ch 4. ch 5. ch 11. and ch 12. Flashcards
Which of the following is true at the output level where average total cost is at its minimum?
A) Marginal cost equals average total cost
B) Average total cost equals average fixed cost
C) Average variable cost equals fixed cost
D) Marginal cost equals average variable cost
A) Marginal cost equals average total cost
Jill Johnson owns a pizzeria. She currently produces 10,000 pizzas per month at a total cost of $500. If she produced one more pizza her total cost rises to $500.11. What does this tell us about Jill’s marginal cost of producing pizzas?
A) The marginal cost of producing pizzas is falling.
B) The marginal cost of producing pizzas is constant.
C) The marginal cost of producing pizzas cannot be determined without more information
D) The marginal cost of producing pizzas is rising.
D) The marginal cost of producing pizzas is rising.
Jonah lives in a small town where there is only one Mexican restaurant. Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant?
A) Demand is likely to be perfectly elastic
B) Demand is likely to be relatively inelastic
C) Demand is likely to be perfectly inelastic
D) Demand is likely to be relatively elastic
C) Demand is likely to be perfectly inelastic
When the average total cost is $16 and the total cost is $800, then the number of units the firm is producing is..
50
If 11 workers can produce 53 units of output while 12 workers can produce 56 units of output, what is the marginal product of the 12th worker?
3
The demand for all carbonated beverages is likely to be ___ the demand for Dr. Pepper.
Less elastic than
The price elasticity of demand for Stork ice cream is -4. Suppose you’re told that following a price increase, quantity demanded fell by 10%. What was the percentage change in price that brought about this change in quantity demanded?
2.5%
If 50 units are sold at a price of $20 and 80 units are sold at a price of $15, what is the absolute value of the price elasticity of demand? (use midpoint formula)
1.62
Pharmacies raise the price of insulin by 10% does total expenditure on insulin rise or fall?
Total revenue rises because it is inelastic
As a result of fare war, the price of a luxury cruise falls 20%. Does luxury cruise companies’ total revenue rise or fall?
Total revenue rises because it is elastic.
Willingness to pay
the maximum amount the buyer is willing to pay for that good
consumer surplus
the amount the buyer is willing to pay minus what the buyer actually pays
A cost that involves spending money
Explicit cost
A non-monetary opportunity cost
Implicit cost
the relationship between the inputs employed and the max out put of the firm.
Production function
