Set 21

The cross elasticity of demand of complements goods is:
1. Less than 0 .
2. Equal to 0.
3. Greater than 0.
4. Between 0 and 1.
It is calculated as the percentage change in quantity demanded of a
given good, with respect to the percentage change in the price of another” good.
1. Price elasticity of demand
2. Income elasticity of dem and
3. Cross price elasticity of demand
4. Supply price elasticity
________________ measures the percentage change in demand given a
percentage change in consumer's income.
1. Price elasticity of demand
2. Income elasticity of demand
3. Supply price elasticity
4. Cross price elasticity
We know that the demand for a product is elastic if:
1. When price rises, revenue rises
2. When price rises, revenue falls
3. When price rises, quantity demanded rises
4. When price falls, quantity demanded rises
The burden of a tax is shifted toward buyers if:
1. Demand is perfectly elastic.
2. Demand is relatively more elastic than supply.
3. Demand is relatively more inelastic than supply.
4. Demand and supply have equal elasticities.
"Utility" is most closely related to the term:
1. Useless
2. Require
3. Necessary
4. Satisfaction
Marginal utility is best described as ____________________.
1. The additional satisfaction gained by consumption of the last good
2. The per unit satisfaction of the good consumed
3. The total satisfaction gained from the total consumption of the good
4. The change in satisfaction from consuming one additional unit of the
  good
As more of a good is consumed, then total utility typically:
1. Increases at a decreasing rate.
2. Decreases as long as marginal utility is negative.
3. Decreases as long as marginal utility is positive.
4. Is negative as long as marginal utility is decreasing.
If you sum all of the marginal utilities for the consumption of units one
through five, you will get:
1. The marginal utility for the consumption of the fifth unit.
2. The marginal utility for the consumption of the sixth unit.
3. The total utility for the consumption of the first five units.
4. The average utility for the consum ption of the first five units.
10. ______ is the extra value that consumers receive above what they pay
for that good.
1. Producer surplus
2. Utility
3. Marginal utility
4. Consumer surplus
Consumers will maximize satisfaction when:
1. The price of each good is exactly equal to the price of every other good
  consumed.
2. The price of each good is exactly equal to the total utility derived from the consumption of every other good.
3. The marginal utility of the last dollar spent on each good is exactly equal
  to the marginal utility of the last dollar spent on any other good.
4. Marginal utility is equal to average utility.
According to the utility model of consumer demand, the law of
diminishing marginal utility indicates that the demand curve is:
1. Vertical
2. U-shaped
3. Upward-sloping
4. Downward-sloping
The rate at which one input can be reduced per additional unit of the
other input, while holding output constant, is measured by the:
1. Marginal rate of substitution.
2. Marginal rate of technical substitution
3. Slope of the isocost curve.
4. Average product of the input.
An isoquant:
1. Must be linear.
2. Cannot have a negative slope.
3. Is a curve that shows all the combinations of inputs that yield the same total out put?
4. Is a curve that shows the maximum total output as a function of the level of labour input?
In a production process, all inputs are increased by 10%; but output
increases less than 10%. This means that the firm experiences:
1. Decreasing returns to scale .
2. Constant returns to scale.
3. Increasing returns to scale.
4. Negative returns to scale.
In the long run:
1. All inputs are fixed.
2. All inputs are variable
3. At least one input is variable and one input is fixed.
4. At most one input is variable and one input is fixed.
Marginal product, mathematically, is the slope of the:
1. Total product curve .
2. Average product curve.
3. Marginal product curve.
4. Implicit product curve.
Two curves that remain parallel as the quantity of output increases are:
1. Total fixed cost and total variable cost.
2. Total cost and total variable cost.
3. Average fixed cost and average variable cost.
4. Average total cost and average fixed cost.
Suppose a firm produces 10 units of output and incurs $30 in per-unit
variable cost and $5 in per-unit fixed cost. In this case, total cost is:
1. $35.
2. $50.
3. $300.
4. $350 .
Suppose the first four units of an output produced incurs corresponding
total costs of 50, 150, 300, 500. The marginal cost of the second unit of
output is:
1. 50.
2. 100.
3. 150.
4. 200.
Why is the law of diminishing marginal returns true?
1. Specialisation and division of labour
2. Spreading the average fixed cost
3. Limited capital
4. All factors being variable in the long-run
A function that indicates the maximum output per unit of time that a firm
can produce, for every combination of inputs with a given technology, is
called:
1. An isoquant.
2. A production possibility curve.
3. A production function .
4. An isocost function
Writ ing total output as Q, change in output as dQ, total labour
employment as L, and change in labour employment as dL, the marginal
product of labour can be written algebraically as:
1. dQ d L
2. Q / L.
3. dL / dQ.
4. dQ / dL .
The law of diminishing returns applies to:
1. The short run only.
2. The long run only.
3. Both the short and the long run.
4. Neither the short nor the long run.
Which of the following costs always declines as output increases?
1. Average cost
2. Marginal cost
3. Fixed cost
4. Average fixed cost
An isocost line reveals the:
1. Costs of inputs needed to produce along an isoquant.
2. Costs of inputs needed to produce along an expansion path
3. Input combinations that can be purchased with a given outlay of funds
4. Output com binations that can be produced with a given outlay of funds.
Assume that a firm's production process is subject to increasing
returns to scale over a broad range of outputs. Long run average costs
over this output will tend to:
1. Increase.
2. Decline
3. Remain constant.
4. Fall to a minim um and then rise.
A Cobb-Douglas production function:
1. Exhibits constant returns to scale.
2. Exhibits increasing returns to scale.
3. Exhibits decreasing returns to scale.
4. Can exhibit constant, increasing, or decreasing returns to scale.
Which of following is an example of a homogeneous product?
1. petroleum
2. copper
3. personal computers
4. Both (a.) and (b.)
The "perfect information" assumption of perfect competition
includes all of the following except one. Which one?
1. Consumers know their preferences
2. Consumers know their income levels.
3. Consumers know the prices available.
4. Consumers can anticipate price changes .

Set 21

Quiz