when the last unit produced costs the same as the benefit recieved by consumers , basically what consumers want when it occurs p=mc
Economics point out that there are costs for which you can't produce a receipt, Normal cost is an implicit cost.
Efficient Market hypothesis
The theory that asset prices reflect all publicly available information about the value of the asset
According to economists the satisfaction people get from their consumption activities is called
Which of the following statements false?
D) The fourth hamburger usually increases total utility by more than the third hamburger.
Purchasing goods such that the ratio of marginal utility to price is equal across all goods results in the
A) greatest total utility
The fact that the average price of a gallon of gasoline in England is much higher than the price in the United states would lead to which of the following predictions?
D) Large cars with poorer gas mileage will be less popular with consumers in England
A rational seller will sell another unit if
B) the cost of making the next unit is less than the revenue gained by selling the next unit.
According to the cost-benefit principle, you should switch to another fast or job when
All the above
Your neighbors asked you to look after their dog while they are on vacation.
D) The value of one hour of leisure, which is greater than zero.
What is the smallest amount of money per window cleaned that would induce John to spend at least one hour per day cleaning?
Of the following characteristics, which one applies exclusively to a perfectly competitive firm?
C) It can sell all it wants to at the market price
Last summer Casey took fresh vegetables to sell at the farmer's market, but this year casey did not plant any vegetables and went to work at the local bank.
C) The farmer's market's attracts a large number of vegetable farmers.
One implication of the shape of the demand curve that faces a perfectly competitive firm is that
C) If the firm increases its price below the market price, it will earn higher revenue
An imperfectly competitive firm is one that
A) has some degree of influence over the price it charges for its output.
The reason we observe the law of diminishing marginal returns is that
E) the production facility eventually becomes congested if the firm keeps hiring workers.
At quantities less than 50 doughnuts
D) average cost is declining because marginal cost is less than average cost.
The shutdown condition for a firm is where
B) total revenues are less than the cost of variable factors of production
Suppose the firm knows that it is not going to shutdown but is going to earn a loss. It should pick the output level where
B) price equals marginal costs.
Suppose a firm is collecting $1250 in total revenues and the total costs of its variable factors of production are $1000 at its current level of output. in the short run, once can predict that the firm will.
D) Continue to operate
A firm that is earning negative profit
C) Should continue to operate in the short run if it is earning total revenues greater than its variable costs.
In the graph above, Average Variable cost is labeled ? Average total cost is labeled ? and Marginal cost is labeled ?
THe fact that INgrid can not buy a ticket to "Mamma Mia" is evidence of
D) A situation that is not Pareto Efficient
If the firm does not have to pay for the damage to the downstream fish, the market equilibrium price will be ? and the market equilibrium quantity will be ?
C) Inefficiently low; inefficiently high
Suppose the government fines the firm an amount equal to the damage imposed on the fish. This government action
E) increases efficiency in the market
THe concept of efficiency is illustrated by which of the following statements?
B) At equilibrium, all mutually beneficial transactions have taken place.
Suppose that the quantity initially being purchased is 10 pounds per day. If the supplier sells an extra pound of oranges to the most eager buyers for $8 then the seller is ? better off than before and the buyer is ? better off than before.
Which of the following statements expresses the justification for making efficiency the first goal of economic interaction?
E) Efficiency maximizes total economic surplus and thereby allows other goals to be more fully achieved.
Except in the extreme cases of perfectly inelastic or elastic demand and/or supply curves, the burden of a per unit tax imposed on sellers falls.
B) Partially on consumers and partially on producers.
IF a tax of one dollar per unit is imposed on the producers of this commodity, the price consumers will pay in the market will
B) Increase by less than one dollar
If the legislature's primary goal in increasing taxes is to raise money most efficiently, it should tax
B) drugs because demand is price inelastic
In an effort to battle obesity, the school board has decided to tax candy sold at the high school snack bar.
D) Demand for candy at the market price is price elastic
Your state legistlature is considering increasing the sales tax on two different commodities:
D) fall by 0.08%
A tax on Commodity A will generate ? deadweight loss relative to an equivalent tax on Commodity B.
A tax on Commodity B will be more effective at ? than an equivalent tax on commodity A.
C) Reducing consumption
The economic theory of business behavior assumes that the goal in a firm is to
E) Maximize its profits
Which of the following is not an example of explicit costs?
B) Personal savings of the owner invested in the firm
You determine that your true profit that month was negative $200. Why?
C) You accounted for lost salary of 1000
If a firm is earning zero economic profits
C) Equal to total revenue minus both explicit and implicit costs
In a perfectly competitive industry over the long run
E) Economic profits and losses are driven towards zero by entry and exit.
If resources are misallocated then the presence of opportunities to profit.
A) will exist and self interests will ensure someone will profit
The copyright of Frank Bernanke's Principles of Economics Textbook
C) Serves as a minor barrier to other publishers.
The ability of the invisible hand to allocate resources efficiently is
E) Reduced by the presence of barriers to entry.
Adam Smith claimed that an efficient allocation of resources was the byproduct of
E) Involvement of self-interested buyers and sellers.
In the short run, Charlie's Reduction in cost will ? the market price of lettuce
D) have no impact on
In the short run, Charlie's total revenue will ? and total cost will ?
C) Be the same as before; decrease
The long run supply curve for the industry will shift ? by ? per harvesting period.
A) Downward; 5g's
According to the textbook, when airlines were regulated with respect to airfares, they competed with each other on the basis of
D) number of flights to and from a particular city
Which of the following would not have been predicted to occur upon deregulation of the airline industry?
C) Accident rates would soar
If the government began to set a relatively high price for SUV's based solely on their gas mileage one could predict.
B) SUV manufactures would soon start offering extras.
YOu have just won the lottery! You may take your winnings in either a single immediate payment of 1million or in annual payments of 25g's forever. At what interest rate would you be indifferent between these two choices?
A share of IBM stock is an
A) Claim to a fraction of the current and future accounting profits of IBM
According to the textbook, when the Wall street Journal compared the performance of stocks picked by experts to randomly picked stocks,
E) the performance of the two sets of stocks was about the same.
The efficient-markets hypothesis suggests
D) Information in stock tip newsletters is too outdated to be useful.
Which of the following statements is not implied by the efficient-markets hypothesis?
D) The same experts will always outperform the market average
Amazon.coms stock price has been consistently high while the company repeatedly reports accounting losses. Apparently, investors
B) expect Amazon to very profitable in the future.
Suppose a Ph. D mathematician from MIT discovers "the formula" for picking stocks, using well-known statistical models and publicly available data, One an predict that.
D) as his success becomes well known, other investors will mimic his choices and thereby drive his return down.