ECON exam 2 homework’s

question

If the price of good X rises and the demand for good X is elastic, then the percentage _______ in quantity demanded is ________ the percentage rise in price, and total revenue ______

answer

fall; greater than; falls

question

suppose that when the price of a good rises from $12 to $14, the quantity demanded of that good falls from 220 units to 180 units. What is the approximate price elasticity of demand between these two prices?

answer

1.3

question

If the percentage change in quantity demanded is less than the percentage change in price for good Y, then the demand for good Y is

answer

inelastic

question

the fewer substitutes for a good,

answer

the lower its price elasticity of demand

question

T/F: soap has a higher price elasticity of demand than the Ivory brand soap

answer

False

question

The shorter the period of time consumers have to adjust to price changes, the _____ the ______ elasticity of demand

answer

lower; price

question

cross elasticity of demand measures the responsiveness of changes in the quantity _______ of one good to changes in ________.

answer

demanded; the price of another good

question

if the cross elasticity of demand for two goods is negative,

answer

the goods are complements

question

if the cross elasticity of demand for good A with respect to good B is 2.7, then good A is

answer

a substitute for good B

question

If jack bought 12 DVDs last year when his income was 40,000 and he buys 14 DVDS this year when his income is $43,000, then his income elasticity of demand is _______ which means that DVDs are an _______ good for jack.

answer

+2.13; normal

question

If casey bought 16 cotton t-shirts last years when her income was $40,000 and she buys 14 cotton t-shirts this year when her income is $45,000, then for casey cotton t-shirts are

answer

an inferior good

question

an inferior good

answer

a good for which the demand rises as income falls

question

suppose a producer decides that if the price of his or her product is $10, the quantity supplied will be 1,000 units, and if the price is $11, the quantity supplied will be 1,100. The supply of the good is

answer

unit elastic

question

suppose the demand for a particular good is perfectly inelastic and the government decides to impose a tax on the production of this good. Who will pay the greater share of such tax?

answer

the buyers will pay the entire share

question

marginal utility is defined as the

answer

change in total utility a person derives from the consumption of a good decided by the change in the quantity of the good consumed

question

suppose you are eating buffalo wings at a local happy hour. the total utility from doing so after the fourth, fifth, sixth, and seventh are 80, 116, 136, 150, respectively. The marginal utility of the sixth wing is

answer

question

T/F: it is possible for total utility to rise as marginal utility falls

answer

true

question

suppose you just finished your third plateful of thanksgiving dinner and it yielded zero units of additional satisfaction. should you go back for more

answer

no way. you could get negative utility from the fourth plateful

question

suppose the marginal utility (MU) of a paperback books is 60 and each book costs $10, while the MU of a hamburger is 50 and each costs $7.50. if you consume one book and buy one hamburger per week, are you attaining consumer equilibrium?

answer

No. you need to buy more hamburgers and fewer books to move toward consumer equilibrium

question

ari is currently consuming 10 hot dogs and 8 hamburgers per week. the last hot dog she consumed yielded 20 utils while the last hamburger she ate gave her 25 utils. if hot dogs cost $2 and hamburgers cost $2.50, is Ari consuming the correct quantities of these two goods to be in consumer equilibrium?

answer

yes, so there is no need to change her consumption

question

suppose a consumer is purchasing Coke and Pretzels in quantities such that she is achieving consumer equilibrium. Then the price of coke decreases. the consumer will likely ______ her consumption of coke and the marginal utility of coke will _____ while the total utility from coke will _____

answer

increase; decrease; increase

question

suppose Valerie is consuming lipstick (L) and eye shadow (E) and nothing else. MUl= 40 and MUe=36. the price of eye shadow is $9 and the price is $15. what should Valerie

answer

consume more eye shadow and less lipstick

question

if the marginal utility of a good is negative, then

answer

consumers should buy less of it

question

suppose that a consumer purchases a combination of X and Y such that MUx/Px= 15 utils per dollar and MUy/Py=10 utils per dollar. To maximize utility, the consumer should buy

answer

more of X and less of Y

question

don receives 100 utils from consuming two oranges. the utility he derives from consuming the second orange equals 30 utils. the information provided

answer

is consistent with the law of diminishing marginal utility

question

if, as a person consumes additional units of a good, total utility rises by a constant amount, it follows that

answer

marginal utility is constant

question

if a persons income falls, his or her budget constraint moves

answer

inward toward the origin, and its slope remains the same

question

a cost is incurred when an actual monetary payment is made is an _____ cost

answer

explicit

question

five months ago wilson opened up a health club. which of the following is an implicit cost related to the health club?

