Eco 125 Exam Quizlet with Verified Solutions for 2023, Exams of Economics

Download Eco 125 Exam Quizlet with Verified Solutions for 2023 and more Exams Economics in PDF only on Docsity! Question 2 2 / 2 pts Eco 125 exam quizlet with verified solutions for 2023 A GRADED Question 1 2 / 2 pts The additional satisfaction that a consumer receives from one more unit of a good or service is known as . profit total utility marginal utility the law of diminishing marginal utility disutility In the short run, certain costs, such as rent on land and equipment, must be paid whether or not any output is produced. These are: the firm's marginal costs. the firm's variable costs. the firm's fixed costs. the firm's break-even costs. the firm's sunk costs. Question 4 2 / 2 pts Question 3 2 / 2 pts The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 10.2 MC: Marginal cost curve MR: Marginal revenue curve ATC: Average-total-cost curve AVC: Average-variable-cost curve Refer to Figure 10.2. What is the profit-maximizing price and output level? $35 and 10 units $50 and 20 units $35 and 20 units $20 and 20 units $50 and 15 units It is often observed that, over the same period of time and for the same good, marginal utility declines rapidly for some consumers and very little for others. This observation illustrates: that if consumers weren't identical, economic theory would not be able to provide insight into consumer behavior. tastes and preferences among consumers are quite similar. Question 10 0 / 2 pts Theory of Consumers' Behavior Social Contract Theory Field Theory Question 9 2 / 2 pts One reason that monopolistically competitive firms often use celebrity endorsements is that: they can have the celebrity as their potential customer. celebrity endorsements are comparatively inexpensive. they can link their product's reputation with the celebrity's reputation. the firm owners like to be around celebrities so they can feel important. firms like to spend a lot on advertisements. One method that firms in many nations use to exit the market is the use of: statutory laws. the uniform commercial code. the federal code. Question 11 2 / 2 pts Question 12 2 / 2 pts Correct Answer bankruptcy laws. antitrust laws. is the change in total utility that occurs because one more unit of a good is consumed or acquired. Diminishing marginal utility Expected utility Total utility Disutility Marginal utility The prices that people are willing to pay for goods and services mostly depend on: the cost of producing the goods and services. the total utility derived from the goods and services. Question 13 2 / 2 pts Question 14 2 / 2 pts the marginal utility derived from the goods and services. the availability of raw materials for producing the goods and services. whether the goods are legal, since the laws affect the position of both supply and demand curves. To economists, feelings such as peace, serenity, religious devotion, and self-esteem are captured in the concept known as . rational self-interest utility total revenue profit surplus Why is a firm in a monopolistically competitive industry considered a "mini" monopoly? The product of each firm is unique in some way or the other. Question 18 2 / 2 pts Question 19 2 / 2 pts the ability for a firm to vary all resources. is the lack of satisfaction yielded after consuming too much of the same product. Ordinal utility Marginal utility Cardinal utility Total utility Disutility Many agricultural products, such as wheat, are produced by thousands of different producers that grow essentially the same product. The market structure that best describes such a model is: oligopoly. monopoly. monopsony. Question 20 2 / 2 pts Question 21 2 / 2 pts monopolistic competition. perfect competition. The ordering of market structures from most market power to least market power (where market power is the ability to set its own price) is: oligopoly, monopoly, monopolistic competition, perfect competition. monopoly, oligopoly, monopolistic competition, perfect competition. monopoly, monopolistic competition, oligopoly, perfect competition. perfect competition, monopolistic competition, oligopoly, monopoly. monopoly, perfect competition, monopolistic competition, oligopoly. If the average variable cost of a firm is falling, then the: marginal cost lies above the average variable cost. Question 22 0 / 2 pts Question 23 2 / 2 pts average fixed cost must be rising. marginal cost lies below the average variable cost. marginal cost must be rising. marginal cost must be falling. In the short run, a firm continues to produce only if it can cover the: Correct Answer variable costs. implicit costs. sunk costs. explicit costs. fixed costs. Question 26 0 / 2 pts increase total revenue more than total cost. Correct Answer cause the firm to lose all of its sales. cause an increase in profits. increase total cost more than total revenue. reduce total cost more than total revenue. In order to maximize utility, consumers . equate the total utilities of each good consumed Correct Answer compare the marginal utilities of the last dollar spent on each good will continue purchasing till diminishing marginal utility is not achieved continue to make purchases until the marginal utility of each good is zero continue to purchase a good until total utility is equal to zero Question 27 2 / 2 pts The table given below shows the total revenue and total cost of producing a commodity. Table 9.1 Total Output Total Revenue Total Cost 0 $0 $1,000 1 $1,700 $2,000 2 $3,300 $2,800 3 $4,800 $3,500 4 $6,200 $4,000 5 $7,500 $4,500 6 $8,700 $5,200 7 $9,800 $6,000 8 $10,800 $7,000 9 $11,700 $9,000 In Table 9.1, the marginal