Question 1

An equilibrium market basket is one that

Accepted Answer

A)  gives the consumer the greatest amount of utility from a given income. 
B)  does not change even if consumer income changes. 
C)  does not change even if prices of the commodities purchased change. 
D)  ensures the consumer a level of satisfaction equal to all other possible consumption alternatives. 
E)  equalizes the marginal and total utilities for each commodity. 
A)  gives the consumer the greatest amount of utility from a given income. 
B)  does not change even if consumer income changes. 
C)  does not change even if prices of the commodities purchased change. 
D)  ensures the consumer a level of satisfaction equal to all other possible consumption alternatives. 
E)  equalizes the marginal and total utilities for each commodity. A

Question 2

A rising marginal cost curve below the average variable cost curve means

Accepted Answer

A)  average variable costs are falling. 
B)  average fixed costs are rising. 
C)  average total costs are rising. 
D)  total variable cost is falling. 
E)  total fixed cost is rising. 
A)  average variable costs are falling. 
B)  average fixed costs are rising. 
C)  average total costs are rising. 
D)  total variable cost is falling. 
E)  total fixed cost is rising. A

Question 3

The decline in additional satisfaction received as more and more units of a commodity are consumed (the consumption of other commodities held constant)is known as the law of

Accepted Answer

A)  consumer demand. 
B)  nature. 
C)  declining desire. 
D)  supply and demand. 
E)  diminishing marginal utility. 
A)  consumer demand. 
B)  nature. 
C)  declining desire. 
D)  supply and demand. 
E)  diminishing marginal utility. E

Question 4

The change in total variable cost for producing an extra unit is the same as the change in ________ cost.

Accepted Answer

A)  total fixed 
B)  total 
C)  average fixed 
D)  average total 
E)  average variable 
A)  total fixed 
B)  total 
C)  average fixed 
D)  average total 
E)  average variable

Question 5

A payment for resources purchased by a firm from outside suppliers is a(n)

Accepted Answer

A)  fixed cost. 
B)  explicit cost. 
C)  joint cost. 
D)  derivative cost. 
E)  isocost. 
A)  fixed cost. 
B)  explicit cost. 
C)  joint cost. 
D)  derivative cost. 
E)  isocost.

Question 6

Cost functions show

Accepted Answer

A)  that one of the functions of production is to incur costs. 
B)  the relationship between various costs of production and output. 
C)  the amount of output per unit of input. 
D)  the demand for factors of production. 
E)  how production costs are derived from input-output price ratios. 
A)  that one of the functions of production is to incur costs. 
B)  the relationship between various costs of production and output. 
C)  the amount of output per unit of input. 
D)  the demand for factors of production. 
E)  how production costs are derived from input-output price ratios.

Question 7

The following question are based on the following table:
  
-The total fixed cost is

Accepted Answer

A)  $4. 
B)  $5. 
C)  $20. 
D)  $26. 
E)  $126. 
A)  $4. 
B)  $5. 
C)  $20. 
D)  $26. 
E)  $126.

Question 8

In the previous question,if marginal cost for the 101st unit is $0.70,average variable cost must be

Accepted Answer

A)  rising. 
B)  falling. 
C)  remaining the same. 
D)  equal to average total cost. 
E)  undeterminable from the information given. 
A)  rising. 
B)  falling. 
C)  remaining the same. 
D)  equal to average total cost. 
E)  undeterminable from the information given.

Question 9

The additional satisfaction received from consuming an additional unit of a commodity is called the

Accepted Answer

A)  marginal product. 
B)  quotient of satisfaction. 
C)  marginal propensity to consume. 
D)  elasticity of demand. 
E)  marginal utility. 
A)  marginal product. 
B)  quotient of satisfaction. 
C)  marginal propensity to consume. 
D)  elasticity of demand. 
E)  marginal utility.

