Micro Economics Ch. 19, 6, 7, 8, 9, 11
Which of the following exchange rates between the dollar and the peso would a Mexican buyer of American goods most prefer? A. $0.25 = 1 peso B. $0.05 = 1 peso C. $0.20 = 1 peso D. $0.15 = 1 peso
A. $0.25 = 1 peso
Refer to the graph shown. (Graph in Quiz Ch. 7, Q5) Assume that the market is initially in equilibrium at a price of $6 and a quantity of 40 units. If the government imposes a $2 per-unit tax on this product, the equilibrium price will change to: A. $7 B. $8 C. $5 D. $4
A. $7
If average movie ticket prices rise by about 5 percent and attendance falls by about 2 percent, other things being equal, the elasticity of demand for movie tickets is about: A. 0.4 B. 0.6 C. 2.5 D. 0.0
A. 0.4
If the price elasticity of supply is 0.5, a 10 percent increase in price will cause a: A. 5 percent increase in quantity supplied. B. 5 percent decrease in quantity supplied. C. 20 percent increase in quantity supplied. D. 20 percent decrease in quantity supplied
A. 5 percent increase in quantity supplied.
Refer to the table shown. (Graph in Quiz Ch. 11a, Q3) If seven workers are employed, total output equals: A. 53 B. 35 C. 5 D. 56
A. 53
Refer to the table shown. (Graph in Quiz Ch. 11a, Q17) The marginal product of the sixth worker is: A. 6 B. 7 C. 9 D. 8
A. 6
The text mentions 10 sources of U.S. comparative advantage. Which of the following is not one of them? A. A substantial policy to limit immigration B. Wealth from past production C. The fact that English is the international language of business D. Extensive natural resources
A. A substantial policy to limit immigration
Refer to the graph shown. (Graph in Quiz Ch. 6, Q5)D When price is $40, revenue equals areas: A. A, B, and D only. B. A, B, C, D, and E. C. A and B only. D. A only.
A. A, B, and D only.
Which of the following is the best example of a long-run decision? A. An automobile manufacturing company considering whether to invest in robotic equipment to develop a more cost-effective production technique. B. A business consulting firm considering whether to hire some interns to assist with research and data processing. C. A business consulting firm considering whether to add new computers while maintaining the same number of employees. D. An automobile manufacturing company considering whether to expand its existing workforce while keeping the same factory and equipment.
A. An automobile manufacturing company considering whether to invest in robotic equipment to develop a more cost-effective production technique.
What do economists mean when they say there is "market failure"? A. Free markets yield results that economists do not consider socially optimal. B. Free markets have led to excessive profits. C. Business has introduced a product that consumers did not want. D. Markets have surpluses or shortages so that government rationing is necessary.
A. Free markets yield results that economists do not consider socially optimal.
In the long run: A. all inputs can be varied and no inputs are fixed B. some inputs can be varied and no inputs are fixed. C. some inputs can be varied and some inputs are fixed D. no inputs can be varied and all inputs are fixed
A. all inputs can be varied and no inputs are fixed
Total fixed costs: A. are positive even when no output is produced. B. decrease as output increases. C. increase as output increases. D. are zero when no output is produced
A. are positive even when no output is produced.
The following table describes utility for consuming cans of soda. At what point does the law of diminishing marginal utility set in? (Graph in Quiz Ch. 19, Q6) A. between three and four cans B. Marginal utility never diminishes C. between four and five cans D. Marginal utility diminishes everywhere
A. between three and four cans
GreenTree Corporation sells live Christmas trees. It observes that when it increases the price of Christmas trees by 10 percent, revenue rises by 25 percent. The demand for Christmas trees is: A. inelastic B. unit elastic C. elastic D. perfectly elastic
A. elastic
Suppose Paul has chosen a combination of two goods, A and B, such that the marginal utility per dollar spent for good A (MUA/PA) is .6 and the marginal utility per dollar spent for good B (MUB/PB) is 1. To increase utility with the same amount of money, Paul should: A. increase the number of B consumed and decrease the number of A consumed. B. increase the number of A consumed and decrease the number of B consumed. C. increase the number of both A and B consumed. D. do nothing; he cannot increase total utility.
