Test Review 2 & Unit 2 Exam
The FC of producing four Brownies is $ _________ . (Answer to 2 decimal places)
2.50
If a 20 percent rise in price leads to a 40 percent decrease in quantity demanded, then demand is ________ and total revenue __________. Elastic; increases Elastic; decreases Inelastic; increases Inelastic; decreases
Elastic; decreases
Which of the following is most likely to have an elastic demand? Furniture Diapers Insulin Telephone service
Furniture
If a 50 percent increase in the price of a good generates a 25 percent decrease in the quantity demanded, the good has an _________ demand. Elastic Inelastic Unit-elastic Insufficient
Inelastic
If a large percent INCREASE in price generates a small percent INCREASE in quantity supplied, we can say that supply is: Elastic Unit-elastic Inelastic Good enough for Steven Manley
Inelastic
As long as the MP is positive, the TP will be increasing. True False
True
Total utility increases at a decreasing rate. True False
True
If the cross price elasticity is negative, the good(s) are normal are inferior are complimentary are substitutes
are complimentary
Bentham concluded that consumers seek to _____ with _____. maximum profit; maximum cost maximum leisure; minimum responsibility maximum utility; minimum cost maximum Manley; minimum pain
maximum utility; minimum cost
The __________________ is the relationship between the number of inputs (such as units of labor) that a firm uses and the resulting units of output (such as quantity of widgets produced). production function marginal cost curve total cost curve production possibilities curve
production function
The price of milk rises from $4 to $5, while the Qd of cereal falls from 100 to 96. Using the midpoint formula, what is the cross price elasticity of demand? (DO NOT include absolute values in the formula, and round to 2 decimal places)
-0.18
When Q = 0, total utility will always be ___. Positive Negative 1 0
0
The price of cigarettes rises from $4 to $5, while the Qd falls from 100 to 96. Using the midpoint formula, what is the price elasticity of demand? (include absolute values in the formula and round to 2 decimal places)
0.18
The price of Manley bobbleheads rises from $4 to $5, while the Qs rises from 100 to 140. Using the midpoint formula, what is the price elasticity of supply? (round to 2 decimal places)
1.5
Steven Manley's income rises from $40 billion to $50 billion, while his Qd of donuts increases from 6 to 10. Using the midpoint formula, what is his income elasticity of demand? (round to 2 decimal places)
2.25
The price of cookies rises from $4 to $5, while the Qd falls from 100 to 50. Using the midpoint formula, what is the price elasticity of demand? (include absolute values in the formula and round to 2 decimal places)
3
These utility concepts can be applied to a decision of what to purchase given utility patterns for two goods as listed in the figure below. If you assume that good R and good S both cost $2 each, how many of each would you purchase if you have an income of $8? 4R and 0S 3R and 1S 3S and 1R 2S and 2R
3S and 1R
In the figure below, the difference between the ATC and the AVC is the ________. MC MR AVC AFC
AFC
MC = ATC at the minimum of the ______ curve . ABC AVC AFC ATC
ATC
_____ = Total Cost (TC) / Quantity Produced (Q) TC MC ATC none of these choices are correct
ATC
Which of the following is most likely to have an inelastic demand? iTunes Cigarettes T-Bone Steaks Washing Machines
Cigarettes
If the price of an elastic good increases, total revenue will ____ Decrease Increase Not change change in a way that only Steven Manley can understand
Decrease
Normal goods have a positive _____. Ed Ei Exy Es
Ei
If a 10 percent increase in the price of a good generates a 25 percent decrease in the quantity demanded, the good has an _________ demand. Elastic Inelastic Unit-elastic Insufficient
Elastic
Elasticity of demand measures can be: (multiple answers possible) Elastic Inelastic Unit-elastic Excessive
Elastic Inelastic Unit-elastic
Economists do not see any difficulty in measuring pleasure and believe that consumer behavior can be measured perfectly using of marginal values. True False
False
Housing and food are opportunity costs of attending college. True False
False
If TP is increasing at an increasing rate, the MP must be decreasing. True False
False
If the price and total revenue change in the same direction, then demand is elastic. True False
False
In the Indifference Diagram above, Points G, H and K represent combinations of consumption for A and B that will yield the same amount of total pleasure. True False
False
In the Indifference Diagram above, Points H, I and J represent combinations of consumption for A and B that will yield the same amount of additional pleasure. True False
False
The amount of paper was one of the limiting factors in the airplane activity. True False
False
The long-run is the time period that is long enough to change at least one of the inputs. True False
False
Total product is maximized when marginal utility is maximized. True False
False
Total utility can never decrease as Q increases. True False
False
The demand curve slopes downward due to: (may have multiple answers) Income effect substitution effect diminishing marginal returns effect elasticity of demand Steven Manley effect
Income effect substitution effect diminishing marginal returns effect
Variable costs are costs that _________ . decrease with increasing output remain constant regardless of changes in output increase with increasing output none of these choices are correct
Incorrect Answer (Do Not Pick) for Steven Manley's Quizzes, Test Reviews, and Exams: remain constant regardless of changes in output
If the price of a good with an inelastic demand increases, total revenue will ___. Decrease Increase Not change Change in a way that only Steven Manley can predict.
