ECON Ch. 6, 7, 8 - Custom Scholars
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ECON Ch. 6, 7, 8

question
Jane has​ $500 a week to spend on clothing ​(c​) and food ​(f​). The price of clothing is​ $25 and the price of food is​ $10.
What is the equation for​ Jane's budget​ constraint?
answer
$25 x Clothing + $10 + Food = $500
question
Marginal utility is the​ ________ satisfaction gained by consuming​ ________ of a good.
answer
​additional; one more unit
question
Kathy eats five slices of pizza on a Saturday night but admits each slice of pizza​ doesn't taste as good as the previous one.
This suggests that for Kathy the
answer
marginal utility of a slice of pizza is positive but decreasing.
question
Diminishing marginal utility sets in after the​ _____ soda per day.
answer
first
question
Total utility is
answer
the total amount of satisfaction yielded by the consumption of a good or service.
question
The law of diminishing marginal utility refers to
answer
a​ consumer's decrease in additional satisfaction as she consumes more and more units of a good.
question
A​ utility-maximizing consumer buys so as to make​ ________ for all pairs of goods.
answer
MUx Px
------ = ------
MUy Py
question
A person maximizes utility when he equalizes the​ ________ across products.
answer
marginal utility per dollar spent
question
Jim has​ $600 a week to spend on clothing and food. The price of clothing is​ $30 and the price of food is​ $5.
The clothing and food pairs in​ Jim's choice set include​ ________ units of clothing and​ ________ units of food.
answer
​10; 60
question
Darius has​ $1,200 a month to spend on clothing
​(c​) and food (f​). The price of clothing is​ $60 and the price of food is​ $10. What is the equation for​ Darius's budget​ constraint, assuming he spends his entire​ budget?
answer
$60 times× Clothing​ + $10 times× Food​ = $1,200
question
Tyrell is consuming X and Y so that he is spending his entire income and MUx​/Px = 7 and MUy​/Py = 7. To maximize​ utility, he should consume
answer
the same amount of X and Y since he is already maximizing utility.
question
Assuming that households confine their choices to products that improve their​ well-being, a decline in the price of any​ product, ceteris paribus​:
answer
makes the household unequivocally better off.
question
A fall in the price of a product might cause a household to shift its purchasing pattern away from substitutes toward that product. This shift is​ called:
answer
the substitution effect of a price change.
question
If the price of a normal good​ falls, the substitution effect suggests that we will purchase​ ________ of that​ good, and the income effect suggests that we will purchase​ ________ of that good.
answer
​more; more
question
A rise in the price of Pepsi that causes a household to shift its purchasing pattern toward Coke and away from Pepsi is the​ ________ effect of a price change.
answer
substitution
question
Total revenue minus total cost is equal to
answer
profit
question
You are the owner and only employee of a company that sets odds for sporting events. Last year you earned a total revenue of​ $100,000. Your costs for rent and supplies were​ $50,000. To start this business you invested an amount of your own capital that could pay you a return of​ $20,000 a year.
Your economic profit last year was
answer
30,000
question
In the long​ run,
answer
there are no fixed factors of production.
question
In the short​ run, a firm
answer
has at least one fixed factor of production
question
The process by which inputs are​ combined, transformed, and turned into outputs is called
answer
production
question
You own a building that has four possible​ uses: a tailor​ shop, a​ pharmacy, a sports​ bar, and an antique mall. The​ building's value in each use is​ $4,000; $6,000;​ $8,000; and​ $10,000, respectively. You decide to open a sports bar. The opportunity cost of using this building for a sports bar is
answer
​$10,000, the value if you rented the building to someone else to use as an antique mall.
question
You own and are the only employee of a company that customizes bicycles. Last year your total revenue was​ $60,000. Your costs for rent and supplies were​ $25,000. To start this business you invested an amount of your own capital that could pay you a​ $45,000 a year return.
answer
70,000
question
You own and are the only employee of a company that customizes bicycles. Last year your total revenue was​ $60,000. Your costs for rent and supplies were​ $25,000. To start this business you invested an amount of your own capital that could pay you a​ $45,000 a year return.
