Final Exam Study Set
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| Which statement is correct about the market system? | show 🗑
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| Define the law of demand? | show 🗑
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| In a competitive market for corn, the law of demand states that, other things equal, as... | show 🗑
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| show | decreased, and the equilibrium quantity has increased.
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| show | P (price) by Q (quantity sold)
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| show | price rises and demand is elastic
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| If the price elasticity of demand for a product is equal to 0.5, then a 10 percent decrease in price will: | show 🗑
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| What is the price-elasticity coefficient and formula? | show 🗑
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| How do we interpret Ed? | show 🗑
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| Given the demand curve, the consumer surplus is... | show 🗑
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| Suppose that Ms. Thompson is currently exhausting her money income by purchasing 10 units of A and 8 units of B at prices $2 and $4, respectively. The marginal utility of the last units of A and B are 16 and 24. These data suggest that Ms. Thompson... | show 🗑
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| Betty Johnson is maximizing her satisfaction from consuming two goods, A and B. IF the marginal utility of A is twice that of B, what is the price of A if the price of B is $.80? | show 🗑
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| show | long-run average total cost is decreasing.
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| The demand curves for firms in a purely competitive industry are perfectly elastic. | show 🗑
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| show | Very large numbers (farm commodities)
Standardized product
"Price takers"
Free entry and exit
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| In moving down the elastic segment of the monopolist's demand curve, total revenue is... | show 🗑
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| show | is upsloping across relevant ranges of output.
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| A monopolistically competitive industry combines elements of both competition and monopoly. It is correct to say that the competitive element results from... | show 🗑
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| What are some characteristics of Monopolistic Competition? | show 🗑
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| show | marginal revenue product of each resource is equal to its price
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| Suppose a $0.25 tax is levied on cigarettes. Under what circumstances will cigarette producers pay the full amount? | show 🗑
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| show | Consumer
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| show | WXZU (equilibrium of S+T curve slash Demand curve) downwards and in the shape of a box.
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| A recurring theme in economics is that people... | show 🗑
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| show | By seeking jobs with the best combination of wages and benefits
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| show | the product has become more expensive and thus consumers are buying less of it.
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| show | Can't be provided to one person without making it available to others as well
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| show | The total satisfaction received from consuming a particular amount of a product
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| show | economic profits
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| show | Pure monopoly
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| If a firm has at least some control over the price of its product, then the firm cannot be in which of the following market models. | show 🗑
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| The long-run supply curve under pure competition will be... | show 🗑
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| Productive efficiency refers to... | show 🗑
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| show | used car sellers have better information about the car condition than buyers.
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| show | SEVEN 7 SEVEN 7 SEVEN 7
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| show | the same as the marginal revenue product schedule
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| Because of the free-rider problem: | show 🗑
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| Alex, Kara, and Susie are the only three people in a community and Alex is willing to pay $20 for the 5th unit of a public good; Kara $15, and Susie $25. Government should produce the 5th unit of the public good if the marginal cost is less than: | show 🗑
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| In a cap-and-trade market for pollution rights and increase in demand would: | show 🗑
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| show | private firms cannot stop consumers who are unwilling to pay for such goods from benefiting from them.
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| A demand curve for a public good is determined by... | show 🗑
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| show | the third unit should be produced.
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| show | compare the benefits and costs associated with any economic activity.
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| According to the marginal-cost-marginal-benefit rule... | show 🗑
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| show | producers do not bear the full cost of producing the good
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| show | bargaining between private parties will remedy externality problems where property rights are clearly defined, the number of people involved is limited, and bargaining costs are low.
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| Opportunity cost is defined as | show 🗑
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| show | a normative economic statement
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| show | households provide land, labor and capital to firms in resource markets.
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| show | a mechanism that coordinates the actions of consumers and producers to determine equilibrium prices and quantities.
