Microeconomics (true, false)
In economics, revenue can be defined as profit minus cost
False
In a perfectly competitive market, buyers and sellers can negotiate for a better deal.
False
A budget constraint means people consume more than they desire because their spending is limited
False
A movement along the downward-sloping demand curve for ice-cream can be caused b a change in income.
False
An increase in both supply and demand will lead to an increase in the equilibrium price and an indeterminate change in the market equilibrium quantity.
False
An increase in the price of chocolate cake causes the demand curve for chocolate cake to shift to the left, where as an increase in income causes a movement along the demand curve for chocolate cake.
False
Average Total cost is the amount that firms pay to buy inputs
False
Budget constraints exist for consumers because they have to pay for goods, and they have unlimited income.
False
Economists normally assume that people are rational. The term "rational people" means systematically and purposefully do their first best so that they can achieve their objectives such as utility minimization or profit minimization.
False
If a heat wave and a tornado occurred during the same fall in CO, the equilibrium price and the equilibrium quantity in the ice-cream market will rise.
False
If an individual prefers a color of red over blue, and blue over yellow, then the person should prefer a color of red over yellow. Since the individual reveals his/her preference in colors, the person will take an action for buying a color of red pen then.
False
Increasing marginal product is the property whereby the marginal product of an input decreases as the quantity of the input increases
False
Marginal cost shows the cost of a typical unit of output if total cost is divided evenly over all units produced. On the other hand, average cost is the additional; increase in total cost that arises from an extra unit of production.
False
Maria has eaten two bowls of ice cream at LaMichoacana. She considers eating a third. As a rational consumer she should make her choice by comparing the benefits from eating all three bowls of ice cream to how much three bowls of ice cream costs.
False
Normative statements are expressions of facts and positive statements are expressions of value judgments.
False
One of the principles of Economics, "Rational People Think at the Margin", indicates that people usually have to give up something to get something else that they like.
False
One of the properties of a typical indifference curve says, "indifference curves do cross."
False
Ordinal Utility states that the satisfaction the consumer derives by consuming goods/services can be measured with numbers. Rather, Cardinal Utility uses a ranking system in which a ranking is provided to the satisfaction that is derived from consumption.
False
Quantity demanded is the maximum amount of a product that buyers are willing and able to purchase at various prices for sale in a market. On the contrary, demand is the amount of a good that buyers are willing and able to purchase at a given price.
False
Regardless of the number of outputs produced, the average-fixed-cost curve is always constant
False
Suppose Braden has $200 of income, the price of popcorn is $4, and the value of B is 100. Then the price of Mt.Dew is$1.
False
Suppose when the price of potatoes rises by 10% the quantity demanded of potatoes decreases by 5%. Then we could conclude that the price elasticity of demand for potatoes is elastic.
False
The budget constraint of the consumer shows the different consumption bundles that yield the same amount of utility.
False
The definition of "Marginal Product" is the property whereby the additional product produced declines as the quantity of the labor increases
False
The law of demand claims that the quantity demanded of a good increases, when the price of the good rises.
False
The market demand curve makes a shift to the right when the price of the good itself decreases
False
The supply of labor is determined by firms, and the demand of labor is determined by workers.
False
The value of the marginal product of labor is the extra output that is produced by hiring an additional unit of labor
False
There are two types of costs: fixed costs and variable costs. Fixed costs are the costs that vary with the quantity of output produced. On the other hand, variable costs are the costs that do not vary with the quantity of output produced.
False
Two goods are considered to be related goods by buyers if the price of one good increases, buyers consume more of the other. This indicates the two goods are complements.
False
Utility is an objective measure of pleasure or satisfaction that can be compared from individual to individual based on their preferences.
False
When a firm receives less by producing an extra good (marginal revenue) than what the firm needs to pay to produce the good (marginal cost), producing that extra good is a rational decision.
False
When elasticity is equal to 1, it is called perfectly elastic
False
A decrease in the prices of computer chips for PCs will increase the supply of PCs.
True
An increase in consumer's income will cause a decrease in the demand for an inferior good.
True
An indifference curve is an economic tool that demonstrates the trade-off between consumption of two goods.
True
Demand shows the maximum amount of a product that buyers are willing and able to purchase at various prices for sale in a market. On the other hand, the quantity demanded shows the amount of a good that buyers are willing and able to purchase at a given price
True
Economics is a subject considered a "SocialScience". This is the study of how individuals, firms, and government choose to allocate scarce resources and how those choices affect society.
True
Economics studies how individuals make decisions in economic and political situations and they look for ways to optimize and enhance society. Also, microeconomics focuses on fundamental analysis of the interactions among consumers, firms, and governments.
True
Equilibrium is a situation in which the market price has reached the level at which quantity supplied equals quantity demanded. Equilibrium price is the price at which the quantity of products supplied is equal to the quantity of products demanded in the market. And equilibrium price is sometimes called the market-clearing price.
True
Factors of production are inputs used to produce an output, or goods and services. Two common inputs are labor and capital.
True
Goods and services tend to have more elastic demand over longer time horizon
True
If a good is inferior, then an increase in income will result in a decrease in the demand for the good.
True
In economics, preference is what the consumer likes or what he/she wants to buy. This could be the level of happiness, degree of satisfaction, or utility from the product. Also,economists assume that rational people can rank or order their preferences.
True
In economics, preferences refer to certain characteristics an individual wants to have in a good or service to make it preferable. This could be the level of happiness, degree of satisfaction, or utility from the product.
True
Indifference curves for perfect complements would be L-shaped.
True
Jennifer's cookie firm experiences diminishing marginal product of inputs. The total cost curve associated with Jennifer's cookie firm gets steeper as output increases.
True
Marginal product is the change in output that arises from an additional unity of input.
True
Marginal product of capital is an economics term that indicates the additional production a firm experiences by adding one unit of capital
True
Marginal utility is the additional sanctification or happiness that a consumer gets by buying or consuming one additional unit of a commodity or service. On the other hand, total utility is the sum of utility that an individual derives from the consumption of all units of a given commodity.
True
Price elasticity of demand refers to the change in the quantity demanded of a product in relation to its price change
True
Regardless of how many goods and services are produces, fixed costs do not vary with the quantity of output produced. Rent, machines, and full-time bookkeepers are examples of fixed costs
True
Revenue can be calculated by the formula that Revenue = price of the commodity multiplied by the Quantity sold
True
Taking the law of demand into account, economists follow the common practice of dropping the minus signs of price elasticities of demand and reporting them as positive numbers
True
The average-total-cost curve intersects marginal cost at the minimum of average-total-cost
True
The law of supply implies the quantity of a good decreases, when the price of the good falls.
True
The law of supply indicates that the supply of a good increases when the price of the good rises
True
The production function shows the property whereby the marginal product of labor declines as the quantity of the input increases, and this the production function becomes flatter
True
The value of the marginal product of labor is the increase in value created from hiring an additional worker. The value of the marginal product of labor equals the price of the output times the marginal product of labor.
True
When Jun decides whether to go to see a free concert, he has to give up something to get something else that he likes. This example shows that people face tradeoffs.
True
When the price of a pair of shoes increases by 200 percent, Cameron's quantity demanded for shoes decreases by 50 percent yielding a price elasticity of demand equal to .25 in absolute value.
True
