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WorksheetsECO202 Exam 2
Total questions: 159
Worksheet time: 2hrs 8mins
If demand is perfectly inelastic, the demand curve is vertical, and the price elasticity of demand equals 0.
True
False
Income elasticity of demand measures how
many units of a good a consumer can buy given a certain income level.
the quantity demanded changes as consumer income changes.
consumer purchasing power is affected by a change in the price of a good.
the price of a good is affected when there is a change in consumer income.
Between point A and point B on the graph, demand is
unit elastic.
elastic, but not perfectly elastic.
perfectly elastic.
inelastic.
Demand is said to be price elastic if
buyers do not respond much to changes in the price of the good.
buyers respond substantially to changes in the price of the good.
demand shifts substantially when income or the expected future price of the good changes.
the price of the good responds substantially to changes in demand.
Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the
flatter the demand curve will be.
closer to the vertical axis the demand curve will sit.
further to the right the demand curve will sit.
steeper the demand curve will be.
Using the midpoint method, if the price falls from $200 to $150, the price elasticity of demand is
inelastic.
elastic.
unit elastic.
zero.
If the demand for donuts is elastic, then a decrease in the price of donuts will
increase total revenue of donut sellers.
not change total revenue of donut sellers.
There is not enough information to answer this question.
decrease total revenue of donut sellers.
Marcus says that he would smoke one pack of cigarettes each day regardless of the price. If he is telling the truth, Marcus's
income elasticity of demand for cigarettes is 0.
price elasticity of demand for cigarettes is infinite.
demand for cigarettes is perfectly inelastic.
demand for cigarettes is unit elastic.
A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.
True
False
For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
The market for the good is broadly defined.
There are no close substitutes for this good.
The relevant time horizon is short.
The good is a luxury.
Necessities tend to have inelastic demands, whereas luxuries tend to have elastic demands.
True
False
At a price of $70 per unit, sellers' total revenue equals
$700.
$1,050.
$1,400.
$1,250.
Using the midpoint method, which of the three supply curves represents the least elastic supply?
Supply curve A
Supply curve B
Supply curve C
All three supply curves have the same elasticity.
Which of the following statements about agriculture in the United States is correct?
Because technological improvements increase the supply of a product for which demand is inelastic, an individual farmer would be better off not adopting the new technology.
From the 1950s to today, agricultural output has approximately doubled.
Increasing the supply of agricultural products typically benefits consumers but harms farmers as a group.
Technological improvements typically increase both supply and revenue for individual farmers.
Demand for a good is said to be inelastic if the quantity demanded increases slightly when the price falls by a large amount.
True
False
If the price elasticity of supply is 2 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.
True
False
Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction
raises prices and total revenue in the drug market.
can increase drug-related crime.
shifts the demand curve for drugs to the left.
shifts the supply curve of drugs to the left.
Cross-price elasticity is used to determine whether goods are substitutes or complements.
True
False
If the price elasticity of demand for a good is 2.0, then a 10 percent increase in price results in a
0.2 percent decrease in the quantity demanded.
40 percent decrease in the quantity demanded.
5 percent decrease in the quantity demanded.
20 percent decrease in the quantity demanded.
Elasticity measures how responsive quantity is to changes in price.
True
False
Your younger sister needs $50 to buy a new bike. She has opened a lemonade stand to make the money she needs. Your mother is paying for all of the ingredients. She currently is charging 25 cents per cup, but she wants to adjust her price to earn the $50 faster. If you know that the demand for lemonade is elastic, what is your advice to her?
Lower the price to increase total revenue.
There isn't enough information given to answer this question.
Raise the price to increase total revenue.
Leave the price at 25 cents and be patient.
A discovery that increases wheat yields per acre helps farmers by increasing both supply and total revenues.
True
False
Along which of these segments of the supply curve is supply least elastic?
CD
GH
AB
AC
If a 25 percent change in price results in a 40 percent change in quantity supplied, then the price elasticity of supply is about
0.63, and supply is elastic.