Your accounting profit last year was
answer
35,000
question
You own and are the only employee of a company that customizes bicycles. Last year your total revenue was​ $60,000. Your costs for rent and supplies were​ $25,000. To start this business you invested an amount of your own capital that could pay you a​ $45,000 a year return.
Your economic profit last year was
answer
-10,000
question
A lawn service company has the following production possibilities. With​ one, two,​ three, and four​ workers, the company can mow​ 4, 9,​ 12, and 14 lawns per​ day, respectively.
The marginal product of the second worker is
answer
5
question
A lawn service company has the following production possibilities. With​ one, two,​ three, and four​ workers, the company can mow​ 4, 9,​ 12, and 14 lawns per​ day, respectively.
The marginal product of the fourth worker is
answer
2
question
A lawn service company has the following production possibilities. With​ one, two,​ three, and four​ workers, the company can mow​ 4, 9,​ 12, and 14 lawns per​ day, respectively.
Diminishing returns to labor set in with the​ _____ worker.
answer
third
question
A lawn service company has the following production possibilities. With​ one, two,​ three, and four​ workers, the company can mow​ 4, 9,​ 12, and 14 lawns per​ day, respectively.
The average product of labor with three workers is
answer
4
question
At the Pampered Pet Salon the marginal products of the​ first, second, and third workers are​ 20, 16, and 10 dogs​ washed, respectively.
The total product​ (number of dogs​ washed) of the two worker is
answer
36
question
At the Larson Bakery the marginal products of the​ first, second, and third salesclerks are​ 20, 17, and 11 customers​ served, respectively.
The total product​ (number of customers​ served) of the two salesclerks is
answer
37
question
If labor is a variable input in​ production, the law of diminishing marginal returns implies that in the short run
answer
​ labor's marginal product decreases after a certain point.
question
If the marginal product of labor is less than the average product of​ labor, then the
answer
average product must be decreasing.
C.
marginal product must be decreasing.
D.
Both B and C
question
The version of the law of diminishing returns that applies to production
answer
applies only in the short run
question
When total product is​ maximized, marginal product
answer
is zero but average product is positive.
question
When the marginal product of labor​ ________ the average product of​ labor, then the average product is maximized.
answer
equals
question
Assume the total product of three workers is 120 and the total product of four workers is 160. The average product of four workers is​ ________, and the marginal product of the fourth worker is​ ________.
answer
40;40
question
If the marginal product of labor is greater than the average product of​ labor, then the
answer
average product must be increasing.
question
A firm has no fixed factors of production in
answer
the long run
question
Total variable cost​ ________ as output​ increases, and total fixed cost​ ________ as output increases.
answer
increase, does not change
question
The Lawn​ Ranger, a landscaping​ company, has total costs of​ $4,000 and total variable costs of​ $1,000.
The Lawn​ Ranger's total fixed costs are
answer
3,000
question
​Wilbur's Widgets, a widget​ company, produces 100 widgets.
Its average fixed cost is​ $5 and its total variable cost is​ $300. What is the total cost of producing 100​ widgets?
answer
$800
question
Average fixed costs
answer
falls as output rises
question
​________ are likely a fixed cost of a firm.
answer
lease payments for office space
question
Marginal cost
answer
is the increase in total cost resulting from producing one more unit.
question
Marginal cost is​ ________ average variable cost when​ ________.
answer
equal​ to; average variable cost is minimized.
question
The formula for
AVC
is
answer
TVC/q
question
In the short​ run, as output​ increases,
answer
the difference between average total cost and average variable cost decreases.
question
Refer to the information provided in the table below to answer the question that follows.
Number of Earrings
....
