Eco Study Question

The affordable bundle that yields the greatest satisfaction to the consumer is: Answer | | the maximum bundle. | | | the equilibrium consumption bundle. | | | the allowable purchasing bundle. | | | the most popular bundle. | Given that income is $500 and PX = $20 and PY = $5, what is the market rate of substitution between goods X and Y? Answer | | 100. | | | 4. | | | -20. | | | 25. | The budget set defines the combinations of good X and Y that Answer | | are desirable to the consumer. | | | are affordable to the consumer. | | | maximizes consumer's utility. | | | maximizes supplier's profit. |The difference between a price decrease and an increase in income is that Answer | | A price decrease does not affect the consumption of other goods while an increase in income does. | | | An increase in income does not affect the slope of the budget line while a decrease in price does change the slope. | | | A price decrease decreases real income while an increase in income increases real inco me. | | | A price decrease leaves real income unchanged while an increase in income increases real income. | All else held constant, as additional firms enter an industry Answer | | more output is available at each given price. | | less output is available at each given price. | | | the same output is available at each given price. | | | output could increase or decrease at each given price. | | | | The law of demand states that, holding all else constant: Answer | | as price falls, demand will fall also. | | | as price rises, demand will also rise. | | | price has no effect on quantity demanded. | | | as price falls, quantity demanded rises. | The economic principle that producers are willing to produce more output when price is high is depicted by the: Answer | | upward slope of the supply curve. | | | extreme steepness of the supply curve. | | downward slope of the supply curve. | | | interaction of the supply and demand curves. | Good X is a normal good if an increase in income leads to Answer | | an increase in the supply for good X. | | | an increase in the demand for good X. | | | a decrease in the demand for good X. | | | a decrease in the supply for good X. | If there are few close substitutes for a good, demand tends to be relatively Answer | | elastic. | | | inelastic. | | | unitary elastic. | | | neither elastic, inelastic nor unitary elastic. | Which of the following is used to determine the statistical significance of a regression coefficient?Answer | | t-statistic. | | | F-statistic. | | | R-square. | | | adjusted R-square. | Assume that the price elasticity of demand is -0. 75 for a certain firm's product. If the firm lowers price, the firm's managers can expect total revenue to Answer (lower than 1 so its inelastic) | | decrease| | | increase| | | remain constant| | | either increase or remain constant depending upon the size of the price decrease. | Assume that the price elasticity of demand is -2 for a certain firm's product. If the firm rai ses price, the firm's managers can expect total revenue to: Answer | | Decrease| | | Increase| | Remain constant| | | Either increase or remain constant depending upon the size of the price increase. | What is the marginal cost of producing the fifth unit? Answer | | 270. | | | 110. | | | 50. | | | 0. | Scarce resources are ultimately allocated toward the production of goods most wanted by society because: Answer | | firms attempt to maximize profits. | | | they are most efficiently utilized in these areas. | | | consumers demand inexpensive goods and services. | | | managers are benevolent. | The additional cost incurred by using an additional unit of the managerial control variable is defined as the: Answer | total cost. | | | net cost. | | | net benefit. | | | marginal cost. | Which is the correct statement about the relationship between government and the market? Answer | | Government should intervene on the consumers' behalf. | | | Government should intervene on the producers' behalf. | | | Government should not intervene on any party's behalf. | | | Government often plays a role in disciplining the market process. | Suppose the long-run average cost curve is U-shaped. When LRAC is in the increasing stage, there exist Answer | | economies of scope. | | | diseconomies of scope. | | economies of scale. | | | diseconomies of scale. | Fixed costs exist only in: Answer | | The long run. | | | Capital intensive markets. | | | The short run. | | | Labor intensive markets. | If the marginal product per dollar spent on capital is less than the marginal product per dollar spent on labor, then in order to minimize costs the firm should use Answer | | less capital and more labor. | | | less labor and more capital. | | | less labor and less capital. | | | more labor and more capital. | Suppose the marginal