1.60, and supply is elastic.
1.60, and supply is inelastic.
0.63, and supply is inelastic.
Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is
negative, and the good is an inferior good.
negative, and the good is a normal good.
positive, and the good is a normal good.
positive, and the good is an inferior good.
Along the elastic portion of a linear demand curve, total revenue rises as price rises.
True
False
For which pairs of goods is the cross-price elasticity most likely to be positive?
Peanut butter and jelly
Pens and pencils
Bicycle frames and bicycle tires
Digital college textbooks and iPhones
A government program that reduces land under cultivation can help farmers by raising prices but hurts consumers.
True
False
If the price decreased from $36 to $12, total revenue would
increase by $4,800, and demand is elastic between points X and Z.
increase by $7,200, and demand is elastic between points X and Z.
decrease by $7,200, and demand is inelastic between points X and Z.
decrease by $4,800, and demand is inelastic between points X and Z.
A key determinant of the price elasticity of supply is the
income of consumers.
price elasticity of demand.
time horizon.
importance of the good in a consumer’s budget.
A decrease in supply will cause the largest increase in price when
demand is elastic and supply is inelastic.
both supply and demand are inelastic.
demand is inelastic and supply is elastic.
both supply and demand are elastic.
If the cross-price elasticity of two goods is negative, then the two goods are
inferior goods.
complement.
normal goods.
necessities.
Between point A and point B, price elasticity of demand is equal to
0.67.
0.33.
1.5.
2.67.
Goods with many close substitutes tend to have
more elastic demands.
less elastic demands.
income elasticities of demand that are negative.
price elasticities of demand that are unit elastic.
The section of the demand curve from A to B represents the
unit elastic section of the demand curve.
elastic section of the demand curve.
inelastic section of the demand curve.
perfectly elastic section of the demand curve.
If the price elasticity of supply is 1.2, and price increased by 5 percent, quantity supplied would
decrease by 4.2 percent.
decrease by 6 percent.
increase by 6 percent.
increase by 4.2 percent.
Which of the following is likely to have the most price elastic demand?
Blue jeans
Pants
Tommy Hilfiger jeans
Clothing
Price elasticity of supply measures how much the quantity supplied responds to changes in the price.
True
False
Using the midpoint method, if the price falls from $200 to $150, the absolute value of the price elasticity of demand is
2.8.
5.3.
0.36.
0.8.
A manufacturer produces 400 units when the market price is $10 per unit and produces 600 units when the market price is $12 per unit. Using the midpoint method, for this range of prices, the price elasticity of supply is about
2.0.
2.2.
200.
0.45.
Jerome says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Jerome's demand for apps is
perfectly elastic.
unit elastic.
perfectly inelastic.
somewhat inelastic, but not perfectly inelastic.
Which of the following is consistent with the elasticities given in Table 5-1?
A has fewer substitutes than B.
A is a good immediately after a price increase and B is that same good three years after the price increase.
A is a good after an increase in income and B is that same good after a decrease in income.
A is a luxury and B is a necessity.
A good will have a more inelastic demand, the
more it is regarded as a luxury.
greater the availability of close substitutes.
longer the period of time.
broader the definition of the market.
A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve
upward by exactly $1.50.
upward by less than $1.50.
downward by less than $1.50.
downward by exactly $1.50.
A binding minimum wage causes the quantity of labor demanded to exceed the quantity of labor supplied.
True
False
A binding price ceiling may not help all consumers, but it does not hurt any consumers.
True
False
A legal minimum on the price at which a good can be sold is called a
price subsidy.
price floor.
price ceiling.
tax
A payroll tax is a
tax that each firm must pay to the government before the firm can hire workers and operate its business.
tax on all wages above the minimum wage.
tax on the wages that firms pay their workers.
fixed number of dollars that every firm must pay to the government for each worker that the firm hires.
A price ceiling is
often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling.
imposed to make sure everyone can earn a fair wage.
often imposed on markets in which “cutthroat competition” would prevail without a price ceiling.
a legal maximum on the price at which a good can be sold.
