question

suppose there is a 6 percent in the price of good x and a resulting 6 percent decrease in the quantity of x demanded. Price elasticity of demand for x is_ a. 0 b. 1 c. 6 d. 36

answer

b. 1

question

typically a price ceiling (i) causes a surplus (ii) causes a shortage (iii) is set at a price above the equilibrium price (iv) is set at a price above the equilibrium price a. (ii) only b. (iv) only c. (i) and (iii) only d. (ii) and (iv) only

answer

d

question

suppose that a 20% increase in the price of good Y causes a 10% decline in the quantity demanded of good X. the cross price elasticity of demand tells us that a. the goods are substitutes and cross price elastic b. the goods are substitutes and cross price inelastic c. the goods are complements and cross price elastic d. the goods are complements and cross price inelastic e. the goods are normal and cross price inelastic

answer

d

question

in long run, a firm that produces and sells electronic book readers gets to choose a. how many workers hire b. the the size of its factories c. which short run average total cost curve to use d. all of the above are correct

answer

d

question

explicit costs a. require and outlay of money by the firm for which a receipt is generated b. include all of the firms opportunity costs c. include the value of the business owner's time d. both b and c are correct

answer

a

question

a local potato chip company plans to operate out of its current factory, which is estimated to last 25 years. all cost decisions it makes during a 25-year period a. are short term decisions b. are long-run decisions c. involve only maintenance of the factory d. are zero because the cost decisions were made at the beginning of the business

answer

a

question

the price elasticity of demand measures how much a. quantity demanded to a change in price b. quantity demanded to a change in income c. price responds to a change in demand d. demand responds to a change in supply

answer

a

question

suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. as a result of the price floor, the a. demand curve for toothpaste shifts to the left b. supply curve for toothpaste shifts to the right c. quantity demanded of toothpaste decreases, and the quantity of toothpaste that firms want to supply increases d. quantity supplied of toothpaste stays the same

answer

c

question

a person who takes a prescription drug to control high blood pressure most likely has a demand for that drug that is a. inelastic b. unit elastic c. elastic d.highly responsive to changes in income

answer

a

question

a firm is producing 1,000 units of output for which the average variable cost of production equals 50 cents. the firm's total fixed costs equal $700. the total cost of producing 1,000 units of output equals a. $700 b. $500 c. $1,000 d. $1,200 e. $1,700

answer

d

question

the greater the price elasticity of demand(more elastic), the a. more likely the product is a necessity b. smaller the responsiveness of quantity demanded to a change in price c. greater the percentage change in price over the percentage change in quantity demanded d. greater the responsiveness of quantity demanded to a change in price

answer

d

question

Good price elasticity of demand A .3 B 2.1 Which of the following is consistent with the table above? a. A is a luxury and B is a necessity b. A is a good several years after a price increase, and b is several days after the price increase c. A is a large ticket item and b is a smaller ticket item d. A has fewer substitutes than B

answer

d

question

which of the following is the most likely explanation for the imposition of a price floor on the market for corn? a. Sellers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor. b. Buyers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor. c. Policymakers have studied the effects of the price floor carefully, and they recognize that the price floor is advantageous for society as a whole. d. Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policy makers into imposing the price floor.

answer

d

question

Jennifer is a junior in college. Her current cumulative grade point average is 3.5 out of a 4.0 scale. Jennifer is hoping that by the time she graduates, she can raise her cumulative GPA. which of the following statements is correct? a. if Jennifer earns between a 3.3 and a 3.5 GPA in her senior year, she will be able to raise her cumulative GPA b. if Jennifer earns a 3.5 GPA in her senior year, she will be able to raise her cumulative GPA c. jennifer must earn above a 3.5 GPA in her senior year in order to raise her cumulative gpa d. either b or c would be correct

answer

c

question

the marginal cost of a good is a. the difference between average total cost and average variable cost b. the addition to total cost from producing one more unit of output c. decreasing whenever average average total cost is decreasing d. the addition to total variable cost from producing an additional unit of output e. both b and d are correct

