Microeconomics

Locotek produces toy trains and pays each worker $350 per week. 5 workers can produce 40 trains per week and 6 workers can produce 50 trains per week. The marginal product per week of the 6th worker is

10 trains

If Good A and Good B are complements in production, then an increase in the price of Good A will cause

An increase in supply of Good B

Which of the following will cause the supply curve for shoes to shift to the right?

An increase in the number of firms producing shoes

An increase in which of the following will cause a firm's marginal cost curve to shift upward?

The price of a variable input

Which of the following will occur if the government imposes a price ceiling below the equilibrium price of a good?

The quantity demanded will exceed the quantity supplied

Mr. Herzig is willing to buy a pound of carrots for $2. At the grocery store, the price that he pays is $1.50. Which of the following is true? Selected:

consumer surplus is .50

Suppose that a large number of unskilled workers enter a nation's labor market. If the labor market is competitive, the number of unskilled workers hired and the wage rate will most likely change in which of the following ways?

number of unskilled workers hired will increase, wage rate will decrease

Gizmos and gadgets have a positive cross-price elasticity. Therefore, they are

substitutes

Marginal revenue product is equal to

the price of the good multiplied times the number of units of the good that the added worker produced.

Assume that the demand for a certain good is perfectly inelastic and the supply curve of the good is upward sloping. Which of the following occurs in the market for the good if the price of an input used to produce the good increases?

A decrease in the supply and an increase in the equilibrium price

Total surplus is maxmized when the price is

At market equilibrium

Suppose the government of the oil-rich country of Oiland sets domestic gasoline prices at $0.25 per gallon, when the market price is $1.50. The Oiland government's actions will

Cause gasoline shortages even in an oil-rich country.

The price of Good A increases resulting in the demand for Good B to shift left. Good A and Good B must be

Complements

Assume that apples and oranges are substitutes. If the price of oranges decreases, what happens in the apple market?

Demand decreases

Assume that tennis racquets and balls are complements. If the price of tennis racquets increases, what will happen in the tennis ball market?

Demand decreases

Which of the following changes in the demand for and the supply of a good will necessarily result in an increase in both the equilibrium price and quantity of the good in a market?

Demand: increase, supply: no change

Which of the following best explains why the short-run average total cost curve is U-shaped?

Diminishing returns eventually overcome the spreading of total fixed costs

Moving from left to right along a downward-sloping linear demand curve, price elasticity varies in which of the following ways?

First elastic, then unit elastic, and finally inelastic

Country A has a Gini coefficient of 0.5, and Country B has a Gini coefficient of 0.3. Which of the following statements is definitely true?

Income is more evenly distributed in Country B than in Country A.

If Good A and Good B are substitutes in production, then a decrease in price of Good A will cause

Increase in supply of Good B

An advancement in technology producing gizmos will cause

Increase in supply of gizmos

Which of the following would cause an increase in the quantity supplied of Good X?

Increase in the price of Good X

Which of the following is true for a perfectly competitive firm in long-run equilibrium?

It creates no deadweight loss.

A profit-maximizing firm should shut down, in the short-run, if which of the following is true?

Its average variable cost exceeds its price.

The minimum cost output is where

MC=ATC

Assume that a firm is maximizing short-run profits and that price is greater than average variable cost. Which of the following must be true at the firm's level of output?

Marginal cost is equal to marginal revenue.

Which of the following would increase supply?

More producers enter the market

During a recession, which of the following characteristic would indicate a good that is likley to experience an increase in the quantity demand?

Negative income elasticity

If Good A has an income elasticity of 2.3, then Good A must be

Normal good

If Mr. Herzig's income increases. As a result, he purchases more widgets and fewer gadgets. Widgets must be

Normal goods

Assume that both the supply of and the demand for a good are relatively price elastic. The imposition of a per-unit excise tax on the sale of the good will cause the equilibrium price and quantity to change in which of the following ways?

Price will increase, quantity will decrease

The grocery store's cost (willingness to supply) a pound of celery is $1.00. The price they sell the celery to Mr. Herzig is $1.50. Which of the following is true?

Producer surplus is .50

If the market demand for a good is elastic and the supply is inelastic, which of the following is true when there is an increase in sales tax?

Producers will bear most of the burden of the tax or risk losing sales.

If the price of Good X increases, what will happen in the Good X market?

Quantity demanded decreases

If a 10 percent wage increase in a particular labor market results in a 5 percent decrease in employment, the demand for labor is

Relatively inelastic

If a severe drought destroys a significant portion of the peanut crop and peanut farmers' revenues increase, which of the following is true over the observed range of prices?

The demand for peanuts must be price inelastic

Mr. Herzig's demand (willingness to pay) for one notebook is $1. The store's supply (willingness to sell) one notebook is $2. The store prices the notebook at $3. Which of the following are true?

There is no consumer nor producer surplus

Mr. Herzig is willing to pay $5 for a half gallon of ice cream. The grocery store's cost (willingness to sell) a half gallon of ice cream is $2. Mr. Herzig buys a half gallon of ice cream from the grocery stor for $4. Which of the following is true?

Total surplus is 3

A society that wishes to achieve greater income equality is most likely to have which of the following?

a progressive income tax system and high estate and gift taxes

Consider two competing motorcycle manufacturers, Harley-Davidson and Honda. If Harley-Davidson raises the price that it charges for its motorcycles, we can expect:

a shift to the right in the demand curve for Hondas and higher prices for Hondas.

If Good X and Good Y have a negative cross-price elasticity, then the two goods must be

complements

The marginal revenue product of labor is the

additional revenue a firm earns when it employs an additional unit of labor

Price discrimination occurs when

differences in a product's price do not reflect differences in costs of production

To alleviate a financial crisis, a university increases student fees. This action will decrease university revenues if the price elasticity of demand for university education is

elastic

If a firm is experiencing economies of scale, which of the following will decrease as output increases?

long run average total cost