Econ Review

After a natural disaster disrupts food supplies, prices for basic groceries rise sharply. What is the likely cause of this price increase?

• A decrease in supply 

• A decrease in demand 

• A price ceiling 

• An increase in supply

When a government introduces a price floor on agricultural products, such as wheat, it will likely lead to a surplus of wheat in the market.

• True

• False

A new technology reduces the cost of producing smartphones. What is the expected impact on the smartphone market?

• Supply increases, prices fall 

• Demand decreases, prices rise 

• Supply decreases, prices rise 

• Supply remains unchanged, but demand increases

If the government sets a minimum wage that is above the equilibrium wage, this is an example of:

• A price ceiling 

• A price floor 

• Increase in supply

• Increase in Demand

   A decrease in the price of a complementary good, such as printers, will cause an increase in the demand for computers.

• True

• False

A bakery is deciding how many workers to hire. Initially, each new worker adds significantly to total output, but after a certain point, each additional worker adds less to output. This is an example of:

• ) Economies of scale 

• Diminishing marginal returns 

• Increasing marginal returns 

• Diseconomies of scale

   In the short run, at least one factor of production is fixed, and firms cannot vary all inputs.

• True

• False

A factory hires more workers to meet increased demand, but the amount of additional output from each new worker begins to decrease. This is referred to as:

• Law of diminishing marginal returns 

• Economies of scale

• Marginal Cost

• Variable cost

When producing 100 units, a firm's total fixed costs are $1,000, and total variable costs are $2,000. What is the average total cost of production?

• 10

• 20

• 30

• 40

   Marginal cost is the additional cost of producing one more unit of output.

• True

• False