Mirco Test 1 (real test)

Question 1

Consumer surplus is the:

Answer 1

amount consumers are willing to pay for a good minus the amount the consumer actually pay for it

Question 2

Producer surplus is the:

Answer 2

amount consumers actually pay for a good minus the amount the sellers are willing to sell the good

Question 3

Total surplus equal

Answer 3

consumer surplus + producer surplus

Question 4

Deadweight loss is the result of

• disequilibrium
• underproduction
• overproduction

Answer 4

all of these are correct

Question 5

If a demand curve for a good were completely vertical, it would be considered:

Answer 5

perfectly inelastic

Question 6

Price elasticity of demand refers to the ratio of the:

Answer 6

percentage change in the quantity demanded of a good to a percentage change in its price

Question 7

If the percentage change in the quantity demanded of a good us less than the percentage change in price, price elasticity of demand is

Answer 7

inelastic

Question 8

Demand price elasticity measures

Answer 8

how consumers change their purchases in response to a change in the price of a product

Question 9

Elasticity measures how “sensitive” consumers are by measuring their change in ____ as the price of the product changes

Answer 9

quantity demanded

Question 10

Firms would like to know the price elasticity of demand for their products because it helps determine the effect of price changes on the firms’

Answer 10

revenues

Question 11

Two goods are complementary if:

Answer 11

they are used together

Question 12

An inferior good is:

Answer 12

one that consumers buy less of as their income rises

Question 13

The ability of a good to satisfy a want refers to its:

Answer 13

utility

Question 14

A util represents a unit of measurement for the:

Answer 14

happiness a person obtains from consuming a good

Question 15

Marginal utility is the change in:

Answer 15

total utility when an extra unit of output is consumed

Question 16

The change in total utility due to a 1-unit change in the quantity consumed is:

Answer 16

marginal utility

Question 17

The statement “as more of a good is consumed, the utility a person derives from each additional unit diminishes” is known as the:

Answer 17

law of diminishing marginal utility

Question 18

Consumer equilibrium exists when:

Answer 18

ratio of marginal utility to price for all goods and services is equal

Question 19

When Pepsi becomes more expensive relative to other beverages, people will purchase less pepsi. This observation is known as the:

Answer 19

substitution effect

Question 20

When a reduction in the price of a good allows a consumer to purchase more of all goods, this effect is called the:

Answer 20

income effect

Question 21

Which of the following is an explicit cost

Answer 21

the wages paid to workers

Question 22

Which of the following is NOT an explicit cost

Answer 22

the firm owner’s time

Question 23

The opportunity costs associated with the use of resources owned by a firm are

Answer 23

implicit costs

Question 24

Which of the following would be considered an implicit cost

Answer 24

foregone rent on assets owned by the firm

Question 25

The sum of the explicit and implicit costs incurred in the production process is called

Answer 25

total cost

Question 26

Economic profit is

Answer 26

total revenues minus total costs

Question 27

When total revenue minus total cost is equal to zero, the firm is

Answer 27

earning a normal profit

Question 28

Which of the following is an example of a fixed input - the acreage of a farmer's land - machinery - the size of a firm's plant

Answer 28

all of these

Question 29

Which of the following represents the key difference between the short run and the long run

Answer 29

in the short run, the firm makes commitments to a certain type of production technology, which are represented as fixed costs in the short run. For example, they have signed a lease on a particular production facility. These fixed costs do not exist in the long run.

Question 30

The short run is a time period such that

Answer 30

the existing firms in the market do not have sufficient time to increase the size of their existing plant or build a new factory

Question 31

The long run is a period of

Answer 31

sufficient length to allow a firm to alter its plant size and capacity and all other factors of production

Question 32

The increase in total output that results form a unit increase in one unit of a variable input is equal to the input's

Answer 32

marginal product

Question 33

The law of diminishing marginal returns implies that, in the short run

Answer 33

the marginal product of the variable input must eventually decrease

Question 34

The ___ is the situation in which the marginal product of labour is greater than zero and declining as more labour is hired.

Answer 34

law of diminishing returns

Question 35

Fixed costs are BEST defined as

Answer 35

cost that do not vary with output

Question 36

Which of the following is MOST likely to be a fixed cost for a business

Answer 36

property taxes on the firm's building

Question 37

Marginal cost is BEST defined as

Answer 37

the amounted added to total cost when one more unit of output is produced

Question 38

Economies of scale are created by greater efficiency of capital and by

Answer 38

increased specialization of labor

Question 39

If a firm's long-run average cost curve is rising, it is experiencing

Answer 39

diseconomies of scale

Question 40

Diseconomies of scale exist for all of the following reasons EXCEPT

Answer 40

firm size is too small