Practice test 3 Flashcards
Suppose Ava buys only two things, e-books, and Matcha tea, and received the same satisfaction from the last book but she did from the last Matcha tea pot. Your books cost twice as much as Matcha tea, and she has spent all of her money. Diminishing marginal utility applies to both good cause she’s trying to maximize her utility. Ava should
Should buy more Matcha tea and fewer e-books
How much utilities gained by spending an additional dollar on tea cups?
MU cups/P cups
Budget lines for tangerines and water melons. For some time, Alberta had five dollars per month to spend on tangerines and water melons. The price of tangerines is $.50 and the price of watermelon is $.25. Which church shows what will happen to his budget line if his income decreases to $2.50
D
For Domingo, the optimum c consumption bundle is the one that——-his——-given his budget constraints
Maximizes, utility
It has a monthly income of $20 that can be spent on Bree and plums. The price of a wheel of Bree is five dollars and the price of a plum is $.50. Which bundle three and plums affordable for eve, but does not use all of her income.
One wheel of brie and 22 plums
If has a monthly income of $20 that can be spent on Bree and pumps. The price of a wheel with Fritas five dollars and the price of a plum is $.50. Which bundle of Bree and plums lies on eves budget line.
2 wheels of brie and 20 plums
Margaret Spencer entire budget on smoothies and muffins. The last smoothie provided Margaret with an additional util, and the last muffin provided her with 25 additional util. The price of a muffin is twice that of a smoothie. Assuming that the mission marginal utility of us are both good, Margaret should consume.—— smoothies, and—— muffins.
Fewer, more
Josephines budget line reflects the —— available to Josephine if she spends —- of her income.
Consumption bundles, all
Eve has a monthly income of $20 that she can spend on brie and plums. The price of a wheel of brie is $5 and the proce of plum is $0.50. The equation for Eves daily budget constraint can be written
5(B)+0.5(P) is greater than or equal to 20
If total utility is rising as more pasta is consumed, we can definitely say that marginal utility is:
Greater than 0
Assume yhat Tanya spends all of her income on Baklava and prunes and is purchasing the optimal consumption bundle. If MUB /MUP = 3 and the price of baklava is $12 then the price of prunes must be:
$4
An individuals—— function indicates the total utility generated by the individuals consumption bundle
Utility
Ahmed spend all of his income on chimichangas and prickly pear margaritas. His income is $100, the price of chimichangas it’s $10 and the price of prickly pear margarita two dollars. If I’m in purchases 10 prickly pear, margarita us he can purchase.—— chimichangas
Eight
Arthur’s budget constraints. If we place e-books on the horizontal access and online movies on the vertical access, the vertical intercept of Arthur’s budget line is.
Arthur’s trying to decide how to allocate his $50 budget for e-books and online movie streaming on the price of an e-book is one dollar in the price of a movie is five dollars
10
Adam is an economics working at the federal reserve bank of Austin. For Adam, the satisfaction, an individual derives from the consumption of goods and services is best described as.
Utility
Adam chooses a combination of pineapples and mangoes along his budget line. At the marginal rate of substitution of pineapples in place of mangoes is to the price of pineapples is $.50 in the price of mangoes is one dollar. Adam.
Should consume more pineapples and fewer mangoes to maximize total utility
Anthony sees candy corn chips as perfect substitutions. He’s always willing to substitute 3 cups of candy corn for one cup of chips. If Anthony consumes only candy corn then we know that the relative price of candy corn in terms of chips is.
Less than 0.33
At the optimal consumption, bundle, which of the following conditions does not hold?
The price of all goods in the optimal bundle are equal
Customer equilibrium in the market for hostels and train tickets. And unattainable level of utility given budget constraint FL is at point.
J
Abbie operates a mobile medical clinic and drives many miles each day to set up and prepare to see patients. She gets utilities from the purchase of medical supplies, but she doesn’t care which brand of supplies she consumes. Suppose she has a daily budget of $100 for bandit aids and today’s health today she notices that the price of Band-Aids is $2.50 and the price of supplies at today’s health is $3.33. What is the optimal purchase of medical supplies
40 units of Band-Aids, and none at today’s health
Consumer equal of room in the market for soap and coconut oil. The highest level of total utility is associated with the point.——-on indifference curve——
J, A
Consumer equilibrium in the market for hostels and train tickets. Assuming that you were consuming the combination of goods at point G, given the budget constraints of FL utility.
