Econ 1580 Graded Quiz 1

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

economies of scale

A person who seeks to earn profits by finding ways to organize factors of production is called a/an:

entrepreneur

An indifference curve shows combinations of two goods that yield:

equal satisfaction

A market shortage occurs if the:

equilibrium price is above the market price

In market capitalism:

factors of production are privately owned and decisions are made privately

Suppose you observe that the sun sets every evening after the six o'clock business report. If you conclude that the six o'clock business report makes the sun set, you are guilty of the fallacy of:

false cause

A/an _______ does not pose the problem of scarcity; one use of the good is not an alternative to another use.

free good

A decrease in the price of eggs, all other things unchanged, will result in a/an:

greater quantity of eggs demanded

In this exhibit (Demand for Shirts) the price elasticity of demand for the segment CD is:

greater than 1 (absolute value).

At 36 units of labor, a firm finds that both average product of labor and marginal product of labor equal 42. We can conclude that the average product curve at 36 units of labor is:

horizontal

If the production possibilities curve were a straight line sloping down from left to right, this would suggest that:

no factor of production has any particular comparative advantage over other resources

The marginal cost curve intersects the total variable cost curve at:

no point; the curves don't intersect

For a/an _______ good, an increase in income will lead to an increase in _______ .

normal; consumption

If the price in the market for a commodity is above the market equilibrium price, the:

quantity supplied exceeds the quantity demanded

If the price of a commodity increases as the result of increased demand, you would expect the:

quantity supplied to increase

Government's role of taxing some citizens and transferring income to others is considered:

redistributing income

If the price of chocolate-covered peanuts increases and the demand for strawberries does not change, this indicates that these two goods are:

unrelated goods

The Case in Point on the oil extraction suggests that one reason oil may become more costly is that:

we will have to give up more and more valuable alternatives to extract oil

The opportunity cost of something is:

what is given up to acquire it

In this exhibit (demand and supply curves), the highest price per unit that buyers would be willing to pay for 250 units is:

$10

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded does not change, this indicates that, if other things are unchanged, the price elasticity of demand is:

0

Assume that the total utilities for the fifth and sixth units of a good consumed are 83 and 97, respectively. The marginal utility for the sixth unit is:

14

Diminishing marginal returns for the first four units of a variable input is exhibited by the marginal product sequence:

50, 40, 30, 20

An example of a normative statement is:

Everyone in the country needs to be covered by national health insurance

The cross price elasticity of demand for Coke with respect to the price of Pepsi has been estimated to be 0.61. If the price of Pepsi falls by 10 percent in a period, how will that affect the demand for Coke in that period, all other things unchanged?

The demand for Coke will fall

The price of oranges falls. What happens in the market for apples, which are a substitute for oranges? Select one: a. The equilibrium price falls and the equilibrium quantity rises. b. The equilibrium price rises and the equilibrium quantity falls. c. The equilibrium price and quantity rise. d. The equilibrium price and quantity fall.

The equilibrium price and quantity fall

Which of the following statements is false? Select one: a. The income effect of normal goods counters the substitution effect so the demand curve is upsloping. b. The income effect and the substitution effect reinforce each other when there are price changes for a normal good. c. The income effect represents the decrease in quantity demanded caused by the implicit change in income due to a fall in the price of an inferior good but not for a normal good. d. The substitution effect represents the change in quantity demanded solely due to a change in the relative price of a good.

The income effect of normal goods counters the substitution effect so the demand curve is upsloping

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 BEST example of making a choice at the margin is:

a coffee drinker drinking another cup of coffee.

In this exhibit (demand and supply curves), a price of $25 per unit will result in:

a surplus of 200 units

If the price of apples falls and the price of oranges remains constant: Select one: a. apples are now relatively cheaper. b. the fall in the price of apples made consumers richer. c. the fall in the price of apples, ceteris paribus, makes the marginal utility of apples divided by their price exceed the marginal utility of oranges divided by their price. d. all of the above statements are true.

all of the above statements are true

(Graph) In this exhibit (A Firm's Cost Curves) the curve labeled W represents the firm's _______ curve.

average total cost

If marginal cost is equal to average total cost, then:

average total cost is at its minimum

In this exhibit (Guns and Butter), the combination of guns and butter at point H:

cannot be attained given the level of technology and the factors of production available

The law of demand implies that:

consumers will, all other things unchanged, buy more at lower prices

In this exhibit (Demand for Bungalow Bob's Bagels) total revenue remains unchanged if the price ________ from ________.

decreases; $0.60 to $0.50

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 the slope of the total product curve is decreasing, the slope of the total variable cost curve is:

increasing

A curve that represents combinations of two goods that yield equal levels of satisfaction is a/an:

indifference curve

After graduation from college you will receive a substantial increase in your income from a new job. If you decide that you will purchase more T-bone steak and less hamburger, then for you hamburger would be considered a/an:

inferior good

The textbook states that the law of demand:

is confirmed by our real-world experience

When moving along a production possibilities curve, the opportunity cost to society of getting more of the good on the horizontal axis:

is measured by the amount of the other good that must be given up

Water is considered a scarce good rather than a free good because:

it has alternative uses

Technology is:

knowledge that can be applied to the production of goods and services

Increasing the level of education in the United States will:

lead to workers possessing greater human capital

(TAble) In this exhibit (Consumer Equilibrium 1), assume that the price of good X is $2 per unit and the price of good Y is $1 per unit, and you consume 3 units of good X and 3 units of good Y. To maximize utility, assuming that the goods are divisible, you would consume:

less of X and more of Y

The demand for agricultural output is price inelastic. This means that if farmers, taken collectively, have a bumper crop, they will experience:

lower prices, greater quantities sold, and lower incomes

The study of a single firm and how it determines prices would fall under:

microeconomics

Each of the following statements about the use of models in the study of economics is true EXCEPT:

models fit the observed facts exactly

Resources from nature that can be used to produce other goods and services are called:

natural resources

Efficient production implies that it is:

not possible to produce more of one good without producing less of another good

Fixed costs include:

op management salaries

The slope of a long-run average cost curve exhibiting diseconomies of scale is:

positive

Although in most cases the price elasticity of labor supply is ________ , for some individuals it may be ________ .

positive; negative

If the price elasticity of demand is found to be -3/4, then demand is:

price inelastic

If total revenue goes down when price falls, the price elasticity of demand is said to be:

price inelastic

The marginal rate of substitution assumes that:

satisfaction remains unchanged

According to the textbook, economics is a:

social science

Average total cost is the ratio of:

total cost to the quantity of output

A demand curve that is perfectly inelastic:

will be vertical