Micro Economics Test 2 Study Guide - Custom Scholars
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# Micro Economics Test 2 Study Guide

question
Price elasticity has an absolute value less than 1
Demand is said to be inelastic only if
question
Price elasticity has an absolute value of 1
Demand is said to be unit elastic whenever
question
Price elasticity has an absolute value greater than 1
Demand is said to be elastic whenever
question
Elastic
If a price reduction leads to larger total revenue, demand is
question
\$50
In Exhibit 0062, what is the total revenue at point a?
question
Insulin
For which of the following is demand most likely to be perfectly inelastic
question
For goods with many substitutes than for goods with only a few
Demand is more elastic
question
Consumers have a long time to adjust to a price range
Which of the following tends to make demand for a good more elastic?
question
Face-lifts
For which of the following medical goods or services is the income elasticity of demand likely to be the largest?
question
Negative
The value of cross-price elasticity of demand between golf balls and golf clubs is
question
The relationship between the demand for one good and the price of another
Cross-price elasticity of demand measures
question
Additional satisfaction obtained from consuming one more unit of a good
Marginal utility is the
question
The marginal utility of the last donut was negative
"I don't feel so good. I shouldn't have had that last donut." Which statement best describes this situation
question
5
Consider the information in Exhibit 0077. What is the marginal utility of the third pretzel?
question
55
In Exhibit 0077, what is the total utility of three pretzels?
question
Marginal utility of A/price of A = marginal utility of B/price of B
If a consumer allocates income between good A and good B, total utility is maximized when
question
\$1.50
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
question
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
Consumer Surplus is
question
Explicit costs
Cash Payments to a steel mill for steel used in production would be an example of
question
\$26,000
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?
question
Total revenue minus explicit costs
Accounting profit is equal to
question
Variable inputs
Inputs can be increased or decreased in the short run are called
question
Between the second and third units of labor
Given the information in Exhibit 0102, at which point do diminishing marginal returns set in?
question
Fixed cost plus variable costs
Total costs are calculated as
question
Increasing
When marginal product is decreasing, marginal cost is
question
\$20
In Exhibit 0107, the average variable cost of producing 20 units is
question
2
If the firm represented in Exhibit 0112 wants to produce output level q, then in the long run it should build a plant size with average total cost curve of
question
Long-run average cost falls as one firm expands plant size
Economies of scale occur where
1 of 28
question
Price elasticity has an absolute value less than 1
Demand is said to be inelastic only if
question
Price elasticity has an absolute value of 1
Demand is said to be unit elastic whenever
question
Price elasticity has an absolute value greater than 1
Demand is said to be elastic whenever
question
Elastic
If a price reduction leads to larger total revenue, demand is
question
\$50
In Exhibit 0062, what is the total revenue at point a?
question
Insulin
For which of the following is demand most likely to be perfectly inelastic
question
For goods with many substitutes than for goods with only a few
Demand is more elastic
question
Consumers have a long time to adjust to a price range
Which of the following tends to make demand for a good more elastic?
question
Face-lifts
For which of the following medical goods or services is the income elasticity of demand likely to be the largest?
question
Negative
The value of cross-price elasticity of demand between golf balls and golf clubs is
question
The relationship between the demand for one good and the price of another
Cross-price elasticity of demand measures
question
Additional satisfaction obtained from consuming one more unit of a good
Marginal utility is the
question
The marginal utility of the last donut was negative
"I don't feel so good. I shouldn't have had that last donut." Which statement best describes this situation
question
5
Consider the information in Exhibit 0077. What is the marginal utility of the third pretzel?
question
55
In Exhibit 0077, what is the total utility of three pretzels?
question
Marginal utility of A/price of A = marginal utility of B/price of B
If a consumer allocates income between good A and good B, total utility is maximized when
question
\$1.50
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
question
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
Consumer Surplus is
question
Explicit costs
Cash Payments to a steel mill for steel used in production would be an example of
question
\$26,000
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?
question
Total revenue minus explicit costs
Accounting profit is equal to
question
Variable inputs
Inputs can be increased or decreased in the short run are called
question
Between the second and third units of labor
Given the information in Exhibit 0102, at which point do diminishing marginal returns set in?
question
Fixed cost plus variable costs
Total costs are calculated as
question
Increasing
When marginal product is decreasing, marginal cost is
question
\$20
In Exhibit 0107, the average variable cost of producing 20 units is
question
2
If the firm represented in Exhibit 0112 wants to produce output level q, then in the long run it should build a plant size with average total cost curve of
question
Long-run average cost falls as one firm expands plant size
Economies of scale occur where

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