micro chapter 3

Which of the following is likely to occur when additional units of bottled water are available at a low price? The total value of bottled water to consumers will be exceedingly low. The opportunity cost of purchasing bottled water will be high. The marginal value derived from bottled water will be quite high. Consumer surplus derived from the first few bottles of water will be large.

Consumer surplus derived from the first few bottles of water will be large.

Which of the following is most likely to be true of a loss incurred by a producer? It occurs when the revenue derived from sales is insufficient to cover the opportunity cost of the resources used to produce a good. It indicates that the good produced is valued more than the other goods those resources could have produced. It indicates the producer has increased the value of the resources under his or her control. It results in a flow of resources to other producers who can produce the same good at a higher cost.

It occurs when the revenue derived from sales is insufficient to cover the opportunity cost of the resources used to produce a good.

Which of the following is true of the demand curve for a good? Its height indicates the marginal benefit consumers receive from additional units of the good. It indicates the relationship between the price of the good and the income of a consumer. Its height indicates the maximum amount of a particular good consumers are willing to buy at a given price. It indicates the relationship between the price of the good and the price of other goods.

Its height indicates the marginal benefit consumers receive from additional units of the good.

Which of the following is most likely to happen when the market price of cereals decreases? More of it will be purchased, resulting in a larger surplus for consumers. More of its substitute will be purchased, resulting in a larger surplus for consumers. Less of its complement will be purchased, resulting in a smaller surplus for consumers. Less of it will be purchased, resulting in a smaller surplus for consumers.

More of it will be purchased, resulting in a larger surplus for consumers.

Which of the following is likely to occur when people anticipate inflation? The money interest rate will rise, and it will overstate the yield from lending funds in the loanable funds market. The purchasing power of money will increase. The inflationary premium paid to the lender will decrease. The money interest rate will fall, and it will understate the true cost of borrowing funds in the loanable funds market.

The money interest rate will rise, and it will overstate the yield from lending funds in the loanable funds market.

Suppose Brax Technologies produces widgets. The workers producing widgets get an hourly wage of $3 per hour. Which of the following is likely to happen when the government imposes a minimum wage of $7 per hour? The supply curve of widgets will most likely shift leftward. There will be a downward movement along the supply curve of widgets. There will be an upward movement along the supply curve of widgets. The supply curve of widgets will most likely shift rightward.

The supply curve of widgets will most likely shift leftward.

When the quantity of a good purchased is highly responsive to a change in its price, the demand curve for the good is most likely to be: flat. upward sloping. U-shaped. steep.

flat

Suppose Perylia can produce two goods: barley and corn. If the world price of corn increases by 30 percent more than the price of barley, the producers of Perylia have a strong incentive to: increase the production of corn as a lower relative price of corn increases the demand for corn. decrease the production of corn as a higher relative price of corn decreases the demand for corn. increase the production of both corn and barley as the terms of trade for agricultural products improve. increase the production of corn as a higher relative price of corn increases their marginal revenue.

increase the production of corn as a higher relative price of corn increases their marginal revenue.

Which of the following is true about the market value of an asset? It is inversely related to the market interest rate. It is always less than the present value of the expected net revenue that can be earned by the asset. It is inversely related to the future income stream generated by the asset. It is always greater than the present value of the expected net revenue that can be earned by the asset.

it is inversely related to the market interest rate

Consumers will tend to expand their consumption of a good until: its price and marginal value are equal. its opportunity cost equals zero. its total value and marginal value are equal. its marginal value equals zero.

its price and marginal value are equal.

If the government increases the tax on cheese, it is most likely to result in a(n): rightward shift of the supply curve of cheese. downward movement along the supply curve of cheese. upward movement along the supply curve of cheese. leftward shift of the supply curve of cheese.

leftward shift of the supply curve

Suppose Derek buys a lottery ticket and expects to win at least $1 million. Such expectations about his future income are most likely to result in a(n): inward shift of his demand curve. outward shift of his demand curve. upward movement along his demand curve. downward movement along his demand curve.

outward shift in his demand curve

Which of the following is true of market prices? Prices coordinate the choices of buyers and sellers. Prices show the minimum price at which sellers are willing to sell. Prices determine the amount of government intervention in the market. Prices show the maximum price that buyers are willing to pay.

prices coordinate the choices of buyers and sellers

Which of the following is likely to occur when investment funds are allocated by the government? The number of new start-up businesses will increase in an economy. Market returns will decide which projects will be undertaken. An efficient and equitable allocation of capital will take place in an economy. Rent-seeking activities will be encouraged in an economy.

rent seeking activities will be encouraged in an economy

When the demand for a good is relatively inelastic, its demand curve is most likely to be: upward sloping. steep. U-shaped. flat.

steep

Producer surplus equals: the difference between the amount a supplier actually receives and the minimum price required to induce the supplier to produce the given units. the ratio of the amount a supplier actually receives to the minimum price required to induce the supplier to produce the given units. the product of the amount a supplier actually receives and the minimum price required to induce the supplier to produce the given units. the sum of the amount a supplier actually receives and the minimum price required to induce the supplier to produce the given units.

the difference between the amount a supplier actually receives and the minimum price required to induce the supplier to produce the given units.

Which of the following is likely to be true when the present value of the revenue derived from an investment project exceeds the present value of its cost? The investor will incur losses in the future. The project will be counterproductive. The investor will undertake the project. The project will diminish the value of the resources used.

the investor will undertake the project

The height of the demand curve for a good at any quantity shows: the maximum amount of the good consumers are willing to buy at different income levels. the maximum amount of the good consumers are willing to buy at a given price. the minimum price consumers are willing to pay for an additional unit of the good. the maximum price consumers are willing to pay for an additional unit of the good.

the maximum price consumers are willing to pay for an additional unit of the good.

The sum of the producer's cost of each resource used to produce a good will equal: the opportunity cost of production. the sunk cost incurred due to production. the average total cost of production. the fixed cost of production.

the opportunity cost of production

Which of the following is likely to occur when the price of a good increases? Producers will decrease their levels of production in order to minimize their losses. The demand for its substitute will decrease. The opportunity cost of the good will increase. Consumers will increase their levels of consumption in order to maximize their utility.

the opportunity cost of the good will increase

According to an economist, firms earn a profit when: the revenues from the goods and services that they supply exceed the marginal cost of the resources used to make them. the marginal revenues from the goods and services that they supply exceed the fixed cost of the resources used to make them. the revenues from the goods and services that they supply exceed the opportunity cost of the resources used to make them. the revenues from the goods and services that they supply exceed the average variable cost of the resources used to make them.

the revenues from the goods and services that they supply exceed the average variable cost of the resources used to make them.

The willingness of consumers to pay a price greater than a good's opportunity cost indicates that: they value the good more than other things that could have been produced with the same resources. they value the money spent on each additional unit of the good more than the marginal value of the good. the total value of the good is more than the marginal value of the good. their total utility from the consumption of the good is more than the marginal utility derived from one additional unit of the good.

they value the good more than other things that could have been produced with the same resources.