X and Y without the intrusion of variable Z.

In order to determine __________, the firm's total costs must be divided by the quantity of its output.

average cost

The _________ curve will always lie below the curve for average cost because average cost includes ___________ in the number of the calculation.

average variable cost; fixed costs

A person should consume more of something when its marginal:

benefit exceeds its marginal cost

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of:

buyers and sellers

Marginal thinking is best demonstrated by:

choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.

When demand is inelastic:

consumers are not very responsive to changes in price.

When __________________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right.

costs of production fall

It is said that in a perfectly competitive market, raising the price of a firm's product from the prevailing market price of $179.00 to $199.00, ____________________.

could likely result in a notable loss of sales to competitors

Refer to Figure 3-2. A change from Point A to Point B represents a(n):

decrease in quantity demanded.

Refer to Figure 3-3. A change from Point A to Point E represents a(n):

decrease in supply.

The term ___________________ is used to describe the common pattern whereby each marginal unit of a consumed good provides less of an addition to utility than the previous unit.

diminishing marginal utility

Which of the following is most likely to cause variation in American household spending patterns?

each of the answers will cause a variation

Scarcity implies that:

it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.

The four factors of production are:

land, labor, capital, and entrepreneurial ability

Economists refer to this pattern, the ___________________________________, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines.

law of diminishing marginal utility

A 10 percent increase in income leads to a 15% decrease in the quantity of macaroni and cheese demanded but no change in the price of macaroni and cheese. From this information, we can assume:

macaroni is an inferior good and price elasticity of demand is greater than 1.

Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good.

marginal analysis

The term __________ is used to describe the additional cost of producing one more unit.

marginal cost

The step-by-step process of finding the choice with highest total utility involves a comparison of the:

marginal utility gained and lost from different choices along the budget constraint.

The term __________ refers to the additional utility provided by one additional unit of consumption

marginal utility.

A decrease in consumer preference for a product, other things being equal, will cause:

market demand to shift to the left.

Which of the following would not be classified as an economic resource by economists?

money in a business checking account

Which of the following is a land resource?

natural gas

Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be.

normative statement

The Latin term "ceteris paribus" means:

other things equal

The elasticity of supply is defined as the _______ change in quantity supplied divided by the _______ change in price.

percentage; percentage

The typical pattern revealed in a budget constraint model shows that as the quantity of a good consumed rises,

total utility rises, but marginal utility falls.

But nearly all supply curves share a basic similarity: they slope _______________.

up from left to right

In microeconomic terms, the ability of a good or a service to satisfy wants is called:

utility

The general pattern that consumption of the first few units of any good tends to bring a higher level of _______ to a person than consumption of later units is a common pattern.

utility

The term ______________ described a situation where the quantity of output rises, but the average cost of production falls.

economies of scale

Refer to Figure 5-1. With reference to Graph B, at a price of $5, total revenue equals:

$200.

Mr. Feencher makes $200 per day as a social science instructor at a local community college. He takes two (2) days off work without pay, to drive to another city to attend a college football game hosted by his favorite team. The cost of transportation, meals, and lodging for the trip is $250. The cost of the football ticket is $6. The opportunity cost of Mr. Feencher's decision to attend the game is:

$400

Refer to Figure 5-1. With reference to Graph A, at a price of $10, total revenue equals:

$400.

Anne Morgan spent all her clothing budget on bathing suits and beach bags. Each bathing suit cost $75. At Tammy's optimal choice, her marginal utility from the last bathing suit purchased is 300 and her marginal utility from the last beach bag purchased is 200. This means that each handbag must cost:

$50

Alex has $18 per week in his entertainment budget. He splits his time between going to the movies and renting video games. Each movie costs $6 while each video game rental costs $3. The measured total utility of each of his activities is shown in the table below. What is Alex's utility maximizing point?

1 movie, 4 video game rentals

Todd is a cattle rancher. In June and July he spent his clothing budget on jeans and cowboy hats. Each pair of jeans cost $50 and each hat cost $100. At Todd's optimal choice, his marginal utility from the last pair of jeans purchased is 200. This means that his marginal utility from the last cowboy hat purchased is:

400

Kelly's company manufactures rubber balls used by elementary schools for playground activities. The table below sets out her firm's production cost information. Some values are missing. Which of the following statements is correct?

A = 20; E = 5

Which of the following is the best synonym for "marginal" in economics?

Additional

In the circular flow diagram model:

All answers are correct.

Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect:

Andy's demand for beer to increase.