A price ceiling set below the equilibrium price causes a shortage in the market.
True
False
A price floor is
often imposed when buyers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor.
a legal maximum on the price at which a good can be sold
a source of efficiency in a market.
a legal minimum on the price at which a good can be sold.
A shortage results when a
binding price ceiling is removed from a market.
nonbinding price ceiling is imposed on a market.
binding price ceiling is imposed on a market.
nonbinding price ceiling is removed from a market.
A surplus results when a
binding price floor is imposed on a market.
nonbinding price floor is imposed on a market.
binding price floor is removed from a market.
nonbinding price floor is removed from a market.
A tax on buyers decreases demand.
True
False
A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.
True
False
A tax on sellers increases supply.
True
False
A tax on the sellers of coffee will increase the price of coffee paid by buyers,
decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.
increase the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.
increase the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.
decrease the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.
Consider the market for gasoline. Buyers
would lobby for a price floor, whereas sellers would lobby for a price ceiling.
would lobby for a price ceiling, whereas sellers would lobby for a price floor.
and sellers would lobby for a price floor.
and sellers would lobby for a price ceiling.
A binding price ceiling is shown in
neither graph (a) nor graph (b).
graph (b) only.
both graph (a) and graph (b).
graph (a) only.
The price ceiling shown in graph (a)
is binding.
creates a shortage.
creates a surplus.
is not binding.
The price that buyers pay after the tax is imposed is
$16
$24
$19
$8
The amount of the tax per unit is
$18
$6
$8
$14
The per-unit burden of the tax on buyers is
$24
$8
$6
$14
How is the burden of the tax shared between buyers and sellers? Buyers bear
two-thirds of the burden, and sellers bear one-third of the burden.
one-fourth of the burden, and sellers bear three-fourths of the burden.
three-fourths of the burden, and sellers bear one-fourth of the burden.
one-half of the burden, and sellers bear one-half of the burden.
A price floor set at $60 would create a surplus of 20 units.
True
False
If the government places a $2 tax in the market, the buyer pays $6.
True
False
The price ceiling
causes a shortage of 60 units of the good.
makes it necessary for sellers to ration the good using a mechanism other than price.
is not binding because it is set below the equilibrium price.
causes a shortage of 30 units of the good.
In graph (b), there will be
a shortage.
lines of people waiting to buy the good.
equilibrium in the market.
a surplus.
Which of the following statements is not correct?
When the price is $12, there is a surplus of 4 units.
When the price is $6, there is a surplus of 8 units.
When the price is $16, quantity supplied exceeds quantity demanded by 12 units.
When the price is $10, quantity supplied equals quantity demanded.
When a certain price control is imposed on this market, the resulting quantity of the good that is actually bought and sold is such that buyers are willing and able to pay a maximum of P 1 dollars per unit for that quantity and sellers are willing and able to accept a minimum of P 2 dollars per unit for that quantity. If P 1 − P 2 = $3, then the price control is
only a price ceiling of $6.00.
only a price floor of $6.00.
only a price ceiling of $3.00.
either a price ceiling of $3.00 or a price floor of $6.00.
Which of the following statements is not correct?
A government-imposed price of $4 would be a binding price ceiling if market demand is either Demand A or Demand B.
A government-imposed price of $10 would be a binding price ceiling if market demand is either Demand A or Demand B.
A government-imposed price of $10 would be a binding price floor if market demand is Demand A and a nonbinding price ceiling if market demand is Demand
A government-imposed price of $8 would be a binding price floor if market demand is Demand A and a binding price ceiling if market demand is Demand B.
In this market, a minimum wage of $7.00 creates a labor
surplus of 4,000 worker hours.
surplus of 2,000 worker hours.
shortage of 2,000 worker hours.
shortage of 4,000 worker hours.
If a tax is levied on the sellers of flour, then
the government will bear the entire burden of the tax.
buyers and sellers will share the burden of the tax.
sellers will bear the entire burden of the tax.
buyers will bear the entire burden of the tax.
