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173 Matching questions

  1. The value of the marginal product of labor is equal to the change in
  2. Economics is primarily the study of
  3. Total utility
  4. When deciding whether to hire an additional worker, firms look at how the additional worker would affect
  5. Suppose that a steel factory emits a certain amount of air pollution and that this pollution constitutes a negative externality. If this market is not required to internalize this externality,
  6. Banks face the problem of ________ in loan markets because bad credit risks are the ones most likely to seek bank loans.
  7. Private markets don't account for externalities because
  8. In the long run,
  9. Measuring poverty using an absolute income scale (like the poverty line) is likely to be deceptive because
  10. If all else is constant, a higher price for ski lift tickets would be expected to
  11. Diseconomies of scale occur when
  12. Suppose you make gold jewelry. If the price of gold falls, we would expect you to
  13. When the price of a good increases, ceteris paribus, consumers perceive
  14. To maximize profit, a competitive firm hires workers until the point where
  15. Economic mobility refers to
  16. Private goods are
  17. Which one of the following factors is NOT an explanation of the positive relationship between market price and quantity supplied?
  18. Which of the following is the best example of a public good?
  19. Fred has recently graduated from college with a degree in journalism and economics. He has decided to pursue a career as a freelance journalist writing for business newspapers and magazines. Fred is typically awake for 112 hours each week (he sleeps an average of 8 hours each day). For each hour Fred spends writing, he can earn $75.
    What is the implicit price that Fred pays for the satisfaction derived from playing an hour of volleyball?
  20. Rent control is
  21. What is the law of demand?
  22. Economies of scale occur when
  23. XYZ Corporation produced 300 units of output but sold only 275 of the units it produced. The average cost of production for each unit of output produced was $100. Each of the 275 units sold were sold for a price of $95. The total revenue of the XYZ Corporation is
  24. One would expect to observe a diminishing marginal product of labor when
  25. If the value of the marginal product exceeds the wage, hiring another worker would be
  26. If a firm produces nothing, which of the following costs will be zero?
  27. When the price of a good decreases, ceteris paribus, the lower price
  28. The theory of consumer choice is based on the hypothesis that each consumer wants to
  29. Consider a profit-maximizing monopoly pricing under the following conditions: The profit-maximizing price charged for goods produced is $16.The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $8. The socially efficient level of production is 12 units. The demand curve and marginal cost curves are linear. What is the deadweight loss?
  30. In monopolistically competitive markets, economic profits
  31. The majority of income in the United States comes from
  32. One way in which monopolistic competition differs from oligopoly is
  33. Angelo is a wholesale meatball distributor. He sells his meatballs to all the finest Italian restaurants in town. Nobody can make meatballs like Angelo. As a result, his is the only business in town that sells meatballs to restaurants. Assuming that Angelo is maximizing his profit, which of the following statements is true?
  34. When a firm has little ability to influence market prices, it is said to be in what kind of a market?
  35. The opportunity cost of an item is
  36. When externalities exist, buyers and sellers
  37. Efficiency means that a
  38. Suppose that the incomes of buyers in a particular market for a normal good declines while a reduction in input prices occurs. What would we expect to occur in this market?
  39. Wheat is the main ingredient in the production of flour. If the price of wheat increases, all else equal, we would expect
  40. The rental price of capital is
  41. The marginal utility of a unit of good X
  42. Tony is a wheat farmer but also spends part of his day teaching guitar lessons. Due to the popularity of his local country western band, Farmer Tony has more students requesting lessons than he has time for if he is to also maintain his farming business. Farmer Tony charges $25 an hour for his guitar lessons. One spring day, he spends 10 hours in his fields planting $130 worth of seeds on his farm. He expects that the seeds he planted will yield $300 worth of wheat.
    Tony's accounting profit equals
  43. A price ceiling that is not binding
  44. The combination of two goods a consumer chooses depends on
  45. Profit is defined as
  46. When a firm is a profit maximizer,
  47. For a profit maximizing monopolist,
  48. Suppose that large-scale pork production has the potential to create groundwater pollution. Why might this type of pollution be considered an externality?
