Econ Test #2 - Custom Scholars
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# Econ Test #2

question
When marginal revenue is positive,
demand is elastic
question

The cross-price elasticity of demand between goods X and Y

both "measures the responsiveness of the quantity of X demanded to changes in the price of Y" and "is greater than zero if X and Y are substitutes".

question
The slope of an indifference curve
is the rate at which the consumer is willing to exchange one good for another, utility held constant.
question
A utility function
shows the relation between the amount of goods consumed and a consumer's utility.
question
Marginal revenue
both "is the change in total revenue when output increases by one unit" and "measures the slope of the total revenue curve".
question
If the quantity of gidgets demanded increases when the price of gadgets decreases,
question

An individual's demand curve for X

shows how the utility-maximizing choice of X changes as the price of X changes.

question
If the demand for plastic surgery is price inelastic,
then when more plastic surgery is performed, total expenditures on plastic surgery will decrease.
question
A typical indifference curve
shows all combinations of goods that give a consumer the same level of utility.
question
The Interior Department recently announced that it will increase the entrance fees at Yellowstone National Park in order to increase park revenues. The Interior Department must believe that
the percentage increase in fees will be greater than the percentage decrease in the number of park visitors.
question
The demand for heart surgery is price inelastic. So it follows that
if the price of heart surgery increases, total expenditure by consumers on heart surgery will rise.
question
Suppose that the Houston Rockets' management is considering a plan in which fans who donate blood can attend games for \$35 instead of the usual \$50. If both ticket revenues and blood donations rise with this plan, which of the following is true?
The demand for Houston Rockets' tickets is price elastic.
question
The rate at which a consumer is able to substitute one good for another is determined by
the budget line.
question
Which of the following assumptions is (are) NOT made in consumer behavior theory?
Consumers can measure the utility they get from all bundles of goods.
question

Now suppose the price of good X increases to \$12 while the price of good Y remains \$4. Utility will be maximized on which indifference curve?

II

question
Marginal utility is
the change in utility that results from increasing the amount of a good consumed by one unit
question
If Mary prefers bananas to plums and plums to peaches, but is indifferent between bananas and oranges, she
prefers oranges to peaches.
question
Which of the following will NOT affect the elasticity of demand for a product?
the cost of producing the product
question
If the demand for umbrellas is price inelastic,
if more umbrellas are sold as the result of a price decrease, total expenditures by consumers on umbrellas will decrease.
question
Demand equations derived from actual market data are

both"empirical demand functions" and "generally estimated using regression analysis".

question
Suppose that you run a house-painting company and currently have 2 workers painting a total of 4 houses per month. If you hire a third worker, 6 houses can be painted per month. If you hire a fourth worker, 9 houses can be painted, and a fifth and sixth worker will increase the number of houses painted to 13 and 15, respectively. Diminishing returns
set in when the sixth worker is hired.
question
Suppose you run a pizza shop and currently have two employees. If you hire a third employee, your output of pizzas per day rises from 55 to 65. If you hire a fourth employee, output rises to 80 per day. A fifth and sixth employee would cause output to rise to 90 and 95 per day, respectively. Pick the correct statement:

a.

Diminishing returns set in with the hiring of the fifth worker.

question

A market-determined price

both "is determined by the intersection of demand and supply curves" and "is an endogenous variable".
question
One problem with consumer interviews is that
both "the sample may not be a representative sample" and "response bias"
question
Manager-determined prices are
both "not determined by the forces of demand and supply" and "exogenous variables in a demand equation".
question
A representative sample
both "reflects the characteristics of the population" and "is frequently a random sample"
question
Which of the following statements is false?
In the short run all inputs are fixed.
question
Qualitative forecasting methods
both "are often the result of expert opinion" and "cannot be replicated by another researcher"
question
A production function measures the relation between
the quantity of inputs and the quantity of output.
question

The estimated demand for a good is

= 4,800 − 16 P− 0.65 M− 1.5 PR

where Q is the quantity demanded of the good, P is the price of the good, M is income, and PR is the price of related good R. The coefficient on P

is negative as dictated by the law of demand.
question

Given the table below, if labor is fixed at three units, how much does the third unit of capital add to total output?

Units of Capital123Units of Labor18010012021802202603270330390434042050053904905906410530650

Amount of total output produced from various combinations of labor and capital.

