econ 200 exam 1
true
BMW constructing a new assembly plant in south carolina is an example of a long run adjustment
False
Income and substitution effects account for an upward sloping supply curve
false
a decrease in supply of X increases the equilibrium price of X, which reduces the demand for X and automatically returns the price of X to its initial level
false
a firms economic profit is usually higher than its accounting profit
true
a government subsidy per unit of output increases supply
false
a linear demand curve has a constant elasticity over the full range of the curve
true
a local bakery hiring two additional workers is an example of a short run adjustment
false
an economic model is an ideal or utopian type of economy that society should strive to obtain through economic policy
false
an economy cannot produce at a point outside of its production possibilities curve because human economic wants are insatiable
true
an increase in demand accompanied by an increase in supply will increase the equilibrium quantity but the effect on equilibrium price will be indeterminate
false
an increase in quantity supplied might be caused by an increase in production costs
true
at zero units of output a firms variable costs are zero
true
average fixed costs diminish continuously as output increases
false
because economic generalizations are simplifications from reality, they are impractical and useless
false
by an increase in demand we mean a leftward shift of the demand curve
true
choices entail marginal costs because resources are scarce
true
consumers buy more of normal goods as their incomes rise
true
diseconomies of scale stem primarily from the difficulties in managing and coordinating a large scale business enterprise
False
economic profit is found by subtracting accounting costs from total revenue
true
generally speaking, the demand for luxury goods is more price elastic than is the demand for necessities
true
given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good will increase equilibrium price and quantity
true
if demand increases and supply simultaneously decreases, equilibrium price will rise
false
if economic theories are solidly based on relevant facts, then appropriate economic policy becomes obvious and uncontroversial
true
if price and total revenue are directly related, demand is inelastic
true
if the demand for wheat is highly inelastic, an extraordinary large crop may reduce farm incomes
true
if the marginal utility of the last unit of A consumed is 12 and the marginal utility of the last unit of B consumed is 8 then a price of A of $6 and a price of B of $4 would be consistent with consumer equilibrium
true
if the marginal-cost curve lies below the average-variable-cost curve, the average variable cost curve must be falling
true
in economics, a firm earns a normal profit when its total revenue equals its total economic costs
true
in the long run there are no fixed costs
true
marginal analysis means that decisions-makers compare the extra benefits wight the extra costs of a specific choice
false
marginal product is the total product divided by the number of workers employed
false
normal statements are expressions of facts
false
positive statements are expression of value judgements
false
price elasticity of demand measures the slope of the demand curve
true
products and services are scarce because resources are scarce
true
rational individuals may make different choices because their preferences and circumstances differ
false
supply refers to the amount of a product that a producer will offer in the market at some particular price
false
surpluses drive market prices up; shortages drive them down
false
the law of diminishing returns explains the diseconomies of scale
true
the law of diminishing returns explains why short run marginal cost curves are upward sloping
False
the law of diminishing returns explains why the long-run average total cost curve is U-shaped
true
the production possibilities curve shows various combinations of two products that an economy can produce when achieving full employment
false
the rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market
true
the real opportunity cost of producing product X is the amounts of products Y,Z, and so forth, that might have been produced if resources had not been used to produce X
False
the short run is a period of time during which all costs are fixed costs
false
the smaller the number of good substitutes for a product, the great will be the price elasticity of demand for it
false
toothpaste and toothbrushes are substitute goods
true
used clothing is a good example of an inferior good
true
variable costs are costs that vary directly with output
False
when a firm decides to produce no output in the short run its costs will be zero
