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The idea of diminishing returns to an input in production suggests that if a local college adds more and more
custodians, the marginal product of labor for the custodial staff will ________ over time.
A. increase at an increasing rate
B. increase at a decreasing rate
C. decrease
D. not change
 
The short run is defined as a:
A. period of time less than 1 year.
B. period of time less than 6 months.
C. period in which some inputs are considered to be fixed in quantity.
D. time period in which some inputs are fixed, but it cannot exceed 1 year.
 
When marginal cost is rising:
A. average variable cost must be rising.
B. average total cost must be rising.
C. average variable cost and average total cost must be falling.
D. both average variable cost and average total cost may be rising or falling.
 
A firm's marginal cost is:
A. the ratio of the change in total cost to the change in the quantity of output.
B. the change in total cost divided by the change in labor input.
C. the slope of the average fixed cost curve.
D. total cost divided by output.
 
Average total cost is:
A. the change in cost divided by the change in output.
B. total cost divided by output.
C. the change in output divided by the change in costs.
D. total cost times output.
 
Marginal revenue:
A. is the slope of the average revenue curve.
B. equals the market price in perfect competition.
C. is the change in quantity divided by the change in total revenue.
D. is the price divided by the change in quantity.
 
The marginal revenue received by a firm in a perfectly competitive market:
A. is greater than the market price.
B. is less than the market price.
C. is equal to its average revenue.
D. increases with the quantity of output sold.
 
Competition in the long run economic profits are zero. Most electric, gas, and water companies are examples of:
A. unregulated monopolies.
B. natural monopolies.
C. restricted-input monopolies.
D. sunk-cost monopolies.
 
In perfect competition, the firm produces the output such that ________, and in monopoly,
the firm produces the output such that ________.
A. P > MR = MC; P = MR = MC
B. P = MR = MC; P < MR = MC
C. P = MR = MC; P > MR = MC
D. P = MR = MC; P = MR = MC
 
The pricing in monopoly prevents some mutually beneficial trades from taking place.
The value of these unrealized mutually beneficial trades is called:
A. sunk costs.
B. opportunity costs.
C. a deadweight loss.
D. inequities.
 
Public policies toward monopoly in the United States consist of:
A. laws outlawing all of them.
B. regulation of natural monopolies.
C. government takeover if monopoly profit exceeds a certain level.
D. forcing monopoly industries to become perfectly competitive.
 
The practice of selling the same product at different prices in different markets,
without corresponding differences in costs, is:
A. price discrimination.
B. privatizing.
C. monopolizing
D. output prioritizing.
 
Price discrimination leads to a ________ price in the market with a ________ demand.
A. higher; less elastic
B. higher; more elastic
C. higher; perfectly elastic
D. lower; less elastic
 
A monopolist or an imperfectly competitive firm practices price
discrimination primarily to:
A. increase profits.
B. expand plant size.
C. lower total costs.
D. reduce marginal costs.
 
A monopoly is best characterized by which of the following?
A. a product with no close substitutes
B. a single buyer and several sellers
C. a large number of small firms
D. a small number of large firms.
 
You own a lemonade stand in a very competitive lemonade market, and as such, you are a
price-taking firm. Which of the following events would most likely increase your market power?
A. The government abolishes the system of patents and copyrights.
B. A booming economy increases the demand for lemonade and attracts entry into the market.
C. The average total cost curve for firms in the industry is horizontal.
D. You own exclusive rights to harvest lemons from all domestic citrus orchards.
 
A firm that experiences economies of scale:
A. at lower levels of output and then encounters diseconomies of scale at higher levels of output is a natural monopoly.
B. over the entire range of outputs demanded is called a natural monopoly.
C. at any particular level of output is called a natural monopoly.
D. has a continually rising long-run average cost curve.
 
If it produces, a perfectly competitive firm will maximize profits at which:
A. marginal revenue equals marginal cost.
B. marginal revenue equals price.
C. price equals average total cost.
D. price exceeds marginal cost.
 
