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ECON 101- Exam Prep

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Quiz sobre ECON 101- Exam Prep, criado por Megan Doleweerd em 30-11-2016.
Megan Doleweerd
Quiz por Megan Doleweerd, atualizado more than 1 year ago
Megan Doleweerd
Criado por Megan Doleweerd quase 8 anos atrás
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Resumo de Recurso

Questão 1

Questão
A household's consumption choices are determined by:
Responda
  • prices of goods and services
  • income
  • preferences
  • all of the above

Questão 2

Questão
Total utility equals:
Responda
  • the sum of the marginal utilities of each unit consumed
  • the area below the demand curve but above the market price
  • the slope of the marginal utility curve
  • the marginal utility of the last unit divided by price
  • the marginal utility of the last unit consumed multiplied by the total number of units consumed

Questão 3

Questão
Total utility is always
Responda
  • greater than the marginal utility
  • less than the marginal utility
  • decreasing when the marginal utility is decreasing
  • decreasing when the marginal utility is increasing
  • increasing when the marginal utility is positive

Questão 4

Questão
According to the principle of diminishing marginal utility, as consumption of a good increases, total utility:
Responda
  • decreases and then eventually increases
  • decreases at an increasing rate
  • decreases at a decreasing rate
  • increases at an increasing rate
  • increases at a decreasing rate

Questão 5

Questão
If a consumer is in equilibrium,
Responda
  • total utility is maximized given the consumer's income and the price of goods
  • marginal utility is maximized given the consumer's income and the price of goods
  • marginal utility per dollar spent is maximized given the consumer's income and the price of goods
  • the marginal utility of each good will be equal
  • none of the above is true

Questão 6

Questão
If potato chips were free, individuals would consume
Responda
  • an infinite number of chips
  • the quantity of chips at which total utility from chips falls to zero
  • the quantity of chips at which the marginal utility from chips falls to zero
  • zero chips, since this equates marginal utility and price
  • Megan would eat all of the potato chips. Megan loves potato chips <3

Questão 7

Questão
In consumer equilibrium, a customer equates the
Responda
  • total utility from each good
  • marginal utility from each good
  • total utility per dollar spent on each good
  • marginal utility per dollar spent on each good
  • total income spent on each good with total utility from each good

Questão 8

Questão
Samir consumes apples and bananas and is in consumer equilibrium. The marginal utility of the last apple is 10 and the marginal utility of the last banana is 5. If the price of an apple is $0.50, what is the price of a banana?
Responda
  • $0.05
  • $0.10
  • $0.25
  • $0.50
  • $1.00

Questão 9

Questão
Squid costs $2 per kilogram and octopus costs $1 per kilogram. Jack buys only octopus and gets gets 10 units of utility from the last kilogram he buys. Assuming that Jack has maximized his utility, his marginal utility, in units, from the first kilogram of squid must be
Responda
  • more than 10
  • less than 10
  • more than 20
  • less than 20
  • zero

Questão 10

Questão
If Soula is maximizing her utility and two goods have the same marginal utility, she will
Responda
  • buy only one
  • buy equal quantities of both
  • be willing to pay the same price for each
  • get the same total utility from each
  • do none of the above

Questão 11

Questão
Sergio is maximizing his utility in his consumption of beer and bubblegum. If the price of beer is greater than the price of bubblegum, then we know with certainty that
Responda
  • Sergio buys more beer than bubblegum
  • Sergio buys more bubblegum than beer
  • the marginal utility of the last purchased beer is greater than the marginal utility of the last purchased bubblegum
  • the marginal utility of the last purchased bubblegum is greater than the marginal utility of the last purchased beer
  • the marginal utilities of the last purchased beer and bubblegum are equal

Questão 12

Questão
Bikes and roller blades are substitutes. Marginal utility theory predicts that when the price of bikes increases due to a decrease in supply, the quantity demanded of bikes
Responda
  • decreases and the demand curve for roller blades shifts rightward.
  • decreases and the demand curve for roller blades shifts leftward.
  • decreases and the demand curve for roller blades will not shift.
  • increases and the demand curve for roller blades shifts rightward.
  • increases and the demand curve for roller blades shifts leftward.