answer

wilson previously worked as an accountant, earning 3,000 a month

question

economic profit is the difference between total revenue and

answer

the sum of explicit and implicit costs

question

consider the following information about a business Diane opened last year: price= $20, quantity sold=25,000; implicit cost= $255,000; explicit cost= $360,000. assuming that all relevant costs and revenue are noted, what was dines economic profit?

answer

-$115,000

question

if a firm earns normal profit, then it has generated revenues

answer

equal to the sum of implicit and explicit costs

question

an unrecovered cost that should be disregarded in an current or future decision is also called a _____ cost.

answer

sunk

question

Cy recently went into the business of producing and selling cardboard boxed. for this business, which of the following is most likely to be a fixed cost

answer

fire insurance

question

the change in total cost than results from a change in output is ______ cost

answer

marginal

question

"as additional units of a variable input are adde to a fixed input, eventually the marginal physical product of the variable input will decline" this is a statement of the

answer

law of diminishing marginal returns

question

a rising marginal cost curve is a reflection of a

answer

falling marginal physical product curve

question

there are 30 students in a class. the average grade for the first 29 students is 87. the grade of the remaining student is 84. given this students grade, the average grade of the 30-student class will be

answer

lower than 87

question

which of the following cost curves is never U-shaped

answer

the average fixed cost curve

question

economies of scale are said coexist when inputs are increased by some percentage and output increases by a ______ percentage, causing unit costs to _______

answer

greater; fall

question

in the long run, If inputs are increased by 10 percent and output increases by 20 percent, then _______ are said to exist.

answer

economies of scale

question

the main difference between the short run and the long run is that

answer

in the short run, one or more inputs are fixed

question

which of the following is an implicit cost

answer

smith, who could work for someone else, works for himself

question

if AFC is $8 at a quantity of output of 1,000 units, and TC is $12,000 at the same level of output, it follows that

answer

AVC is $4

question

the demand curve facing a perfectly competitive firm

answer

is horizontal

question

the market demand curve in a perfectly competitive market is

answer

downward sloping

question

the price at which a perfectly competitive firms sells its product is determined by

answer

all sellers and buyers of the product

question

the perfectly competitive firms will seek to produce the level of output for which

answer

marginal cost equals marginal revenue

question

a perfectly competitive firm should increase its level of production as long as

answer

marginal level is greater than marginal cost

question

if MR>MC, then

answer

the firm can increase its profits (or minimize its losses) by increasing output

question

Consider the following data: equilibrium price=$15, quantity of output produced= 10,000 units, average total cost= $12 and average variable cost $7. Given this data, total revenue is _______, total cost is __________, and total fixed cost is

answer

$150,000; $120,000; $50,000

question

why must profits be zero in long-run competitive equilibrium?

answer

if profits are not zero, firms will enter or exit the industry

question

if an industry is in long-run competitive equilibrium and experiences a decrease in demand, then as a result the equilibrium price will _______, which will cause the representative firm's _____ curve to shift downward and some firms will _______ the industry

answer

fall; demand; exit

question

as firms exit an industry, the industry supply curve shifts ______ and the equilibrium price _____ until long-run competitive equilibrium is established and the surviving firms are earning _______ economic profits

answer

leftward; rises; zero

question

which of the following is not a characteristic of perfect competition

answer

sellers product and sell a heterogeneous product

question

if, for a perfectly competitive firm, marginal cost is greater than marginal revenue for the 100th unit, then it follows that

answer

producing the 100th unit adds more to total cost than it does to total revenue

question

for a price taker, market equilibrium price is $50. At 1,000 units MR=MC, ATC=$45, and AVC=$30. This price taker will

answer

earn 5,000 profits if it produces 1,000 units

1 of 57

question

If the price of good X rises and the demand for good X is elastic, then the percentage _______ in quantity demanded is ________ the percentage rise in price, and total revenue ______

answer

fall; greater than; falls

question

answer

1.3

question

If the percentage change in quantity demanded is less than the percentage change in price for good Y, then the demand for good Y is

answer

inelastic

question

the fewer substitutes for a good,

answer

the lower its price elasticity of demand

question

T/F: soap has a higher price elasticity of demand than the Ivory brand soap

answer

False

question

The shorter the period of time consumers have to adjust to price changes, the _____ the ______ elasticity of demand

answer

lower; price

question

cross elasticity of demand measures the responsiveness of changes in the quantity _______ of one good to changes in ________.

answer

demanded; the price of another good

question

if the cross elasticity of demand for two goods is negative,

answer

the goods are complements

question

if the cross elasticity of demand for good A with respect to good B is 2.7, then good A is

answer

a substitute for good B

question

answer

+2.13; normal

question

If casey bought 16 cotton t-shirts last years when her income was $40,000 and she buys 14 cotton t-shirts this year when her income is $45,000, then for casey cotton t-shirts are

answer

an inferior good

question

an inferior good

answer

a good for which the demand rises as income falls

question

answer

unit elastic

question

suppose the demand for a particular good is perfectly inelastic and the government decides to impose a tax on the production of this good. Who will pay the greater share of such tax?

