micro economics test 2

Which of the following is an explicit cost? Please choose the correct answer from the following choices, and then select the submit answer button. interest that could have been earned with start-up capital wages the owner could have made at his or her old job wages paid to employees depreciation of a work truck

wages paid to employees Explicit costs are paid directly to another economic entity.

Ted's Lawn Care has total variable costs of $200,000 and an output of 50,000 units. What is Ted's Lawn Care's average variable cost? Please choose the correct answer from the following choices, and then select the submit answer button. $1 $2 $3 $4

$4 Average variable cost is determined by dividing the total variable costs by the output. The solution is $200,000/50,000 = $4.

If price is $10 and quantity sold is 55, total revenue is equal to: Please choose the correct answer from the following choices, and then select the submit answer button. $55. $550. $10. $5,550.

$550. Total revenue is equal to price multiplied by quantity.

If a 20% off sale on Diesel jeans increases sales of Diesel jeans by 30%, what is the elasticity of demand for Diesel jeans? 0.5 1.5 2.0 3.0

1.5

2. If the price elasticity of demand is 10, then for every 1% increase in price, there is a: 10% decrease in quantity demanded. 1% increase in quantity demanded. 1% decrease in quantity demanded. 10% increase in quantity demanded.

10% decrease in quantity demanded.

)Economists for McDonalds estimate that the price elasticity of demand for their french fries is 0.8. So, if McDonalds raises the price of its french fries by 20 percent, the quantity demanded will decrease by ____ percent. 20 8 16 25

16

Suppose the government wants to reduce teenage smoking by 50%. If the teenage elasticity of demand for a pack of cigarettes is 2, by what percentage would the government have to increase the price of a pack of cigarettes to achieve their goal? 10% 25% 50% 100%

25%

Suppose output = 100 units, fixed cost = $300, total cost = $800, and marginal cost = $60. What is the firm's total variable cost? $360 $500 $1,100 $6,000

500

In the long run, which factor of production can a firm NOT adjust? Please choose the correct answer from the following choices, and then select the submit answer button. labor capital energy All factors of production can be adjusted in the long run.

All factors of production can be adjusted in the long run. In the long run, firms can adjust all factors, even to the point of leaving an industry.

Ted's Lawn Care has total fixed costs of $300,000, total variable costs of $200,000, and an output of 50,000 units. What is Ted's Lawn Care's average total cost? Please choose the correct answer from the following choices, and then select the submit answer button. $10 $4 $5 $11

Average total cost is determined by dividing the total costs by the output. Total cost equals fixed costs plus variable costs. The equation is $500,000/50,000, or $10.

_____ refer to all of the opportunity costs of using resources that belong to the firm. Please choose the correct answer from the following choices, and then select the submit answer button. Economic costs Explicit costs Implicit costs Sunk costs

Implicit costs Implicit costs are all of the opportunity costs of using resources that belong to the firm.

What will happen to the quantity demanded of a perfectly inelastic product when its price increases by 5%? Please choose the correct answer from the following choices, and then select the submit answer button. Quantity demanded will increase by 5%. Quantity demanded will decrease by 5%. Quantity demanded will drop to zero. Quantity demanded will stay the same.

Quantity demanded will stay the same. For products with perfectly inelastic demand, quantity demanded does not change when price changes.

If demand is inelastic, the tax burden falls primarily on the _____ and deadweight loss is _____. seller; large buyer; small seller; small buyer; large

buyer; small

Marginal cost is the: Please choose the correct answer from the following choices, and then select the submit answer button. change in total revenue when one more unit of output is sold. change in total cost when one more unit of output is produced. same as total revenue. average revenue per product sold.

change in total cost when one more unit of output is produced. Marginal cost is the change in total cost when one more unit of output is sold.

Marginal revenue is the: Please choose the correct answer from the following choices, and then select the submit answer button. average revenue per product sold. same as total revenue. change in total revenue when one more unit of output is sold. change in total cost when one more unit of output is sold.

change in total revenue when one more unit of output is sold. Marginal revenue is the change in total revenue when one more unit of output is sold.

