About SmartExpert

Levels Tought:
Elementary,Middle School,High School,College,University,PHD

Expertise:

Accounting,Business & Finance See all

Accounting,Business & Finance,Economics,English,HR Management,Math Hide all

Teaching Since:	Apr 2017
Last Sign in:	5 Weeks Ago
Questions Answered:	7559
Tutorials Posted:	7341

Education

BS,MBA, PHD
Adelphi University/Devry
Apr-2000 - Mar-2005

Experience

HOD ,Professor
Adelphi University
Sep-2007 - Apr-2017

Category > Economics Posted 30 Apr 2020 My Price 50.00

ECON 1002 Microeconomics Final Exam

ECON 1002 Microeconomics Final Exam

Click below link for Answer

Which example below represents a fixed input?

Utility bills

Raw materials for construction

Office space being rented

Hourly employees

CONCEPT

Production Function and Constraints

This graph below shows three indifference curves for blankets and pillow cases.

Consider choice A and determine why this would NOT be the optimal choice.

The consumer cannot afford this choice.

It does not provide the consumer with the highest level of utility possible.

Additional income would be left over with this choice.

These indifference curves violate the conditions of consumer theory.

CONCEPT

Optimal Choice

The additional income a company generates from selling one more unit due to this is called which of the following?

Output effect

Break even point

Diseconomies of scale

Price effect

CONCEPT

Revenue: Total, Marginal and Average

Which one of the following is NOT an example of a practice that contributes to anthropomorphic climate change?

Emissions of greenhouse gases

Deforestation and use of pesticides

Overuse and grazing of lands

Change in migration patterns

CONCEPT

Assessing Costs of Anthropomorphic Climate Change--Regulatory Intervention

Which of the following is a characteristic of monopolistic competition?

Cooperation between firms is sometimes used to maintain prices.

Firms sell homogenous products.

Advertising increases the cost of production.

Predatory price cutting occurs.

CONCEPT

Monopolistic Competition

Which of the following is not considered a factor of production?

The property that a factory is built on

Interest earned on an investment

The employees for a gas station

A printer to make copies for a company

CONCEPT

Resource Allocation for Firms

Movement along the supply curve is most likely caused by which of the following?

Changes in input prices

Changes in market price

Technological changes

Government taxes or subsidies

CONCEPT

Changes in Supply and Movements along Supply Curve

In anticipation of the college's athletic banquet, Lauren considered purchasing gifts for several members of the athletics club who had put a lot of time and effort into making it such a successful program. Lauren decided to buy roses for the women and a leather-bound portfolio and resume paper combination for the men.

Which of the following scenarios corresponds to cross-price elasticity?

Lauren cannot decide which color of roses to buy because they are all priced the same.

A local high school’s prom is also the same weekend as the ceremony, so the price of roses has increased.

Lauren worked overtime last week and made more money. As a result, she decided to purchase the more expensive portfolios that have the university logo on the front, and she decided to buy one more than she had originally planned.

The price of resume paper has decreased. Because of this, Lauren can now afford to purchase more paper and an additional portfolio and still be within her budget for gifts.

CONCEPT

Cross-Price Elasticity

If Bundle of Goods A contains two pizzas and three sodas, and Bundle B contains three pizzas and three sodas, then Patrick will select Bundle B based on the principle of __________.

non-satiation

transitivity

utility theory

completeness

CONCEPT

Consumer Choice Theory

Given the information on this graph, this firm needs to produce which of the following number of units to start making a profit?

CONCEPT

Breakeven Point

Number of Employees Total Production Marginal Product of Labor Marginal Revenue Product

0 0 0

1 9 9

2 24 15

3 36 12

4 43 7

If the price of the item is $15.00 per unit and the employees cost $125 each, how many employees should the firm hire to maximize their profit?

One employees

Two employees

Four employees

Three employees

CONCEPT

Output Optimization: Marginal Revenue Product

Brent decides to purchase ground beef to make tacos rather than pricier steak because his weekly budget restricts his expenditure on food.

Brent is acting as a rational consumer in that he is recognizing that __________.

he needs to stay within his budget constraint

he is spending beyond his budget to feed his family

he is purchasing where his marginal cost is greater than his marginal benefit

he is keeping his total costs below his variable costs

CONCEPT

Cost and Benefit Optimization for Consumers

If the goal is to maximize profit, at which point on the graph would a firm’s output be optimized?

Point 2

Point 4

Point 1

Point 3

CONCEPT

Output Optimization: Marginal Revenue / Marginal Cost

When a firm uses five machines, it can produce 600 units daily. A sixth machine allows the firm to product 880 units.

Which of the following is true regarding production?

The marginal product for the fifth machine is 600 and the average product is 120 units.

The marginal product for the sixth machine is 280 units and the average product is 147 units.

The marginal production for the sixth machine is 880 units and total production would be 1,480 units.

The total production for 11 machines would be 1,480 units with an average production of 164 units.

CONCEPT

Product: Total, Marginal, Average, and (Marginal) Revenue

Which indicators show change at the same time as the economy and thus give a sense of where the economy is in relation to the business cycle?

Leading indicators

Lagging indicators

Coincident indicators

All of the given answer choices are correct

CONCEPT

Coincident Indicators

Which statement below is NOT true regarding process mapping?

Almost all business practices and decisions have been documented in some way or another.

Process mapping is used for evaluating sustainable business solutions.

A process map is a visual representation of the stages in a process.

Process mapping forms a foundation for efficiency evaluation.

CONCEPT

Process Mapping--Efficiency

Which scenario below is an example of consumer surplus?

A car dealership sells exactly as many cars as it has in stock.

George is willing to pay up to $20,000 for a car, but he finds one he likes for $15,000.

Tom usually charges $75/hour but in certain cases is willing to go as low as $65/hour.

A grocery store that usually charges $7/pound for beef is willing to lower the price to $5/pound when a huge shipment comes in.

CONCEPT

Market Equilibrium

Which of the following is NOT an obstacle to the implementation of environmentally sustainable business practices?

Investor awareness of climate change as a risk has increased enough to be addressed by the SEC.

CEOs have a fiduciary responsibility to guarantee returns on investments.

Environmental impact is not an issue for most investors when assessing the value of an investment.

Environmentally sustainable business practices might not be profitable in the short term.

CONCEPT

Sustainable Returns--Investor Impact

Ben's Bagels charges $10 per dozen bagels and he sells 30 dozen bagels each day. Ben's costs of production total $150 each day. Ben recently quit his job where he earns $100 per day in order to open his bagel store.

Ben's accounting profit per day would be __________.

$150

$450

$50

$300

CONCEPT

Accounting Profit

In which type of market structure might we see firms attempting to collude with one another to set prices?

Monopoly

Perfect competition

Monopolistic competition

Oligopoly

CONCEPT

Oligopoly

Which definition below defines perfectly elastic demand?

Any change in price always results in a very significant change in demand.

A change in price of one good affects a consumer’s decision to purchase a different good.

This is the degree to which demand changes in response to a change of price.

This is a situation in which a change in price will never change a consumer’s decision to buy a certain good.

CONCEPT

Defining Elasticity

Which of the following statements best describes the minimum wage?

It is a price floor that decreases producer surplus as compared to the free market equilibrium price and output.

It is a price floor that decreases consumer surplus as compared to the free market equilibrium price and output.

It is a price ceiling that decreases consumer surplus as compared to the free market equilibrium price and output.

It is a price ceiling that decreases producer surplus as compared to the free market equilibrium price and output.

CONCEPT

Welfare Analysis

Which of the following is NOT an example of a constraint limiting a decision?

Peter opts to purchase frozen pizza for an upcoming party; he doesn't have enough money to have pizza delivered.

Frank decides to wait until he can afford to put 20% down on a new house, and continues to rent.

Susan can't apply for the job she really wants because the hours conflict with her university classes.

Bella decides not to purchase another pair of shoes; she thinks they are too similar to those she already owns.

CONCEPT

Resource Allocation for Consumers

An estimate of the money and paperwork spent complying with environmental regulations could be compared to the advantages of cleaning up pollution.

This method of determining the value of the environment is known as __________.

cost-benefit analysis

healthcare costs

hedonic pricing

contingent valuation

CONCEPT

Assessing Costs of Waste and Pollution--Environmental Economics

Assuming ceteris paribus, which of the following is FALSE?

When the price of a good rises, the quantity supplied of that good rises.

When the price of a good falls, the quantity supplied of that good falls.

When the price of a good falls, the quantity demanded of that good rises.

When the price of a good rises, the quantity demanded of that good rises.

CONCEPT

Demand

Supply

Diseconomies of scale are seen when __________.

the long run average cost curve is rising

the fixed cost curve does not change over the scope of production

the marginal revenue curve intersects the marginal cost curve

the marginal cost curve intersects the average cost curve

CONCEPT

Economies, Constant and Diseconomies of Scale

A group of activists wants to develop a process for targeting businesses that pollute the air.

Their process map would begin with which shape?

CONCEPT

Process Mapping--Efficiency

Which statement below is correct?

Private goods are nonrival and excludable.

Common goods are rival and nonexcludable.

Common goods are nonrival and excludable.

Public goods are rival and excludable.

CONCEPT

Public Goods, Private Goods, and the “Tragedy of the Commons”

Which of the following accurately describes market equilibrium?

It is the difference between the actual price paid for a good and the highest amount the consumer would have paid.

It is dominance achieved over another company due to decreased opportunity cost, increased efficiency in process and lower marginal cost.

It is when the price is such that the quantity supplied of a good or service is equal to the quantity demanded.

It is the difference between actual payment for a good and the least amount a producer would have agreed to receive for the good.

CONCEPT

Market Equilibrium

Pollution by-product that impacts third parties is which type of failure?

Government failure due to externalities

Market failure due to moral hazard

Government failure due to moral hazard

Market failure due to externalities

CONCEPT

Details on Regulatory Intervention and Market Failure

Which economic concept below is NOT present on the graph shown here?

Substitution effect

Optimal choice

Change in income

Change in price

CONCEPT

Budget Constraints: Change in Price

The idea that a consumer must be able to evaluate all of the choices offered fulfills the assumptions of which of the following, related to preference behavior?

Completeness

Non-satiation

Consumer choice

Transitivity

CONCEPT

Consumer Choice Theory

Which of the following is an example of the "tragedy of the commons?"

It is difficult to keep common people out of private gardens because they are rivalrous and excludable.

It is difficult to keep people from polluting the air because it is rivalrous but not exclusive.

It is difficult to keep people from watching a fireworks display even if they don't pay because it is not rivalrous and not exclusive.

It is difficult to keep people from watching the same movie because it is not rivalrous.

CONCEPT

Public Goods, Private Goods, and the “Tragedy of the Commons”

Consumer surplus exists in which of the following situations?

Craig is happy to purchase three DVDs at $15 each.

The price of movie tickets falls and Ralph takes his entire family to the movies.

Sam decides not to purchase a new bicycle until the price falls by $10.

Sarah is willing to pay the $60 ticket price for an upcoming concert, but is happy to buy a ticket from her roommate for $45.

CONCEPT

Market Equilibrium

A store devotes more space to bicycles so it now has less space for books.

This is an example of what decision-making relationship for the rational firm?

Opportunity cost

Cost minimization

Profit maximization

Infinite resources

CONCEPT

Decision Making Relationships: Rational Firm

When sales double, a pizza restaurant finds its costs for sauce, dough and electricity increase, because these are __________.

variable costs

sunk costs

fixed costs

implicit costs

CONCEPT

Cost: Total, Marginal and Average

Ben recently took a 20% cut in pay at work.

Which of the following is most likely to happen as a result?

Ben will bring his lunch to work rather than going to a restaurant.

Ben will work more hours, as his leisure is now relatively more expensive.

Ben will drive to work more, rather than taking the bus, as driving is faster.

Ben will hire a career consultant in order to secure a new job.

CONCEPT

Budget Constraints: Change in Income

A firm trying to maximize profit will produce up to the point that marginal revenue is __________.

less than marginal benefit

equal to marginal cost

equal to marginal benefit

greater than marginal cost

CONCEPT

Cost and Benefit Optimization for Producers

Select the definition of output effect.

Amount of revenue lost from lowering the price enough to sell one more unit

The additional revenue from raising the price of a good

The revenue that results from selling additional units of a good or service.

Market price multiplied by the number of units sold

CONCEPT

Revenue: Total, Marginal and Average

Where the supply curve is more inelastic than the demand curve, who bears more of the burden of a tax?

Consumers

There is not enough information to answer this question

Producers

Both consumers and producers share the burden equally

CONCEPT

Taxation and Subsidy

Based on this graph, what amount should the company choose to produce to maximize profit?

CONCEPT

Output Optimization: Total Revenue / Total Cost

Given the following production function for a train engine manufacturing company, at what point (or points) should the firm produce?

E & D

B & E

CONCEPT

Production Function and Constraints

Which of the following is NOT an obstacle to the implementation of environmentally sustainable business practices?

CEOs have a fiduciary responsibility to guarantee returns on investments.

Environmental impact is not an issue for most investors when assessing the value of an investment.

Investor awareness of climate change as a risk has increased enough to be addressed by the SEC.

Environmentally sustainable business practices might not be profitable in the short term.

CONCEPT

Sustainable Returns--Investor Impact

Which of the following causes the budget constraint to make a non-parallel shift inward?

The budget goes up.

The price of one item goes up.

The consumer's income goes up.

The consumer's satisfaction goes up.

CONCEPT

Budget Constraints: Change in Price

Maria had to decide whether to work an additional shift over the weekend or use the time to work on her lawn.

The sacrifice Maria makes by choosing one option over the other next best alternative is referred to as the __________.

opportunity cost

short-run constraint

marginal benefit

utility

CONCEPT

Decision Making Relationships: Rational Consumer

Ben's accounting profit per day would be __________.

$50

$150

$450

$300

CONCEPT

Accounting Profit

If the variable costs for a firm are $57, the fixed costs are $143, and the firm sells 40 units, what are the firm's average total costs?

$5.00

$25.00

$20.00

$10.00

CONCEPT

Cost: Total, Marginal and Average

Marginal cost is equal to the __________.

average fixed cost plus average variable cost

average total cost minus the fixed cost

total cost minus fixed costs

change in total cost involved with producing one more unit

CONCEPT

Cost: Total, Marginal and Average

Select the statement that is true about perfect competition.

In perfect competition, firms have the power to set their own prices.

There are many real-world examples of perfect competition.

With perfect competition, information is withheld about the market.

Perfect competition is a simplified view of a market.

CONCEPT

Perfect Competition

When Joe went back to college to finish his degree in Economics, he cut back from full-time to part-time work at his firm. During this time, the lease on his SUV ran out and he leased a smaller compact car as a result.

The smaller compact car is an example of which type of good?

Veblen

Normal

Inferior

Giffen

Product Price

Unit Cost

Units Sold

Units Produced

Opportunity Costs

$35.00

$5.00

100

1000

$750

Given the information in the table shown here, the economic profit is which of the following?

