651 Quizes
By the transitivity property if A > B and B > C then
A>C
Advertising can influence demand by altering tastes of consumers. This type of advertising is known as
persuasive advertising
If a shortage exists in a market, the natural tendency is for:
price to increase
Suppose you produce wooden desks, and government legislation protecting the spotted owl has made it more expensive for you to purchase wood. What do you expect to happen to the equilibrium price and quantity of wooden desks?
price will increase but quantity will decrease.
When marginal cost curve is below an average cost curve, average cost is
decrease with output
Many gourmet shops go out of business during recessions since they sell almost exclusively
normal goods
A firm manager with vertical indifference curves (output on the horizontal axis, profit on the vertical axis) views
only output to be "goods"
Suppose market demand and supply are given by Q d = 100 - 2P and Q S = 5 + 3P. If the government sets a price floor of $30 and agrees to purchase all surplus at $30 per unit, the total cost to the government will be:
$1,650
Suppose a worker is offered a wage of $8 per hour, plus a fixed payment of $100 per day, and he can use 24 hours per day. What is the minimum the worker can earn in a day?
$100
Suppose a worker is offered a wage of $8 per hour, plus a fixed payment of $100 per day, and he can use 24 hours per day. What is the maximum total earnings the worker can earn in a day?
$292
A worker's total earnings for one day is $100. He received a $20 fixed payment and consumes 14 hours of leisure. What is the hourly wage rate?
$8
Suppose a worker is offered a wage of $8 per hour, plus a fixed payment of $100 per day, and he can use 24 hours per day. What is the market rate of substitution between leisure and income?
$8
The demand for good X has been estimated by Q xd = 6 - 2Px + 5Py. Suppose that good X sells at $3 per unit and good Y sells for $2 per unit. Calculate the own price elasticity.
-0.6
Suppose demand is given by Q xd = 50 - 4Px + 6Py + Ax , where Px = $4, Py = $2, and Ax = $50.What is the advertising elasticity of demand for good x?
.52
The demand for good X has been estimated to be lnQ xd = 100 - 2.5 lnPX + 4 lnPY + lnM. The advertising elasticity of good X is
0
If quantity demanded for sneakers falls by 6% when price increases 20% we know that the absolute value of the own-price elasticity of sneakers is
0.3
The demand for good X is estimated to be Q xd = 10,000 - 4PX + 5PY + 2M + AX, where PX is the price of X, PY is the price of good Y, M is income and AX is the amount of advertising on X. Suppose the present price of good X is $50, PY = $100, M = $25,000, and AX = 1,000 units. Based on this information, the income elasticity of good X is
0.82
If the production function is Q = K.5L.5 and capital is fixed at 1 unit, then the average product of labor when L = 25 is
1/5
For a cost function C = 100 + 10Q + Q2, the average fixed cost of producing 10 units of output is
10
If the income elasticity for lobster is .6, a 25% increase in income will lead to a
15% increase in demand for lobster.
If the income elasticity for lobster is .4, a 40% increase in income will lead to a:
16% increase in demand for lobster
Suppose the demand for good X is given by Qdx= 20 - 4Px + 2Py + M. The price of good X is $5, the price of good Y is $15, and income is $150. Given these prices and income, how much of good X will be purchased?
180
If the demand function for a particular good is Q = 25 - 10P, then the price elasticity of demand (in absolute value) at a price of $1 is
2/3
Given that income is $300, the price of good Y is $15, and the price of good X is $20. What is the vertical intercept of the budget line?
20
What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and Px = $10, Py = $15, X = 30, and M = 600?
20
What is the value marginal product of labor if: P = $10, MPL = $25, and APL = 40?
250
Given that income is $200 and the price of good Y is $40. What is the vertical intercept of the budget line?
5
If the cross-price elasticity between ketchup and hamburgers is -2.5, a 2% increase in the price of ketchup will lead to a
5% drop in demanded of hamburgers
Suppose market demand and supply are given by Q d = 100 - 2P and Q S = 5 + 3P. If a price floor of $30 is set, what will be size of the resulting surplus?
55
Suppose the production function is Q = min {3K, L}. How much output is produced when 6 units of labor and 3 units of capital are employed?