cost of producing the sixth unit of output is equal to . $300 $200 Question 28 2 / 2 pts Question 29 2 / 2 pts $600 $700 $500 Which of the following is true of marginal cost? Marginal cost is the cost per unit of output produced. Marginal cost is the change in total cost divided by the change in total output. Marginal cost curve is negatively sloped at the profit-maximizing level of output. Marginal cost initially increases with an increase in output but subsequently declines. Marginal cost is equal to total cost divided by the quantity of output. The below table shows the average utility (in utils) obtained from the consumption of goods A and B. Table 7.3 Quantity of A Average Utility Quantity of B Average Utility Question 32 2 / 2 pts Question 33 2 / 2 pts zero. When practicing price discrimination, a firm can increase its revenue by: charging a higher price to the customers with a perfectly elastic demand. supplying less in a market with lower elasticity of demand. charging a higher price to the customers with a more inelastic demand. charging a lower price in a market dominated by wealthy consumers. supplying more in a market with a more inelastic demand. In the context of market structure, the characteristic that best describes a monopolistically competitive market is that: the products produced cannot be easily differentiated. entry and exit are both difficult. there are few firms in the market. Question 34 2 / 2 pts Question 35 2 / 2 pts firms spend very little on advertising and promotion. firms spend a great deal on advertising and promotion. If a monopolist is producing at a point at which marginal revenue is greater than marginal cost, then it should: raise its prices. lower its prices. continue producing at the current level. increase the level of production. decrease the level of production. The profit of a firm is maximized when: marginal revenue is equal to marginal cost. Question 36 0 / 2 pts Question 37 2 / 2 pts marginal cost is minimum. marginal revenue is maximum. marginal revenue is less than marginal cost. marginal revenue is greater than marginal cost. When the existing firms in a monopolistically competitive industry earn above-normal profit: Correct Answer new firms enter into the market, and entry continues until firms earn normal profit. their cost structure automatically changes, eliminating the additional profit. new firms have an incentive to enter the market but are legally barred from doing so. new firms have no incentive to enter the market. they increase their production and lower the price level. Question 40 2 / 2 pts Question 41 2 / 2 pts a period of post war recovery. Which of the following will be the best example of a monopoly firm? The Bank of America The US Bank National City Bank Washington Mutual Funds Bank The Federal Reserve The firms in an oligopoly market structure agree to collude because: the firms want to maintain a healthy relationship with each other. it helps them to earn more profits. each firm wants to know the strategy of its rivals. Eci 102 exam 2 Question 42 2 / 2 pts Question 43 0 / 2 pts it helps them to enjoy economies of scale. each firm wants to charge a lower price for its product than its rivals. Which of the following is true of the model of monopolistic competition? The number of firms declines over time as a result of economies of scale. Barriers to entry enable firms to enjoy positive profits in the long run. The monopolistically competitive firms enjoy a greater market power than a monopolist. Firms tend to locate near each other in order to minimize total travel costs for consumers. The firms end up charging same prices for their individual products. If economic losses exist in a monopolistically competitive market, the average total cost curve must lie below the demand curve. firms will exit the market and the existing firms' demand curves will shift to the left. Question 44 2 / 2 pts Question 45 2 / 2 pts Eci 102 exam 2 new firms will enter the market because they see potential for profit in the future. new products will be introduced. Correct Answer firms will exit the market and existing firms' demand curves will shift to the right. When economists describe the theory of consumer choice, they point out that consumers rarely consider utility in their purchase decisions; they look at other factors like convenience, peer behavior, and price. assert that the retail price is the only variable consumers really consider in making their purchasing decisions. assert that consumer's decisions are based on which goods and services give them the greatest utility within their limited incomes. portray people as simple and methodical with perfectly predictable patterns of behavior. admit that consumer behavior is random and there is no credible economic theory to explain the phenomenon. With expansion in the level of output, total fixed cost: Question 49 2 / 2 pts Question 50 2 / 2 pts Eci 102 exam 2 marginal cost is negative. marginal revenue is equal to marginal cost. If the marginal utility of a product is diminishing relative to the marginal utility of other products, then . the price of the product must have increased the consumer has been purchasing relatively more of the product the consumer is in equilibrium the consumer has been purchasing relatively less of the product the price of the product must have decreased The following table shows the cost of producing different units of ball point pens by a firm. Table 8.1 Total Output Total Cost 0 10 Eci 102 exam 2 1 12 2 14 3 18 4 24 5 30 Refer to Table 8.1. What is the marginal cost of producing the fifth unit? $8 $6 $2 $10 $4 Quiz Score: 82 out of 100 Previous Ne xt