Econ Optional Test

if a firm's demand for labor is elastic, a union-negotiated wage increase will

cause the firm's payroll to decline

which of the above diagrams illustrates the effect of an increase in automobile worker wages on the market for automobiles

it is costlier to produce automobiles so LEFTWARD shifter of supply curve (answer D)

the demand for auto's is likely to be

less elastic than the demand for Honda Accords

suppose that the price of product X rises by 20% and the quantity supplied of X increases by 15%. the coefficient of price elasticity of supply for good X is

less than 1 and therefore supply is inelastic

if in the short run a firm's total product is increasing then its

marginal product could be either increasing or decreasing

marginal product

may initially increase, then diminish, and ultimately become negative

explicit costs

monetary payments

which of the following would NOT shift the demand curve for beef

a reduction in the price of cattle feed

creamy crisps economic profit is

add together costs and subtract that number from total rev

creamy crisps total economic cost (explicit + implicit costs, including a normal profit) are

add together everything except annual revenue from operations

refer to the above diagram in which S is the market supply curve and S1 is a supply curve comprising all costs of production including external costs. assume that the number of people affected by these external costs is large. without government interference this market will reach

an over allocation of resources to this production

when the production or consumption of a good involves an externality

someone not involved in buying or selling the good is affected

the long run average total cost curve is based on the assumption that

the assumption that all resources are variable

refer to diagram. this production possibilities curve is constructed so that (bowed outward)

the opportunity cost of bread increases as more bread is made

normal profit is

the return to the entrepreneur when economic profits are 0

if the demand for product B shifts to the right as the price of product A declines then

A and B are complementary goods

the vertical distance between a firm's ATC and AVC curves represents

AFC decreases as output increases

which of the above diagrams illustrates the effects of a decline in the price of personal computers on the market for software

complementary goods decline on price would cause software demand to shift to the RIGHT (answer A)

if the demand for farm products is price inelastic a good harvest will cause farm revenues to

decrease

if Z is an inferior good, a decrease in money income will shift the

demand curve for Z to the right

which of the diagrams illustrates the effect of a governmental subsidy on the market for AIDS research

government gives subsidy to reduce cost of research which causes a RIGHTWARD shift in supply (answer C)

the diagram concerns supply adjustments to an increase in demand (d1 to d2) in the immediate market period, the short run and the long run. in the immediate market period the increase in demand will

increase equilibrium price but not the equilibrium quantity

if the demand for farm products is price elastic a good harvest will cause farm revenues to

increase in supply

marginal product is

increase in total output attributable to the employment of one more worker

moving upward on a downward sloping straight-line demand curve, we find that price elasticity

increases continually

the short run average total cost curve is U shaped because

increasing and diminishing returns

elastic

price and total rev change in opposite direction

inelastic

price and total rev change in same direction

which of the following is assumed in constructing a typical production possibilities curve

production technology is fixed

where is diseconomies of scales on the curve

rising section of curve

because the marginal product of a variable resource at first increases and then decreases as the output of the firm is increased

total cost at first increases at a decreasing rate and then increases at an increasing rate

implicit costs

value of next best use, self-owned resources, self-employed resources

economic systems differ according to what two main characteristics

who owns the factors of production and the methods used to coordinate economic activity