Economies of scale occur where

question

Demand is said to be inelastic only if

answer

price elasticity has an absolute value less than 1

question

Demand is said to be unit elastic whenever

answer

price elasticity has an absolute value of 1

question

Demand is said to be elastic whenever

answer

price elasticity has an absolute value greater than 1

question

If a price reduction leads to larger total revenue, demand is

answer

elastic

question

For which of the following is demand most likely to be perfectly inelastic?
a.BMW automobiles
b.Dr. Pepper
c.hot dogs
d.insulin
e.Tylenol

answer

Insulin

question

Demand is more elastic

answer

for goods with many substitutes than for goods with only a few

question

Which of the following tends to make demand for a good more elastic?
a.A reduction in the number of substitutes for the good.
b.Consumers have a long time to adjust to a price change.
c.The amount spent on the good is a small proportion of the consumer's budget.
d.The good is broadly defined.
e.The good is a necessity.

answer

Consumers have a long time to adjust to a price change.

question

For which of the following medical goods or services is the income elasticity of demand likely to be largest?
a.emergency services after a car accident
b.measles shots
c.physical examinations for life insurance applications
d.medical tests to diagnose specific symptoms
e.face-lifts

answer

Facelifts

question

The value of cross-price elasticity of demand between golf balls and golf clubs is

answer

Negative

question

Cross-price elasticity of demand measures

answer

the relationship between the demand for one good and the price of another

question

Marginal utility is the

answer

additional satisfaction obtained from consuming one more unit of a good

question

"I don't feel so good. I shouldn't have had that last donut." Which statement best describes this situation?

answer

The marginal utility of the last doughnut is negative

question

If a consumer allocates income between good A and good B, total utility is maximized when

answer

marginal utility of A/price of A = marginal utility of B/price of B

question

Elvis values the first gravy sandwich at $5, the second at $4.50, the third at $4. If he buys three for $4 each, his consumer surplus is

answer

$1.50

question

Consumer surplus is

answer

the difference between the maximum amount that a consumer is willing to pay for a given amount of a good and the amount that the consumer actually pays

question

Cash payments to a steel mill for steel used in production would be an example of

answer

Explicit cost

question

A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $20,000 a year, and take over a store building that he owns and currently rents to his brother for $6,000 a year. His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity. What are his implicit costs?

answer

$26000

question

Accounting profit is equal to

answer

total revenue minus explicit costs

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Inputs that can be increased or decreased in the short run are called

answer

variable inputs

question

Total costs are calculated as

answer

fixed costs plus variable costs

question

When marginal product is decreasing, marginal cost is

answer

increasing

question

Economies of scale occur where

answer

long-run average cost falls as one firm expands plant size

1 of 22

question

Demand is said to be inelastic only if

answer

price elasticity has an absolute value less than 1

question

Demand is said to be unit elastic whenever

answer

price elasticity has an absolute value of 1

question

Demand is said to be elastic whenever

answer

price elasticity has an absolute value greater than 1

question

If a price reduction leads to larger total revenue, demand is

answer

elastic

question

For which of the following is demand most likely to be perfectly inelastic?
a.BMW automobiles
b.Dr. Pepper
c.hot dogs
d.insulin
e.Tylenol

answer

Insulin

question

Demand is more elastic

answer

for goods with many substitutes than for goods with only a few

question

answer

Consumers have a long time to adjust to a price change.

question

answer

Facelifts

question

The value of cross-price elasticity of demand between golf balls and golf clubs is

answer

Negative

question

Cross-price elasticity of demand measures

answer

the relationship between the demand for one good and the price of another

question

Marginal utility is the

answer

additional satisfaction obtained from consuming one more unit of a good

question

"I don't feel so good. I shouldn't have had that last donut." Which statement best describes this situation?

answer

The marginal utility of the last doughnut is negative

question

If a consumer allocates income between good A and good B, total utility is maximized when

answer

marginal utility of A/price of A = marginal utility of B/price of B

question

Elvis values the first gravy sandwich at $5, the second at $4.50, the third at $4. If he buys three for $4 each, his consumer surplus is

answer

$1.50

question

Consumer surplus is

answer

the difference between the maximum amount that a consumer is willing to pay for a given amount of a good and the amount that the consumer actually pays

question

Cash payments to a steel mill for steel used in production would be an example of

answer

Explicit cost

question

answer

$26000

question

Accounting profit is equal to

answer

total revenue minus explicit costs

question

Inputs that can be increased or decreased in the short run are called

answer

variable inputs

question

Total costs are calculated as

answer

fixed costs plus variable costs

question

When marginal product is decreasing, marginal cost is

answer

increasing

question

Economies of scale occur where

answer

long-run average cost falls as one firm expands plant size

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Economies of scale occur where

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