Rustici exam 2 answer

suppose you have a $15 gift certificate usable in three different restaurants in which you can eat lunch. Your goal is to eat in the restaurant so that you can have as much of your 15$ to take home as cash

A technological choice

Which of the following is true

A. Economic efficiency deals with ends not means B. Technological efficiency always implies economic efficiency C. Economic efficiency always implies technological efficiency D.It is always economically is to use the most advanced technology E. none of the above is true answer *E. none of the above is true

Which of the following is true

A. Free trade lowers the wages of people in highly industrialized countries, because producers move their operations to countries where wages are absolutely cheaper. B. Tariffs save America Jobs by preventing cheaper, foreign goods from competing with domestically produced products. C. Restricting imports of goods for national security purposes are a necessary method of keeping vital equipment from US enemies. D. Dumping is a gift from foreign nations that dump in the USA answer *Dumping is a gift from foreign nations that dump in the USA

which of the following is true?

A. In the inelastic region of the demand curve, an increase in price will increase the firm's total revenues B. Ceteris paribus, the more substitutes available, the more elastic the demand curve C. Cetreris paribus, the greater the percentage of the consumer's budget spent on the good, the more elastic the demand curve D. Ceteris paribus, time makes the demand curve more elastic E. The general form for elasticity s the percentage change in price divided by the percentage change in some other variable(relative quantity, income, other prices) answer *E

which of the following is true

A. The short-run price elasticity of demand for all economic goods is elastic. B. The more elastic the supply and demand curve are, the greater the quantity of output restriction caused by minimum and maximum price controls. C. The law of diminishing returns implies that demand is more elastic than supply. D. Once the law of diminishing returns sets in, the marginal product of the variable output is negative E all of the above is true answer *The more elastic the supply and the demand curve are, the greater the quantity of output restriction caused by minimum and maximum price controls.

which of the following is not true ?

A. according to Coase, in the perfect price competition the firm would not exist B. without the entrepreneur, the production involving 5 workers would require 10 separate contractors. C. The costs and benefits of using the price system is important for the Coase theory of the firm. D. the firm has compertaive advantage in resource allocation versus the open market(the price system) E. the firm will never knowingly produce in the range of diminishing returns. answer *E.the firm will never knowingly produce in the range of diminishing returns.

The following is a diagram of the structure of the production. All of the goods are specialized economic goods. Which of the following s true

A. the goods of the third order is good"1" B. The goods of the first order is goods 7-9 C. Derived demand means goods are moving down the structure while value is moving down the structure D. Only good "1" serves human needs E. The classical school believed that both goods and value move down the structure answer The classical school believed that both goods and value move down the structure.

which of the following illustrates the concept of derived demand

An increase in the demand for new houses leads to an increase in the demand for construction workers

Suppose the workers in Mexico make $3/hour and workers in the US make $12/hour. Also assume workers in the US are 4 times more productive than Mexican workers on average. Which of the following would likely occur following free trade

none of the above will occur

which of the following is not an assumption or implication of the perfect-price competition model

output is restricted in the market

According to Charles Maurice and Charles Smithson "The energy crises is over" the energy crises ended primarily because

price induced movements in both supply and demand.

Suppose Crusoe and Friday are stranded on an island. There are two economic goods, coconuts and pineapples. Each person wants one of both goods every day. The time spent gathering each good is given below Friday pineapples 200 min coconut 140 min Crusoe pineapples 60 min coconut 75 min

suppose the terms of trade in the free market are one pineapple for one coconut. Which of the following is true? *The gains from trade are 60 min for Friday and 15 min for Crusoe

Which of the following is true

the consumer's surplus is the area above the price and below the demand curve

which of the following is true

the gains from trade come from the imports, not exports

Carl Menger would agree with which following statements

Economic goods have value because needs exceed available quantity

Short answer essay question worth 15 points

Graphically illustrate the economic effects of minimum and maximum price controls. Verbally explain how thes e controls send misinformation and cause chaos in the plans of producers and consumers(Note: List 3 negative unintended side effects of each policy)

which of the following is not true with the respect to the economic theories of the firm?

In the Coase Theory, the firm minimizes costs while Alchain-Demsetz theory does not

which of the following is true quantity Price Total cost 1 5 2 2 5 2.5 3 5 6 4 5 9.8 5 5 14.3 6 5 19.1 7 5 25 8 5 31 9 5 38

The firm will maximize at what level of output? 5 unit

Suppose the exchange rate between dollars and yen is 1 dollar to 100 yen and the Japan runs a higher rate of interest than America. Before the exchange rate adjusts, which of the following is true?

There will be an excess supply of dollars in Japan relative to yen

According to the law of diminishing marginal returns

With a fixed input and successive additions of a variable input, at some point the rate of output growth of the variable input begins to decline.

which of the following relationship is not true

A. Classical School: objective value, cost-of-production price theory, aggregate quantity analysis. B. Aristotle: people trade equal values C. Mercantilism: zero-sum, government planning creates order, and money is wealth. D. Neoclassical: subjectivism and the "paradox of value" E. Scholasticism: the "just" price doctrine answer *D

suppose we have a coefficient of elasticity at +.7 what can we infer

A. D=MR=AR=P B. this is an inelastic demand curve C. This is an inelastic demand curve D. This is an inferior good E. none of the above answer * E. none of the above

In "Rent controls" by walker Block,Block states that rent controls

Are nearly as effective or more effective as bombing in destroying a city

In Hans Senholz's essay " the formation and function of prices", he points out that prices

Are production signals from consumers.

which of the following is the crucial distinction between sunk costs and opportunity costs

Sunk costs are the irrelevant component of cost since they do not offer an opportunity for chioce

in the elastic region of the demand curve, a reduction in the price of the good will lead

an increase in total revenues