ECO 201

Diminishing marginal product

A bakery hires a baker who can make 15 cakes per day. The bakery then decides to hire a second baker who will use the kitchen at the same time as the first baker. The bakery finds that the second baker can produce only an additional nine cakes per day. What concept does this scenario illustrate.

At prices below the equilibrium price

Graphically, shortages will always occur

You can charge a higher price per pumpkin

Suppose that you have a pumpkin stall at a farmer's market, and the Halloween season arrives. You know that your customers will want to buy many pumpkins to decorate their houses and make pumpkin pies. Which of the following is a likely result of this scenario?

Vary with the quantity of output produced.

Variable costs are the costs that

Only variable costs

When you calculate marginal costs, they should include:

(i), (iii), (iv)

Which of the following are correct about fixed costs? (i) They do not change with the level of production in the short run (ii) They include variable costs (iii) They are present even when the firm is producing zero units. (iv) They are irrelevant to marginal cost.

The supply of cacao beans, used to produce chocolate has fallen around the world

You eat M&Ms every day. When you go to the store to buy some, you find that M&Ms are more expensive than they were last month. Which of the following could explain why M&Ms are more expensive?

quantity corresponding to the intersection of the demand and supply curves.

Graphically, the equilibrium quantity can be identified as the:

There was a surplus of the product in the store

If a store runs a sale on a product to clear out its stock, we can conclude that:

greater than or equal to the marginal cost

The Rational Rule for Sellers says that a seller should sell one more unit of an item if the price is:

(i), (ii), and (iii)

The United Kingdom plans to end the use of gas-powered and diesel-powered cars by the year 2040. At the same time, car manufacturers, such as General Motors and Nissan, are increasing the number of electric car models they produce Based on this information, which of the following statements is/are correct?

Quantity demanded exceeds quantity supplied.

A shortage occurs when:

A market in action

A seller at a farmer's market wants $10 for a bag of 10 apples. You think his price is too high, so you counter with an offer of $6 for the bag. The seller then offers you a much smaller bag of five apples for $6. You bargain again, and the seller lets you buy 10 apples for $8. This scenario is an example of:

Determined by the intersection of the demand and supply curves.

An equilibrium price is:

Demand for skills education increases

When there is a shortage of highly skilled workers in a particular region, the:

There is a shortage of the item

You're shopping online, and you place an item in your virtual cart. Two days later, you return to the virtual cart to check out and find that the item is now more expensive. Assuming that the market is competitive, what could explain the price increase?

Variable cost

a cost that varies with the level of output.

diminishing marginal product

is an economic principle usually considered by managers in productivity management. Generally, it states that advantages gained from slight improvement on the input side of the production equation will only advance marginally per unit and may level off or even decrease after a specific point.

Multiply the individual supply of one of the suppliers by ten.

A market consists of ten similar suppliers that are making the same supply decisions. To find the market supply of these ten suppliers, you:

When the quantity supplied equals the quantity demanded

An equilibrium in a market occurs:

fall, due to a rise in supply.

As a result of technological innovation, automated water pumps are being installed on the farms of Kenyan tomato farmers. As a result of the increased use of automated water pumps, the equilibrium price of tomatoes will:

It is the amount of an item that a seller is willing to sell at a particular price.

What is quantity supplied?

as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa.

What is the law of supply?

the quantity supplied goes on the horizontal axis

When plotting a supply curve

Highly skilled workers can negotiate higher salaries

When there is a shortage of highly skilled workers in a particular region:

(i), (ii), and (iii)

Which of the following five scenarios illustrate markets in action? (i) You rent a book at the university bookstore. (ii) You bargain at a street stall. (iii) You mow your own lawn. (iv) You get a manicure at a nail salon. (v) You grow your own vegetables and consume them yourself.

the market price of a product

Which of the following is NOT a factor that can shift supply? a) the market price of a product b) the price of a complement-in-production c) the price of a substitute-in-production d) the expected future price of a product

a rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production

Which of the following lists only the factors that would cause a decrease in the supply of an item? a) A fall in input prices; an increase in productivity; a fall in the price of a substitute-in-production. b) A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production. c) A rise in the price of a substitute-in-production; a rise in the price of a complement-in-production; an expectation that the price of the item will rise in the future. d)A decrease in the number of sellers in the market; a fall in the price of a complement-in-production; an increase in productivity.

American Airlines determines the marginal cost of an extra passenger to be $75 and sells a discount seat for $250.

Which of the following scenarios depicts a seller who is following the Rational Rule for Sellers?

They slope upward because higher prices lead individual businesses to supply a larger quantity and more businesses are willing to supply goods and services.

Why are supply curves typically upward-sloping?