Can be increased by consuming more train tickets, and fewer nights in a hotel rooms
Hacks for cell phones and Uber rides. Rafael is originally consuming his optimal consumption bottle at point a win. The price of Uber rides falls. The movement from K one to K to reflect the.——— the decrease in the price of Uber rides
Substitution effect of
Anthony sees candy corn chips as perfect substitute. He’s always willing to substitute 3 cups of candy corn for one cup of chips. If the price of a cup of candy corn equals the price of a cup of chips, Anthony will eat.
Only chips
Emma sees cream and milk as perfect substitutions. She’s always willing to substitute 1 teaspoon of cream for 2 teaspoons of milk. If the price of a pint of cream is half of a pint of milk, Emma will use.
Only cream
Edward is tired of graduate school, as well as his part-time bartending job. On the spur of the moment, he decides to take a weekend trip to the Cayman Islands for snorkeling. He pays for it with his credit card rather than money from his bank account, which type of irrational behavior does this best describe?
Mental accounting
Generally, if you were to hire an accountant to assist you in economic decisions, you’re considering, the accountant would use only—— cost in her analysis
Explicit
Gennaro is a blogger living in Italy who could work for LA Republica a newspaper in the room as a food critic for $50,000 a year but instead runs a blogging business online through advertising makes revenues of $80,000 per year. His only business expenses are $2000 for supplies and $18,000 for rent for his office space. What is your Narrs economic profit from working as a freelance writer
$10,000
The optimal quantity. If the marginal benefit curve of lawnmowing were to increase the marginal.——-curve in the figure which shift to the—-And the optimal quantity would be——-then five lawns mowed
Benefit right grader
Jillian’s cupcake shop. Given the information provided Jillian should stop selling cupcakes asked her.
Jillian wants a cupcake shop where she sells cupcakes for one dollar each. She employs five people each of homework for a total of 500 hours last year. She paid them $10 per hour. Her cost of equipment and roll material adds up to $75,000 her business ability is legendary and other companies have offered to pay Jillian $100,000 to come and work for them. She also knows she could sell her cupcake shop for $150,000. The bank in town pays an annual interest rate of 3% on all funds deposited is it
Implicit costs are greater than her accounting profit
A person who is oversensitive to loss, unwilling to recognize a loss and move on, is
Los averse
Amanda’s accountant tells him that he made a profit of $21,300 running a pottery studio in Boston or man’s wife and economics claims are mad lost $21,300 running his pottery studio. This means his wife is claiming that he incurred.—— in——-cost
$42,600, implicit
Katz delicatessen’s is having a special on pastrami sandwiches. One sandwich for $12.02 sandwiches for $21.03 sandwiches for $29 and four sandwiches for $35. The marginal cost of the second sandwiches.
Nine dollars
—— is the mistaken belief that and unrecoverable cost represents an opportunity cost
Sunk cost fallacy
Gwen sells lawnmowers. She can sell five per week at a price of $2000 per machine. If she charges $2100 per machine, she will sell only through for per week. The marginal benefit of selling the fifth lawnmower is.
$1600
After three years at the Massachusetts Institute of technology, Rod realizes that he doesn’t want to finish school, but really wants to be a chef. One rod mentioned that he is considering leaving University for culinary school, his parents and sister, he say for one more year to get his degree. Which statement is true
Rods parents are wrong, the marginal benefit to Rod of another year of university is less than the marginal cost of university
If Giordano’s pizza in Chicago computed its profits, without taking into account, it’s implicit cost, it would only be considering it’s
Accounting profit
Lucas installs custom alarm systems in Charis. If he installs set an alarm’s per day, his total cost or $300. If he installs eight alarm systems per day, his total cost or $400, Lucas will install a alarm systems per day only if the eighth customer is willing to pay at least
$100
Marginal analysis is relevant to
Only how much decisions
If at a given quantity—— the decision maker should do—— of the activity
MB<MC less
The marginal benefit curve. The total benefit of cleaning six pools is approximately.