answer

the buyers will pay the entire share

question

marginal utility is defined as the

answer

change in total utility a person derives from the consumption of a good decided by the change in the quantity of the good consumed

question

answer

question

T/F: it is possible for total utility to rise as marginal utility falls

answer

true

question

suppose you just finished your third plateful of thanksgiving dinner and it yielded zero units of additional satisfaction. should you go back for more

answer

no way. you could get negative utility from the fourth plateful

question

answer

No. you need to buy more hamburgers and fewer books to move toward consumer equilibrium

question

answer

yes, so there is no need to change her consumption

question

answer

increase; decrease; increase

question

suppose Valerie is consuming lipstick (L) and eye shadow (E) and nothing else. MUl= 40 and MUe=36. the price of eye shadow is $9 and the price is $15. what should Valerie

answer

consume more eye shadow and less lipstick

question

if the marginal utility of a good is negative, then

answer

consumers should buy less of it

question

suppose that a consumer purchases a combination of X and Y such that MUx/Px= 15 utils per dollar and MUy/Py=10 utils per dollar. To maximize utility, the consumer should buy

answer

more of X and less of Y

question

don receives 100 utils from consuming two oranges. the utility he derives from consuming the second orange equals 30 utils. the information provided

answer

is consistent with the law of diminishing marginal utility

question

if, as a person consumes additional units of a good, total utility rises by a constant amount, it follows that

answer

marginal utility is constant

question

if a persons income falls, his or her budget constraint moves

answer

inward toward the origin, and its slope remains the same

question

a cost is incurred when an actual monetary payment is made is an _____ cost

answer

explicit

question

five months ago wilson opened up a health club. which of the following is an implicit cost related to the health club?

answer

wilson previously worked as an accountant, earning 3,000 a month

question

economic profit is the difference between total revenue and

answer

the sum of explicit and implicit costs

question

answer

-$115,000

question

if a firm earns normal profit, then it has generated revenues

answer

equal to the sum of implicit and explicit costs

question

an unrecovered cost that should be disregarded in an current or future decision is also called a _____ cost.

answer

sunk

question

Cy recently went into the business of producing and selling cardboard boxed. for this business, which of the following is most likely to be a fixed cost

answer

fire insurance

question

the change in total cost than results from a change in output is ______ cost

answer

marginal

question

"as additional units of a variable input are adde to a fixed input, eventually the marginal physical product of the variable input will decline" this is a statement of the

answer

law of diminishing marginal returns

question

a rising marginal cost curve is a reflection of a

answer

falling marginal physical product curve

question

answer

lower than 87

question

which of the following cost curves is never U-shaped

answer

the average fixed cost curve

question

economies of scale are said coexist when inputs are increased by some percentage and output increases by a ______ percentage, causing unit costs to _______

answer

greater; fall

question

in the long run, If inputs are increased by 10 percent and output increases by 20 percent, then _______ are said to exist.

answer

economies of scale

question

the main difference between the short run and the long run is that

answer

in the short run, one or more inputs are fixed

question

which of the following is an implicit cost

answer

smith, who could work for someone else, works for himself

question

if AFC is $8 at a quantity of output of 1,000 units, and TC is $12,000 at the same level of output, it follows that

answer

AVC is $4

question

the demand curve facing a perfectly competitive firm

answer

is horizontal

question

the market demand curve in a perfectly competitive market is

answer

downward sloping

question

the price at which a perfectly competitive firms sells its product is determined by

answer

all sellers and buyers of the product

question

the perfectly competitive firms will seek to produce the level of output for which

answer

marginal cost equals marginal revenue

question

a perfectly competitive firm should increase its level of production as long as

answer

marginal level is greater than marginal cost

question

if MR>MC, then

answer

the firm can increase its profits (or minimize its losses) by increasing output

question

answer

$150,000; $120,000; $50,000

question

why must profits be zero in long-run competitive equilibrium?

answer

if profits are not zero, firms will enter or exit the industry

question

answer

fall; demand; exit

question

answer

leftward; rises; zero

question

which of the following is not a characteristic of perfect competition

answer

sellers product and sell a heterogeneous product

question

if, for a perfectly competitive firm, marginal cost is greater than marginal revenue for the 100th unit, then it follows that

answer

producing the 100th unit adds more to total cost than it does to total revenue

question

for a price taker, market equilibrium price is $50. At 1,000 units MR=MC, ATC=$45, and AVC=$30. This price taker will

answer

earn 5,000 profits if it produces 1,000 units

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ECON exam 2 homework’s

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