product of labor is 10 and the marginal product of capital is 8.If the wage rate is $5 and the price of capital is $2, then in order to minimize costs the firm shou ld use Answer | | more capital and less labor. | | | more labor and less capital. | | | equal amounts of labor and capital. | | | none of the statements associated with this question are correct. | A price decrease causes a consumer's â€Å"real† income to: Answer | | increase. | | | decrease. | | | remain unchanged. | | | decrease or increase depending on the size of the price change. | The idea that a consumer is limited to selecting a bundle of goods that is affordable is captured by the: Answer | budget constraint. | | | indifference curve. | | | consumer equilibrium. | | | price changes. | Suppose market demand and supply are given by Qd = 100 – 2P and QS = 5 + 3P. If a price ceiling of $15 is imposed, Answer | | there will be a surplus of 40 units. | | | there will be neither a surplus or shortage. | | | there will be a shortage of 40 units. | | | there will be a shortage of 20 units. | The minimum legal price that can be charged in a market is: Answer | | a pric e floor. | | | a price ceiling. | | | non-pecuniary price. | | | full economic price. | Suppose that good X is a substitute for good Y.Then an increase in the price of good Y leads to Answer | | an increase in the demand of good X. | | | a decrease in the demand of good X. | | | a decrease in the supply of good X. | | | an increase in the supply of good X. | In a competitive market, the market demand is Qd = 60 – 6P and the market supply is Qs = 4P. A price ceiling of $3 will result in a Answer | | shortage of 30 units. | | | shortage of 15 units. | | | surplus of 30 units. | | | surplus of 12 units| As the usage of an input increases, marginal product Answer | | initially increases then begins to decline. | | initially decreases then begins to increase. | | | consistently decreases. | | | consistently increases. | Costs that are forever lost after they have been paid are: Answer | | Production costs. | | | Fixed costs. | | | Sunk costs. | | | Variable costs. | The maximum am ount of output that can be produced with K units of capital and L units of labor is the: Answer | | Production function. | | | Technological constraint. | | | Research and development schedule. | | | Total product. | An isocost line Answer | | represents the combinations of w and K that cost the firm the same amount of money. | | represents the combinations of K and L that cost the firm the same amount of money. | | | represents the combinations of r and w that cost the firm the same amount of money. | | | has a convex shape. | Demand is more inelastic in the short-term because consumers: Answer | | are impatient. | | | have no time to find available substitutes. | | | are present-oriented. | | | are neither impatient, have no time to find available substitutes nor are present-oriented. | Which of the following factors would not affect the own-price elasticity of a good? Answer | | Time. | | | Price of an input. | | Available substitutes. | | | Expenditure share. | Use the figure ab ove to calculate the income elasticity of demand when income increases from $25,000 to $30,000. Answer | | -0. 10 | | | -1. 10 | | | 0. 1818 | | | 0. 20 | | | 1. 10| ? As a rule-of-thumb, a parameter estimate is statistically different from zero when the absolute value of the t-statistic is: Answer | | zero. | | | less than one. | | | greater than or equal to one. | | | greater than or equal to two. | In order to maximize net benefits, firms should produce where: Answer | | total benefits equal total costs. | | | profits are zero. | | marginal cost is minimized. | | | marginal benefits equal marginal costs| | | | Scarce resources are ultimately allocated toward the production of goods most wanted by society because: Answer | | firms attempt to maximize profits. | | | they are most efficiently utilized in these areas. | | | consumers demand inexpensive goods and services. | | | managers are benevolent. | Generally when calculating profits as total revenue minus total costs, accountin g profits are larger than economic profits because economists take into account Answer | | only explicit costs. | | | only implicit costs. | | both explicit and implicit costs. | | | both types of profits are always equal because they account for the same costs. | | | | To an economist, maximizing profit is: Answer | | maximizing the value of the firm. | | | maximizing the current year's profits. | | | minimizing the permanent total costs. | | | minimizing the future risks| At the point of consumer equilibrium the slope of the budget line is equal to the: Answer | | market rate of substitution. | | | indifference curve. | | | marginal rate of substitution. | | | consumer preference. | If the