Need A Tutor?    |   Need Homework Help?                                                                             Help and Support     | Join or Cancel

Economists identify the satisfaction a person derives from the consumption of goods and services as
a)  pleasure.
b)  happiness.
c)  usefulness.
d)  utility.
   
Utility is most closely related to:
a)  requirement.
b)  necessity.
c)  usefulness.
d)  satisfaction.
   
The amount by which an additional unit of a good or service increases a consumer's total utility, all other things unchanged, is:
a)  marginal utility.
b)  required utility.
c)  average utility.
d)  maximum utility.
   

(Table: Utility of Pecan Rolls) Look at the table The Utility of Pecan Rolls. Marginal utility is zero for the ________ roll.
a)  third
b)  first
c)  second
d)  fifth
   

(Table: The Utility of Macaroni and Cheese) Look at the table The Utility of Macaroni and Cheese. Carmen loves
macaroni and cheese for Thanksgiving. The marginal utility she derives from the second serving she eats is:
a)  35.
b)  5.
c)  10.
d)  15.
   
At any given time, Molly's spending will be ________ by her ________.
a)  unlimited; budget
b)  limited; marginal utility
c)  limited; budget
d)  unlimited; marginal utility
   
Adam has a monthly income of $20 that can be spent on books (B) and pencils (P). The price of a book is $5
and the price of a pencil is $0.50. Which of the following bundles of books and pencils is unaffordable?
a)  4 books and zero pencils
b)  2 books and 20 pencils
c)  2 books and 30 pencils
d)  1 book and 20 pencils
   
The price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $10.
The maximum number of bags of peanuts that you can purchase is:
a)  20.
b)  5.
c)  40.
d)  10.
   
The optimum consumption bundle is the one that ________ his or her ________, given his budget constraint.
a)  minimizes; total utility
b)  maximizes; opportunity cost
c)  minimizes; opportunity cost
d)  maximizes; total utility
   

(Table: Utility from Oranges and Starfruit) Oranges cost $2 per pound and starfruit costs $5 per pound.
Calvin has $26 to spend. If Calvin buys 4 pounds of starfruit and 3 pounds of oranges, how much is his total utility?
a)  180
b)  72
c)  280
d)  364
   
The utility of a good is determined by how much ________ a particular consumer obtains from it.
a)  need fulfillment
b)  cost
c)  satisfaction
d)  usefulness
   
Adam has a monthly income of $20 that can be spent on books (B) and pencils (P).  
The price of a book is $5 and the price of a pencil is $0.50.
Which of the following bundles of books and pencils lies ON Adam's budget line?
A. 2 books and 20 pencils
B. 1 book and 40 pencils
C. 3 books and 5 pencils
D. no books and 20 pencils
   
How much ________ Susan obtains from eating green beans is a measure of the utility of green beans.
a)  cost
b)  efficiency
c)  satisfaction
d)  usefulness
   
What is the reason for monopoly deadweight loss (relative to perfect competition)?
a) the monopolist faces a downward-sloping demand curve
b) people boycott monopolies more often
c) the monopolist sells less output at a higher price
d) the monopolist has no competitors
   
George has a weekly income (I) of $50, which he uses to purchase doughnuts (D) and coffee (C). If the price of
a doughnut is $1 and the price of coffee is $2.50, which of the following consumption bundles lies BEYOND George's budget constraint?
A. 10C and 25D
B. 15C and 15D
C. 5C and 10D
D. 5C and 5D
   
Which of the following most accurately describes a patent?
a) an incentive to innovate
b) a profit-sharing mechanism
c) a redistribution of wealth
d) an original invention
   
What is true for a profit-maximizing monopoly?
a) P = MR = MC
b) P = MR > MC
c) P > MR = MC
d) P > MR > MC
   
A decrease in a consumer's income will do all of the following EXCEPT:
A. decrease the vertical intercept.
B. shift the budget line away from the origin.
C. reduce the individual's consumption possibilities.
D. decrease the horizontal intercept
   
The price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag. You have $5 to spend.
You decide to purchase 6 boxes of popcorn. The maximum number of bags of peanuts that you can purchase is:
A. 10.
B. 8.
C. 12.
D. 4.
   
Adam has a monthly income of $20 that can be spent on books (B) and pencils (P). The price of a book is $5 and the
price of a pencil is $0.50. Which of the following bundles of books and pencils is affordable but does not use all of Adam's income?
a)  1 book and 30 pencils
b)  2 books and 20 pencils
c)  zero books and 40 pencils
d)  1 book and 10 pencils
   
George has a weekly income (I) of $50, which he uses to purchase doughnuts (D) and coffee (C). If the price
of a doughnut is $1 and the price of coffee is $2.50, his budget constraint can be expressed as:
A. D = 50 - 0.25C.
B. D = 50 + 2.50C.
C. D = 50 - 2.50C.
D. D = 50 - 25C.
   