A. increase the number of B consumed and decrease the number of A consumed.
In general, the greater the elasticity, the: A. larger the responsiveness of quantity to changes in price. B. larger the responsiveness of price to changes in quantity. C. smaller the responsiveness of quantity to changes in price. D. smaller the responsiveness of price to changes in quantity.
A. larger the responsiveness of quantity to changes in price.
New developments in computer monitors have made flat panel LCD's cheaper and better than the older CRT models. Given that monitors can contain as much as 8 pounds of lead, disposing of the old monitors creates a: A. negative externality B. neutral externality C. limited liability D. positive externality
A. negative externality
When negative externalities are present, market failure often occurs because: A. the cost borne by a third party not involved in the trade is not reflected in the market price. B. the existence of imports from foreign countries takes jobs (and income) away from U.S. citizens. C. consumers will consume the good at a level at which their individual marginal benefits exceed the marginal costs borne by the firm producing the good. D. the cost borne by a third party not involved in the trade is reflected in the market price.
A. the cost borne by a third party not involved in the trade is not reflected in the market price.
Fixed cost divided by quantity produced is called
Average Fixed Cost
A business owner makes 50 items by hand in six hours. She could have earned $10 an hour working for someone else. If each item sells for $5 and the explicit costs total $14, economic profit equals: A. $0 B. $176 C. $64 D. $236
B. $176
Refer to the graph shown. (Graph in Quiz Ch. 7, Q3) In equilibrium, consumer surplus is equal to: A. 600 B. 1400 C. 1200 D. 2000
B. 1400
Compute the approximate elasticity of supply from the following data: (Graph in Quiz Ch. 6, Q 15) A.5.0 B. 2.1 C. .2 D. .5
B. 2.1
If the price of one can of Alpo is $0.50 and the price of each McBurger is $1, which of the following would Ms. Tightwad, a utility-maximizing consumer, buy with her $4? (Graph in Quiz Ch. 19, Q10) A. 4 McBurgers B. 3 McBurgers and 2 cans of Alpo C. 1 McBurger and 6 cans of Alpo D. 2 McBurgers and 4 cans of Alpo
B. 3 McBurgers and 2 cans of Alpo
The following table lists the utility that Sarah receives from consuming bananas at $0.25 a banana. What is the marginal utility of consuming the fourth banana? ( Graph in Quiz Ch. 19. Q1) A. 40 B. 8 C. 2 D. 32
B. 8
Refer to the graph shown. (Graph in Quiz Ch. 11a, Q5) Within which section(s) of the production function is marginal product increasing? A. B B. A C. C D. A and B
B. A
When Ross Perot ran for president as a third party candidate in the 1992 presidential elections, he argued that free trade with Mexico would result in massive job losses in the United States because Mexican wages were so low. Which of the following is the best explanation of why few economists agreed with Perot? A. Economists believed that the U.S. unemployment rate would rise. B. Although economists agreed that in some areas the United States would lose jobs, they expected that the United States would gain jobs in other areas. C. Economists did not believe that any jobs would be lost in the United States. D. Although economists predicted that unemployment would rise, the increased profits of corporations would raise stock prices enough to compensate for the lost jobs.
B. Although economists agreed that in some areas the United States would lose jobs, they expected that the United States would gain jobs in other areas.
Assume that in Canada the opportunity cost of producing one television set is two bushels of wheat. Assume that in the United States the opportunity cost of producing one bushel of wheat is two television sets. If these two countries specialize according to comparative advantage and then trade with each other: A. Canada will export both televisions and wheat. B. Canada will export wheat and import televisions. C. the United States will export wheat and import televisions. D. the United States will export both televisions and wheat.
