Microeconomics: Final Smith

What is the marginal cost of the 120th unit of output in Figure 21.2?

$288

Normative economic statements

are based on values, goals and priorities.

Other things being equal, as more firms enter a market, the market supply curve

shifts to the right

Which of the following statements best captures the concept of consumer surplus?

"I was willing to pay $30 for a dozen roses, but I bought them for $20."

Total fixed costs in Table 21.5 are equal to

15$

Over the price range from $180 to $120 in Figure 20.1, ceteris paribus,

Demand is elastic.

Rosa is willing to pay $200 for the iPhone, but the actual price is $400. This means

Rosa will not buy an iPhone

If the demand for concert tickets increases, then at the initial equilibrium which of the following would be true?

There will be a shortage of concert tickets and the price will increase.

The demand will be ________ if the consumer has ________ substitute goods to choose from

elastic; more

Which of the following is a factor of production for the Little Biscuit Bread Company?

flour

Suppose a university raises its tuition by 6 percent and as a result the enrollment of students decreases by 3 percent. The absolute value of the price elasticity of demand is

0.5

f the price increases by 10 percent, and the quantity demanded falls by 5 percent, the absolute value of the price elasticity will be

0.5

If the price of sandals increases by 10 percent and the quantity demanded falls by 20 percent, then the price elasticity of demand in absolute value is

2

Refer to the data in Figure 22.1. The profit-maximizing output for this firm is

200 units

In the $160 to $180 price range in Figure 20.1, the absolute value of the price elasticity of demand is closest to

5.7

If the price elasticity of demand is 0.6, then a 10 percent increase in the price of the good will lead to a ________ in the quantity demanded.

6 percent decrease

In terms of the production possibilities curve, inefficiency is represented by

All points inside the curve.

The productivity of workers will increase in response to

An increase in the amount of physical capital per worker.

Which of the following would lead to an increase in the demand for winter coats in middle Tennessee?

An increase in the population of middle Tennessee

Implicit costs

Are the value of resources used for which no direct payment is made.

The law of diminishing marginal utility states that

As a consumer enjoys successive units of a good, eventually marginal utility will fall

In the market economy, which of the following determines the price?

Buyers and sellers interact to determine prices.

When economists refer to the determinants of demand, they are referring to factors that when changed,

Cause the demand curve to shift left or right.

The marginal physical product is the

Change in total output associated with one additional unit of input.

Graphically, as a consumer buys more of a good, the marginal utility line will

Continuously decline if diminishing returns are present

A firm that makes zero economic profits

Covers all its costs, including a provision for normal profit.

Refer to Figure 22.3 for a perfectly competitive firm. If the market price is $15,

Economic profits will be zero

Capital, as economists use the term, refers to

Final goods that are used to produce other goods and services

Capital, as economists use the term, refers to

Final goods that are used to produce other goods and services.

When an economy is producing efficiently, it is

Getting the maximum goods and services possible from the available resources.

Ceteris paribus, if income increases and as a result, the demand for good X increases and the demand for good Y falls,

Good X is a normal good and good Y is an inferior good.

According to the law of increasing opportunity costs,

Greater production of one good requires increasingly larger sacrifices of other goods

When a producer can control the market price for the good it sells, the producer

Has market power.

Greater labor productivity means

Higher output per worker.

Elasticity of supply tells us

How much sellers will increase production in response to a change in price.

Price elasticity looks at

How much the quantity demanded or supplied changes after a change in price

Cross-price elasticity refers to

How responsive consumers of one good are to a change in the price of another good.

Which of the following statements concerning a PRICE FLOOR is TRUE?

If the price floor is set BELOW the equilibrium price, it will have no effect.

If Carmen's Coffee Company wants to increase total revenue and the price elasticity of demand is 0.43, the company should

Increase the price of its coffee.

If an individual demands a good, it means that he or she

Is willing and able to purchase the good at some price

The basic factors of production include

Land, labor, capital, and entrepreneurship.

The perfectly competitive market structure includes all of the following except

Large advertising budgets.

Sam owns a taco restaurant, and he conducted a consumer survey that indicates that the price elasticity of demand for his restaurant is 3.5. You would advise Sam to

Lower his price to increase revenue.

Refer to Figure 22.3 at quantity level E

Marginal cost is greater than marginal revenue, so it should cut production.

Ceteris paribus, the law of diminishing returns states that beyond some point, the

Marginal physical product of a factor of production diminishes as more of it is employed with a given quantity of other inputs

In Table 19.2, the marginal utility of the third unit is

Marginal utility is the change in total utility obtained by consuming one additional good or service. Total utility increases from 24 to 30 when the third unit is consumed, an increase of 6 utils.

Market structure is determined by the

Number and relative size of the firms in an industry.

