ECO Final Exam Study

Question 1

Both households and societies face many decisions because a. resources are scarce b. populations may increase or decrease over time c. wages for households and therefore society fluctuate business cycles d. people, by nature, tend to disagree

Answer 1

resources are scarce

Question 2

A rational decision maker takes an action only if the a. marginal benefit is less than the marginal costb. marginal benefit is greater than the marginal costc. average benefit is greater than the average costd. any benefit is greater than all cost

Answer 2

marginal benefit is greater than the marginal cost

Question 3

Sally decides to spend 6 hours working overtime rather than watching a video with her friends. She earns $8 an hour. Her opportunity cost of working isa. the $48 she earns workingb. the $48 minus the enjoyment she would have received from watching a videoc. the enjoyment she would have received when she watched the videod. nothing, since she would have received less than $24 of enjoyment from the video

Answer 3

the enjoyment she would have received when she watched the video

Question 4

Which one is correct about market economy?a. government agency controls all informationb. former Soviet Union had market economyc. decentralized households and firms who seek self interest interact in goods and service marketd. all of the above answers are correct

Answer 4

decentralized households and firms who seek self interest interact in goods and service market

Question 5

Which is the correct answer about market failure?a. it is a situation in which the market allocates resources equitablyb. it is a situation in which the market allocates resources efficientlyc. it appears when externalities existd. all of the above answers are correct

Answer 5

it appears when externalities exist

Question 6

In the simple circular-flow diagram, which is correct?a. firms own the factors of productionb. households sell the goods and services that firms producec. two markets are a market for goods and services and a market for international traded. all of the above are incorrect

Answer 6

all of the above are incorrect

Question 7

When constructing a simple production possibilities frontier, all of the following are assumptions excepta. all of the economy’s resources are being usedb. the economy has a fixed level of technologyc. the economy has fixed resourcesd. there are two decision makers in the economy

Answer 7

there are two decision makers in the economy

Question 8

The production possibilities frontier is bow shaped becausea. resources are not perfectly or easily shift-ableb. the amount of resources increasesc. the level of technology increasesd. both b and c are correct

Answer 8

resources are not perfectly or easily shift-able

Question 9

Which is the correct sequence of the number of sellers from most to least?a. perfect competitive, oligopoly, monopolistic competition, and monopolyb. perfect competitive, monopolistic competition, oligopoly, monopolyc. monopoly, oligopoly, monopolistic competition, perfect competitived. monopolistic competition, monopoly, oligopoly, perfect competitive

Answer 9

perfect competitive, monopolistic competition, oligopoly, monopoly

Question 10

If Alice receives a decrease in her pay, we would expecta. Alice’s demand for each good she purchases to decreaseb. Alice’s demand for normal goods to decreasec. Alice’s demand for inferior goods to decreased. Alice’s demand for substitute goods to decrease

Answer 10

Alice’s demand for normal goods to decrease

Question 11

If salsa and chips are complements, a decrease in the price of chips will result in a. an increase in demand for chipsb. an increase in supply of chipsc. an increase in demand for salsad. an increase in supply of salsa

Answer 11

an increase in demand for salsa

Question 12

On the graph, shifting the demand curve to the right could be caused bya. an increase in input priceb. an increase in the price of the good itselfc. an increase in the price of a complimentd. an increase in the price of a substitute

Answer 12

an increase in the price of a substitute

Question 13

Which of the following is correct to suppliers?a. If the prices of inputs for the good decrease, the supply curve of the good shifts rightb. If technology improves, then the supply curve shifts leftc. If the rice of the good itself rises, then the supply curve shifts rightd. If consumer income rises, then the supply curve shifts left

Answer 13

If the prices of inputs for the good decrease, the supply curve of the good shifts right

Question 14

We sum the individual supply curves ______ to obtain the market supply.a. verticallyb. horizontallyc. diagonallyd. and then averaged