60
question
A short-run production function assumes that
at least one input is a fixed input.
question
If average product is increasing, then marginal product
must be greater than average product.
1 of 33
question
When marginal revenue is positive,
demand is elastic
question

The cross-price elasticity of demand between goods X and Y

both "measures the responsiveness of the quantity of X demanded to changes in the price of Y" and "is greater than zero if X and Y are substitutes".

question
The slope of an indifference curve
is the rate at which the consumer is willing to exchange one good for another, utility held constant.
question
A utility function
shows the relation between the amount of goods consumed and a consumer's utility.
question
Marginal revenue
both "is the change in total revenue when output increases by one unit" and "measures the slope of the total revenue curve".
question
If the quantity of gidgets demanded increases when the price of gadgets decreases,
question

An individual's demand curve for X

shows how the utility-maximizing choice of X changes as the price of X changes.

question
If the demand for plastic surgery is price inelastic,
then when more plastic surgery is performed, total expenditures on plastic surgery will decrease.
question
A typical indifference curve
shows all combinations of goods that give a consumer the same level of utility.
question
The Interior Department recently announced that it will increase the entrance fees at Yellowstone National Park in order to increase park revenues. The Interior Department must believe that
the percentage increase in fees will be greater than the percentage decrease in the number of park visitors.
question
The demand for heart surgery is price inelastic. So it follows that
if the price of heart surgery increases, total expenditure by consumers on heart surgery will rise.
question
Suppose that the Houston Rockets' management is considering a plan in which fans who donate blood can attend games for \$35 instead of the usual \$50. If both ticket revenues and blood donations rise with this plan, which of the following is true?
The demand for Houston Rockets' tickets is price elastic.
question
The rate at which a consumer is able to substitute one good for another is determined by
the budget line.
question
Which of the following assumptions is (are) NOT made in consumer behavior theory?
Consumers can measure the utility they get from all bundles of goods.
question

Now suppose the price of good X increases to \$12 while the price of good Y remains \$4. Utility will be maximized on which indifference curve?

II

question
Marginal utility is
the change in utility that results from increasing the amount of a good consumed by one unit
question
If Mary prefers bananas to plums and plums to peaches, but is indifferent between bananas and oranges, she
prefers oranges to peaches.
question
Which of the following will NOT affect the elasticity of demand for a product?
the cost of producing the product
question
If the demand for umbrellas is price inelastic,
if more umbrellas are sold as the result of a price decrease, total expenditures by consumers on umbrellas will decrease.
question
Demand equations derived from actual market data are

both"empirical demand functions" and "generally estimated using regression analysis".

question
Suppose that you run a house-painting company and currently have 2 workers painting a total of 4 houses per month. If you hire a third worker, 6 houses can be painted per month. If you hire a fourth worker, 9 houses can be painted, and a fifth and sixth worker will increase the number of houses painted to 13 and 15, respectively. Diminishing returns
set in when the sixth worker is hired.
question
Suppose you run a pizza shop and currently have two employees. If you hire a third employee, your output of pizzas per day rises from 55 to 65. If you hire a fourth employee, output rises to 80 per day. A fifth and sixth employee would cause output to rise to 90 and 95 per day, respectively. Pick the correct statement:

a.

Diminishing returns set in with the hiring of the fifth worker.

question

A market-determined price

both "is determined by the intersection of demand and supply curves" and "is an endogenous variable".
question
One problem with consumer interviews is that
both "the sample may not be a representative sample" and "response bias"
question
Manager-determined prices are
both "not determined by the forces of demand and supply" and "exogenous variables in a demand equation".
question
A representative sample
both "reflects the characteristics of the population" and "is frequently a random sample"
question
Which of the following statements is false?
In the short run all inputs are fixed.
question
Qualitative forecasting methods
both "are often the result of expert opinion" and "cannot be replicated by another researcher"
question
A production function measures the relation between
the quantity of inputs and the quantity of output.
question

The estimated demand for a good is

= 4,800 − 16 P− 0.65 M− 1.5 PR

where Q is the quantity demanded of the good, P is the price of the good, M is income, and PR is the price of related good R. The coefficient on P

is negative as dictated by the law of demand.
question

Given the table below, if labor is fixed at three units, how much does the third unit of capital add to total output?

Units of Capital123Units of Labor18010012021802202603270330390434042050053904905906410530650

Amount of total output produced from various combinations of labor and capital.

60
question
A short-run production function assumes that
at least one input is a fixed input.
question
If average product is increasing, then marginal product
must be greater than average product.

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