Quiz Micro Chap 10 & 11, Midterm 2 Micro 12-12, Quiz 6 micro

consider all costs of production, the marginal cost of producing a hot dog is $1.00. The price of a hot dog is $1.50. Thus, the producer surplus from this hot dog is

$0.50

In perfectly competition, the price of the product is determined where the market

Supply curve and market demand curve intersect

Total cost equals

TFC + TVC

The position of a firm's short run cost curve depends on two factors: select all that apply

Technology Prices of factors of product

Marginal utility theory predicts that when income increases a

a person 's consumption of normal goods will increase

The paradox of value is illustrated by the fact that

a pound of bread is cheaper than a pound of gold

A proprietorship is a firm with

a single owner who has unlimited liability

The most efficient way to encourage the growth of an infant industry is through

a tariff

Which of the following statements concerning tariffs is NOT true?

a tariff leaves the price of imports unchanged.

When economist speak of normal goods they mean goods for which

a) marginal utility decreases as consumption increases d) the demand curve slopes downward

The principal-agent problem is the issue of inducing

agents to act in the best interests of principals

When the price of an inferior good falls, the substitute effect leads to ____ in the quantity purchased and the income effect leads to ____ in the quantity purchased.

an increase; a decrease

A point outside a production possibilities frontier indicates

an output combination that society cannot attain given its current level of resources and technology.

The short run is a time frame in which

at least one factor of production is fixed

Team production is a production process in which

Individuals specialize in mutually supportive tasks.

In a perfectly competitive market, there are

many buyers and many sellers

Total utility is maximized when the ____ for all goods.

marginal utility per dollar spent is equal

Robinson spends all his income on mango and bananas. Mango cost $3 per pound and bananas cost $1 per pound. The marginal utility is 30 for the last pound of mango purchased and 8 for the last pound of bananas. To maximize his utility, Robinson should buy

more mango and fewer banana

three ways of coping with the principal-agent problem are

ownership, incentive pay, long term contracts

A market structure in which many firms are selling an identical product is called

perfect competition

Propecia was developed to treat mild to moderate male pattern hair loss in men. Macro has hair loss and he is willing to pay any amount of money to be able to buy this drug each month. Marco's price elasticity of demand is

perfectly inelastic

An important determinant of the price elasticity of supply is the extent to which

production requires the use of particularly scarce or specialized resources.

If the United States imposes a tariff on imported steel, the tariff will

raise the U.S. price of imported steel.

An import quota protects domestic producers by

setting a limit on the amount of imports.

When NAFTA was approved, Congress attempted to soften the losses suffered by some industries by

setting aside funds to support and retain workers who lost their jobs because of NAFTA.

A cost that has already been made and cannot be recovered is called a

sunk cost

The government raises the sales tax on shirts. The tax is imposed on sellers. As a result, the

supply curve of shirts shifts leftward

Total utility describes

the benefit gained from all consumption

A key difference between tariffs and quotas is that

the government receives revenue with tariffs, but the importer receives added profit with quotas

The Soot-Hawley Act introduced

the highest tariffs set by the United States in the last 90 years.

Average total costs are total costs divided by

total output

The break-even point is defined as occurring at an output rate at which

total revenue equals total opportunity cost

The total benefit that a person receives from the consumption of goods and services is called

total utility

In the figure below, diminishing marginal utility is shown by

total utility curve C

the principle of diminishing marginal utility says that

total utility increases by smaller and smaller amounts as the quantity of the good consumed increases

Which of the following is not pros for partnership type of firm:

Simple decision making

economies of scale refer to

The range of output over which the long-run average cost falls as output increases.

In the table below, if the firm sells 5 units of output, it's total revenue is Quantity Sold. Price 5. $15 6 $15 7. $15

$75

In the long run, for a perfectly competitive market, if economic profit is - greater than zero, than some firms will market and the market supply curve will shift rightward - equal to zero, then there is no entry or exit of firms into or out of the market - less than zero, then some firms will exit the market and the market supply curve will shift leftward - all of the choices are correct

- all of the choices are correct

If a 6 % decrease in the price leads to a 5% increase in the quantity demanded, the price elasticity of demand is

0.83

The table above gives Cathy's total utility from Mt. Dew. Cathy's marginal utility from the 4th Mt. Dew is ________ Quantity of Mt. Dew Total Utility Per Day (Units) 1 30 2 55 3 75 4 90 5 100

15

The table above gives Cathy's total utility from Mt. Dew. Cathy's marginal utility from the 3rd Mt. Dew is ________ Quantity of Mt. Dew Total Utility Per Day (Units) 1 30 2 55 3 75 4 90 5 100

20

The table below provides information about the relationship between labor and various product measures. The total product that can be produced with 6 units of labor is Labor. Total Product. Marginal. Average (Workers) (Units) Product. Product 0. 0. 1 3 2 4.5 3 14 4. 3 5. 19 6. 1

20

The table below shows Tom's total utility from milkshakes and sodas. What is the marginal utility of Tom's eighth milkshake?

32 units

The table below gives cost at Jan's bike shop. Unfortunately, Jan's record keeping has been spotty. Each worker is paid $100 a day. Labor costs are the only variable costs of production. What is the total cost of producing 50 bikes? Labor. Output. Total. Total. Total cost (Workers) (Bikes). Fixed Variable (Dollars) Cost $ Cost $ 0. 0. 200. ______. ___________ 1. 20. ______. ______. ___________ 2. 50. ______. ______. ___________ 3. 60. ______. ______. ___________ 4. 64. ______. ______. ___________

400

The table below shows the total product of producing baseball hats. The marginal product of the 4th worker is equal to Labor. Total product (Workers per day). (Hats per day) 0. 0 1. 4 2. 10 3. 18 4. 25 5. 30

7 baseball hats

A perfectly competitive firm's demand curve is

A horizontal line

The four-firm concentration ratio measures

A) competitiveness B) profitability C) technological efficiency

According to the principle of diminishing marginal utility, as the quality of a good or service consumed increases, total utility

A) zero b) increase D) is unchanging

Which of the following curves is not U-shaped?