Given that resources are scarce,

Opportunity costs are experienced whenever choices are made.

The four determinants of demand that are held constant when we consider a movement along a demand curve include all of the following except

Price

Ceteris paribus, as the number of substitutes for a good increases, the

Price elasticity of demand should become larger.

To maximize profits, a competitive firm will seek to expand output until

Price equals marginal cost.

In the $80 to $40 price range in Figure 20.1, demand is

Price-inelastic.

Price elasticity of demand shows how

Responsive the quantity demanded is to a change in price.

Car dealers can easily price discriminate because

Sellers negotiate a separate price agreement with each individual buyer.

Which of these examples is an example of price discrimination?

Seniors pay one price at the movie theater and adults pay more.

The marginal physical product of labor in Figure 21.1 is negative for the

Sixth worker.

If a decrease in the price of DVRs increases the demand for TVs, this indicates that

TVs and DVRs are complements

The opportunity cost of studying for an economics test is

The activity that is the best alternative use of your time.

The marginal utility for a good is computed as

The change in total utility divided by the change in quantity.

Which of the following is not a determinant of demand?

The cost of the factor inputs.

Consumer surplus measures

The difference between the maximum price a consumer is willing to pay and the price actually paid.

If demand is elastic, then

The elasticity number E is greater than 1.

Which of the following headlines is the best example of a MACROECONOMIC issue?

The federal government implements a national spending plan to counteract the falling nationwide output of all goods and services.

If a good had a zero price (i.e., the good was free), a rational person would consume

The good until the marginal utility of the last unit was zero.

Jose goes to an all-you-can-eat buffet at a Chinese restaurant and consumes three plates of food. He does not go back for a fourth plate of food because

The marginal utility of the fourth plate would no longer be positive.

If a new sushi restaurant opens, then

The market supply curve for sushi will shift to the right.

The opportunity cost of building a new police station is

The next best use of government resources.

When demand is inelastic

The percentage change in price is greater than the percentage change in quantity demanded.

The basic formula for price elasticity of demand is

The percentage change in quantity demanded divided by the percentage change in price.

Which of the following is most likely a fixed cost?

The rent for a factory.

The fundamental problem of economics is

The scarcity of resources relative to human wants

Total utility is

The sum of the marginal utilities from the consumption of good.

In Table 19.2, the total utility when four units are consumed is

The total utility when three units are consumed is 30, and the fourth unit adds 3 additional utils, which causes total utility to increase to 33.

The market mechanism may best be defined as

The use of market prices and sales to signal desired output.

Given the following diagram:If the actual market price were fixed at $6 per unit in the above diagram

There would be a shortage of 20 units.

When sellers price discriminate,

They are attempting to charge a price that is the maximum price each individual is willing to pay.

A firm maximizes profit when

Total revenue exceeds total cost by the greatest amount.

A mixed economy

Utilizes both market and nonmarket signals to allocate goods and services.

Which of the following industries is the best example of perfect competition?

Wholesale fresh flowers

A price ceiling is

a government established upper limit on the price that can be charged for a product.

If the quantity of concert tickets demanded equals 1200 and the quantity of concert tickets supplied equals 1000, then

a. there is a shortage of concert tickets. b. everyone who wants to sell a ticket will find a buyer. c. the price of the tickets is below the equilibrium price. d. the price of concert tickets will tend to rise. e. all of the above true.

In terms of the production possibilities curve, inefficiency is represented by

all points inside the curve

Which of the following does not influence the price elasticity of demand?

costs of production

Which of the following would cause an increase in the supply of automobiles?

improved technology in automobile production.

Marginal cost

is the change in total cost associated with a one-unit increase in production.

According to the law of demand, if the price of houses falls

larger numbers of houses will be demanded

According to the law of demand, if the price of houses falls

larger numbers of houses will be demanded.

Which of the following products will have more inelastic demand?

medicines

Typically textbooks define economics as the study of how

people allocate scarce resources to satisfy their wants and needs

Typically textbooks define economics as the study of how

people allocate scarce resources to satisfy their wants and needs.

According to the law of supply, if the price of houses falls

smaller quantities of houses will be supplied.

Demand for a good occurs when

someone is both willing and able to buy a good or service.

Supply refers to

the amount of product that sellers are willing and able to put on the market

If the elasticity of demand is 3, and the price rises by 15 percent, then

the quantity demanded will fall by 45 percent.

A change in price changes the quantity demanded and is represented by a movement along the demand curve.

true

When the number of buyers in a market changes, the market demand curve shifts even if individual demand curves do not shift.

true

A price change will have no effect on total revenue if demand is

unitary elastic

To be consistent with the law of supply, a diagram depicting the supply curve will present the supply curve as

upward sloping to the right (positively sloped).