B. Canada will export wheat and import televisions.
If quantity demanded falls by 25 percent when price rises by 50 percent, demand is said to be: A. proportional B. Inelastic C. unit elastic D. elastic
B. Inelastic
The demand for a good is inelastic. Which of the following would be an explanation for this? A. The good is specifically defined. B. The good is a necessity C. The good costs a large portion of one's total income. D. The time interval considered is long.
B. The good is a necessity
If the United States were to stop trading with other nations, economists would predict that in the long run the United States would end up with: A. a higher standard of living B. a lower standard of living. C. more jobs. D. lower prices.
B. a lower standard of living.
The distance between the demand curve and the price the consumer has to pay for a product (given quantity demanded) is referred to as: A. market shortage. B. consumer surplus. C. market surplus. D. producer surplus.
B. consumer surplus
Marginal product eventually: A. increases because some inputs are fixed B. declines because some inputs are fixed. C. increases because some inputs are variable. D. declines because some inputs are variable
B. declines because some inputs are fixed.
In the graph below, the value of the dollar is: (Graph in Quiz Ch. 9, Q16) A. appreciating because the dollar buys more yuan. B. depreciating because the dollar buys fewer yuan C. depreciating because the dollar buys more yuan. D. appreciating because the dollar buys fewer yuan.
B. depreciating because the dollar buys fewer yuan
The price elasticity of demand for insulin by diabetic patients is much smaller than the price elasticity of demand for leather shoes. This is an example of how the price elasticity of demand: A. falls the less specifically the good is defined. B. falls the more a good is a necessity. C. rises the more a good is a necessity. D. rises the less specifically the good is defined.
B. falls the more a good is a necessity.
Refer to the table shown. (Graph in Quiz Ch. 11a, Q2) Diminishing marginal productivity begins when the: A. third worker is hired B. fifth worker is hired. C. sixth worker is hired D. fourth worker is hired.
B. fifth worker is hired.
The foreign exchange rate is the rate at which: A. foreign good are traded between domestic consumers. B. one country's currency can be traded for another country's currency C. taxes are imposed on foreign imports D. immigrants are exchanged between countries
B. one country's currency can be traded for another country's currency
If Steve willingly consumes another slice of pizza, you can be sure that his marginal utility is: A. Rising B. Positive C. Falling D. Negative
B. positive
If the minimum that the Smith family would be willing to sell their house for is $185,000, but they in fact sell it for $210,000, they will receive: A. consumer surplus in the amount of $210,000. B. producer surplus in the amount of $25,000. C. consumer surplus in the amount of $25,000. D. producer surplus in the amount of $210,000.
B. producer surplus in the amount of $25,000.
When labor is the variable input, the average product equals the: A. marginal product divided by the number of workers B. quantity of output divided by the number of workers C. marginal product multiplied by the number of workers. D. number of workers divided by the quantity of output
B. quantity of output divided by the number of workers
Refer to the table shown. (Graph in Quiz Ch. 11b, Q7) If the output of bicycles is 4 per week, the marginal cost of producing another bicycle per week is: A. $120 B. $110 C. $140 D. $130
C. $140
As the manager of a ski resort, you want to increase the number of lift tickets sold by 8 percent. Your staff economist has determined that the price elasticity of demand for lift tickets is 2. To increase sales by the desired amount, you should decrease the price of a lift ticket by: A. 16 percent B. 8 percent C. 4 percent D. 2 percent
C. 4 percent
Joan is deciding where to spend her spring break. If she goes to Cancún, Mexico, the trip will give her 9,000 units of utility and will cost her $300. If she travels to Florida instead, the trip will give her 8,000 units of utility and will cost her only $200. Joan will do best going to: A. Florida because her total cost will be lower B. Mexico because her pleasure per dollar will be greater C. Florida because her pleasure per dollar will be greater D. Mexico because her total pleasure will be greater
C. Florida because her pleasure per dollar will be greater
Total revenue minus explicit measurable costs equals: A. normal profit. B. economic profit. C. accounting profit. D. average profit
C. accounting profit.
You run a small business producing picture frames. This month your total cost is $10,000, your variable cost is $5,000, and your output is 5,000 picture frames. Given this information, your: A. average total cost is $1. B. average total cost is $3. C. average fixed cost is $1 D. average variable cost is $2.