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| If the price of hand calculators falls from $10 to $9, and as a result, the quantity demanded increases from 100 to 125, then | show 🗑
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| Which of the following is a determinant of demand for good X? | show 🗑
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| The elasticity of supply coefficient of product X is one if the price of X rises by | show 🗑
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| show | substitutes
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| A schedule showing the varying amounts of a good producers are willing and able to produce at a series of possible prices in a given time frame is | show 🗑
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| ______ would cause an increase in the quantity of a product supplied at a given price. | show 🗑
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| Refer to the table 1 above. The equilibrium price is: | show 🗑
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| show | price is less than the equilibrium price
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| Refer to table 1 above. A surplus will occur whenever | show 🗑
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| A supply curve that is a vertical straight line indicates that | show 🗑
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| If price and total revenue are directly (not inversely) related, demand is inelastic. | show 🗑
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| Refer to table 2 above. If the government sets a price ceiling of $80 per bottle of wine, the result will be | show 🗑
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| show | a surplus of 230 million bottles of wine
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| show | true
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| The law of demand states that | show 🗑
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| If the price elasticity of demand for gasoline is 0.20 | show 🗑
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| show | a change in consumer preferences for good X
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| show | price is increased and quantity sold is reduced
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| A normal good is one | show 🗑
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| In product markets | show 🗑
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| Refer to the graph in figure 1. Starting at point !, what is the opportunity cost of producing one additional unit of bread? | show 🗑
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| show | 4 drill presses
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| show | increases
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| A cross elasticity of demand and coefficient of +2.5 indicates that the two product are substitutes | show 🗑
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| show | All efficient combinations of two goods attainable with a fixed set of resources and every possible combination of two goods that can be produced when the set of fixed resources is fully emoployed
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| show | false
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| A point to the left of the budget line is | show 🗑
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| show | true
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| If demand increases and supply simultaneously decreases, equilibrium price will rise. | show 🗑
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| show | product markets
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| show | a decrease in the price of one will decrease the demand for the other
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| show | false
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| An income elasticity coefficient of -1.8 means that the product is a normal good. | show 🗑
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| show | true
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| show | false
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| show | true
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| The rationing function of prices refers to the fact that government must distribute any surplus goods that maybe left in a competitive marekt | show 🗑
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| show | expand in industry Z, as more resources will move to that industry.
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| show | a decrease in the quantity of resources employed in industry X
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| show | to do so will maximize the firms profits.
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| Along a single demand curve, product price and consumer surplus are inversely related. | show 🗑
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| show | consumers will substitute other products for the one whose price has risen.
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| One reason the quantity of a good demanded rises when its price falls is that: | show 🗑
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| The basic formula for the price elasticity of demand coefficient is | show 🗑
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| If the demand or product X is inelastic, a 4 percent increase in the price of X will | show 🗑
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| The concept of price elasticity of demand measures | show 🗑
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| Which of the following statements is not correct | show 🗑
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| If the demand for farm products is inelastic, a good harvest will cause farm revenues to | show 🗑
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| IN which of the following cases will total revenue increase? | show 🗑
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| The limited money income of consumers results in a so-called ubdgedt constraint | show 🗑
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| show | Becasue demand for agricultural products is very inelastic
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| show | more elastic; necessities
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| show | cause a surplsue
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| show | rightward; rightward
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| show | increase; decrease
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| Determinants of supply include.... | show 🗑
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| show | in the long run all resources are variable, while in the short run at least one resource is fixed.
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| show | marginal product of labor is negative
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| show | The one where MP intersects AP at it's maximum, and the one where TP reaches a maximum when MP reaches zero.
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| Marginal cost can be defined as the | show 🗑
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| show | poindexter
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| In pure competition, the demand for the product of a single firm is perfectly | show 🗑
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| show | total revenue divided by the quantity of output
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| Assume the price of a product sold by a purely competivie firm is $5. Given the data in the table above, at what output is total profit highest in the short run? | show 🗑
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| show | Shut down if the minimum possible average variable cost is $5.25
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| show | zero economic profits (becasue MR or D is below ATC)
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| The market demand curve for a purely competitive market is downwrad-sloping. The demand curve faced by a single firm in a purely competivie market it | show 🗑
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| show | Profit is maximized when marginal cost equals marginal revnue
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| show | A local bakery hires two additional bakers
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| show | postiive and increasing
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| Which of the following statements is correct? | show 🗑
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| A firm reaches a break-even point (normal profit position) where: | show 🗑
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| show | will also be $5
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| Monopolistic competition is characterized by a: | show 🗑
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| show | Relativiely easy entry
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| If the XYZ Company can sell 4 units per week at $10 per unit and 5 units per week at $9 per unit, the marginal revenue of the fifth unit is $5 | show 🗑
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| show | true
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| Entry into a monopolistically competitive industry is typically blocked | show 🗑
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| Refer to the above diagram. This firm will maximize profits by producing output D | show 🗑
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| show | True (it is at equilibrium :))
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| show | The more bags of potato chips a person eats, the less additional satisfaction she gets from consuming another bag
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| Which of the following is correct? | show 🗑
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| show | b. marginal utility obtained from the last dollar spent on each product is the same.
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| 29. The satisfaction one gets from consuming a good or service is . . . | show 🗑
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| show | c. varies from person to person using the product
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| show | d. The additional satisfaction received from consuming one additional unit of a product.
