Midterm 2 Homework Quiz Questions (midterm2) Flashcards
- Assume a person is in consumer equilibrium in consuming goods A and B. The price of A is $20 and the price of B is $30. Then MUA/MUB is
a. 2/5
b. 1/2
c. 2/3
d. 3/2
A:
2/3
- Which of the following is a feature of agricultural markets?a. The Price Subsidy Program with Target Prices may induce farmers to produce a larger quantity of their crop.
b. Demand has high price elasticity.
c. Weather changes cause the supply curve to shift.
d. Production quotas imposed by the government usually result in a surplus.
e. both a and c
e. both a and c
a. The Price Subsidy Program with Target Prices may induce farmers to produce a larger quantity of their crop.
c. Weather changes cause the supply curve to shift.
- If the government puts an effective price ceiling on a commodity, then
a. there will be excess demand for the commodity.
b. a black market cannot exist.
c. there will be excess supply for the commodity.
d. there will not be a shortage in this market.
a. there will be excess demand for the commodity.
- The total utility from consuming good A will peak out and decline if
a. the marginal utility from consuming good A peaks out and declines.
b. the marginal utility from consuming good A reaches zero and becomes negative.
c. the marginal utility from consuming good A is rising.
d. the marginal utility from consuming good A becomes constant.
b. the marginal utility from consuming good A reaches zero and becomes negative.
- Suppose for Sam the marginal utility of bread is 35 and the marginal utility of butter is 40; the price of bread is $1 and the price of butter is also $1. Then Sam should
a. buy less bread to maximize his total utility.
b. buy less butter to maximize his total utility.
c. do nothing since he is maximizing his total utility.
d. buy more bread to maximize his marginal utility.
a. buy less bread to maximize his total utility.
- Matt had $100 to spend on steak and coffee last week. Suppose this week Matt has $200 to buy steak and coffee, but both the price of steak and the price of coffee have doubled. Then
a. his budget line shifts outward in a parallel manner.
b. his budget line shifts inward in a parallel manner.
c. his budget line shifts outward but not in a parallel manner.
d. his budget line shifts inward but not in a parallel manner.
e. his budget line does not shift at all.
e. his budget line does not shift at all.
- Which of the following statements is TRUE?
a. When the average product is increasing, the marginal product is always increasing.
b. When the average product is increasing, the marginal product is always higher than the average product.
c. When the average product is decreasing, the marginal product is always negative.
d. none of above
b. When the average product is increasing, the marginal product is always higher than the average product.
- Which of following statements is TRUE?
a. Economic cost does not include any implicit costs.
b. Accounting cost includes only explicit costs.
c. Accounting cost includes depreciation.
d. Economic cost does not include forgone interest.
c. Accounting cost includes depreciation.
- A firm is producing 100 chairs. The average variable cost is $20 and average fixed cost is $10 for the production. Then the total cost of producing 100 chairs is
a. $1,000
b. $3,000
c. $5,000
d. $7,000
b. $3,000
- Which of the following is TRUE?
a. The long-run average cost curve touches one point of the short run average cost curves.
b. “Minimum efficient scale” is the quantity of output at which long-run average cost is largest.
c. “Economies of Scale” appear when the long-run average cost curve is increasing.
d. The long-run average cost curve plots the relationship between the average cost and output when capital is fixed.
The long-run average cost curve touches one point of the short run average cost curves
- When we have “constant returns to scale”, then
a. a doubling of spending on inputs always leads to less than doubling of output.
b. a doubling of spending on inputs always leads to more than doubling of output.
c. the long-run average cost curve is vertical.
d. the long-run average cost curve is horizontal
.. the long-run average cost curve is horizontal
- When the government uses a Price Support Program involving “inventory-holding”, then
a. when agricultural output is higher than expected, the government will sell crops.
b. when agricultural output is lower than expected, the government will buy crops.
c. when agricultural output is higher than expected, the government will buy crops.
d. the government causes the demand for crops to be perfectly elastic.
c. when agricultural output is higher than expected, the government will buy crops.
- In the short-run,
a. all factors of production can be altered.
b. only capital can be altered.
c. only variable factors of production can be altered.
d. the Law of Diminishing Marginal Product does not apply.
A: c. only variable factors of production can be altered.
- If Paul manages his own business instead of working for someone else, then for Paul,
a. accounting profits will be less than economic profits.
b. accounting profits will be greater than economic profits.
c. Paul’s business has no implicit costs.
d. Paul’s business has only explicit costs.
e. both b and c
b. accounting profits will be greater than economic profits.
- An effective rent control will
a. create a deadweight loss.
b. cause shortages of apartments to be greater in the short-run than in the long run.
c. cause shortages of apartments to be greater in the long-run than in the short- run.
d. cause a surplus of apartments in the long-run.
e. both a and c
e. both a and c
a. create a deadweight loss.
c. cause shortages of apartments to be greater in the long-run than in the short- run.