6
The demand for good X is estimated to be Q xd = 10,000 - 4PX + 5PY + 2M + AXwhere PX is the price of X, PY is the price of good Y, M is income and AX is the amount of advertising on X. Suppose the present price of good X is $50, PY = $100, M = $25,000, and AX = 1,000 units. What is the quantity demanded of good X?
61300
You are the manager of a popular shoe company. You know that the advertising elasticity of demand for your product is .15. How much will you have to increase advertising in order to increase demand by 10%?
66.7%
Suppose the production function is given by Q = 4K + 6L. What is the average product of capital when 10 units of capital and 5 units of labor are employed?
7
In a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. The full economic price under a price ceiling of $3 is
8
Suppose Q xd = 10,000 - 2 Px + 3 Py - 4.5M , where Px = $100, Py = $50, and M = $2,000. How much of good X is consumed?
950 units
Suppose the demand for X is given by Q xd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. Based on this information, we know that good X is
A substitute good for Y and a normal good
Which of the following can explain an increase in the demand for housing in retirement communities?
An increase in the population of the elderly
The difference between average total costs and average variable costs is
Average fixed cost
Which of the following is not a supply shifter?
Average income level
When there are economies of scope between products, selling off an unprofitable subsidiary
Could lead to only a minor reduction in cost
Suppose a worker is offered a wage of $8 per hour, plus a fixed payment of $100 per day, and he can use 24 hours per day. What is the equation for the worker's opportunity set? (E is total earnings and L is leisure)
E = 292 - 8L.
Advertising provides consumers with information about the underlying existence or quality of a product. These types of advertising messages are called
Informative advertising
If the price of labor increases, in order to minimize the costs of producing a given level of output, the firm manager should use
Less of labor and more of capital
The minimum average cost of producing alternate levels of output, allowing for optimal selection of all variables of production is defined by the:
Long run average total cost curve
The horizontal intercept of the budget line is:
M/Px
The supply function for good X is given by Q x s = 1,000 + PX - 5 PY - 2PW , where PX is the price of X, PY is the price of good Y and PW is the price of input W. If PX = 100, PY = 150 PW = 50, then the supply curve is
Q x s = 150 + Px
Which of the following is not a means of acquiring product and process innovations?
Mass production of the existing product.
Suppose the supply of good X is given by Q Sx = 10 + 2 Px . How many units of good X are produced if the price of good X is 20?
None of the above
The demand for video recorders has been estimated to linear and given by the demand relation Qv = 145 - 3.2Pv + 7M - .95Pf - 39Pm, where Qv is the quantity of video recorders, Pf denotes the price of video recorder film, Pm is the price of attending a movie, Pv is the price of video recorders, and M is income. Based on the estimated demand equation we can conclude:
a and b (video recorders are normal goods, video recorder film is a complement for video recorders)
If widgets and gidgets are complements and both are normal goods, then a decrease in the demand for widgets will result from
a decrease in income
Good Y is a complement to good X if an increase in the price of good Y leads to
a decrease in the demand for good X.
If you sell an inferior good, offering to sell gift certificates to those looking for a gift may result in
a greater quantity sold than if the customer resorts to giving a cash gift
The demand for good X is estimated to be Q xd = 10,000 - 4PX + 5PY + 2M + AX, where PX is the price of X, PY is the price of good Y, M is income and AX is the amount of advertising on X. Suppose the present price of good X is $50, PY = $100, M = $25,000, and AX = 1,000 units. Based on this information, good X is
a normal good
Suppose the demand for X is given by Q xd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. Based on this information, we know that good Y is
a substitute for good X.
The firm manager with indifference curves which are convex from the origin (output on the horizontal axis and profit on the vertical axis) views
both profits and outputs to be "goods".
You are the manager of a supermarket, and know that the income elasticity of peanut butter is exactly -0.7. Due to the recession, you expect incomes to drop by 15% next year. How should you adjust your purchase of peanut butter?
buy 10% more PB (10.5% more?)