____________ occur when the marginal gain in output diminished as each additional unit of input is added.

Diminishing marginal returns

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

The statement is correct.

___________ included all spending on labor, machinery, tools, and supplied purchased from other firms.

Total costs

_____________ is calculated by taking the quantity of everything that is sold and multiplying it by the sale price.

Total revenue

___________ include all of the costs of production that increase with the quantity produced.

Variable costs

When __________________ exist, doubling of all inputs will result in more than doubling output, which means __________________________________________.

economies of scale; a larger factory can produce at a lower average cost than a smaller company.

Demand is said to be ___________ when the quantity demanded is very responsive to changes in price.

elastic

The ______________ is the only price where quantity demanded is equal to quantity supplied.

equilibrium price

If the supply curve for housing is perfectly inelastic, then a reduction in demand will cause the equilibrium price to:

fall and the equilibrium quantity to stay the same.

Which of the following should typically be ignored because spending has already been made and cannot be changed?

fixed (sunk) costs

A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production.

fixed costs; do not change.

The circular flow diagram of economic activity is a model of the:

flow of goods, services, and payments between households and firms

An inferior good is a product:

for which demand decreases as income increases.

Which of the following best describes a fiscal policy tool?

government spending

Which of the following would reduce the supply of microcomputers?

higher wage rates for the workers that assemble the computers

A perfectly elastic supply curve is:

horizontal.

The term _____________ describes a situation where a ________________ causes a reduction in the buying power of income, even though actual income has not changed.

income effect; higher price

The longer the time period considered, the more the elasticity of supply tends to:

increase

Refer to Figure 3-1. Using the graph above and beginning on D1, a shift to D2 would indicate a(n):

increase in demand.

Refer to Figure 3-3. A change from Point A to Point B represents a(n):

increase in quantity supplied.

Refer to Figure 3-3. A change from Point A to Point D represents a(n):

increase in supply.

The price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise:

increasing the price of game tickets because demand is inelastic.

The demand schedule for a good:

indicates the quantities that will be purchased at alternative market prices.

Refer to Figure 5-1. Graph B represents a demand curve that is relatively _________. Total revenue _________ as the price decreases from $10 to $5.

inelastic; decreases

Taxes on goods with __________ demand curves will tend to raise more tax revenue for the government than taxes on goods with __________ demand curves.

inelastic; elastic

Which of the following best describes a monetary policy tool?

interest rates

When Marietta chooses to only purchase a combination of goods that lie within her budget line, she:

is maximizing utility.

Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business. Which is it?

physical space for the galllery

For economists, the word "utility" means:

pleasure or satisfaction

If a perfectly competitive firm is a price taker, then

pressure from competing firms will force acceptance of the prevailing market price.

The term _________________ refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product.

price taker

The downward slope of the demand curve again illustrates the pattern that as _____________ rises, _________________ decreases.

price, quantity demanded

Why would labor be treated as a variable cost?

producing larger quantities of a good or service generally requires more workers

According to Ralph Waldo Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover." According to economists, "Want" exceeds "Have" because:

productive resources are limited

The price elasticity of demand measures the:

responsiveness of quantity demanded to a change in price.

If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to:

rise and the equilibrium quantity to stay the same.

Fixed costs are important because, at least in the ___________, the firm _______________.

short run; cannot alter them.

If a firm's revenues do not cover its average variable costs, then that firm has reached its _________________ .

shutdown point

If the supply curve for aspirin is perfectly elastic, then a reduction in demand will cause the equilibrium price to:

stay the same and the equilibrium quantity to fall.

The ________________ arises when a price changes because consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price.

substitution effect

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the _________________________.

supply curve to the right

Will decides to spend an hour playing basketball rather than studying. His opportunity cost is:

the benefit to his grades from studying for an hour

The opportunity cost of attending university includes which of the following?

the income you forgo in order to attend classes

Which of the following is considered to be a tell-tale signal that the point with the highest total utility has been found?

the marginal utility per dollar is the same for both goods

Economics may best be defined as the:

the social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity

If new manufacturers enter the computer industry, then (ceteris paribus):

the supply curve shifts to the right.

A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of:

the supply curve.

Refer to the diagram above. Based on the information illustrated in the graph, which of the following is correct?

the transition point between where MC is pulling down and pulling up AC always occurs at the minimum points of the AC curve

If cola and iced tea are good substitutes for consumers, then it is likely that:

their cross price elasticities are greater than zero.

According to the law of supply:

there is a direct relationship between price and quantity supplied.