price of good X increases, what will happen to the budget line?Answer | | It will have a parallel shift inward. | | | It will have a parallel shift outward. | | | It will become steeper. | | | It will become flatter. | The possible goods and services a consumer can afford to consume represents t he: Answer | | consumer behavior. | | | consumer preferences. | | | consumer status. | | | consumer opportunities. | | | | | | | At what level of output does marginal cost equal marginal revenue? Answer | | 1. | | | 2. | | | 3. | | | 4. | If marginal benefits exceed marginal costs, it is profitable to: Answer | | increase Q. | | | decrease Q. | | | stay at that level of Q. | | all of the statements associated with this question are correct| The change in total output attributable to the last unit of an input is the: Answer | | Total product. | | | Average product. | | | Marginal product. | | | Marginal return. | The combinations of inputs that produce a given level of output are depicted by: Answer | | Indifference curves. | | | Budget lines. | | | Isocost curves. | | | Isoquants. | ? Suppose the demand for good X is given by Qdx = 20 – 4Px + 2Py + M. The price of good X is $5, the price of good Y is $15, and income is $150. Given these prices and income, how much of good X w ill be purchased?Answer | | 160. | | | 180. | | | 220. | | | None of the statements associated with this question are correct. | Which of the following pairs of goods are probably complements? Answer | | televisions and roller skates. | | | frozen yogurt and ice cream. | | | steak and chicken. | | | hamburgers and ketchup. | A change in income will not lead to: Answer | | a movement along the demand curve. | | | a leftward shift of the demand curve. | | | a rightward shift of the demand curve. | | | all of the statements associated with the question are correct. | Suppose market demand and supply are given by Qd = 100 – 2P and QS = 5 + 3P.The equilibrium price is: Answer | | $15. | | | $19. | | | $17. | | | $20. | The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is: Answer | | elastic. | | | unitary. | | | falling. | | | inelastic. | In the figure above, what is the point price elasticity of demand when price is $60? Answer | | -0 . 50 | | | -0. 75 | | | -1. 00 | | | -1. 60 | | | -2. 00| Demand is perfectly elastic when the absolute value of the own price elasticity of demand is: Answer | | zero. | | | one. | | | infinite. | | | unknown. | Which of the following provides a measure of the overall fit of a regression?Answer | | t-statistic. | | | F-statistic and R-Square. | | | p-value. | | | the t-statistic and the p-value. | | | | When marginal revenue is positive, demand is Answer Selected Answer: elastic. The short run response of quantity demanded to a change in price is usually: Answer Selected Answer: Less than the long run response. Suppose demand is given by Q xd = 50 – 4Px + 6Py + Ax, where Px = $4, Py = $2, and Ax = $50. What is the quantity demanded of good x? Answer Selected Answer: 96. A price elasticity of zero corresponds to a demand curve that is: Answer Selected Answer: VerticalEconomics Answer Selected Answer: exists because of the scarcity. Good A is an inferior good, an increase in i ncome leads to: Answer Selected Answer: a decrease in the demand for good A. A price ceiling is Answer Selected Answer: the maximum legal price that can be charged in a market. A floor price is Answer Selected Answer: the minimum legal price that can be charged in a market. Suppose the demand for X is given by Qxd = 100 – 2PX + 4PY + 10M + 2A, where PX represents the price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X.Based on this information, we know that good X is a Answer Selected Answer: substitute for good Y and a normal good. The law of supply states that, holding all else constant, as the price of a good falls: Answer Selected Answer: quantity supplied falls. If the marginal product per dollar spent on capital is less than the marginal product per dollar spent on labor, then in order to minimize costs the firm should use Answer Selected Answer: less labor and more capital. Which of the following â€Å"costs† coul d a firm that wants to remain in business avoid if it halted current production? Answer Selected Answer:Variable costs. The marginal rate of technical substitution Answer Selected Answer: is the absolute value of the slope of the isoquant. Accounting profits are: Answer Selected Answer: total revenue minus total cost. Which of the following is an implicit cost to a firm that produces a good or service? Answer Selected Answer: foregone profits of producing a different good or service. The elasticity that measures the responsiveness of consumer demand to changes in income is the: Answer Selected Answer: income elasticity. Demand tends to be Answer Selected Answer: