EXAM 2 MICROECONMICS
Refer to Exhibit 8.6, which shows the demand and the cost curves of a perfectly competitive firm. The market price equals _____
$28
Refer to Exhibit 8.6, which shows the demand and the cost curves of a perfectly competitive firm. Total revenue at the profit-maximizing output equals _____
$5,600
If the price elasticity of demand for a product is 5, and price decease 10 percent then demand will
increase by 50 percent
If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then the demand is
inelastic
Suppose Ripco owns the building from which it operates. If
its usage of the building precludes it from renting to anyone else, there is an opportunity cost
for a perfectly competitive firm operating at the profit-maximizing output level in the short run
marginal cost equals price
The price charged by a perfectly competitive firm is determined by
market demand and market supply
According to the utility theory , in "consumer equilibrium" households have
spent their incomes in such a that their overall satisfaction is maximized
Utility measures
tastes and preferences in consumption
Which of the following is most likely to be fixed resource for a word processing firm?
the building
The reason why Diana does not drink five cups of coffee at breakfast is that
the marginal utility derived from the fifth cut off coffee is negative
As a consumer allocated income between Good A and Good B, total utility is maximized when
the marginal utility of Good A= the marginal utility of Good B
Carvel advertises a football-shaped ice cream cake for $7; you can buy a second one only $4. What does Carvel know about consumers preferences?
the marginal utility of ice cream cakes Diminishes
Demand is inelastic if
the percentage change in price is greater than the percentage change in quantity demanded
Refer to exhibit 5.10, which shows two upward-sloping linear supply curves that pass through the origin. The price elasticity of supply between $20 and $40 on the supply curve s^1
1
If quantity increases by 15 percent when prices decrease 5 percent, then elasticity for the product is
3
If the price of Coca-cola increases from 40 cents to 50 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the value of price elasticity of demand for Coca-cola is
3
Refer to Exhibit 8.6, which shows the demand and the cost curves of a perfectly competitive firm. Total cost at the profit-maximizing output equals _____
4,400
according to the law of ___, the marginal utility received from each additional unit of a good consumed declines, other things constant
Diminishing marginal utility
Tyrell has $50 to spend on Good A and Good B per week. The price of Good A is $5 and that of Good B is $4. He buys six units of Good A and five units of Good B. The marginal utility of the sixth unit of Good A is 25 units, and the marginal utility of the fifth unit of Good B is 20 units. Which of the following is true?
He is Maximizing his utility
The market price on a graph equals
D=MR=AR
John moved his office from the building he was renting downtown to the carriage house he owns behind his house. How will his profit change?
Accounting profit will rise
The production function is defined as
The relationship between the amount of resources employed and total product
The reason economists assume that firms try to maximize economic profit is that
a firm that don't earn profits will, over time, have difficulty securing financing to survive
Total product is defined as
a firm's total output
Which of the following is an example of diminishing marginal utility? a. a person buying additional goods after getting a pay raise b. a person eating more Twinkies but enjoying each successive Twinkie less than the previous one c. a person giving some of his income to a needy person d. a person who spends more hours studying than his fellow students e. a person buying goods as long as her marginal utility is greater than zero
a person eating more Twinkies but enjoying each successive Twinkie less than the previous one
Refer to Exhibit 8.6, which shows the demand and the cost curves of a perfectly competitive firm. At the profit- maximizing output level, the firm experiences _____
a profit of 1,200
Which of the following characterizes a perfectly competitive market?
perfect information
the demand curve for the output of a perfectly competitive firm is
perfectly elastic
For perfectly competitive firms, which of the following correctly shows the relationship among market price (P), average revenue (AR), and marginal revenue (MR)?
price = average revenue (AR) = marginal revenue (MR)
in economics, elasticity means
responsiveness to price changes
One group of people uses the New York City subways only during the rush hour to travel to and from work. Another group uses them only at midday for leisure activity. If New York City wants to increase transit fares with the smallest possible reduction in revenue, for which group should it increase the fare?
the rush-hour group, because its demand for subway service is less elastic than that of the mid-day group
A perfectly competitive firms profit per unit of output equals
total revenue minus total cost
If a manufacturer shuts down in the short run, it must be true that before the shutdown, at all positive output levels, _____
total revenue was greater than the variable cost of production
If the price elasticity of supply in the kiwi fruit industry equals 1, supply is
unit elastic