$154
In making an either or decision, it is generally recommended to
Choose the activity that results in the greater economic profit
Average variable cost is
Total variable cost divided by output
In economics, the short run is defined as
A period in which at least one input is fixed
Orville’s ocular paradise produces 10 pairs of sunglasses. It’s average variable cost is $30 and it’s average fixed cost is five dollars. The average total cost of producing 10 pairs of sunglasses is.
$35
Average total cost is
Total cost divided by output
Anita is an economic system with the national Bureau of economic research. I need a nose that one the long run average total cost curve is that it’s lowest point, it is tangent to the.——-of the corresponding short run average total cost curve
Minimum
Suppose that hiring one, two, three or four workers at a glass factory generates total outputs of 200, 350, 450, or 500 fancy glasses. Respectively. The marginal product of going from 2 to 4 workers is.—— fancy glasses
75
Suppose that when a platinum mining for Myers one, two, three, four or five workers, the corresponding total output levels are 10, 15, 19, 22, and 24 tons of platinum respectively. The marginal product of the fourth worker is.—-tons of platinum
Three
Marginal cost cannot be calculated as
Change inATC/change inQ, where ATC it is average, total cost, and Q is output
The total product for swimming pool, cleaning company. As labor is hired between L1 and L2, too, the total product is—— and the marginal product is——
Increasing, probably positive
A cost that does not depend on the quantity of output produced is
Fixed
Derek runs a clothing shop with average fixed cost of $60 per day and a total output of 50 articles of clothing per day. Derek shuts down every year during the last week of July and the first week of August so that the store is open 50 weeks per year. What is his annual fixed cost if it is open in six days per week.
$18,000
Labor for quinoa production. The total product given seven workers is.—— bushels
91
Suppose that hiring one, two, three, or four workers at a glass factory generates a total output of 200, 350, 450, and 500 fancy glasses, respectively. The marginal production of the second to work or is.
150
An important quality cannot be changed in the short run is
Fixed
The total product for swimming pool, cleaning company. One L2 labor is hired, so total product is at.—-and the marginal product of labor is——
Maximum, zero
Short run costs for wallets. At six wallet marginal cost is approximately.
$200
Short run costs for the picnic table firm. The vertical difference between Kirby and curve see at any quantity of output is.—— cost
Average fixed
Choices that maximize total utility General Produce demand curves that are
Downward sloping
Frederique has eaten three burritos at the county fair, and if she eats another, she will get sick on the roller coaster. Knowing this and ignoring any impact price might have on her decision, we can say that the fourth burrito, the
Marginal utility is less than zero
Assume that Alex is consuming the utility maximizing quantity of fish and vegetables. We can conclude that.
The ratio of marginal utility to price is the same for fish and for vegetables
According to the law of diminishing marginal utility, we would expect the slope of the marginal utility curve to be
Negative
Budget lines for bottled water and biscotti. For months now Angela has had $20 per month to spend on bottled water and biscotti. The price of each cup of bottled water and each biscotti is one dollar. Which chart shows what will happen to her budget line if the price of biscotti rises to two dollars.
B
Josephine’s budget line reflects the—— available to Josephine if she spends—-/-of her income
Consumption bundles, all
Eve has monthly income of $20 that can be spent on Bree and plums. The price of a wheel of brie is five dollars and the price of a plum is $.50. Which bundle of brie and plums lies on eves budget line.
Two wheels of Bree, and 20 plums
—— is the measure of the satisfaction of a consumer derives from the consumption of goods and services
Utility
And individuals—— function indicates the total utility generated by the individuals consumption bundle
Utility
How much do utility is gained by spending an additional dollar on tea cups?
MU cups/P cups
Economists refer to the satisfaction of person, derives from the consumption of goods and services as
Utility
Suppose the price of tea cups falls, and the consumer decides to buy more tea cups, Soley, because they are less expensive, this describes the
Substitution effect
Tabitha default all of her income to the consumption of oranges and mars bars. At her current level of consumption, the marginal utility of an orange is six and the marginal utility of a Mars bar is eight. Assume that diminishing marginal utility applies to both oranges and mars bars. Suppose the price of an orange is $.10 and the price of a mars bars is $.25. To maximize your total utility she would.