Question 10

The law of diminishing marginal utility implies that

Accepted Answer

A)  as people consume more and more goods, their happiness diminishes. 
B)  a person's satisfaction declines as more and more of a particular good is consumed. 
C)  a person's satisfaction rises indefinitely as additional units of a commodity are consumed. 
D)  increases in a person's satisfaction eventually decline as more and more units of a commodity are consumed. 
E)  as a person's income rises, consumption of all commodities falls. 
A)  as people consume more and more goods, their happiness diminishes. 
B)  a person's satisfaction declines as more and more of a particular good is consumed. 
C)  a person's satisfaction rises indefinitely as additional units of a commodity are consumed. 
D)  increases in a person's satisfaction eventually decline as more and more units of a commodity are consumed. 
E)  as a person's income rises, consumption of all commodities falls.

Question 11

The following question are based on the following information. Five adolescents are willing to buy the latest iPhone game at these prices:
  
-A $1 price increase would reduce the quantity demanded in this market by

Accepted Answer

A)  zero. 
B)  one. 
C)  two. 
D)  three. 
E)  four. 
A)  zero. 
B)  one. 
C)  two. 
D)  three. 
E)  four.

Question 12

To an individual firm,its costs represent

Accepted Answer

A)  gross income to the firm resulting from its ownership of the means of production. 
B)  profits that accrue to those internally supplied inputs. 
C)  the payments to owners of resources needed to bid these resources from alternative uses. 
D)  the value of the assets used in the production process. 
E)  the monetary sum of the variety of alternatives open to its resources. 
A)  gross income to the firm resulting from its ownership of the means of production. 
B)  profits that accrue to those internally supplied inputs. 
C)  the payments to owners of resources needed to bid these resources from alternative uses. 
D)  the value of the assets used in the production process. 
E)  the monetary sum of the variety of alternatives open to its resources.

Question 13

The following question are based on the following graph:
  
-At 50 units of output per day,total fixed cost is

Accepted Answer

A)  $1,000. 
B)  $1,500. 
C)  $2,500. 
D)  $3,500. 
E)  $4,500. 
A)  $1,000. 
B)  $1,500. 
C)  $2,500. 
D)  $3,500. 
E)  $4,500.

Question 14

The fact that a single large factory may be more efficient than several smaller factories of the same total capacity is a reflection of

Accepted Answer

A)  increasing returns to scale. 
B)  the law of diminishing marginal returns. 
C)  comparative advantage. 
D)  the crowding-out effect. 
E)  reproduction cost of assets. 
A)  increasing returns to scale. 
B)  the law of diminishing marginal returns. 
C)  comparative advantage. 
D)  the crowding-out effect. 
E)  reproduction cost of assets.

Question 15

The following schedule shows the utility Mr. Pomeroy derives from consumption of various amounts of food per day. Use it to answer the next question.
  
-A person who eats a first chocolate from a box of candies,and a second,then a third,and so on (and nothing else),in an afternoon experiences a

Accepted Answer

A)  continuous fall in total utility. 
B)  continuous rise in marginal utility. 
C)  simultaneous rise and fall in both total and marginal utility. 
D)  rise in marginal utility while total utility declines. 
E)  rise in total utility while marginal utility rises and then falls. 
A)  continuous fall in total utility. 
B)  continuous rise in marginal utility. 
C)  simultaneous rise and fall in both total and marginal utility. 
D)  rise in marginal utility while total utility declines. 
E)  rise in total utility while marginal utility rises and then falls.

Question 16

The experience of 1971 price ceilings on oil taught us that a price ceiling curbs technological research and development in an activity where

Accepted Answer

A)  foreign competition is great. 
B)  supply exceeds demand. 
C)  employment is rising. 
D)  the risk is great. 
E)  equilibrium prices are falling. 
A)  foreign competition is great. 
B)  supply exceeds demand. 
C)  employment is rising. 
D)  the risk is great. 
E)  equilibrium prices are falling.