Economic profits in a perfectly competitive industry induce ________, and losses induce ________.
A. exit; entry
B. entry; entry
C. entry; exit
D. exit; exit
 
If firms are experiencing economic losses in the short run, firms will leave the industry and  industry output
will ________ and economic losses will ________ in the long run.
A. fall; fall
B. rise; fall
C. rise; rise
D. fall; rise
 
Mr. Porter sells 10 bottles of champagne per week at a price of $50 per bottle. He can sell 11
bottles per week if he lowers the price to $45 per bottle. The quantity and the price effects
on total revenue would be, respectively,:
A. an increase of $450 and a decrease of $500.
B. an increase of $495 and a decrease of $550.
C. an increase of $45 and a decrease of $5.
D. an increase of $45 and a decrease of $50.
 
The demand curve for a monopoly is:
A. the MR curve above the AVC curve.
B. the MR curve above the horizontal axis.
C. the entire MR curve.
D. above the MR curve.
 
Marginal revenue for a monopolist is:
A. equal to price.
B. greater than price.
C. less than price.
D. equal to average revenue.
 
In a monopoly in the long run:
A. economic profits will be eliminated by the entry of rival firms.
B. economic profits will be reduced, but not eliminated entirely, by the entry of rival firms.
C. entry will not occur.
D. social surplus is maximized.
 
When economic profits in an industry are zero:
A. firms are really doing badly.
B. it means that firms are doing as well as they could do in other markets.
C. firms should exit, so they can make an economic profit in some other market.
D. the industry is not in long-run equilibrium.
 
Lilly is the price-taking owner of an apple orchard. Currently the price of apples is high enough that Lilly is earning
positive economic profits. In the long run, Lilly should expect:
A. lower apple prices due to entry of new firms.
B. higher apple prices due to exit of existing firms.
C. lower apple prices due to exit of existing firms.
D. higher apple prices due to entry of new firms.
 
A wheat farmer operating in the short run produces 100 bushels of wheat. Her average total cost per bushel is
$1.75, total revenue is $450, and (total) fixed costs are equal to $100. Then:
A. average fixed cost is equal to $1.50.
B. profit per bushel is equal to $2.75.
C. average variable cost is equal to $1.25.
D. economic profit is equal to $250.
 
The break-even price for a perfectly competitive firm is equal to:
A. the minimum value of average variable cost.
B. the marginal revenue, provided that marginal revenue is equal to marginal cost.
C. the average fixed cost at the output level at which the firm is producing.
D. the minimum value of average total cost.
 
Average variable cost is the ratio of:
A. total cost to the marginal cost.
B. total cost to the amount of variable input.
C. variable cost to the quantity of output.
D. marginal cost to the quantity of output.
 
If a firm produces 10 units of output and incurs $30 in average variable cost and $5 in
average fixed cost, average total cost is:
A. $30.
B. $35.
C. $50.
D. $300.
 
If a firm produces 10 units of output and incurs $35 in average total cost, and $5 in
average fixed cost, average variable cost is:
A. $30.
B. $35.
C. $50.
D. $300.
 
If a firm produces 10 units of output and incurs $30 in average variable cost and $35 in
average total cost, total fixed cost is:
A. $30.
B. $35.
C. $50.
D. $300.
 
If a firm experiences lower costs per unit as it increases production in the long run,
this is an example of:
A. increasing returns to scale.
B. decreasing returns to scale.
C. increasing opportunity costs.
D. scale reduction.
 
The slope of a long-run average total cost curve exhibiting decreasing returns to scale is:
A. zero.
B. infinite.
C. positive.
D. negative.
 
The slope of a long-run average total cost curve exhibiting increasing returns to scale is:
A. zero.
B. infinite.
C. positive.
D. negative.
 