Answer 14

horizontally

Question 15

If the supply of a product increases, we would expecta. both equilibrium price and equilibrium quantity to increaseb. both equilibrium price and equilibrium quantity to decreasec. equilibrium price to increase and equilibrium quantity to decreased. equilibrium price to decrease and equilibrium quantity to increase

Answer 15

equilibrium price to decrease and equilibrium quantity to increase

Question 16

What would happen to the equilibrium price and quantity of tea if the wages of tea pickers rose and the price of coffee rose at the same time? Coffee and tea are substitutesa. quantity will fall and the effect on price is ambiguousb. quantity will rise and the effect on price is ambiguousc. price will fall and the effect on quantity is ambiguousd. price will rise and the effect on quantity is ambiguous

Answer 16

price will rise and the effect on quantity is ambiguous

Question 17

Suppose the market price of roses is $20.00 per dozen. The equilibrium price of roses is $15.00 per dozen. We would expect a a. shortage to exist and the market price of roses to decreaseb. shortage to exist and the market price of roses to increasec. surplus to exist and the market price of roses to decreased. surplus to exist and the market price of roses to increase

Answer 17

surplus to exist and the market price of roses to decrease

Question 18

On the production possibilities frontier shown, which point or points are efficient? a. B b. B, C c. D d. A, D

Answer 18

A, D

Question 19

On the production possibilities frontier shown, the opportunity cost to the economy of getting 20 additional toasters by moving from point D to point A is a. 60 toothbrushes b. 50 toothbrushes c. 40 toothbrushes d. 30 toothbrushes

Answer 19

30 toothbrushes

Question 20

According to the graph shown, price of roses and quantity of roses have a. a positive correlation b. a negative correlation c. a random correlation d. no correlation

Answer 20

a negative correlation

Question 21

In the graph shown, the slope of the curve between points A and B is a. 5/2 b. 2/5 c. -5/2 d. -2/5

Answer 21

-5/2

Question 22

The movement from point A to point B on the graph is called a. an increase in the quantity supplied b. a decrease in the quantity supplied c. an increase in supply d. a decrease in supply

Answer 22

an increase in the quantity supplied

Question 23

The price elasticity of demand measures how responsivea. buyers are to a change in incomeb. sellers are to a change in pricec. buyers are to a change in priced. sellers are to a change in buyers incomes

Answer 23

buyers are to a change in price

Question 24

Suppose there is a 5 percent increase in the price of good X and resulting a 5 percent decrease in the quantity demanded of good X. Price elasticity of demand for X isa. 1b. 5c. 0d. infinite

Answer 24

1

Question 25

Which of the following is NOT a main determinant of the price elasticity of demand?a. the availability of close substitutesb. the definition of the marketc. time horizond. purchasing power

Answer 25

purchasing power

Question 26

Which of the following would probably have the most elastic demand?a. insulinb. restaurant mealsc. gasolined. residential electricity

Answer 26

restaurant meals

Question 27

To determine whether a good is considered a substitute or a complement to buyers, one would consider the goodsa. income elasticity of demandb. price elasticity of demandc. price elasticity of supplyd. cross-price elasticity of demand

Answer 27

cross-price elasticity of demand

Question 28

Last year, Joan bought 50 pounds of hamburger when the household income was $40,000. This year, the household income is $60,000 and Joan buys only 10 pounds of hamburger. All else constant Joans income elasticity of demand for hamburger isa. positive, so Joan considers hamburger to be an inferior goodb. positive, so Joan considers hamburger to be an normal goodc. negative, so Joan considers hamburger to be an inferior goodd. negative, so Joan considers hamburger to be an normal good

Answer 28

negative, so Joan considers hamburger to be an inferior good

Question 29

If the demand for eggs is inelastic, an increase in the price of eggs willa. increase total revenue of egg sellersb. decrease total revenue of egg sellersc. not change total revenue of egg sellersd.there is not enough info to answer this question

