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# final

question
In competitive markets, a surplus or shortage will
cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage.
question
(1)(2)(3)(4)(5)QdQdPriceQsQs5040\$1070806050960708060850609070740501008063040

Suppose that market demand is represented by two demanders in columns (1) and (2) and market supply is represented by two suppliers in columns (4) and (5). If the price were artificially set at \$9
a surplus of 20 units would occur.
question
Which of the following will cause a decrease in market equilibrium price and a decrease in equilibrium quantity?
a decrease in demand
question
A television station reports that the price of coffee has increased but the quantity traded in the market has decreased. This situation would be caused by a(n)
decrease in supply.
question
An increase in demand for oil, along with a simultaneous increase in supply of oil, will
increase quantity, but whether it increases price depends on how much each curve shifts.
question
A market for a product reaches equilibrium when
buyers intend to buy a quantity equal to the quantity that sellers intend to sell.
question
If the price in this market is \$4 per bushel, there will be a
surplus, and the price will tend to fall.
question
If demand decreased by 4 units at each price, what would the new equilibrium price and quantity be?
\$3 and 5 units
question
Using the regular percentage change formula, what is the price elasticity of demand when price decreases from \$9 to \$7?
-2.25
question
The price elasticity of demand (based on the midpoint formula) when price increases from \$14 to \$16 is
-1.37.
question
The price elasticity of demand of a linear demand curve is
elastic in high-price ranges and inelastic in low-price ranges.
question
Demand is said to be inelastic when
a reduction in price results in a decrease in total revenue.
question
The supply of product X is elastic if
a 5% increase in price generates a 7% increase in quantity supplied. (is greater than one)
question
In some markets consumers may buy many different brands of a product. Which of the statements below best represents a situation where demand for a particular brand would be very elastic?
"The different brands are almost identical. I always buy the cheapest."
question
The price elasticity of demand increases with the length of the period considered because
consumers will be better able to find substitutes.
question
The demand for a luxury good whose purchase would exhaust a big portion of one's income is
relatively elastic.
question
The concept of price elasticity of demand measures the
sensitivity of consumer purchases to price changes.
question
The main difference between the short run and the long run is that
in the short run, some inputs are fixed and some are variable.
question
With the addition of the second unit of input, the marginal product is ________ and the average product is ________.
15 and 10. difference between two and then divide.
question
The average product generated with 5 units of the input is
50/5 = 10
question
The total cost associated with the production of 5 units of output is
\$2500
question
The marginal product of the 30th input item is
12. 20
600
30
720 720-600 120/30-20
question
Harvey quit his job at State University where he earned \$45,000 a year. He figures his entrepreneurial talent or foregone entrepreneurial income to be \$5,000 a year. To start the business, he cashed in \$100,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at \$75 each. Of the \$75, \$55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building.

What is the accounting profit generated by Extreme Gaming in the first year?
220,000
question
A rising short-run average variable cost of production for a firm indicates that
marginal cost is above average variable cost.
question
In the long run
all costs are variable.
question
A firm encountering economies of scale over some range of output will have a
falling long-run average total cost curve.
question
The ability of Intel to spread product development costs over a larger number of units of output arises from
economies of scale.
question
Which characteristic would best be associated with perfect competition?
price takers
question
The short-run supply curve for a perfectly competitive firm is the
segment of the MC curve lying at and above the AVC curve.
question
Refer to the data in the accompanying table. If the firm's minimum average variable cost is \$16, the firm's profit-maximizing level of output would be
3.
question
A perfectly competitive firm does not try to raise its price above the market price because
it would not be able to sell its output.
question
To maximize profits, the perfectly competitive firm should produce output at
C where the mc is
question
Assume that the market for soybeans is perfectly competitive. Currently, firms growing soybeans are experiencing economic profits. In the long run, we can expect
new firms to enter, causing the market price of soybeans to decrease.
question
A firm sells a product in a perfectly competitive market. The marginal cost of the product at the current output level of 200 units is \$4. The minimum possible average variable cost is \$3.50. The market price of the product is \$3. To maximize profits or minimize losses, the firm should
shut down.
question
Productive efficiency refers to
cost minimization, where P = minimum ATC.
1 of 35
question
In competitive markets, a surplus or shortage will
cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage.
question
(1)(2)(3)(4)(5)QdQdPriceQsQs5040\$1070806050960708060850609070740501008063040

