Paper, Order, or Assignment Requirements

QUESTION 1

1. College students living off-campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese. When they finish school and start careers, their consumption of both goods frequently declines. This suggests that ramen noodles and boxed macaroni and cheese are:

		inferior goods.
		normal goods.
		complementary goods.
		substitute goods.

4 points    

QUESTION 2

1. Refer to the above diagram. A decrease in demand is depicted by a:

		move from point x to point y.
		shift from D1 to D2.
		shift from D2 to D1.
		move from point y to point x.

4 points    

QUESTION 3

1. Refer to the above table. Suppose that demand is represented by columns (3) and (2) and supply is represented by columns (3) and (5). If the price were artificially set at $6,

		the market would clear.
		a surplus of 40 units would occur.
		a shortage of 40 units would occur.
		demand would change from columns (3) and (2) to columns (3) and (1).

4 points    

QUESTION 4

1. A market is in equilibrium:

		provided there is no surplus of the product.
		at all prices above that shown by the intersection of the supply and demand curves.
		if the amount producers want to sell is equal to the amount consumers want to buy.
		whenever the demand curve is downsloping and the supply curve is upsloping.

4 points    

QUESTION 5

1. Refer to the above diagram. The highest price that buyers will be willing and able to pay for 100 units of this product is:

		$30.
		$60.
		$40.
		$20.

4 points    

QUESTION 6

1. Refer to the above diagram. If this is a competitive market, price and quantity will move toward:

		$60 and 100, respectively.
		$60 and 200, respectively.
		$40 and 150, respectively.
		$20 and 150, respectively.

4 points    

QUESTION 7

1. Refer to the above diagram, which shows demand and supply conditions in the competitive market for product X. If supply is S₁ and demand D₀, then

		at any price above 0G a shortage would occur.
		0F represents a price that would result in a surplus of AC.
		a surplus of GH would occur.
		0F represents a price that would result in a shortage of AC.

4 points    

QUESTION 8

1. (Last Word) A market-based system of buying and selling human organs for transplant would:

		reduce total health care spending.
		create a surplus of organs.
		increase the quantity of organs available for transplant.
		reduce the price of organs.

4 points    

QUESTION 9

1. The basic formula for the price elasticity of demand coefficient is:

		absolute decline in quantity demanded/absolute increase in price.
		percentage change in quantity demanded/percentage change in price.
		absolute decline in price/absolute increase in quantity demanded.
		percentage change in price/percentage change in quantity demanded.

4 points    

QUESTION 10

1. The demand for a product is inelastic with respect to price if:

		consumers are largely unresponsive to a per unit price change.
		the elasticity coefficient is greater than 1.
		a drop in price is accompanied by a decrease in the quantity demanded.
		a drop in price is accompanied by an increase in the quantity demanded.

4 points    

QUESTION 11

1. Which of the following is notcharacteristic of the demand for a commodity that is elastic?

		The relative change in quantity demanded is greater than the relative change in price.
		Buyers are relatively sensitive to price changes.
		Total revenue declines if price is increased.
		The elasticity coefficient is less than one.

4 points    

QUESTION 12

1. Suppose the price elasticity coefficients of demand are 1.43, 0.67, 1.11, and 0.29 for products W, X, Y, and Z respectively. A 1 percent decrease in price will increase total revenue in the case(s) of:

		W and Y.
		Y and Z.
		X and Z.
		Z and W.

4 points    

QUESTION 13

1. Gigantic State University raises tuition for the purpose of increasing its revenue so that more faculty can be hired. GSU is assuming that the demand for education at GSU is:

		decreasing.
		relatively elastic.
		perfectly elastic.
		relatively inelastic.

4 points    

QUESTION 14

1. The demand schedules for such products as eggs, bread, and electricity tend to be:

		perfectly price elastic.
		of unit price elasticity.
		relatively price inelastic.
		relatively price elastic.

4 points    

QUESTION 15

1. The above diagram concerns supply adjustments to an increase in demand (D₁to D₂) in the immediate market period, the short run, and the long run. On the basis of this illustration we can conclude that:

		short-run adjustments are more economically efficient than are long-run adjustments.
		the amount of time producers have to adjust to a change in demand is not a determinant of supply elasticity.
		supply is more elastic the greater the amount of time producers have to adjust to a change in demand.
		supply is less elastic the greater the amount of time producers have to adjust to a change in demand.

4 points    

QUESTION 16

1. (Consider This) Elasticity can be thought of as degree of relative:

		video brightness.
		price bounce.
		audio volume.
		quantity stretch.

4 points    

QUESTION 17

1. Which of the following statements concerning the relationships between total product (TP), average product (AP), and marginal product (MP) is notcorrect?

		AP continues to rise so long as TP is rising.
		AP reaches a maximum before TP reaches a maximum.
		TP reaches a maximum when the MP of the variable input becomes zero.
		MP cuts AP at the maximum AP.

4 points    

QUESTION 18

1. The law of diminishing returns results in:

		an eventually rising marginal product curve.
		a total product curve that eventually increases at a decreasing rate.
		an eventually falling marginal cost curve.
		a total product curve that rises indefinitely.

4 points    

QUESTION 19

1. Use the following data to answer the next question(s):}

   Refer to the above data. Marginal product becomes negative with the hiring of the __________ unit of labor.

		third
		fourth
		sixth
		seventh

4 points    

QUESTION 20

1. Marginal cost is the:

		rate of change in total fixed cost that results from producing one more unit of output.
		change in total cost that results from producing one more unit of output.
		change in average variable cost that results from producing one more unit of output.
		change in average total cost that results from producing one more unit of output.

4 points    

QUESTION 21

1. Refer to the above diagram. At output level Q:

		marginal product is falling.
		marginal product is rising.
		marginal product is negative.
		one cannot determine whether marginal product is falling or rising.

4 points    

QUESTION 22

1. Other things equal, if the fixed costs of a firm were to increase by $100,000 per year, which of the following would happen?

		Marginal costs and average variable costs would both rise.
		Average fixed costs and average variable costs would rise.
		Average fixed costs and average total costs would rise.
		Average fixed costs would rise, but marginal costs would fall.

4 points    

QUESTION 23

1. Refer to the above short-run production and cost data. In Figure A curve (1) is:

		total product and curve (2) is average product.
		total product and curve (2) is marginal product.
		average product and curve (2) is marginal product.
		marginal product and curve (2) is average product.

4 points    

QUESTION 24

1. If the total variable cost of 9 units of output is $90 and the total variable cost of 10 units of output is $120, then:

		the average variable cost of 10 units is $10.
		the average variable cost of 9 units is $10.
		the marginal cost of the tenth unit is $90.
		the firm is operating in the range of increasing marginal returns.

4 points    

QUESTION 25

1. Refer to the above graph. Which one of the following would cause a move from point b to point c along short-run average total cost curve ATC₁?

		diminishing marginal returns
		an increase in the wage rate
		a decrease in the wage rate
		increasing marginal returns