Econ Midterm

If the market for butter is perfectly competitive, then the demand curve facing a firm that produces butter will be:

perfectly elastic.

Total revenue minus both explicit and implicit costs defines a firm's:

profit.

If a consumer buys two different goods, the rational spending rule requires that the:

ratio of marginal utility to price be equal for the two goods.

The goal of utility maximization is to allocate your ______ in order to maximize your ______.

resources; satisfaction

The law of demand indicates that as the cost of an activity:

rises, less of the activity will occur.

joaquin's marginal utility from an additional slice of pumpkin pie is 4 utils and his marginal utility from an additional slice of pecan pie is 6 utils. If a slice of pumpkin pie costs $2.50, and a slice of pecan pie costs $3.00, then Joaquin:

should reallocate his spending towards pecan pie and away from pumpkin pie.

The tendency for marginal utility to decline as consumption increases beyond some point is called:

the law of diminishing marginal utility.

If marginal utility is positive, then as consumption increases:

total utility will increase

Individual supply curves generally slope ______ because ______.

upward; of increasing opportunity costs.

According to economists, the satisfaction people get from their consumption activities is called:

utitlity

Growing rice requires extensive irrigation in California. Economists consider water to be a ______ for rice farmers in California.

want

Taking a limousine to a five-star restaurant in New York is a:

want to both Joe Average and Richie Rich.

Higher education is a ______ and assigned textbooks are ______.

want; wants

After subsistence levels of food, shelter, and clothing have been provided, economists refer to all other goods and services as:

wants

If price is 1 demand is

Unit elastic

The long run is best defined as:

a period of time sufficiently long that all factors of production are variable

The short run is best defined as:

a period of time sufficiently short that at least one factor of production is fixed.

According to the law of demand, when the price of shoes ______, people will consume ______ shoes.

falls; more

An imperfectly competitive firm is one that:

has at least some influence over the market price.

The most important challenge facing a firm in a perfectly competitive market is deciding:

how much to produce.

A rational seller will sell another unit of output:

if the cost of making another unit is less than the revenue gained from selling another unit.

For a given seller, the accompanying figure shows the relationship between the number of units produced and the opportunity cost of producing an additional unit of output. As the market price of this good increases, the quantity produced by this seller will ______.

increase

Cory gets 18, 23, and 25 units worth of total utility from consuming 10, 11, and 12 raw oysters, respectively, and the price per oyster is 25 cents. Thus, one can infer that Cory:

is experiencing diminishing marginal utility.

In some countries, medical care is provided free-of-charge to citizens and is paid for by the government. In those countries, medical care:

is rationed by some non-monetary method.

The ______ combination of goods is the combination that yields the highest total utility given a consumer's income.

optimal

Shelter for homeless people is an example of:

A need

Blair has vast riches and consumes thousands of dollars' worth of consumer goods each week, yet she is never satisfied. Why not?

People's wants are unlimited.

Assume that Dusty has $30 in income, the price of a loaf of bread is $1.50, and the price of a jar of peanut butter is $3. Dusty can buy a maximum of ______ loaves of bread or a maximum of ______ jars of peanut butter.

20;10

Which of the following is a defining characteristic of all perfectly competitive markets?

All firms sell the same standardized product.

price elasticity of demand

As the percentage change in quantity demanded from 1% change in price

Which of the following would be considered a factor of production in the provision of bus service?

Bus drivers

Which of the following is NOT a characteristic of a perfectly competitive market?

Each firm in the market sells a somewhat different variant of the good.

If price is greater than 1 it's demand is

Elastic

During Thanksgiving you participated in a pumpkin-pie eating contest. You really enjoyed the first two pies, the third one was okay, but as soon as you ate the fourth one you became ill and lost the contest. Your total utility ______ with the first three pies you ate.

Increased

Joe is shopping for a new computer. A computer can be delivered to Joe's home for $1,200. Alternatively, Joe can pick up the same computer at the warehouse for $1,000. How should Joe buy the computer?

Joe should drive to the warehouse if his cost of driving to the warehouse is less than $200.

Let MUc denote the marginal utility that Pablo receives from a cup of coffee, and let Pc denote the price of a cup of coffee. We typically expect that as Pablo buys more coffee:

MUc/Pc will fall.

The additional utility gained from consuming an additional unit of a good is called:

Marginal Utility

During Thanksgiving you participated in a pumpkin-pie eating contest. You really enjoyed the first two pies, the third one was okay, but as soon as you ate the fourth one you became ill and lost the contest. You got ______ utility from eating the first pie than from eating the third pie.

More

Which of the following is the most likely to be a fixed factor of production at a farm?

The land on which the farm is located

Suppose a cup of tea costs $0.60 and a scone costs $1.20. If Edith spends all of her income on these two goods, and at her current level of consumption, she receives a marginal utility of 6 utils from the last cup of tea she buys and a marginal utility of 24 utils from the last scone she buys, then Edith should:

buy less tea and more scones.

As Lynn eats more pizza, we would typically expect her marginal utility from eating pizza to:

decrease

It is impossible for total utility to be ______ when marginal utility is ______.

decreasing; positive

Jenny sells lemonade in front of her house in the summer. Several other kids in Jenny's neighborhood also run lemonade stands in the summer. If the lemonade market is perfectly competitive, and Jenny is charging the equilibrium price, then Jenny can increase her revenue if she:

keeps the price of her lemonade the same and increases the output.

The tendency for consumers to purchase more of a good or service as its price falls is captured by the

law of demand

If Terry's total utility is maximized when he owns 10 pairs of shoes, then Terry's total utility from owning 7 pairs of shoes is ______ Terry's total utility from owning 8 pairs.

less than

The primary objective of most private firms is to:

maximize profit

The rational spending rule is derived from the consumer's desire to:

maximize utility.

In most markets, scarce goods or services are rationed among competing users using:

monetary prices.

If we plot John's opportunity cost per window on the vertical axis and the number of windows cleaned each day on the horizontal axis, we will have John's ______ curve for window-cleaning services.

supply