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| show | b. fourth unit.
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| show | close to zero
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| Which of the following is an assumption of the marginal-utility theory of consumer behavior? | show 🗑
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| show | $2 per unit
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| When the price of a product that is a normal good falls, the.... | show 🗑
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| show | false
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| A person paying $800 to fly from on city to another instead of $100 for a bus trip between the same two cities is making an irrational choice, and is not maximizing his utility | show 🗑
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| show | 40
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| show | 16
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| show | explicit and implicit costs, including a normal profit
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| show | implicit costs refer to non-expenditure costs, and explicit costs refer to monetary payments
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| show | $200,000 and its economic profits were zero
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| show | unable to meet foreign competition, a U.S. watch manufacturer sells one of its branch plants
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| show | False
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| show | relationship between resource inputs and product outputs in the short run.
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| Total output of a firm will be at a maximum where... | show 🗑
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| show | any cost which does not vary when the firm changes its outpu
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| If you owned a small farm, which of the following would most likely be a fixed cost? | show 🗑
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| show | baking supplies (flour, salt, etc)
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| show | marginal cost, average variable cost, and average total cost would all fall.
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| Total fixed cost... | show 🗑
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| show |
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| show | firms can enter and exit the market in the long run, but not the short run.
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| show | economic profits earned by firms already in the industry
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| In a purely competitive industry... | show 🗑
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| Suppose a purely competitive increasing-cost industry is in long-run equilibrium. Now assume that a decrease in consumer demand occurs. AFter all resulting adjustments have been completed, the new equilibirum price... | show 🗑
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| show | there is no tendnecy for the firm's industry to expand or contract.
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| If the long-run supply curve of a purely competitive industry slopes upward, this implies that the prices of relevant resources... | show 🗑
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| show | producing less output than allocative efficiency requires
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| show | the process by which firms and new products replace existing firms and products.
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| Pure monopoly refers to... | show 🗑
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| A firm in pure monopoly... | show 🗑
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| show | are the basis for monoplyg
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| show | will be less than $35
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| show | $1,000
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| The demand curve faced by a monopolist.... | show 🗑
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| show | false
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| Monopolistic competition means.... | show 🗑
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| REfer to the diagram above. At the profit-maximizing level of output, the firm will receive | show 🗑
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| In the short run, a monopoolist's economic profits... | show 🗑
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| A monopolistically competitive firm has a .... | show 🗑
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| A monopolistically competitive firm's marginal revenue curve... | show 🗑
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| show | will be equal to ATC
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| P > minimum ATC for a monopolistically competitive firm in long-run equilibrium | show 🗑
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| Is price quals minimum average total cost a characteristic of long-run equlibrium under monopolistic competition? | show 🗑
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| The term "oligopoly" indicates.... | show 🗑
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| In an oligopolistic market... | show 🗑
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| show | resource prices are a major determinant of money incomes, resource prices allocate scare resources among alternative uses, resource price, along with resource productivity are important in minimizing their costs
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| The demand for a resource dependes primarily upon.. | show 🗑
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| The labor demand curve of a purely competitive seller... | show 🗑
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| 40. The general rule for hiring any input (labor, for example) in the profit-maximizing amount is MRC = MRP. This rule takes the special form W = MRP (where W is the wage rate) when the | show 🗑
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| ssume that a restaurant is hiring labor in an amount such that the MRC of the last worker is $16 and her MRP is $12. On the basis of this information we can say that . . . | show 🗑
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| show | multiplying product by product price
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| 43. Suppose the demand for strawberries rises sharply, resulting in an increased price of strawberries. As it relates to demand for strawberry pickers, we would expect the . . . | show 🗑
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| show | productivity of the resource increases
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| show | more of an input whose price has fallen and less of other inputs in producing a given outp
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| show | output effect
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| show | elastic
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| show | labor demand is unit-elastic
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| show | the labor supply and marginal labor (resource) cost curves will concide and be perfectly elastic
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| The concept of "wages" includes: | show 🗑
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| show | prices of goods and services remained constant while the nominal wage rate increased.
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| show | Truth.
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| show | is perfectly elastic
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| The wage rate the firm must pay varies directly with the number of workers it employs describes a labor market that is a monopsony. | show 🗑
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| show | MRPl/MRCl = MRPc/MRCc = 1
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| show | lies above teh supply curve of labor
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| 60. Critics of the minimum wage argue that an increase in the minimum wage rate above the equilibrium rate of a purely competitive labor market would . . . | show 🗑
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