If Sherry produces zero​ earrings, her total fixed costs are
answer
$100
question
If the marginal cost curve is below the average variable cost​ curve, then
answer
average variable costs are decreasing
question
In perfect​ competition,
answer
price always equals marginal revenue.
question
The main decision for a profit maximizing perfectly competitive firm is not what​ ________ but what​ ________.
answer
price to​ charge; level of output to produce
question
If an individual perfectly competitive firm charges a price above the industry equilibrium​ price, it will
answer
not sell any of what it produces
question
If an individual perfectly competitive firm charges a price below the industry equilibrium​ price, it will
answer
sell all that it produces but gain less revenue than competing firms will.
question
The added revenue that a firm takes in when it increases output by one additional unit is​ ________ revenue.
answer
marginal
question
Marginal revenue for a perfectly competitive firm is
answer
horizontal
question
​Profit-maximizing firms want to maximize the difference between
answer
total revenue and total cost
question
Assume​ Robbie's Robots operates in a perfectly competitive market producing​ 3,000 robots per day. At this output​ level, the selling price is​ $800 per robot and the marginal cost is​ $625 per robot. It follows that producing one more robot will cause this​ firm's
answer
profits to increase
question
Assume that fruit baskets are sold in a perfectly competitive market. The market price of a fruit basket is​ $15. To maximize​ profits, Exotic Fruit should sell​ _____ fruit​ basket(s) and their profit is​ _____.
answer
​five; −​$21
question
​Joe's Butcher Shop is producing where MR​ = MC​, Joe's Butcher Shop must be
answer
maximizing profits
question
The​ profit-maximizing level for all​ firms, regardless of industry​ structure, is the output level where
answer
MC=MR
question
Refer to the information provided in the figure at right to answer the question that follows.
This​ farmer's profit-maximizing level of output is​ _____ units of output.
answer
1,000
question
A perfectly competitive industry consists of firms that produce​ ________ products.
answer
identical
question
If the average variable cost of the fifth hat is​ $30, then the total variable cost of five hats is
answer
$150
question
If a​ firm's total costs are​ $80 when 10 units of output are produced and​ $90 when 11 units of output are​ produced, the marginal cost of the 11th unit is
answer
$10
question
Which statement is not true regarding the total variable cost​ curve?
answer
...
question
The marginal cost curve intersects the​ ________ at its minimum.
answer
average total cost curve
1 of 66
question
Jane has​ $500 a week to spend on clothing ​(c​) and food ​(f​). The price of clothing is​ $25 and the price of food is​ $10.
What is the equation for​ Jane's budget​ constraint?
answer
$25 x Clothing + $10 + Food = $500
question
Marginal utility is the​ ________ satisfaction gained by consuming​ ________ of a good.
answer
​additional; one more unit
question
Kathy eats five slices of pizza on a Saturday night but admits each slice of pizza​ doesn't taste as good as the previous one.
This suggests that for Kathy the
answer
marginal utility of a slice of pizza is positive but decreasing.
question
Diminishing marginal utility sets in after the​ _____ soda per day.
answer
first
question
Total utility is
answer
the total amount of satisfaction yielded by the consumption of a good or service.
question
The law of diminishing marginal utility refers to
answer
a​ consumer's decrease in additional satisfaction as she consumes more and more units of a good.
question
A​ utility-maximizing consumer buys so as to make​ ________ for all pairs of goods.
answer
MUx Px
------ = ------
MUy Py
question
A person maximizes utility when he equalizes the​ ________ across products.
answer
marginal utility per dollar spent
question
Jim has​ $600 a week to spend on clothing and food. The price of clothing is​ $30 and the price of food is​ $5.
The clothing and food pairs in​ Jim's choice set include​ ________ units of clothing and​ ________ units of food.
answer
​10; 60
question
Darius has​ $1,200 a month to spend on clothing
​(c​) and food (f​). The price of clothing is​ $60 and the price of food is​ $10. What is the equation for​ Darius's budget​ constraint, assuming he spends his entire​ budget?
answer
$60 times× Clothing​ + $10 times× Food​ = $1,200
question
Tyrell is consuming X and Y so that he is spending his entire income and MUx​/Px = 7 and MUy​/Py = 7. To maximize​ utility, he should consume
answer
the same amount of X and Y since he is already maximizing utility.