Questão 13

Questão
Which of the following is not a prediction of marginal utility theory?
Responda
  • Other things remaining the same, the higher the price of the good, the lower the quantity demanded.
  • Other things remaining the same, the higher the price of the good, the higher the consumption of substitutes for that good.
  • Other things remaining the same, the lower the price of the good, the lower the consumption of substitutes for that good.
  • The law of demand.
  • Diminishing marginal utility.

Questão 14

Questão
Chuck and Barry have identical preferences but Chuck has a much higher income. If each is maximizing his utility,
Responda
  • they will have equal total utilities.
  • Chuck will have lower total utility than Barry.
  • Chuck will have lower marginal utility than Barry for each normal good consumed.
  • Chuck will have higher marginal utility than Barry for each normal good consumed.
  • they will have equal marginal utilities for each normal good consumed.

Questão 15

Questão
The relative price of beer to back bacon are 2:1. If Bob's current consumption is at a level where MUbeer/MUbacon is 1:2, to achieve maximum utility Bob must
Responda
  • consume more beer and less bacon
  • not change his current consumption of beer and bacon
  • consume less beer and more bacon
  • increase the price of beer
  • consume twice as much beer and half as much bacon

Questão 16

Questão
Bob is initially maximizing his utility in his consumption of goods X and Y. The price of goo X doubles, ceteris paribus. for Bob to once again maximize his utility, his quantity of X consumed must
Responda
  • rise until the marginal utility of X had doubled
  • fall to one half its previous level
  • fall until the marginal utility of X had doubled
  • fall until the marginal utility of X falls to one half its previous level
  • yield infinite bliss

Questão 17

Questão
Beverly is currently in consumer equilibrium. An increase in her income will
Responda
  • increase her total utility
  • decrease her total utility
  • increase her marginal utility of all goods
  • decrease her marginal utility of all goods
  • increase her consumption of all goods

Questão 18

Questão
Bill and Ted consume 15 chocolate bars each at the current price. If Bill's demand curve is more elastic than Ted's demand curve
Responda
  • Bill's willingness to pay for the 15th chocolate bar is greater than Ted's
  • Ted's willingness to pay for the 15th chocolate bar is greater than Bill's
  • Bill's consumer surplus is greater than Ted's
  • Ted's consumer surplus is greater than Bill's
  • Bill's consumer surplus equals Ted's

Questão 19

Questão
The high price of diamonds relative to the price of water reflects the fact that, at typical levels of consumption,
Responda
  • the total utility of water is relatively low
  • the total utility of diamonds is relatively high
  • the marginal utility of water is relatively high
  • the marginal utility of diamonds is relatively low
  • none of the above

Questão 20

Questão
The principal of diminishing marginal utility means that the consumer surplus from a second slice of pizza is
Responda
  • greater than that of the first
  • equal to that of the first
  • less than that of the first
  • equal to that of the first divided by 2
  • equal to that of the first multiplied by 2

Questão 21

Questão
Which of the following statements best describes a customer's budget line?
Responda
  • the amount of each good a consumer can purchase
  • the limits to a consumer's set of affordable consumption choices
  • the desired level of consumption for the consumer
  • the consumption choices made by a consumer
  • the set of all affordable consumption choices

Questão 22

Questão
Real income is measured in
Responda
  • monetary units
  • price units
  • units of satisfaction
  • units of indifference
  • units of goods

Questão 23

Questão
The budget line depends on
Responda
  • income only
  • prices only
  • income and prices
  • preferences only
  • preferences and prices

Questão 24

Questão
Bill consumes apples and bananas. Suppose Bill's income doubles and the prices of apples and bananas also double. Bill's budget line will
Responda
  • shift left but not change slope
  • remain unchanged
  • shift right but not change slope
  • shift right and become steeper
  • shift right and become flatter

Questão 25

Questão
The initial budget equation for pop and movies is Qp=20-4Qm, and the price of pop (Pp) is $5. If the price of pop falls to $4, which of the following is the new budget equation?
Responda
  • Qp=25-2Qm
  • Qp=25-4Qm
  • Qp=25-5Qm
  • Qp=20-5Qm
  • none of the above