If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would
increase by exactly $1,000.
increase by less than $1,000.
increase by more than $1,000.
decrease by an indeterminate amount.
If the government wants to reduce the burning of fossil fuels, it should impose a tax on
only the buyers of gasoline.
either buyers or sellers of gasoline.
whichever side of the market is less elastic.
only the sellers of gasoline.
Most labor economists believe that the supply of labor is
less elastic than the demand, and, therefore, workers bear most of the burden of the payroll tax.
more elastic than the demand, and, therefore, workers bear most of the burden of the payroll tax.
more elastic than the demand, and, therefore, firms bear most of the burden of the payroll tax.
less elastic than the demand, and, therefore, firms bear most of the burden of the payroll tax.
Rent control
is regarded by most economists as an efficient way of helping the poor.
serves as an example of how a social problem can be alleviated or even solved by government policies.
serves as an example of a price ceiling.
is the most efficient way to allocate scarce housing resources.
Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the
government has required that buyers remit the tax payments.
supply is more inelastic than the demand.
government has required that sellers remit the tax payments.
demand is more inelastic than the supply.
Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum. The tax would
create a 50-cent tax burden each for buyers and sellers.
raise the equilibrium price by 50 cents.
discourage market activity.
shift the supply curve upward by less than 50 cents.
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $2 above the equilibrium price in this market.
5
9
10
15
The goal of rent control is to
help landlords by assuring them a low vacancy rate for their apartments.
help the poor by making housing more affordable.
help the poor by assuring them an adequate supply of apartments.
facilitate controlled economic experiments in urban areas.
The minimum wage was instituted to ensure workers
a minimally adequate standard of living.
unemployment compensation.
employment.
a middle-class standard of living.
The term tax incidence refers to
the distribution of the tax burden between buyers and sellers.
whether buyers or sellers of a good are required to send tax payments to the government.
widespread view that taxes (and death) are the only certainties in life.
whether the demand curve or the supply curve shifts when the tax is imposed.
To determine the incidence of a tax, it is necessary to have information on both the elasticity of demand and the elasticity of supply.
True
False
When a tax is placed on the buyers of lemonade, the
sellers bear the entire burden of the tax.
burden of the tax will always be equally divided between the buyers and the sellers.
burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.
buyers bear the entire burden of the tax.
Which of the following is not correct?
The impact of a minimum wage depends on the skill and experience of the worker.
A minimum wage would be binding for workers with high skills and much experience.
The economy contains many labor markets for different types of workers.
A minimum wage would not be binding if the equilibrium wage was above the minimum wage.
A demand curve reflects each of the following except the
value each buyer in the market places on the good.
willingness to pay of all buyers in the market.
quantity that each buyer will ultimately purchase.
highest price buyers are willing to pay for each quantity.
A drought in California destroys many red grapes causing the prices of both red grapes and red wine to rise. As a result, the consumer surplus in the market for red grapes
decreases, and the consumer surplus in the market for red wine decreases.
decreases, and the consumer surplus in the market for red wine increases.
increases, and the consumer surplus in the market for red wine decreases.
increases, and the consumer surplus in the market for red wine increases.
A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it
minimizes costs and maximizes output.
maximizes the combined welfare of buyers and sellers.
minimizes the level of welfare payments.
maximizes both the total revenue for firms and the quantity supplied of the product.
A simultaneous increase in both the demand for tablets and the supply of tablets would imply that
the value of tablets to consumers has increased, and the cost of producing tablets has decreased.
both the value of tablets to consumers and the cost of producing tablets has increased.
the value of tablets to consumers has decreased, and the cost of producing tablets has increased.
both the value of tablets to consumers and the cost of producing tablets has decreased.
A supply curve can be used to measure producer surplus because it reflects
quantity supplied.
sellers' costs.
the actions of sellers.
the amount that will be purchased by consumers in the market.
All else equal, an increase in demand will cause an increase in producer surplus.