Consume more oranges and fewer mars bars
Max, a carefully utility maximizer, consumes peanut brittle and frozen yogurt. Assume that both peanut brittle and frozen yogurt or normal goods and not diminishing marginal utility applies to both goods. Right after he cheats the utility maximizing level of consumption of the two goods the price of peanut brittle falls as he adjust to this event, the marginal utility a peanut brittle—— and that a frozen yogurt goes——.
Falls, rises
Budget lines for tangerines and water melons. For some time, Albert has had five dollars per month to spend on tangerines and watermelons. The price of a tangerine is $.50 and the price of a watermelon is $.25. Which church is what will happen to his budget line if his income increases to six dollars.
Hey, the budget line moves outwards
Combinations of two goods that yield equal levels of utility are shown on an—— curve
Indifference
As a consumer moves upward along and indifference curve, giving up some cheese on the horizontal axis to get more yogurt, on the vertical access, his or her marginal rate of substitution of cheese for yogurt
Increases
Anthony sees candy, corn and chips as perfect substitute. He is always willing to substitute 3 cups of candy corn for one cup of chips. If Anthony consumes only chips, then we know that the relative price of candy corn in terms of chips is.
Between 0.33 and three. (I would say greater than three)
Consumer equilibrium in the market for soap and coconut oil. The highest level of total utility is associated with point——-on the indifference curve———.
J, A , the highest point on the paper, despite where the straight line is
Consumer equilibrium in the market for hostels and train tickets. The highest level of utility shown in the figure is associated with indifference curve.
X, the highest curve on the paper, despite where the straight line is.
Consumer equilibrium in the market for hostels in train tickets. The highest level of utility is at point.
Jay, the highest point on the graph, despite where the line is
Consumer equilibrium in the market for tacos, and Manzana left. The figure shows three of Addison’s indifference curves for tacos and manzana lift (a popular beverage in Mexico) per week. Addison has $180 per month to spend on the two goods. The price of a taco is $20 and the price of a Manzana left is $1.50 if Addison consumes 1.5 tacos and 100 months on a lift he
Should consume more tacos, and fewer monzana lift to maximize his total utility
Income and substitution effect for cell phones, an Uber rides. Rafael is consuming his optimal consumption bundle at point a on the price of Uber rides falls. The movement from K to decay three reflects the——— The decrease in the price of Uber rides
Income effect of
Anthony sees candy corn and chips as perfect substitute. He’s always willing to substitute 3 cups of candy corn for one cup of chips. If the price of a cup of candy corn is four dollars and the price of a cup of chips is one dollar, Anthony will eat.
Only chips
Income and substitution effect for cell phones, an Uber rides. Rafael is consuming his optimal, conception bottle at point a on the price of Uber rides falls. The dash line tangent L one shows a hypothetical budget line reflecting.
The new price of Uber rides in terms of cell phones, and a change in income, to keep Rafael on the original indifference curve
Jillian’s cupcake shop. Given the information provided, Jillians implicit costs are:
Jillian runs a cupcake shop where she sells cupcakes for one dollar each. She employees five people, each of Huma worked a total of 500 hours last year, she paid them $10 per hour. Her cost of equipment and raw material adds up to $75,000. Her business ability is legendary and other companies have offered to pay Jillian $100,000 to come work for them. She also knows she could sell her cupcake shop for $150000. The bank in town pays an annual interest rate of 3% on all funds deposited with it.
Her salary, if she worked elsewhere and interest, Schaefer ghost by not selling her shop and putting the money in the bank
Marginal, benefits and marginal costs from studying microeconomics. More time, and Spencer in microeconomics leads to hire exam scores in microeconomics, but at the expense of lower exam, scores and political science. At four hours of study, Camille will maximize her benefit from studying time because.
The difference between total benefits and total cost is maximized
Edward is tired of graduate school as well as his part-time bartending job. On the spur of the moment he decides to take a weekend trip to the Cayman Islands for snorkeling. He pays for it with his credit card rather than money from his bank account. Which type of irrational behavior does this best describe?