At the level of output at which marginal revenue (MR) equals marginal cost (MC), a firm could: Please choose the correct answer from the following choices, and then select the submit answer button. have losses, break even, or earn economic profits. stop production to increase profits. decrease production to increase profits. increase production to increase profits.

have losses, break even, or earn economic profits. When MR = MC the firm is producing its "best" level of output. However, "best" may mean minimizing losses, breaking even, or earning economic profits.

Elasticity is likely to be highest for goods that: have many substitutes and are not necessary for basic living have few substitutes and are not necessary for basic living have many substitutes and are necessities have few substitutes and are necessities

have many substitutes and are not necessary for basic living

Ted's Lawn Care hired a new employee, then saw diminishing marginal returns. In this case, total output _____ at a(n) _____ rate. Please choose the correct answer from the following choices, and then select the submit answer button. decreases; diminishing increases; diminishing increases; increasing decreases; increasing

increases; diminishing Diminishing marginal returns occur when an additional worker adds to total output but at a diminishing rate.

Which of the following is a fixed cost? Please choose the correct answer from the following choices, and then select the submit answer button. lease payments for a supermarket inventory purchases for a toy store wages for hourly employees at a manufacturing plant raw material purchases for a construction company

lease payments for a supermarket Fixed costs do not change as a firm's output expands or contracts; these costs are often called overhead. These payments include items such as lease payments, administrative expenses, property taxes, and insurance.

Utility is a hypothetical measure of consumer: Please choose the correct answer from the following choices, and then select the submit answer button. satisfaction. wealth. time. income.

satisfaction. Utility is a hypothetical measure of consumer satisfaction.

If the equilibrium price in a perfectly competitive market for apples is $1 per pound, then an individual firm in this market could: not sell additional apples unless the firm lowers its price. not sell additional apples at any price because the market is at equilibrium. sell an additional pound at $1. sell an additional pound at a price slightly higher than $1.

sell an additional pound at $1.

Megan receives a promotion at work. Her hourly wages increase from $12.50 per hour to $15 per hour. What happens to Megan's budget line after her promotion? Please choose the correct answer from the following choices, and then select the submit answer button. It stays the same. It pivots outward. It shifts inward. It shifts outward.

shifts outward

The _____ is a period over which at least one factor of production is fixed. Please choose the correct answer from the following choices, and then select the submit answer button. short run market period fiscal period long run

short run The short run is a period over which at least one factor of production is fixed.

Marginal cost is calculated as: Please choose the correct answer from the following choices, and then select the submit answer button. ΔTR/ΔQ. P × Q. ΔTC/ΔQ. TR/Q.

ΔTC/ΔQ. Marginal cost is the change in total cost when one more unit of output is produced.

Marginal revenue is calculated as: Please choose the correct answer from the following choices, and then select the submit answer button. ΔTC/ΔQ. ΔTR/ΔQ. P × Q. TR/Q.

ΔTR/ΔQ. Marginal revenue is the change in total revenue when one more unit of output is sold.

You sell t-shirts in the street corner in order to support some of your tuition costs. Around the middle of the semester, your friend Carlos gives you the following advice: "if you increase the price of each t-shirt you sell you will be able to make a lot more money selling your t-shirts". For Carlos to be right, the price elasticity of t-shirts must be price: a) Constant b) Elastic c) Unitary d) Inelastic

In elastic

In a perfectly competitive market, price is currently $8 and average total cost is $11. What is expected to happen to the number of firms in this market in the long run? Please choose the correct answer from the following choices, and then select the submit answer button. The number of firms should increase. All firms will exit the market. The number of firms should stay the same. The number of firms should decrease.

The number of firms should decrease. When losses are being earned, firms will exit the market.

As output increases, _____ cost will decrease to a certain point and then increase. Please choose the correct answer from the following choices, and then select the submit answer button. average fixed average total total fixed

average total Average total costs decrease to a certain point and then begin to increase as more output is produced. Challenge this Question

When price is below the minimum point of the _____ curve, but above the minimum point of the average variable cost curve, the firm continues to operate, but it suffers an economic loss. Please choose the correct answer from the following choices, and then select the submit answer button. price average fixed cost marginal revenue average total cost

average total cost Average total cost includes average variable cost and average fixed cost. When price is below the minimum point of the average total cost curve, but above the minimum point of the average variable cost curve, the firm continues to operate, but it has an economic loss.

