What is a scarce good?
A good in which the choice of one alternative requires that another be given up
A good in which the choice of one use does not require that we give up another
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A good in which the cost of one is equal to the cost of another
A good in which the cost of alternative goods cannot be calculated
When considering the issue of scarcity, which one of the following questions must be answered?
How should the goods or services be distributed?
What should be produced?
Where should the goods or services be produced?
What should the goods or services cost?
The study of individual consumers and the decisions they make is contained in the field of:
Which of the following may be an example of an opportunity cost when you make the decision to play a video game rather than studying for your economics exam?
A Good Grade on the Economics Exam
A good score on your video game
Your time is scarce, therefore there is no opportunity cost
The price of the video game
John purchases a new tractor to help him produce the vegetables he sells at the farmers market What type of production is the tractor?
One requirement for total utility maximization is that budgets are fully expended What is the second requirement that must be met?
Marginal indifference rates are equal across all consumption choices
Total utility to price ratios are equal across all consumption choices
Marginal utility to price ratios are equal across all consumption choices
Marginal rates of substitution are equal across all consumption choices
If all the factors of production that are available for use under current market conditions are being utilized, which of the following would be true?
The economy has achieved full employment
The economy will have high unemployment
There will be a high level of under-employment
Poverty will increase sharply
In theory, perfect price discrimination _____
Decreases consumer surplus
Increases deadweight loss
Decreases the monopolist’s profits
A single firm sells hammers at a retail price to consumers for $1899 each The same firm sells the same hammer to the government at a price of $67800 each What is this known as?
Rule of reason
How do surpluses arise?
When quantity demanded is greater than quantity supplied
When quantity supplied is greater than quantity demanded
When quantity supplied is less than quantity demanded
When quantity supplied is equal to quantity demanded
Which of the following is an example of a demand shifter?
Input cost increases
Production technology advances
If a reduction in the price of one good increases the demand for another, the two goods are called what?
Which of the following represents how much a market can offer?
An decrease in supply is shown as a shift of the supply curve in which direction?
When the price of labor increases significantly for car manufactures, what change will take place?
An increase in the quantity suppliers will offer at any price
A decrease in the quantity suppliers will offer at any price
A shift in the supply curve to the right
A movement along the supply curve
What is net benefit?
The difference between consumer surplus and producer surplus
The measure of consumer utility
The sum of consumer surplus and producer surplus
The efficiency condition of a market’s allocation
It is time for lunch and you go out with a group of friends to a local pizza restaurant You are very hungry and eat one piece of pizza It provides a high level of utility You eat a second piece of pizza and it provides a lower level of satisfaction You eat a third piece of pizza and it provides a low level of utility, or satisfaction In economics, what is this an example of?
The law of diminishing utility
The law of marginal utility
The law of satisfaction utility
The law of diminishing returns
During the last 10 years in the US there has been an increase in the number of law students What effect can be predicted by this increase in supply?
Wages for attorneys will decrease and unemployment will increase
Wages for attorneys will increase and unemployment will decrease
Wages will not be impacted, but unemployment will increase
Wages for attorneys and unemployment will both decrease
The amount by which total utility rises with consumption of an additional unit of a good, service, or activity, all other things unchanged, is called which of the following?
What is the incidence of a sales tax in a market where supply is relatively less price-responsive than demand?
Buyers will pay the tax to government
Sellers will bear more of the economic burden of the tax than buyers
Buyers will bear more of the economic burden of the tax than sellers
Sellers will pay the tax to government
Which one of the following is an example of third degree price discrimination?
Purchasing a car at a dealership that negotiates the total cost of the vehicle
Purchasing a case of paper towels at a lower cost than if purchased individually
A local clothing retail store that offers a “Buy One Shirt, Get the Second one at Half Price”
Charging a lower price to senior citizens at a local restaurant
If supply is unit elastic and demand is inelastic, a shift in which curve would cause an effect in quantity?
Marginal returns curve
Marginal product curve
Which of the following is an example of a public good?
National Park annual paid membership
If a sharp increase in the price of insulin has only a small effect on the amount of insulin purchased, then what is the demand for insulin considered to be?
If the price elasticity of a computer is -53, its elasticity is said to be which of the following?
Unit price elastic
If a good or service is inferior, then an increase in income will cause which of the following to occur?
Demand for the good or service will decrease
Demand for the good or service will increase
Supply of the good or service will increase
Price of the good or service will increase
If the price elasticity of oil is 30, the supply of oil will do what when the price is decreased by 2%?
Increase by 2%
Increase by 3%
Decrease by 6%
Decrease by 3%
Using the table below, what would the marginal revenue for three units of output be?
