Microeconomics final exam

200

The marginal utilities for the first three units are 200, 150, 125. The TU for the first unit is what?

Total utility

The marginal utility of coffee consumption for Steve is the change in ___ generated by consuming an additional cup of coffee.

Price where QD equals QS

The market equilibrium is found at what point?

What is given up to acquire it

The opportunity cost of something is what?

Is equal to the market set price

The price received by a firm in a perfectly competitive market..

False

The short run and the long run are defined in terms of a specific time period?

Marginal cost curve above its average variable cost curve

The short-run supply curve for a perfectly competitive firm is its?

Satisfaction

The utility of a good is determined by how much ____ a particular consumer obtains from it.

Bayer aspirin to be more elastic

There are several close substitutes for Bayer aspirin but fewer substitutes for a complete medical examination. Therefore, you would expect the demand for ...

law of diminishing returns

This occurs when some inputs are fixed and some are variable?

Total product

Total quantity or output

oppportunity cost

Value of what you gave up, can change over time.

Price

What causes the quantity supplied to change?

Price

What changes the quantity demanded?

marginal analysis

examination of the additional benefits of an activity compared to the additional costs incurred by that same activity.

Surplus

quantity supplied is greater than quantity demanded

People have unlimited wants facing limited means to satisfy them

A key to economics is what?

MR=MC

A perfectly competitive firm maximizes profit in the short run by producing the quantity at which?

Create pressure for price to fall

A price above the equilibrium price will what?

Increase; supply of

A technological advance in the production of automobiles will _____ the ____ automobiles.

Marginal Product

Additional output per 1 unit

Lead to a decrease in supply

All other things unchanged, a tax on a product that leads to an increase in the cost of production would what?

Shifts the supply curve upward

An excise tax that the government collects from the producers of a good does what to the supply curve?

Increase; decrease in demand

An inferior good is one for which a(n) ____ in buyers' income causes a(n) _____?

Average fixed cost declines

As output increases, average total cost and average cost get closer together because..

0

At what value is marginal product when total product is at its maximum?

Law of demand

Buyers side, price goes up, quantity demanded goes down.

change in TU/ change in Q

Calculating marginal utility

multiply utility of each good by number of goods then add together

Calculating total utility

Inside

Consider a production possibility frontier of Iraq. If in 2014, Iraq's resources are not being fully utilized, Iraq will be somewhere ____ of its production possibility frontier.

Comparative advantage; export

Countries that engage in trade will tend to specialize in goods in which they have _____ and will _____ those goods.

On producers more than consumers

Demand for Gala apples is relatively more elastic compared to the supply of Gala apples, so if a tax is imposed on the consumers of Gala apples, the tax incidence is typically..

electricity

Fixed costs do NOT include what?

equal to price

For a perfectly competitive firm, marginal revenue is?

Insignificant effect; standardized

For the Colorado beef industry to be classified as perfectly competitive, ranchers in Colorado must have ___ on prices and beef must be a____ product.

Opportunity cost of wine production is lower in France than in England

France and England both produce wine and clothing with constant opportunity costs. France will have a comparative advantage in wine production if what?

Scarcity

Gap between limited resources and limitless resources.

Equlibrium

Goods are being produced in quantities that consumers are willing and able to purchase.

Elastic demand

High responsiveness to change in prices.

Marginal utility; fall; marginal utility; rise

If Vanessa buys more pomegranates and fewer bananas, the ___ of pomegranates will __, and the ___ of bananas will ___ ?

taker

If a California avocado stand operates in a perfectly competitive market, the stand owner will be a price?

More elastic

If a good is a luxury item that looms large in the household budget, then the price of elasticity of demand will tend to be what?

less elastic (inelastic)

If a good is a necessity with few substitutes, then the price elasticity of demand will tend to be what?

Inferior good

If the income elasticity of demand for a good is negative, the good is said to be a what?

Decreasing

If the marginal product is increasing, the marginal cost must be?

A straight line

If the opportunity costs of production are constant, then the production possibility frontier is?

Inelastic

If the price elasticity of demand is found to be -3/4, then demand is what?

Produce at a profit

If the price is greater than average total cost at the profit-maximizing quantity of output in the short run, a perfectly competitive firm will do what?

Inelastic

If the quantity demanded of agricultural is very unresponsive to a fall in price, the demand for agricultural output is what?

A surplus

If the supply and demand curves intersect at $47, than any price above that would result in what?

Not enough information

If, for a particular consumer, the marginal utility of ties if greater than the marginal utility of shirts, consumer should?

Sellers will drive the price down

In a competitive market, if there should be a surplus of a product at a given price, then what?

amount of the other good that must be given up

In movement along a production possibility frontier, the opportunity cost to society of getting more of one good is measured by what?

short; positive

In perfect competition, the assumption of easy entry and exit implies that in the ____ run all firms in the industry will earn ____ economic profits.

Efficient production

It is not possible to produce more of one good without producing less of another good indicates?

Inelastic demand

Low responsiveness to change in prices.

Explicit cost

Money that a firm spends on health care for employees is a what?

Opportunity costs

The concept of comparative advantage is based upon what?

Perfectly elastic (horizontal)

The demand curve for a perfectly competitive is ?

Lower prices, greater quantities sold, and lower incomes

The demand for agricultural output is price inelastic

Consumer income has decreased

The last two months, Bob has seen the quantity demanded for high-end tractors decrease by 35% compared to the same time last year. What is a possible explanation?

Shortage

Quantity supplied is less than quantity

Equilibrium price and quantity rise

Researchers demonstrate conclusively that drinking 4-6 ounces of ginger ale each day increase life expectancy by 3 years. What happens in the market for ginger ale?

PPF

Shows trade-offs between two goods when reallocating sources.

Trade-off

Something must be given up, cause opportunity costs.

substitutes

Suppose that the cross-price elasticity of demand for spinners with respect to the prices of widgets id 23 cents. The two goods are what?

decrease prices in SC, and increase prices in MS

Suppose the price elasticity of demand for fishing lures equals 1.5 in SC and .63 in MS. To increase revenue, the fishing lure manufacturers should

Shift out

The U.S. production possibility frontier will do what when there is a large influx of working-age immigrants.

law of diminishing marginal utility

The additional utility decreases with each unit added.

Reaches peak at MPC

What is the relationship between Marginal product and Average product?

Supply of

What will decrease when fertilizer prices increase?

An increase in the number of suppliers

What would result in a movement along the demand curve.?

MU per dollar is spent equal for all goods consumed

When Tom has maximized satisfaction from his fixed income..

Less marginal utility

When an individual continues to eat more turkey, if the principle of diminishing marginal utility applies, each additional serving yields?

The cost of that choice could be referred to as opportunity cost

Whenever a choice is made..

Higher prices=low quantity demanded

Why is the demand curve downward sloping?

Need to sell extra output at higher prices

Why is the supply curve upward sloping?

Continue to operate even though she is taking an economic loss

Zoe's Bakery determines that P < ATC and P > AVC. In the short run, Zoe should do what?

tax incidence

analysis of how a tax burden is divided between consumers and producers.