Short-run _____ will cause firms to exit an industry in the long run. Please choose the correct answer from the following choices, and then select the submit answer button. zero economic profits normal profits economics losses economic profits

economics losses Short-run losses will likely cause firms to exit an industry in the long run.

When a firm has _____ its long-run average total costs decrease with increased output. Please choose the correct answer from the following choices, and then select the submit answer button. economies of scope constant returns to scale diseconomies of scale economies of scale

economies of scale When a firm has economies of scale, its long-run average total costs decrease with increased output. Economies of scale can result from specialization of labor and management, better use of capital, and increased possibilities for making several products that utilize complementary production techniques.

Normal profits are earned if price is: Please choose the correct answer from the following choices, and then select the submit answer button. equal to marginal costs. greater than average variable cost. greater than average fixed costs. equal to average total costs.

equal to average total costs. Normal profits are equal to zero economic profits (price equals average total costs).

If price is $12 and average total cost is $11, actual profits in a perfectly competitive market are: Please choose the correct answer from the following choices, and then select the submit answer button. equal to zero. greater than or equal to zero. greater than zero. less than zero.

greater than zero. P − ATC is greater than zero when actual profit exceeds normal profit.

Willco Manufacturing hired a new employee, after which it saw increasing marginal returns. In this case, average product _____ and marginal product _____. Please choose the correct answer from the following choices, and then select the submit answer button. decreases; increases increases; decreases decreases; decreases increases; increases

increases; increases Increasing marginal returns occur when a new worker adds more to total output than the previous new worker, so that both average and marginal products are rising.

Hybrid cars run on batteries that are made using lithium. This element is costly to extract, and firms are reluctant to invest in new plants. As hybrid cars become more and more popular, lithium is likely to be an example of a(n): Please choose the correct answer from the following choices, and then select the submit answer button. constant cost industry. decreasing cost industry. zero cost industry. increasing cost industry.

increasing cost industry. An increasing cost industry experiences upward pressure on the prices of the key input, such as lithium, due to industry expansion. Thus, costs will increase.

Suppose Ted's Lawn Care hired a new employee. If the company saw total output decrease, there were _____ marginal returns. Please choose the correct answer from the following choices, and then select the submit answer button. It is not possible that hiring another worker would cause a reduction in output. negative diminishing increasing

negative Negative marginal returns occur when adding a worker actually leads to less total output than previous new worker.

_____ are expenses paid directly to some other economic entity. Please choose the correct answer from the following choices, and then select the submit answer button. Sunk costs Explicit costs Economic costs Implicit costs

Explicit costs Explicit costs are paid directly to some other economic entity.

If the quantity demanded of personal computers increases by 5% every time the price of personal computers decreases by 10%, the price elasticity of personal computers is (remember to report the absolute value): a) 4 b) 0.5 c) 1 d) 2

b

Typically, businesses that require large amounts of capital need more time to make _____ adjustments. Please choose the correct answer from the following choices, and then select the submit answer button. fiscal period market period short-run long-run

long-run Typically, businesses that require large amounts of capital need more time to make long-run adjustments.

What illustrates the lowest unit cost at which any particular output can be produced in the long run? Please choose the correct answer from the following choices, and then select the submit answer button. long-run average fixed cost short-run average total cost short-run average fixed cost long-run average total cost

long-run average total cost The long-run average total cost is the lowest unit cost at which any particular output can be produced in the long run, when a firm is able to adjust all of the factors of production.

Which type of supply curve is more elastic? Please choose the correct answer from the following choices, and then select the submit answer button. long-run supply curve medium-run supply curve short-run supply curve

long-run supply curve In the long run, plant capacity and the number of firms can change. This is illustrated with an elastic supply curve. While firms have some ability to adjust output in the short run, they have a greater ability to adjust in the long-run.

The utility-maximizing rule states that utility is maximized when the _____ per dollar is equal for all products. Please choose the correct answer from the following choices, and then select the submit answer button. marginal utility diminishing marginal utility utility total utility

marginal utility The utility-maximizing rule states that utility is maximized when the marginal utility per dollar is equal for all products.

