Econ Optional Test
if a firm's demand for labor is elastic, a union-negotiated wage increase will
cause the firm's payroll to decline
which of the above diagrams illustrates the effect of an increase in automobile worker wages on the market for automobiles
it is costlier to produce automobiles so LEFTWARD shifter of supply curve (answer D)
the demand for auto's is likely to be
less elastic than the demand for Honda Accords
suppose that the price of product X rises by 20% and the quantity supplied of X increases by 15%. the coefficient of price elasticity of supply for good X is
less than 1 and therefore supply is inelastic
if in the short run a firm's total product is increasing then its
marginal product could be either increasing or decreasing
marginal product
may initially increase, then diminish, and ultimately become negative
explicit costs
monetary payments
which of the following would NOT shift the demand curve for beef
a reduction in the price of cattle feed
creamy crisps economic profit is
add together costs and subtract that number from total rev
creamy crisps total economic cost (explicit + implicit costs, including a normal profit) are
add together everything except annual revenue from operations
refer to the above diagram in which S is the market supply curve and S1 is a supply curve comprising all costs of production including external costs. assume that the number of people affected by these external costs is large. without government interference this market will reach
an over allocation of resources to this production
when the production or consumption of a good involves an externality
someone not involved in buying or selling the good is affected
the long run average total cost curve is based on the assumption that
the assumption that all resources are variable
refer to diagram. this production possibilities curve is constructed so that (bowed outward)
the opportunity cost of bread increases as more bread is made
normal profit is
the return to the entrepreneur when economic profits are 0
if the demand for product B shifts to the right as the price of product A declines then
A and B are complementary goods
the vertical distance between a firm's ATC and AVC curves represents
AFC decreases as output increases
which of the above diagrams illustrates the effects of a decline in the price of personal computers on the market for software
complementary goods decline on price would cause software demand to shift to the RIGHT (answer A)
if the demand for farm products is price inelastic a good harvest will cause farm revenues to
decrease
if Z is an inferior good, a decrease in money income will shift the
demand curve for Z to the right
which of the diagrams illustrates the effect of a governmental subsidy on the market for AIDS research
government gives subsidy to reduce cost of research which causes a RIGHTWARD shift in supply (answer C)
the diagram concerns supply adjustments to an increase in demand (d1 to d2) in the immediate market period, the short run and the long run. in the immediate market period the increase in demand will
increase equilibrium price but not the equilibrium quantity
if the demand for farm products is price elastic a good harvest will cause farm revenues to
increase in supply
marginal product is
increase in total output attributable to the employment of one more worker
moving upward on a downward sloping straight-line demand curve, we find that price elasticity
increases continually
the short run average total cost curve is U shaped because
increasing and diminishing returns
elastic
price and total rev change in opposite direction
inelastic
price and total rev change in same direction
which of the following is assumed in constructing a typical production possibilities curve
production technology is fixed
where is diseconomies of scales on the curve
rising section of curve
because the marginal product of a variable resource at first increases and then decreases as the output of the firm is increased
total cost at first increases at a decreasing rate and then increases at an increasing rate
implicit costs
value of next best use, self-owned resources, self-employed resources
economic systems differ according to what two main characteristics
who owns the factors of production and the methods used to coordinate economic activity
