Micro SLO exam

12. What is the total utility gained from consuming all three cups of coffee? A) 23 B) 13 C) 10 D) none of these

A) 23

16. Inputs that do not change in the short run as a firm increases output are known as _____. A) fixed inputs B) variable inputs C) diminishing inputs D) none of these

A) fixed inputs

19. Firms in perfect competition have a demand curve that is _____. A) horizontal B) vertical C) downward sloping D) none of these

A) horizontal

1. The market for milk is initially in equilibrium. Milk producers engage in a nationwide advertising campaign to encourage milk drinking. The campaign is successful so the demand for milk increases. Therefore, it can be concluded that the equilibrium price of milk will __________. A) increase B) decrease C) remain the same D) none of these

A) increase

2. The market for milk is initially in equilibrium. Milk producers engage in a nationwide advertising campaign to encourage milk drinking. The campaign is successful so the demand for milk increases. Therefore, it can be concluded that the equilibrium quantity of milk will __________. A) increase B) decrease C) remain the same D) none of these

A) increase

3. The market for milk is initially in equilibrium. If workers in the milk industry are successful in negotiating higher wages we would expect equilibrium prices to ______. A) increase B) decrease C) remain the same D) none of these

A) increase

7. If a firm raises the price of the good it sells and experiences higher revenues, then this good's price elasticity of demand must be _____. A) inelastic B) elastic C) unit elastic D) none of these

A) inelastic

4. The market for milk is initially in equilibrium. If workers in the milk industry are successful in negotiating higher wages we would expect the equilibrium quantity to ______. A) increase B) decrease C) remain the same D) none of these

B) decrease

13. Generally speaking, as production of a good increases, the marginal cost curve: A) in horizontal B) decreases and then increases C) is vertical D) none of these

B) decreases and then increases

5. After you graduate from college, you open a business selling computers. There are many other businesses in your city that sell similar computers so the number of substitutes is high. Based on this information, the price elasticity of demand for the computers that your business ​sells will be more __________. A) inelastic B) elastic C) diversified D) none of these

B) elastic

18. One major difference between Perfect Competition and Monopoly is that monopolies produce ______ goods and charger a __________ price. A) more, lower B) fewer, higher C) fewer, lower D) none of these

B) fewer, higher

10. Assume a consumer purchases a combination of good X and Y such that MUx/Px = 20 and MUY/PY = 10. To maximize utility, the consumer should buy _________ of good Y. A) less B) more C) same amount D) none of these

B) more

9. Assume a consumer purchases a combination of good X and Y such that MUx/Px = 20 and MUY/PY = 10. To maximize utility, the consumer should buy _________ of good X. A) less B) more C) same amount D) none of these

B) more

Use the following table to answer questions #11 and #12: Cups of coffee Marginal Utility First Cup of coffee 10 Second cup of coffee 8 Third cup of coffee 5 11. At which cup of coffee is diminishing marginal utility observed? A) first cup B) second cup C) third cup D) None of these D) none of these

B) second cup

15. If a firm's average fixed cost is $4 and its average variable cost is $2, then average total cost is _____. A) $2 B) $3 C) $6 D) none of these

C) $6

17. Firms in any market structure produce where ________. A) MR < MC B) MR > MC C) MR = MC D) none of these+

C) MR = MC

14. Generally speaking, as production of a good increases, the marginal cost (MC) curve intersects the average total cost curve (ATC) ________. A) at ATC's beginning B) at ATC's end C) at ATC's minimum D) none of these

C) at ATC's minimum

20. A monopoly has a demand curve that is _____. A) horizontal B) vertical C) downward sloping D) none of these

C) downward sloping

8. Which of the following would be an example of a good whose price elasticity of demand is inelastic? A) a luxury cruise B) soft drinks C) insulin for diabetics D) none of these

C) insulin for diabetics

6. Suppose you calculate the income elasticity to be 2.65. Based on this calculation, this good is a(n) ___________ good. A) substitute B) inferior C) normal D) none of these

C) normal