Econ Final
If the market price is $25, the average revenue of selling five units is
$25
Katie's Gyro House sells Gyros. The cost of ingredients To make Gyros is $2. Katie pays her employees $60 a day. She also incurs a fixed cost of $120 a day. Calculate Katy's total cost per day when she produces 50 gyros using two workers.
$340
A perfectly competitive firm produces 3000 units of a good at a total cost of $36,000. The price of each good is $10. Calculate the firm's total run profit or loss
$6,000
If average total cost is $50 and average fixed cost is $15 when output is 20 units, then the firm's total variable cost at that level of output is
$700
Paul goes to sportsmart to buy a new tennis racket. He is willing to pay $200 for a new racket but buys one on sale for $125. Paul's consumer surplus for the purchase is
$75
When the price of a car is $25,000, car prices are $10,000 per month. When the price of a car increases to $29,000, car prices fall to $8,000 per month. Therefore, using Point method, a 1% increase in the price of the car will result in a_________ in the quantity demanded of the cars.
1.25% decrease
Suppose movie streaming Incorporated lowers the price of its online movie club membership from $25 to 2250 and as a result Cinema Arts video experienced a decline in its Movie Club membership from 520 to 430. What is the value of the Cross price elasticity between the two Movie Club memberships?
1.8
the supply product of X is perfectly inelastic If the product of x rasesi by
10% and quantity supplied stays the same
Suppose the price elasticity of supply for playing cards is 0.6 and the price decreased by 20%. The quantity supplied will decrease by what
12%
if a firm produces 50000 units of output, its total cost equals 6.5 million. When an increases its production to 70000 units of output oh, it's total cost increases to 9.4 million. Within this range then marginal cost of an additional unit of output is
145
The price elasticity of demand for widgets is $0.80. Assuming no change in the demand curve for widgets, a 16% increase in sales implies a
20% reduction in price
Suppose your expenses for this term are as follows: $12,000, room & Board: 500 $6,500 for books and tuition as well as $3,500 for other educational expenses and supplies $1,500 for additional expenses. Further during your term you can only work part-time and are in 3500. Instead of your full-time salary of $14,000. What is your opportunity cost of going to college this term assuming that your room and board expenses would be the same if you did not go to college.
30,500 ( two terms of room and board)
If 11 workers can produce a total of 54 units of a product and 1/12 worker has a marginal product of 6 units, then the average product of 12 workers is
5 units
The first Pepsi yields Craig 18 units of utility in the second yields him an additional 12 units of utility his total utility from three Pepsi's is 38 units of utility. The marginal utility of the third Pepsi is
8 units of utility
Which of the following is the best example of a tariff
A $150 fee and post on All Imports residential air conditioning
Studies show that the income elasticity of demand for wine is approximately five. What does this mean
A 1% increase in income leads to a 5% increase in wine consumption
an externality is
A benefit or cost experienced by someone who is not a producer or consumer of a good or service.
If variable a is inversely related to variable be, then_________
A decrease in A will be accompanied by an increase in B
Which of the following would cause both the equilibrium price and equilibrium quantity of wheat to increase
A decrease in consumer income
a monopolistically competitive firm that is earning profits will, in the long run experience all of the following except
A decrease in the number of rival products
Which of the following will cause the production possibilities Frontier to shift outward?
A increase in the size of the labor force
In 2004 hurricanes damaged a large portion of Florida's orange crop. As a result of this many orange growers were not able to supply fruit to the market. At the pre-hurricane equilibrium price. We would expect to see
A shortage of oranges
Oligopoly is a market structure that is characterized by
A small number of interdependent firms producing identical or differentiated products
A decrease in quantity demand of a good is caused by
An increase in the price of the good
Economists assume that individuals:
Are rational
in 1955 the chairman of the Sony Corporation offered to sell transistor radios through department stores in the United States. Sony based selling price on its average total cost of production. If it's store bought five thousand radios, Sony would sell them at 2995 each. For 10,000 stores there would be a discount, and for more than 10,000 the price would begin to climb. Based on this information, Sony reached maximum efficient scale
At a quantity of 10,000 radios
The law of diminishing marginal utility states that
Beyond some point additional units of a product will yield less extra satisfaction to a consumer
The decision about what goods and services will be produced in a market economy is made by:
Choosing which goods and services to buy
This is the ability of an individual, firm or a country to produce a good or service at a lower opportunity cost than competitors.