more inelastic in the short-term than in the long-term.What is/are the important things that must be developed when characterizing consumer behavior? Answer Selected Answer: Consumer preferences and consumer opportunities. When quantity demanded exceeds quantity supplied Answer Selected Answer: the price is below the equilib rium price. Graphically, an increase in the number of vegetarians will cause the demand curve for Tofu (a meat substitute) to Answer Selected Answer: shift rightward. Which of the following can explain an increase in the demand for housing in retirement communities? Answer Selected Answer: An increase in the population of the elderly.Demand shifters do not include Answer Selected Answer: the price of the good. If the price of an input rises, producers are willing to produce Answer Selected Answer: less output at each given price. If marginal costs exceed marginal benefits, then: Answer Selected Answer: the firm should decrease its production level. The optimal amount of studying is determined by comparing: Answer Selected Answer: marginal benefit and the marginal cost of studying. Each week Bill buys exactly 7 bottles of cola regardless of its price. Bill's own price elasticity of demand for cola in absolute value is: AnswerSelected Answer: less than one. The long-run is defined as Answer Selected Answer: the horizon in which the manager can adjust all factors of production. Economies of scale exist whenever long-run average costs Answer Selected Answer: decrease as output is increased. Constant returns to scale exist when long-run average costs Answer Selected Answer: remain constant as output is increased. Consumers adjust their purchasing behavior so that: Answer Selected Answer: the ratio of prices they pay equals their marginal rate of substitution. The demand curve for a good is horizontal when it is: Answer Selected Answer: perfectly elastic good. The cross price elasticity of demand between goods X and Y is -3. 5. If the price of X decreases by 7%, the quantity demanded of Y will: Answer Selected Answer: decrease by 24. 5%. If the absolute value of the own price elasticity of demand is greater than one, then demand is said to be Answer Selected Answer: elastic. If consumers expect future prices to be higher Answer Selected Answer: stockpiling will happ en when products are durable in nature. The market supply curve indicates the total quantity all producers in a competitive market would produce at each price, AnswerSelected Answer: allowing input price to vary. Technological advances will cause the supply curve to: Answer Selected Answer: shift to the right. The demand curve for a good is horizontal when it is: Answer Selected Answer: a perfectly elastic good. The market supply curve indicates the total quantity all producers in a competitive market would produce at each price, Answer Selected Answer: holding all supply shifters fixed. When government imposes a price floor above the market price, the result will be that Answer Selected Answer: surpluses occur. If income increases, the budget lineAnswer Selected Answer: shifts to the right. The value of marginal product of an input is the value of the Answer Selected Answer: output produced by the last unit of an input. Which of the following conditions is true when a producer mini mizes the cost of producing a given level of output? Answer Selected Answer: The marginal product per dollar spent on all inputs is equal and the MRTS is equal to the ratio of the quantity of inputs. Since most consumers spend very little on salt, a small increase in the price of salt will Answer Selected Answer: not reduce quantity demanded by very much.The elasticity which shows the responsiveness of the demand for a good due to changes in the price of a related good is the: Answer Selected Answer: cross-price elasticity. Good X is a normal good if an increase in income leads to Answer Selected Answer: an increase in the demand for good X. If A and B are complements, an increase in the price of good A would: Answer Selected Answer: lead to a decrease in demand for B. For a wood furniture manufacturer, an increase in the cost of lumber will cause the supply curve to:Answer Selected Answer: shift to the left.Which of the following conditions is true when a producer minimizes the cos t of producing a given level of output? Answer Selected Answer: The marginal product per dollar spent on all inputs is equal. The long-run is defined as Answer Selected Answer: the horizon in which the manager can adjust all factors of production. What is the horizontal intercept of the budget line, given that M = $1,000, PX = $50, and PY = $40? Answer Selected Answer: 20. 0. Given that income is $750 and PX = $32 and PY = $8, what is the market rate of substitution between goods X and Y? Answer Selected Answer: 4