511 ECON Final (4-7)

0.64.

The price elasticity of supply (based on the midpoint formula) when price increases from $15 (250) to $20 (300) is? -1. -0.69. -0.64. -0.51.

the current price is lower than the equilibrium price

There is a shortage in a market for a product when? -the current price is lower than the equilibrium price. -supply is less than demand. -demand is less than supply. -quantity demanded is lower than quantity supplied.

$4 per bushel.

There will be a surplus of 8,000 bushels at the price of -$4 per bushel. -$3 per bushel. -$2 per bushel -$5 per bushel.

-0.856

Using the regular percentage change formula, what is the price elasticity of demand when price increases from $6 (70) to $7(60)? -1 -0.856 -0.525 -1.166

falling long-run average total cost curve.

A firm encountering economies of scale over some range of output will have a? -rising long-run average total cost curve. -falling long-run average total cost curve. -constant long-run average cost curve. -rising, then falling, then rising long-run average total cost curve.

shut down.

A firm sells a product in a perfectly competitive market. The marginal cost of the product at the current output level of 200 units is $4. The minimum possible average variable cost is $3.50. The market price of the product is $3. To maximize profits or minimize losses, the firm should? -continue producing 200 units. -decrease production to less than 200 units. -increase production to more than 200 units. -shut down.

buyers intend to buy a quantity equal to the quantity that sellers intend to sell.

A market for a product reaches equilibrium when? -the actual quantity bought by buyers equals actual -quantity sold by sellers. the price rises further after there is a surplus. -buyers intend to buy a quantity equal to the quantity that sellers intend to sell. -price falls further after there is a shortage.

decreasing incomes of people in that city.

A newspaper reports that the average price of new homes in a certain city had decreased, and the number of new homes sold had also decreased. This situation is probably caused by? -decreasing costs of construction materials and services in that city. -decreasing incomes of people in that city. -higher government subsidies to new homebuyers in that city. -a rising population in that city.

it would not be able to sell its output.

A perfectly competitive firm does not try to raise its price above the market price because? -its competitors would not permit it. -it would not be able to sell its output. -this would be considered unethical price chiseling. -its demand curve is inelastic, so total revenue will decline.

marginal cost is above average variable cost.

A rising short-run average variable cost of production for a firm indicates that? -average fixed cost is constant. -average total cost is at its maximum. -marginal cost is above average variable cost. -marginal cost is below average variable cost.

increased by 30 units.

A technological advance lowers production costs such that the quantity supplied increases by 60 units of this product at each price. Because of this technological change, equilibrium output in this market -decreased by 60 units -increased by 60 units. -increased by 30 units. -decreased by 30 units.

decrease in supply.

A television station reports that the price of coffee has increased but the quantity traded in the market has decreased. This situation would be caused by a(n) -increase in demand. -increase in supply. -decrease in demand. -decrease in supply.

the additional product generated by additional units of an input will eventually diminish.

According to the law of diminishing marginal returns? -total product will fall and then rise as additional units of an input are employed. -employing additional inputs will diminish total product. -the additional product generated by additional units of an input will eventually diminish. -the additional inputs necessary to produce an additional unit of output will diminish.

increase quantity, but whether it increases price depends on how much each curve shifts.

An increase in demand for oil, along with a simultaneous increase in supply of oil, will? -decrease price and increase quantity. -increase price and decrease quantity. -increase quantity, but whether it increases price depends on how much each curve shifts. -increase price, but whether it increases quantity depends on how much each curve shifts.

new firms to enter, causing the market price of soybeans to decrease.

Assume that the market for soybeans is perfectly competitive. Currently, firms growing soybeans are experiencing economic profits. In the long run, we can expect -new firms to enter, causing the market price of soybeans to decrease. -new firms to enter, causing the market price of soybeans to increase. -some firms to exit, causing the market price of soybeans to decrease. -some firms to exit, causing the market price of soybeans to increase.

relatively more elastic in the long run than in the short run.