True
False
All else equal, what happens to consumer surplus if the price of a good increases?
Consumer surplus increases
Consumer surplus is unchanged
Consumer surplus decreases
Consumer surplus may increase, decrease, or remain unchanged
As a result of a decrease in price,
new buyers enter the market, decreasing consumer surplus.
existing buyers exit the market, increasing consumer surplus.
existing buyers exit the market, decreasing consumer surplus.
new buyers enter the market, increasing consumer surplus.
At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling 10 danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for
$3.50 each.
$2.00 each.
$5.00 each.
$0.50 each.
Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually has to pay for it.
True
False
Cost is a measure of the
seller's producer surplus.
producer shortage.
seller's willingness to sell.
seller's willingness to buy.
Efficiency in a market is achieved when
no buyer is willing to pay more than the equilibrium price for any unit of the good.
all firms are producing the good at the same low cost per unit.
a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs.
the sum of producer surplus and consumer surplus is maximized.
When the price rises from P 1 to P 2 , consumer surplus
increases by an amount equal to B+C.
decreases by an amount equal to B+C.
increases by an amount equal to A.
decreases by an amount equal to C.
At the equilibrium price, consumer surplus is
$800.
$700.
$1,400.
$1,600.
If the price of the good is $14, then producer surplus is
$19.50.
$20.50.
$25.00.
$22.50.
If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus to existing producers?
$3,125
$625
$2,500
$5,625
If the government imposes a price ceiling of $55 in this market, then total surplus will be
$250.00.
$266.67.
$125.00.
$187.50.
At equilibrium, producer surplus is represented by the area
F+G.
D+H+F.
D+H+F+G+I.
F.
If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the
price of the good will fall due to market forces.
market is not a competitive market.
consumer has consumer surplus of $2 if he or she buys the good.
consumer does not purchase the good.
If a market is in equilibrium, then it is impossible for a social planner to raise economic welfare by increasing or decreasing the quantity of the good.
True
False
If the government imposes a binding price floor in a market, then the consumer surplus in that market will decrease.
True
False
If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is
zero.
negative, and the consumer would not purchase the product.
positive, and the consumer would purchase the product.
There is not enough information given to answer this question.
In a competitive market, sales go to those producers who are willing to supply the product at the lowest price.
True
False
Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?
200
50
8
40
Moving production from a high-cost producer to a low-cost producer will
lower total surplus.
raise total surplus.
lower producer surplus.
raise producer surplus but lower consumer surplus.
On a graph, consumer surplus is represented by the area
below the price and above the supply curve.
below the demand curve and above price.
below the demand curve and to the right of equilibrium price.
between the demand and supply curves.
Suppose the market demand curve for a good passes through the point (quantity demanded = 100, price = $25). If there are five buyers in the market, then
the sum of the five buyers' willingness to pay for the 100th unit of the good is $25.
all of the five buyers are willing to pay at least $25 for the 100th unit of the good.
the marginal buyer's willingness to pay for the 100th unit of the good is $25.
the average of the five buyers' willingness to pay for the 100th unit of the good is $25.
If the price of the product is $110, then who would be willing to purchase the product?
Calvin
Calvin, Sam, and Andrew
Calvin, Sam, Andrew, and Lori
Calvin and Sam
The equilibrium price is
$8.00.
$6.00.
$10.00.
$4.00.
At a price of $2.00, total surplus is
larger than it would be at the equilibrium price.
smaller than it would be at the equilibrium price.
the same as it would be at the equilibrium price.
There is insufficient information to make this determination.
Both the demand curve and the supply curve are straight lines. At equilibrium, consumer surplus is
$36.
$48.
$24.
$42.
Both the demand curve and the supply curve are straight lines. At equilibrium, producer surplus is
$24.
$64.
$48.
$32
Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is
$56.
$96.
$72.
$44.
For each of the three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day.
3
4
2
5
You are selling extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. Which of the following graphs represents the market demand curve?