$1,500

$2,250

-$1,500

-$2,250

CONCEPT

Economic Profit

If the variable costs for a firm are $40,000, the fixed costs are $20,000, and the firm sells 100 units, what are the firm's average total costs?

$600

$60,000

$20,000

$400

CONCEPT

Cost: Total, Marginal and Average

Which of the scenarios below is an example of a monopoly?

This industry has stable pricing due to the tendency of groups of firms to work together to set prices.

In this industry, it is easy to enter and exit the market.

A company engages in predatory price cutting in order to discourage any competition.

A company produces a lemon-lime soda that is identical to others on the market in terms of taste but has a recognizable brand because of advertising.

CONCEPT

Monopoly

A real estate agency’s policy is to start all sales commission negotiations at 6%. However, the agency is willing to accept sales commissions as low as 5%.

The scenario above is an example of which principle?

Ceteris paribus

Consumer surplus

Deadweight loss

Producer surplus

CONCEPT

Market Equilibrium

Which of the following describes the visual representation of the steps that form a process?

It plays an important role in efficiency evaluation.

Almost all processes have been documented in this way.

It is an established process that's been used for over a century.

Every process needs to be constructed as a closed loop.

CONCEPT

Process Mapping--Efficiency

Which point(s) on the graph shown here are over budget?

B and C

D only

E and A

B only

CONCEPT

Optimal Choice

An economy in which price and quantity sold of goods and services is determined solely by supply and demand is a ___________.

market economy

mixed command economy

mixed market economy

command economy

CONCEPT

Comparative Economic Systems

Which of the following is a characteristic of monopolistic competition?

Firms sell homogenous products.

Predatory price cutting occurs.

Advertising increases the cost of production.

Cooperation between firms is sometimes used to maintain prices.

CONCEPT

Monopolistic Competition

Which of the following corresponds to an increase in income?

The budget constraint will make a parallel shift inward.

The budget constraint will make a parallel shift outward.

The budget constraint will shift outward in a non-parallel fashion.

The budget constraint will shift inward in a non-parallel fashion.

CONCEPT

Budget Constraints: Change in Income

This preference map shows the various amounts of DVDs and magazines Jennifer likes to purchase each month, depending on her monthly income.

Which of the following statements best describes why Jennifer will not choose option C on the preference map?

Although she would prefer option C, she cannot choose it due to budget constraints.

Option A would provide utility maximization.

Option C is on the budget constraint.

Although she would enjoy option C, she would prefer B.

CONCEPT

Optimal Choice

Which of the following is NOT an example of a shift in demand or supply?

Around the winter holidays, demand increases for a particular children’s toy.

Technological advances increase the production of a particular product, causing a change in supply.

A fertilizer price reduction of $10 per bag causes farmers to buy more.

As more books become available in electronic form, demand for paperback books decreases.

CONCEPT

Changes in Supply and Movements along Supply Curve

Mimi is granted a license to sell her unique Spirit Pins at local high school lacrosse games. When Mimi prices her pins at $10, she sells 20 pins per game. When she lowers her price to $8, she sells 40 pins.

The additional money she earns from dropping her price is known as the __________.

Opportunity cost

Marginal revenue

Price effect

Output effect

CONCEPT

Revenue: Total, Marginal and Average

Which one of the following examples would cause a movement along the demand curve?

The price of a service remains constant, but a change in income affects demand.

The price of a service remains constant, but changes in preferences affect demand.

The price of a service remains constant, but a change of price in related goods affects demand.

The price of a product decreases, therefore the quantity demanded increases.

CONCEPT

Changes in Demand and Movements along Demand Curve

As a consumer's income increases, demand for this type of good decreases.

The statement above corresponds to which type of good?

Luxury good

Inferior good

Veblen good

Giffen good

CONCEPT

Types of Goods

Choose the example below that is a coincidence indicator.

Consumer confidence index

Unemployment rate

Weekly jobless claims

Laffer Curve

CONCEPT

Coincident Indicators

During the Great Recession, many investors purchased gold and other precious metals, thinking they would be reliable forms of investment.

If we looked at this phenomenon on a graph, we would see which of the following?

Movement down the demand curve

Shift in demand

Movement up the demand curve

Shift in supply

CONCEPT

Changes in Demand and Movements along Demand Curve

The Prisoner's Dilemma can come into play when firms ___________.

engage in predatory pricing to move each other out of the market

are forced to advertise and market their goods to consumers

are regulated by the government in order to provide fair pricing to consumers

decide whether to work together on things like price or production levels

CONCEPT

Oligopoly

Which example below represents an oligopoly?

A company produces jeans that are pretty much the same as other jeans on the market, except for their advertising, which features a world-famous supermodel.

A farmer grows corn that is identical to all of the other corn grown in that region.

In the country where this company is located, government regulations prevent competition from other companies.

In this industry, groups of firms work together to establish stable pricing.

CONCEPT

Oligopoly

The following is a list of methods used to gather information on the burden pollution places on society.

Which of these is used to analyze how regulation affects market prices?

Hedonic pricing

Cost-benefit analysis

Contingent valuation

Healthcare outcomes

CONCEPT

Assessing Costs of Waste and Pollution--Environmental Economics

Assuming that Marley, a dairy farmer whose farm produces a number of dairy products, operates in a perfectly competitive market.

Which of the following statements is true?

No determination about his products can be made.

The products he produces are identical and thus homogeneous.

The products he produces are unique and varied.

The products he produces are similar but are differentiated by advertising.

CONCEPT

Perfect Competition

Rent control is a type of price __________ that has the effect of __________ producer surplus as compared to the free market equilibrium.

ceiling; reducing

ceiling; increasing

floor; increasing

floor; reducing

CONCEPT

Welfare Analysis

Which answer choice below does NOT influence decision making for the rational consumer?

·Opportunity cost

·Profit maximization

·Utility maximization

·Finite resources

CONCEPT

Decision Making Relationships: Rational Consumer

A person who consumes a good without paying for it is known as a(n) __________.

rival

free rider

utility maximizer

producer

CONCEPT

Public Goods, Private Goods, and the “Tragedy of the Commons”

Using the data provided, what production quantity would represent output optimization for this firm?

100

CONCEPT

Output Optimization: Marginal Revenue / Marginal Cost

Laura was in charge of purchasing food for the next book club meeting. She usually ordered sandwiches from the nearby deli, but the price of sandwiches had increased. One option for food was ordering pizza, which was $3 less than a sandwich. However, because the price of sandwiches had gone up, Laura could afford fewer sandwiches and pizza than previous meetings.

The reduction in Laura's ability to purchase both sandwiches and pizza due to the increase of price in sandwiches is known in economic terms as ________.

a budget constraint

the income effect

the substitution effect

a change in income

CONCEPT

Budget Constraints: Change in Price

Which scenario below is an example of complementary products, based on their cross-price elasticity?

Bananas and lettuce, with an elasticity of 0

Green salsa and red salsa, with an elasticity of 2.75

Coffee and tea, with an elasticity of 2.25

Shampoo and conditioner, with an elasticity of -3.5

Alex was shopping for his son's birthday party and had already purchased $75 worth of supplies. He was debating whether or not to spend another $25 for a piñata.

Which statement below best defines marginal cost?

The $75 he had already spent

The $25 for the piñata

What he will have to give up in his budget to afford the total bill

The $100 amount he was considering spending overall

Mariah received a promotion at work and wanted to replace her mobile phone with a more expensive smartphone that she could now afford.

The lower-priced cell phone that Mariah no longer wanted to have is an example of which type of good?

Giffen good

Inferior good

Veblen good

Normal good

Which of the following corresponds with unemployment insurance claims?

Indicators collected by states for tax purposes

Leading indicators that firms might use to predict which part of the business cycle an economy is in

Coincident indicators that lets people know which industries might be hiring

Lagging indicator that firms might use to analyze what labor costs will be in the future

Which of the following is true about the long run average cost curve?

The long run average cost curve cannot be equal to or lie below any short run average cost curve because in the short run all factors of production can be variable.

The long run average cost curve is comprised of all the lowest points of each of the short run average cost curves because no firm will operate at a level of higher per-unit costs in the long run than in the short run.

The long run average cost curve is shaped like a bell and rises because of economies of scale while falling because of diseconomies.

The long run average cost curve can be found as the MC from above the shut down point onward.

What is true of point D in the above graph?

It is right on budget.

it is the optimal choice, given the current budget.

It is over budget.

It is under budget.

Which of the following is NOT related to government failure?

Externalities

Moral failure

Information failure

Principal-agent problems

The additional income a company generates from selling one more unit due to this is called which of the following?

Output effect

Price effect

Diseconomies of scale

Break even point

Which statement defines a budget constraint?

When the price on one item increases, the consumer purchases less of both items.

This maximizes the consumer's utility.

When the price of one item goes up, the consumer purchases more of a second item.

This represents the combinations of two items that spend all of the consumer's money allotted for those items.

When a firm sees average costs start to increase as production increases, this is known as __________.

increasing total costs

diseconomies of scale

a firm's shut down point

scope of production

Which of the following is NOT an example of the labor-leisure tradeoff?

Debbie declines to accept overtime work and pay in order to join her family at the beach for a long weekend.

Sam skips dinner with friends in order to complete a project for school.

A firm decides to layoff workers in order to meet budget.

A CEO decides to have a company retreat over a long weekend, figuring the improvement to morale will offset the cost to the firm.

Given the information in the graph shown here, at which level of production will profit be maximized?

The following is a list of methods used to gather information on the burden pollution places on society.

Which of these is used to analyze how regulation affects market prices?

Healthcare outcomes

Contingent valuation

Hedonic pricing

Cost-benefit analysis

When Isabella and Sam chose to put up an affordable, maintenance-free plastic fence in their yard instead of the wrought-iron fence they preferred but could not afford on their budget, they demonstrated __________.

profit maximization

consumer optimization

labor/leisure trade-off

consumer surplus

CONCEPT

Cost and Benefit Optimization for Consumers

Which of the following is not considered a factor of production?

Interest earned on an investment

The property that a factory is built on

The employees for a gas station

A printer to make copies for a company

CONCEPT

Resource Allocation for Firms

The rational consumer will seek to do which of the following?

Consume to the point where utility is the highest while also using the fewest amount of resources

Recognize that opportunity costs do not exist when resources are fully employed

Use infinite resources to maximize consumption

Increase consumption at zero opportunity cost.

CONCEPT

Decision Making Relationships: Rational Consumer

Joe paid $5,000 for a used car, but he was willing to pay as much as $10,000.

Which economic concept below corresponds to the example above?

Ceteris paribus

Consumer surplus

Producer surplus

Deadweight loss

CONCEPT

Market Equilibrium

Consumer surplus exists in which of the following situations?

Craig is happy to purchase three DVDs at $15 each.

Sam decides not to purchase a new bicycle until the price falls by $10.

Sarah is willing to pay the $60 ticket price for an upcoming concert, but is happy to buy a ticket from her roommate for $45.

The price of movie tickets falls and Ralph takes his entire family to the movies.

CONCEPT

Market Equilibrium

Which of the following would a student of macroeconomics NOT study?

The percentage of a nation's labor force that is employed

How governments can act to alleviate a recession

How the price of apples affects the market for oranges

Changes in the overall price level in an economy over time

CONCEPT

What is Economics?

When the small town where Grand Vacations was located experienced an increase in its unemployment rate, the travel agency, whose prices remained constant, saw a decline in the number of customers seeking its services.

Which of the economic principles below is being demonstrated in this example?

Shift in supply

Movement along the supply curve

Shift in demand

Movement along the demand curve

CONCEPT

Changes in Demand and Movements along Demand Curve

Determine which of the following is an example of opportunity cost.

How many times will I be able to wear this shirt before it falls apart or goes out of style?

If I take a second job, I will have more money, but less time to spend with my family.

With my current salary, I can only afford to spend $500/month on food.

We have a week of vacation. Let's go on a Mexican cruise.

CONCEPT

Decision Making Relationships: Rational Consumer

Which choice below is a factor in the process of resource allocation for consumers?

Capital

Land

Time

Short-run constraints

CONCEPT

Resource Allocation for Consumers

Which of the following defines cost minimization?

A firm’s procedure for determining supply and cost that yields the greatest gain

The sacrifice made by choosing one value or opportunity over another

A firm’s output strategy that incurs the least amount of expenditure

The amount of utility gained by a firm as a result of producing an additional unit of a particular good

CONCEPT

Decision Making Relationships: Rational Firm

Which of the concepts below is a characteristic of a Veblen good?

A good that offers better quality and features that is consumed when income rises.

An increase in price of the good causes a decrease in quantity demanded.

As income increases, demand for less expensive goods decreases.

As price of the good increases, demand for it increases to establish prestige.

CONCEPT

Types of Goods

Which one of the following examples would cause a movement along the demand curve?

The price of a service remains constant, but changes in preferences affect demand.

The price of a service remains constant, but a change of price in related goods affects demand.

The price of a service remains constant, but a change in income affects demand.

The price of a product decreases, therefore the quantity demanded increases.

CONCEPT

Changes in Demand and Movements along Demand Curve

The smaller compact car is an example of which type of good?

Inferior

Giffen

Veblen

Normal

CONCEPT

Types of Goods

When examining how price affects either the supply or demand curve, economists apply the concept of ceteris paribus.

This most often translates into which of the following?

Examining each of the factors of production before making a decision

Including all models of economic behavior when making a decision

Holding other factors constant and only examining effect of price on supply and demand

Taking all factors affecting demand into consideration

CONCEPT

Demand

Supply

Which of the following is characteristic of macroeconomics?

A consumer's reaction to an increased taxation on cigarettes

Factors that help determine menu prices at a local restaurant

A study analyzing a nation’s unemployment rate

A consumer's reaction to changes in the price of gasoline

CONCEPT

What is Economics?

Which of the following is NOT an example of a shift in demand or supply?

As more books become available in electronic form, demand for paperback books decreases.

A fertilizer price reduction of $10 per bag causes farmers to buy more.

Technological advances increase the production of a particular product, causing a change in supply.

Around the winter holidays, demand increases for a particular children’s toy.

CONCEPT

Changes in Supply and Movements along Supply Curve

Identify which statement is a characteristic of long-run for a firm.

Time period with the least control over constraints

Time period when constraints are most likely to be variable

Time period of determining quantity and cost that yields the greatest profit

Time period with at least one fixed element

CONCEPT

Resource Allocation for Firms

Which choice below is NOT an example of an intermediate good?

Orange juice sold at a grocery store

Juice that is used in a mixed drink sold at a bar

Vegetables in a salad sold at a restaurant

Cloth used to make clothing sold at a mall

CONCEPT

Factor Markets

A firm that produces and distributes baked goods decides to produce more units of their frozen ice cream cakes once they experience an increase in demand for the cakes.

Assuming it is a rational firm, choose the statement from below that is true.

As long as the marginal revenue exceeds the marginal cost, the firm will continue to produce the cakes.

As long as the marginal cost exceeds marginal revenue, the firm will continue to produce the cakes.

If the firm decides to lower the price of the cakes, the quantity demanded will decrease.

The firm will earn a higher incremental profit for each additional cake that it produces.