Answer 29

increase total revenue of egg sellers

Question 30

According to the graph, which demand curve is most elastic as price falls from Pa to Pb? a. D1 b. D2 c. D3 d. All of the above are equally elastic

Answer 30

D1

Question 31

If a 60 percent change in price causes a 30 percent change in quantity supplied, then the price elasticity of supply isa. 1/2 and supply is elasticb. 1/2 and supply is inelasticc. 2 and supply is inelasticd. 2 and supply is elastic

Answer 31

1/2 and supply is inelastic

Question 32

Which of the following is the main determinant of the price elasticity of supply isa. time horizonb. the definition of the marketc. the number of close substitutesd. luxuries vs. necessities

Answer 32

time horizon

Question 33

Willingness to pay measures the a. amount a buyer is willing to pay for a good minus the amount the buyer actually pays for itb. amount a sellers actually receives for a good minus the amount the sellers is willing to accept.c. maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to acceptd. maximum amount that a buyer is willing and able to pay for a good

Answer 33

maximum amount that a buyer is willing and able to pay for a good

Question 34

Consumer surplus is a. a buyers willingness to pay minus the priceb. a buyers willingness to pay plus the pricec. the price of the product minus the buyers willingness to payd. when the buyers willingness to pay and the price of the product are equal

Answer 34

a buyers willingness to pay minus the price

Question 35

Producer surplus equalsa. value to buyers - amount paid by buyersb. price - cost of sellersc. willingness to pay - cost of sellersd. value to buyers - amount paid by buyers + amount received by sellers - cost of sellers

Answer 35

price - cost of sellers

Question 36

A supply curve can be used to measure producer surplus because it reflectsa. the actions of sellersb. quantity suppliedc. sellers costd. the amount that will be purchased by consumers in the market

Answer 36

sellers cost

Question 37

What happens to consumer surplus if firms produce cars at the lower cost due to technology improvements in a car market?a. it decreaseb. it increasesc. it is unchangedd. it may increase, decrease, or remain unchanged

Answer 37

it increases

Question 38

Which of the following is correct about efficiency?a. producers produce the most goods and services at the highest costb. efficiency is attained when total surplus is maximizedc. equilibrium in the perfectly competitive market is efficient if there is no externalityd. a labor market is efficient even thought price floor policy is imposed

Answer 38

equilibrium in the perfectly competitive market is efficient if there is no externality

Question 39

Which of the following statements is correct about the quantity Q2? a. the market is in equilibrium b. the value to buyers is greater than the cost to sellers c. the sum of consumers surplus and producer surplus is maximized d. the value to buyers is less than the cost to sellers

Answer 39

the value to buyers is greater than the cost to sellers

Question 40

When a price ceiling is imposed and is also binding in the market, what are the actual quantity and actual price of a good? a. Q1 and P1 b. Q2 and P2 c. Q2 and P3 d. Q3 and P3

Answer 40

Q2 and P3

Question 41

If the minimum wage is set and binding at a price of P3 which area represents consumer surplus? a. A b. A + B + C c. A + B + D d. D + E + F

Answer 41

A

Question 42

If the minimum wage is set and binding at a price of P3 which area represents the deadweight loss from total surplus? a. G + H b. A + B c. A + B + C d. C + E

Answer 42

C + E

Question 43

Dolores used to work as a high school teacher for $40,000 per year but quit in order to start her own catering business. To buy the necessary equipment, she withdrew $20,000 from her savings, (which paid 3% interest) and borrowed $30,000 from bank at 3% interest per year. Last year she paid $25,000 for ingredients and had revenue of $60,000. Calculate her economic profit.a. economic profit is $34,100b. economic profit is $33,500c. economic profit is -$5,900d. economic profit is -$6,500

Answer 43

economic profit is -$6,500

Question 44

For a firm, the relationship between the quantity of input and quantity of output is called the a. profit functionb. production functionc. total - cost functiond. quantity function