If a Florida strawberry wholesaler is in a perfectly competitive market, that wholesaler will
have a ________ share of the market, and consumers will consider her strawberries to be ________.
Therefore, ________ advertising will take place in this market.
A. large; standardized; no
B. small; standardized; little, if any
C. small; differentiated; no
D. large; differentiated; extensive
 
If all firms in an industry are price-takers, then:
A. each firm can take the price that it wants to charge the prices other firms are charging.
B. each firm takes the market and alters its output significantly.
C. an individual firm cannot alter the market price even if it doubles its output.
D. the market sets the price, and each firm can take it or leave it.
 
Perfect competition is a model of the market that assumes all of the following except:
A. a large number of firms.
B. firms face downward-sloping demand curves.
C. firms produce identical goods.
D. many buyers.
 
A perfectly competitive firm is a:
A. price-taker.
B. price-searcher.
C. cost-maximizer.
D. quantity-taker.
 
The total product curve:
A. shows the relation between output and the quantity of a variable input for varying levels of the fixed input.
B. will become flatter as output increases, if there are diminishing returns to the variable input.
C. will be downward-sloping, if there are diminishing returns to the variable input.
D. will become horizontal, when the marginal product of the variable input is constant.
 
Price elasticity of demand measures the change in _______ due to change in _____.
Quantity demanded; price
 
What does the price elasticity of demand measure?
A measure of the responsiveness of quantity demanded to a change in price
 
If a friend says, "I am never going to buy another Avicii remix again!" his or her price elasticity of demand for Avicii remixes is __________.
Perfectly inelastic
 
Salima is a devoted Coca-Cola consumer, whereas Antonia can drink either Coca-Cola or Pepsi products.
Salima's demand for Coca-Cola will be ________, while Antonia's demand will be relatively more ________.
Inelastic; Elastic
 
Suppose that when the price of cereal rises by 10%, the quantity demanded of cereal falls by 20%.
Based on this information, what is the approximate price elasticity of demand for cereal?
-2
 
When the price increases by 20% and the quantity demanded drops by 20%, the price elasticity of demand is _________ elastic
-1
 
Price elasticity of demand is measured as the
the responsiveness of quantity demanded to a change in price
 
Nicolette raised her quantity demanded of hockey pucks from 100 to 150 when the price fell from $6 to $4
per puck. Using the midpoint method, her price elasticity of demand is ________
-1
 
When the price of scooters drops by 5%, the quantity demanded changes by 15%. We know that the price
elasticity of demand for scooters is _________ elastic
-3
 
At a price of $2, the quantity demanded for pens is 16. When the price increases to $3, the quantity
demanded for pens is 14. Using the midpoint method, the price elasticity of demand for pens is
-0.03325
 
Suppose that the price elasticity of demand is -0.80 for aspirin. We could then say that the demand for aspirin is
relatively inelastic
 
When the demand curve is perfectly horizontal, the price elasticity of demand has
Perfectly elastic, an effect on quantity
 
When the demand curve is vertical, the price elasticity of demand is positive, negative or zero
Zero
 
Why demand is almost always more price-elastic in the long run When prices change consumers
often need more time to respond and change
their shopping habits
 
"No matter the price, I will always buy five gallons of ice cream a week. I love ice cream!"
This statement reflects a price elasticity of demand that is
Perfectly Inelastic
 
In a typical demand curve, the price-elastic portion of demand is found in the ________ region and the
price-inelastic portion of demand is found in the ________ region of the graph.
Upper; lower
 
As we move downward along the demand curve, the price elasticity of demand
More inelastic
 
When can a firm lower price and still increase revenue?
If demand is elastic
 
A price change does not affect the firm's total revenue when the price elasticity of demand is
Elastic
 
A 15% increase in the price of cookies results in a 9% decrease in the quantity of cookies sold. The revenue received by cookie suppliers will ________ because the price elasticity of demand for cookies is ________.
increase, inelastic
 
A local merchant raises the price of his good and finds that his total revenues increase. The demand for this good must have been
Inelastic
 