  49. Jerry has two jobs, one for the winter and one for the summer. In the winter, he workers as a lift attendant at a ski-resort and earns $10 per hour. During the summer, Jerry drives a tour bus around the ski resort and earns $12 per hour. During the winter months, what is Jerry's opportunity cost of taking an hour off work to go skiing?
  50. Because each oligopolist cares about its own profit rather than the collective profit of all the oligopolists together,
  51. The value of the marginal product of any input is equal to the marginal product of that input multiplied by
  52. Equity means that
  53. Marginal utility is
  54. Since a firm in a monopolistically competitive market faces a
  55. Regulation of a firm in a monopolistically competitive market
  56. When firms are encouraged to enter monopolistically competitive markets,
  57. As a group, oligopolists would always be better off if they would act collectively
  58. Factor markets are different from product markets in an important way, because
  59. Optimizing consumers will select a consumption bundle in which their
  60. Elaine values the utility of her first cup of coffee at $1; a second cup, $0.75; and a third cup, $0.50. If Elaine drinks three cups of coffee for breakfast, her total utility is equal to
  61. Chocolate chip ice cream would tend to have very elastic demand because
  62. The marginal product of labor (where Δ denotes "change") can be defined as
  63. Utility measures
  64. A dress manufacturer is expecting higher prices for dresses in the near future. We would expect
  65. The "competition" in monopolistically competitive markets is most likely a result of
  66. Last year, Joan bought 50 pounds of hamburger when her household income was $40,000. This year, her household income was only $30,000 and Joan bought 60 pounds of hamburger. If all else is constant, Joan's income elasticity of demand for hamburger is
  67. A fundamental source of monopoly market power arises from
  68. Economics is defined as the study of
  69. Sally tells you that she thinks the price of her favorite stationery will increase in the near future. She will probably respond by
  70. A consumer possesses five pounds of bananas and values their total utility at $2.14. If one additional pound is acquired and marginal utility is 11 cents, total utility will
  71. Which of the following best illustrates the concept of "derived demand" ?
  72. In a market economy, economic activity is guided by
  73. When firms are able to increase the amount of physical capital available to workers,
  74. The sharp reduction in marginal tax rates during the 1980s
  75. The supply curve of a price taker firm in the short run is
  76. A firm in a perfectly competitive market produces and sells 500 door knobs at a price of $10 each. It then chooses to increase its output to 1,000 door knobs. After the increase in output, its average revenue will
  77. What will occur in the rice market if buyers are expecting higher prices in the near future?
  78. Which of the following costs does NOT vary with the amount of a firm's output?
  79. The poverty line reflects an annual income equal to approximately
  80. Which of the following would cause both the equilibrium price and equilibrium quantity of number two grade potatoes (an inferior good) to increase?
  81. The legal maximum price at which a good can be sold is a
  82. Suppose that John receives a pay increase. We would expect
  83. A downward-sloping portion of a long-run average total cost curve is the result of
  84. Natural monopolies differ from other forms of monopoly because
  85. Labor markets are different from most other markets because labor demand is
  86. In economics, the opportunity cost of an item or entity is
  87. The marginal utility of a unit of good Y to Jane is
  88. When a profit-maximizing firm in a monopolistically competitive market is producing the long-run equilibrium quantity,
  89. Monopolistic competition differs from perfect competition because in monopolistically competitive markets,
  90. Competitive firms that maximize profit will hire workers until the value of the marginal product
  91. One problem with regulating a monopolist on the basis of cost is that
  92. If the expansion of output in an industry leads to unchanged resource prices, the industry is most likely to be a(n)
  93. If a firm is making zero economic profit,
  94. One assumption that distinguishes short-run cost analysis from long-run cost analysis for a profit-maximizing firm is that in the short run,
