BYU-I ECON 150- Broadbent tophat questions

Suppose that a monopolist increases production from 10 units to 11 units. If the market price declines from $30 per unit to $29 per unit, marginal revenue for the eleventh unit is:

19

If a perfectly competitive firm increases production from 10 units to 11 units, and the market price is $20 per unit, total revenue for 11 units is:

220

A farm can produce 1,000 bushels of wheat per year with 2 workers and 1,300 bushels of wheat per year with 3 workers. The marginal product of the third worker is:

300

If a firm produces 10 units of output and incurs $30 in average variable cost and $5 in average fixed cost, average total cost is

35

Suppose that the price of Cracker Jacks is 50 cents a box and the price of M&Ms is 25 cents a bag. If you have $5 to spend and decide to purchase 8 boxes of Cracker Jacks, the maximum quantity of M&Ms that you can purchase is bags.

4

If a firm in perfect competition sells 10 units of output at a market price of $5 per unit, its marginal revenue is:

5

Which of the following statements is true?

A minimum wage reduces the quantity demanded of labor.

If a 20 percent increase in the price of one good leads to a 10 percent increase in the quantity demanded of another good at a specific price, the goods are:

substitutes

The principle stating that, for virtually all goods and services, there is a negative relationship between price and quantity demanded, all other things unchanged, is the law of:

Demand

In a perfectly competitive factor market, a firm finds that the price of a factor of production is ___ its marginal factor cost.

Equal to

Imperfectly competitive markets include:

an industry with a few firms, producing a similar product, and in some cases an identical product.

If marginal cost is greater than average total cost, then:

average total cost is increasing.

A tariff imposed on Japanese imports into the United States tends to:

benefit U.S. producers and penalize Japanese producers.

If a monopolist is producing a quantity that generates MC > MR, then profit:

can be increased by decreasing production.

A linear demand curve:

can have both elastic and inelastic price elasticity of demand

Marginal revenue product is the:

change in total revenue resulting from a unit change in the quantity of a variable input.

Sally Garcia devotes all of her income to the consumption of two goods, apples and Reese's Peanut Butter Cups. She has just discovered that at her current level of consumption the marginal utility of an apple is 6 and the marginal utility of a Reese's Peanut Butter Cup is 8. Suppose the price of an apple is $0.20, while the price of a Reese's Peanut Butter Cup is $0.25. To maximize her total utility, assuming that the goods are divisible, she would:

consume more Reese's Butter Cups and fewer apples.

The transfer to monopoly of a portion of _ is a(n) _ issue.

consumer surplus; equity

A price above the equilibrium price will:

create pressure for price to fall.

If the quantity supplied in a market exceeds the quantity demanded in a market, we would expect price to:

decrease

If the slope of the total variable cost curve is increasing, the slope of the total product curve is:

decreasing

If consumer income, preferences, and the prices of all other goods remain constant while the price of X varies, the amount purchased of X is defined by the:

demand curve

If price is greater than average variable cost and less than average total cost at the profit-maximizing quantity of output in the short run, a perfectly competitive firm will:

produce at an economic loss.

Regardless of whether they pay for them, people cannot be excluded from receiving the benefits of:

public goods.

A perfectly competitive firm is a price _

setter

A decrease in the price of milk (and ingredient of ice cream) will result in a(n

shift of the supply curve of ice cream to the right.

Which of the following is true regarding a budget constraint?

The budget constraint indicates that there are limits on the consumption possibilities for a consumer.

Which of the following is NOT an opportunity cost of going on vacation?

The money you spend on food

A decrease in the price of a good will, all other things unchanged, result in

an increase in the quantity demanded

A tariff is most likely to _ prices and _ consumption of the good or service being protected.

increase decrease

If a monopoly firm produces where P = MC, it could _ profits by producing and __ its price.

increase; less; raising

A market price floor for wheat:

increases the price paid by consumers.

The slope of a(n) _ curve shows the rate at which two goods can be exchanged _ the consumer's .

indifference; without affecting; total utility

If the quantity of housing supplied in a community is less than the quantity of houses demanded, the existing price

is below the market equilibrium price.

