micro

Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sold 4,000 units of its output at $300 per unit, its accounting profits were

$200,000 and its economic profits were zero.

Suppose the price elasticity coefficients of demand are 1.43, 0.67, 1.11, and 0.29 for products W, X, Y, and Z, respectively. A 1 percent decrease in price will increase total revenue in the cases of

W and Y

If price and total revenue vary in opposite directions, demand is

relatively elastic

The supply curve of antique reproductions is

relatively elastic

The demand for a luxury good whose purchase would exhaust a big portion of one's income is

relatively price elastic

The demand for a necessity whose cost is a small portion of one's total income is

relatively price inelastic

The price elasticity of demand is a measure of the

responsiveness of buyers of a good to changes in its price.

Utility refers to the

satisfaction that a consumer derives from a good or service

Refer to the table. The addition of which unit has the greatest marginal utility?

sixth

Normal profit is

the average profitability of an industry over the preceding 10 years.

Marginal product is

the change in total output attributable to the employment of one more worker.

The basic characteristic of the short run is that

the firm does not have sufficient time to change the size of its plant.

In spending all his income on beer and pizza, Fred finds that the marginal utility of the last pizza he consumed is 8, and the marginal utility of the last bottle of beer is 4. The price of a bottle of beer is $1.50. If Fred has maximized his utility, the price of pizza must be

$3

The marginal cost of the fourth unit of output is

$37

If the price of A decreases, while the price of B and the consumer's income stay the same, we would expect

) MU/P of A to increase, and the consumer will thus buy less of B.

Refer to the data. The value for W is

20

Refer to the data. The value for Y is

45

What do wages paid to factory workers, interest paid on a bank loan, forgone interest, and the purchase of component parts have in common?

All are opportunity costs.

Which of the following definitions is correct?

Economic profit = accounting profit - implicit costs.

Refer to the graphs above. Which one shows demand with a price-elasticity coefficient equal to zero?

Graph C

The total output of a firm will be at a maximum where

MP is zero.

Answer the question on the basis of the following information. TFC = Total Fixed Cost Q = Quantity of Output MC = Marginal Cost P = Product Price TVC = Total Variable Cost Average fixed cost is _______.

TFC / Q

Which of the following is not characteristic of a product with relatively inelastic demand?

There are a large number of good substitutes for the good.

The demand for Cheerios cereal is more price-elastic than the demand for cereals as a whole. This is best explained by the fact that

There are more substitutes for Cheerios than for cereals as a whole

Fixed cost is

any cost that does not change when the firm changes its output.

Which product is most likely to be the most price elastic?

automobiles

Marginal utility is the

change in total utility obtained by consuming one more unit of a good.

The law of diminishing marginal utility explains why

demand curves slope downward

For a linear demand curve,

demand is elastic at relatively high prices.

If the price of hand calculators falls from $10 to $9 and, as a result, the quantity demanded increases from 100 to 125, then

demand is price elastic

If the price-elasticity coefficient for a good is 1.75, the demand for that good is described as

elastic

To the economist, total cost includes

explicit and implicit costs

Economic profits are calculated by subtracting

explicit and implicit costs from total revenue.

Which of the following is most likely to be an implicit cost for Company X?

forgone rent from the building owned and used by Company X

A perfectly inelastic demand curve

graphs as a line parallel to the vertical axis.

Accounting profits are typically

greater than economic profits because the former do not take implicit costs into account.

The larger the positive cross elasticity coefficient of demand between products X and Y, the

greater their substitutability.

To economists, the main difference between the short run and the long run is that

in the long run all resources are variable, while in the short run at least one resource is fixed.

If the demand for bacon is relatively elastic, a 10 percent decline in the price of bacon will

increase the amount demanded by more than 10 percent.

If the price elasticity of demand for a product is unity, a decrease in price will

increase the quantity demanded, but total revenue will be unchanged.

We use the midpoint formula in computing the price elasticity of demand coefficient in order to

make the coefficient value become independent of whether price goes up or down.

The first, second, and third workers employed by a firm add 24, 18, and 9 units to total product, respectively. Therefore, we can conclude that

marginal product of the third worker is 9

We would expect the cross elasticity of demand between dress shirts and ties to be

negative, indicating complementary goods.

The price-elasticity of demand coefficient, Ed, is measured in terms of

percentage change in price and percentage change in quantity demanded.

A demand curve that is parallel to the horizontal axis is

perfectly elastic

If quantity demanded is completely unresponsive to price changes, demand is

perfectly inelastic

In the immediate market period for a highly perishable crop like tomatoes, the individual farmer's supply curve tends to be

perfectly inelastic

The supply of known Monet paintings is

perfectly inelastic

Refer to the provided graph, which shows the total product (TP) curve. At which point is the marginal product zero?

point c

Studies show that the demand for gasoline is

price inelastic in both the short and long run.

In which of the following instances will total revenue decline?

price rises and demand is elastic

The formula for cross elasticity of demand is percentage change in

quantity demanded of X/percentage change in price of Y.

Implicit and explicit costs are different in that

the former refer to nonexpenditure costs and the latter to monetary payments.

The more time consumers have to adjust to a change in price,

the greater will be the price elasticity of demand

Implicit costs are

the opportunity cost of the means of production

Average fixed costs for a given level of output can be determined graphically by

the vertical distance between ATC and AVC.

Accounting profits equal total revenue minus

total explicit costs

Which of the following constitutes an implicit cost to the Johnston Manufacturing Company?

use of savings to pay operating expenses instead of generating interest income

The satisfaction or pleasure one gets from consuming a good or service is called

utility

Where total utility is at a maximum, marginal utility is

zero