ECON
Which curve(s) does the marginal cost curve intersect at the (their) minimum point?
Average total cost curve and average variable cost curve
The own price elasticity of demand for apples is í1.2. If the price of apples falls by 5 percent, what will happen to the quantity of apples demanded?
It will increase 6 percent
Suppose the demand for good X is given by Qdx = 10 + axPx + ayPy + aMM. From the law of demand we know that ax will be:
Less than 0
Which of the following methods might be an efficient way of obtaining inputs when specialized investments are not important?
Spot exchange
If the cross-price elasticity between goods A and B is negative, we know the goods are:
complements
Suppose the marginal product of labor is 8 and the marginal product of capital is 2. If the wage rate is $4 and the price of capital is $2, then in order to minimize costs the firm should use:
more labor and less capital
The supply function for good X is given by Qxs = 1,000 + PX - 5PY - 2PW, where PX is the price of X, PY is the price of good Y and PW is the price of input W. If the price of input W increases by $10, then the supply of good X
none of the statements associated with this question are correct.
In a competitive market, the market demand is Qd = 70 - 3P and the market supply is Qs = 6P. A price ceiling of $4 will result in a
shortage of 34 units.
Changes in the price of an input cause:
slope changes in the isocost line.
A relationship-specific exchange occurs when
specialized investments are important.
Sydney Roofers Incorporated recently purchased 100 pounds of standard roofing nails from Lowes, a nationwide hardware and building supplies store. This transaction most likely involves:
spot exchange.
Costs that are forever lost after they have been paid are:
sunk costs
An excise tax shifts the supply curve
up by the amount of the tax.
An isoquant defines the combination of inputs that yield the producer:
the same level of output
Suppose a new contracting environment with an economic environment that looks more uncertain is considered. This new contract will result in:
) an increase in the marginal cost and a shorter optimal contract.
The short-run response of quantity demanded to a change in price is usually:
) less than the long-run response.
Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. The equilibrium price is:
19
Suppose the market demand for good X is given by QXd = 20 - 2PX. If the equilibrium price of X is $5 per unit then consumer surplus is
25
Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. If a price floor of $30 is set, what will be size of the resulting surplus
55
Generally when calculating profits as total revenue minus total costs, accounting profits are larger than economic profits because economists take into account:
A) both explicit and implicit costs
Basic principles that comprise good management include:
A) recognizing the nature and importance of profits. B) identifying goals and constraints. C) understanding incentives
If steak is a normal good, what do you suppose would happen to price and quantity during an economic recession?
B) Price and quantity would both decrease.
The absolute value of the slope of the isoquant is the:
B) marginal rate of technical substitution.
When the own price elasticity of good X is í3.5, then total revenue can be increased by:
C) decreasing the price
If there are few close substitutes for a good, demand tends to be relatively
Inelastic
The production function for a competitive firm is Q = K.5L.5. The firm sells its output at a price of $10, and can hire labor at a wage of $5. Capital is fixed at 25 units. The profit-maximizing quantity of labor is:
None of the answers are correct.
Suppose the demand for good x is ln Qxd = 21 í 0.8 ln Pxí 1.6 ln Py + 6.2 ln M + 0.4 ln Ax. Then we know good x is
Normal Good
Fixed costs exist only in:
The short Run
If good A is an inferior good, an increase in income leads to:
a decrease in the demand for good A
If the absolute value of the own price elasticity of steak is 0.4, a decrease in price will lead to:
a reduction in total revenue.
The marginal product of capital for the Cobb-Douglas production function is given by:
aKa-1 Lb.
Producer surplus is the
area above the supply curve but below the market price of the good.
The law of demand states that, holding all else constant:
as price falls, quantity demanded rises
NPV
cashflow -------- -1 (1+i)t
The disadvantage of vertical integration is that:
firms no longer specialize in what they do best.
If marginal benefits exceed marginal costs, it is profitable to:
increase Q.
According to the five forces framework, sustainable industry profits depend upon:
industry entry conditions. B) the degree of industry rivalry. C) the power of input suppliers.
If the price of an input rises, producers are willing to produce
less output at each given price.
The primary inducement for new firms to enter an industry is:
presence of economic profits
The value of the firm is the
present discounted value of all future profits.
An isocost line:
represents the combinations of K and L that cost the firm the same amount of money.
The activity known as shirking is LEAST likely to occur when:
the earnings of a worker are closely tied to the worker's output.
A potential problem with piece-rate plans is that:
workers may stress quantity instead of quality