Answer 44

production function

Question 45

When increases in output from an additional labor is smaller than increases in output resulted from the previous units of labor, we have the property of a. diminishing outputb. diminishing laborc. diminishing marginal product of labord. negative marginal product

Answer 45

diminishing marginal product of labor

Question 46

Which of the following statements about marginal product is wrong for a firm that uses labor to produce output?a. marginal product represents the slope of the production functionb. when marginal product > average product, average product is decreasingc. marginal product is defined as the changes in the quantity of output obtained by one additional unit of the inputd. when marginal product

Answer 46

when marginal product > average product, average product is decreasing

Question 47

The amount changes in the total cost, when the firm produces one additional unit of output, is calleda. average costb. marginal costc. fixed costd. variable cost

Answer 47

marginal cost

Question 48

When marginal cost is greater than average total cost,a. average fixed cost must be risingb. marginal product must be always fallingc. average total cost must be risingd. average total cost must be falling

Answer 48

average total cost must be rising

Question 49

What is the fixed cost of producing zero widget? a. $0 b. $5 c. $10 d. it cant be determined from the info given

Answer 49

$10

Question 50

The marginal cost of producing the fourth widget is a. $1b. $3c. $4d. $5INSERT PICTURE

Answer 50

$4

Question 51

Which of the curves is most likely to represent average total cost? a. A b. B c. C d. D

Answer 51

B

Question 52

Which of the curves is most likely to represent marginal cost? a. A b. B c. C d. D

Answer 52

A

Question 53

When a firm in a competitive market receives $500 in total revenue, it has average revenue of $10. What is the price and how many units were sold?a. $5 and 100b. $1 and 500c. $10 and 50d. The answer cannot be determined from the information given

Answer 53

$10 and 50

Question 54

At a production level of 8 units which of the following is true? a. marginal cost is $6 b. total revenue is less than variable cost c. marginal revenue is less than marginal cost d. all of the above re correct

Answer 54

marginal revenue is less than marginal cost

Question 55

At which quantity of output is marginal revenue equal to marginal cost? a. 4 b. 6 c. 8 d. all of the choices are correct

Answer 55

6

Question 56

The maximum profit available to this firm is a. $5 b. $4 c. $3 d. $2

Answer 56

$3

Question 57

A firm in a competitive market has the following cost structure: (Hint ATC and AVC) This firm will a. shut down if price is and below $4 and exit if price is and below $7 b. shut down if price is $7 and exit if price is and below $4 c. shut down if price is $6 and exit if price is and below $6 d. shut down if price is $9 and exit if price is $9

Answer 57

shut down if price is and below $4 and exit if price is and below $7

Question 58

A competitive firm always earns a negative economic profit in the short run if,a. market price is greater than TCb. market price is greater than its min. AVCc. market price is lower than its min. ATCd. market price is greater than its min ATC

Answer 58

market price is lower than its min. ATC

Question 59

Which one is correct about the long-run equilibrium of a market?a. some firms exit the marketb. the price of the good exceeds average total costc. firms are operating at their efficient scaled. average total cost exceeds the price of the good

Answer 59

firms are operating at their efficient scale

Question 60

When the market price is P3 the firm finds at P3 that a. marginal revenue exceeds marginal cost at a production level of Q2 b. if it produces at output level Q3 it will earn a positive profit c. producing output at Q4 would maximize the firms profit d. all of the above are correct

Answer 60

marginal revenue exceeds marginal cost at a production level of Q2

Question 61

When the market price is P1 the firm finds at P1 that a. fixed cost is higher at a production level of Q1 than it is at Q3 b. it is unwilling to produce any output c. it should produce Q4 units of output d. it should produce Q1 units of output