In equilibrium in a perfectly competitive labor market, the price of labor:

is the same as the MFCL.

if a country has a comparative advantage in the production of a good:

it can produce that good at a lower opportunity cost.

Monopolistic competition is an industry characterized by a:

large number of firms producing similar products, with relatively easy entry for firms.

Whenever MB < MC, the decision maker should do ___ of the activity.

less

The more work a person does, all other things unchanged, then the:

less his or her leisure.

A perfectly competitive firm will not produce any output in the short run and will shut down if price is:

less than average variable cost.

A planning period during which all of a firm's factors of production are variable is the:

long run

In analyzing the impact of a progressive tax system, economists focus on the tax rate.

marginal

The amount by which total utility increases when an additional unit of a good is consumed is called utility.

marginal

The change in total output resulting from a 1-unit increase in the quantity of a factor of production used, holding the quantities of all other factors of production constant, is __ product

marginal

When the market does not result in an efficient allocation of scarce resources, economists call this:

market failure

If a perfectly competitive firm is producing a quantity that generates MC = MR, then profit is ___.

maximized

If a consumer purchases a combination of commodities x and y such that MUx/Px = 20 and MUy/Py = 10, to maximize utility, the consumers should buy.

more of x and less of y.

Which of the following is (are) true concerning monopoly?

-It is at the opposite end of the spectrum from a perfectly competitive firm. -A monopoly has no rivals. -A monopoly does not need to worry about other firms entering the industry.

In perfect competition:

-a firm's total revenue is found by multiplying market price by the firm's quantity of output. -the firm's total revenue curve is a linear, upward-sloping line -at any price, the greater the quantity sold, the greater is a firm's total revenue

Barriers to entry are characteristics of a particular market:

-in which the industry can make it so difficult for entry that only a few firms can do so, and this leads to monopoly power. -that block new firms from entering. -which include economies of scale, location advantages, and high sunk costs.

Assume that the demand curve for golfballs (in dozens) is given by the equation P = 20 - 2Q. If 1 dozen goflballs is purchased at the price of $18 what is consumer surplus?

1

Which of the following is the best example of a marginal decision

Deciding to purchase another can of soda

A firm will maximize profits in the hiring of labor if it hires where:

MRP = MFC.

Given that MUY = marginal utility of income, MULE = marginal utility of leisure, and W is the wage, utility is maximized by allocating time between work and leisure so that:

MUY/PY = MULE/W.

A demand curve that is downward sloping will ensure that:

P > MR.

Assume a market initially exhibits a shortage. Assuming that both prices and quantities are flexible, which of the following will be true after the market adjusts to equilibrium?

Quantity supplied is more.

What is the condition of having to choose among many alternative known as?

Scarcity

The price elasticity of supply for a good is 3 if:

a 1 percent decrease in price leads to a 3 percent decrease in quantity supplied.

The primary difference between a change in supply and a change in the quantity supplied is:

a change in quantity supplied is a movement along the supply curve, and a change in supply is a shift of the supply curve.

The difference between iron ore deposits and the steel produced from these deposits that is later used to make factory equipment illustrates the difference between

a natural resource and capital

A maximum legal price is called

a price ceiling.

As consumers make choices in the marketplace, they reveal information about their:

ability to pay for goods and services.

Which of the following always results in an increase in equilibrium price and quantity?

an increase in demand with no change in supply

A market surplus occurs if the quantity:

demanded is less than the quantity supplied.

A firm that is experiencing diminishing returns in management's ability to use and disseminate information as it increases production in the long run is an example of:

diseconomies of scale.

The demand curve for a firm under monopolistic competition is:

downward sloping

the demand curve facing a monopolist is:

downward sloping

An industry with two firms is generally termed:

duopoly

When an increase in the firm's output reduces its long-run average cost, it experiences:

economies of scale.

When the net benefits of all economic activities are maximized, economists say the allocation of resources is ___

efficient

A men's tie store sold an average of 30 ties per day when the price was $5 per tie but sold 50 of the same ties per day when the price was $3 per tie. Hence, the absolute value of the price elasticity of demand is:

equal to 1.

In perfect competition, price will _ marginal cost. In monopoly, price will _ marginal cost.

equal; exceed

Marginal revenue:

equals the market price in perfect competition.