Questão 26

Questão
Zarina's income allows her to afford 3 tomatoes and no toothbrushes, or 2 toothbrushes and no tomatoes. The relative price of toothbrushes (price toothbrush/price tomato) is
Responda
  • 2/3
  • 3/2
  • 6/1
  • 1/6
  • impossible to know with this information

Questão 27

Questão
If the price of the good measured on the vertical axis increases, the budget line will
Responda
  • become steeper
  • become flatter
  • shift leftward but stay parallel to the original budget line
  • shift rightward but stay parallel to the original budget line
  • shift leftward and become steeper

Questão 28

Questão
If income increases, the budget line will
Responda
  • become steeper
  • become flatter
  • shift leftward but stay parallel to the original budget line
  • shift rightward but stay parallel to the original budget line
  • stay parallel but shift leftward or rightward depending on whether a good is normal or inferior

Questão 29

Questão
The budget equation for pop and movies is Qp=10-5Qm, with movies on the horizontal axis and pop on the vertical axis. The price of pop (Pp) is $4. That means income (Y) is ______ and the price of movies (Pm) is _______.
Responda
  • Y= $50, Pm=$20
  • Y=$200, Pm=$20
  • Y=$40, Pm=$2
  • Y=$40, Pm=$20
  • none of the above

Questão 30

Questão
The shape of the indifference curve depends on
Responda
  • the price of goods
  • household income
  • the substitutability between goods for the household
  • the level of satisfaction for the household
  • all of the above

Questão 31

Questão
In general, as a consumer moves down an indifference curve increasing consumption of good X (measured on the horizontal axis)
Responda
  • more of Y will need to be given up for each additional unit of X
  • a constant amount of Y must be given up for each additional unit of X
  • less of Y must be given up for each additional unit of X
  • the relative price of Y increases
  • the relative price of Y decreases

Questão 32

Questão
Which of the following statements is false?
Responda
  • Indifference curves are negatively sloped
  • A preference map consists of a series of nonintersecting indifference curves
  • Indifference curves are bowed out from the orgin
  • The marginal rate of substitution is the magnitude of the slope of an indifference curve
  • The marginal rate of substitution increases with movement up an indifference curve

Questão 33

Questão
In moving down along an indifference curve, the marginal rate of substitution (MRS) for compliments will
Responda
  • increase faster than the MRS for substitutes
  • increase more slowly than the MRS for substitutes
  • be relatively constant
  • decrease faster than the MRS for substitutes
  • decrease more slowly than the MRS for substitutes

Questão 34

Questão
If two goods are perfect substitutes, their
Responda
  • indifference curves are positively sloped straight lines
  • indifference curves are negatively sloped straight lines
  • indifference curves are L-shaped
  • marginal rate of substitution is zero
  • marginal rate of substitution in infinity

Questão 35

Questão
When the price of an inferior good rises, the income effect
Responda
  • is always larger than the substitution effect
  • decreases consumption of the good and the substitution effect increases consumption
  • and the substitution effect both increase consumption of the good
  • and the substitution effect both decrease consumption of the good
  • increases consumption of the good and the substitution effect decreases consumption

Questão 36

Questão
For a rise in price, the substitution effect
Responda
  • always increases consumption
  • increases consumption for normal goods only
  • decreases consumption for normal goods only
  • decreases consumption for inferior goods only
  • none of the above

Questão 37

Questão
If the price of good X (horizontal axis) falls, the substitution effect is represented by a movement to a
Responda
  • higher indifference curve
  • lower indifference curve
  • steeper part of the same indifference curve
  • flatter part of the same indifference curve
  • flatter part of a higher indifference curve

Questão 38

Questão
When some hot guy took his shirt off he was not wearing an undershirt. As a result, men's undershirt sales plummeted. Ceteris paribus, we can conclude that men's undershirt
Responda
  • preferences changed when price changed
  • preferences changed when income changed
  • choices changed when preferences changed
  • choices changed when prices changed
  • choices changed when income changed

Questão 39

Questão
When the price of an inferior good falls, the 1. income and substitution effect both move quantity demanded in the same direction 2. income and substitution effect move quantity demanded in opposite directions 3. income effect is usually larger than the substitution effect 4. substitution effect is usually larger than the income effect
Responda
  • 1 and 2
  • 1 and 4
  • 2 and 3
  • 2 and 4
  • none of the above