Pepsi vendors who raise their price at professional sporting events increase total revenue because the price
elasticity of demand is ________. When they raise their prices at gas stations, they decrease total revenue
because the price elasticity of demand is ________.
inelastic; elastic
 
When Heavenly Cookies prices its sugar cookies at $1.00, it sells 75 cookies. It lowers the price to $0.50 and sells 200 cookies. Its total revenue ________ because the price elasticity of demand for sugar cookies is ________.
Increased; elastic
 
If the percentage change in the quantity consumed of pizza is 6% and the percentage change in income is 2%, what is the income elasticity of demand for pizza?
3%, quantity consumed/ income
 
What good amongst gourmet pizza, steak, designer/fancy clothing or instant noodles is most likely to have a negative income elasticity of demand?
Instant Noodles
 
Between a five-star hotel, a doctor's visit, used clothing, toilet paper. What good is most likely to have an income elasticity of demand equal to 8?
5 Star Hotel
 
When her income increases from $10,000 to $20,000, as shown in the accompanying table, Juanita increases the quantity demanded from 3 rolls of sushi to 7 rolls at a price of $3 each. From the midpoint method, income elasticity of demand for sushi is
1.2
 
When two goods are substitutes for each other,
Cross price elasticity is positive
 
The cross-price elasticity is measured by
taking the percentage change in quantity demanded of one good and dividing it by the percentage
change in the price of the other good
 
When you measure the change in the quantity demanded of one good because of a change in the price of another good, you are measuring
Cross-price elasticity
 
If the cross-price elasticity of demand is -3, Goods A and B are
complements
 
If the cross-price elasticity of demand is 4, Goods A and B are
Substitutes
 
What is the responsiveness of quantity consumers buy to price changes
Price elasticity of supply
 
Pepsi and Coke is likely to have a positive or negatively cross-price elasticity of demand?
Positive
 
Shoes and Socks is likely to have a negative or positive cross-price elasticity of demand?
negative
 
If the percentage change in quantity demanded of Good B is 2% and the percentage change in the price of
Good A is -10%, what is the cross-price elasticity of demand?
-1/5
 
If the supply of a good is perfectly inelastic, then the price elasticity of supply will equal
zero
 
What is price elasticity of supply?
measures the responsiveness to the supply of a good or service after a change in its market price
 
Over time, the price elasticity of supply becomes more inelastic. True or False?
false
 
A vertical supply curve can be described as _________ inelastic
perfectly
 
A perfectly elastic supply curve is vertical or horizontal.
horizontal
 
Over time, the price elasticity of supply for sunglasses will become more elastic, inelastic or unchanged.
elastic
 
As price elasticity of supply becomes more elastic over time, the overall shape of the supply curve becomes -
more horizontal, more vertical, or completely vertical
More horizontal
 
If the price elasticity of supply is 1.5, we know that supply is ______ elastic.
Relatively
 
What are externalities?
the cost or benefit that affects a third party who did not choose to incur that cost or benefit, (external costs)
 
What are internal costs?
the direct monetized costs for a person or organization undertaking an activity.
 
The amount an individual pays for gasoline for his or her car is an example of what type of cost?
Internal
 
Suzanne drives to work each day. The amount Suzanne pays to maintain her car is an example of what type of cost?
Internal cost
 
What are external costs?
The cost incurred by an individual, firm or community as a result of an economic transaction
which they are not directly involved in.
 
An ______ cost is best defined as the cost of an activity imposed on third party
external
 
The pollution emitted by a car is an example of a(n) ________ cost.
external
 
Lila shares a house with two other people. She is a concert pianist and often practices at home. One roommate
enjoys listening to her practice, but the other does not. For the roommate who enjoys listening to Lila play,
this is an example of ________; for the other roommate, it is an example of ________.
Positive externality; negative externality
 
Negative externalities have what kind of costs for third parties?
External costs
 
What kind of externality exists when production of a good creates an
external cost
negative externality
 