Comparative advantage
Which of the following describes the infant industry agreement for protection
Domestic producers require time to gain experience and lower their unit costs, this will allow these producers to compete successfully in international markets.
Which of the following characteristics is common to monopolistic competition and perfect competition
Entry barriers into the industry are low
The opportunity cost of taking a semester-long economics class is
Equal to the highest value of an alternative use of the time and money spent on the class
If the supply of product X is perfectly inelastic, an increase in the demand for it will increase
Equilibrium equilibrium price will be unchanged
An analytical framework used in the analysis of strategic choices
Game Theory
goods for which the price elasticity of demand is relatively inelastic
Have few substitutes
Which of the following is a positive economic statement
If the price of iPhones Falls, a larger quantity of iPhones will be purchased.
Which of the following is not an example of a negative externality Immunization against disease, pollution, playing a Boombox with loud rock music at a symphony, rush hour traffic.
Immunization against disease
Goods and services bought domestically but produced in other countries are referred to as
Imports
If am on a monopolistically competitive firm is producing at an output where marginal revenue is $23 and marginal cost is 19, then to maximize profits The Firm should
Increase output
The price of a hamburger is $1 in the price of a movie is $6 the consumer has purchased two hamburgers in two movies and his marginal utility from the second hamburger is 20 and from the second movie is a hundred the consumer has an income of $14 this combination of goods
Is not an equilibrium because the marginal utility of the last dollar spent on hamburgers is greater than that spent on movies
a dominant strategy
Is one that is best for a firm, no matter what strategies other firms use
Production is efficient when:
It generates a output that lies on the production possibilities curve
Firms in an Oligopoly can increase profit by
Jointly acting to reduce output and increase prices
if the income elasticity of demand for a lard is -3 dollars this means that
Lard is an inferior good
Deadweight losses occur when the quantity of an output produced is
Less than or greater than the competitive equilibrium quantity
A perfectly competitive firm supply curve is
Marginal cost curve above it's minimum average variable cost
A consumer's demand curve for product is downward-sloping because
Marginal utility diminishes as more of a product is consumed
The difference between the total utility you received from your first Snickers bar in the total utility you received from eating your second Snickers bar is best described as
Marginal utility of the second Snickers bar
The production possibilities Frontier shows the______ combinations of two products that may be produced in a particular time period with Available resources
Maximum attainability
producing a differentiated product occurs in which of the following Industries
Monopolistic competition and oligopoly
The two main characteristics of a public good are
Non rivalry and non excludability
During the recession of 2007 several casual dining restaurants experienced a drop in business as many consumers chose to become more cautious and spending their declining incomes. The decrease in demand due to Falling income indicates that meals sold in casual restaurants are considered.
Normal goods
The category of Economics that contain statements about what ought to be is known as
Normative economics
Oligopolies exist and do not attract new Rivals because
Of barriers to entry
In an Oligopoly market
One Ferb's pricing decision affects all other firms
The idea of a comparative advantage is dependent on
Opportunity cost
The free rider problem refers to a situation in which
People consume a pure public good without payment, even though the good may not be produced if no one chooses to pay
The basic formula for the price elasticity of demand is
Percentage change in quantity demanded divided by percentage change in price
The formula for cross price elasticity of demand is
Percentage change in quantity demanded of x divided by percentage change in price of Y
in which of the following instances will total revenue decline
Prices rise and demand is elastic
in New York City about 1 million apartments are subject to rent control by the local government. Rent control
Put a legal limit on the rent that landlords can charge for an apartment
At market equilibrium
Quantity demanded equals quantity supplied
If for a product the quantity supplied exceeds the quantity demanded the market price will fall until
Quantity demanded equals quantity supplied. The market price will the equal the equilibrium price.
The terms-of-trade reflect the
Ratio at which nations will exchange to Goods
In economics, places must be made because we live in a world of:
Scarcity
If price exceeds average variable cost but is less than average total cost a firm
Should stay in business for a while longer until it's fixed cost expire
Suppose that MIx/Py <MUy/Py this implies that
Spending a dollar less than x, and spending a dollar more and why increases utility
What two conditions must hold for a competitive market to produce efficient outcomes?