Willco Manufacturing undersells its competitors because its higher production levels have decreased its long-run average total costs. This is because of: Please choose the correct answer from the following choices, and then select the submit answer button. economies of scope. constant returns to scale. economies of scale. diseconomies of scale.

economies of scale. Economies of scale occur as a firm's output increases and specialization and other efficiencies cause long-run average total costs to decrease.

In the market for many construction products (e.g., wallboard, lumber) production by all firms is based on government standards. This would be an example of: Please choose the correct answer from the following choices, and then select the submit answer button. monopoly. barriers to entry. price takers. homogeneous products.

homogeneous products. This is an example of homogeneous, or standardized, products.

What is the shape of the long-run supply curve in a constant cost industry? Please choose the correct answer from the following choices, and then select the submit answer button. downward sloping upward sloping vertical horizontal

horizontal The long-run supply curve in a constant cost industry is represented by a horizontal line.

After Lindsay received a 30% raise at work, she bought 15% less canned cream corn. For Lindsay, which type of good is canned creamed corn? Please choose the correct answer from the following choices, and then select the submit answer button. luxury good normal good inferior good income-superior good

inferior good The quantity demanded of an inferior good falls when consumer income increases.

A firm is an economic institution that transforms _____ into outputs for consumers. Please choose the correct answer from the following choices, and then select the submit answer button. explicit costs inputs profit revenue

inputs A firm is an economic institution that transforms inputs, or factors of production, into outputs for consumers.

A firm that operates in a market with many buyers and sellers is NOT operating under which market structure? Please choose the correct answer from the following choices, and then select the submit answer button. pure competition monopoly perfect competition monopolistic competition

monopoly Monopolies are characterized by one firm.

If price is $12 and average total cost is $11, normal profit in a perfectly competitive market is: Please choose the correct answer from the following choices, and then select the submit answer button. greater than or equal to actual profit. greater than actual profit. equal to actual profit. less than actual profit.

less than actual profit. Actual profit exceeds normal profit when P > ATC.

economies of scale. When a firm has economies of scale, its long-run average total costs decrease with increased output. Economies of scale can result from specialization of labor and management, better use of capital, and increased possibilities for making several products that utilize complementary production techniques.

t

Which of the following always increases when output increases? Average fixed costs Variable costs Marginal costs Average total costs

Variable costs

If you do not spend your entire budget in a given month, your consumption will appear: as a point on your budget line as a point above your budget line as a point below your budget line as two points corresponding to the goods purchased

as a point below your budget line

When each additional input produces fewer and fewer additional units of production, this is referred to as: economies of scale economies of scope increasing marginal returns diminishing marginal returns

diminishing marginal returns

The ninth worker adds 15 units to total production. When the tenth worker is hired, he adds 12 units to total production. The company has: Please choose the correct answer from the following choices, and then select the submit answer button. increasing marginal returns. diminishing marginal returns. decreasing marginal returns. constant marginal returns.

diminishing marginal returns. Diminishing marginal returns occur when an additional worker adds to total output but at a diminishing rate.

Constance decides she really wants to buy a couch today rather than save her money and buy one next year. She decides to finance the couch at 27% interest. This is an example of: Please choose the correct answer from the following choices, and then select the submit answer button. overvaluing the present relative to the future. sunk cost fallacy. framing bias. altruism.

over valuing

Which of the following is considered an explicit cost? Please choose the correct answer from the following choices, and then select the submit answer button. payment of the electric bill opportunity cost of the firm's capital depreciation of a work truck depletion of a prepaid service contract

payment of the electric bill Explicit costs are paid directly to another economic entity; they include wages, lease payments, taxes, and utilities.

Many agricultural markets are characterized by standardized products. This is be an example of which type of market structure? Please choose the correct answer from the following choices, and then select the submit answer button. perfect competition monopolistic competition monopoly oligopoly

perfect competition A perfectly competitive market is one that deals with homogeneous, or standardized, products.