Mental accounting
In economics, the total profit of an activity is maximized when
MB= MC
Jenelle loves sashimi. Her first piece of sashimi normally gives her a marginal benefit five dollars. Each additional piece yield of marginal benefit that the clients by $.25 per piece. If her favorite sushi bar charges $2.75 per piece of sushi me how many pieces should she eat??
10
Katz delicatessen is having a special on pastrami sandwiches. One sandwich for $12.02 sandwiches for 21 and three sandwiches for 29 and four sandwiches for 35. The marginal cost of the second sandwich is.
Nine dollars
The marginal analysis of calligraphy pens. You are considering purchasing calligraphy pens how many calligraphy pens will you buy?
For, were the two lines intersect
The marginal analysis of calligraphy pens. You’re considering purchasing calligraphy pens for your department. If you buy the fifth calligraphy pen, your change in total profit will be equal to.
-2 dollars, because you’ll be losing two dollars between marginal benefit and marginal cost
——-is the mistaken belief that unrecoverable cost represents an opportunity cost
The sunk cost fallacy
As Massimo ate cheesecake during one recent outing, he found that he enjoyed each additional slice less and less. This implies that is marginal benefit was.
Decreasing
Person who is loss averse
Has a hard time recognizing losing investments, and moving on
Generally, when economics are interested in finding a solution to how much decision, they compare the—— of an action to the——-of that action
Marginal benefit, marginal costs
Economic profits are calculated by
Taking the difference between total revenue, and the sum of explicit and implicit cost
A person who is oversensitive to loss, unwilling to recognize a loss and move on, is
Loss averse (I believe the risk averse)
If a person engages in mental accounting, they
Value some dollars more than others
Some airport only have one runway, others have two, three, or more. If each runway cost $10 million, the total benefit of a three runway airport must be.——-million
$30 or more
Making an either or decision is generally recommended to
Choose the activity that results in the greater economic profit
In economics, the short run is defined as
A period in which at least one input is fixed
Everest total fixed cost at the bakery is $3600 per month. Avery employees 20 workers, paying each eight dollars per hour. The marginal product of the 20th worker is 12 iced brownies per hour. What is the marginal cost of the last brownie produced by the last worker Avery hires?
$.66
Suppose that one, a platinum mining farm, hires one, two, three, four, or five workers, the corresponding total output levels are 10, 15, 19, 22, and 24 tons of platinum. The marginal product of the fourth worker is.—— tons of platinum
3
Affirm that has lower cost per unit as it increases production over the long run has
Increasing returns to scale
Suppose that hiring one, two, three, or four workers at a glass factory generates a total output of 200, 350, 450, and 500 fancy glasses, respectively. The marginal product of the second worker is.
150
Nardelli owns Nardelli’s grinder shop in Connecticut and can produce 300 sandwiches per day with two workers and 400 sandwiches per day with three workers. The marginal product of the third worker is.—— sandwiches
100
Cost of wedding cakes. Assume that fixed costs are $10, the minimum average variable cost occurs at an output of.
4
A—— is an organization that produces goods or services for sale
Firm
A cost that does not depend on the quantity of output produced is
Fixed
Add to the current level of output, Romy furniture is marginal cost curve is a buffet average total cost curve. This means Rameez furniture average total cost curve.
Is rising
A—— function is a relationship between the quantity of input. A firm uses in the quantity of output it produces.
Production
Variable, fixed, and total cost for buckwheat. When 64 bushels of buck we are produced, the average variable cost is.—-, the average fixed cost is——-and the average total cost is——-.
$12.50, $6.25, and $18.75
Cost of producing bagels at the bagel factory. Christopher recently purchased a bagel factory franchise that he opened in park slope Brooklyn. His cost are given in the table below. Marginal cost reaches its minimum value with the.——-bagel
Third
Cost data for handbags at Horatio’s handbag factory. The average total cost of producing five handbags is.
$48 (divide total cost of handbags by the number of handbags)
Ashley furniture expects it’s marginal cost curve to eventually slope upward because, as with most production processes, the furniture manufacturing has
Diminishing marginal returns(I would say decreasing opportunity cost)
Short run cost for wallets. At six wallet average total cost is approximately.
$170
The total product for a swimming pool cleaning company. Labor added from L1 and up to L2.
Is subject to diminishing marginal returns
