Econ Quiz 4 - Custom Scholars
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Econ Quiz 4

question
The law of diminishing returns implies that, with the quantity of capital fixed as the use of labor rises,
answer
The marginal product of labor will fall eventually
question
The short run is a period of time in which
answer
At least one factor of production is fixed.
question
The income elasticity of demand is
answer
Positive for a normal good and negative for an inferior good
question
A firm's total product curve shows
answer
That in the long run the firm must adjust the quantity of all the resources it employs
question
Dan sells newspapers. Dan says that a 4 percent increase in the price of a newspaper will decrease the quantity of newspapers demanded by 8 percent. According to Dan, the demand for newspapers is ______.
answer
Elastic
question
Increasing marginal returns to labor or total product increasing at a faster rate might occur at low levels of labor input because of
answer
Increasing specialization of tasks, division of labor, and teamwork
question
A firm's total cost (TC) equals the sum of its fixed cost plus its
answer
Variable cost
question
If the cross elasticity of demand between goods A and B is positive,
answer
A and B are substitutes
question
Demand is perfectly inelastic when
answer
Shifts of the supply curve result in no change in quantity demanded, but an inverse change in price
question
The air route from Dallas to Mexico City is served by more than one airline. The demand for tickets from American Airlines for that route is probably
answer
Elastic and more elastic than the demand for all tickets for that route regardless of carrier
question
Marginal cost is equal to
answer
The change in total cost divided by the change in output
question
A firm's primary objective is best described as
answer
Maximizing profit
question
The marginal product of labor is equal to the
answer
None of the above answers are correct
question
Suppose that the quantity of beer demanded declines from 100,000 gallons per week to 94,000 gallons per week as a consequence of a 10 percent increase in the price of beer. The price elasticity of demand is
answer
0.60
question
The implicit cost for capital includes the
answer
Interest income forgone by purchasing the piece of capital equipment
question
If economic profit is equal to zero, then
answer
The entrepreneur is earning only a normal rate of return
question
The price elasticity of demand is calculated as the absolute value of the
answer
Percentage change in quantity demanded divided by the percentage change in price.
question
Ernie's Earmuffs produces 200 earmuffs per week at a total cost of $2,000 and $400 of this cost is fixed. What is Earnie's average total cost?
answer
$8
question
If demand is inelastic, an increase in the price will
answer
Increase total revenue
1 of 19
question
The law of diminishing returns implies that, with the quantity of capital fixed as the use of labor rises,
answer
The marginal product of labor will fall eventually
question
The short run is a period of time in which
answer
At least one factor of production is fixed.
question
The income elasticity of demand is
answer
Positive for a normal good and negative for an inferior good
question
A firm's total product curve shows
answer
That in the long run the firm must adjust the quantity of all the resources it employs
question
Dan sells newspapers. Dan says that a 4 percent increase in the price of a newspaper will decrease the quantity of newspapers demanded by 8 percent. According to Dan, the demand for newspapers is ______.
answer
Elastic
question
Increasing marginal returns to labor or total product increasing at a faster rate might occur at low levels of labor input because of
answer
Increasing specialization of tasks, division of labor, and teamwork
question
A firm's total cost (TC) equals the sum of its fixed cost plus its
answer
Variable cost
question
If the cross elasticity of demand between goods A and B is positive,
answer
A and B are substitutes
question
Demand is perfectly inelastic when
answer
Shifts of the supply curve result in no change in quantity demanded, but an inverse change in price
question
The air route from Dallas to Mexico City is served by more than one airline. The demand for tickets from American Airlines for that route is probably
answer
Elastic and more elastic than the demand for all tickets for that route regardless of carrier
question
Marginal cost is equal to
answer
The change in total cost divided by the change in output
question
A firm's primary objective is best described as
answer
Maximizing profit
question
The marginal product of labor is equal to the
answer
None of the above answers are correct
question
Suppose that the quantity of beer demanded declines from 100,000 gallons per week to 94,000 gallons per week as a consequence of a 10 percent increase in the price of beer. The price elasticity of demand is
answer
0.60
question
The implicit cost for capital includes the
answer
Interest income forgone by purchasing the piece of capital equipment
question
If economic profit is equal to zero, then
answer
The entrepreneur is earning only a normal rate of return
question
The price elasticity of demand is calculated as the absolute value of the
answer
Percentage change in quantity demanded divided by the percentage change in price.
question
Ernie's Earmuffs produces 200 earmuffs per week at a total cost of $2,000 and $400 of this cost is fixed. What is Earnie's average total cost?
answer
$8
question
If demand is inelastic, an increase in the price will
answer
Increase total revenue

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