If you decide to grow a mango tree in your backyard and sell the mangos at the farmer's market at the same price as all other mango vendors, your business would be considered a(n): perfectly competitive firm monopoly monopolistically competitive firm oligopoly

perfectly competitive firm

Which of the following is a flaw of marginal utility theory? Please choose the correct answer from the following choices, and then select the submit answer button. It does not help to explain consumer behavior. It assumes that consumers can accurately measure the utility of consumption. It is not effective at predicting consumer behavior. It does not model actual consumer behavior.

It assumes that consumers can accurately measure the utility of consumption. The major flaw of marginal utility theory is its assumption that consumers can accurately measure the utility of consumption.

Which of the following is most likely a variable cost? The cost of property insurance The cost of the machinery used in the production process The cost of furniture used by the staff The cost of electricity used in the production process

The cost of electricity used in the production process

Stopping to help a stranger change a tire on the side of the road without accepting payment is an example of: Please choose the correct answer from the following choices, and then select the submit answer button. altruism. consumer surplus. sunk cost fallacy. overvaluing the present relative to the future.

altruism. Altruism includes actions undertaken solely out of goodwill or generosity.

Elastic supply curves: Please choose the correct answer from the following choices, and then select the submit answer button. are vertical. always pass through the origin. always cross the quantity axis. always cross the price axis.

always cross the price axis. Elastic supply curves always cross the vertical or price axis.

A company has diminishing marginal returns. If the third worker adds 7 units to total production, how much does the fourth worker add to total production? Please choose the correct answer from the following choices, and then select the submit answer button. 8 units between 1 and 6 units no units between 7 and 15 units

between 1 and 6 units Diminishing marginal returns occur when an additional worker adds to total output but at a diminishing rate.

Suppose a car manufacturer discovers that the marginal cost of the last car produced was $15,000, while the marginal revenue was $14,000. In order to increase profits, the car manufacturer should __________ the quantity of cars produced. increase stay the same increase or decrease decrease

decrease

When a firm has _____ its long-run average total costs increase with increased output. Please choose the correct answer from the following choices, and then select the submit answer button. constant returns to scale diseconomies of scale economies of scope economies of scale

diseconomies of scale When a firm has diseconomies of scale, its long-run average total costs increase with increased output. Diseconomies of scale can result from a firm becoming so big that management cannot efficiently control its operations.

An increase in competition within an industry would likely: make the good produced in that industry more inelastic make the good produced in that industry more elastic make the good produced in that industry unitary elastic make the good produced in that industry close to perfectly inelastic

make the good produced in that industry more elastic

Individual firms are price takers, which means that in a perfectly competitive market they get their prices from the _____ since they are so small they cannot influence market price. Please choose the correct answer from the following choices, and then select the submit answer button. government suppliers market customers

market Individual firms are price takers, which means that in a competitive market they get their prices from the market since they are so small they cannot influence market price.

Industries with one firm have: Please choose the correct answer from the following choices, and then select the submit answer button. a high degree of competition. the highest degree of competition. no competition. a moderate degree of competition.

no competition. Industries with more firms have a higher degree of competition.

A firm that is generating zero economic profit after implicit costs are factored in is earning: Please choose the correct answer from the following choices, and then select the submit answer button. implicit profits. explicit profits. economic profits. normal profits.

normal profits. A firm that is generating zero economic profit after implicit costs are factored in is earning normal profits.

For more than two decades, the global commercial airliner manufacturing industry was dominated by Boeing (an American company) and Airbus (a European company). More recently, Embraer (from Brazil) and Bombardier (from Canada) have been gaining market share. With these new entrants the commercial airliner manufacturing industry is an example of which type of market structure?

oligopoly An oligopoly is an industry in which there are only a small number of large firms.

Dan purchases nonrefundable tickets to the latest animated movie for his kids. His kids want to go to the park instead. He says they can't go because he has already spent $40 on movie tickets. This is an example of: Please choose the correct answer from the following choices, and then select the submit answer button. price. overvaluing the present relative to the future. framing bias. sunk cost fallacy.

sunk cost fallacy. Sunk cost fallacy occurs when people make decisions based on how much was already spent rather than how the decision might affect their current well-being.

Marginal product is: Please choose the correct answer from the following choices, and then select the submit answer button. calculated by dividing the total output by the number of workers. fixed cost plus variable cost. the amount of product being produced. the change in output that results from a change in labor.

the change in output that results from a change in labor. Marginal product is the change in output that results from a change in labor.