Answer 61

it is unwilling to produce any output

Question 62

When the market price changes from P3 to P4 the firm finds that a. fixed costs are lower at a production level of Q4 than Q3 b. average revenue exceeds marginal revenue at a production level of Q4 c. profit is maximized at a production level of Q1 at P4 d. it can earn a positive profit at the production level of Q4 at P4

Answer 62

it can earn a positive profit at the production level of Q4 at P4

Question 63

Which of the following is not an example of the opportunity cost of going to school?a. the money a student could have earned by working if he had not gone to collegeb. the nap a student could have enjoyed if he had not attended classc. the party a student could have enjoyed if he had not stayed in to to study for his examd. the total amount of money a student spends on rent for his apartment while attending school

Answer 63

the total amount of money a student spends on rent for his apartment while attending school

Question 64

What will happen in the crude oil market if buyers are expecting higher crude oil price in the near future?a. the future demand for crude oil will increaseb. the current demand for crude oil will increasec. the current quantity demanded for crude oil will be decreasedd. the supply of crude oil will increase

Answer 64

the current demand for crude oil will increase

Question 65

Which of the following items is not a factor of production?a. laborb. landc. capitald. money

Answer 65

money

Question 66

Which of the following statements about markets is most accurate?a. markets are usually a good way to organize economic activityb. markets are usually inferior to central planning as a way to organize economic activityc. markets fail and are therefore not an acceptable way to organize economic activityd. markets are a good way to organize economic activity in developed nations, but not in less developed nations

Answer 66

markets are usually a good way to organize economic activity

Question 67

An example of an oligopoly market in the U.S. would be the a. piano lessonsb. #2 wooden pencilc. local utilities such as tap waterd. breakfast cereals

Answer 67

breakfast cereals

Question 68

Here are production possibilities for an imaginary economy for a given yearCars - Newspaper10 - 40012 - 34014 - ?In the production possibilities frontiers bow shaped, than what number might be suitable in place of the "?"a. 280b. 300c. 270d. 290

Answer 68

270

Question 69

Market failure can be caused bya. low consumer demandb. equilibrium pricesc. externalities and market powerd. high prices and foreign competition

Answer 69

externalities and market power

Question 70

Traci is planning to sell her house, and she is considering making two upgrades to the house before listing it for sale. Replacing the carpeting will cost her $3000 and replacing the roof will cost her $6000. Traci expects the new carpeting to increase the value of her house by $2500 and the new roof to increase the value of her house by $7500.a. Traci should replace the carpeting but not replace the roofb. Traci should replace the roof but not the carpetingc. Traci should not make either improvement to her housed. Traci should make both improvements to her house

Answer 70

Traci should replace the roof but not the carpeting

Question 71

Which of the following statements about the circular -flow diagram is correct?a. one must imagine that the economy operates without money in order to make sense of the diagramb. the diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firmsc. in the diagram, households use the factors of production to produce goods and servicesd. all of the above are correct

Answer 71

the diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms

Question 72

When a production possibilities frontier is linear it showsa. that resources are perfectly shift-able from the production of one good to anotherb. truer picture of real life than a bow-shaped production possibilities frontierc. an example of increasing opportunity costd. all of the above are correct

Answer 72

that resources are perfectly shift-able from the production

Question 73

Which topics are the parts of Microeconomics?i) the impact of a change in consumer income on the purchase of luxury automobilesii) the effect of a change in the price of Coke on the purchase of Pepsiiii) the impact of a war in the Middle East on the rate of inflation in the United Statesa. i & iib. ii & iiic. i & iiid. i, ii, & iii

Answer 73

i & ii

Question 74

When the government implements programs such as progressive income taxes, which of the following is likely to occur?a. equity is increased and efficiency is increasedb. equity is increased and efficiency is decreasedc. equity is decreased and efficiency is increasedd. equity is decreased and efficiency is decreased

Answer 74

equity is increased and efficiency is decreased

Question 75

A decrease in the price of milk woulda. decrease the supply of milkb. increase the quantity demanded of milkc. give producers an incentive to increase investment on their current productiond. shift the supply curve of milk to the left

