Econ Micro Exam 2

question

The shorter the period of time consumers have to adjust to price changes, the __________ the __________ elasticity of demand.

answer

lower ; price

question

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

answer

the goods are compliments

question

If the cross elasticity of demand for good A with respect to good B is (positive) 2.7, then good A is

answer

a substitute

question

If Casey bought 16 cotton t-shirts last year 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 is

answer

a good for which demand rises as income falls

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 a tax?

answer

the buyers will pay the entire share

question

marginal utility

answer

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

question

If the marginal utility of a good is negative, then

answer

consumers should buy less of it.

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 person's income falls, his or her budget constraint moves

answer

inward toward the origin, and its slope remains the same

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

answer

= total revenue - (explicit + implicit costs)

question

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

answer

equal to the sum of implicit and explicit costs.

question

An unrecoverable cost that should be disregarded in any current or future decision is also called a(n) __________ cost.

answer

sunk

question

The change in total cost that results from a change in output is __________ cost.

answer

marginal

question

"As additional units of a variable input are added 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

Which of the following cost curves is never U-shaped?

answer

the average fixed cost curve

question

Economies of scale are said to exist when inputs are increased by some percentage and output increases by a(n) __________ 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

a) Williamson pays his income taxes on April 15.
b) (Correct) Smith, who could work for someone else, works for himself.
c)Brown pays the bill he received in the mail.
d)Jones buys $100 worth of supplies from Smith.

1 of 22

question

The shorter the period of time consumers have to adjust to price changes, the __________ the __________ elasticity of demand.

answer

lower ; price

question

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

answer

the goods are compliments

question

If the cross elasticity of demand for good A with respect to good B is (positive) 2.7, then good A is

answer

a substitute

question

If Casey bought 16 cotton t-shirts last year 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 is

answer

a good for which demand rises as income falls

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 a tax?

answer

the buyers will pay the entire share

question

marginal utility

answer

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

question

If the marginal utility of a good is negative, then

answer

consumers should buy less of it.

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 person's income falls, his or her budget constraint moves

answer

inward toward the origin, and its slope remains the same

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

answer

= total revenue - (explicit + implicit costs)

question

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

answer

equal to the sum of implicit and explicit costs.

question

An unrecoverable cost that should be disregarded in any current or future decision is also called a(n) __________ cost.

answer

sunk

question

The change in total cost that results from a change in output is __________ cost.

answer

marginal

question

"As additional units of a variable input are added 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

Which of the following cost curves is never U-shaped?

answer

the average fixed cost curve

question

Economies of scale are said to exist when inputs are increased by some percentage and output increases by a(n) __________ 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

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Econ Micro Exam 2

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