What are all of the attainable combinations of goods given a consumer's budget line? those on or to the left of the budget line those to the left of the budget line those to the right of the budget line

those on or to the left of the budget line The points on and to the left of the budget line make up all attainable combinations of goods.

Suppose that a consumer has $10 to spend. A candy bar costs $2 and a bag of peanuts costs $1.50. Which of the following combinations lies ON the budget line? Please choose the correct answer from the following choices, and then select the submit answer button. three candy bars and one bag of peanuts one candy bar and four bags of peanuts two candy bars and four bags of peanuts two candy bars and one bag of peanuts

two candy bars and four bags of peanuts Two candy bars and five bags of peanuts would cost (2 × $2) + (4 × $1.50) = $10. This combination lies on the budget line.

If the total cost of 3 units is $40 and the total cost of 4 units is $50, the marginal cost of the 4th unit is: $90 $50 $40 $10

$10

Ocean Magic is a surfboard company that sells surfboards in a competitive market. If it sells surfboards for $400 each and the average total cost for each surfboard is $300, what is the average profit (AP)? Please choose the correct answer from the following choices, and then select the submit answer button. $700 $100 $500 $300

$100 Average profit is equal to price minus average total cost, so the equation looks like: AP = $400 − $300, AP = $100.

Ocean Magic is a surfboard company that sells surfboards in a perfectly competitive market. The market price in the long run for surfboards is $325. If Ocean Magic sells 37 surfboards at $325, what is its long-run average total cost? Please choose the correct answer from the following choices, and then select the submit answer button. $300 $325 $350 $375

$325 When a firm is selling at the long-run market equilibrium price, the price equals long-run average total cost. Challenge this Question

A consumer is consuming at a point on her budget line. Her income is $40 a week, and she purchases hamburgers and grilled cheese sandwiches. Both goods cost $1 each and she consumes 10 hamburgers. How many grilled cheese sandwiches does she consume? Please choose the correct answer from the following choices, and then select the submit answer button. 20 40 30 35

30 (Price of hamburgers × Quantity of hamburgers) + (Price of sandwiches × Quantity of sandwiches) = Income. $40 − ($1 × 10) = $30; $30/$1 = 30 grilled cheese sandwiches

Willco Manufacturing has made the decision to increase output. What will happen to the average fixed cost as the output increases? Please choose the correct answer from the following choices, and then select the submit answer button. It will increase. It will decrease to a certain point and then it will increase. It will decrease. It will stay the same.

It will decrease. Average fixed costs decrease continuously as more output is produced.

Increasing marginal returns occur when: Please choose the correct answer from the following choices, and then select the submit answer button. an additional worker adds to total output but at a diminishing rate. a new worker adds more to total output than the previous worker, so that both average and marginal products are rising. a new worker adds nothing to total output. a new worker adds less to total output than the previous worker.

a new worker adds more to total output than the previous worker, so that both average and marginal products are rising. Increasing marginal returns occur when a new worker adds more to total output than the previous new worker, so that both average and marginal products are rising.

Which of the following is the additional cost of producing one more unit? average fixed cost average variable cost economic cost marginal cost

average variable cost

The short-run supply curve is the marginal cost curve above the minimum point on the _____ curve. Please choose the correct answer from the following choices, and then select the submit answer button. average total cost average variable cost marginal revenue price

average variable cost The short-run supply curve is the marginal cost curve above the minimum point on the average variable cost curve (the shutdown point).

The commercial airliner manufacturing industry tends to have very little competition because it is prohibitively expensive to start a new company in this industry. This is an example of: Please choose the correct answer from the following choices, and then select the submit answer button. barriers to entry. the nature of the industry's products. the extent to which individual firms can control prices. the number of firms in the industry.

barriers to entry. Prohibitively expensive start-up costs are considered a barrier to entry when performing a market structure analysis.

The third worker adds 5 units to total production. When the fourth worker is hired, she adds 1 unit to total production. The company has: Please choose the correct answer from the following choices, and then select the submit answer button. decreasing marginal returns. diminishing marginal returns. constant marginal returns. increasing marginal returns.

diminishing marginal returns. Diminishing marginal returns occur when an additional worker adds to total output but at a diminishing rate.

