final

question

In competitive markets, a surplus or shortage will

answer

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

answer

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?

answer

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)

answer

decrease in supply.

question

An increase in demand for oil, along with a simultaneous increase in supply of oil, will

answer

increase quantity, but whether it increases price depends on how much each curve shifts.

question

A market for a product reaches equilibrium when

answer

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

answer

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?

answer

$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?

answer

-2.25

question

The price elasticity of demand (based on the midpoint formula) when price increases from $14 to $16 is

answer

-1.37.

question

The price elasticity of demand of a linear demand curve is

answer

elastic in high-price ranges and inelastic in low-price ranges.

question

Demand is said to be inelastic when

answer

a reduction in price results in a decrease in total revenue.

question

The supply of product X is elastic if

answer

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?

answer

"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

answer

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

answer

relatively elastic.

question

The concept of price elasticity of demand measures the

answer

sensitivity of consumer purchases to price changes.

question

The main difference between the short run and the long run is that

answer

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 ________.

answer

15 and 10. difference between two and then divide.

question

The average product generated with 5 units of the input is

answer

50/5 = 10

question

The total cost associated with the production of 5 units of output is

answer

$2500

question

The marginal product of the 30th input item is

answer

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?

answer

220,000

question

A rising short-run average variable cost of production for a firm indicates that

answer

marginal cost is above average variable cost.

question

In the long run

answer

all costs are variable.

question

A firm encountering economies of scale over some range of output will have a

answer

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

answer

economies of scale.

question

Which characteristic would best be associated with perfect competition?

answer

price takers

question

The short-run supply curve for a perfectly competitive firm is the

answer

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

answer

question

A perfectly competitive firm does not try to raise its price above the market price because

answer

it would not be able to sell its output.

question

To maximize profits, the perfectly competitive firm should produce output at

answer

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

answer

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

answer

shut down.

question

Productive efficiency refers to

answer

cost minimization, where P = minimum ATC.

1 of 35

question

In competitive markets, a surplus or shortage will

answer

cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage.

question

answer

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?

answer

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)

answer

decrease in supply.

question

An increase in demand for oil, along with a simultaneous increase in supply of oil, will

answer

increase quantity, but whether it increases price depends on how much each curve shifts.

question

A market for a product reaches equilibrium when

answer

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

answer

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?

answer

$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?

answer

-2.25

question

The price elasticity of demand (based on the midpoint formula) when price increases from $14 to $16 is

answer

-1.37.

question

The price elasticity of demand of a linear demand curve is

answer

elastic in high-price ranges and inelastic in low-price ranges.

question

Demand is said to be inelastic when

answer

a reduction in price results in a decrease in total revenue.

question

The supply of product X is elastic if

answer

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?

answer

"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

answer

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

answer

relatively elastic.

question

The concept of price elasticity of demand measures the

answer

sensitivity of consumer purchases to price changes.

question

The main difference between the short run and the long run is that

answer

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 ________.

answer

15 and 10. difference between two and then divide.

question

The average product generated with 5 units of the input is

answer

50/5 = 10

question

The total cost associated with the production of 5 units of output is

answer

$2500

question

The marginal product of the 30th input item is

answer

12. 20
600
30
720 720-600 120/30-20

question

answer

220,000

question

A rising short-run average variable cost of production for a firm indicates that

answer

marginal cost is above average variable cost.

question

In the long run

answer

all costs are variable.

question

A firm encountering economies of scale over some range of output will have a

answer

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

answer

economies of scale.

question

Which characteristic would best be associated with perfect competition?

answer

price takers

question

The short-run supply curve for a perfectly competitive firm is the

answer

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

answer

question

A perfectly competitive firm does not try to raise its price above the market price because

answer

it would not be able to sell its output.

question

To maximize profits, the perfectly competitive firm should produce output at

answer

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

answer

new firms to enter, causing the market price of soybeans to decrease.

question

answer

shut down.

question

Productive efficiency refers to

answer

cost minimization, where P = minimum ATC.

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