Consider a market where production of a good generates a positive externality. In the market equilibrium,
what happens to the quantity of good being produced?
Too much of the good is being produced
 
What kind of externality exists whenever production of good creates an external benefit?
Positive externality
 
Clean air is a ________ good
public
 
Give examples of a common-resource good
Parks, nature preserves and natural resources
 
Common-resource goods are nonrival, like public goods, and
nonexcludable, like private goods. Is this true or false?
False
 
What is excludable and rivalrous
private goods
 
What is rivalrous and nonexcludable
common resources
 
What is excudable and non rivalrous
club goods
 
what is non excludable and non rivalous
public goods
 
Common resources are overused or underused?
overused
 
Can a club good be defined as rival or nonrival? Excludable or non-excludable?
Nonrival, excludable
 
The city decides to offer a subsidy to each homeowner's association that plants flowers in their common areas.
In the market for flowers, what will be its effect on the demand curve?
The demand curve will shift right
 
Is entertainment television a public good?
No, club good
 
Any passerby can enjoy the show without paying. This factor contributes to making street performances a _____ good.
Public
 
________ goods can be jointly consumed by more than one person, and nonpayers are difficult to exclude
Public
 
Which characteristics best define a public good? Rival or nonrival? Excludable or non- excludable?
Non-excludable; Non-rival
 
Total revenue minus total cost is equal to what?
total profit
 
_____ costs are tangible out-of-pocket expenses.
Explicit Costs
 
For a business that manufactures bicycles wages paid by the business to its employees is example of what type of costs?
Explicit Costs
 
If a firm has total costs of $535,000 and its implicit costs are $165,000, how much are its explicit costs?
370,000
 
Remi owns a small pizza restaurant, where he works full-time in the kitchen. His total revenue last year was $100,000, and his rent was $3,000 per month. He pays his one employee $2,000 per month, and the cost of ingredients averages $500 per month. Remi could earn $35,000 per year as the manager of a competing pizza restaurant nearby. His explicit costs last year were ________.
66,000
 
Lisette is the owner of a bakery that earns zero economic profit. Last year, her total revenue was $145,000,
her rent was $12,000, her labor costs were $65,000, and her other monetary expenses were $25,000.
From this information, we know that her explicit costs were ________.
102000
 
Why can implicit costs be difficult to measure for business owners?
Business owners cannot always observe them directly
 
If a firm generates $280,000 in revenue, earns $120,000 in economic profit, and its explicit costs are $80,000,
how much are its implicit costs?
80,000
 
What is the change in total output divided by the change in input known as?
marginal product
 
What is the change in total output known as when a firm hires another employee and, as a result, total output increases?
Marginal product
 
Lester owns a candy equipment store that produces, among other things, chocolate fountains. He currently has 5 employees; with 5 employees, his candy equipment store can produce 8 chocolate fountains per day. If he hired a sixth employee, he'd be able to produce 9 chocolate fountains per day. What is the marginal product of the sixth employee in terms of chocolate fountain(s)?
1
 
Fatima owns a car shop that repairs, among other things, spoilers. She currently has 6 employees; with 6 employees, her repair shop can repair 9 spoilers per day. If she hired a seventh employee, she'd be able to repair 11 spoilers per day. Therefore, the marginal product of the seventh employee is ________ car spoilers.
2
 
Would fixed costs change as you increase total output?
No
 
What are good examples of a variable cost in the short run?
the cost of labor
 
When is the average total cost curve at its minimum?
Marginal cost curve interests the average total cost curve
 
What would happen if a firm set its price higher above the market price in a perfectly competitive market?
incur a loss
 
How is the market price determined in a competitive market?
The price is determined by the intersection of the market supply and demand curves.
 
List three main characteristics of a competitive market
many buyers and sellers
similar products
easy entry into the market.
 