If marginal utility is diminishing, the marginal utility curve is _____, since each additional unit of the good consumed yields _____ satisfaction.
A. upward-sloping; less
B. downward-sloping; more
C. downward-sloping; less
D. upward-sloping; more
   
Which of the following firms will most likely be a natural monopoly?
a) a grocery store
b) a cable TV company
c) a gas station
d) a barbershop
   
George has a weekly income (I) of $50, which he uses to purchase doughnuts (D) and coffee (C). The price of a
doughnut is $1 and the price of coffee is $2.50. Suppose George's income increases to $100 and the prices of
both doughnuts and coffee remain unchanged. Given this income change, one would expect George's budget line:
A. to shift to the left.
B. to rotate around the coffee axis point.
C. to shift to the right.
D. not to be affected.
   
The price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $5.
The maximum number of bags of peanuts that you can purchase is:
a)  10.
b)  5
c)  20.
d)  40.
   
Firms in perfect competition are often described as price
a. leaders.
b. setters.
c. makers.
d. takers.
   
The slope of a budget line for a consumer buying two goods is equal to the _____ of the price of the good
on the _____ axis divided by the price of the good on the _____ axis.
A. positive; horizontal; vertical
B. negative; vertical; horizontal
C. negative; horizontal; vertical
D. positive; vertical; horizontal
C. negative; horizontal; vertical
   
A firm earns a profit of exactly zero at its optimal output level only if
a. P = MR.
b. P = SRAVC.
c. P = MC.
d. P = AC.
   
We expect the demand curve in the perfectly competitive industry to be
a. horizontal.
b. vertical.
c. negatively sloped.
d. perfectly elastic.
   
The difference between zero accounting profit and zero economic profit is that
a. an accounting profit of zero indicates a fair rate of return because it includes the opportunity cost of a firm's capital.
b. an economic profit of zero indicates a fair rate of return because it includes the opportunity cost of a firm's capital.
c. an economic profit of zero indicates more than a fair rate of return because it includes opportunity cost and explicit cost.
d. an economic profit of zero indicates an unacceptable rate of return because it does not include the opportunity cost of a firm's capital.
   
The perfectly competitive widget industry is in long-run equilibrium. A profit-maximizing manufacturer receives
total revenue of $55,000. He uses his labor, $15,000 worth of wire, and $15,000 worth of steel to make the widgets.
The manufacturer:
a. must have an opportunity cost of labor of less than $25,000.
b. must have an opportunity cost of labor of more than $25,000.
c. is earning an economic profit of $25,000.
d. must have an opportunity cost of labor of exactly $25,000.
   
The long-run industry supply curve in perfect competition is derived from the
a. freedom of firms from sunk costs so that new cost curves become long-run curves.
b. All of the reasons listed.
c. short-run industry supply curve which shifts as old firms exit the industry.
d. short-run industry supply curve which shifts as new firms enter the industry.
   
George has a weekly income (I) of $50, which he uses to purchase doughnuts (D) and coffee (C). The price of a doughnut
is $1 and the price of coffee is $2.50. Suppose George's income drops to $25 and the prices of doughnuts and coffee each
fall to one-half their initial prices. One would expect George's budget line to:
A. rotate around one of the axes, but one cannot tell which one.
B. stay the same.
C. shift to the left.
D. shift to the right.
   
The long-run adjustment process ensures that firms earn...
 
zero economic profit in the long run
   
The price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag. You have $5 to spend.
You decide to purchase 8 boxes of popcorn. The maximum number of bags of peanuts that you can purchase is:
A. 8.
B. 10.
C. 12.
D. 4.
   
A monopoly is a single firm that:
 
sells a product without close substitutes, it can prevent entry by new firms
   
Profit maximizing rule under a perfect competition:
 
P = MR
   
Profit maximizing rule for a monopoly
 
P > MR
   
Under the theory of perfect competition, firms and buyers know the availability and prices associated with all products in the market.
 
True
   
A perfectly competitive firm has a horizontal demand curve because it can sell as much as it wants at the market price
 
True
   
In perfect competition, a firm's marginal revenue is the same as the demand curve at high levels of output.
 
False
   
In a long-run equilibrium in a perfectly competitive market, the average firm earns positive economic profits.
 
False
   
Perfect competition requires that three conditions be satisfied.
 
False
   
The price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag. You have $10 to spend on both goods.
The maximum number of bags of peanuts that you can purchase is:
A. 5.
B. 20.
C. 40.
D. 10.