C. average fixed cost is $1
The foreign exchange market is the market in which: A. foreigners buy U.S. real estate. B. foreign stocks and bonds are bought and sold C. currencies of different countries are bought and sold. D. ideas from different countries are exchanged.
C. currencies of different countries are bought and sold
If a market has no externalities, marginal private costs: A. are below marginal social costs. B. exceed marginal social costs. C. equal marginal social costs. D. intersect marginal social costs.
C. equal marginal social costs.
Refer to the graph shown. (Graph in Quiz Ch. 9, Q5) If the price of shekels is $1.10, the quantity of shekels supplied is: A. less than the quantity demanded. This causes the shekel to gain value. B. greater than the quantity demanded. This causes the shekel to gain value. C. greater than the quantity demanded. This causes the shekel to lose value. D. less than the quantity demanded. This causes the shekel to lose value.
C. greater than the quantity demanded. This causes the shekel to lose value.
An economist estimates the elasticity of demand for baseball tickets to be 0.23. Using this information, a club that wants to raise revenues should: A. leave ticket prices unchanged, because it is maximizing revenue. B. lower ticket prices C. increase ticket prices. D. raise the prices of other goods sold at games.
C. increase ticket prices.
If the quantity of houses supplied in an area increases 10 percent when the price goes up 25 percent, the supply: A. is unit elastic. B. is elastic. C. is inelastic. D. is perfectly elastic.
C. is inelastic
In choosing between two products, a rational consumer will choose the product that gives her the: A. greatest total utility regardless of cost. B. least marginal utility per dollar. C. lowest cost per additional unit of utility. D. highest cost per additional unit of utility.
C. lowest cost per additional unit of utility.
The marginal cost curve is a mirror image of the: A. average product curve. B. total product curve. C. marginal product curve D. average variable cost curve
C. marginal product curve
If the euro rises in price, it becomes: A. cheaper for Americans to buy European products but more expensive for Europeans to buy American products. B. cheaper for Americans to buy European products and cheaper for Europeans to buy American products. C. more expensive for Americans to buy European products but cheaper for Europeans to buy American products. D. more expensive for Americans to buy European products and more expensive for Europeans to buy American products.
C. more expensive for Americans to buy European products but cheaper for Europeans to buy American products.
When my neighbors benefit from my cleaning up of my yard, they are experiencing a: A. government-subsidized lunches. B. pollution. C. national defense. D. competition
C. national defense
Rachel left her job as a graphic artist, where she earned $42,000 per year, to open her own graphic arts firm. Her explicit costs for her new business include: A. only her forgone salary of $42,000 per year. B. neither the expenses incurred for office space, equipment, and supplies nor her forgone salary of $42,000 per year. C. only the expenses incurred for office space, equipment, and supplies. D. both the expenses incurred for office space, equipment, and supplies and her forgone salary of $42,000 per year.
C. only the expenses incurred for office space, equipment, and supplies.
The marginal cost curve: A. rises when the average total cost curve lies above the average variable cost curve B. first rises and then declines. C. rises when the point of diminishing marginal productivity is reached. declines until average total cost increases
C. rises when the point of diminishing marginal productivity is reached.
When you purchase and eat a hamburger, no one else can eat the same hamburger. When you download a file on the Internet, the file is still available for others to download. Economists explain this difference between hamburgers and computer files by saying that the hamburger is: A. excludable whereas the computer file is not B. nonexcludable whereas the computer file is not. C. rival in consumption whereas the computer file is not D. nonrival in consumption whereas the computer file is not
C. rival in consumption whereas the computer file is not
In the short run: A. firms can use any input combination they want. B. all inputs are variable. C. some inputs are fixed. D. firms can choose among all possible production techniques.
