ECO-4 Study Guide

question

A demand schedule

answer

indicates the amounts of a product that a buyer would purchase at different prices in a defined period.

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According to the Law of Demand, an increase in the price of Good X will cause

answer

a decrease in quantity demanded.

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A demand curve for a good is shown on a graph that has

answer

price on the vertical axis, quantity on that horizontal axis, and the curve is downward sloping.

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Because the Law of Demand, demand curves

answer

slope downward.

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The different amounts of a product that a seller would make available at different prices in a defined time period when all nonprice factors are held constant is

answer

supply.

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A supply schedule

answer

-is based on a seller's ability to cover costs and earn a profit.
-indicated there is a direct relationship between a product's price and the quantity supplied
-indicates the different amounts of a product that a seller would offer for sale at different prices over a defined time period.

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Market demand is

answer

the total amount of a product demanded by all buyers in a market at each price.

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A shortage occurs when quantity demanded

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is more that quantity supplied.

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At a price of $35 a ticket, the local hockey team discovers that there are many empty seats. This is evidence that

answer

the current price is higher than the equilibrium price.

question

If procedures in this market charged a price of $6, there would be a

answer

surplus of 200 units.

question

If procedures in this market charged a price of $2, there would be

answer

a shortage of 300 units.

question

There would be no surplus or shortage in this market if procedures charged a price of

answer

question

An increase in demand means that

answer

the demand curve for a product has shifted to the right.

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Which of the following would cause a decrease in the demand curve for a product

answer

-Expectations of a future price reduction
-A reduction in buyer's income
-Reductions in the prices of substitute products

question

Which of the following would increase the demand for compact discs

answer

An increase in the prices of cassette tapes.

question

An increase in income would result in

answer

A rightward shift of a buyer's demand curve for a product.

question

A local sports team began selling season tickets this week. There is a rumor that season tickets will decrease in price by 25% in three weeks. This rumor will

answer

decrease the current demand for tickets.

question

If, in a market, a price ceiling is set below the equilibrium price, then

answer

a shortage will develop.

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Explicits costs would include the:

answer

rent.

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A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $20,000 a year, and take over a store building that he owns and current rents to his brother for $6000 a year. His expenses at the sushi bar would be $50,000 for food and $2000 for gas and electricity. What are his explicit costs?

answer

$52,000.

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Payments to nonowners of a firm are called:

answer

Explicit costs.

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Implicit costs are best thought of as:

answer

Opportunity costs.

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If a firm has total revenue of $200 million, explicit costs of $190 million, and implicit costs of $30 million, its economic profit is:

answer

-$20 million.

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A firm has $200 million total revenue and explicit costs of $190 million. Suppose its owners have invested $100 million in the company at an opportunity cost of 10% interest rate per year. The firm's economic profit is:

answer

zero (normal profit).

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Economic profit is:

answer

less than accounting profit if implicit costs are greater than zero.

question

Normal profit is a term for:

answer

the minimum profit to keep a firm in operation.

question

Which of the following is an example of a fixed input?

answer

-The acreage of a farmed's land
-Machinery
-The size of a firm's plant

question

Variable inputs are defined as any resource that:

answer

can be changed as output changes.

question

During the short run, a firm has enough time to adjust:

answer

its variable inputs.

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Which of the following statements are true?

answer

-Economic profit equals accounting profit minus implicit costs.
-The short run is any period of time in which there is at least one fixed input.
-A fixed input is any resource for which the quantity cannot change during the period under consideration.
-In the long run there are no fixed costs.

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In order for the law of diminishing returns to be present, we must have:

answer

at least one factor of production to be fixed.

question

If a firm's use of labor obeys the law of diminishing returns, then:

answer

hiring additional workers adds less and less additional output per worker.

question

In exhibit 6-7, filling in the blanks it can be determined that the fixed costs are:

answer

200

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In exhibit 6-7, by filling in the blanks it can be determined that the marginal cost of the first unit of output is:

answer

700

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In exhibit 6-7, by filling in the blanks it can be determined that the total cost of the second unit of output is:

answer

1800

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In exhibit 6-7, by filling in the blanks, it can be determined that the marginal cost of the third unit of output is:

answer

1200

question

A market demand curve:

answer

is the sum of the demand curves of all individuals in a particular market.

question

Which of the following would shift the demand curve for a good

answer

-An increase in the consumer's income.
-A decrease in the number of consumers.
-The expectation of price increase.

question

Suppose bread and biscuits are substitute goods. If the price of bread increases, we can expect

answer

The demand curve for biscuits will shift to the right.

question

If a good is a normal good, an increase in consumer's income, other things being equal, will

answer

Shift the demand curve to the right.

question

A supply curve slopes upward because

answer

Rising prices provide producers with a greater profit incentives

question

Which of the following could cause the supply of oranges to decrease

answer

Fertilizer costs increases

question

A shortage occurs when

answer

Price is below the equilibrium price.