CONCEPT

Cost and Benefit Optimization for Producers

Josh is a hockey player on his university's team. He practices four times a week with his team and sometimes attends Friday night open skate with his friends. If Josh decides to attend the Friday night skate, the cost is $5.

Which of the following is economically true regarding Josh's decision to join his friends on Friday night?

Since Josh already skates four times a week with his hockey team, he will never choose to skate a fifth time that week.

Josh will only attend Friday night skate if there is no charge, a fifth time skating will not benefit him at all.

If Josh decides to join his friends, he must feel that he gains at least $5 in fun by attending a fifth weekly session on the ice.

Josh should never attend Friday night open skate--he could get hurt and jeopardize his hockey career.

CONCEPT

Cost and Benefit Optimization for Consumers

The rational consumer will seek to do which of the following?

Use infinite resources to maximize consumption

Consume to the point where utility is the highest while also using the fewest amount of resources

Increase consumption at zero opportunity cost.

Recognize that opportunity costs do not exist when resources are fully employed

CONCEPT

Decision Making Relationships: Rational Consumer

Which one of the following examples would cause a movement along the demand curve?

The price of a service remains constant, but changes in preferences affect demand.

The price of a product decreases, therefore the quantity demanded increases.

The price of a service remains constant, but a change of price in related goods affects demand.

The price of a service remains constant, but a change in income affects demand.

CONCEPT

Changes in Demand and Movements along Demand Curve

Which of the following would cause the supply curve to shift to the right?

The price of lead increases; as a result there are fewer pencils produced.

The price of wheat decreases, so more bread is produced.

The price of cotton increases, so farmers grow more cotton.

The price of apples falls, so consumers purchase more apples.

CONCEPT

Changes in Supply and Movements along Supply Curve

The smaller compact car is an example of which type of good?

Normal

Veblen

Inferior

Giffen

CONCEPT

Types of Goods

Which of the following would a student of macroeconomics NOT study?

The percentage of a nation's labor force that is employed

Changes in the overall price level in an economy over time

How governments can act to alleviate a recession

How the price of apples affects the market for oranges

CONCEPT

What is Economics?

Determine which of the following is an example of opportunity cost.

If I take a second job, I will have more money, but less time to spend with my family.

We have a week of vacation. Let's go on a Mexican cruise.

With my current salary, I can only afford to spend $500/month on food.

How many times will I be able to wear this shirt before it falls apart or goes out of style?

CONCEPT

Decision Making Relationships: Rational Consumer

Which of the following is economically true regarding Josh's decision to join his friends on Friday night?

Since Josh already skates four times a week with his hockey team, he will never choose to skate a fifth time that week.

If Josh decides to join his friends, he must feel that he gains at least $5 in fun by attending a fifth weekly session on the ice.

Josh will only attend Friday night skate if there is no charge, a fifth time skating will not benefit him at all.

Josh should never attend Friday night open skate--he could get hurt and jeopardize his hockey career.

CONCEPT

Cost and Benefit Optimization for Consumers

Which of the following is NOT an example of the labor-leisure tradeoff?

A firm decides to layoff workers in order to meet budget.

Sam skips dinner with friends in order to complete a project for school.

Debbie declines to accept overtime work and pay in order to join her family at the beach for a long weekend.

A CEO decides to have a company retreat over a long weekend, figuring the improvement to morale will offset the cost to the firm.

CONCEPT

Resource Allocation for Consumers

profit maximization

labor/leisure trade-off

consumer surplus

consumer optimization

CONCEPT

Cost and Benefit Optimization for Consumers

Due to high unemployment, people travel less, which affects the markets for things like hotel rooms and gasoline.

Which economic concept corresponds to this scenario?

Movement up the demand curve

Shift in supply

Movement down the demand curve

Shift in demand

CONCEPT

Changes in Demand and Movements along Demand Curve

A firm acts as a rational decision maker when its leaders decide to do which of the following?

Using all of its resources in order to maximize production, regardless of profit

Cut hours and workers in order to minimize costs

Solely using labor in a production process, rather than a combination of labor and capital

Entice investors by promising lower than average returns on investment

CONCEPT

Decision Making Relationships: Rational Firm

Joe paid $5,000 for a used car, but he was willing to pay as much as $10,000.

Which economic concept below corresponds to the example above?

Ceteris paribus

Deadweight loss

Producer surplus

Consumer surplus

CONCEPT

Market Equilibrium

Which answer choice below is NOT an example of microeconomics?

Analysis of the influence of changes in healthcare on a small business

A study of how one's salary level influences spending on leisure items

A study of whether or not the trade embargo against Iran has been successful

An analysis of how a change in one's salary affects individual shopping habits

CONCEPT

What is Economics?

Which of the following combinations contains both an intermediate good and a final good?

Tires and bicycles

Steak and chicken

Architect and new building

Peanut butter and jelly

CONCEPT

Factor Markets

Which of the following is an example of a constraint?

Harbor Sweets will produce to the point where marginal revenue is equal to marginal cost.

Sarah decides not to purchase an additional pair of Ugg boots because she already has two pairs at home.

A SouthCoast Clothing decides that five machines and 15 workers is the most efficient in production.

Peter's Place can serve 300 people in its banquet room, and often has to turn away large parties.

CONCEPT

Resource Allocation for Firms

Which of the following is not considered a factor of production?

Interest earned on an investment

The employees for a gas station

The property that a factory is built on

A printer to make copies for a company

CONCEPT

Resource Allocation for Firms

When a firm incurs an additional cost to produce one more unit, this is known as which of the following?

Fixed cost

Per-unit profit

Marginal cost

Marginal revenue

CONCEPT

Cost and Benefit Optimization for Producers

A real estate agency’s policy is to start all sales commission negotiations at 6%. However, the agency is willing to accept sales commissions as low as 5%.

The scenario above is an example of which principle?

Ceteris paribus

Producer surplus

Consumer surplus

Deadweight loss

CONCEPT

Market Equilibrium

Which of the following is an example of an inferior good?

A famous brand of leather good produces a handbag that costs as much as a used car. Although it is far from cheap, it is one of the brand's most popular items.

Very poor people in China consume a great deal of rice. When the price of rice rises, consumption of it may even rise.

Chris just graduated from college and sometimes eats ramen noodles when his finances get tight. After he gets his paycheck, he purchases less ramen noodles as he can afford healthier food.

Every once in a while, Nelly treats herself to a manicure and pedicure with a massage.

CONCEPT

Types of Goods

When examining how price affects either the supply or demand curve, economists apply the concept of ceteris paribus.

This most often translates into which of the following?

Holding other factors constant and only examining effect of price on supply and demand

Including all models of economic behavior when making a decision

Examining each of the factors of production before making a decision

Taking all factors affecting demand into consideration

CONCEPT

Demand

Supply

A store devotes more space to bicycles so it now has less space for books.

This is an example of what decision-making relationship for the rational firm?

Profit maximization

Cost minimization

Infinite resources

Opportunity cost

CONCEPT

Decision Making Relationships: Rational Firm

Determine which of the following descriptions is true regarding the rational consumer.

Makes choices that exhibit decreasing utility with the ability to increase consumption

Wants to maximize utility

Has unlimited resources to consider in making decisions

Makes decisions based on an unlimited income

CONCEPT

Decision Making Relationships: Rational Consumer

Leah has two options this Friday evening. She can either babysit for her professor's kids and earn $50 for the evening, or she can join some friends for dinner and a movie. The movie will cost $25 for ticket and concessions and dinner usually runs around $20. Her roommate has a coupon for 50% off dinner at their favorite restaurant and is trying to convince Leah to come with them rather than babysitting.

Which of the following is Leah's opportunity cost if she decides to go with her friends?

The $10 she will save using the 50% off coupon for dinner

The $25 she will spend on movie ticket and concessions

The $50 she would earn from babysitting

The difference between what she would earn from babysitting and what she would spend at dinner and the movies

CONCEPT

Decision Making Relationships: Rational Consumer

Andrea cannot spend all of her money on bananas. She has to purchase other groceries and pay her bills.

Which economic term corresponds to the idea that Andrea must budget how she spends her limited income?

Marginal cost

Consumer optimization

Constraint

Marginal benefit

CONCEPT

Cost and Benefit Optimization for Consumers

Bob opens a new diner and has to make many decisions about the resources he is going to employ.

Which of the following combinations is NOT correct?

The wait staff is an example of labor.

The restaurant building is an example of land.

A brick oven is an example of capital.

A computer ordering system for staff is an example of technology.

CONCEPT

Resource Allocation for Firms

Which of the following is true about the field of economics?

Economics is commonly broken into Labor Economics and Consumer Economics

Economics as a field of study was introduced during the Industrial Revolution and has not changed over time

Economics can correctly predict when a recession is coming and how long it will last

Economics is a social science that intersects with other fields of study

CONCEPT

What is Economics?

consumer optimization

profit maximization

labor/leisure trade-off

consumer surplus

CONCEPT

Cost and Benefit Optimization for Consumers

A real estate agency’s policy is to start all sales commission negotiations at 6%. However, the agency is willing to accept sales commissions as low as 5%.

The scenario above is an example of which principle?

Ceteris paribus

Deadweight loss

Producer surplus

Consumer surplus

CONCEPT

Market Equilibrium

Which of the following is an intermediate good?

pizza sold to a customer in a restaurant

Flour used to bake bread in a bakery

A textbook used by a teacher in a classroom

A tractor used by a farmer

CONCEPT

Factor Markets

A local supermarket was forced to hold a sale on beef when they received an extra shipment of this perishable good. Over the course of the weekend, the store sold twice as many packages of ground beef as they normally do.

This is an example of which economic principle?

Movement along the demand curve

Shift in demand

Movement along the supply curve

Shift in both supply and demand

CONCEPT

Changes in Demand and Movements along Demand Curve

Which of the following is NOT an example of a shift in demand or supply?

Technological advances increase the production of a particular product, causing a change in supply.

A fertilizer price reduction of $10 per bag causes farmers to buy more.

Around the winter holidays, demand increases for a particular children’s toy.

As more books become available in electronic form, demand for paperback books decreases.

CONCEPT

Changes in Supply and Movements along Supply Curve

When examining how price affects either the supply or demand curve, economists apply the concept of ceteris paribus.

This most often translates into which of the following?

Examining each of the factors of production before making a decision

Taking all factors affecting demand into consideration

Including all models of economic behavior when making a decision

Holding other factors constant and only examining effect of price on supply and demand

CONCEPT

Demand

Supply

Which choice below is a factor in the process of resource allocation for consumers?

Time

Land

Capital

Short-run constraints

CONCEPT

Resource Allocation for Consumers

Identify which statement is a characteristic of long-run for a firm.

Time period when constraints are most likely to be variable

Time period with the least control over constraints

Time period of determining quantity and cost that yields the greatest profit

Time period with at least one fixed element

CONCEPT

Resource Allocation for Firms

What is the study of the behavior of consumers and businesses holistically across an economy?

Social science

Civics

Microeconomics

Macroeconomics

CONCEPT

What is Economics?

During the Great Recession, many investors purchased gold and other precious metals, thinking they would be reliable forms of investment.

If we looked at this phenomenon on a graph, we would see which of the following?

Movement down the demand curve

Shift in supply

Movement up the demand curve

Shift in demand

CONCEPT

Changes in Demand and Movements along Demand Curve

The smaller compact car is an example of which type of good?

Normal

Giffen

Inferior

Veblen

CONCEPT

Types of Goods

Which of the concepts below is a characteristic of a Veblen good?

An increase in price of the good causes a decrease in quantity demanded.

As price of the good increases, demand for it increases to establish prestige.

As income increases, demand for less expensive goods decreases.

A good that offers better quality and features that is consumed when income rises.

CONCEPT

Types of Goods

Joe paid $5,000 for a used car, but he was willing to pay as much as $10,000.

Which economic concept below corresponds to the example above?

Producer surplus

Ceteris paribus

Deadweight loss

Consumer surplus

CONCEPT

Market Equilibrium

A firm that produces and distributes baked goods decides to produce more units of their frozen ice cream cakes once they experience an increase in demand for the cakes.

Assuming it is a rational firm, choose the statement from below that is true.

As long as the marginal cost exceeds marginal revenue, the firm will continue to produce the cakes.

As long as the marginal revenue exceeds the marginal cost, the firm will continue to produce the cakes.

The firm will earn a higher incremental profit for each additional cake that it produces.

If the firm decides to lower the price of the cakes, the quantity demanded will decrease.

CONCEPT

Cost and Benefit Optimization for Producers

The machinery that is used to construct and embroider running apparel would be an example of which of the following?

Land

Labor

Capital

Natural resources

Which of the following is NOT an example of the labor-leisure tradeoff?

Sam skips dinner with friends in order to complete a project for school.

A firm decides to layoff workers in order to meet budget.

A CEO decides to have a company retreat over a long weekend, figuring the improvement to morale will offset the cost to the firm.

Debbie declines to accept overtime work and pay in order to join her family at the beach for a long weekend.

Which of the following is an example of macroeconomics?

An analysis of the most efficient way for a small business to produce the highest quality of goods while achieving the highest profit

A consumer’s decision whether to spend a weekly paycheck on a small vacation or to stay home and save that weekly pay

A restaurant owner’s decision on whether to open another location or to expand the current building

A study that analyzes the reasons why one nation’s economy has grown faster than another nation’s economy

Which of the following is characteristic of macroeconomics?

A study analyzing a nation’s unemployment rate

A consumer's reaction to an increased taxation on cigarettes

Factors that help determine menu prices at a local restaurant

A consumer's reaction to changes in the price of gasoline

Which of the following defines cost minimization?

A firm’s procedure for determining supply and cost that yields the greatest gain

A firm’s output strategy that incurs the least amount of expenditure

The amount of utility gained by a firm as a result of producing an additional unit of a particular good

The sacrifice made by choosing one value or opportunity over another

Anita gets a new job and her salary doubles. As a result, she moves to a bigger apartment in a trendy part of town.

Her new apartment, as a result of her increase in salary, can be categorized as which of the following two types of goods?

Veblen and Normal

Veblen and Inferior

Giffen and Inferior

Giffen and Normal

The smaller compact car is an example of which type of good?

Inferior

Veblen

Normal

Giffen

When examining how price affects either the supply or demand curve, economists apply the concept of ceteris paribus.

This most often translates into which of the following?

Taking all factors affecting demand into consideration

Holding other factors constant and only examining effect of price on supply and demand

Including all models of economic behavior when making a decision

Examining each of the factors of production before making a decision

Which statement below is NOT true regarding short-run and long-run production constraints?

The size of the site of production is variable in the long-run.

The standard assumption in economics is that all factors are variable in the long-run.

Changes in production capacity are more variable in the long-run.

Constraints are variable in the short-run and fixed in the long-run.

In anticipation of an upcoming football season, State University increased the price of all logo apparel at the bookstore. To the bookstore manager's surprise, he sold fewer units of logo apparel.

This situation is an example of which of the following?