If the market price is $1,000, the producer surplus in the market is
$700.
$1000.
$300.
$1,700.
If the sellers bid against each other for the right to sell the good to a consumer, then the good will sell for
$50 or slightly more.
$100 or slightly less.
$150 or slightly less.
$200 or slightly more.
The distinction between efficiency and equality can be described as follows:
Efficiency refers to maximizing the number of trades among buyers and sellers; equality refers to maximizing the gains from trade among buyers and sellers.
Efficiency refers to minimizing the price paid by buyers; equality refers to maximizing the gains from trade among buyers and sellers.
Efficiency refers to maximizing the size of the pie; equality refers to producing a pie of a given size at the least possible cost.
Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society.
The slope of total product can be explain as the
change in toal cost divided by the change in output
change in total product divided by the change in ouput
marginal cost of production
change in total product divided by the change in the resource employed
Marginal cost is equal to average total cost when
average fixed cost is rising.
average total cost is at its minimum.
average variable cost is falling.
marginal cost is at its minimum.
As the number of workers increases,
total output increases at an increasing rate.
marginal product decreases.
total output decreases.
marginal product increases but at a decreasing rate.
Curve A is always declining because
we are dividing fixed costs by higher and higher levels of output.
marginal product first decreases, then increases.
Marcus sells 300 candy bars at $0.50 each. His total costs are $125. His profits are
25
2
if marignal product is increasing than
dinishing returns have yet to set in
marginal cost must be decreasing
average total cost must be falling
all
Average total cost is increasing whenever
marginal cost is greater than average total cost.
marginal cost is less than average total cost.
Suppose that a firm's long-run average total costs of producing televisions decreases as it produces between 10,000 and 20,000 televisions. For this range of output, the firm is experiencing
economies of scale.
i
In the short run average total cost is u-shaped because of
of diminshing returns.
at least one resource is fixed.
the the slope of marginal product.
all
Zero economic profit implies that
Accounting profit is equal to the firm's oppertunity costs.
i
Economies of scale occur when
long-run average total costs fall as output increases.
d
A difference between explicit and implicit costs is that
implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do.
w
The Wooden Chair Factory experiences diminishing marginal product of labor with the addition of which worker?
6th worker
idk
What is the value of B?
100
2
A firm's opportunity costs of production are equal to its
implicit costs only.
v
Assume the Wooden Chair Factory currently employs 5 workers. What is the marginal product of labor when the factory adds a 6th worker?
15 per hour
b
If total cost is $2500 and average variable costs are $4 when output is equal to 500 units, then
fixed costs must be equal to $500
Average fixed costs must be declining
Average fixed costs must be $1.
all
An example of an explicit cost of production would be the
lease payments for the land on which a firm's factory stands.
h
If long-run average total cost decreases as the quantity of output increases, the firm is experiencing
economies of scale.
h
If total cost is $2500 and average variable cost is $4, when output is equal to 500 units then,
Average total cost must be $5.
b
What is the value of C?
100
b
At which number of workers does diminishing marginal product begin?
2
h
If marginal cost is rising,
marginal product must be falling.
j
If a firm produces nothing, which of the following costs will be zero?
Variable cost
j
If marginal cost is below average total cost but above average variable cost then
marginal cost must be increasing.
k
What is the value of D?
50
g
The graph illustrates a typical
production function.
j
If average variable costs are decreasing with increased production then
margianl cost must be below average variable cost.
m
Which firm is experiencing diseconomies of scale?
Firm C only
j
Firms may experience diseconomies of scale when
large management structures are bureaucratic and inefficient.
k
Average total cost start must increase once
margianl cost intesects average total cost
j
if economic profit is negative,
accounting profit must be less than implicit cost.
m
The efficient scale of production occurs at which quantity?
C
z
If economic profit is negative but the accounting profit is positive then,
the accounting profit must be less than the oppertunity costs.
m
A firm produces 300 units of output at a total cost of $1,000. If fixed costs are $100,
average variable cost is $3.
n