The tendency of people or firms to consume a public good without paying for it is the problem.

free rider

If an economy is producing a level of output that is on its production possibilities curve, the economy

has no idle resources and is using resources efficiently

The market for breakfast cereal contains hundreds of similar products, such as Fruit Loops, Corn Flakes, and Rice Krispies, that are considered to be different products by different buyers. This situation violates the perfect competition assumption of:

identical goods.

If the opportunity cost of manufacturing machinery is lower in the United States than in Britain and the opportunity cost of manufacturing sweaters is higher in the United States than in Britain, then the United States will:

import sweaters from Britain and export machinery to Britain

For an inferior good, income elasticity of demand will be:

negative

Economic profits in the long run are guaranteed for firms under:

neither monopolistic competition nor perfect competition.

The total benefit of an activity minus its total cost is

net benefit.

If your purchases of shoes remain constant at 9 pairs per year when the price of shirts increases from $8 to $12, then, for you, shoes and shirts are considered:

nonresponsive

If income increases and the consumption of bagels increases, bagels are considered a(n):

normal good

For a(n) _ good, an increase in income will lead to an increase in _ .

normal; consumption

If, for a particular consumer, the marginal utility of ties is greater than the marginal utility of shirts, this consumer should:

not do anything until more information is available.

In general, production possibilites curves are "bowed out" because

of the law of increasing opportunity cost

An industry dominated by a few firms, where each of those firms recognizes that its own choices will affect the choices of its rivals and that its rivals' choices will affect it, is a(n):

oligopoly

The sacrifice of an alternative is called

opportunity cost

If the ___ differ between two countries, this suggests the possibility for mutually advantageous trade.

opportunity costs

If the only two firms in an industry openly agree to fix the price at a given level, then this is an example of:

overt collusion.

A leftward shift in the labor supply curve would result if:

people value leisure more highly.

The cross price elasticity of demand for substitute goods is:

positive

The ratio of the percentage change in the quantity demanded to the percentage change in price, all other things unchanged, is:

price elasticity of demand

A firm that faces a downward-sloping demand curve is a:

price setter

A tax imposed by a government on imported goods or services is a:

tariff

Determining whether the burden of taxes falls on consumers, workers, or owners of other factors of production is

tax incidence analysis.

The competitive model assumes all of the following EXCEPT:

that firms attempt to maximize their total revenue.

The point on the production possibilities curve at which an economy will operate is determined by:

the demands of consumers.

A persistent shortage may occur if:

the government imposes a price ceiling.

A demand curve is generated from indifference curves by changing:

the price of one good

A change in the quantity demanded of peanuts, a factor of production used to produce chocolate-covered peanuts, will occur if:

the price of peanuts decreases.

The burden of a tax that is imposed on a good is said to fall on consumers if:

the price paid by consumers for the good increases.

A firm's marginal cost is:

the ratio of the change in total cost to the change in the quantity of output.

The price elasticity of supply measures:

the responsiveness of quantity supplied to changes in prices.

Economic profit is maximized when:

the slope of the total revenue curve is equal to the slope of the total cost curve.

characteristic of public goods is that:

their benefits cannot be withheld from anyone, regardless of whether the person pays for them.

A curve which shows the quantities of output that can be obtained from different quantities of a variable factor of production, assuming other factors of production are fixed, is called the ___ curve.

total product

A profit-maximizing firm will base its decision to hire additional labor on the marginal decision rule: If the extra output that is produced by hiring one more unit of labor adds more to _ than to _ , the firm will increase its profit by increasing the use of labor.

total revenue; total cost

Society's production possibilities curve is primarily concerned with answering the economic question of what goods and services a society can produce

true

International exchange in which countries both import and export the same good is called ___

two way trade

Economists identify the satisfaction a person derives from the consumption of goods and services as:

utility

A factor of production whose quantity can be changed during a particular period is a:

variable factor of production.

The costs associated with variable factors of production are _ costs and the costs associated with factors of production are __ costs.

variable; fixed; fixed

Different points on a production possibilities curve:

yield different values of total output.

In long-run equilibrium, economic profits in a perfectly competitive industry are ___.

zero

In long-run equilibrium, economic profits in a perfectly competitive industry are:

zero