Shift in demand to the left

Decrease in quantity demanded

Increase in quantity demanded

Shift in demand to the right

When quantity demanded for a good equals quantity supplied, what will happen to a market for that good?

Quantity supplied will always increase as long as a profit can be made

The market is considered to be in equilibrium

Consumers will find other markets due to the shortage

Suppliers will supply fewer units in order to drive up price

Which of the following would a student of macroeconomics NOT study?

The percentage of a nation's labor force that is employed

Changes in the overall price level in an economy over time

How the price of apples affects the market for oranges

How governments can act to alleviate a recession

Determine which definition below corresponds with ceteris paribus?

The S curve is upward sloping.

A phrase that means considering one factor and assuming all others are the same.

An increase in income will cause consumers to purchase more normal goods.

A negative advertisement will cause consumers to purchase less of the good.

Determine which statement below applies when income goes down.

Consumer preference for inferior goods decreases.

Consumer preference for normal goods increases.

The indifference curve shifts to the right.

The indifference curve shifts downward and to the left.

CONCEPT

Budget Constraints: Change in Income

Last month, Robert’s income was $1,000, and he went to the movies twice. This month, Robert’s income increased to $2,000, and he went to the movies five times.

Determine the income elasticity using the midpoint formula.

2.5

1.28

-2.1

0.5

CONCEPT

Income Elasticity

Jim usually goes to the movies with friends on Friday nights at the local movie theater. This week, the movie theater held over the movie, Anchorman 2, which Jim saw last week. Jim and his buddies decide to go bowling rather than attend the movie a second time.

Which of the following best describes why Jim decided to go bowling this weekend?

Consumer budget constraint

Profit maximization

Diminishing marginal returns

Jim's utility function

CONCEPT

Utility Theory

What does point D on this graph represent?

An optimal choice

A choice that would result in income left over

An impossible choice given the income

A choice on the budget constraint

CONCEPT

Optimal Choice

A popular clothing website sold five units of a dress when the price was $300 and 20 units when the price was marked down to $100.

What is the own-price elasticity of demand for the dress using the midpoint formula?

-1.2

2.5

1.25

-2

CONCEPT

Own-Price Elasticity

A Chinese restaurant and a Thai restaurant both sold buffet meals at the single price of $15 per person. When the Thai restaurant reduced their price to $12 per person, the number of dinners sold at the Chinese restaurant decreased from 100 to 75.

What is the cross-price elasticity for dinners at the two restaurants, using the midpoint formula?

-0.28

1.28

-1.5

CONCEPT

Cross-Price Elasticity

Select the cross-price elasticity amount below that is categorized as a substitute.

-1.2

-0.23

0.71

CONCEPT

Cross-Price Elasticity

Perfectly inelastic demand for a good exists when __________.

a 50% increase in price will result in a 50% decrease in quantity demanded

a small increase in price results in a big change in quantity demanded

consumers will purchase the same amount of the good, regardless of price

firms will only offer a set amount of a good for sale, regardless of price

CONCEPT

Defining Elasticity

Using the graph shown here, determine which statement is FALSE.

A is the optimal choice.

C could become the optimal choice if the budget increased.

Point A represents a choice that is under budget.

These indifference curves are from a rational consumer.

CONCEPT

Optimal Choice

Which economic concept below is NOT present on the graph shown here?

Change in price

Substitution effect

Optimal choice

Change in income

CONCEPT

Budget Constraints: Change in Price

When the price of surfboards goes down, demand for both surfboards and wetsuits increases, meaning that these two goods are which of the following, based on their elasticity?

Substitute goods

Normal goods

Complement goods

Unit elastic

CONCEPT

Cross-Price Elasticity

Select the statement below that is true.

Indifference means that only a particular combination of goods are preferable to the consumer.

The consumer's preference is indicated by the Y axis.

Non-satiation means that more is always better.

Completeness means that none of the items in a set should be missing.

CONCEPT

Consumer Choice Theory

Ryan greatly preferred oranges during long football practices. His teammates often joked that Ryan would pay 10 times the usual amount to have his oranges rather than eat other fruits, and they always knew when the price had jumped too much by the days when Ryan showed up with cheaper bananas instead.

What type of elasticity can be used to describe the oranges that Ryan eats during practice?

Perfectly inelastic

Perfectly elastic

Relatively elastic

Relatively inelastic

CONCEPT

Own-Price Elasticity

Which of the following best describes an indifference curve?

A graph that shows how the price of substitute goods causes a consumer to prefer one bundle of goods over another

A graph that shows the change in demand for a good when the price of its complementary good changes

A graph that shows the change in demand for goods and services when income changes

A graph that shows different bundles of goods for which a consumer has equal preference

CONCEPT

Utility Theory

Which scenario below is an example of completeness?

A consumer is able to logically rank his preferences for the three different price combinations for a flight that he will purchase for an upcoming trip.

For $7, a shopper can buy a gallon of milk and one box of an expensive cereal or a gallon of milk and two boxes of a cheaper cereal. He decides to purchase a gallon of milk and one box of cheaper cereal, keeping the leftover cash.

If a guest at a banquet can purchase a raffle ticket for gift baskets that are nearly identical, she will choose to purchase a ticket for the basket that has an additional gift.

A consumer is able to compare possible combinations and quantities of bath towels and wash cloths she is purchasing for her bathroom to determine the best combination based on her preferences.

CONCEPT

Consumer Choice Theory

According to consumer choice theory, what will a rational consumer do?

Choose the bundle of goods that is least expensive, in order to maximize utility

Always choose a bundle of goods that has the best quality

Always select the bundle of goods below his/her budget constraint

Compare two bundles of goods and select the one which provides the best utility

CONCEPT

Consumer Choice Theory

Determine which scenario below is an example of own-price elasticity.

Because he makes more money this year than he did last year, George purchased more gifts for his family members this year.

Tom, a construction foreman, will buy 100 sheets of plywood when the price is $12 per sheet. He will buy 150 sheets of plywood when the price drops to $10 per sheet.

Helium balloons are on sale this week, so LaTisha will need fewer streamers for the party to celebrate her husband's job promotion.

If the price of leather sofas increases next month, Heather will opt to purchase a microfiber sofa instead.

CONCEPT

Own-Price Elasticity

Which of the following would most likely have an income elasticity of -1?

A deluxe manicure-pedicure

A necklace for regular price

A pair of brand new shoes that are not on sale

A dress on clearance

CONCEPT

Income Elasticity

Which of the following corresponds to an increase in income?

The budget constraint will make a parallel shift inward.

The budget constraint will shift outward in a non-parallel fashion.

The budget constraint will make a parallel shift outward.

The budget constraint will shift inward in a non-parallel fashion.

CONCEPT

Budget Constraints: Change in Income

Which of the following describes what will happen to Peter’s budget constraint on his annual trip to the amusement park when the price of game tokens remains the same as last year but the price of ride tickets decreases?

The budget constraint will pivot out along the axis with ride tickets.

The budget constraint will remain the same.

Indifference curves will cross.

The budget constraint will shift to the right, parallel.

CONCEPT

Budget Constraints: Change in Price

A popular clothing website sold five units of a dress when the price was $300 and 20 units when the price was marked down to $100.

What is the own-price elasticity of demand for the dress using the midpoint formula?

-2

1.25

2.5

-1.2

CONCEPT

Own-Price Elasticity

What type of elasticity can be used to describe the oranges that Ryan eats during practice?

Relatively elastic

Relatively inelastic

Perfectly elastic

Perfectly inelastic

CONCEPT

Own-Price Elasticity

Which description below describes an indifference curve?

Where the quantities of two items are maximized

The highest level of satisfaction that a consumer can attain within certain limits

A curve on a consumer choice graph that indicates different combinations of goods that are all equally appealing to the consumer

The curve on a consumer choice graph that indicates how much money the consumer can spend

CONCEPT

Utility Theory

Which point(s) on the graph shown here are over budget?

E and A

B only

B and C

D only

CONCEPT

Optimal Choice

The idea that a consumer must be able to evaluate all of the choices offered fulfills the assumptions of which of the following, related to preference behavior?

Transitivity

Completeness

Consumer choice

Non-satiation

CONCEPT

Consumer Choice Theory

Ben recently took a 20% cut in pay at work.

Which of the following is most likely to happen as a result?

Ben will hire a career consultant in order to secure a new job.

Ben will drive to work more, rather than taking the bus, as driving is faster.

Ben will work more hours, as his leisure is now relatively more expensive.

Ben will bring his lunch to work rather than going to a restaurant.

CONCEPT

Budget Constraints: Change in Income

According to the conditions of consumer choice theory which of the following options shows what is being violated in this indifference curve?

Non-satiation

Non-satiation & Transitivity

Completeness & Transitivity

Transitivity

CONCEPT

Consumer Choice Theory

Which of the following scenarios corresponds to cross-price elasticity?

Lauren cannot decide which color of roses to buy because they are all priced the same.

A local high school’s prom is also the same weekend as the ceremony, so the price of roses has increased.

The price of resume paper has decreased. Because of this, Lauren can now afford to purchase more paper and an additional portfolio and still be within her budget for gifts.

CONCEPT

Cross-Price Elasticity

Select the example below that could be categorized as own-price elasticity.

Since Tanya got a new job, she was able to buy a new car and get rid of the old one.

When the price of gasoline goes up, people purchase fewer large vehicles.

When the price of colombiano coffee goes up, people purchase guatemalteco coffee instead.

Tim's favorite brand of tools are marked down 50%, so he buys twice as many.

CONCEPT

Own-Price Elasticity

Last year, Paula's income was $2,000, and she went to vacation twice. This year, Paula's income increased to $3,000, and she went to vacation five times.

Determine the income elasticity using the midpoint formula.

0.33

0.47

1.80

2.14

CONCEPT

Income Elasticity

According to consumer choice theory, which of the statements below must be true?

It is possible that a rational consumer cannot come to a decision after considering all possible combinations.

A rational consumer's choices will yield indifference curves that cross each other on a preference map.

When given the opportunity, a rational consumer will always prefer the bundle of goods that will give him the greatest utility maximization.

A rational consumer will always prefer a bundle that offers fewer of one of the goods, keeping the amount of the other good constant.

CONCEPT

Consumer Choice Theory

When the price of salad was $5, a cafeteria sold 50 packets of salad dressing a day at $0.50 per packet. When they raised the price of salad to $7 but kept the dressing at the same price, they sold only 25 packets of dressing per day. This graph shows the elasticity of demand for salad and dressing.

Using the mid-point formula, the cross-price elasticity is __________ and the goods are __________.

2, substitutes

-2, complements

-0.5, complements

0.5, substitutes

CONCEPT

Cross-Price Elasticity

Perfectly inelastic demand for a good exists when __________.

a small increase in price results in a big change in quantity demanded

firms will only offer a set amount of a good for sale, regardless of price

consumers will purchase the same amount of the good, regardless of price

a 50% increase in price will result in a 50% decrease in quantity demanded

CONCEPT

Defining Elasticity

Using the graph shown here, determine which statement is FALSE.

A is the optimal choice.

Point A represents a choice that is under budget.

These indifference curves are from a rational consumer.

C could become the optimal choice if the budget increased.

CONCEPT

Optimal Choice

Which of the following would most likely have an income elasticity of 3?

Dinner at a local pizzeria

A high-end luxury car

Clothing from a second-hand store

A cell phone

CONCEPT

Income Elasticity

The reduction in Laura's ability to purchase both sandwiches and pizza due to the increase of price in sandwiches is known in economic terms as ________.

a change in income

the income effect

the substitution effect

a budget constraint

CONCEPT

Budget Constraints: Change in Price

This graph depicts Laura's budget for airline flights and road trips.

What is the most likely cause of the change in her budget line?

Road trips got less expensive.

Airline flights got less expensive.

Airline flights got more expensive.

Road trips got more expensive.

CONCEPT

Budget Constraints: Change in Price

Which of the following best describes why Jim decided to go bowling this weekend?

Profit maximization

Jim's utility function

Diminishing marginal returns

Consumer budget constraint

CONCEPT

Utility Theory

If jeans and yoga pants are substitutes, what is true about their cross-price elasticity?

It can be positive or negative.

It will always be positive.

It will always be negative.

It will always be greater than 1.

CONCEPT

Cross-Price Elasticity

Which of the following is likely to happen when Crystal increases her income by earning a promotion and pay raise at work?

On a graph for indifference curves for new clothing and new shoes, Crystal’s budget constraint will shift to the left.

Crystal’s preference for normal goods will increase.

Crystal's consumption of inferior goods, such as generic brand items, will stay the same.

Crystal will buy fewer normal and luxury goods.

CONCEPT

Budget Constraints: Change in Income

Which of the following is an example of perfectly elastic demand?

The Smith family eats at the same pizza restaurant each week because they have the best sauce.

Susie always purchases three bagels on Friday because the bakery runs a special that day.

Juan stopped purchasing peaches from his cousin's stall at the farmer's market when his cousin was the only farmer to raise prices.

Danny got a tip that the price of downloads on iTunes was going to increase, so he purchased 20 additional songs today.

CONCEPT

Defining Elasticity

According to consumer choice theory, which of the statements below must be true?

When given the opportunity, a rational consumer will always prefer the bundle of goods that will give him the greatest utility maximization.

A rational consumer's choices will yield indifference curves that cross each other on a preference map.

A rational consumer will always prefer a bundle that offers fewer of one of the goods, keeping the amount of the other good constant.

It is possible that a rational consumer cannot come to a decision after considering all possible combinations.

CONCEPT

Consumer Choice Theory

Select the statement that is unlikely to happen when Miguel scales down from 40 to 25 hours per week, thus lowering his income.

Miguel will buy more inferior goods.

Miguel will buy fewer normal goods.

Miguel’s budget constraint will shift outward.

Miguel will purchase goods that provide him with the highest level of utility.

CONCEPT

Budget Constraints: Change in Income

Cross-price elasticity refers to the change in demand that happens as a result of change in __________.

income

price of complement or substitute goods

consumer taste or preferences

change in the price of the good itself

CONCEPT

Cross-Price Elasticity

Which description below describes an indifference curve?

A curve on a consumer choice graph that indicates different combinations of goods that are all equally appealing to the consumer

The curve on a consumer choice graph that indicates how much money the consumer can spend

Where the quantities of two items are maximized

The highest level of satisfaction that a consumer can attain within certain limits

CONCEPT

Utility Theory

Determine which scenario below is an example of own-price elasticity.

Tom, a construction foreman, will buy 100 sheets of plywood when the price is $12 per sheet. He will buy 150 sheets of plywood when the price drops to $10 per sheet.

If the price of leather sofas increases next month, Heather will opt to purchase a microfiber sofa instead.

Because he makes more money this year than he did last year, George purchased more gifts for his family members this year.

Helium balloons are on sale this week, so LaTisha will need fewer streamers for the party to celebrate her husband's job promotion.

CONCEPT

Own-Price Elasticity

The budget constraint will remain the same.

The budget constraint will pivot out along the axis with ride tickets.

Indifference curves will cross.

The budget constraint will shift to the right, parallel.