Short-run _____ will cause firms to enter an industry in the long run. Please choose the correct answer from the following choices, and then select the submit answer button. zero economic profits economic profits normal profits economic losses

economic profits Short-run economic profits will likely cause firms to enter an industry in the long run.

Firms that produce a number of products often find it cheaper to produce another product whose production processes are interdependent. This is called: Please choose the correct answer from the following choices, and then select the submit answer button. constant returns to scale. economies of scope. diseconomies of scale. economies of scale.

economies of scope. When firms produce a number of products, it is often cheaper for them to produce another product whose production processes are interdependent. These economies are called economies of scope.

Which of the following is a variable cost? Please choose the correct answer from the following choices, and then select the submit answer button. lease payments for a furniture show room. maker liability insurance for a convenience store electricity costs for a theater membership dues paid to a professional organization

electricity costs for a theater Variable costs, including expenses such as labor and material costs, fluctuate with output.

Which of the following is a variable cost? Please choose the correct answer from the following choices, and then select the submit answer button. employee's wages for a delivery company liability insurance for a construction company property taxes for a retail store in a strip mall membership dues for a professional organization

employee's wages for a delivery company Variable costs, including expenses such as labor and material costs, fluctuate with output.

If normal profit is being earned in a perfectly competitive market, P − ATC is: Please choose the correct answer from the following choices, and then select the submit answer button. less than zero. greater than zero. less than or equal to zero. equal to zero.

equal to zero. P − ATC is equal to zero when normal profit is being earned in a perfectly competitive market. Challenge this Q

A "Buy One Get One Free" sale is an example of: Please choose the correct answer from the following choices, and then select the submit answer button. altruism. sunk cost fallacy. framing bias. price.

framing bias. framing bias is one of the five factors.

Able Pads, Inc., sells plain white printer paper in a perfectly competitive market. What does its individual demand curve look like? Please choose the correct answer from the following choices, and then select the submit answer button. downward-sloping line upward-sloping line vertical line horizontal line

horizontal line Although the market demand curve in a perfectly competitive market is downward sloping, the individual demand curve is a horizontal line.

Some fast-food restaurants and retail stores seem to be able to clone their operations from market to market without a noticeable rise in costs. We'd expect the long-run supply curve to be: Please choose the correct answer from the following choices, and then select the submit answer button. downward sloping. upward sloping. vertical. horizontal.

horizontal. The long-run supply curve in a constant cost industry is represented by a horizontal line.

`Total production is 2 units when the first worker is hired. Total production is 5 units when the second worker is hired and rises to 10 units when the third worker is hired. The company has: Please choose the correct answer from the following choices, and then select the submit answer button. constant marginal returns. increasing marginal returns. diminishing marginal returns. decreasing marginal returns.

increasing marginal returns. Increasing marginal returns occur when a new worker adds more to total output than the previous new worker, so that both average and marginal products are rising.

Suppose that a 10% discount on the price of Tempur-Pedic mattresses results in quantity demanded to increase by 5%. Based on this information, demand for Tempur-Pedic is: inelastic elastic unitary elastic income elastic

inelastic

Which of the following is an implicit cost? Please choose the correct answer from the following choices, and then select the submit answer button. interest that could have been earned on the money the owner used to buy the equipment for the business taxes the insurance premium on the office equipment wages paid to the part-time employees who work in the maintenance department

interest that could have been earned on the money the owner used to buy the equipment for the business Implicit costs are the opportunity costs of using resources that belong to the firm.

Which of the following is an implicit cost? the wages paid to the part-time employees who work in the maintenance department lease payments interest that could have been earned with start-up capital

interest that could have been earned with start-up capital Implicit costs are the opportunity costs of using resources that belong to the firm.

Which of the following is a fixed cost? Please choose the correct answer from the following choices, and then select the submit answer button. supermarket cashiers' wages gasoline for a delivery service liability insurance for a lawn care company raw material purchases for a construction company

liability insurance for a lawn care company Fixed costs do not change as a firm's output expands or contracts; such costs are often called overhead. These payments include items such as lease payments, administrative expenses, property taxes, and insurance.