  95. The government provides public goods because
  96. A higher price for batteries would tend to
  97. Constant returns to scale occur when
  98. As a group, oligopolists would always be better off collectively if they would
  99. A diminishing marginal product of labor occurs when adding another unit of labor
  100. Economic profit is equal to
  101. Which of the following would NOT be a determinant of demand?
  102. A key determinant of labor productivity is
  103. Economists compute the price elasticity of demand as
  104. In a perfectly competitive market, the barriers limiting the entry into or the exit from the market are
  105. If one observes a profit-maximizing firm decreasing employment, it is possible to infer that the
  106. A monopoly's marginal cost will likely
  107. In perfectly competitive price-taking markets, firms
  108. Fred has recently graduated from college with a degree in journalism and economics. He has decided to pursue a career as a freelance journalist writing for business newspapers and magazines. Fred is typically awake for 112 hours each week (he sleeps an average of 8 hours each day). For each hour Fred spends writing, he can earn $75.
    If Fred decides to spend 80 hours a week playing volleyball on the beach and the rest of his time writing, how much income will he have available to spend on consumption goods?
  109. The deadweight loss associated with a monopolistically competitive market is a result of
  110. A group of firms that are acting in unison to maximize collective profits is called a
  111. In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those circumstances, what were the economic incentives for producers?
  112. If firms in a monopolistically competitive market are earning economic profits, which of the following scenarios would best reflect the change facing incumbent firms as the market adjusts to its new equilibrium?
  113. An externality exists when
  114. The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" is called
  115. If a decrease in income increases the demand for a good, then the good is
  116. When marginal cost is less than average total cost,
  117. In the midst of a price war, a soft drink company determines that the price of a six-pack is $0.69 and expects that price to hold for up to three months. If the firm temporarily shuts down for three months, it could avoid $0.84 per six-pack in costs. Economic theory suggests that the firm should
  118. Tony is a wheat farmer but also spends part of his day teaching guitar lessons. Due to the popularity of his local country western band, Farmer Tony has more students requesting lessons than he has time for if he is to also maintain his farming business. Farmer Tony charges $25 an hour for his guitar lessons. One spring day, he spends 10 hours in his fields planting $130 worth of seeds on his farm. He expects that the seeds he planted will yield $300 worth of wheat.
    Tony's economic profit equals
  119. Compared to those with higher incomes, low-income families are less likely to
  120. When a firm operates under conditions of a monopoly, its price is
  121. If the marginal utility to Juan of sleeping an extra hour (from 8 a.m. to 9 a.m.) is negative,
  122. If a monopolist faces a downward-sloping market demand curve, its
  123. An optimizing consumer will select a consumption bundle in which utility is maximized
  124. One advantage market economies have over central planning is that market economies
  125. The earned income tax credit is an example of
  126. For most goods and most people, marginal utility probably
  127. A bottle of wine costs $8, and a quiche costs $5. At Robert's present levels of consumption, he spends all of his income and receives marginal utility of $10 from the last bottle of wine and marginal utility of $4 from the last quiche. To maximize his total utility, Robert should
  128. When marginal cost exceeds average total cost,
  129. In economics, the opportunity cost of a good or service is
  130. A price-taker firm will tend to expand its output as long as its
  131. Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized mutually beneficial trades are
  132. The economic inefficiency of a monopolist can be measured by
  133. The impact of one person's actions on the well-being of a bystander is called
  134. When a profit-maximizing firm makes a decision to employ a worker, that decision is based on
  135. The profit-maximizing rule for a firm in a monopolistically competitive market is to select the quantity at which
  136. For a monopoly firm, which of the following equalities is true?
  137. A lighthouse is typically considered an example of a public good because
  138. The rate at which a consumer is willing to exchange one good for another, and at which a constant level of satisfaction is maintained, is called the
  139. Suppose that both demand and supply decrease. What would you expect to occur in the market for the good?
  140. Suppose you like banana cream pie made with vanilla pudding. Although all other factors are constant, you notice that the price of bananas has gone up. How would your demand for vanilla pudding be affected by the price of bananas?