CONCEPT

Budget Constraints: Change in Price

Using the mid-point formula, the cross-price elasticity is __________ and the goods are __________.

0.5, substitutes

-2, complements

-0.5, complements

2, substitutes

CONCEPT

Cross-Price Elasticity

When Sam's Sandwiches were priced at $6, he sold 70 each day during lunch. When he reduced the price to $4 a sandwich, he sold 80 each day.

Using the midpoint formula, the own price elasticity for Sam's Sandwiches would be __________.

-0.67

-0.33

1.33

0.50

CONCEPT

Own-Price Elasticity

Which choice below is one of the three assumptions of behavior within consumer choice theory?

Indifference

Preference

Utility

Completeness

CONCEPT

Consumer Choice Theory

Last year, Paula's income was $2,000, and she went to vacation twice. This year, Paula's income increased to $3,000, and she went to vacation five times.

Determine the income elasticity using the midpoint formula.

2.14

0.33

1.80

0.47

CONCEPT

Income Elasticity

Which statement below is true about the $75 Peter and his wife occasionally spend for two meals and drinks at a Korean barbecue restaurant since Peter was promoted, if the income elasticity for the expense is 2?

It is a substitute.

It is an inferior good.

It is a complement.

It is a luxury good.

CONCEPT

Income Elasticity

Which of the following is an example of the law of diminishing returns?

If Shane and Marie order an additional bucket of popcorn, it will provide more satisfaction to them than the first bucket.

The rate of utility gained decreases each additional hour that Isabella stays up to study, because her studying provides less benefit to her as she starts to get tired.

As Shana continues to win more and more first place awards, each additional first place award means more to her than the previously earned ones.

As Alice consumes more tea, each additional cup of tea provides her with more satisfaction than the previous one.

CONCEPT

Utility Theory

The reduction in Laura's ability to purchase both sandwiches and pizza due to the increase of price in sandwiches is known in economic terms as ________.

a change in income

the substitution effect

a budget constraint

the income effect

CONCEPT

Budget Constraints: Change in Price

Select the statement below that is true.

Completeness means that none of the items in a set should be missing.

Non-satiation means that more is always better.

Indifference means that only a particular combination of goods are preferable to the consumer.

The consumer's preference is indicated by the Y axis.

CONCEPT

Consumer Choice Theory

Select the cross-price elasticity amount below that is categorized as a substitute.

0.71

-0.23

-1.2

CONCEPT

Cross-Price Elasticity

Using the graph shown here, determine which statement is FALSE.

C could become the optimal choice if the budget increased.

Point A represents a choice that is under budget.

A is the optimal choice.

These indifference curves are from a rational consumer.

CONCEPT

Optimal Choice

Perfectly inelastic demand for a good exists when __________.

a small increase in price results in a big change in quantity demanded

a 50% increase in price will result in a 50% decrease in quantity demanded

firms will only offer a set amount of a good for sale, regardless of price

consumers will purchase the same amount of the good, regardless of price

CONCEPT

Defining Elasticity

Jacob recently graduated from college and was promoted from intern to a paid position.

Which of the following is most likely to change in his spending habits?

Jacob will purchase more normal goods.

Jacob's budget constraint will shift to the left if shown on a graph.

Jacob will not respond as much to price changes in normal goods.

Jacob will purchase fewer normal goods and more inferior goods.

CONCEPT

Budget Constraints: Change in Income

Which point(s) on the graph shown here are over budget?

B only

B and C

D only

E and A

CONCEPT

Optimal Choice

When the price of a good goes up 1% and demand decreases by the same amount, a good is said to be which of the following?

Unit elastic

Perfectly inelastic

Perfectly elastic

Elastic

This preference map shows the various amounts of DVDs and magazines Jennifer likes to purchase each month, depending on her monthly income.

Which of the following statements best describes why Jennifer will not choose option C on the preference map?

Although she would prefer option C, she cannot choose it due to budget constraints.

Option C is on the budget constraint.

Although she would enjoy option C, she would prefer B.

Option A would provide utility maximization.

Which of the following is true regarding indifference curves?

A consumer is happiest at the highest point on his/her indifference curve.

Indifference curves do not change when incomes increase or decrease.

Each bundle of goods on a consumer's indifference curve provides the same utility.

A consumer will have more utility on an indifference curve closer to the origin than one farther away.

According to consumer choice theory, what will a rational consumer do?

Always choose a bundle of goods that has the best quality

Compare two bundles of goods and select the one which provides the best utility

Choose the bundle of goods that is least expensive, in order to maximize utility

Always select the bundle of goods below his/her budget constraint

On a popular Internet deals site, consumers purchased 1,000 weekend getaway packages when the price was $300. After the price increased to $400, consumers purchased 600 packages. This graph shows the elasticity of demand for the weekend getaway package.

Using the midpoint formula, what is the own-price elasticity of the weekend getaway package?

-1.75

-1.50

1.50

0.34

Which of the following is an example of own-price elasticity?

The change in quantity of steaks purchased after the price of seafood increased at a local market

The change in quantity demanded after the price of a 32” television decreased by $70

The change in demand for inferior goods after a series of lay-offs in a small town

The change in quantity of canoes demanded when the price of kayaks changed

This graph below shows three indifference curves for blankets and pillow cases.

Consider choice A and determine why this would NOT be the optimal choice.

These indifference curves violate the conditions of consumer theory.

Additional income would be left over with this choice.

The consumer cannot afford this choice.

It does not provide the consumer with the highest level of utility possible.

As the women's soccer coach, Karissa was in charge of choosing and ordering uniforms. Since the knee socks and shin guards had a unique matching logo, Karissa only ordered from one particular company. When she ordered them three years ago, the knee socks were $5 per pair, and the shin guards were $7 per pair. Karissa ordered 15 pairs of knee socks and 15 pairs of shin guards.

Now the price of the shin guards hasn't changed, but knee socks were $7 per pair. Karissa decided she would only buy 10 pairs of shin guards this year.

Using the mid-point formula, the cross-price elasticity for the shin guards is __________.

1.25

-1.2

-0.83

According to the conditions of consumer choice theory which of the following options shows what is being violated in this indifference curve?

Non-satiation & Transitivity

Non-satiation

Transitivity

Completeness & Transitivity

Which statement below refers to the law of diminishing returns?

This is the spot on an indifference curve that maximizes utility, given budget constraints.

After a certain point, the rate of utility decreases with each additional unit of an item consumed.

This states that the consumer's utility is dependent on different variables.

This is equivalent to the slope of an indifference curve.

Steven's income decreased from $1,800 a month to $1,200 a month when he went back to school. As a result, he cut back on trips to his favorite gyro stand, from 15 to 10.

What is Steven's income elasticity?

-1.33

1.0

.33

-.67

Which of the following statements is true of perfectly elastic demand?

Buying less of another item in order to purchase medications needed to sustain life

Buying the same amount of salt regardless of price fluctuations

Continuing to buy gasoline when the price goes up in order to commute to work

Not buying a good at all anymore when the price goes up a little

Product Price

Cost Per Unit

Quantity Sold

Quantity Produced

Opportunity Cost

$1.25

$0.75

690

750

100

Using the data in this table, calculate the firm’s economic profit.

$320

-$300

$300

-$200

-$520

$200

CONCEPT

Economic Profit

This firm is currently producing at 25 units; which of the following should it do in order to maximize profit?

The firm should shut down production entirely.

The firm should decrease output.

The firm should increase output to 80 units.

The firm should do nothing. It is already producing at maximum optimization.

CONCEPT

Output Optimization: Marginal Revenue / Marginal Cost

Which of the following is a characteristic of monopolistic competition?

Advertising increases the cost of production.

Predatory price cutting occurs.

Firms sell homogenous products.

Cooperation between firms is sometimes used to maintain prices.

CONCEPT

Monopolistic Competition

Using the graph above, the firm is best served producing at __________.

Point A

Point D

Point B

Point C

CONCEPT

Production Function and Constraints

If the market price of apples drops to $9, at which of the following will the firm be?

Operating at a short term loss

At the shutdown point

Making a profit

Below the shutdown point

Just breaking even

CONCEPT

Breakeven Point

Which of the following is true regarding how a market type interacts with constant, increasing and decreasing cost industries?

In a perfectly competitive market, firms will usually experience significant economies of scale until very high levels of output.

In a natural monopoly, firms will always reach diseconomies of scale at high levels of output.

In a monopoly, firms are likely to begin experiencing diseconomies of scale at relatively low levels of output.

In a perfectly competitive market, firms tend to experience diseconomies of scale at relatively low levels of output.

CONCEPT

Constant, Increasing and Decreasing Cost Industries

Given the graph shown here, the firm should contemplate shutting down production at which of the following points?

When MC (the purple line) reaches its lowest point

At Q1

When MC (the purple line) is greater than Q1

At Q2

CONCEPT

Shut-down Point

If the variable costs for a firm are $40,000, the fixed costs are $20,000, and the firm sells 100 units, what are the firm's average total costs?

$400

$60,000

$20,000

$600

CONCEPT

Cost: Total, Marginal and Average

Which of the following is why the long run average cost curve must lie at the same level or below any short run average cost curve?

Because of the law of diminishing returns

Because of economies of scale

Because in the long run, a firm will generally operate at higher per-unit cost than in the short run

Because in the long run, all production costs are variable

CONCEPT

Long-Run Supply Curve

Based on the descriptions below of different jobs Nancy has held, which would qualify as an oligopoly?

Nancy was a telemarketer for a software company with many buyers and sellers. Everyone’s products were fairly unique, but it was very easy to enter the software market. One advantage Nancy’s company had was that it had an informational advantage over many other companies.

Nancy was a fruit vendor. In her market there were many buyers and sellers. It was easy and cheap to start a vendor stand. Everyone’s fruits were basically identical.

Nancy was an administrative assistant for an oil company with very few other sellers. Other companies had trouble getting into the fossil fuel market. All the fossil fuel companies had the same information, but they had an information advantage over the buyers.

Nancy was a customer service representative for the local water company. The company had exclusive rights to operate as the only company providing water to local residents since the costs to lay competing pipelines were a barrier to entry preventing competition. They were, however, regulated by the government.

CONCEPT

Oligopoly

Number of Employees Total Production Marginal Product of Labor Marginal Revenue Product

0 0 0

1 9 9

2 24 15

3 36 12

4 43 7

If the price of the item is $15.00 per unit and the employees cost $125 each, how many employees should the firm hire to maximize their profit?

Three employees

Four employees

Two employees

One employees

CONCEPT

Output Optimization: Marginal Revenue Product

A variable input is one that __________.

will change as a result of changes in production

will always have increasing costs

will not change over the scope of production

is highly expensive to change in the long run

CONCEPT

Production Function and Constraints

Average total costs are equal to __________.

total cost minus quantity provided

marginal cost as production increases

fixed costs plus variable costs

average variable plus average fixed costs

CONCEPT

Cost: Total, Marginal and Average

The Prisoner's Dilemma can come into play when firms ___________.

decide whether to work together on things like price or production levels

are regulated by the government in order to provide fair pricing to consumers

are forced to advertise and market their goods to consumers

engage in predatory pricing to move each other out of the market

CONCEPT

Oligopoly

Based on this graph, what amount should the company choose to produce to maximize profit?

CONCEPT

Output Optimization: Total Revenue / Total Cost

When a firm sees average costs start to increase as production increases, this is known as __________.

a firm's shut down point

diseconomies of scale

increasing total costs

scope of production

CONCEPT

Economies, Constant and Diseconomies of Scale

As a part of her research before hiring another employee to help sell cookbooks at her Books for Cooks store, manager Shelly calculated weekly production numbers.

Number of Workers Total Product Marginal Product Average Product

0 0 --- ---

1 75 75 75

2 157 82 78.5

3 213 ? ?

4 235 22 58.75

5 275 40 55

What are the marginal product and average product for three workers?

Marginal Product = 56;

Average Product = 71

Marginal Product = 7;

Average Product = 71

Marginal Product = 56;

Average Product = 18.7

Marginal Product = 7;

Average Product = 18.7

CONCEPT

Product: Total, Marginal, Average, and (Marginal) Revenue

Which of the following is a trait of a perfectly competitive market?

Information flows freely

Firms are not producing at minimum cost

Firms are price makers

Barriers to entry exist

CONCEPT

Perfect Competition

The additional income a company generates from selling one more unit due to this is called which of the following?

Break even point

Price effect

Diseconomies of scale

Output effect

CONCEPT

Revenue: Total, Marginal and Average

Which of the following market structures has only one seller, who acts as a price maker?

Monopoly

Monopolistic competition

Perfect competition

Oligopoly

CONCEPT

Monopoly

Product Price

Unit Cost

Units Sold

Units Produced

Opportunity Cost

$40.00

$10.00

200

1100

$850

Given the information in the table shown above, the accounting profit is which of the following?

-$3,000

$11,000

-$2,150

$8,000

CONCEPT

Economic Profit

5 questions were answered incorrectly.

Based on this graph, what amount should the company choose to produce to maximize profit?

CONCEPT

Output Optimization: Total Revenue / Total Cost

Using the graph above, the firm is best served producing at __________.

Point B

Point C

Point D

Point A

CONCEPT

Production Function and Constraints

Product Price

Cost Per Unit

Quantity Sold

Quantity Produced

Opportunity Cost

$1.25

$0.75

690

750

100

Using the data in this table, calculate the firm’s economic profit.

-$300

$300

$200

-$200

-$520

$320

CONCEPT

Economic Profit

If the variable costs for a firm are $40,000, the fixed costs are $20,000, and the firm sells 100 units, what are the firm's average total costs?

$400

$600

$60,000

$20,000

CONCEPT

Cost: Total, Marginal and Average

The prisoner’s dilemma in an economic context can be explained as which of the following?

A model showing when running at a loss would actually be beneficial in the long run

A model used to illustrate why collusion tends to break down

A model showing the sacrifice made by a firm when choosing one value or opportunity over another

A model showing how a firm should make decisions when variable cost is high and profit is not

CONCEPT

Oligopoly

Product Price

Unit Cost Quantity Sold Quantity Produced Opportunity Cost

$20.50

$10.25 500 800 $550

Calculate the firm’s accounting profit from the data shown above.

$1,500

–$1,500

$2,050

–$11,275

CONCEPT

Accounting Profit

Select the definition that represents an oligopoly.

A model that explains why price fixing tends to break down

A market structure that consists of a few firms that all sell similar products

When firms work together to determine the price and number of products

A group of firms engaged in price fixing

CONCEPT

Oligopoly

BWCT is a mining company that operates the world's exclusive mining site to harvest a new metal.

Assuming it is a monopoly, which of the following statements is least likely concerning entry and exit in this market currently?

There are government regulations enabling firms to enter the market easily.

There is an economy of scale at work making it cheap to produce more products.

There is predatory price cutting being done by BWCT to keep new companies out of mining.

There is tight control over a key resource by BWCT.