What is a disadvantage of a sole proprietorship?

limited ability to raise capital Single owners are limited in their ability to raise capital

The _____ is a period sufficient for firms to adjust all factors of production. Please choose the correct answer from the following choices, and then select the submit answer button. market period short run long run fiscal period

long run The long run is a period sufficient for firms to adjust all factors of production.

The electric company in Alice's neighborhood is the only firm from whom Alice can receive electricity for her home. This is an example of which type of market structure? Please choose the correct answer from the following choices, and then select the submit answer button. oligopoly monopolistic competition perfect competition monopoly

monopoly A monopoly is a market structure in which there is only a single firm.

The cable TV company in Taryn's neighborhood is the only firm from which Taryn can get cable TV for her home. This is an example of which type of market structure? Please choose the correct answer from the following choices, and then select the submit answer button. perfect competition monopolistic competition oligopoly monopoly

monopoly A monopoly is a market structure in which there is only one firm.

The commercial airliner manufacturing industry is dominated by two firms that supply products to the entire world. There are few other firms because of the industry's expensive start-up costs. This industry is an example of which type of market structure? Please choose the correct answer from the following choices, and then select the submit answer button. perfect competition monopolistic competition oligopoly monopoly

oligopoly An oligopoly is an industry in which there are only a small number of firms and high barriers to entry.

What is a disadvantage of a sole proprietorship? Please choose the correct answer from the following choices, and then select the submit answer button. personal assets subject to unlimited liability difficulty of establishing and managing ease of raising capital relatively little paperwork

personal assets subject to unlimited liability In a sole proprietorship, the owner's personal assets are subject to unlimited liability.

Knowing a product's price elasticity allows economists to: predict the amount by which quantity supplied will change in response to a change in price. predict the amount by which quantity demanded will change in response to a change in price. respond quickly to tariff changes. predict how changes in consumers' income will affect sales.

predict the amount by which quantity demanded will change in response to a change in price.

ABC Corp. has spent nearly $10 million developing a new adhesive that has proved ineffective in company trials. The product line manager tries to convince the board of directors that the project cannot be abandoned because the company has already spent $10 million on its development. This is an example of: Please choose the correct answer from the following choices, and then select the submit answer button. overvaluing the present relative to the future. sunk cost fallacy. framing bias. altruism.

sunk cost fallacy. Sunk cost fallacy occurs when people make decisions based on how much was already spent rather than how the decision might affect their well-being.

Mark makes a nonrefundable deposit on a cruise. He realizes he has less paid time off than he thought and considers canceling the trip. He decides to go on the cruise because he has already paid the $400 deposit. This is an example of: Please choose the correct answer from the following choices, and then select the submit answer button. framing bias. overvaluing the present relative to the future. sunk cost fallacy. altruism.

sunk cost fallacy. Sunk cost fallacy occurs when people make decisions based on how much was already spent rather than how the decision might affect their well-being.

Firms will earn normal profits in a perfectly competitive industry in: Please choose the correct answer from the following choices, and then select the submit answer button. the long run. constant cost industries. decreasing cost industries. the short run only.

the long run. In the long run, firms can only earn normal profits because firms can enter and leave the industry and change the total output for the industry.

A budget line graphically illustrates: Please choose the correct answer from the following choices, and then select the submit answer button. the possible combinations of three goods that can be purchased with a given income, given the prices of all of the goods. the amount of one good that can be purchased with a given income, given the price of that good. the possible combinations of three or more goods that can be purchased with a given income, given the prices of all goods. the maximum possible combinations of two goods that can be purchased with a given income, given the prices of both goods.

the maximum possible combinations of two goods that can be purchased with a given income, given the prices of both goods.

A firm will maximize total revenue if it sells its product at a price that corresponds to: Please choose the correct answer from the following choices, and then select the submit answer button. a point below the midpoint of the demand curve. a point above the midpoint of the demand curve. the midpoint of the demand curve. the point at which the demand curve crosses the vertical axis.

the midpoint of the demand curve. At the midpoint of the demand curve the elasticity is equal to one. The firm will maximize total revenue if it sells at the price that corresponds to that point.