Supply curves must reflect all costs of production, and demand curves must reflect customers full willingness to pay.
the theory of consumer Behavior assumes
That consumers behave rationally, attempting to maximize their satisfaction
Economics of scale exist as a firm increases its size in the long run because of all of the following except: The Firm can afford more sophisticated technology in production Labor and management can specialize even further in their tasks as a larger input buyer, The Firm can purchase inputs at a lower per-unit cost as the firm expands its production, its profit margin per unit of output increases
The Firm can afford more sophisticated technology and production
suppose the equilibrium price in a perfectly competitive industry is $15 in a single firm in the industry charges 21. Which of the following will happen
The Firm will not sell any output
You are planning to open a new Italian restaurant in your hometown where there are three other Italian restaurants. You plan to distinguish your restaurant from your competitors by offering Northern Italian cuisine and using locally grown organic produce. What is likely to happen in the restaurant Market in your hometown after you open?
The demand curve facing each restaurant owner becomes more elastic
The principle of opportunity cost is that:
The economic cost of using a resource is the alternative use of that resource that is given up
a very large number of small-scale sellers who sell identical products imply
The inability of one seller to influence price
Robert buys more new clothes when his income Rises. This means that for Robert
The income elasticity of demand for new clothes is positive
When there is an overproduction of a good
The marginal cost of the good exceeds its marginal benefit
Red Stone Creamery currently hires 5 workers. When added a 6 worker, it's out part actually fell. Which of the following statements is true?
The marginal product Of the sixth worker must be negative
A consumers Optimum is found when
The marginal utility of the last dollar spent on each good is equal in all income is spent
If a consumer always buys Goods rationally then
The marginal utility per dollar spent on all Goods will be equal.
One would speak of a change in the quality of a good supplied rather than a change in Supply if
The price of the good changes
A perfectly competitive wheat farmer produces a thousand bushels of wheat at a total cost of $50,000. The prevailing market price is $48. What will happen to the market price of wheat in the long run?
The price rises above $48
The meaning of demand is
The quantities of a good that people will buy at various prices
The Illinois Central Railroad once asked the Illinois Commerce Commission for permission to increase its Commerce rates by 20%. The railroad argued that declining revenues made this rate increase essential. Opponents of the rate increase condemned that the railroads Revenue would fall because of the rate hike. It can be concluded that
The railroad felt that the demand for passenger service was inelastic in the opponents of the rate increase felt that it was elastic
Suppose when the price of laptops fall, college students buy more laptops. This implies that:
There is a negative relationship between laptop prices and quantities purchased by college students.
What is the profit-maximizing rule for a monopolistically competitive firms
To produce quantities such that marginal revenue equals marginal cost
The three fundamental questions that an economy must address
What goods and services to produce; how will these goods and services be produced; and who will receive them?
Rent control is an example of
a price ceiling
Which term refers to a legally established minimum price that firms can charge
a price floor
To maintain a pure Monopoly, a firm must have
an insurmountable barriers to entry
Which of the following is a reason why a firm would experience diseconomics of scale
as the size of the firm increases it becomes more difficult to coordinate the operations of its manufacturing plants
At the midpoint of a linear downward-sloping demand curve, the price elasticity of demand is A.) greater than one,
equal to one
an entry barrier exists when firms in an industry change the lowest price possible for their products
false
If a demand for a product is elastic, the value for the price elasticity coefficient is
greater than one
Simos suppose the domestic price of copper is $1.20 a pound in the United States while the world price is $1 a pound. Assuming no Transportation cost, the United States will
import copper
Assume Sarah is a CPA who earns $100,000 a year in her favorite entertainment magazine cost her $15 a year. For her, the price elasticity of demand for the magazine is likely to be
inelastic
The price of the product X is reduced from $100 to $90 and, as a result, the quantity demanded increases from 50 to 60 units. Therefore demand for X in this price range_________.
is elastic
Compared to perfect competition, the consumer surplus in a monopoly
is lower because prices higher and output is lower
The price of a seller's product in price competition
market demand and market supply
which of the following would be evidence of market failure
market prices do not reflect true production costs
An economic______ is a simplified version of some aspect of the real world, used to analyze an economic issue.
model
A price ceiling
must be set below the equilibrium price
Another word for utility is
satisfaction
The law of diminishing marginal returns States
that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of a variable input to decline.
if a firm has excess capacity, it means
that the firm is not producing its minimum efficient scale of output
If the supply has decreased in the market for apples then
the supply curve for apples has shifted left.
which of the following cost will not change as output changes
total fixed cost