CONCEPT

Monopoly

A variable input is one that __________.

will always have increasing costs

will change as a result of changes in production

is highly expensive to change in the long run

will not change over the scope of production

CONCEPT

Production Function and Constraints

When a firm sees average costs start to increase as production increases, this is known as __________.

diseconomies of scale

scope of production

increasing total costs

a firm's shut down point

CONCEPT

Economies, Constant and Diseconomies of Scale

If the goal is to maximize profit, at which point on the graph would a firm’s output be optimized?

Point 3

Point 2

Point 4

Point 1

CONCEPT

Output Optimization: Marginal Revenue / Marginal Cost

Given the graph shown here, when is the firm operating at a short run loss?

At Q1

At Q2

Between Q1 and Q2

When MC (the purple line) is greater than Q1

CONCEPT

Shut-down Point

Which statement below is NOT true about the long run average supply curve?

The long run supply curve must be equal to or lie below the short term supply curve.

The long run supply curve consists of MC from the shutdown point onward.

The shape of the long run curve is due to economies and diseconomies of scale.

The long run supply curve consists of the minimum points of short run supply curves.

CONCEPT

Long-Run Supply Curve

Marginal cost is equal to the __________.

change in total cost involved with producing one more unit

total cost minus fixed costs

average fixed cost plus average variable cost

average total cost minus the fixed cost

CONCEPT

Cost: Total, Marginal and Average

Which of the following is true regarding how a market type interacts with constant, increasing and decreasing cost industries?

In a natural monopoly, firms will always reach diseconomies of scale at high levels of output.

In a perfectly competitive market, firms tend to experience diseconomies of scale at relatively low levels of output.

In a monopoly, firms are likely to begin experiencing diseconomies of scale at relatively low levels of output.

In a perfectly competitive market, firms will usually experience significant economies of scale until very high levels of output.

CONCEPT

Constant, Increasing and Decreasing Cost Industries

Assuming that Marley, a dairy farmer whose farm produces a number of dairy products, operates in a perfectly competitive market.

Which of the following statements is true?

The products he produces are similar but are differentiated by advertising.

The products he produces are identical and thus homogeneous.

The products he produces are unique and varied.

No determination about his products can be made.

CONCEPT

Perfect Competition

The additional money she earns from dropping her price is known as the __________.

Price effect

Marginal revenue

Opportunity cost

Output effect

CONCEPT

Revenue: Total, Marginal and Average

Which of the following is NOT a trait of monopolistic competition?

Barriers to entry

Imperfect information

Firms do not produce at minimum cost

Easy entry and exit to and from the market

CONCEPT

Monopolistic Competition

Given the information on this graph, this firm needs to produce which of the following number of units to break even?

CONCEPT

Breakeven Point

Number of Employees Total Production Marginal Product of Labor Marginal Revenue Product

0 0 0

1 9 9

2 24 15

3 36 12

4 43 7

If the price of the item is $15.00 per unit and the employees cost $125 each, how many employees should the firm hire to maximize their profit?

One employees

Three employees

Four employees

Two employees

CONCEPT

Output Optimization: Marginal Revenue Product

When a firm uses five machines, it can produce 600 units daily. A sixth machine allows the firm to product 880 units.

Which of the following is true regarding production?

The total production for 11 machines would be 1,480 units with an average production of 164 units.

The marginal production for the sixth machine is 880 units and total production would be 1,480 units.

The marginal product for the fifth machine is 600 and the average product is 120 units.

The marginal product for the sixth machine is 280 units and the average product is 147 units.

CONCEPT

Product: Total, Marginal, Average, and (Marginal) Revenue

As a part of her research before hiring another employee to help sell cookbooks at her Books for Cooks store, manager Shelly calculated weekly production numbers.

Number of Workers Total Product Marginal Product Average Product

0 0 --- ---

1 75 75 75

2 157 82 78.5

3 213 ? ?

4 235 22 58.75

5 275 40 55

What are the marginal product and average product for three workers?

Marginal Product = 7;

Average Product = 18.7

Marginal Product = 56;

Average Product = 71

Marginal Product = 7;

Average Product = 71

Marginal Product = 56;

Average Product = 18.7

CONCEPT

Product: Total, Marginal, Average, and (Marginal) Revenue

Assuming that Marley, a dairy farmer whose farm produces a number of dairy products, operates in a perfectly competitive market.

Which of the following statements is true?

The products he produces are similar but are differentiated by advertising.

The products he produces are identical and thus homogeneous.

The products he produces are unique and varied.

No determination about his products can be made.

CONCEPT

Perfect Competition

Given the graph shown here, when is the firm operating at a short run loss?

At Q1

When MC (the purple line) is greater than Q1

At Q2

Between Q1 and Q2

CONCEPT

Shut-down Point

Select the definition that represents an oligopoly.

A market structure that consists of a few firms that all sell similar products

A group of firms engaged in price fixing

A model that explains why price fixing tends to break down

When firms work together to determine the price and number of products

CONCEPT

Oligopoly

This firm is currently producing at 25 units; which of the following should it do in order to maximize profit?

The firm should shut down production entirely.

The firm should decrease output.

The firm should increase output to 80 units.

The firm should do nothing. It is already producing at maximum optimization.

CONCEPT

Output Optimization: Marginal Revenue / Marginal Cost

Which of the following is NOT a trait of monopolistic competition?

Imperfect information

Firms do not produce at minimum cost

Barriers to entry

Easy entry and exit to and from the market

CONCEPT

Monopolistic Competition

Given the following production function for a train engine manufacturing company, at what point (or points) should the firm produce?

E & D

B & E

CONCEPT

Production Function and Constraints

If the variable costs for a firm are $40,000, the fixed costs are $20,000, and the firm sells 100 units, what are the firm's average total costs?

$400

$20,000

$60,000

$600

CONCEPT

Cost: Total, Marginal and Average

Sergio leaves his job as a hockey coach to open his own skate sharpening shop at a local rink. Sergio is confident that the skate sharpening business will earn him more than the $500 per week that he earned at his coaching position.

Sergio's business is good; he averages 100 pairs of skates per week, and charges $8 per pair to sharpen skates. He does all of the work himself, but has to pay the rink $150 per week for the lease on the equipment.

Is Sergio better off operating his own business?

Yes, he is earning an economic profit of $800 each week.

No, he should have stayed at the coaching position where he earned $500 per week.

No, he is only earning $150 per week.

Yes, he is now earning an economic profit of $150 per week.

CONCEPT

Economic Profit

The Prisoner's Dilemma can come into play when firms ___________.

decide whether to work together on things like price or production levels

are forced to advertise and market their goods to consumers

engage in predatory pricing to move each other out of the market

are regulated by the government in order to provide fair pricing to consumers

CONCEPT

Oligopoly

Which of the following is true about marginal cost?

In the long run, every firm’s marginal cost must equal zero.

Marginal cost is the change in total cost that results from a single unit increase in the quantity produced.

Marginal cost can be found at the intersection of a firm's budget constraints and production function.

The marginal cost will consistently fall with an increase in production.

CONCEPT

Cost: Total, Marginal and Average

Which of the following describes an industry that experiences economies of scale, even at high levels of output?

Perfectly competitive industry

Oligopoly

Monopolistic competition

Natural monopoly

CONCEPT

Constant, Increasing and Decreasing Cost Industries

Product Price

Unit Cost

Units Sold

Units Produced

Opportunity Cost

$40.00

$10.00

200

1100

$850

Given the information in the table shown above, the accounting profit is which of the following?

-$2,150

-$3,000

$11,000

$8,000

CONCEPT

Economic Profit

Given the information on this graph, this firm needs to produce which of the following number of units to break even?

CONCEPT

Breakeven Point

Which scenario corresponds with economies of scale?

A decrease in production will cause the next unit to cost the same.

An increase in production will cause the cost of the next unit to decrease.

A decrease in production will cause the next unit to first increase in cost, then decrease, then increase again.

An increase in production will cause the cost of the next unit to increase.

CONCEPT

Economies, Constant and Diseconomies of Scale

The additional money she earns from dropping her price is known as the __________.

Marginal revenue

Opportunity cost

Price effect

Output effect

CONCEPT

Revenue: Total, Marginal and Average

Which of the following is why the long run average cost curve must lie at the same level or below any short run average cost curve?

Because in the long run, all production costs are variable

Because of economies of scale

Because in the long run, a firm will generally operate at higher per-unit cost than in the short run

Because of the law of diminishing returns

CONCEPT

Long-Run Supply Curve

Which of the following market structures has only one seller, who acts as a price maker?

Monopolistic competition

Perfect competition

Monopoly

Oligopoly

CONCEPT

Monopoly

A variable input is one that __________.

will not change over the scope of production

will change as a result of changes in production

is highly expensive to change in the long run

will always have increasing costs

CONCEPT

Production Function and Constraints

Number of Employees Total Production Marginal Product of Labor Marginal Revenue Product

0 0 0

1 19 19

2 50 31

3 75 25

4 96 21

5 111 15

Based on the data in this table, how many employees should the company hire in order to maximize their profit if the price of product is $5 and cost of each worker is $100?

Three employees

Five employees

Two employees

Four employees

CONCEPT

Output Optimization: Marginal Revenue Product

Based on the graph above, should the firm increase, decrease or stay at current levels of production to maximize profit?

Decrease until total cost is at its lowest point

Increase until the total revenue curve and total cost curve intersect

Increase until the slope of the total revenue curve and total cost curve are equal

Decrease until total revenue is at its highest point

CONCEPT

Output Optimization: Total Revenue / Total Cost

Which of the following is true regarding how a market type interacts with constant, increasing and decreasing cost industries?

In a perfectly competitive market, firms tend to experience diseconomies of scale at relatively low levels of output.

In a perfectly competitive market, firms will usually experience significant economies of scale until very high levels of output.

In a monopoly, firms are likely to begin experiencing diseconomies of scale at relatively low levels of output.

In a natural monopoly, firms will always reach diseconomies of scale at high levels of output.

CONCEPT

Constant, Increasing and Decreasing Cost Industries

Which scenario corresponds with economies of scale?

A decrease in production will cause the next unit to cost the same.

A decrease in production will cause the next unit to first increase in cost, then decrease, then increase again.

An increase in production will cause the cost of the next unit to increase.

An increase in production will cause the cost of the next unit to decrease.

CONCEPT

Economies, Constant and Diseconomies of Scale

Is Sergio better off operating his own business?

No, he is only earning $150 per week.

No, he should have stayed at the coaching position where he earned $500 per week.

Yes, he is earning an economic profit of $800 each week.

Yes, he is now earning an economic profit of $150 per week.

CONCEPT

Economic Profit

If the market price of apples drops to $9, at which of the following will the firm be?

Making a profit

At the shutdown point

Below the shutdown point

Operating at a short term loss

Just breaking even

CONCEPT

Breakeven Point

Select the definition that represents an oligopoly.

A model that explains why price fixing tends to break down

A group of firms engaged in price fixing

A market structure that consists of a few firms that all sell similar products

When firms work together to determine the price and number of products

CONCEPT

Oligopoly

If variable costs for a firm are $800, the average total costs are $6, and the firm sells 175 units, what are the firm's fixed costs?

$162.50

$975

$1050

$250

CONCEPT

Cost: Total, Marginal and Average

When a firm uses four machines, it can produce 300 units daily. A fifth machine allows the firm to product 440 units.

Which of the following is true regarding production?

The marginal product for the fifth machine is 140 units and the average product is 88 units.

The marginal production for the fifth machine is 440 units and total production would be 740 units.

The marginal product for the fourth machine is 300 and the average product is 75 units

The total production for nine machines would be 740 units with an average production of 123.33 units.

CONCEPT

Product: Total, Marginal, Average, and (Marginal) Revenue

The graph shown here is used to determine how to maximize the quantity of helium balloons a company can produce based on the combination of labor they employ and machines they use.

What should the company do in order to maximize efficiency?

The company should employ eight laborers and use eight helium balloons machines.

The company should employ eight laborers and use five helium balloons machines.

The company should employ nine laborers and use six helium balloons machines.

The company should employ 14 laborers and use two helium balloons machines.

CONCEPT

Production Function and Constraints

Given the information in the graph shown here, at which level of production will profit be maximized?

CONCEPT

Output Optimization: Total Revenue / Total Cost

Which of the scenarios below is an example of a monopoly?

In this industry, it is easy to enter and exit the market.

This industry has stable pricing due to the tendency of groups of firms to work together to set prices.

A company produces a lemon-lime soda that is identical to others on the market in terms of taste but has a recognizable brand because of advertising.

A company engages in predatory price cutting in order to discourage any competition.

CONCEPT

Monopoly

Which of the following is true about marginal cost?

The marginal cost will consistently fall with an increase in production.

Marginal cost can be found at the intersection of a firm's budget constraints and production function.

Marginal cost is the change in total cost that results from a single unit increase in the quantity produced.

In the long run, every firm’s marginal cost must equal zero.

CONCEPT

Cost: Total, Marginal and Average

Product Price

Unit Cost Quantity Sold Quantity Produced Opportunity Cost

$20.50

$10.25 500 800 $550

Calculate the firm’s accounting profit from the data shown above.

–$11,275

–$1,500

$1,500

$2,050

CONCEPT

Accounting Profit

If the goal is to maximize profit, at which point on the graph would a firm’s output be optimized?

Point 1

Point 4

Point 2

Point 3

CONCEPT

Output Optimization: Marginal Revenue / Marginal Cost

Number of Employees Total Production Marginal Product of Labor Marginal Revenue Product

0 0 0

1 18 18

2 30 12

3 41 11

4 46 5

If the price of the item is $10.00 per unit and the employees cost $100 each, how many employees should the firm hire to maximize their profit?

Two employees

Three employees

One employee

Four employees

CONCEPT

Output Optimization: Marginal Revenue Product

If the firm is decreasing production from Q1 to Q2, how is the firm doing?

Good; it is making a profit.

Poorly; it is at the shutdown point.

None of these answer choices are correct.

Very poorly; it is past the shutdown point.

It is at the break even point.

CONCEPT

Shut-down Point

The Prisoner's Dilemma can come into play when firms ___________.

are forced to advertise and market their goods to consumers

are regulated by the government in order to provide fair pricing to consumers

decide whether to work together on things like price or production levels

engage in predatory pricing to move each other out of the market

CONCEPT

Oligopoly

Which of the following is why the long run average cost curve must lie at the same level or below any short run average cost curve?

Because in the long run, all production costs are variable

Because of economies of scale

Because in the long run, a firm will generally operate at higher per-unit cost than in the short run

Because of the law of diminishing returns

CONCEPT

Long-Run Supply Curve

Which type of market structure has many small firms that spend money in order to differentiate their products through advertising?

Perfect competition

Oligopoly

Monopoly

Monopolistic competition

CONCEPT

Monopolistic Competition

Which of the following is a trait of a perfectly competitive market?

Barriers to entry exist

Firms are price makers

Information flows freely

Firms are not producing at minimum cost

CONCEPT

Perfect Competition

The additional money she earns from dropping her price is known as the __________.

Output effect

Marginal revenue

Opportunity cost

Price effect

CONCEPT

Revenue: Total, Marginal and Average

Which example below represents a fixed input?