question
Assuming that households confine their choices to products that improve their​ well-being, a decline in the price of any​ product, ceteris paribus​:
answer
makes the household unequivocally better off.
question
A fall in the price of a product might cause a household to shift its purchasing pattern away from substitutes toward that product. This shift is​ called:
answer
the substitution effect of a price change.
question
If the price of a normal good​ falls, the substitution effect suggests that we will purchase​ ________ of that​ good, and the income effect suggests that we will purchase​ ________ of that good.
answer
​more; more
question
A rise in the price of Pepsi that causes a household to shift its purchasing pattern toward Coke and away from Pepsi is the​ ________ effect of a price change.
answer
substitution
question
Total revenue minus total cost is equal to
answer
profit
question
You are the owner and only employee of a company that sets odds for sporting events. Last year you earned a total revenue of​ $100,000. Your costs for rent and supplies were​ $50,000. To start this business you invested an amount of your own capital that could pay you a return of​ $20,000 a year.
Your economic profit last year was
answer
30,000
question
In the long​ run,
answer
there are no fixed factors of production.
question
In the short​ run, a firm
answer
has at least one fixed factor of production
question
The process by which inputs are​ combined, transformed, and turned into outputs is called
answer
production
question
You own a building that has four possible​ uses: a tailor​ shop, a​ pharmacy, a sports​ bar, and an antique mall. The​ building's value in each use is​ $4,000; $6,000;​ $8,000; and​ $10,000, respectively. You decide to open a sports bar. The opportunity cost of using this building for a sports bar is
answer
​$10,000, the value if you rented the building to someone else to use as an antique mall.
question
You own and are the only employee of a company that customizes bicycles. Last year your total revenue was​ $60,000. Your costs for rent and supplies were​ $25,000. To start this business you invested an amount of your own capital that could pay you a​ $45,000 a year return.
answer
70,000
question
You own and are the only employee of a company that customizes bicycles. Last year your total revenue was​ $60,000. Your costs for rent and supplies were​ $25,000. To start this business you invested an amount of your own capital that could pay you a​ $45,000 a year return.
Your accounting profit last year was
answer
35,000
question
You own and are the only employee of a company that customizes bicycles. Last year your total revenue was​ $60,000. Your costs for rent and supplies were​ $25,000. To start this business you invested an amount of your own capital that could pay you a​ $45,000 a year return.
Your economic profit last year was
answer
-10,000
question
A lawn service company has the following production possibilities. With​ one, two,​ three, and four​ workers, the company can mow​ 4, 9,​ 12, and 14 lawns per​ day, respectively.
The marginal product of the second worker is
answer
5
question
A lawn service company has the following production possibilities. With​ one, two,​ three, and four​ workers, the company can mow​ 4, 9,​ 12, and 14 lawns per​ day, respectively.
The marginal product of the fourth worker is
answer
2
question
A lawn service company has the following production possibilities. With​ one, two,​ three, and four​ workers, the company can mow​ 4, 9,​ 12, and 14 lawns per​ day, respectively.
Diminishing returns to labor set in with the​ _____ worker.
answer
third
question
A lawn service company has the following production possibilities. With​ one, two,​ three, and four​ workers, the company can mow​ 4, 9,​ 12, and 14 lawns per​ day, respectively.
The average product of labor with three workers is
answer
4
question
At the Pampered Pet Salon the marginal products of the​ first, second, and third workers are​ 20, 16, and 10 dogs​ washed, respectively.
The total product​ (number of dogs​ washed) of the two worker is
answer
36
question
At the Larson Bakery the marginal products of the​ first, second, and third salesclerks are​ 20, 17, and 11 customers​ served, respectively.
The total product​ (number of customers​ served) of the two salesclerks is
answer
37
question
If labor is a variable input in​ production, the law of diminishing marginal returns implies that in the short run
answer
​ labor's marginal product decreases after a certain point.
question
If the marginal product of labor is less than the average product of​ labor, then the
answer
average product must be decreasing.
C.
marginal product must be decreasing.
D.