Answer 75

increase the quantity demanded of milk

Question 76

A certain production possibilities frontier shows production possibilities for two goods; wheat and shirt. Which of the following concepts can not be illustrated in this model?a. the flow of dollars between (i) sellers of wheat and shirts and (ii) buyers of wheat and shirtsb. the tradeoff between production of wheat and production of shirtsc. the opportunity cost of shirts in terms of wheatd. the effect of economic growth on production possibilities involving wheat and shirts

Answer 76

the flow of dollars between (i) sellers of wheat and shirts and (ii) buyers of wheat and shirts

Question 77

When quantity supplied increases at every price we know that the supply curve has a. shifted to the leftb. shifted to the rightc. not changed, but we have moved down the curve to a new pointd. not changed, but we have moved up the curve to a new point

Answer 77

shifted to the right

Question 78

A likely effect of government policies that redistributes income and wealth from the wealthy to the poor is that those policiesa. enhance equityb. reduce efficiencyc. reduce the reward for working hardd. all of the above are correct

Answer 78

all of the above are correct

Question 79

Bananas and apples are substitutes for each other. A decrease in the price of bananas would affect to a. a decrease in supply of bananasb. a decrease in demand for bananasc. a decrease in supply of applesd. a decrease in demand for apples

Answer 79

a decrease in demand for apples

Question 80

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto workers accept lower wages and automobile insurance becomes more expensive?a. price will riseb. price will fallc. price will stay exactly the samed. the price change will be ambiguous

Answer 80

price will fall

Question 81

Factors of production in the circular flow diagram area. used to produce goods and services by firmsb. sold by firmsc. abundant in most economiesd. bought by households

Answer 81

used to produce goods and services by firms

Question 82

Adam Smith believed that a market economy can produce a socially desirable outcome because individuals are motivated by their own selfish interest.True or False

Answer 82

True

Question 83

An economic model cannot accurately explain how the economy is organized because it does not include all features of the real world.True or False

Answer 83

True

Question 84

"Pollution taxes decrease the quantity of pollution generated by firms" is a positive statement. True or False

Answer 84

True

Question 85

Precisely define the law of demand.

Answer 85

The claim that, all things constant, an increase in a price of a good will result in a decrease in the quantity demanded for said good.

Question 86

Suppose the price of bulletin boards is $25 per each. Laurens willingness to pay was $35, Leslies willingness to pay was $30, and Lydias willingness to pay was $20. Total consumer surplus from buyers would be a. $85b. $65c. $45d. $15

Answer 86

$15

Question 87

When the percentage change in the rental price of DVD movies is 60%, the percentage change in quantity demanded is 40%. We will know that price elasticity of demand for DVD rentals is a. elastic and the curve would be relatively flatb. elastic and the curve would be relatively steepc. inelastic and the curve would be relatively flatd. inelastic and the curve would be relatively steep

Answer 87

inelastic and the curve would be relatively steep

Question 88

A price floor, if it is bindinga. is a legal minimum on the price at which a good can be soldb. is a legal maximum on the price at which a good can be soldc. creates the actual market price in the market which is temporarily below the equilibrium priced. will usually result in a shortage

Answer 88

is a legal minimum on the price at which a good can be sold

Question 89

A perfectly inelastic demand curve will bea. verticalb. horizontalc. downward sloping to the rightd. upward sloping to the right

Answer 89

vertical

Question 90

Producer surplus in a market is a. the area below supply curveb. the distance from the supply curve to the horizontal axisc. the area below the price and above the supply curved. the area above the price and below the demand curve

