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Midterm quiz questions

Terms in this set (34)

If price is below equilibrium
quantity demanded exceeds quantity supplied, and a shortage exists
A change in the quantity demanded of skis is a movement along the demand curve for skis. In contrast, a change in demand for skis
can be caused by an increase in the popularity of the sport
According to the law of supply, if the price of electric ranges decreased, everything else held constant, then
the quantity supplied of electric ranges would decrease
If producers obtain a lower price of resource to produce any given quantity of good, we can conclude that
supply increased
The law of demand illustrates that
as price decreases, quantity demanded increases
Which of the following is not constant along an individual consumer's demand curve for Coke?
The consumer's tastes
According to the law of demand, if the price of compact disks decreased, then, ceteris paribus,
the quantity demanded of compact disks would increase
If Mark's income increases he consumers more hamburger, other things held constant. To Mark hamburger is
a normal good
When making decisions, consumers tend to
compare perceived costs and benefits and choose that option with the greatest relative benefits
Utility is
the satisfaction a consumer obtains from a product
You arrive at the doughnut shop early in the morning feeling very hungry. You and your friend order coffee and a dozen assorted doughnuts. The first doughnut you eat tastes incredibly good. The second, pretty good. The third, just OK. The fourth, you are turning somewhat green. The fifth you are feeling sick. Your friend, an economist, know you have just experienced firsthand the principle of
diminishing marginal utility
Suppose that you have five bottles of lemonade. According to the law of diminishing marginal utility, how can you receive the most utility?
Consume one bottle each day for the next five days.
You are hosting a back-to-school party with very limited funds. On the invitation you tell people the party is BYOB (bring your own bottle). You have decided to do this rather than provide the drinks because
people will consume less if they bring their own
A consumer is purchasing two goods, A and B and he or she is in equilibrium. The prices of the last units of A and B the consumer purchases are $100 and $10, respectively. It can be concluded that this consumer
is purchasing 10 units of B for each unit of A
Consumer equilibrium exists when
the marginal utility per dollar of expenditure is the same for all goods and services.
The substitution effect of a price change says
consumers will purchase less of more expensive goods and more of less expensive goods
The price elasticity of demand for a product measures
how responsive consumers are to a price change
To say there is an inelastic demand for a product means that
consumers are not very responsive to a change in the price of the product
If a 1 percent change in the price of a good causes a 1 percent change in the quantity demanded of that good, the price elasticity of demand is
unit-elastic
If the price elasticity of demand for a product is 2, this implies that
if the price increases by 1 percent, the quantity demanded will decrease by 2 percent
Assume the demand curve for a certain good is a horizontal line. This demand curve illustrates the idea that
people can purchase any quantity they want at the single prevailing price
If a change in price causes no response at all in the quantity of the product demanded, then demand for the product is
perfectly inelastic
If there are few substitutes for a product, few competitors, and a short time period under consideration, then
if price rises, total revenue (or total consumer expenditures) will also rise
Demand is more likely to be elastic if
consumers have a long time to adjust to a price change
If the cross-price elasticity of demand for goods M and N is equal to 1.5, when price of good M increases 10 percent, the quantity demanded for good N will
increase 15 percent
If, as the price of good X rises, the quantity demanded for good Y rises, while everything else is held constant, then
goods X and Y are substitutes
The law of diminishing marginal returns states
when successive equal amount of a variable resource are combined with a fixed amount of another resource marginal increases in output that can be attributed to each additional unit of the variable will eventually decline
Total costs are
the costs of variable and fixed resources
Average total cost is calculated by dividing
total cost by total output
If a firm is currently producing zero output in the short run, total cost equals
total fixed cost
At is minimum point, the average-total-cost curve is intersected by the
marginal-cost curve
The period of time in which the firm can change the scale of production is known as
the long run
Diseconomies of scale
occur when at least one resource is fixed and unit costs increase as the quantity of production increases
Which industry is most likely to benefit from economies of scale?
Cable television service
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