Econ Midterm
. Individual supply curves generally slope ______ because ______.
Upward; of increasing opportunity costs.
According to economists, the satisfaction people get from their consumption activities is called:
Utility
Growing rice requires extensive irrigation in California. Economists consider water to be a ______ for rice farmers in California
Want
Higher education is a ______ and assigned textbooks are ______
Want; wants
After subsistence levels of food, shelter, and clothing have been provided, economists refer to all other goods and services as
Wants
The short run is best defined as
a period of time sufficiently short that at least one factor of production is fixed.
The long run is best defined as
A period of time sufficiently short that at least one factor of production is fixed
Total revenue minus both explicit and implicit costs defines a firm's
Profit
How many hours a day should John spend cleaning windows?
2
Refer to the accompanying figure. The marginal utility of the 5 th apple is
-5
Refer to the accompanying figure. The marginal utility of the 7th pizza is
-5
Refer to the accompanying table. The marginal utility of the 4th dinner out per week is:
15
Refer to the accompanying table. The total utility of consuming two dinners out per week is:
175
Assume that Dusty has $30 in income, the price of a loaf of bread is $1.50, and the price of a jar of peanut butter is $3. Dusty can buy a maximum of ______ loaves of bread or a maximum of ______ jars of peanut butter
20;10
What is this seller's reservation price for the 250th unit?
4
Refer to the accompanying figure. The marginal utility of the 6th pizza is:
5
Which of the following is a defining characteristic of all perfectly competitive markets
All firms sell the same standardized product.
Refer to the accompanying table. The law of diminishing marginal utility
Applies to both Good A and Good B
Which of the following would be considered a factor of production in the provision of bus service
Bus drivers
Suppose a cup of tea costs $0.60 and a scone costs $1.20. If Edith spends all of her income on these two goods, and at her current level of consumption, she receives a marginal utility of 6 utils from the last cup of tea she buys and a marginal utility of 24 utils from the last scone she buys, then Edith should:
Buy less tea and more scones
As Lynn eats more pizza, we would typically expect her marginal utility from eating pizza to:
Decrease
It is impossible for total utility to be ______ when marginal utility is ______.
Decreasing; positive
Which of the following is NOT a characteristic of a perfectly competitive market?
Each firm in the market sells a somewhat different variant of the good
According to the law of demand, when the price of shoes ______, people will consume ______ shoes.
Falls; more
Refer to the accompanying figure. As Jeff watches more movies, his marginal utility
Gets smaller
An imperfectly competitive firm is one that
Has at least some influence over the market price
The most important challenge facing a firm in a perfectly competitive market is deciding
How much to produce
A rational seller will sell another unit of output
If the cost of making another unit is less than the revenue gained from selling another unit.
As the market price of this good increases, the quantity produced by this seller will ______.
Increase
During Thanksgiving you participated in a pumpkin-pie eating contest. You really enjoyed the first two pies, the third one was okay, but as soon as you ate the fourth one you became ill and lost the contest. Your total utility ______ with the first three pies you ate.
Increased
Let MUc denote the marginal utility that Pablo receives from a cup of coffee, and let Pc denote the price of a cup of coffee. We typically expect that as Pablo buys more coffee
MUc/Pc will fall.
The additional utility gained from consuming an additional unit of a good is called:
Marginal utility
The primary objective of most private firms is to
Maximize profit
The rational spending rule is derived from the consumer's desire to:
Maximize utility.
In most markets, scarce goods or services are rationed among competing users using
Monetary prices
If a consumer buys two different goods, the rational spending rule requires that the:
Ratio of marginal utility to price be equal for the two goods
The goal of utility maximization is to allocate your ______ in order to maximize your ______.
Resources; satisfaction
The law of demand indicates that as the cost of an activity
Rises, less of the activity will occur
If we plot John's opportunity cost per window on the vertical axis and the number of windows cleaned each day on the horizontal axis, we will have John's ______ curve for window cleaning services.
Supply
The tendency for marginal utility to decline as consumption increases beyond some point is called
The law of diminishing marginal utility
Which of the following is the most likely to be a fixed factor of production at a farm?
the land on which the farm is located
Shelter for homeless example is an example of:
A need
Cory gets 18, 23, and 25 units worth of total utility from consuming 10, 11, and 12 raw oysters, respectively, and the price per oyster is 25 cents. Thus, one can infer that Cory
Is experiencing diminishing marginal utility.
In some countries, medical care is provided free-of-charge to citizens and is paid for by the government. In those countries, medical care
Is rationed by some non-monetary method.
Joe is shopping for a new computer. A computer can be delivered to Joe's home for $1,200. Alternatively, Joe can pick up the same computer at the warehouse for $1,000. How should Joe buy the computer?
Joe should drive to the warehouse if his cost of driving to the warehouse is less than $200.
. Jenny sells lemonade in front of her house in the summer. Several other kids in Jenny's neighborhood also run lemonade stands in the summer. If the lemonade market is perfectly competitive, and Jenny is charging the equilibrium price, then Jenny can increase her revenue if she
Keeps the price of her lemonade the same and increases the output.
The tendency for consumers to purchase more of a good or service as its price falls is captured by the:
Law of demand.
If Terry's total utility is maximized when he owns 10 pairs of shoes, then Terry's total utility from owning 7 pairs of shoes is ______ Terry's total utility from owning 8 pairs.
Less than
During Thanksgiving you participated in a pumpkin-pie eating contest. You really enjoyed the first two pies, the third one was okay, but as soon as you ate the fourth one you became ill and lost the contest. You got ______ utility from eating the first pie than from eating the third pie.
More
Joaquin's marginal utility from an additional slice of pumpkin pie is 4 utils and his marginal utility from an additional slice of pecan pie is 6 utils. If a slice of pumpkin pie costs $2.50, and a slice of pecan pie costs $3.00, then Joaquin:
Should reallocate his spending towards pecan pie and away from pumpkin pie
If marginal utility is positive, then as consumption increases
Total utility will increase
Taking a limousine to a five-star restaurant in New York is a:
Want to both Joe Average and Richie Rich
Refer to the accompanying figure. The total utility of consuming two pizzas a week is
55
Refer to the accompanying table. The marginal utility of the 3rd dinner is:
60
. The first hour John spends cleaning windows costs him ______ that he could have earned in the grocery store
7
What is John's opportunity cost of cleaning windows for an hour
7
Refer to the accompanying figure. The total utility of consuming 4 pizzas a week is
90
The ______ combination of goods is the combination that yields the highest total utility given a consumer's income
Optimal
Blair has vast riches and consumes thousands of dollars' worth of consumer goods each week, yet she is never satisfied. Why not?
People's wants are unlimited
If the market for butter is perfectly competitive, then the demand curve facing a firm that produces butter will be
Perfectly elastic