AREC Final
The price at which the quantity demanded is equal to the quantity supplied is known as ________ price
equilibrium
Vadim is currently working as a stockbroker. He earns $50000 per year. If he quit his job, he would take a job as a manager, making $40,000 per year. What is vadims economic profit from being a stockbroker?
$10,000
At his current level of consumption, Evan gets twice as much marginal utility from an additional bottle of water as that from an additional bottle of soda. If the price of soda is $1.00 per bottle, then Evan is maximizing utility if the price of a bottle of water is:
$2.00
At his current level of consumption, Evan gets twice as much marginal utility from an additional bottle of water as that from an additional bottle of soda. If the price of soda is $1.00 per bottle, then Evan is maximizing utility if the price of a bottle of water is:
$2.00
Which of the following is likely to be a variable cost for the firm, in the long run?
-Technology -Lease Payments on a factory -wages to workers -cost of equipment All the above
If the percentage change in the price of the product is 20% when the percentage change in quantity demanded is 40%, the elasticity would be expressed as
2
Assume that Dusty has $30 in income, the price of a loaf of bread is a $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
A skunk cost is best described as
A cost that is not recoverable
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 of24 utils from the last scone she buys, then Edith should:
A)buy less tea and more scones.
If the price elasticity of demand for cell phone service is 2, then if the price of cell phone service decreases by 3%, quantity demanded would:
Increase by 6%
According to the law of demand, when the price of shoes________people will consume ______—- shoes.
Falls; more
T/F a characteristic of a perfectly competitive market Each firm in the market sells somewhat different variant of the good
False
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
In perfectly competitive markets ______the price
No buyer or seller is large enough to influence
Another name for a legal maximum price is a
Price ceiling
Which of the following is likely to be a variable cost for the firm, in the short run?
Wages paid to workers
The Law of Supply predicts that ceteris paribus
as price rises, quantity supplied will increase.
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
Complements are goods or services that
consumers use together in some way.
As Lynn eats more pizza, we would typically expect her marginal utility from eating pizza to:
decrease
If demand is inelastic, total revenue will
fall when price falls
When the price of a good rises, marginal utility per dollar spent on that good ________, leading consumers to purchase ________ of that good.
falls; less
Economics is best defined as the study of :
how individuals or societies choose to use scarce resources to try to satisfy their unlimited wants.
If the the price elasticity of demand for cell phone service is 2, then if the price of cell phone service decreases by 3%, quantity demanded would:
increase by 6%.
Suppose the company that owns the vending machines on your campus has increased the price of a can of soda by 20%. They then notice that they are selling approximately 10% fewer sodas. The price elasticity of demand for sodas from the campus vending machines, therefore, is:
inelastic
A fixed factor of production:
is fixed only in the short run
An unexpected freeze that wipes out the Florida orange crop would
lower the supply of oranges on the market
The buyer's reservation price of a particular good or service is the:
maximum amount the buyer would be willing to pay for it.
Suppose that Cathy spends all of her income on 20 units of good X and 25 units of good Y. Cathy's marginal utility from the 20th unit of good X is 9 utils, and her marginal utility from the 25th unit of good Y is 19 utils. If the price of good X is $0.50 per unit and the price of good Y is $1.00 per unit, then to comply with the rational spending rule, Cathy should:
purchase less than 20 units of good X and more than 25 units of good Y.
The quantity that consumers are willing and able to purchase at a given price is called
quantity demanded.
Suppose you want to maximize your total utility. If your marginal utility per dollar spent is higher for one good than for all others, then you should:
reallocate your spending towards that good
Jessica's marginal cost for producing a pitcher of lemonade is $0.25. Therefore, $0.25 can also be called her:
reservation price
The goal of utility maximization is to allocate your ________ in order to maximize your ________.
resources; happiness
Petroleum is an input into making plastics. Therefore, if the price of petroleum falls, we would expect the supply of goods made of plastic to
rise.
A decrease in demand causes a
surplus to occur at the original price, which leads to decreases in equilibrium price and equilibrium quantity.
When the price of coffee increases
the quantity supplied of coffee increases