Units of Output Price Total Cost Total Revenue
1 $700 $1200 $700
2 $700 $1400 $1400
3 $700 $1600 $2100
4 $700 $1800 $2800
5 $700 $2000 $3500
Please refer to the table below Using the information from the table, how many workers will the firm hire if the equilibrium wage rate is $800 per week?
Quantity of Labor Total Output Marginal Product of Labor Value of Marginal Labor
1 250 250 $1,000
2 600 350 $1,400
3 900 300 $1,200
4 1,125 225 $900
5 1,300 175 $700
6 1,450 150 $600
7 1,560 110 $440
8 1,670 70 $300
A local pizza restaurant is considering hiring another worker at a wage of $60 per day The owners hope an additional worker would be able to make 40 pizzas per day, and each pizza would add $200 in revenue Using the information provided, what is the marginal product revenue of hiring an additional worker?
$12000 per day
$2000 per day
$8000 per day
$4000 per day
Which theory states that public officials are driven by self interest?
Public choice theory
Public interest theory
Consumer protection theory
Rent controls are examples of what type of government induced market constraint?
What conditions do price ceilings create?
Artificial supply decreases
Artificial demand increases
What is it called when a firm can consider all factors of production as “variable” during the planning period?
What is the relationship called that exists between factors of production and the output of a firm?
A production plan
A production function
Which points on the graph represent diminishing marginal returns?
Joe’s Pizza is thinking of increasing the amount of Pizza Cooks from three to five According to the table below, what will be the result of this decision?
Pizza Cooks Hired Output of Pizza
Joe’s Pizza will experience diminishing marginal returns
Joe’s Pizza will experience negative marginal returns
Joe’s Pizza will experience increasing marginal returns
Joe’s Pizza will experience economies of scale
Sally is a receptionist for a local company She uses a phone several times throughout the day The phone is considered what form of a factor of production?
Product price, in a perfectly competitive market, will be determined by what?
Competition, and competitive advantage
Demand and Supply in the market
The amount of product a firm is willing to sell
Which one of the following statements is true when comparing a monopolistic firm to a perfectly competitive firm?
Monopolistic firms have very few barriers to entry, where perfectly competitive firms has many barriers to entry
Monopolistic firms are price takers, where perfectly competitive firms are price setters
Monopolistic firms can determine price, where perfectly competitive firms accept the market price
Monopolistic firms have many competitors, where perfectly competitive firms have only a few competitors
In what ways are a price-taking firm and a monopoly alike?
Their price exceeds marginal cost at the profit-maximizing level of output for both
In the long run, they both earn zero economic profits
They both maximize profits by choosing an output where marginal revenue equals marginal cost, provided that price exceeds average variable cost
They both have prices that equal marginal revenue
In the short run, the slope of the total cost curve is which of the following?
A firm that acts as a price setter possesses which of the following?
Assume capital and labor are complementary factors of production If the government implemented regulation that reduces the amount of capital, what will be the impact to the amount of labor employed?
The amount of labor will increase
The amount of labor will decrease
There will be no change to the amount of labor, however prices will decrease
There will be no change in the amount of labor
Which of the following is a characteristic of monopolistic competition when compared to a monopoly?
High barriers to entry
Easy entry and exit
What do firms face when products in a monopolistically competitive industry are differentiated?
A horizontal supply curve
A downward-sloping supply curve
A downward-sloping demand curve
An upward-sloping demand curve
Which of the following is a benefit that advertising provides to consumers?
Always reduces product prices through improved consumer knoweldge
Reduces competition between firms
Discourages price competition
Informs consumers about the availability of new products
Less than the socially optimal level, since the price of the product exceeds marginal cost
The socially optimal output level, since the firm’s marginal revenue equals its marginal cost
Greater than the socially optimal level, since the firm’s marginal cost exceeds marginal revenue
Greater than the socially optimal level, since the firm earns an economic profit
In 1999, Coca Cola announced a business strategy that involved a new vending machine that would be able to charge more for a bottle of Coke on hot days What makes this strategy a form of price discrimination?
On hot days, the demand for Coke is more elastic than on cool days
Consumers are willing to pay higher amounts for Coke, even on cool days
The market equilibrium price of Coke is lower than the output caused by providing products from a vending machine
On hot days, the demand for Coke is more inelastic than on cool days
Under oligopoly, why do a few large firms control most of the production and sale of the product?
Marginal costs rise as production expands
Average total costs rise as production expands
Diseconomies of scale make it difficult for small firms to compete
Economies of scale make it difficult for small firms to compete