Both B and C
question
The version of the law of diminishing returns that applies to production
answer
applies only in the short run
question
When total product is​ maximized, marginal product
answer
is zero but average product is positive.
question
When the marginal product of labor​ ________ the average product of​ labor, then the average product is maximized.
answer
equals
question
Assume the total product of three workers is 120 and the total product of four workers is 160. The average product of four workers is​ ________, and the marginal product of the fourth worker is​ ________.
answer
40;40
question
If the marginal product of labor is greater than the average product of​ labor, then the
answer
average product must be increasing.
question
A firm has no fixed factors of production in
answer
the long run
question
Total variable cost​ ________ as output​ increases, and total fixed cost​ ________ as output increases.
answer
increase, does not change
question
The Lawn​ Ranger, a landscaping​ company, has total costs of​ $4,000 and total variable costs of​ $1,000.
The Lawn​ Ranger's total fixed costs are
answer
3,000
question
​Wilbur's Widgets, a widget​ company, produces 100 widgets.
Its average fixed cost is​ $5 and its total variable cost is​ $300. What is the total cost of producing 100​ widgets?
answer
$800
question
Average fixed costs
answer
falls as output rises
question
​________ are likely a fixed cost of a firm.
answer
lease payments for office space
question
Marginal cost
answer
is the increase in total cost resulting from producing one more unit.
question
Marginal cost is​ ________ average variable cost when​ ________.
answer
equal​ to; average variable cost is minimized.
question
The formula for
AVC
is
answer
TVC/q
question
In the short​ run, as output​ increases,
answer
the difference between average total cost and average variable cost decreases.
question
Refer to the information provided in the table below to answer the question that follows.
Number of Earrings
....
If Sherry produces zero​ earrings, her total fixed costs are
answer
$100
question
If the marginal cost curve is below the average variable cost​ curve, then
answer
average variable costs are decreasing
question
In perfect​ competition,
answer
price always equals marginal revenue.
question
The main decision for a profit maximizing perfectly competitive firm is not what​ ________ but what​ ________.
answer
price to​ charge; level of output to produce
question
If an individual perfectly competitive firm charges a price above the industry equilibrium​ price, it will
answer
not sell any of what it produces
question
If an individual perfectly competitive firm charges a price below the industry equilibrium​ price, it will
answer
sell all that it produces but gain less revenue than competing firms will.
question
The added revenue that a firm takes in when it increases output by one additional unit is​ ________ revenue.
answer
marginal
question
Marginal revenue for a perfectly competitive firm is
answer
horizontal
question
​Profit-maximizing firms want to maximize the difference between
answer
total revenue and total cost
question
Assume​ Robbie's Robots operates in a perfectly competitive market producing​ 3,000 robots per day. At this output​ level, the selling price is​ $800 per robot and the marginal cost is​ $625 per robot. It follows that producing one more robot will cause this​ firm's
answer
profits to increase
question
Assume that fruit baskets are sold in a perfectly competitive market. The market price of a fruit basket is​ $15. To maximize​ profits, Exotic Fruit should sell​ _____ fruit​ basket(s) and their profit is​ _____.
answer
​five; −​$21
question
​Joe's Butcher Shop is producing where MR​ = MC​, Joe's Butcher Shop must be
answer
maximizing profits
question
The​ profit-maximizing level for all​ firms, regardless of industry​ structure, is the output level where
answer
MC=MR
question
Refer to the information provided in the figure at right to answer the question that follows.
This​ farmer's profit-maximizing level of output is​ _____ units of output.
answer
1,000
question
A perfectly competitive industry consists of firms that produce​ ________ products.
answer
identical
question
If the average variable cost of the fifth hat is​ $30, then the total variable cost of five hats is
answer
$150
question
If a​ firm's total costs are​ $80 when 10 units of output are produced and​ $90 when 11 units of output are​ produced, the marginal cost of the 11th unit is
answer
$10
question
Which statement is not true regarding the total variable cost​ curve?
answer
...
question
The marginal cost curve intersects the​ ________ at its minimum.
answer
average total cost curve

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