ECON Unit 4 Test

If an inferior good is produced in a competitive market, which of the following combination of events could cause the price of the good to increase and the quantity change be intermediate?

A decrease in the average income of consumers and a decrease in the number of producing firms

The law of diminishing marginal returns states that

An increase in one unit of input yields less extra output

If MUx/Px exceeds MUy/Py, then the consumer should

Consume more of good X and less of good Y

Marginal product is

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

If a store raises price by 20% and its total revenue increases by 10% the demand it faces in this price range must be

Elastic

A typical marginal cost curve for a firm

First falls then rises as diminishing returns sets in

If a firm's average total cost decreases as the firm increases its output, the marginal cost of the firm must be

Less than the average total cost

Garcia is currently spending his entire lunch budget on 3 sodas and 4 hot dogs. At his current level of consumption, Garcia's marginal utility for sodas is 5 utils and his marginal utility for hot dogs is 10 utils. In order to maximize his total utility, Garcia should

Maintain his current level of consumption if the price of a soda is $1 and the price of a hot dog is $2

Which of the following will occur if the government imposes a price floor below the equilibrium price of a good

Marginal cost will equal marginal benefit

Assume that labor is the only variable input. If a firm's short-run marginal cost is increasing as output rises, which of the following must be true

Marginal product of labor is decreasing

Assuming that the demand for cigarettes is relatively inelastic with respect to price, a $1.00 tax on cigarettes will likely be paid according to which of the following?

More than 50 cents will be paid by consumers

The distance between ATC and AVC reflects

The average fixed cost at each level of output

Assume that more corn is used to produce ethanol. Simultaneously, more effective control of pests and weeds occurs in farming. Which of the following will definitely occur in the corn market

The quantity of corn will increase

Which of the following is true if consuming one unit of good yields 100 utils and consuming the second unit of the good increases satisfaction by 20 utils?

The total utility of consumer two utils is 120