 
What is the short-run supply curve of a perfectly competitive firm?
MC curve above the minimum point on the AVC curve
 
What is sunk cost? Should it change our decision?
A sunk cost refers to money that has already been spent and which cannot be recovered.
Because sunk costs do not change, they are not considered
 
What is a monopolist? What characterizes a monopolist?
An individual, group, or company that controls all of the market for a particular good or service
 
What are barriers to entry
Barriers to entry describes the high start-up costs or other obstacles that prevent new competitors
from easily entering an industry or area of business
 
What are the ways to restore competitiveness in a monopoly market?
Antitrust laws
 
The cafeteria at a remote ski resort is most like a
monopoly.
 
A monopolist
has a lot of control over market pricing.
 
The total revenue for a monopoly is calculated by
Price x Output Quantity.
 
If MR < MC, a monopolist should
increase profit by decreasing output.
 
Barriers to entry prevent competition for monopolies. Which of the following is a barrier to entry?
Government licensing
 
If a company has a patent for a more efficient production process, this would be an example of a(n)
artificial barrier to entry.
 
Monopolistic enterprises will lobby for governmental barriers to entry, like
governmental licensing of their industry.
 
When firms can separate their consumers into groups by willingness to pay differing amounts, they can practice
price discrimination.
 
A state considers changing highway tolls during rush hour to take advantage of price discrimination.
To maximize revenue, they will make the fees higher for the drivers
with less elastic demand.
Correct. In price discrimination, the less-elastic consumer is willing to pay more, and is therefore charged more.
 
When compared to perfect competition, which market structure is typically criticized for restricting output?
Monopoly
 
When compared to perfectly competitive firms, monopolies produce
less.
 
“Deadweight loss” is the consumer surplus “left on the table” by
monopolists
 
Monopolistic competition is “monopolistic” in that
there are differentiated products and some barriers to entry
 
Monopolistic competitors use nonprice competition to
differentiate their product from competitors.
 
The largest four firms in an industry account for $60 million of the industry’s total sales of $75 million. The four-firm concentration ratio is
0.80
 
An oligopoly is
either pure/homogeneous or differentiated.
 
The ability of oligopolists to coordinate their activities is affected by all of the following except
the number of millennial consumers for the product.
 
The short-run demand curve of a monopolistically competitive firms is
negatively sloped.
 
A monopolistically competitive firm will achieve profit-maximizing output over the long term when MC is equal to
MR.
 
Over the long run, monopolistic competitors will make
no economic profit.
 
Monopolistic competition is different from a monopoly in that monopolistic competition
makes no long-term economic profit.
 
Monopolistic competition is different from perfect competition in that monopolistic competition
has products that are slightly differentiated.
 
Economic profit is earned in the long run in
a monopoly.
 
When a production facility is in production and running well, it adds a new worker. You would expect this worker to produce
less than prior workers.
 
When production is just beginning, more efficient use of each input can be achieved by
adding a new variable inputs
 
Observe the following table, consisting of the number of variable inputs and resulting yields. In the table,
the average product of the third input is 20.

Variable Inputs Yield
1              5
2              20
3              40
4              55
False
 
To implement technical efficiency, a producer would choose to
minimize the amount of input resources used.
 
An example of a variable input is
labor costs for production
 
Assume labor and capital are the only two factors of production for a given firm. If the price of labor rises, the firm will shift
to a factor mix that uses more __________; as a result, we say that the firm is becoming more __________.
capital; capital intensive 
 
When the long run average cost (LRAC) curve is horizontal, it implies there are:
constant returns to scale. 
 
To minimize the cost of producing a given level of output in the long run, a firm must do which of the following?
Follow the marginal decision rule and equate the ratio of marginal product to price for all factors of production.
 
When MP > AP, production increases. As a result, the MP curve must intersect the AP curve at:
the maximum point of the AP curve. 
 
The following table describes the total cost schedule of a firm that produces hats. What is the firm’s fixed cost?
Quantity of Hats Produced                       Total Cost
0                                                                    10
1                                                                     30
2                                                                     45
3                                                                     55
4                                                                     60
5                                                                     85
10 
 
For a competitive firm in the long run, which of the following conditions is true?
MC = MR 
 
In the short run, a perfectly competitive firm can maximize profits at the level of output where:
the total revenue exceeds the total cost by the greatest amount. 
 