Answer 90

he area below the price and above the supply curve

Question 91

Price elasticity of demand for beer: 0.23Cross price elasticity of demand between beer and wine: 0.31Cross price elasticity of demand between beer and pizzas -0.84Income elasticity of demand for beer -0.09Income elasticity of demand for wine: 5.03Income elasticity of demand for spirits: 1.21100% decrease in price of beer will causea. 0.23 decrease in quantity demanded for beerb. 0.23 increase in quantity demanded for beerc. 23% decrease in quantity demanded for beerd. 23% increase in quantity demanded for beer

Answer 91

23% increase in quantity demanded for beer

Question 92

Price elasticity of demand for beer: 0.23Cross price elasticity of demand between beer and wine: 0.31Cross price elasticity of demand between beer and pizzas -0.84Income elasticity of demand for beer -0.09Income elasticity of demand for wine: 5.03Income elasticity of demand for spirits: 1.21Choose the best answer. Beer and pizzas area. normal goodsb. inferior goodsc. substitute goodsd. complement goods

Answer 92

complement goods

Question 93

Orange juice and apple juice are substitutes. Good weather that sharply increases the orange harvest woulda. increase consumer surplus in the market for orange juice and decrease producer surplus in the market for apple juiceb. increase consumer surplus in the market for orange juice and increase producer surplus in the market for apple juicec. decrease consumer surplus in the market for orange juice and increase producer surplus in the market for apple juiced. decrease consumer surplus in the market for orange juice and decrease producer surplus in the market for apple juice

Answer 93

increase consumer surplus in the market for orange juice and decrease producer surplus in the market for apple juice

Question 94

An increase in the price of pure chocolate morsels from $2.25 to $2.45 causes Nestle to increase production from 125 bags to 145 bags. We know thata. the price elasticity of supply is elastic and equal to 1.74b. the price elasticity of supply is elastic and equal to 0.57c. the price elasticity of supply is inelastic and equal to 0.57d. the price elasticity of supply is inelastic and equal to 1.74

Answer 94

the price elasticity of supply is elastic and equal to 1.74

Question 95

The efficient scale to the quantity of output thata. maximizes marginal productb. maximizes profitc. minimizes average total costd. minimizes total cost

Answer 95

minimizes average total cost

Question 96

Which of the following expressions is correct? a. marginal cost = (change in quantity of output) / (change in total cost) b. average total cost = total cost / quantity of output c. total cost = fixed cost + marginal cost d. all of the above are correct

Answer 96

average total cost = total cost / quantity of output

Question 97

Total surplus equalsa. value to buyers - amount paid by buyersb. amount received by sellers - cost of sellersc. value to buyers - cost to sellersd. value to buyers + amount paid by buyers + amount received by sellers + costs of sellers

Answer 97

value to buyers - cost to sellers

Question 98

The owner of the local gasoline station finds out that demand for gasoline is quite inelastic. If the owner is only interested revenue, he shoulda. leave the price of gasolineb. lower the price of gasolinec. raise the price of gasolined. reduce cost

Answer 98

raise the price of gasoline

Question 99

If an increase in the price of a good results in an increase in total revenue for the firm then the supply of the good must bea. unit elasticb. inelasticc. elasticd. nothing can be said about price elasticity of supply from the information given

Answer 99

nothing can be said about price elasticity of supply from the information given

Question 100

If marginal cost is risinga. average variable cost must be fallingb. average fixed cost must be risingc. marginal product must be fallingd. marginal product must be rising

Answer 100

marginal product must be falling

Question 101

If a firm produces nothing, which of the following costs will be zero?a. total costb. fixed costc. opportunity costd. variable cost

Answer 101

variable cost

Question 102

The supply of a good will be more elastic if a. the more the good is considered a luxuryb. the broader the market is definedc. the quantity supplied is easily adjustabled. the shorter the time period is considered

Answer 102

the quantity supplied is easily adjustable

Question 103

If a seller receives a price exactly equal to his costs of producing goods, then a. his producer surplus is negativeb. his producer surplus is positivec. his producer surplus is zerod. consumers value is less than the costs to sellers on the good

Answer 103

his producer surplus is zero