ECON 101- Exam Prep

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A household's consumption choices are determined by:

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Total utility equals:

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Total utility is always

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According to the principle of diminishing marginal utility, as consumption of a good increases, total utility:

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If a consumer is in equilibrium,

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If potato chips were free, individuals would consume

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In consumer equilibrium, a customer equates the

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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?

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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

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If Soula is maximizing her utility and two goods have the same marginal utility, she will

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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

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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

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Which of the following is not a prediction of marginal utility theory?

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Chuck and Barry have identical preferences but Chuck has a much higher income. If each is maximizing his utility,

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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

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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

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Beverly is currently in consumer equilibrium. An increase in her income will

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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

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The high price of diamonds relative to the price of water reflects the fact that, at typical levels of consumption,

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The principal of diminishing marginal utility means that the consumer surplus from a second slice of pizza is

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Which of the following statements best describes a customer's budget line?

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Real income is measured in

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The budget line depends on

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Bill consumes apples and bananas. Suppose Bill's income doubles and the prices of apples and bananas also double. Bill's budget line will

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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?

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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

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If the price of the good measured on the vertical axis increases, the budget line will

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If income increases, the budget line will

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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 _.

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The shape of the indifference curve depends on

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In general, as a consumer moves down an indifference curve increasing consumption of good X (measured on the horizontal axis)

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Which of the following statements is false?

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In moving down along an indifference curve, the marginal rate of substitution (MRS) for compliments will

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If two goods are perfect substitutes, their

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When the price of an inferior good rises, the income effect

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For a rise in price, the substitution effect

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If the price of good X (horizontal axis) falls, the substitution effect is represented by a movement to a

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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

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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

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Which of the following is not a characteristic of a perfectly competitive industry?

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For perfect competition to arise it is necessary that industry demand be

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If a firm faces a perfectly elastic demand for its product ,

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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?

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In which of the following situations will a perfectly competitive firm earn economic profit?

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In the price range below minimum average variable cost, a perfectly competitive firm's supply curve is

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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

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If a profit-maximizing firm in perfect competition is earning economic profit, it must be producing at a level of output where

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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

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The short-run industry supply curve is

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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?

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The maximum loss for a firm in long-run equilibrium is

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For a perfectly competitive firm in long-run equilibrium, which of the following is not equal to price?

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When economic profit is zero

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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?

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If an industry experiences external economies as the industry expands in the long run, the long run industry supply curve will

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Which of the following is not true of a new long-run equilibrium resulting from a new technology in a perfectly competitive industry?

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A long-run equilibrium in a perfectly competitive industry would not be efficient if

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Resources are used efficiently when

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Which of the following is a natural barrier to the entry of new firms in an industry?

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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?

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A profit-maximizing monopoly will never produce at an output level

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A single-price monopolist will maximize profits if it produces the output where

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If a profit-maximizing monopoly is producing an output at which marginal cost exceeds marginal revenue, it

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Which of the following is true for a producing single-price monopolist but not for a producing perfect competitor?

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Activity for the purpose of creating monopoly is

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Taking rent-seeking activity into account, the social cost of monopoly is equal to the

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When perfect price discrimination occurs, which of the following statements is false?

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The output of a (not perfect) price-discriminating monopoly will be

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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

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A natural monopoly has

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A monopolist under rate of return regulation has an incentive to

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An externality is a cost or benefit arising from an economic activity that falls on

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The production of too few goods with positive externalities is an example of

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Which of the following illustrates the concept of external cost?

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The income elasticity of demand for a better environment is

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Levels of acid rain caused by air pollution are

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At the current level of production of buckyballs, marginal social benefit is less than marginal social cost. To achieve allocative efficiency,

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The production of too many goods with negative externalities is an example of

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An externality is

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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

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A market economy tends to __ goods with negative externalities and _ goods with positive externalities

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Policies for correcting problems of negative externalities include all of the following EXCEPT,

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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

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Policies to achieve allocative efficiency when there are external benefits include

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Knowledge, as a factor of production,

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When market failure occurs, government will act to reduce inefficiency. This is a prediction of a

Quiz on ECON 101- Exam Prep, created by Megan Doleweerd on 30/11/2016.

ECON 101- Exam Prep

A household's consumption choices are determined by:

Total utility equals:

Total utility is always

According to the principle of diminishing marginal utility, as consumption of a good increases, total utility:

If a consumer is in equilibrium,

If potato chips were free, individuals would consume

In consumer equilibrium, a customer equates the

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?

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

If Soula is maximizing her utility and two goods have the same marginal utility, she will

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

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

Which of the following is not a prediction of marginal utility theory?

Chuck and Barry have identical preferences but Chuck has a much higher income. If each is maximizing his utility,

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

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

Beverly is currently in consumer equilibrium. An increase in her income will

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

The high price of diamonds relative to the price of water reflects the fact that, at typical levels of consumption,

The principal of diminishing marginal utility means that the consumer surplus from a second slice of pizza is

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 _.