Question 17

The following question are based on the following table:
  
-The total cost of producing three units is

Accepted Answer

A)  $20. 
B)  $22. 
C)  $26. 
D)  $66. 
E)  $92. 
A)  $20. 
B)  $22. 
C)  $26. 
D)  $66. 
E)  $92.

Question 18

A consumer's demand curve slopes downward because as the

Accepted Answer

A)  price of a commodity rises, the marginal utility per dollar falls relative to other goods so that less will be purchased to restore equilibrium. 
B)  average utility of the commodity rises, the price falls; this increases the individual's consumption. 
C)  price of a product rises, its total utility rises, so the consumer will buy less. 
D)  consumer buys more, total utility falls, so he or she is not willing to pay as much for the units. 
E)  price of a commodity falls, demand decreases. 
A)  price of a commodity rises, the marginal utility per dollar falls relative to other goods so that less will be purchased to restore equilibrium. 
B)  average utility of the commodity rises, the price falls; this increases the individual's consumption. 
C)  price of a product rises, its total utility rises, so the consumer will buy less. 
D)  consumer buys more, total utility falls, so he or she is not willing to pay as much for the units. 
E)  price of a commodity falls, demand decreases.

Question 19

The following question are based on the following table:
  
-The marginal cost of producing the first unit is

Accepted Answer

A)  $5. 
B)  $10. 
C)  $16. 
D)  $20. 
E)  $30. 
A)  $5. 
B)  $10. 
C)  $16. 
D)  $20. 
E)  $30.

Question 20

Tonight,after grading this economics exam,your instructor plans to spend $6 at a local pub.From the information in the table,how many dollars will your instructor spend on beer and how many on chips?

Accepted Answer

A)  $1 on beer, $5 on chips 
B)  $2 on beer, $4 on chips 
C)  $3 on beer, $3 on chips 
D)  $4 on beer, $2 on chips 
E)  $5 on beer, $1 on chips 
A)  $1 on beer, $5 on chips 
B)  $2 on beer, $4 on chips 
C)  $3 on beer, $3 on chips 
D)  $4 on beer, $2 on chips 
E)  $5 on beer, $1 on chips

Exam 4: Getting Behind the Demand and Supply Curves

An equilibrium market basket is one that

A rising marginal cost curve below the average variable cost curve means

The decline in additional satisfaction received as more and more units of a commodity are consumed (the consumption of other commodities held constant)is known as the law of

The change in total variable cost for producing an extra unit is the same as the change in ________ cost.

A payment for resources purchased by a firm from outside suppliers is a(n)

Cost functions show

The following question are based on the following table: -The total fixed cost is

In the previous question,if marginal cost for the 101st unit is $0.70,average variable cost must be

The additional satisfaction received from consuming an additional unit of a commodity is called the

The law of diminishing marginal utility implies that

The following question are based on the following information. Five adolescents are willing to buy the latest iPhone game at these prices: -A $1 price increase would reduce the quantity demanded in this market by

To an individual firm,its costs represent

The following question are based on the following graph: -At 50 units of output per day,total fixed cost is

The fact that a single large factory may be more efficient than several smaller factories of the same total capacity is a reflection of

The following schedule shows the utility Mr. Pomeroy derives from consumption of various amounts of food per day. Use it to answer the next question. -A person who eats a first chocolate from a box of candies,and a second,then a third,and so on (and nothing else),in an afternoon experiences a

The experience of 1971 price ceilings on oil taught us that a price ceiling curbs technological research and development in an activity where

The following question are based on the following table: -The total cost of producing three units is

A consumer's demand curve slopes downward because as the

The following question are based on the following table: -The marginal cost of producing the first unit is

Tonight,after grading this economics exam,your instructor plans to spend $6 at a local pub.From the information in the table,how many dollars will your instructor spend on beer and how many on chips?

What is Economics

Markets and Prices

The Business Firm: Organization,motivation,and Optimal Input Decisions

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

National Income and Product

Business Fluctuations and Unemployment

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Monetary Policy,interest Rates,and Economic Activity

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

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