Microeconomics Exam 2 WVU

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the maximum output that can be produced from each possible quantity of inputs.

The production function shows

It is perfectly inelastic.

Jenna runs a small boutique in Capitola. She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more. On the basis of this information, what can you conclude about her price elasticity of demand for wool hand warmers?

rent that could have been earned on a building owned and used by the firm.

Which of the following is an implicit cost of production?

horizontal

The demand curve for an individual seller's product in perfect competition is

the law of diminishing marginal utility

If, as a person consumes more and more of a good, each additional unit adds less satisfaction than the previous unit consumed, we are seeing the workings of

some firms will exit in the long run, causing market supply to decrease and market price to rise increasing profits for the remaining firms

If a typical firm in a perfectly competitive industry is incurring losses, then

both productive efficiency and allocative efficiency

In the long-run, a perfectly competitive market exhibits

Negative, so Sefton considers potatoes to be inferior goods.

Last year, Sefton purchased 60 pounds of potatoes to feed his family of five when his household income was $30,000. This year, his household income fell to $20,000 and Sefton purchased 80 pounds of potatoes. All else constant, Sefton's income elasticity of demand for potatoes is

economic costs add the opportunity costs of a firm using its own resources while accounting costs do not.

Economics costs of production differ from accounting costs in that

how responsive quantity demanded is to a change in price.

Price elasticity of demand measures

1.62

If 50 units are sold at a price of $20 and 80 units are sold at a price of $15, what is the absolute value of the price elasticity of demand? Use the midpoint formula.

market demand and market supply.

The price of a seller's product in perfect competition is determined by

heart surgery

Which of the following products comes closet to having a perfectly inelastic demand?

The elasticity coefficient is constant along the demand curve.

Which of the following statements is true about the price elasticity of demand?

is a necessity.

A demand curve that is horizontal indicates that the commodity

average fixed costs.

The vertical difference between curves ATC and AVC measures

horizontal; vertical

A demand curve which is ______ represents perfectly inelastic demand, and a demand curve which is _______ represents perfectly elastic demand.

Negative

For people who live near a bus route, a subway station, or a commuter rail line, public transportation provides a substitute to driving their own cars. So, for these people, the cross-price elasticity of demand between gasoline and public transportation is

No, because price is greater than marginal cost.

Is a monopolistic competitive firm allocatively efficient?

$25

If the market price is $25 in a perfectively competitive market, the marginal revenue from selling the fifth unit is

marginal cost curve above its minimum average variable cost.

A perfectly competitive firm's supply curve is its

the number of sellers in the markets.

A major difference between monopolistic competition and perfect competition is

There is only one seller in the market.

Which of the following is a characteristic of a monopoly?

extra satisfaction received from consuming one more unit of a product.

Marginal utility is the

the increase in quantity sold is large enough to offset the lower price.

When demand is elastic, a fall in price causes total revenue to rise because

at the minimum of the average total cost curve.

The break-even point for an individual firm occurs

There are restrictions on exit of firms.

Which of the following is not a characteristic of a perfectly competitive market structure?

operating in the short run.

If a producer is not able to expand its plant capacity immediately, it is

that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline.

The law of diminishing marginal returns states

there will be more firms in the industry and the market price will decrease.

Suppose the prevailing price is $20 and the firm is currently producing 1,350 units. In the long-run equilibrium,

all inputs can be varied.

A characteristic of the long run is

each buyer and seller is too small relative to others to independently affect the market price.

Both buyers and sellers are price takers in a perfectly competitive market because

5 pounds

What is the marginal product of the fourth worker?

10.8

What is the average product of labor when the farm hires 5 workers?

Marginal revenue equals marginal cost.

Which of the following is not a characteristic of long-run equilibrium in monopolistically competitive market?

0.5; The product is inelastic.

Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good. Calculate the price elasticity of supply and characterize the product.

only one seller who faces a downward-sloping demand curve.

In monopolistic competition there is/are

$100

Vipsana's Gyros House sells gyros. The cost of ingredients (pita, meat spices, etc.) to make a gyro is $2.00. Vispana pays her employees $60 per day. She also incurs a fixed cost of $120 per day. Calculate Vispana's variable cost per day when she produces 50 gyros using two workers?

Po

If the firm represented in the diagram is currently producing and selling Qa units, what is the price charged?

the area Po a d P3

What is the area that represents the loss made by the firm?

3 pita wraps and 3 bubble teas

What is Keegan's optimal consumption bundle?

3 pita wraps

If pita wraps were free, how many would Keegan consume?

P=$50; Q=6 cases

What is the output (Q) that maximizes profit and what is the price (P) charged?

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