Questão 40

Questão
Which of the following is not a characteristic of a perfectly competitive industry?
Responda
  • downward-sloping industry demand curve
  • perfectly elastic demand curve for each individual firm
  • each firm decides the quantity of output
  • slightly differentiated products
  • many firms each supplying a small fraction of industry supply

Questão 41

Questão
For perfect competition to arise it is necessary that industry demand be
Responda
  • inelastic
  • elastic
  • perfectly elastic
  • large relative to the minimum efficient scale of a firm
  • small relative to the minimum efficient scale of a firm

Questão 42

Questão
If a firm faces a perfectly elastic demand for its product ,
Responda
  • it is not a price taker
  • it will want to lower its price to increase sales
  • it will want to raise its price to increase total revenue
  • its marginal revenue curve is equal to the price of the product
  • it will always earn zero economic profit

Questão 43

Questão
In a perfectly competitive industry, the market price is $10. An individual firm is producing the output at which MC=ATC=$15. AVC at that output is $10. What should the firm do to maximize its short-run profits?
Responda
  • shut down
  • expand output
  • contract output
  • leave output unchanged
  • insufficient information to answer

Questão 44

Questão
In which of the following situations will a perfectly competitive firm earn economic profit?
Responda
  • MR>AVC
  • MR>ATC
  • ATC>MC
  • ATC>AR
  • AR>AVC

Questão 45

Questão
In the price range below minimum average variable cost, a perfectly competitive firm's supply curve is
Responda
  • horizontal at the market price
  • vertical at zero output
  • the same at its marginal cost curve
  • the same as its average variable cost curve
  • none of the above

Questão 46

Questão
A firm in a perfectly competitive industry is maximizing its short-run profits by producing 500 units of output. At 500 units of output, which of the following must be false
Responda
  • MC<AVC
  • MC<ATC
  • MC>ATV
  • AR<ATC
  • AR>AVC

Questão 47

Questão
If a profit-maximizing firm in perfect competition is earning economic profit, it must be producing at a level of output where
Responda
  • price is greater than marginal cost
  • price is greater than marginal revenue
  • marginal cost is greater than marginal revenue
  • marginal cost is greater than average total cost
  • average total cost is greater than marginal cost

Questão 48

Questão
If a perfectly competitive firm in the short run is able to pay its variable cost and part, but not all, of its fixed costs, then it is operating in the range on its marginal cost curve that is anywhere
Responda
  • above the break-even point
  • below the break-even point
  • above the shutdown point
  • below the shutdown point
  • between the shutdown and break-even points

Questão 49

Questão
The short-run industry supply curve is
Responda
  • the horizontal sum of the individual firms' supply curves
  • the vertical sum of the individual firms' supply curves
  • vertical at the total level of output being produced by all firms
  • horizontal at the current level market price

Questão 50

Questão
The supply curve for the individual firm in a perfectly competitive industry is P=1+2Qs. If the industry consists of 100 identical firms, then what is the industry supply when P=7?
Responda
  • 300
  • 400
  • 600
  • 800
  • none of the above

Questão 51

Questão
The maximum loss for a firm in long-run equilibrium is
Responda
  • zero
  • its total cost
  • its total variable cost
  • its average variable cost
  • none of the above

Questão 52

Questão
For a perfectly competitive firm in long-run equilibrium, which of the following is not equal to price?
Responda
  • short-run average total cost
  • short-run average variable cost
  • short-run marginal cost
  • long-run average cost
  • average revenue

Questão 53

Questão
When economic profit is zero
Responda
  • the product will not be produced in the short run
  • the product will not be produced in the long run
  • firms will leave the industry
  • revenues are not covering implicit costs
  • none of the above will occur

Questão 54

Questão
A perfectly competitive industry is in short-run equilibrium with price below average total cost. Which of the following is not a prediction of the long-run consequences of such a situation?
Responda
  • price will increase
  • the output of the industry will increase
  • firms will leave the industry
  • the output of each remaining firm will increase
  • economic profit will be zero