Which of the following is a characteristic of communism?
The government decides the level of goods and services to produce. 
 
Suppose you own a profitable tailoring company that hires two workers. The combined
production of the two workers is 10 shirts per day. You decide to double the amount
of capital and labor and see that the total number of shirts produced each day has
increased to 22. This implies that your company is exhibiting which of the following?
Increasing returns to scale
 
Suppose labor is the only variable input in the production of a certain good. Increasing the number of labor inputs from 5 to 6
increases the output from 50 to 55 units. If the final product sells at $5 per unit, what is the marginal revenue product of
this additional worker in a purely competitive market?
$25 
 
The price elasticity of demand for a resource will be more elastic when:
there are substitutes for the resource. 
 
If the marginal revenue product of a firm’s input is $25 and its marginal cost is $15, then we can say with certainty that the firm:
will find it profitable to hire more workers. 
 
We can expect the cross price elasticity of demand between tea and coffee to be:
positive, indicating coffee and tea are inferior goods.
 
A competitive employer will hire additional labor as long as:
MRP exceeds the wage rate.
 
If a 2% increase in income results in a 1% decline in the demand for a certain good, we can conclude
that the coefficient of income elasticity of demand for that good is:
negative and the good is an inferior good.
 
What do economists assume about consumer behavior?
Consumers have imperfect information about the goods they are consuming.
 
In economics, the level of satisfaction obtained from consuming a good or service is its __________.
utility
 
The marginal utility provided from eating a second ice cream cone is generally less than the total utility derived
from eating ice cream cones.
True
 
Denise gets 50 utils from consuming three cups of coffee. The first cup of coffee provides 25 utils and the third
cup provides 10 utils. What is the marginal utility of the second cup of coffee?
15 utils
 
If you consume pasta every day of the week, its marginal utility is bound to _________ at the end of the week,
ceteris paribus, and this is guided by the law of _________.
decrease; diminishing marginal utility 
 
Given the individual demand functions in the following table, what is the market demand at price P2?

Prices	A's Demand	B's Demand	C's Demand	D's Demand
P1	5	6	8	4
P2	8	8	10	6
P3	4	5	6	2

 
32
 
 
“Value in exchange” versus “value in use” were Adam Smith’s means of distinguishing _______  __________ and utility.
between; price
 
Each additional unit of a good consumed will have greater utility than the prior unit.
False
 
Jacques has $15 left to spend, and is deciding between a $9 burger (provides 5 utils of satisfaction for Jacques),
a $7.50 order of cheesy fries (provides 2 utils), a $6 bucket of popcorn (provides 4 utils), and a $3 cookie
A burger and a popcorn
 
Denise finds that she gets too sore to function well if her workout lasts more 20-minute routine would be _______?
-3
 
For items that aren’t free, consumer surplus is less than the value of a good or service to the consumer.
True
 
A company CEO is planning an expansion of the business, and his plan involves starting a second shift.
He is thinking about the long-run time period.
False
 
In the short run, a firm maximizes output by choosing inputs so that every dollar spent on inputs has the same
marginal product
 
A ____________ economy relies on incentives and the self-interested behavior of individuals to direct production
and consumption through "voting with their dollars".
market
 
A traditional economy relies on a centralized government authority to guide and direct production and consumption decisions.
False
 
If the cost of an item to Producer A from Producer B is ____________ Producer A’s cost and greater than Producer
B’s cost, both parties will gain from trade.
Less than
 
The presence of increasing opportunity costs suggests that the production possibilities curve will be bowed outward from the origin.
True
 
Implicit opportunity costs are included when calculating
economic profit only
 
If an entrepreneur could start a different company with a different set of skills, the equivalent value of those skills would
be subtracted from his or her current company’s accounting profit.
False