Econ 102 homework questions

Changes in production functions are associated with changes in

technology.

The law of diminishing marginal product is a statement

that concerns changes in variable input and changes in output.

When Stephanie increases the consumption of pizza and decrease the consumption of soda, her marginal utility of

pizza falls and the marginal utility of soda will increase

The utility that people experience from the consumption of a good depends on

their tastes and preferences.

Mathematically, economic profit is

total revenue - (explicit costs + implicit costs)

Which of the following would be a fixed input to an automobile firm

A factory in Detroit

Which of following is necessarily true regarding total utility (TU) and marginal utility (MU)?

A) Diminishing MU implies negative MU B) If MU is diminishing it means that TU is decreasing C) If MU is negative it means that TU is increasing D) Most people generally exhibit the same TU and MU functions for similar goods E) None of the above THIS IS RIGHT

hich of the following statements is FALSE?

A) Included in the firm's short-run production function are both fixed and variable inputs. B) An efficient firm can obtain more output than the production function shows. THIS STATEMENT IS FALSE C) The production function shows the technical relationship between a firm's inputs and outputs. D) The production function presents the technically efficient methods of combining inputs to produce output.

Mr. James' company produces chocolate candy bars. Which is NOT a variable input for this firm?

A) Sugar B) Assembly line workers C) The big chocolate-stirring machines THIS IS THE ANSWER D) Packaging materials

Which of following is true about utility and consumption?

A) we would expect to never see a rational person continue to consume while he is experiencing diminishing marginal utility B) eating inferior goods such as SPAM will cause negative marginal utility C) people generally have similar preferences in making their consumption choices D) all of the above E) none of the above THIS IS CORRECT

Look at the article "Saved by Sin Taxes" to answer this question. According to the article, a study by Saffer and Pacula, what is true about elasticity with regards to smoking?

Black men are relatively more elastic than white men when it comes to cigarette price increases.

Suppose Bill gets a pay raise of 10%, and he decides he from now on, he will purchase 5% less canned tuna. What can we say about Bill and his preference for canned tuna?

Canned tuna is an inferior good for Bill

Which of the following activities is not included in the production process?

Determining the value of the goods

Fred's Franks originally sold hotdogs and soft drinks from a cart located in front of City Hall. Then Fred purchased another hotdog cart and hired someone to sell hotdogs and soft drinks near the high school. Both locations have been successful. When Fred's Franks expanded to two locations, which of the following did NOT occur?

Fred's production function changed. THIS ONE IS NOT CORRECT B) Production increased. C) The company increased the inputs it employs. D) The firm employed additional capital.

If, as an entrepreneur, I am earning accounting profits of $50,000 per year and the opportunity cost of my time is $60,000,

I should close my business.

Mike and Lauren have decided to stop studying economics and get a bite to eat. Mike wants to go for a pizza and Lauren wants a hamburger. They decide to go for pizza. What can we conclude from this?

Lauren gets less utility from pizza than she could have got from a hamburger

I have posted some articles in the Current Assignments folder along with this homework. Look at the article "Are Wal-Mart Goods Normal?" During the year 2008, we see that Wal-Mart stock price increased during the year 2008, which was the year that the recent recession began. What specifically does this particular situation tell us about consumer behavior?

People tend to buy more inferior goods when income is lower or uncertain

Food and drink vending machines dispense one item when a consumer pays. However, newspaper vending machines often allow the consumer to open the box after paying, thus giving the consumer access to dozens of newspapers he didn't pay for. What is the most likely explanation for this

The marginal utility of a second newspaper is extremely low, so it is unlikely that a consumer will grab more than one newspaper

In economics, how long is the long run?

Whatever time it takes a firm to vary all inputs

The term marginal means

additional.

As a firm continues to produce additional output, which of the following will continue to decline as output expands?

average fixed costs

If average total cost is decreasing as more and more units are produced, then marginal cost must be

below average total cost

Look at the article "Saved by Sin Taxes" to answer this question. According to the article, a study by Saffer and Chaloupka found that alcohol and marijuana are _____________ goods.

complement

If a firm gets so large that management of employees and other resources becomes a costly problem, it will be experiencing

diseconomies of scale.

Which of following situations is most likely to cause negative marginal utility?

eating too much food at a buffet

Suppose a firm doubles its output in the long run. At the same time the average cost of production remains unchanged. We can conclude that the firm is

facing constant returns to scale.

Production functions indicate the relationship between

factor inputs and the quantity of output.

Ajax Corporation has recently finished building a new factory. They moved into the factory a month ago and found that it is the perfect size given the amount they want to produce. Ajax is operating in the

long run

The addition to total costs associated with the production of one more unit of output is referred to as

marginal cost

If average variable costs are increasing while average total costs are decreasing, then

marginal cost must lie between average variable and average total costs.

When total product is rising,

marginal product must be positive.

A rational consumer will NEVER purchase a product when

marginal utility is negative.

Look at the article "Saved by Sin Taxes" to answer this question. According to the article, a study by Saffer and Chaloupka estimated that the price elasticity of demand for alcohol is:

‒ 0.43