Questão 55

Questão
If an industry experiences external economies as the industry expands in the long run, the long run industry supply curve will
Responda
  • be perfectly inelastic
  • be perfectly elastic
  • have a positive slope
  • have a negative slope
  • have an allocative inefficiency

Questão 56

Questão
Which of the following is not true of a new long-run equilibrium resulting from a new technology in a perfectly competitive industry?
Responda
  • price will be lower
  • industry output will be greater
  • firm profits will be greater
  • all firms in the industry will be using new technology
  • average total cost will be lower

Questão 57

Questão
A long-run equilibrium in a perfectly competitive industry would not be efficient if
Responda
  • firms are price takers
  • new technologies are developed
  • there are external economies or external diseconomies
  • there are external costs or external benefits
  • there is free entry into the industry

Questão 58

Questão
Resources are used efficiently when
Responda
  • consumers are on their marginal social benefit curves
  • firms are economically efficient
  • price= marginal social benefit=marginal social cost
  • there are no external benefits or external costs
  • all of the above are true

Questão 59

Questão
Which of the following is a natural barrier to the entry of new firms in an industry?
Responda
  • licensing of professions
  • economies of scale
  • issuing a patent
  • a public franchise
  • all of the above

Questão 60

Questão
In order to increase sales from 7 units to 8 units, a single-price monopolist must drop the price from $7 per unit to $6 per unit. What is the marginal revenue in this range?
Responda
  • $48
  • $6
  • $1
  • -$1
  • none of the above

Questão 61

Questão
A profit-maximizing monopoly will never produce at an output level
Responda
  • where it would incur economic losses
  • where marginal revenue is less than price
  • where average cost is greater than marginal cost
  • in the inelastic range of the demand curve
  • in the inelastic range of its marginal revenue curve

Questão 62

Questão
A single-price monopolist will maximize profits if it produces the output where
Responda
  • price equals marginal cost
  • price equals marginal revenue
  • marginal revenue equals marginal cost
  • average revenue equals marginal cost
  • average revenue equals marginal revenue

Questão 63

Questão
If a profit-maximizing monopoly is producing an output at which marginal cost exceeds marginal revenue, it
Responda
  • should raise price and lower output
  • should lower price and raise output
  • should lower price and lower output
  • is incurring losses
  • is maximizing profit

Questão 64

Questão
Which of the following is true for a producing single-price monopolist but not for a producing perfect competitor?
Responda
  • The firm maximizes profit by setting marginal cost equal to marginal revenue.
  • The firm is a price taker.
  • The firm can sell at any level of output at any price it sets.
  • The firm's marginal cost is less than average revenue.
  • None of the above.

Questão 65

Questão
Activity for the purpose of creating monopoly is
Responda
  • called rent seeking
  • illegal in Canada
  • called price discrimination
  • called legal monopoly
  • costless

Questão 66

Questão
Taking rent-seeking activity into account, the social cost of monopoly is equal to the
Responda
  • deadweight loss from monopoly
  • monopoly profit
  • deadweight loss plus monopoly profit
  • deadweight loss minus monopoly profit
  • consumer surplus lost plus producer surplus lost

Questão 67

Questão
When perfect price discrimination occurs, which of the following statements is false?
Responda
  • buyers cannot resell the product
  • the firm can distinguish between buyers
  • the firm sets prices
  • the firm captures consumer surplus
  • efficiency is worse than with a single-price monopoly

Questão 68

Questão
The output of a (not perfect) price-discriminating monopoly will be
Responda
  • less than a single-price monopoly
  • more than a single price-monopoly, but less than a perfectly competitive industry
  • the same amount as a perfectly competitive industry
  • more than a perfectly competitive industry
  • none of the above

Questão 69

Questão
Many video stores charge a lower rental for Wednesday nights compared with weekends. The price discrimination is profitable only if the average willingness to pay for DVDs on Wednesdays is
Responda
  • greater than the average willingness to pay for DVDs on the weekends
  • less than the average willingness to pay for DVDs on weekends
  • positive and the average willingness to pay for DVDs on weekends id negative.
  • negative and the average willingness to pay for DVDs on weekends id positive.
  • equal to one