C. some inputs are fixed.
The Mexican demand for American goods leads to: A. the demand for Mexican pesos and the supply of U.S. dollars on the foreign exchange market B. the demand for U.S. dollars and the supply of U.S. dollars on the foreign exchange market C. the demand for U.S. dollars and the supply of Mexican pesos on the foreign exchange market. D. the demand for U.S. dollars and the demand for Mexican pesos on the foreign exchange market.
C. the demand for U.S. dollars and the supply of Mexican pesos on the foreign exchange market.
Refer to the table shown to answer the question.(Graph in Quiz Ch. 6, Q17 Between $2 and $2.20, demand is: A. elastic B. perfectly elastic C. unit elastic D. inelastic
C. unit elastic
What is the difference between what consumers would have been willing to pay and what they actually pay. Also, the value the consumer gets from buying a product less its price.
Consumer surplus
A change in the exchange rate so that one currency buys fewer units of a foreign currency is called
Currency Depreciation
A firm is producing 100 units of output at a total cost of $400. The firm's average variable cost is $3 per unit. What is the firm's total fixed cost? A. $300 B. $50 C. $1 D. $100
D. $100
Refer to the table shown. The average total cost of producing 5 units of output is: A. $25. B. $15. C. $10 D. $5.
D. $5.
Refer to the graph shown. (Graph in Quiz Ch. 6, Q3) Calculate the approximate average elasticity of demand as the price falls from $18 to $0: A. 2/3 B. 3 C. 3/2 d. 1
D. 1
If 1 Canadian dollar costs 0.60 U.S. dollar, 1 U.S. dollar costs: A. 0.40 Canadian dollar. B. 0.60 Canadian dollar. C. 1.40 Canadian dollars D. 1.67 Canadian dollars
D. 1.67 Canadian dollars
The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production. (Graph in Quiz Ch. 11b, Q10) Marginal cost is minimized when output equals: A. 21 units B. 25 units C. 6 units D. 12 units
D. 12 units
Refer to the graph shown. (Graph in Quiz Ch. 7, Q6) If price is increased from $3 to $4, consumer surplus will fall by: A. 100 B. 50 C. 25 D. 125
D. 125
Refer to the table shown. (Graph in Quiz Ch. 11a, Q18) The average product when eight workers are employed is: A. 3 B. 5 C. 4 D. 6
D. 6
Which short-run cost curve continually declines as output increases? A. Total cost B. Average variable cost C. Marginal cost D. Average fixed cost
D. Average fixed cost
Which of the following statements correctly summarizes a difference between the layperson's and the economist's views of the net benefits of trade? A. Economists most often argue that the costs of trade outweigh the benefits while laypeople often argue that the benefits of trade outweigh the costs. B. Economists focus on trade in manufactured goods while laypeople also focus on trade involving the services of people who manage the trade C. Economists often argue that most U.S. jobs are at risk of outsourcing while laypeople intuitively recognize that inherent in comparative advantage is that each country has a comparative advantage in the production of some good. D. Economists often argue that the gains from trade in the form of low consumer prices tend to be widespread and not easily recognizable while the costs in jobs lost tend to be concentrated and readily identifiable.
D. Economists often argue that the gains from trade in the form of low consumer prices tend to be widespread and not easily recognizable while the costs in jobs lost tend to be concentrated and readily identifiable.
Refer to the graph shown. (Graph in Quiz Ch. 7, Q4) When the market is in equilibrium, producer surplus is area: A. A plus area F B. C plus area D plus area E. C. A D. F
D. F
The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production. (Graph in Quiz Ch. 11b, Q11) The average total cost curve is represented by which curve? A. IV B. I C. II D. III
D. III
As long as total utility is increasing, we know that marginal utility is: A. Decreasing B. Increasing C. Negative D. Positive
D. Positive
Mr. Woodard's cabinet shop is experiencing rapid growth in sales. As sales have increased, Mr. Woodard has found it necessary to hire more workers. However, he has observed that doubling the number of workers has less than doubled his output. What is the likely explanation? A. The law of demand B. The law of supply C. The law of diminishing marginal utility D. The law of diminishing marginal productivity
D. The law of diminishing marginal productivity
Assuming government's goal is to benefit society as much as possible: A. actions with negative and positive externalities should be restricted. B. actions with negative and positive externalities should be encouraged. C. actions with negative externalities should be encouraged and actions with positive externalities should be restricted D. actions with negative externalities should be restricted and actions with positive externalities should be encouraged.