Hourly employees

Utility bills

Office space being rented

Raw materials for construction

Which type of firms will belong to a decreasing cost industry at high output levels?

Perfect competition

It is impossible for firms to have decreasing costs at a high output level

All firms are equally situated to enjoy decreasing costs at a high output level

Monopoly

When a firm sees average costs start to increase as production increases, this is known as __________.

scope of production

a firm's shut down point

diseconomies of scale

increasing total costs

If the firm is decreasing production from Q1 to Q2, how is the firm doing?

Very poorly; it is past the shutdown point.

Poorly; it is at the shutdown point.

Good; it is making a profit.

None of these answer choices are correct.

It is at the break even point.

When a firm sees average costs start to increase as production increases, this is known as __________.

diseconomies of scale

scope of production

a firm's shut down point

increasing total costs

Where the supply curve is more inelastic than the demand curve, who bears more of the burden of a tax?

There is not enough information to answer this question

Both consumers and producers share the burden equally

Producers

Consumers

CONCEPT

Taxation and Subsidy

Which statement below applies to a pure command economy?

The level of government involvement must change with society.

The government is responsible for all production, resulting in potential allocation inefficiencies.

Public goods tend to be over-provided.

The government does not interfere in the market.

CONCEPT

Comparative Economic Systems

Which of the following scenarios relates to both natural and frictional employment?

Chip lost his job due to a massive slowdown in the economy and cannot find a job in the current recession.

Mikhal just moved with his family from Miami to Chicago and is looking for work.

Michelle is unemployed because she doesn't have the technology skills needed in the current job market.

Linda lost her job in manufacturing due to her company moving all manufacturing out of the country.

CONCEPT

Assessing Costs of Unemployment--Labor Economics

Which of the following is an example of the "tragedy of the commons?"

It is difficult to keep people from polluting the air because it is rivalrous but not exclusive.

It is difficult to keep people from watching the same movie because it is not rivalrous.

It is difficult to keep people from watching a fireworks display even if they don't pay because it is not rivalrous and not exclusive.

It is difficult to keep common people out of private gardens because they are rivalrous and excludable.

CONCEPT

Public Goods, Private Goods, and the “Tragedy of the Commons”

The following is a list of methods used to gather information on the burden pollution places on society.

Which of these is used to analyze how regulation affects market prices?

Healthcare outcomes

Hedonic pricing

Contingent valuation

Cost-benefit analysis

CONCEPT

Assessing Costs of Waste and Pollution--Environmental Economics

Which of the following is an example of moral hazard?

A congresswoman voting for additional fracking rights to bring more money to her local district

Secondhand smoke costs that result in higher health insurance premiums

Continuance of unemployment benefits that act as a disincentive for people to find jobs

The monopoly granted by the government to a power company

CONCEPT

Details on Regulatory Intervention and Market Failure

When a business owner uses process mapping, an activity is marked by __________.

an oval

a box or rectangle

a circle

a diamond

CONCEPT

Process Mapping--Efficiency

Which of the following is NOT related to government failure?

Information failure

Externalities

Moral failure

Principal-agent problems

CONCEPT

Details on Regulatory Intervention and Market Failure

CEO "say on pay" was a result of __________.

greater CEO involvement in "green initiatives"

CEO involvement in selection of mutual funds in which to place their companies

CEOs deciding what type of stock options to issue their executive employees

closer investor scrutiny of CEO pay

CONCEPT

Sustainable Returns--Investor Impact

Which statement below is NOT true regarding process mapping?

Almost all business practices and decisions have been documented in some way or another.

A process map is a visual representation of the stages in a process.

Process mapping is used for evaluating sustainable business solutions.

Process mapping forms a foundation for efficiency evaluation.

CONCEPT

Process Mapping--Efficiency

When do producers benefit from an inelastic supply?

When a tax is imposed

When a subsidy is provided

When input costs increase

When quotas are placed on goods

CONCEPT

Taxation and Subsidy

Which of the following situations has revealed the level of influence that investors have in defining public company behavior?

Increasing awareness of the holistic connection between social sustainability, investment returns and climate change

Investor vigilance regarding compensation for CEOs

The US not signing the Kyoto Protocol

Investors becoming increasingly aware of the immediacy related to climate change mitigation activities

CONCEPT

Sustainable Returns--Investor Impact

Which of the following explains why the S & P 500 is considered a leading economic indicator?

It predicts consumption behavior in the future.

Changes in stock prices reflect investors' expectations for the future of the economy and interest rates.

It indicates what consumer decision making will look like in the short term.

It shows where the economy is with respect to the business cycle.

CONCEPT

Key Leading Indicators

What is contingent valuation as it relates to alternative methods for estimating the value of environmental regulations?

Using the change in property values in response to a change in pollution to provide an estimate of the cost of pollution

Multiplying the amount of people who are willing to pay for trips to natural resources by the number of citizens to construct an estimate on the value of environmental goods

Comparing how much it costs to clean waste sites to the cost of regulation

Linking the amount of pollution to healthcare costs to estimate the cost of regulation

CONCEPT

Assessing Costs of Waste and Pollution--Environmental Economics

Which one of the answers listed is NOT a reason why businesses have been slow to adopt sustainable practices in regard to unemployment?

Businesses might lay off people in order to meet profitability in a given quarter.

Sustainable business practices mean larger profits in the long run.

Employment levels follow the business cycle.

Sustainable business practices often seem counterintuitive.

CONCEPT

Assessing Costs of Unemployment--Labor Economics

Which of the following is a result of anthropomorphic climate change?

Damage caused by weather-related disasters has increased.

Insurance claims have been turned over to government committees.

Emissions gasses have decreased.

Insurance is more readily available to consumers.

CONCEPT

Assessing Costs of Anthropomorphic Climate Change--Regulatory Intervention

Which indicators show change at the same time as the economy and thus give a sense of where the economy is in relation to the business cycle?

Leading indicators

Lagging indicators

Coincident indicators

All of the given answer choices are correct

CONCEPT

Coincident Indicators

A public good is considered which of the following?

Non-rivalrous and exclusive

Rivalrous and exclusive

Rivalrous and non-exclusive

Non-rivalrous and non-exclusive

CONCEPT

Public Goods, Private Goods, and the “Tragedy of the Commons”

Which of the following statements best describes the minimum wage?

It is a price floor that decreases consumer surplus as compared to the free market equilibrium price and output.

It is a price ceiling that decreases consumer surplus as compared to the free market equilibrium price and output.

It is a price ceiling that decreases producer surplus as compared to the free market equilibrium price and output.

It is a price floor that decreases producer surplus as compared to the free market equilibrium price and output.

CONCEPT

Welfare Analysis

A good that a producer can prevent a consumer from using by charging a price is __________.

a public good that is non-rivalrous

a private good that is excludable

a public good that is excludable

a private good that is non-rivalrous

CONCEPT

Public Goods, Private Goods, and the “Tragedy of the Commons”

In a pure market economy, public goods ___________.

are sold at a higher price than private goods

tend to be under-provided

are over-provided, because the government is not involved in the economy

are provided by the government

CONCEPT

Comparative Economic Systems

CEOs are limited in making policy changes regarding climate change by all of the following EXCEPT __________.

investor support which is linked directly to profits

the necessity to think in the long term rather than the short term

his/her fiduciary responsibility to the company

needing support from the Board of Directors

CONCEPT

Sustainable Returns--Investor Impact

Which of the following situations has revealed the level of influence that investors have in defining public company behavior?

Investors becoming increasingly aware of the immediacy related to climate change mitigation activities

Increasing awareness of the holistic connection between social sustainability, investment returns and climate change

Investor vigilance regarding compensation for CEOs

The US not signing the Kyoto Protocol

CONCEPT

Sustainable Returns--Investor Impact

Which of the following statements is NOT true regarding process mapping?

Symbols are used to guide the process map.

It is a pictorial representation of a process.

It is an established procedure, developed in the 1930s.

It is used to document processes.

CONCEPT

Process Mapping--Efficiency

Which of the following is an example of moral hazard?

Secondhand smoke costs that result in higher health insurance premiums

A congresswoman voting for additional fracking rights to bring more money to her local district

The monopoly granted by the government to a power company

Continuance of unemployment benefits that act as a disincentive for people to find jobs

CONCEPT

Details on Regulatory Intervention and Market Failure

Which of the following is true regarding contingent valuation?

An examination of healthcare costs that are incurred as a result of pollution

An approach used to compare expenses and value-added when making a decision relative to the environment

Used to evaluate individual preferences in order to place a value on the environment

Seen when houses located in areas of less pollution have greater value

CONCEPT

Assessing Costs of Waste and Pollution--Environmental Economics

Patricia decides whether or not she can afford to travel to Africa to meet with vendors in person.

Which of the following shapes in a process map would this scenario correspond with?

Oval

Rectangle

Circle

Diamond

CONCEPT

Process Mapping--Efficiency

A public good is considered which of the following?

Non-rivalrous and exclusive

Rivalrous and non-exclusive

Rivalrous and exclusive

Non-rivalrous and non-exclusive

CONCEPT

Public Goods, Private Goods, and the “Tragedy of the Commons”

Which of the following corresponds with unemployment insurance claims?

Leading indicators that firms might use to predict which part of the business cycle an economy is in

Indicators collected by states for tax purposes

Coincident indicators that lets people know which industries might be hiring

Lagging indicator that firms might use to analyze what labor costs will be in the future

CONCEPT

Key Leading Indicators

Which one of the following is NOT an example of a practice that contributes to anthropomorphic climate change?

Emissions of greenhouse gases

Change in migration patterns

Deforestation and use of pesticides

Overuse and grazing of lands

CONCEPT

Assessing Costs of Anthropomorphic Climate Change--Regulatory Intervention

Determine which example represents a coincidence indicator.

The S & P 500

Building permits

Consumer Confidence Index

Unemployment rate

CONCEPT

Coincident Indicators

Sarah is a great teacher; however, she struggles with the technology used by potential students and school districts, and thus is not able to find work.

Sarah's type of unemployment is considered __________.

structural

seasonal

cyclical

frictional

CONCEPT

Assessing Costs of Unemployment--Labor Economics

A good that a producer can prevent a consumer from using by charging a price is __________.

a public good that is non-rivalrous

a public good that is excludable

a private good that is non-rivalrous

a private good that is excludable

CONCEPT

Public Goods, Private Goods, and the “Tragedy of the Commons”

Which of the following best describes externalities?

The result of information failure and hamper cost-benefit analysis

The result of politicians acting as utility maximizers

An example of a moral hazard

Third party costs or benefits that skew the correct market equilibrium

CONCEPT

Details on Regulatory Intervention and Market Failure

Which statement below regarding welfare analysis is NOT true?

It gives us clear-cut rules for knowing when costs outweigh benefits.

It allows us to analyze the effects of public policy by evaluating consumer and producer surplus.

We still need to exercise our judgment when analyzing these effects.

We can use it to determine potential benefits of certain policies.

CONCEPT

Welfare Analysis

The "tragedy of the commons" occurs with goods that are __________.

rival and non-excludable

non-rival and excludable

non-rival and non-excludable

rival and excludable

CONCEPT

Public Goods, Private Goods, and the “Tragedy of the Commons”

The price at which the consumer purchases the taxed good increases by less than the amount of the tax.

Who of the following bears more of the burden of this tax, assuming that demand is more elastic than supply?

Both consumers and producers would equally share this tax burden

Based on the given information, this is unclear

Consumers

Producers

CONCEPT

Taxation and Subsidy

Which one of the answers listed is NOT a reason why businesses have been slow to adopt sustainable practices in regard to unemployment?

Employment levels follow the business cycle.

Sustainable business practices mean larger profits in the long run.

Sustainable business practices often seem counterintuitive.

Businesses might lay off people in order to meet profitability in a given quarter.

CONCEPT

Assessing Costs of Unemployment--Labor Economics

An estimate of the money and paperwork spent complying with environmental regulations could be compared to the advantages of cleaning up pollution.

This method of determining the value of the environment is known as __________.

cost-benefit analysis

hedonic pricing

contingent valuation

healthcare costs

CONCEPT

Assessing Costs of Waste and Pollution--Environmental Economics

Which of the following always occurs when a tax is imposed?

The quantity sold of the good will increase.

The price of the good will increase.

Producers pay more of the tax than consumers.

Consumers pay more of the tax than producers.

CONCEPT

Taxation and Subsidy

Which of the following best describes externalities?

The result of information failure and hamper cost-benefit analysis

An example of a moral hazard

The result of politicians acting as utility maximizers

Third party costs or benefits that skew the correct market equilibrium

CONCEPT

Details on Regulatory Intervention and Market Failure

Which of the following corresponds with unemployment insurance claims?

Lagging indicator that firms might use to analyze what labor costs will be in the future

Leading indicators that firms might use to predict which part of the business cycle an economy is in

Indicators collected by states for tax purposes

Coincident indicators that lets people know which industries might be hiring

CONCEPT

Key Leading Indicators

Which of the following scenarios relates to both natural and frictional employment?

Chip lost his job due to a massive slowdown in the economy and cannot find a job in the current recession.

Mikhal just moved with his family from Miami to Chicago and is looking for work.

Michelle is unemployed because she doesn't have the technology skills needed in the current job market.

Linda lost her job in manufacturing due to her company moving all manufacturing out of the country.

CONCEPT

Assessing Costs of Unemployment--Labor Economics

A public good is considered which of the following?

Rivalrous and non-exclusive

Non-rivalrous and non-exclusive

Non-rivalrous and exclusive

Rivalrous and exclusive

CONCEPT

Public Goods, Private Goods, and the “Tragedy of the Commons”

Which statement below regarding welfare analysis is NOT true?

It allows us to analyze the effects of public policy by evaluating consumer and producer surplus.

We can use it to determine potential benefits of certain policies.

It gives us clear-cut rules for knowing when costs outweigh benefits.

We still need to exercise our judgment when analyzing these effects.

CONCEPT

Welfare Analysis

Which statement below applies to a pure command economy?

The government does not interfere in the market.

Public goods tend to be over-provided.

The government is responsible for all production, resulting in potential allocation inefficiencies.

The level of government involvement must change with society.

CONCEPT

Comparative Economic Systems

Patricia decides whether or not she can afford to travel to Africa to meet with vendors in person.

Which of the following shapes in a process map would this scenario correspond with?

Oval

Circle

Diamond

Rectangle

CONCEPT

Process Mapping--Efficiency

Determine which example represents a coincidence indicator.

Building permits

Unemployment rate

Consumer Confidence Index

The S & P 500

CONCEPT

Coincident Indicators

CEO "say on pay" was a result of __________.

CEO involvement in selection of mutual funds in which to place their companies

greater CEO involvement in "green initiatives"

CEOs deciding what type of stock options to issue their executive employees

closer investor scrutiny of CEO pay

CONCEPT

Sustainable Returns--Investor Impact

What is contingent valuation as it relates to alternative methods for estimating the value of environmental regulations?