Increase
If a large percent decrease in price generates a small percent increase in quantity demanded, we can say that demand is: Elastic Inelastic Unit-elastic Excessive
Inelastic
Who studied consumer behavior in the early 1830s? Steven Manley Jeremy Bentham Karl Marx David Ricardo
Jeremy Bentham
In just about every situation, ___________ carry the burden of a tax on a good. Corporations Retailers Wholesalers People
People
You sell a good with an inelastic demand. If you raise your prices: Sales revenue will fall Sales fall in huge quantities Sales fall off insignificantly You will lure more customers into your store
Sales fall off insignificantly
One reason why the demand for gasoline is inelastic is because: There are many substitutes for gasoline Substitutes for gasoline are hard to find Gasoline is a luxury item Gasoline's price is high compared to one's income
Substitutes for gasoline are hard to find
The principle determinant for the elasticity of supply is: How desperate the customers are to buy the product The price of the product The advertising The amount of time the supplier has to respond to a price change
The amount of time the supplier has to respond to a price change
The demand for a good is more likely to be elastic if: The good is a necessity The good has few substitutes The good carries a small price tag The good is a luxury item
The good is a luxury item
Price elasticity of demand measures: How many more we would buy if the price falls or rises by 1 cent How many less we would buy if the price falls by 1 cent The intensity of consumers' response compared to a price change The degree to which the government is involved in a market
The intensity of consumers' response compared to a price change
Elasticity of demand measures: How many more we would buy if the price falls How many less we would buy if the price rises The intensity of consumers' response to a price change The degree to which the government is involved in a market
The intensity of consumers' response to a price change
All the points along one indifference curve have: The same MU The same TU both the same MU and TU the same slope
The same TU
Accounting profits are always greater than or equal to economic profits. True False
True
Adding more and more paper airplane makers yields a diminishing marginal product of labor. True False
True
As we spend more money our total pleasure increases to a maximum point, but with additional increases in spending our marginal utility (additional pleasure) declines. True False
True
Average fixed costs always decrease as Q increases. True False
True
Beyond a small quantity, total utility increases at a decreasing rate. True False
True
Consider the example of an individual in a grocery store examining two cans of peaches, Alpha Peaches and Beta Peaches. If Alpha is thought to provide 10 units of pleasure per dollar and Beta is thought to provide 8 units per dollar, then Alpha should be chosen. True False
True
Governments often experience diseconomies of scale. True False
True
If the TP is increasing at a decreasing rate, the MP must be decreasing. True False
True
Labor costs are usually the highest resource costs for firms. True False
True
The diminishing marginal utility effect states that as more of an item is consumed and the amount of additional satisfaction decreases, the seller must lower price to induce the consumer to buy more. True False
True
Total product is maximized when marginal product is zero. True False
True
Total utility increases at a decreasing rate due to the law of diminishing marginal returns. True False
True
In your bakery, the price of rye bread increases by 10 percent and the quantity demanded decreases by 10 percent. The demand for rye bread is _________ and total revenue will ________. Unit-elastic; stay the same Inelastic; increase Elastic; decrease Unit-elastic;increase
Unit-elastic; stay the same
Which of the following is not a characteristic of a good having an elastic demand? There are readily available substitutes The price tag is big compared to income You can wait until later to buy the good You want to use the product right away
You want to use the product right away
In the figure above, this product is price ___________ between Point B and Point C. elastic unit-elastic inelastic none of these choices are correct
elastic
A good that is luxury (such as a weekend trip to an island resort) is not a required purchase and, therefore, tends to have a coefficient of elasticity _________ "1.00". equal to none of these choices are correct less than greater than
greater than
Economies of scale exist because of: (may be multiple answers) increased specialization of resources increased productivity of managers bureaucratic hierarchies increased use of capital resources
increased specialization of resources increased productivity of managers increased use of capital resources
If the income elasticity of demand is negative, the good is a(n) ____ good. Manley pants normal inferior substitute
inferior
The change in output per change in input is referred to as ______. total productivity marginal product fixed costs average marginal costs
marginal product
In the ____________ the Elasticity of Supply is perfectly inelastic (supply line is vertical) because no adjustments can be made immediately in the amount produced. market period short-run long-run all of these choices are correct
market period
Elasticity of demand is unitary when there is a _____________ (but inverse) change in quantity demanded for a given price change. none of these choices are correct smaller percentage proportional larger percentage
proportional
The __________ run is a time period too brief to increase capacity, but sufficient to increase operations to the maximum of the existing capacity. all of these choices can be correct depending on conditions long market short
short
Maximum consumer utility is found where ___. MU = TU the budget constraint line is steepest the budget constraint line is tangent to the indifference curve the budget constraint line has the slope - price ratio.
the budget constraint line is tangent to the indifference curve
If a percent increase in price generates an equally sized percent decrease in quantity demanded, we can say that demand is: elastic inelastic unit-elastic excessive
unit-elastic
Diamonds usually cost more than water because: of the laws of supply and demand while TUw > TUd, MUw < MUd TUw < TUd MUw < TUd
while TUw > TUd, MUw < MUd