Demand is generally? -relatively more elastic in the long run than in the short run. -relatively more elastic in the short run than in the long run. -equally elastic in both the short run and the long run. -relatively more elastic for "necessities" than it is for "luxuries."

a reduction in price results in a decrease in total revenue

Demand is said to be inelastic when? -an increase in price results in a reduction in total revenue. -a reduction in price results in an increase in total revenue. -a reduction in price results in a decrease in total revenue. -the absolute value of the price elasticity of demand exceeds 1.

a reduction in price results in a decrease in total revenue.

Demand is said to be inelastic when? -an increase in price results in a reduction in total revenue. -a reduction in price results in an increase in total revenue. -a reduction in price results in a decrease in total revenue. -the absolute value of the price elasticity of demand exceeds 1.

X3, since any increase in output beyond that point will reduce profits

Given the graph above, which level of output should the perfectly competitive firm choose? -either X1 or X3, since profits will be the same -X3, since any increase in output beyond that point will reduce profits -X1, since a lower level of output will reduce profits -X2, since at this level of output the difference between MR and MC is maximized

Price of the rides decreased, and the quantity of rides have increased.

How have companies like Uber and Lyft affected the ride-sharing market? -Price and quantity of the rides have increased. -Price and quantity of the rides have decreased. -Price of the rides increased, and the quantity of rides have decreased. -Price of the rides decreased, and the quantity of rides have increased.

perfectly competitive firm.

If the demand curve faced by an individual firm is perfectly elastic, the firm must be a(n)? -pure monopoly. -perfectly competitive firm. -oligopolistic firm. -monopolistically competitive firm.

increase the quantity of X demanded by less than 12 percent.

If the demand for product X is inelastic, a 12 percent decrease in the price of X will? -decrease the quantity of X demanded by more than 12 percent. -decrease the quantity of X demanded by less than 12 percent. -increase the quantity of X demanded by more than 12 percent. -increase the quantity of X demanded by less than 12 percent.

a surplus of 60 units.

If the market price is $15, the market is experiencing? (D 20, S 80) -a surplus of 60 units. -a shortage of 60 units. -equilibrium. -a surplus of 20 units.

surplus, and the price will tend to fall.

If the price in this market is $4 per bushel, there will be a? (Above the supply and demand curves) -surplus, and the price will tend to rise. -shortage, and the price will tend to rise. -surplus, and the price will tend to fall. -shortage, and the price will tend to fall.

sellers will quickly run out of corn that they bring to market.

If the price in this market is fixed at $2 per bushel, then? (Shortage) -sellers will not be able to sell all the corn that they intended to sell. -sellers will quickly run out of corn that they bring to market. -buyers will find too much corn in the market. -buyers will be able to get as much corn as they wish to buy.

farmers would not be able to sell all their wheat.

If the price in this market was $4 -the market would clear; quantity demanded would equal quantity supplied. -buyers would want to purchase more wheat than is currently being supplied. -farmers would not be able to sell all their wheat. -there would be a shortage of wheat.

increase, and the quantity increase.

If the price of gasoline increases significantly, then we'd expect the price for hybrid and electric cars to? -increase, and the quantity increase. -increase, and the quantity to decrease. -decrease, and the quantity to increase. -decrease, and the quantity to decrease.

cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage.

In competitive markets, a surplus or shortage will? -never exist because the markets are always at equilibrium. -cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage. -cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage. -cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage.

equal to MR, MC, and the minimum ATC

In long-run equilibrium, a perfectly competitive firm will operate where price is? -greater than MR but equal to MC and the minimum ATC. -greater than MR and MC, but equal to the minimum ATC. -greater than MC and the minimum ATC, but equal to MR. -equal to MR, MC, and the minimum ATC.

"The different brands are almost identical. I always buy the cheapest."

In some markets consumers may buy many different brands of a product. Which of the statements below best represents a situation where demand for a particular brand would be very elastic? -"The different brands are almost identical. I always buy the cheapest." -"I use so little of that product that when I do buy it, I don't pay much attention to the price." -"The brand I buy is so superior to other available brands that I hardly consider the others." -"I pinch pennies in buying other products, but like most people I feel I owe it to myself to get the best brand of this product."

all costs are variable.