Questão 70

Questão
A natural monopoly has
Responda
  • low fixed cost and low marginal cost
  • low fixed cost and high marginal cost
  • high fixed cost and low marginal cost
  • high fixed cost and high marginal cost
  • high fixed cost and increasing marginal cost

Questão 71

Questão
A monopolist under rate of return regulation has an incentive to
Responda
  • inflate costs
  • produce more than the efficient quantity of output
  • charge a price equal to marginal cost
  • maximize consumer surplus
  • maximize shareholder profits

Questão 72

Questão
An externality is a cost or benefit arising from an economic activity that falls on
Responda
  • consumers but not producers
  • producers but not consumers
  • free riders
  • rivals
  • none of the above

Questão 73

Questão
The production of too few goods with positive externalities is an example of
Responda
  • market failure
  • government failure
  • producer sovereignty
  • customer sovereignty
  • external costs

Questão 74

Questão
Which of the following illustrates the concept of external cost?
Responda
  • bad weather reduces the size of the wheat crop
  • a reduction in the size of the wheat crop causes income of wheat farmers to fall
  • smoking harms the health of the smoker
  • smoking harms the health of nearby nonsmokers
  • public health services reduce the transmission of disease

Questão 75

Questão
The income elasticity of demand for a better environment is
Responda
  • negative
  • zero
  • positive
  • trendy
  • impossible to know without additional information

Questão 76

Questão
Levels of acid rain caused by air pollution are
Responda
  • less than efficient levels due to external costs
  • less than efficient levels due to external benefits
  • more than efficient levels due to external costs
  • more than efficient levels due to external benefits
  • decreasing the earth's average temperature

Questão 77

Questão
At the current level of production of buckyballs, marginal social benefit is less than marginal social cost. To achieve allocative efficiency,
Responda
  • buckyballs should be taxed
  • buckyballs should not be produced
  • output of buckyballs should increase
  • output of buckyballs should decrease
  • property rights in buckyballs should be established

Questão 78

Questão
The production of too many goods with negative externalities is an example of
Responda
  • redistribution
  • consumer sovereignty
  • producer sovereignty
  • public failure
  • market failure

Questão 79

Questão
An externality is
Responda
  • the amount by which price exceeds marginal private cost
  • the amount by which price exceeds marginal social cost
  • the effect of government regulation on market price and output
  • someone who consumes a good without paying for it
  • a cost or benefit that arises from an activity but affects people not part of the original activity

Questão 80

Questão
The marginal private cost curve (MC) is a positively sloped straight line starting at the origin. If marginal external costs per unit of output are constant , the marginal social cost curve is a positively sloped straight line
Responda
  • parallel to and above MC
  • parallel to and below MC
  • starting at the origin and above MC
  • starting at the origin and below MC
  • identical to MC

Questão 81

Questão
A market economy tends to ________ goods with negative externalities and _______ goods with positive externalities
Responda
  • overproduce; overproduce
  • overproduce; underproduce
  • underproduce; overproduce
  • underproduce; underproduce
  • produce; consume

Questão 82

Questão
Policies for correcting problems of negative externalities include all of the following EXCEPT,
Responda
  • emission charges
  • patents
  • quantitative limits
  • Pigovian taxes
  • marketable permits

Questão 83

Questão
The marginal private benefit curve (MB) is a negatively sloped straight line. If marginal external benefits per unit of output are positive and decreasing with additional output, the marginal social benefit curve is a negatively sloped straight line
Responda
  • parallel to and above MB
  • parallel to and below MB
  • above and steeper than MB
  • above and flatter than MB
  • below and flatter than MB

Questão 84

Questão
Policies to achieve allocative efficiency when there are external benefits include
Responda
  • intellectual property
  • subsidies
  • public provision
  • all of the above
  • none of the above

Questão 85

Questão
Knowledge, as a factor of production,
Responda
  • displays diminishing marginal productivity
  • creates external costs
  • has costs totalling those paid to the parent holder
  • is encouraged by intellectual property rights
  • is all of the above

Questão 86

Questão
When market failure occurs, government will act to reduce inefficiency. This is a prediction of a
Responda
  • fair results theory of government behaviour
  • fair rules theory of government behaviour
  • social interest theory of government behaviour
  • public choice theory of government behaviour
  • rent-seeking theory of government behaviour

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