D. actions with negative externalities should be restricted and actions with positive externalities should be encouraged.
If marginal cost is less than average total cost: A. average variable cost is decreasing with output B. average variable cost is increasing with output C. average total cost is increasing with output D. average total cost is decreasing with output.
D. average total cost is decreasing with output.
Average fixed cost: A. equals total cost divided by output. B. increases as output increases. C. remains constant and doesn't vary with output D. decreases as output increases.
D. decreases as output increases.
Average variable cost is total variable cost: A. multiplied by price B. multiplied by output C. divided by input D. divided by output
D. divided by output
The best example of a positive externality is: A. roller coaster rides. B. alcoholic beverages. C. pollution. D. education.
D. education.
Alex is playing his music at full volume in his dorm room. The other people living on his floor find this to be nuisance, but Alex does not care. Alex's music playing is an example of a: A. normative externality. B. positive externality. C. Pareto externality. D. negative externality.
D. negative externality.
Fixed costs plus variable costs equal: A. average costs B. average total costs C. marginal costs D. total costs
D. total costs
The supply of euros on the foreign exchange market slopes: A. downward because European consumers buy more foreign goods when the value of the euro decreases. B. downward because European consumers buy fewer foreign goods when the value of the euro decreases. C. upward because European consumers buy more foreign goods when the value of the euro decreases. D. upward because European consumers buy fewer foreign goods when the value of the euro decreases.
D. upward because European consumers buy fewer foreign goods when the value of the euro decreases.
What is explicit and implicit revenue minus explicit and implicit cost. Also, a return on entrepreneurship above and beyond normal profits.
Economic Profit
If the percentage change in quantity is greater than the percentage change in price (E > 1) then the demand or supply curve is said to be
Elastic
What is the price of one country's currency in terms of another currency. You Answered
Exchange Rate
What are costs that are spent and cannot be changed in the period of time under consideration.
Fixed Costs
The idea that says that the reduction in quantity demanded is because price increases make us poorer is known as the
Income Effect
What is the computed by the percentage change in demand divided by the percentage change in income
Income Elasticity of Demand
The idea that as more and more of a variable input is added to an existing fixed input, eventually the additional output one gets from that additional input is going to fall is called the
Law of Diminishing Marginal Productivity
A decision in which a firm chooses among all possible production techniques is a(n)
Long-Run Decision
What is the additional output that will be forthcoming from an additional worker, other inputs constant.
Marginal Product
The marginal private benefit of consuming a good plus the benefits of the positive externalities resulting from consuming that good is known as
Marginal Social Benefit
What is the satisfaction one gets from consuming one additional unit of a product above and beyond what one has consumed up to that point.
Marginal Unity
What refers to the adverse effect of a decision on others not taken into account by the decision maker. It occurs when the effects of a decision not taken into account by the decision maker are detrimental to others.
Negative Externality
In a case where quantity does not respond at all to changes in price (E = 0) we call the demand or supply curve
Perfectly Inelastic
What is the percentage change in quantity demanded divided by the percentage change in price.
Price Elasticity of Demand
What is the price the producer sells a product for less the cost of producing it.
Producer Surplus
What is a good that if supplied to one person must be supplied to all and whose consumption by one individual does not prevent its consumption by another individual. That is, a good that is nonexclusive and nonrival.
Public Good
The name economists give to the pleasure or satisfaction that one expects to get from consuming a good or service is
Utility