Macroeconomics: Chapter 16
If an additional unit of labor costs $20 and has a MPP of 15 units of output, the marginal cost is:
$1.33
The total variable cost of 2 units of output in the Table is:
$12.
The marginal cost of the third unit of output in the Table is:
$3.
The total cost of 3 units of output in the Table is:
$30.
Which of the following could be the elasticity of demand for a good for which an increase in price would increase revenues?
0.5
What is the marginal physical product of the fourth unit of labor in the Table?
20.
If the elasticity of demand for tuna is 2, then a 1.5% increase in the price of tuna will decrease the quantity demanded by:
3%, and tuna sellers' total revenue will decrease as a result.
If income falls 4 percent for a year and as a result the quantity of new homes demanded falls from 23 million to 20 million units for the year, the value of the income elasticity of demand for housing is closest to:
3.5.
How many units of output can be produced when one unit of labor is employed in the Table?
30.
What is the marginal physical product of the second unit of labor in the Table?
36.
If the price elasticity of demand for a good is 0.1, then a 0.4 percent decrease in quantity demanded must have been caused by a
4 percent increase in price.
The marginal physical product of the fourth unit of labor in the Figure above is:
8.0 units per day
The marginal cost curve intersects the minimum of the curve representing:
ATC.
In the Figure above, a firm that produces over 800 units of output should choose a plant with which short-run average total cost function?
ATC3 only.
Hideki is the owner/operator of a flower shop. Last year he earned $250,000 in total revenue. His explicit costs were $175,000 paid to his employees and suppliers (assume that this amount represents the total opportunity cost of these resources). During the course of the year he received three offers to work for other flower shops with the highest offer being $75,000 per year. Which of the following is true about Hideki's accounting and economic profit?
Accounting profit = $75,000; economic profit = $0
Suppose the quantity demanded of ski boats falls from 4.0 million to 3.0 million as a result of an average price increase from $20,000 to $25,000 per boat. The absolute value of the price elasticity of demand is closest to:
B) 1.29.
Marginal cost is equal to:
Change in total cost ÷ change in total output.
Assume a given amount of output can be produced by several small plants or by one large plant with identical minimum per-unit costs. This long-run situation reflects the existence of:
Constant returns to scale.
As the production rate is increased, average fixed costs:
Decline.
If Carmen's Coffee Company wants to increase total revenue and the price elasticity of demand is 1.4, the company should:
Decrease the price of coffee.
Which of the following is a long-run concept?
Diseconomies of scale.
Accounting costs and economic costs differ because
Economic costs include implicit costs and accounting costs do not.
In the short run, when a firm produces zero output, total cost equals:
Fixed costs.
f a decrease in the price of music downloads causes an increase in the sales of CD burners, then the:
Greater and smaller, respectively, than their accounting counterparts
Which of the following is the best explanation of why the law of diminishing returns does not apply in the long run?
In the long run, firms can increase the availability of space and equipment to keep up with the increase in variable inputs.
If MPP is falling, then the:
Marginal cost of each unit of output is rising.
The ATC curve will be sloping upward so long as:
Marginal costs are greater than average total costs.
A production function shows the:
Maximum output that can be produced with varying combinations of factor inputs.
According to the law of diminishing returns, the marginal physical product of a factor declines as:
More of the factor is used, holding other inputs constant.
MP3 players and MP3 files are complementary goods. The cross-price elasticity of demand between MP3 players and MP3 files is expected to be:
Negative.
Which of the following is most likely a fixed cost in the short run?
Property taxes.
In the long run, which of the following is likely to be a variable cost?
Rent, wages and all other costs are variable in the long run.
Marginal cost:
Rises as a direct result of diminishing marginal returns.
Which of the following is always downward sloping?
The average total cost curve when it is above the marginal cost curve.
Which of the following statements is/are incorrect?
The demand for natural gas is more elastic over a short period of time than over a long period of time.
In economics, the long run is considered to be:
The time period when all costs are variable.
An increase in production in the short run definitely results in an increase in:
Total costs.
At any given rate of output, the difference between total cost and fixed cost is:
Variable cost.
Which of the following is true as output increases?
Variable costs rise.
"Unit labor cost" is equal to the:
Wage rate divided by MPP.
Average variable costs approach average total costs as output rises because:
average fixed costs are falling.
If the demand for donuts is elastic, then a decrease in the price of donuts will
increase total revenue of donut sellers.
A 10% fall in the price of apples results in a 5% increase in the quantity of apples demanded. Demand of apples in that price range is:
inelastic
A person who needs to have hearth surgery soon to survive has a demand for hospital services that is relative
inelastic.
If increasing the price of a good leads to an increase in total revenue, then the demand for the good must be
inelastic.
Economic costs and economic profits are typically:
normal good and a substitute for good B
The income elasticity of good A is positive and the cross-price elasticity between good A and good B is positive. Good A is a(n) :
normal good and a substitute for good B
An average value is declining only if:
the marginal value is below the existing average value