Micro midterm

Given the information above, the average variable cost of 25 units of output is

(A) $2

The cross-price elasticity of demand between good X and good Z measures the percentage change in the quantity demanded of good X in response to a percentage change in

(C) the price of good Z

The relationship in the graph above best illustrates the economic concept of

(C)diminishing marginal returns in production

According to the cost schedule in the table above, the firm's total fixed cost is

(D) $100

The opportunity cost of increasing the production of good Y from 0 to 200 is

(D) 20 units of X

If the product price is $85, how many units of output must the firm produce in order to maximize profits?

(D) 5

Which of the following will shift the supply curve for apples to the right?

(D) A decrease in the rental price for apple harvesting equipment.

The demand curve for a normal good slopes down for which of the following reasons?

(D) I and II only

The table above shows the maximum possible output combinations of good X and good Y that Microland can produce by using all of its available resources and technology. As the production of good X increases, what happens to the opportunity cost of producing good X?

(D) It increases, because the production of good Y decreases by greater amounts.

The firm's short-run supply curve is which of the following?

(D) The MC curve above P2

If a firm's production function exhibits diminishing marginal product of the variable input in the short run, which of the following about the firm's short-run marginal cost (MC) curve must be true?

(A) As output increases, the MC curve slopes upward.

According to the data above, if Mr. X and Ms. Y have the opportunity to trade, which of the following will be mutually beneficial?

(A) Ms. Y sells shoes to and buys bread from Mr. X.

Given the production possibilities curve above, which of the following represents a movement from efficiency to inefficiency?

(A) Point X to point W

A constant-cost, perfectly competitive industry is in long-run equilibrium. If the demand for the good increases, which of the following will occur in the long run?

(A) The price will remain unchanged.

Movement along a production possibilities curve shows which of the following?

(A) The trade-offs society faces

Assume a perfectly competitive firm is currently producing 100 units of output. Its marginal cost is $6 and rising at that output quantity. Its average variable cost is $7 and its average fixed cost is $3. If the product's price is $6, which of the following will the firm do in the short run to maximize its profit?

(A) shut down

Given the production schedule above, what is the maximum number of workers the firm can hire before the effects of diminishing marginal returns set in?

(B) 2

Which of the following will cause the demand curve for good X to shift to the right?

(B) An increase in the price of good Y, a substitute for good X

Both Amy and Brad produce and consume apple pie and ice cream. In one hour, Brad makes five apple pies or ten gallons of ice cream while Amy makes fifteen apple pies or fifteen gallons of ice cream. Based on the above information, one can correctly conclude that

(B) Brad has a comparative advantage in making use cream and will sell ice cream to Amy.

The table above shows the opportunity costs of producing apples and oranges in Countries X and Y. Which of the following can be concluded based on the data given in the table?

(B) Country Y has a comparative advantage in producing both goods.

The graph above shows an economy's production possibilities frontier for the production of two goods, X and Y. Assume that the economy is currently at point B. The opportunity cost of moving from point B to point C is

(B) HG units of good Y

If shirts and ties are complements and if the price of shirts increases due to an increase in the price of cotton, which of the following is most likely to occur in the market for ties in the short run?

(B) The equilibrium price and quantity of ties will decrease.

At a price of $10, the quantity demanded of pizzas is 100 and the quantity supplied is 150. Which of the following statements must be true?

(B) The equilibrium price of pizza is below $10.

A perfectly competitive firm's short-run supply curve is the portion of the marginal cost curve that is

(B) above the average variable cost curve

Kyle spent all of his allocated budget on video games and comic books. To maximize his utility, Kyle should have purchased

(B) fewer video games and more comic books

An outward shift of a production possibilities curve can be caused by

(B) improving technology

If a hurricane reduced the crab population, the price of crabs and quantity sold would change in which of the following ways?

(B) price increases, quantity deceases again

If an unusually cold summer destroyed a large portion of the bee population, the equilibrium price and quantity of honey produced by bees will most likely change in which of the following ways?

(B) price increases, quantity decreases

Most economists argue that a monopoly is inefficient because it

(B) produces too little output and sets a price above marginal cost

The graph above shows the cost curves for a competitive firm that produces 20 units of output. What are the total cost and the total fixed cost of producing 20 units of output?

(C) $120, 20

The table above shows the quantity of gasoline supplied and demanded at various prices in a country. If the government sets a price floor of $2.75 on a gallon of gasoline, what is the price per gallon?

(C) $3.25

If there is only one variable input, diminishing marginal returns first occur with the production of which unit of output?

(C) 5th

Assume that the market for beef is perfectly competitive and in equilibrium. Which of the following would most likely result in an increase in both the equilibrium price and the equilibrium quantity of beef?

(C) An increase in the supply of potatoes, a complementary good

According to the information in the table above, which of the following statements is true if both countries have the same number of workers?

(C) Country A has an absolute advantage in manufactured goods but a comparative advantage in service goods.

If tasks are assigned according to comparative advantage, which of the following is true?

(C) Kim should install computers and Maria should paint garages.

Which of the following is most likely to occur if the firm increases production beyond 10 units?

(C) The firm would have to lower its price to sell more than 10 units.

In the figure above, at which of the given points is demand most elastic?

(C) Z

If the firm produces Q1 units of output with two inputs, the firm will be experiencing which of the following in the short run and in the long run?

(C) diminishing, economies

The study of economics exists because people are confronted with the basic problem of

(C) scarcity

The firm shown in the diagram above qualifies as a natural monopoly because

(C) the average total cost is decreasing in the relevant range of market demand

Carlos has a van with 20 seats and charges $10 per person per ride to the airport from downtown. Carlos' cost of the trip is $140 for any number of passengers. On one trip, Carlos has 19 seats filled when a person offers him $5 for the last seat. Should Carlos accept the offer?

(D) Yes, since the marginal benefit exceeds the marginal cost.

Monopolies are inefficient compared to perfectly competitive firms because monopolies

(D) charge a price greater than marginal cost

The diagram above shows a perfectly competitive firm's short-run cost curves. If the price of the output increases from $8 to $10, the profit-maximizing firm will

(D) increase output to 18 units because this is the output at which price equals marginal cost

Opportunity cost is defined as

(D) the value of the next best alternative that is forgone when an activity is pursued

The diagram above shows the production possibilities curves for two countries, Country X and Country Y. Assume that both countries use equal amounts of resources in production. If the two countries engage in trade, both would be better off under which of the following conditions?

(E) Country Y specialized in the production of cars, because it has a comparative advantage in the production of cars.

Which of the following can give a firm market power?

(E) Having economies of scale in production over the range of market output.

An increase in the supply of good X resulted in an increase in the price and quantity of good Y. It can be concluded that good Y is

(E) a complement for good X

In a perfectly competitive market, which of the following shifts in the supply and demand curves will definitely cause both equilibrium price and quantity to decrease?

(E) no shift, shifts to the left

Assume that mustard and ketchup are considered substitutes by consumers. If the price of mustard increases, which of the following graphs represents the most likely response in the ketchup market?

Graph C

In the graph above, S is the original supply curve, and S1 is the supply curve including an excise tax. The area representing the tax revenue to the government is

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