Linking the amount of pollution to healthcare costs to estimate the cost of regulation

Multiplying the amount of people who are willing to pay for trips to natural resources by the number of citizens to construct an estimate on the value of environmental goods

Comparing how much it costs to clean waste sites to the cost of regulation

Using the change in property values in response to a change in pollution to provide an estimate of the cost of pollution

CONCEPT

Assessing Costs of Waste and Pollution--Environmental Economics

When do producers benefit from an inelastic supply?

When input costs increase

When a tax is imposed

When quotas are placed on goods

When a subsidy is provided

CONCEPT

Taxation and Subsidy

Given the information above, which of the following is true?

Producers will bear a greater tax incidence because supply is inelastic.

Producers will bear a greater tax incidence because supply is elastic.

Consumers will bear a greater tax incidence because demand is elastic.

Consumers will bear a greater tax incidence because demand is inelastic.

CONCEPT

Taxation and Subsidy

Which of the following describes the visual representation of the steps that form a process?

Every process needs to be constructed as a closed loop.

It is an established process that's been used for over a century.

It plays an important role in efficiency evaluation.

Almost all processes have been documented in this way.

CONCEPT

Process Mapping--Efficiency

Which of the following is an example of the "tragedy of the commons?"

It is difficult to keep people from polluting the air because it is rivalrous but not exclusive.

It is difficult to keep people from watching a fireworks display even if they don't pay because it is not rivalrous and not exclusive.

It is difficult to keep people from watching the same movie because it is not rivalrous.

It is difficult to keep common people out of private gardens because they are rivalrous and excludable.

CONCEPT

Public Goods, Private Goods, and the “Tragedy of the Commons”

Which of the following situations has revealed the level of influence that investors have in defining public company behavior?

The US not signing the Kyoto Protocol

Increasing awareness of the holistic connection between social sustainability, investment returns and climate change

Investors becoming increasingly aware of the immediacy related to climate change mitigation activities

Investor vigilance regarding compensation for CEOs

CONCEPT

Sustainable Returns--Investor Impact

Which of the following examples would correspond with a principal-agent problem?

A company emitting pollution because it is cheaper than producing cleanly, but it is causing people in the area to get sick

The local electric company responding slowly to an outage because they don't have to worry that customers will switch providers

Purchasing a car then realizing it had been in previous accidents and required a lot of repairs you did not anticipate

A doctor recommending an unnecessary surgery because it generates income for her

CONCEPT

Details on Regulatory Intervention and Market Failure

Which of the following is a result of anthropomorphic climate change?

Insurance claims have been turned over to government committees.

Insurance is more readily available to consumers.

Emissions gasses have decreased.

Damage caused by weather-related disasters has increased.

CONCEPT

Assessing Costs of Anthropomorphic Climate Change--Regulatory Intervention

The cost of cleaning up pollution can be measured by all of the following EXCEPT ___________.

market prices and quantity of goods/services produced

healthcare costs associated with pollution

contingent valuation as measured by surveys

hedonic pricing as it relates to areas of pollution

CONCEPT

Assessing Costs of Waste and Pollution--Environmental Economics

Which of the following statements below is true in terms of unemployment and a healthy economy?

Full employment in an economy means that the entire labor force is employed.

Full employment in an economy means that every adult who is not in school is employed.

The natural rate of unemployment is 5%, according to most economists.

Full employment means having some cyclical employment.

CONCEPT

Assessing Costs of Unemployment--Labor Economics

A good that a producer can prevent a consumer from using by charging a price is __________.

a public good that is excludable

a public good that is non-rivalrous

a private good that is non-rivalrous

a private good that is excludable

CONCEPT

Public Goods, Private Goods, and the “Tragedy of the Commons”

Which of the following situations has revealed the level of influence that investors have in defining public company behavior?

Investor vigilance regarding compensation for CEOs

The US not signing the Kyoto Protocol

Increasing awareness of the holistic connection between social sustainability, investment returns and climate change

Investors becoming increasingly aware of the immediacy related to climate change mitigation activities

CONCEPT

Sustainable Returns--Investor Impact

Which of the following statements best describes the minimum wage?

It is a price floor that decreases producer surplus as compared to the free market equilibrium price and output.

It is a price ceiling that decreases consumer surplus as compared to the free market equilibrium price and output.

It is a price floor that decreases consumer surplus as compared to the free market equilibrium price and output.

It is a price ceiling that decreases producer surplus as compared to the free market equilibrium price and output.

CONCEPT

Welfare Analysis

Which one of the answers listed is NOT a reason why businesses have been slow to adopt sustainable practices in regard to unemployment?

Sustainable business practices mean larger profits in the long run.

Employment levels follow the business cycle.

Businesses might lay off people in order to meet profitability in a given quarter.

Sustainable business practices often seem counterintuitive.

CONCEPT

Assessing Costs of Unemployment--Labor Economics

Which of the following statements is NOT true regarding process mapping?

It is an established procedure, developed in the 1930s.

It is used to document processes.

It is a pictorial representation of a process.

Symbols are used to guide the process map.

CONCEPT

Process Mapping--Efficiency

An estimate of the money and paperwork spent complying with environmental regulations could be compared to the advantages of cleaning up pollution.

This method of determining the value of the environment is known as __________.

healthcare costs

contingent valuation

cost-benefit analysis

hedonic pricing

CONCEPT

Assessing Costs of Waste and Pollution--Environmental Economics

Which of the following is a result of anthropomorphic climate change?

Damage caused by weather-related disasters has increased.

Insurance is more readily available to consumers.

Emissions gasses have decreased.

Insurance claims have been turned over to government committees.

CONCEPT

Assessing Costs of Anthropomorphic Climate Change--Regulatory Intervention

The "tragedy of the commons" occurs with goods that are __________.

rival and non-excludable

non-rival and non-excludable

non-rival and excludable

rival and excludable

CONCEPT

Public Goods, Private Goods, and the “Tragedy of the Commons”

In a pure market economy, public goods ___________.

are provided by the government

are over-provided, because the government is not involved in the economy

are sold at a higher price than private goods

tend to be under-provided

CONCEPT

Comparative Economic Systems

All of the following are reasons why companies are slow to adopt sustainable practices that are better for the environment EXCEPT__________.

it is difficult to get an accurate cost on the impact of climate change

the universal adoption of the Kyoto Protocol

US investors are less concerned about the environment and climate change than those in Europe

CEO compensation is tied to stock performance

CONCEPT

Sustainable Returns--Investor Impact

When do producers benefit from an inelastic supply?

When a subsidy is provided

When input costs increase

When quotas are placed on goods

When a tax is imposed

CONCEPT

Taxation and Subsidy

Determine which example represents a coincidence indicator.

The S & P 500

Unemployment rate

Consumer Confidence Index

Building permits

CONCEPT

Coincident Indicators

A(n) __________ good is one that can be consumed by one person, and still continue to be consumed by other people.

exclusive

rivalrous

non-rivalrous

non-exclusive

CONCEPT

Public Goods, Private Goods, and the “Tragedy of the Commons”

Which of the following is an example of moral hazard?

A congresswoman voting for additional fracking rights to bring more money to her local district

The monopoly granted by the government to a power company

Secondhand smoke costs that result in higher health insurance premiums

Continuance of unemployment benefits that act as a disincentive for people to find jobs

CONCEPT

Details on Regulatory Intervention and Market Failure

Which potential shortcoming below matches the contingent valuation method?

It relies on survey-based information that is subject to biases.

It assumes ceteris paribus to evaluate observed pricing as a means to attribute costs to externalities.

It might not consider the heterogeneity of the population.

It is limited by assessed inputs and might not consider wider economic impacts.

CONCEPT

Assessing Costs of Waste and Pollution--Environmental Economics

Which of the following best describes externalities?

Third party costs or benefits that skew the correct market equilibrium

The result of information failure and hamper cost-benefit analysis

The result of politicians acting as utility maximizers

An example of a moral hazard

CONCEPT

Details on Regulatory Intervention and Market Failure

Patricia decides whether or not she can afford to travel to Africa to meet with vendors in person.

Which of the following shapes in a process map would this scenario correspond with?

Oval

Diamond

Rectangle

Circle

CONCEPT

Process Mapping--Efficiency

A club good, such as a movie theater, is __________.

excludable and non-rivalrous

excludable and rivalrous

non-excludable and non-rivalrous

non-excludable and rivalrous

CONCEPT

Public Goods, Private Goods, and the “Tragedy of the Commons”

Sarah is a great teacher; however, she struggles with the technology used by potential students and school districts, and thus is not able to find work.

Sarah's type of unemployment is considered __________.

cyclical

structural

frictional

seasonal

CONCEPT

Assessing Costs of Unemployment--Labor Economics

The price at which the consumer purchases the taxed good increases by less than the amount of the tax.

Who of the following bears more of the burden of this tax, assuming that demand is more elastic than supply?

Producers

Both consumers and producers would equally share this tax burden

Consumers

Based on the given information, this is unclear

CONCEPT

Taxation and Subsidy

Which of the following explains why the S & P 500 is considered a leading economic indicator?

It predicts consumption behavior in the future.

Changes in stock prices reflect investors' expectations for the future of the economy and interest rates.

It shows where the economy is with respect to the business cycle.

It indicates what consumer decision making will look like in the short term.

CONCEPT

Key Leading Indicators

Which statement below does NOT describe the effect of climate change seen in insurance claim activities?

The damage from climate change is expected to influence the spread of vector-borne disease.

Global property and casualty insurers have paid out unprecedented sums related to natural disasters.

The limitation of insurance availability is expected to reduce economic growth.

Climate change has resulted in heightened weather volatility, which is reflected in insurance claims.

A club good, such as a movie theater, is __________.

excludable and non-rivalrous

excludable and rivalrous

non-excludable and non-rivalrous

non-excludable and rivalrous

Which statement below is NOT true regarding process mapping?

Process mapping forms a foundation for efficiency evaluation.

A process map is a visual representation of the stages in a process.

Process mapping is used for evaluating sustainable business solutions.

Almost all business practices and decisions have been documented in some way or another.

Joe owns an electrical company that specializes in work on custom homes.

Which of the following economic indicators would be most helpful in Joe's line of business for helping him to decide whether or not to add a permanent employee to payroll?

Building permits

The unemployment rate

The Conference Board Consumer Confidence Index

The S & P 500

Which of the following is true regarding contingent valuation?

An approach used to compare expenses and value-added when making a decision relative to the environment

Used to evaluate individual preferences in order to place a value on the environment

An examination of healthcare costs that are incurred as a result of pollution

Seen when houses located in areas of less pollution have greater value

Which of the following is an example of a sustainable business practice as it relates to employment?

Businesses lay off workers to keep costs down.

Businesses recognize the benefit of keeping skilled workers in the long run.

Businesses trade labor for capital during periods of economic growth.

Businesses lay off workers during downturns in the business cycle.

Which of the following occurs when a subsidy is provided?

The demand curve may shift to the left; price will decrease and quantity sold will increase.

The supply curve may shift to the right; price will increase and quantity sold will increase.

The demand curve may shift to the right; price will decrease and quantity sold will increase.

The supply curve may shift to the right; price will decrease and quantity sold will increase.

Which of the following is NOT one of the causes of unemployment?

Economic slowing

Natural separation of employees

Change in industry composition

The implementation of sustainable business practices

If William quit his office job and is now looking for a position teaching English overseas, what type of unemployment would he be experiencing?

Structural

Seasonal

Cyclical

Frictional

Which of the following corresponds with non-competitive market failure?

A tax on imported cotton that raises the price of cotton for consumers

Farmers unaware of market price for cotton

One international corporation with a monopoly on cotton seed production

Pesticide used to keep cotton free of insects makes people sick

Tania really enjoyed the salads sold at her local grocery store, so she purchased five of them to eat throughout the week. The first salad is delicious, and Tania eats it quickly, looking forward to the next one. The second day, the next salad is also good. By the third day, some of the ingredients in the next salad are starting to go bad, and by the fourth day, Tania cannot bring herself to eat any more and throws away the remaining salads.

Which statement would be unlikely in economic terms?

Tania's marginal benefit was higher for the first two salads than the third and fourth.

Tania would achieve higher marginal utility by eating something other than the fourth salad.

Tania would achieve higher marginal utility if she purchased fewer salads.

Tania achieved utility maximization with her purchase of five salads.

The additional income a company generates from selling one more unit due to this is called which of the following?

Price effect

Break even point

Output effect

Diseconomies of scale

A(n) __________ good is one that, when consumed by one person, cannot be consumed by another.

non-rivalrous

rivalrous

non-exclusive

exclusive

Answers

SmartExpert

(118)

Status NEW Posted 30 Apr 2020 05:04 PM My Price 50.00

ECO-----------N 1-----------002----------- Mi-----------cro-----------eco-----------nom-----------ics----------- Fi-----------nal----------- Ex-----------am ----------- Us-----------e a-----------ll -----------mil-----------est-----------one-----------s t-----------o a-----------nsw-----------er -----------the----------- fi-----------nal----------- ex-----------am -----------as -----------wel-----------l-----------

Attachments

file 1597705272-Final Exam.docx preview (22132 words )

1----------- W-----------hic-----------h e-----------xam-----------ple----------- be-----------low----------- re-----------pre-----------sen-----------ts -----------a f-----------ixe-----------d i-----------npu-----------t? ----------- -----------Uti-----------lit-----------y b-----------ill-----------s ----------- R-----------aw -----------mat-----------eri-----------als----------- fo-----------r c-----------ons-----------tru-----------cti-----------on ----------- -----------Off-----------ice----------- sp-----------ace----------- be-----------ing----------- re-----------nte-----------d ----------- H-----------our-----------ly -----------emp-----------loy-----------ees----------- C-----------ONC-----------EPT----------- -----------HYP-----------ERL-----------INK----------- &a-----------mp;-----------quo-----------t;h-----------ttp-----------s:/-----------/ww-----------w.s-----------oph-----------ia.-----------org-----------/sp-----------cc/-----------mic-----------roe-----------con-----------omi-----------cs------------2/u-----------nit-----------3/s-----------tud-----------y-g-----------uid-----------e/8-----------320-----------&am-----------p;q-----------uot-----------; P-----------rod-----------uct-----------ion----------- Fu-----------nct-----------ion----------- an-----------d C-----------ons-----------tra-----------int-----------s -----------2 -----------Thi-----------s g-----------rap-----------h b-----------elo-----------w s-----------how-----------s t-----------hre-----------e i-----------ndi-----------ffe-----------ren-----------ce -----------cur-----------ves----------- fo-----------r b-----------lan-----------ket-----------s a-----------nd -----------pil-----------low----------- ca-----------ses-----------. ----------- C-----------ons-----------ide-----------r c-----------hoi-----------ce -----------A a-----------nd -----------det-----------erm-----------ine----------- wh-----------y -----------thi-----------s w-----------oul-----------d -----------NOT-----------

Not Rated(0)

Buy Answer

Relevent Questions

ECON 1002 Microeconomics Final Exam Many Sets

Hire Dedicated Virtual Team / Business Solution for SMEs.

SmartExpert

(118)

About SmartExpert

Education

Experience

ECON 1002 Microeconomics Final Exam

Answers

Attachments

Are You a Business Owner?