In the long run? -all costs are variable. -all costs are fixed. -total variable cost equals total fixed cost. -total fixed cost is greater than total variable cost.

price increases and Ed equals -2.47

In which instance will total revenues decline? -price increases and Ed equals -.41 -price increases and demand is unit-elastic -price decreases and demand is elastic -price increases and Ed equals -2.47

The increased demand but no change in quantity supplied causes a shortage of salt.

Nebraska had an unseasonable cold winter requiring more salt for the roads than normal. If the supply does not change what would happen to the market for salt? -The increased demand but no change in quantity supplied causes a surplus of salt. -The increased demand but no change in quantity supplied causes a shortage of salt. -There is no change in the market. -There will be more suppliers of salt at every price

quantity supplied will increase.

Picture a competitive market with the usual upward sloping supply curve and downward sloping demand curve. If the current price is creating a shortage, then market forces will cause the price to adjust and? -quantity supplied will increase. -quantity supplied will decrease. -quantity demanded will increase. -demand will decrease.

cost minimization, where P = minimum ATC

Productive efficiency refers to -cost minimization, where P = minimum ATC. -production at a level where P = MC. -maximizing profits by producing where MR = MC. -setting TR = TC.

decrease in consumer incomes

Refer to the graph, which shows that the demand for beef shifted from D1 and D2. The change in equilibrium from E1 to E2 is most likely to result from a(n) -decrease in consumer incomes. -increase in the cost of cattle feed. -increase in the price of pork. -decrease in the tax on beef products.

decrease in consumer incomes.

Refer to the graph, which shows that the demand for beef shifted from D1 and D2. The change in equilibrium from E1 to E2 is most likely to result from a(n)? (left shift) -decrease in consumer incomes. -increase in the cost of cattle feed. -increase in the price of pork. -decrease in the tax on beef products.

a shortage of 110 units would occur.

Suppose that market demand is represented by two demanders in columns (1) and (2) and market supply is represented by two suppliers in columns (4) and (5). If the price were artificially set at $6? (100,80, 30,40) -the market would clear. -a surplus of 50 units would occur. -a shortage of 110 units would occur. -demand would change from (2) to (1).

Price decreases and quantity increases

Suppose there is new fertilizer technology which allows avocados to be grown using less water, how might this affect the market for avocados? -Price increases and quantity decreases -Price increases and quantity increases -Price decreases and quantity decreases -Price decreases and quantity increases

economies of scale.

The ability of Intel to spread product development costs over a larger number of units of output arises from? -economies of scale. -diseconomies of scale. -minimum efficient scale. -constant returns to scale.

sensitivity of consumer purchases to price changes.

The concept of price elasticity of demand measures the? -slope of the demand curve. -number of buyers in a market. -extent to which the demand curve shifts as the result of a price decline. -sensitivity of consumer purchases to price changes.

relatively elastic.

The demand for a luxury good whose purchase would exhaust a big portion of one's income is? -unit-elastic. -perfectly elastic. -relatively inelastic. -relatively elastic.

in the short run, some inputs are fixed and some are variable.

The main difference between the short run and the long run is that? -the short run always refers to a time period of less than five years. -the long run always refers to a time period of one year or longer. -in the short run, some inputs are fixed and some are variable. -in the long run, all inputs are fixed.

-1.

The price elasticity of demand (based on the midpoint formula) when price increases from $10 (36) to $12 (30) is? -3.29. -1.37. -1. -0.33.

consumers will be better able to find substitutes.

The price elasticity of demand increases with the length of the period considered because? -consumers' incomes will increase over time. -the demand curve will shift outward as time passes. -all prices will increase over time. -consumers will be better able to find substitutes.

elastic in high-price ranges and inelastic in low-price ranges.

The price elasticity of demand of a linear demand curve is? -elastic in high-price ranges and inelastic in low-price ranges. -elastic but does not change at various points on the curve. -inelastic but does not change at various points on the curve. -1 at all points on the curve.

segment of the MC curve lying at and above the AVC curve.