AFC or average fixed cost curve

Which of the following is NOT an assumption of marginal utility theory?

As more of a good is consumed, the decrease in the marginal utility from the good means that the total utility from the good decreases also.

The table below gives techniques jitter coffee company can use to package 5,000 lbs of coffee. Which technique is technologically inefficient? Technique Capital. Labor (Units). (Units) A. 70. 20 B. 80. 60 C. 120. 20 D. 5. 180

B and C

Which of the following is a valid reason for protecting an industry? A) The industry is unable to compete with low-wage foreign competitors. B) None of the other reasons is a valid reason for protection. C) Protection keeps richer nations from exploiting the workers of poorer countries. D) Protection penalizes lax environmental standards.

B) None of the other reasons is a valid reason for protection.

Which of the following best defines "economies of scope"?

Because firms use specialized resources to produce a range of goods, as the number of products produced increases, the cost of producing a unit decreases.

Economic depreciation is the

Change in the market value of capital over a given period.

A firm's total variable cost (TVC) is defined as a cost that

Changes as the firm changes its output

A perfect competitive firm maximizes it's profit by

Choosing to produce the quantity that sets MC equal to MR

Which of the following forms of business organizations is likely is likely to suffer most from the principal agent problem between the owners and managers of the business?

Corporations

Economies of scale exist when the

Cost of producing a unit of a good falls as it's output increases.

All of the following except _____ are a firm's opportunity cost of production is the sum of the cost of using resources.

Economic efficiency

Which of the following statements regarding the long-term equilibrium is TRUE?

Entry and exit stop when firms make zero economic profit

8) Which of the following occur when a person maximizes utility?

II. the highest level of utility is attained III. all of a person's budget is spent

Suppose the world price of a good is $4. Based on the table below, the country would Price Q Demanded Q Supplied 2 100 70 4 95 75 6 90 80 8 85 85 10 80 90 12 75 95

Import 20 Units

A period of time in which the quantity of all factors of production used by a firm can be varied is called the

Long run

A firm's average variable cost is $60, its total fixed cost is $3,000, and its output is 600 units. It's average total cost is

More than $64

A perfectly competitive firm is definitely making an economic profit when

P > ATC.

For a perfectly competitive firm, in the long-run equilibrium

P=MC=ATC=MR

The long-run average cost curve is the

Relationship between the lowest attainable average total cost and output when both the plant size and labor are varied.

Utilitarianism is a principle whose goal is

The greatest happiness for the greatest number

Average product equals the

Total amount of output produced divided by the quantity of labor employed.

A firm's shutdown point is the quantity and price at which the firm's total revenue just equals its

Total variable cost

A firm's total cost (TC) equals the sum of its fixed cost plus its

Variable cost

___ is an illegal activity between buyers and sellers sometimes used to evade a price ceiling.

a black market.

With rent controls, which of the following is most likely to occur?

black market activity

Which of the following is CORRECT?

both imports and exports include goods and services.

According to a behavioral economist, people are assumed to have the following three impediments that prevent rational choice:

bounded rationality, bounded self-interest, bounded willpower

Marginally utility theory predicts that if a consumer's income decreases, the consumers

buys fewer normal goods.

technological efficiency occurs when the firm produces a given output

by using the least amount of inputs

The minimum wage

can create a surplus of labor

Marginal utility is the

change in satisfaction that results from a one-unit increase in the quantity of a good consumed.

International trade arises from

comparative advantage

Total variable cost is the sum of all

costs that rise as output increases

If the price of a pizza increases and the demand curve for pizza does NOT shift, then the consumer surplus from pizza will

decrease

The figure shows the market for rental units in Gladstone. The market is in equilibrium. The government now introduces a rent ceiling of $500 a month. The price of a rental unit ________ and the number of units rented _______.

decreases by $100 per month; decreases

As the quantity of a good consumed increases, its marginal utility ________ and its total utility ________.

decreases; increases

As you consume more and more of any good, you experience ____ utility.

diminishing marginal

The fact that the fourth plate from the "All You Can Eat Country Buffet" generated more satisfaction than the fifth plate is an example of

diminishing marginal utility

The fact that the fourth plate from the "All You Can Eat Country Buffet" generated more satisfaction than the fifth plate is an example of

diminishing marginal utility.

Selling a product in a foreign nation at a price less than its cost of production is called

dumping

In a market open to international trade, at the world price the quantity demanded is 150 and quantity supplied is 200. This country will

export 50 units.

When the principle of comparative advantage is used to guide trade, then a country specializes in producing only

goods with the lowest opportunity costs.

In perfect competition, the product of a single firm

has many perfect substitutes produced by other firms

a rent ceiling set above the equilibrium rent

has no effect on the market outcome

Imposing a minimum wage that is above the equilibrium wage rate results in

higher job search costs.

The goods and services that our country buys from other countries are termed

imports

Marginal utility theory concludes that a decrease in the price of a good increases the quantity demanded and

increases total utility.

The "law of demand" states that, other things remaining the same, the quantity demanded of any good is

inversely related to its price.

All of the following statements about marginal benefits are correct EXCEPT the marginal benefit of a good.

is equal to zero when resource use is efficient.

The water and diamonds paradox of value

is that water is essential for life and yet is cheap, whereas diamonds are totally nonessential and yet are expensive.

which of the following is an effect of a price ceiling set below the equilibrium price?

less of the good is produced with the ceiling than would be produced without the ceiling