MicroEconomics Test Study

If the consumer's money income were cut from $52 to $28, and the prices of J and K remain at $8 and $4 respectively, she would maximize her satisfaction by

2 units of J and 3 units of K

If the production possibilities curve is a straight line:

economic resources are perfectly shiftable between the production of the two products.

Productive efficiency refers to:

the use of the least-cost method of production.

The substitution effect indicates that:

when the price of a product falls, the lower price will induce the consumer to buy more of that product at the expense of other products.

Refer to the above table. A total output of 3 units of capital goods and 4 units of consumer goods:

would involve an inefficient use of the economy's scarce resources.

Refer to the data above. What level of total utility is realized from the equilibrium combination of J and K determined in the previous question?

276 utils

Refer to the above data. If Alpha and Omega each were producing at alternatives B before trade, the gain from specialization would be:

30 tons of wheat.

If a customer has a money income of $52 and the prices of J and K are $8 and $4 respectively, the consumer will maximize her utility by purchasing:

4 units of J and 5 units of K

On the basis of production possibilities data shown:

Landia has a comparative advantage in chips while Scandia has a comparative advantage in fish.

Suppose that MUx/Px exceeds MUy/Py. To maximize utility the consumer who is spending all her money income should buy:

More of X and less of Y.

Refer to the above data. On the basis of the above information:

Omega should export steel to Alpha and Alpha should export wheat to Omega.

If a rational consumer is in equilibrium, which of the following conditions will hold true?

The marginal utility of the last dollar spent on each good purchased will be the same.

Which of the following is a distinguishing feature of a market system?

Wide-spread private ownership of capital.

There is too little of a good thing when its marginal:

benefit exceeds its marginal cost.

Refer to the above diagram. Other things equal, this economy will achieve the most rapid rate of growth if:

it chooses point A.

Money is not an economic resource because:

money, as such, is not productive.

Allocative efficiency is concerned with:

producing the combination of goods most desired by society.