  141. Suppose that the number of buyers in a market increases and a technological advancement occurs simultaneously. What would we expect to happen in the market?
  142. Markets are often inefficient when negative production externalities are present because
  143. A good from which it is impossible or at least very costly to exclude nonpaying customers, and of which many individuals can share the consumption and benefit of the same unit of the good, is called a
  144. Consumers maximizes total utility (measured in money terms) when, at the chosen quantity of every good the consumers buys, their marginal utility
  145. Data on the distribution of income among individuals and families in the United States indicate that
  146. When the price of a commodity rises, we can expect
  147. Jerry has two jobs, one for the winter and one for the summer. In the winter, he works as a lift attendant at a ski-resort and earns $10 per hour. During the summer, Jerry drives a tour bus around the ski resort and earns $12 per hour. Assume that Jerry has an upward-sloping labor supply curve. Jerry's employer is considering an increase in his summer wage. If Jerry is offered $14 per hour, he should
  148. If buyers lose interest in a product (their tastes decrease) and the number of suppliers increases, what would you expect to occur in the market for the good?
  149. A perfectly elastic demand curve will be
  150. Land resources are compensated according to
  151. The marginal product of labor is equal to the
  152. Economists assume that monopolists behave as
  153. Less demand paired with a larger supply would necessarily result in
  154. Air pollution creates a negative production externality. As such,
  155. The defining characteristic of a natural monopoly is its
  156. If the cross-price elasticity of demand is 1.25, then the two goods would be
  157. If the minimum wage is above the equilibrium wage,
  158. If a price-taking firm selling in a perfectly competitive market offers its product at a higher price than others, it will
  159. Economists generally believe that rent control is
  160. If a tax is imposed on a market with inelastic demand and elastic supply,
  161. Tony is a wheat farmer but also spends part of his day teaching guitar lessons. Due to the popularity of his local country western band, Farmer Tony has more students requesting lessons than he has time to instruct them if he is also to maintain his farming business. Farmer Tony charges $25 an hour for his guitar lessons. One spring day, he spends 10 hours in his fields planting $130 worth of seeds on his farm. He expects that the seeds he planted will yield $300 worth of wheat.
    What is the total opportunity cost Farmer Tony incurred for his spring day in the field planting wheat?
  162. To increase their profits further, members of a cartel have an incentive to
  163. Tom is buying a quantity of wheat at which the marginal utility (in dollars) exceeds price. He should
  164. An agreement among firms in the same industry over production and price is called a
  165. An important implicit cost incurred by almost all businesses is the
  166. What is the monopoly's profit under the following conditions? The profit-maximizing price charged for goods produced is $16. The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $8. Average cost for 10 units of output is $6.
  167. Goods that are nonexcludable and nonrival are
  168. A good is NOT scarce in a society if
  169. A monopoly that arises from exclusive ownership of a key resource results in
  170. A profit-maximizing firm will continue to expand output
  171. Comparative advantage is based on
  172. The amount of a good an individual has
  173. In a perfectly competitive market, the actions of any single buyer or seller will
  1. a Δoutput / Δlabor.
  2. b A perfectly competitive market
  3. c The demand for rice will increase.
  4. d as long as revenues from the production and sale of an additional unit exceed the marginal cost of the unit.
  5. e have a negligible impact on the market price.
  6. f public goods.
  7. g all passing ships are able to enjoy the benefits of the lighthouse without paying.
  8. h it does not care directly about the number of workers it hires.
  9. i the portion of the firm's marginal cost curve that lies above average variable cost curve.
  10. j each of the sellers offers a somewhat different product.
  11. k When the price of a good falls, buyers respond by purchasing more, all else remaining the same.
  12. l it is covering its opportunity costs.
  13. m affects the rate at which the consumer is willing to trade.