The short-run supply curve for a perfectly competitive firm is the? -entire MC curve. -segment of the MC curve lying below the AVC curve. -segment of the MC curve lying at and above the AVC curve. -segment of the AVC curve lying to the right of the MC curve.

a 5% increase in price generates a 7% increase in quantity supplied.

The supply of product X is elastic if? -a 5% increase in price generates a 7% increase in quantity supplied. -an 8% increase in price generates an 8% increase in quantity supplied. -a 10% decrease in price does not affect quantity supplied. -a 7% decrease in price generates a 5% decrease in quantity supplied.

greater than $1.50 per gallon.

There would be excess production of milk whenever the price is? -greater than $1.50 per gallon. -greater but not less than $2.00 per gallon. -less than $1.50 per gallon. -less but not greater than $2.00 per gallon.

1

Using the midpoint formula, what is the price elasticity of supply when price increases from $5 (100) to $10 (200)? -1 -0.69 -0.64 -0.51

-3.335

Using the regular percentage change formula, what is the price elasticity of demand when price decreases from $10 to $8? -1 -2 -2.668 -3.335

the demand for Coca-Cola to be relatively more elastic than the demand for soft drinks in general.

We would expect? -the demand for Coca-Cola to be relatively more inelastic than the demand for soft drinks in general. -the demand for Coca-Cola to be relatively more elastic than the demand for soft drinks in general. -no relationship between the price elasticity of demand for Coca-Cola and the price elasticity of demand for soft drinks in general. -none of these to hold true.

supply increases and demand decreases

What combination of changes would most likely decrease the equilibrium price? -supply decreases and demand increases -demand increases and supply increases -demand decreases and supply decreases -supply increases and demand decreases

Price of Disney World tickets decreases, and quantity bought decreases

What might happen to the equilibrium price and quantity of Disney World tickets if Universal Studios offers discounts to families? -Price of Disney World tickets decreases, and quantity bought increases -Price of Disney World tickets increases, and quantity bought increases -Price of Disney World tickets increases, and quantity bought decreases -Price of Disney World tickets decreases, and quantity bought decreases

price takers

Which characteristic would best be associated with perfect competition? -few sellers -price takers -nonprice competition -product differentiation

3

Which diagram above illustrates the effect on the natural-gas market, with the widespread use of "fracking" or hydraulic fracturing by gas-drilling companies? -(1) -(2) -(3) -(4)

S1-S2 (Right Shift)

Which diagram above illustrates the effect on the natural-gas market, with the widespread use of "fracking" or hydraulic fracturing by gas-drilling companies? -D1-D2 (Right shift) -D1-D2 (Left Shift) -S1-S2 (Right Shift) -S1-S2 (Left Shift)

products are standardized or homogeneous

Which is a feature of a perfectly competitive market? -price differences between firms producing the same product -significant barriers to entry into the industry -the industry's demand curve is perfectly elastic -products are standardized or homogeneous

There are a large number of good substitutes for the good.

Which is not characteristic of a product with relatively inelastic demand? -The good is regarded by consumers as a necessity. -There are a large number of good substitutes for the good. -Buyers spend a small percentage of their total income on the product. -Consumers have had only a short time period to adjust to changes in price.

fuel and power payments

Which of the following is most likely to be a variable cost of production in the short run? -fuel and power payments -the interest on a business loan -rental payments on IBM equipment -real estate taxes

-The firm is generating a loss.

Which of the following statements is true? -The firm should increase production in the short run. -The firm is generating a loss. -The firm is earning a normal profit. -The firm is making economic profits.

a decrease in demand

Which of the following will cause a decrease in market equilibrium price and a decrease in equilibrium quantity? -an increase in supply -an increase in demand -a decrease in supply -a decrease in demand

the $50,000 salary the entrepreneur could be making as a CPA

Which of the following would be an implicit cost for a business owner? -the $50,000 salary the entrepreneur could be making as a CPA -the $1500 electric bill for his business -the $40,000 profit for this fiscal year -the $10 per unit cost for production of widgets