Microeconomics Quiz 2

question

If Elastic, price down

answer

total revenue goes up

question

If inelastic, price down

answer

total revenue goes down

question

If demand perfectly elastic then the burden is on

answer

the producers

question

If demand perfectly inelastic then the burden is on

answer

the consumers

question

If supply is perfectly inelastic, then the burden is

answer

all on the sellers (producers)

question

If supply is perfectly elastic, then the burden is

answer

mostly on the buyers (consumers)

question

If relatively inelastic, then the burden is on

answer

mostly the consumers

question

If relatively elastic, then the burden is on

answer

mostly the producers

question

If the demand curve for a good is downward sloping and the supply curve for the good is
perfectly inelastic, the loss in buyers' and sellers' profits from a per unit tax on purchasers
of the good will be greater than the revenue the government receives from the tax.

answer

False

question

If the supply curve for a good is perfectly elastic and the demand curve for the good is
downward sloping, a per unit tax on the good will cause buyers that continue to buy to
lose profits equal to the revenue raised by the tax.

answer

True

question

Suppose Bob is maximizing his utility subject to his budget constraint. If his marginal
utility for hot dogs is greater than his marginal utility for juice boxes, then hot dogs must
be more expensive than juice boxes

answer

True

question

If the supply curve for a good is perfectly elastic and the demand curve for the good is downward
sloping, a sales tax on the good will cause losses to consumers that exceed the revenue raised by the tax.

answer

True

question

A profit-maximizing firm will always want to hire an additional worker if the value of
the average product of labor is greater than the wage.

answer

False

question

If a competitive industry with free entry and exit is in long-run equilibrium, any firm
that is not currently producing in the industry could not make a profit by entering the
industry.

answer

True

question

Total Cost =

answer

variable cost + fixed cost

question

average cost =

answer

total cost / quantity

question

∆R/R =

answer

∆q/q + ∆p/p

question

Elastic Demand < -1

answer

quantity effects dominates

question

Inelastic Demand > -1

answer

price effect dominates

question

If the average variable cost of a firm increases as output increases and the firm desires to maximize its profits, it
should produce the output at which its average variable cost is equal to the price it receives for each unit of
output.

answer

False

question

If the minimum wage is above the competitive equilibrium wage, an increase in the minimum wage will
increase voluntary unemployment.

answer

False

question

If the demand for a good is inelastic, the demand curve has not changed, and consumers are spending more on
the good than before, the supply curve has shifted out (more supply at every price).

answer

False

1 of 22

question

If Elastic, price down

answer

total revenue goes up

question

If inelastic, price down

answer

total revenue goes down

question

If demand perfectly elastic then the burden is on

answer

the producers

question

If demand perfectly inelastic then the burden is on

answer

the consumers

question

If supply is perfectly inelastic, then the burden is

answer

all on the sellers (producers)

question

If supply is perfectly elastic, then the burden is

answer

mostly on the buyers (consumers)

question

If relatively inelastic, then the burden is on

answer

mostly the consumers

question

If relatively elastic, then the burden is on

answer

mostly the producers

question

answer

False

question

answer

True

question

answer

True

question

answer

True

question

A profit-maximizing firm will always want to hire an additional worker if the value of
the average product of labor is greater than the wage.

answer

False

question

If a competitive industry with free entry and exit is in long-run equilibrium, any firm
that is not currently producing in the industry could not make a profit by entering the
industry.

answer

True

question

Total Cost =

answer

variable cost + fixed cost

question

average cost =

answer

total cost / quantity

question

∆R/R =

answer

∆q/q + ∆p/p

question

Elastic Demand < -1

answer

quantity effects dominates

question

Inelastic Demand > -1

answer

price effect dominates

question

answer

False

question

If the minimum wage is above the competitive equilibrium wage, an increase in the minimum wage will
increase voluntary unemployment.

answer

False

question

If the demand for a good is inelastic, the demand curve has not changed, and consumers are spending more on
the good than before, the supply curve has shifted out (more supply at every price).

answer

False

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Microeconomics Quiz 2

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