  14. n marginal utility of the last unit purchased to rise.
  15. o the satisfaction a consumer receives from consuming a bundle of goods.
  16. p declines as consumption increases.
  17. q a lower equilibrium price.
  18. r the size of the factory is fixed.
  19. s work more hours.
  20. t shut down but only temporarily, if it expects the price to be sufficiently high after three months.
  21. u welfare will be enhanced when some, but not all, air pollution is eliminated.
  22. v maximize total utility.
  23. w the benefits of society's resources are distributed fairly among society's members.
  24. x a wage subsidy.
  25. y opportunity cost of financial capital that has been invested in the business.
  26. z the individual contribution that the worker makes to the profit of the firm.
  27. aa the value of the marginal product of labor will increase.
  28. ab National defense
  29. ac the price paid to use capital for a limited time period.
  30. ad an externality.
  31. ae the quantity demanded of labor will be less than the quantity supplied.
  32. af subject to constraints imposed by their budget.
  33. ag average total cost is falling.
  34. ah The equilibrium price would decrease, but the impact on the amount of goods sold in the market would be ambiguous.
  35. ai $2,400. Fred spends 32 hours writing times $75 per hour for a total of $2,400.
  36. aj be less than average variable cost.
  37. ak marginal revenue is always less than the price of the units it sells.
  38. al wages and fringe benefits.
  39. am produce more jewelry than before at each possible price.
  40. an price ceiling.
  41. ao The prices of the inputs used to produce the good
  42. ap increase the demand for electricity.
  43. aq buyers will bear most of the burden of the tax.
  44. ar free-riders make it difficult for private markets to supply the socially optimal quantity.
  45. as regulations do not provide an incentive for the monopolist to reduce its cost.
  46. at long-run average total costs rise as output increases.
  47. au constrained by demand.
  48. av equal $10.
  49. aw Variable cost
  50. ax excludable and rival.
  51. ay income measures don't include the value of in-kind transfers
  52. az substantial inequality in annual income emanates from differences in education, age, hours worked, and family size.
  53. ba rise to $2.25.
  54. bb An automobile producer's decision to supply more cars will lead to an increase in the demand for automobile production workers.
  55. bc social costs exceed private costs at the private market solution.
  56. bd $75
  57. be Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
  58. bf A decrease in consumer income
  59. bg the difference between any two successive total utility figures.
  60. bh price = average revenue
  61. bi the Sherman Act.
  62. bj Total fixed costs
  63. bk $-80. Economic profit is total revenue minus opportunity costs (explicit costs and implicit costs) or $-80.
  64. bl cartel.
  65. bm as a single monopolist.
  66. bn constant cost industry.
  67. bo all members of a society can have all they want of it.
  68. bp decision makers in the market fail to take account of the external effects of their behavior.
  69. bq marginal revenue is equal to marginal cost.
  70. br Juan should get up at 8 a.m.
  71. bs some firms in the market must be making economic profits.
  72. bt an inferior good.
  73. bu A decrease in demand
  74. bv free entry.
  75. bw the consumer's budget constraint and preferences.
  76. bx total profit.
  77. by average total cost is rising.
  78. bz a loss in well-being since they can no longer purchase the same bundle that they had previously.
  79. ca wage exceeds the value of the marginal product.
  80. cb increased the visible income for high-income Americans.
  81. cc Meatball prices will exceed marginal cost.
  82. cd total revenue minus total cost.
  83. ce John's demand for inferior goods to decrease.
  84. cf $380. Opportunity cost is equal to the implicit cost ($250) plus the explicit cost ($130) or $380.
  85. cg how society manages its scarce resources.
  86. ch The pollution has the potential for creating a health risk for water users in the region surrounding the pork production facility.
  87. ci are more efficient.
  88. cj the deadweight loss.
  89. ck equals the price of every good.
  90. cl is unlikely to improve market efficiency.
  91. cm My demand would decrease.
  92. cn buy more wine and less quiche.