Suppose that market demand is represented by two demanders in columns (1) and (2) and market supply is represented by two suppliers in columns (4) and (5). If the price were artificially set at \$9
a surplus of 20 units would occur.
question
Which of the following will cause a decrease in market equilibrium price and a decrease in equilibrium quantity?
a decrease in demand
question
A television station reports that the price of coffee has increased but the quantity traded in the market has decreased. This situation would be caused by a(n)
decrease in supply.
question
An increase in demand for oil, along with a simultaneous increase in supply of oil, will
increase quantity, but whether it increases price depends on how much each curve shifts.
question
A market for a product reaches equilibrium when
buyers intend to buy a quantity equal to the quantity that sellers intend to sell.
question
If the price in this market is \$4 per bushel, there will be a
surplus, and the price will tend to fall.
question
If demand decreased by 4 units at each price, what would the new equilibrium price and quantity be?
\$3 and 5 units
question
Using the regular percentage change formula, what is the price elasticity of demand when price decreases from \$9 to \$7?
-2.25
question
The price elasticity of demand (based on the midpoint formula) when price increases from \$14 to \$16 is
-1.37.
question
The price elasticity of demand of a linear demand curve is
elastic in high-price ranges and inelastic in low-price ranges.
question
Demand is said to be inelastic when
a reduction in price results in a decrease in total revenue.
question
The supply of product X is elastic if
a 5% increase in price generates a 7% increase in quantity supplied. (is greater than one)
question
In some markets consumers may buy many different brands of a product. Which of the statements below best represents a situation where demand for a particular brand would be very elastic?
"The different brands are almost identical. I always buy the cheapest."
question
The price elasticity of demand increases with the length of the period considered because
consumers will be better able to find substitutes.
question
The demand for a luxury good whose purchase would exhaust a big portion of one's income is
relatively elastic.
question
The concept of price elasticity of demand measures the
sensitivity of consumer purchases to price changes.
question
The main difference between the short run and the long run is that
in the short run, some inputs are fixed and some are variable.
question
With the addition of the second unit of input, the marginal product is ________ and the average product is ________.
15 and 10. difference between two and then divide.
question
The average product generated with 5 units of the input is
50/5 = 10
question
The total cost associated with the production of 5 units of output is
\$2500
question
The marginal product of the 30th input item is
12. 20
600
30
720 720-600 120/30-20
question
Harvey quit his job at State University where he earned \$45,000 a year. He figures his entrepreneurial talent or foregone entrepreneurial income to be \$5,000 a year. To start the business, he cashed in \$100,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at \$75 each. Of the \$75, \$55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building.

What is the accounting profit generated by Extreme Gaming in the first year?
220,000
question
A rising short-run average variable cost of production for a firm indicates that
marginal cost is above average variable cost.
question
In the long run
all costs are variable.
question
A firm encountering economies of scale over some range of output will have a
falling long-run average total cost curve.
question
The ability of Intel to spread product development costs over a larger number of units of output arises from
economies of scale.
question
Which characteristic would best be associated with perfect competition?
price takers
question
The short-run supply curve for a perfectly competitive firm is the
segment of the MC curve lying at and above the AVC curve.
question
Refer to the data in the accompanying table. If the firm's minimum average variable cost is \$16, the firm's profit-maximizing level of output would be
3.
question
A perfectly competitive firm does not try to raise its price above the market price because
it would not be able to sell its output.
question
To maximize profits, the perfectly competitive firm should produce output at
C where the mc is
question
Assume that the market for soybeans is perfectly competitive. Currently, firms growing soybeans are experiencing economic profits. In the long run, we can expect
new firms to enter, causing the market price of soybeans to decrease.
question
A firm sells a product in a perfectly competitive market. The marginal cost of the product at the current output level of 200 units is \$4. The minimum possible average variable cost is \$3.50. The market price of the product is \$3. To maximize profits or minimize losses, the firm should
shut down.
question
Productive efficiency refers to
cost minimization, where P = minimum ATC.

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