An ad valorem tax shifts the supply curve
by rotating it counter-clockwise
The price elasticity of demand is -2.0 for a certain firm's product. If the firm raises price, the firm manager can expect total revenue to
decrease
Suppose the own-price elasticity of demand for good X is -0.5, and that the price of good X increases by 10%. We would expect the quantity demanded of good X to
decrease by 5%
Assume that the price elasticity of demand is -0.75 for a certain firm's product. If the firm lowers price, the firm's managers can expect total revenue to
decrease
If demand increases, then
demand curve shifts right
If the own price elasticity of demand is infinite in absolute value, then
demand is perfectly elastic
If you include in your offerings some inferior goods, the demand for these products will increase
during bad economic times
When the price of sugar was "low", consumers in the U.S. spent a total of $3 billion annually on sugar consumption. When the price doubled, consumer expenditures remained at $3 billion annually. This data indicates that:
none of the above
Which of the following provides a measure of the overall fit of a regression?
f-stat
The cross-price elasticity of demand for textbooks and copies of old exams is -3.5. If the price of copies of old exams increase by 10 percent, the quantity demanded of textbooks will
falls by 35%
As a general rule-of-thumb, a manager can be 95 percent confident that the true value of the underlying parameter in the regression is not zero, when the absolute value of the t-statistic is
greater than 2
For given input prices, isocosts farther from the origin are associated with
higher costs
If you were running an advertising campaign for designer men's suits, you should target families with:
higher incomes
The cross price elasticity of demand between goods X and Y is -3.5. If the price of X decreases by 7%, the quantity demanded of Y will:
increase by 24.5%
If you are in the business of selling chicken and the price of selling chicken and the price of beef both were to drop dramatically, what should you do with your inventory level of chicken?
increase the inventory
Diminishing marginal rate of substitution implies that
indifference curves are convex from the origin
Joe consumes 10 units of food and 12 units of clothing. Since food is an inferior good, a gift to Joe of a $12 gift certificate at a food store will
induce Joe to eat more than 10 units of food
Competitive market equilibrium
is determined by the intersection of the market demand and supply curves.
Producer surplus
is the area above the supply curve but below the market price of the good.
The combinations of inputs that produce a given level of output are depicted by:
isoquants
We would expect the own price elasticity of demand for food to be:
less elastic than the demand for cereal.
Some individuals choose to undertake risky prospects while others choose safer ones, because they have different
marginal rates of substitution between risk and reward.
The demand for women's clothing is
more elastic than the demand for clothes in general
We would expect the demand for jeans to be:
more elastic than the demand for clothing.
If the price of a good purchased by a utility maximizing consumer goes down, all other things remain the same, and the consumer's income is adjusted so that he can just barely attain his previous level of satisfaction, and if the consumer had indifference curves of the usual shape it will be found that
more of the good will be purchased than before
The supply function
recognizes that the quantity of a good produced depends on its price and supply shifters.
Non-fed ground beef is an inferior good. In economic booms, grocery managers
reduce orders
The cross-price advertising of demand for books and magazines is -2.0. If the price of magazines decreases by 10 percent, the quantity demanded of books will
rise by 20 percent
Graphically, a decrease in advertising will cause the demand curve to:
shift leftward.
As additional firms enter an industry, the market supply curve
shifts to the right
When an effective price ceiling is in place
some consumers are better off and others are worse off.
If a firm offers to pay a worker $10 for each hour of leisure the worker gives up then the opportunities confronting the worker will be given by
straight line with a negative slope
Which of the following is not the important factor that affects the magnitude of the own price elasticity of a good? Group of answer choicesavailable substitutes.
supply of the good
The budget set defines the combinations of good X and Y
that are affordable to the customer
If money income doubles and the prices of all goods triples, then
the consumer is worse off due to inflation
If the own price elasticity of demand is infinite in absolute value, then
the demand curve is horizontal
Other things held constant, the greater the price of a good
the lower the consumer surplus
The lower the standard error,
the more confident the manager can be that the parameter estimates reflect the true values.
When quantity demanded exceeds quantity supplied
the price is below the equilibrium price.
The marginal rate of substitution (MRS) determines the rate at which a consumer is willing to substitute between two goods in order to achieve
the same level of satisfaction
An excise tax of $1.00 per gallon of gasoline placed on the suppliers of gasoline, would shift the supply curve
up by $1
A price elasticity of zero corresponds to a demand curve that is:
vertical
Since most consumers spend very little on salt, a small increase in the price of salt
will not reduce quantity demanded by very much