1 of 43

question

A demand schedule

answer

indicates the amounts of a product that a buyer would purchase at different prices in a defined period.

question

According to the Law of Demand, an increase in the price of Good X will cause

answer

a decrease in quantity demanded.

question

A demand curve for a good is shown on a graph that has

answer

price on the vertical axis, quantity on that horizontal axis, and the curve is downward sloping.

question

Because the Law of Demand, demand curves

answer

slope downward.

question

The different amounts of a product that a seller would make available at different prices in a defined time period when all nonprice factors are held constant is

answer

supply.

question

A supply schedule

answer

question

Market demand is

answer

the total amount of a product demanded by all buyers in a market at each price.

question

A shortage occurs when quantity demanded

answer

is more that quantity supplied.

question

At a price of $35 a ticket, the local hockey team discovers that there are many empty seats. This is evidence that

answer

the current price is higher than the equilibrium price.

question

If procedures in this market charged a price of $6, there would be a

answer

surplus of 200 units.

question

If procedures in this market charged a price of $2, there would be

answer

a shortage of 300 units.

question

There would be no surplus or shortage in this market if procedures charged a price of

answer

question

An increase in demand means that

answer

the demand curve for a product has shifted to the right.

question

Which of the following would cause a decrease in the demand curve for a product

answer

-Expectations of a future price reduction
-A reduction in buyer's income
-Reductions in the prices of substitute products

question

Which of the following would increase the demand for compact discs

answer

An increase in the prices of cassette tapes.

question

An increase in income would result in

answer

A rightward shift of a buyer's demand curve for a product.

question

A local sports team began selling season tickets this week. There is a rumor that season tickets will decrease in price by 25% in three weeks. This rumor will

answer

decrease the current demand for tickets.

question

If, in a market, a price ceiling is set below the equilibrium price, then

answer

a shortage will develop.

question

Explicits costs would include the:

answer

rent.

question

answer

$52,000.

question

Payments to nonowners of a firm are called:

answer

Explicit costs.

question

Implicit costs are best thought of as:

answer

Opportunity costs.

question

If a firm has total revenue of $200 million, explicit costs of $190 million, and implicit costs of $30 million, its economic profit is:

answer

-$20 million.

question

answer

zero (normal profit).

question

Economic profit is:

answer

less than accounting profit if implicit costs are greater than zero.

question

Normal profit is a term for:

answer

the minimum profit to keep a firm in operation.

question

Which of the following is an example of a fixed input?

answer

-The acreage of a farmed's land
-Machinery
-The size of a firm's plant

question

Variable inputs are defined as any resource that:

answer

can be changed as output changes.

question

During the short run, a firm has enough time to adjust:

answer

its variable inputs.

question

Which of the following statements are true?

answer

question

In order for the law of diminishing returns to be present, we must have:

answer

at least one factor of production to be fixed.

question

If a firm's use of labor obeys the law of diminishing returns, then:

answer

hiring additional workers adds less and less additional output per worker.

question

In exhibit 6-7, filling in the blanks it can be determined that the fixed costs are:

answer

200

question

In exhibit 6-7, by filling in the blanks it can be determined that the marginal cost of the first unit of output is:

answer

700

question

In exhibit 6-7, by filling in the blanks it can be determined that the total cost of the second unit of output is:

answer

1800

question

In exhibit 6-7, by filling in the blanks, it can be determined that the marginal cost of the third unit of output is:

answer

1200

question

A market demand curve:

answer

is the sum of the demand curves of all individuals in a particular market.

question

Which of the following would shift the demand curve for a good

answer

-An increase in the consumer's income.
-A decrease in the number of consumers.
-The expectation of price increase.

question

Suppose bread and biscuits are substitute goods. If the price of bread increases, we can expect

answer

The demand curve for biscuits will shift to the right.

question

If a good is a normal good, an increase in consumer's income, other things being equal, will

answer

Shift the demand curve to the right.

question

A supply curve slopes upward because

answer

Rising prices provide producers with a greater profit incentives

question

Which of the following could cause the supply of oranges to decrease

answer

Fertilizer costs increases

question

A shortage occurs when

answer

Price is below the equilibrium price.

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ECO-4 Study Guide

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