answer

e

question

pete owns a shoe-shine business. his accountant most likely includes which of the following costs on his financial statements? a. wages pete could earn washing windows b.dividends pete's money was earning in the stock market before pete sold his stock and shoe shine booth c. the cost of shoe polish d. both b and c are correct

answer

c

question

in the case of perfectly inelastic demand a. the change in quantity demanded equals the change in price b. the percentage change in quantity demanded equals the percentage change in price c. infinitely large changes in quantity demanded result from very small changes in the price d. quantity demanded stays the same whenever price changes

answer

d

question

if the price elasticity of demand for a good is 0.4 then a 10% increase in price results in a a. 0.4% decrease in the quantity b. 2.5% decrease in the quantity demanded c. 4% decrease in the quantity demanded d. 40% decrease in the quantity demanded

answer

c

question

which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk? a. buyers of milk, believing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling

answer

c

question

accounting profits are based upon

answer

actual cash receipts and actual expenditures of cash

question

in the long run

answer

inputs that were fixed in the short run become variable

question

suppose that the quantity demand falls by 30% as a result of a 5% increase in price. the price elasticity of demand for this good is

answer

elastic and equal to 6

question

the price of a product increases from $1 to $1.50. as a result of the price increase, consumers decrease the amount they purchase by 6,000,000 units. based on this data, we can say with certainty that the elasticity of demand is

answer

unkown

question

we would expect the cross price elasticity of demand between pepsi and coke to be

answer

positive, indicating substitute goods

question

fixed costs are defined as

answer

costs that do not vary with output

question

a convenience store notices that it takes in the same amount of revenue from customers from the sale of slurpees regardless of the price of slurpees. based on the evidence, the demand for slurpees

answer

unit elastic

question

a difference between explicit and implicit costs is that

answer

implicit costs do not require direct monetary outlay by the firm, whereas explicit costs do

question

for a particular good, a 5% increase in price causes a 2% decrease in quantity demanded. which of the following statements is most likely applicable to this good

answer

purchasing this good involves a small part of the consumers income

question

when demand is unit elastic, price elasticity of demand equals

answer

1, and total revenue does not change when the price changes

question

an example of an explicit cost of production would be the

answer

lease payments for the land on which the farm's factory stands

question

if a firm produces nothing, which of the following will be zero?

answer

total variable cost

question

suppose that the quantity of beach homes sold declines by 20% as a result of a recession in the economy that reduced the average household income by 10%. this would mean that beach houses are

answer

a normal good and income elastic

question

fixed costs can be defined as costs that

answer

are incurred even if nothing is produced

question

which of the following statements is correct?

answer

if there are implicit costs, accounting profit is greater than the economic profit for the business firm

question

if the price of gasoline rises, when are consumers most likely to have elastic demand

answer

one year after the price increases

question

when looking at a graph of the average total cost curve and the average variable cost curve, the vertical distance between the average total cost curve and the average variable cost curve equals

answer

average fixed cost

question

economists compute the price elasticity of demand as the

answer

percentage change in quantity demanded divided by the percentage change in price

question

which of the following is the best example of a variable cost?

answer

monthly wage payments for hired labor

question

which of these assumptions is often realistic for a firm in the short run?

answer

the firm can vary the number of workers it employs but not the size of its factory

question

a city wants to raise revenues to build a new municipal swimming wool next year. the mayor suggests that the city raise the price of admission to the current municipal pools this year to increase revenues. the city manager suggests that the city lower the price of admission to increase revenues. who is correct?

answer

the mayor would be correct correct if demand were price inelastic, the city manager would be right if demand was price elastic

question

when we move upward and to the left along a linear, downward sloping demand curve, price elasticity of demand

answer

always becomes larger

question

economic profit always exceeds accounting profit

answer

false

question

ray tucker has run his company, tuckers towing and wrecking for 2 years and has made an accounting profit of $34000 each year. as long as tuckers towing continues to make accounting profits, it is rational to remain in the towing business

answer

false

question

accountants keep track of the money that flows into and out of firms

answer

true

question

when marginal cost are greater than the average variable cost, the average variable cost must be increasing

answer

true

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