  93. co substitutes.
  94. cp decrease ski sales.
  95. cq $2.25.
  96. cr marginal cost is less than the market price.
  97. cs Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
  98. ct what you forgo to get that item.
  99. cu increases as long as marginal utility is positive.
  100. cv the amount of human capital workers acquire through education and training.
  101. cw total revenue minus the opportunity cost of producing goods and services.
  102. cx a person engages in an activity that influences the well-being of a bystander and yet neither pays nor receives payment for that effect.
  103. cy generally depends on how much X the consumer already possesses.
  104. cz crowded office space reduces the productivity of new workers.
  105. da derived.
  106. db $26,125. Total revenue is 275 units times $95, which equals $26,125.
  107. dc opportunity costs.
  108. dd the dress manufacturer to supply fewer dresses now.
  109. de three times the cost of providing an adequate diet.
  110. df equals the wage.
  111. dg cheat.
  112. dh an example of a price ceiling.
  113. di To produce to meet the output target, without regard for quality or cost
  114. dj downward-sloping demand curve, it will always operate at excess capacity.
  115. dk a highly inefficient way to help the poor raise their standard of living.
  116. dl Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
  117. dm the additional utility that Jane gets from consuming one more unit of Y.
  118. dn they are unable to maintain monopoly power.
  119. do profitable.
  120. dp prices.
  121. dq what you sacrifice to acquire it.
  122. dr in oligopoly markets, there are only a few sellers.
  123. ds pricing above marginal cost.
  124. dt $170. Accounting profit equals total revenue minus explicit costs or 170
  125. du what you sacrifice to obtain it.
  126. dv other flavors of ice cream are almost perfect substitutes.
  127. dw P > MR = MC.
  128. dx considered nonexistent.
  129. dy collusion.
  130. dz the movement of people among income classes.
  131. ea they are generally not worried about competition eroding their monopoly position in the market.
  132. eb all inputs are considered to be variable.
  133. ec value of the marginal product curve and the wage curves intersect.
  134. ed profit maximizers.
  135. ee negative, so Joan considers hamburger to be an inferior good.
  136. ef total revenue with the addition of the last worker.
  137. eg $10
  138. eh the supply of flour to decrease.
  139. ei its demand curve will be a tangent to its average total cost curve.
  140. ej society is getting the most it can from its scarce resources.
  141. ek long-run average total costs are constant as output increases.
  142. el horizontal.
  143. em increasing her current demand for the stationery.
  144. en $100. Total revenue is $160, and total cost is $60. Therefore, profit is equal to $100.
  145. eo long-run average total costs fall as output increases.
  146. ep adverse selection
  147. eq have both a husband and a wife in the labor force or be headed by a college graduate.
  148. er limit production.
  149. es the percentage change in the quantity demanded divided by the percentage change in price.
  150. et increases output but not by as large a margin as previous units of labor.
  151. eu economies of scale over the relevant range of output.
  152. ev $8
  153. ew the market equilibrium would not be the socially optimal quantity.
  154. ex increase in output obtained from a one-unit increase in labor.
  155. ey factor demand is a derived demand.
  156. ez neglect the external effects of their actions, and the market equilibrium is not efficient.
  157. fa not have the capacity to sell any output.
  158. fb For most firms, unit costs decrease as output increases in the long run.
  159. fc a deadweight loss to society.
  160. fd marginal rate of substitution is equal to the relative price ratio.
  161. fe signal new firms to enter the market.
  162. ff a price that exceeds marginal cost of production.
  163. fg can sell all of its output at the market price.
  164. fh the value of the marginal product of land.
  165. fi increase wheat consumption, thus lowering MU to the level at which MU = P.
  166. fj marginal rate of substitution.
  167. fk barriers to entry.
  168. fl economies of scale.
  169. fm has no effect on today's market.
  170. fn pubic good.
  171. fo scarcity.
  172. fp expands the consumer's set of buying opportunities.
  173. fq the market price of the output.