Test bank fghsgterio
William Gregg owned a mill in South Carolina. In December 1862, he placed a notice in
the Edgehill Advertiser announcing his willingness to exchange cloth for food and other
items. Here is an extract: - answers buy bacon and trade it for cloth because they could
buy 8 yards of cloth for only $1.60, and use that cloth to obtain a bushel of salt.
The opportunity cost of good A in terms of good B is equal to the - answers ratio of the
money price of good A to the money price of good B.
The opportunity cost of a hot dog in terms of hamburgers is - answers the ratio of the
money price of a hot dog to the money price of a hamburger.
In April 2014, the money price of a litre of milk was $2.01 and the money price of a litre
of gasoline was $1.30. The real price of a litre of gasoline in terms of milk was - answers
0.65 litres of milk.
1) The law of demand states that, other things remaining the same, - answers A) the
higher the price of a good, the smaller is the quantity demanded.
2) Which one of the following events shifts the demand curve for grape jelly to the right?
- answers A) an increase in income if grape jelly is a normal good
3) The demand curve slopes downward to the right because - answers C) of the law of
demand.
6) A turnip is an inferior good if - answers B) an increase in income decreases the
demand for turnips.
7) If a turnip is an inferior good, then, ceteris paribus, an increase in the price of a turnip
will - answers E) decrease the quantity of turnips demanded.
17) The price of good X falls and the demand for good Y decreases. We can conclude
that - answers E) X and Y are substitutes.
20) Good A is a normal good if - answers D) the demand for A increases when income
rises.
26) Consider the market for cell phones. Suppose the price of a cell phone falls. Explain
the effect of this event on the quantity of cell phones demanded and on the demand for
cell phones. - answers C) The quantity of cell phones demanded increases and the
demand for cell phones is unchanged.
,28) Oatmeal is a normal good and cold cereal is a substitute for oatmeal. Raisins are a
complement of oatmeal. Which of the following increases the demand for oatmeal? -
answers D) an increase in the price of cold cereal
30) The Government of Canada promises to produce more defence goods without any
decrease in the production of other goods. This promise is valid - answers C) if Canada
is producing at a point inside its PPF.
32) The substitution effect influences food purchases because when the price of a
certain food rises, other things remaining the same, ________. Consumers ________. -
answers C) its relative price rises; purchase more of a different food that is less
expensive
1) The law of supply tells us that other things remaining the same, as the - answers A)
price of gasoline falls, the quantity of gasoline supplied decreases.
2) The supply curve of a good slopes upward to the right because of - answers B) the
law of supply.
3) An increase in supply is shown by - answers C) a rightward shift of the supply curve.
4) If goods X and Y are substitutes in production, then a rise in the price of good X -
answers D) decreases the supply of good Y.
5) If a producer can use its factors of production to produce either good A or good B,
then a rise in the price of A - answers D) decreases the supply of B.
20) Which of the following shifts the supply curve for good X leftward? - answers B) an
increase in the cost of the machinery used to produce X
17) Which one of the following correctly describes how price adjustment eliminates a
surplus? - answers D) As the price falls, the quantity demanded increases and the
quantity supplied decreases.
18) Which one of the following correctly describes how price adjustment eliminates a
shortage? - answers A) As the price rises, the quantity demanded decreases and the
quantity supplied increases.
Refer to Table 3.4.2. The table shows the demand and supply schedules for shampoo.
If the price is $6 a bottle, there is a ________ of shampoo. So the price of a bottle of
shampoo ________, the quantity demanded ________ and the quantity supplied
________. The market moves to equilibrium. - answers A) shortage; rises; decreases;
increases
,27) If the quantity of textbooks supplied is 10,000 per year and the quantity of textbooks
demanded is 8,000 per year, there is a ________ in the market and the price will
________. - answers D) surplus; fall
31) The kitchen manager at an Italian restaurant is deciding what assignments he
should give to his two cooks, John and David. John can make 25 pizzas or 40 servings
of pasta per hour and David can make 20 pizzas or 30 servings of pasta per hour.
Which is the manager's best choice? - answers B) David will make pizza because he
has a comparative advantage in making pizza.2) If the demand curve is in Figure 3.5.1,
5) The price of a good will rise if - answers B) supply of the good decreases.
6) The price of a good will fall if - answers C) there is a surplus of the good.
9) When the demand for electricity peaks during the hottest days of summer, Hydro One
can generate more electricity by using more fuel and increasing the working hours of
many of its employees. The company cannot, however, increase electric power
production by building additional generating capacity. This means that the company is
operating in the - answers short run
7) Marginal product of labour is the increase in total product that results from a -
answers A) one-unit increase in the quantity of labour employed, other inputs remaining
the same.
21) The steeper the slope of the total product curve, - answers E) the greater the
marginal product.
24) Diminishing marginal returns refers to a situation where the ________ of an
additional worker is less than the ________ of the previous worker. - answers C)
marginal product; marginal product
25) The law of diminishing marginal returns states: - answers C) As a firm uses more of
a variable factor of production, with a given quantity of the fixed factor of production, the
marginal product of the variable factor eventually diminishes.
26) The law of diminishing marginal returns refers to the tendency for the ________ to
eventually decrease as more labour is employed, everything else remaining the same. -
answers D) marginal product of labour
8) Marginal cost is equal to - answers B) the increase in total cost divided by the
increase in output.
18) As soon as diminishing returns set in, a firm's - answers D) marginal cost increases.
28) A rise in the price of a fixed input shifts a firm's - answers B) average total cost
curve upward.
, 30) A firm's total fixed cost is $100. If total cost is $200 for one unit of output and $310
for two units, what is the marginal cost of the second unit? - answers $110
31) If ATC is falling, then MC must be - answers below ATC
44) Marginal cost - answers C) decreases at low outputs and increases at high outputs.
45) The marginal cost curve slopes downward at low outputs because of ________.
The marginal cost curve eventually slopes upward because of ________. - answers A)
greater specialization and division of labour; the law of diminishing returns
46) Which type of cost does not change as the quantity of output produced changes? -
answers total fixed cost
47) Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400
of this cost is fixed. What is Ernie's total variable cost? - answers $1,600
48) Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400
of this cost is fixed. What is Ernie's average variable cost? - answers $8
51) Marginal cost ________ as the quantity produced increases. - answers A) initially
decreases and then decreases
Fluctuations in the price of corn and in transportation costs shift all of the following
except the - answers B) average fixed cost and total fixed cost curves.
4) The marginal product of capital is the - answers B) change in total product resulting
from a 1-unit increase in the quantity of capital employed, holding the quantity of the
labour constant.
5) Suppose Honda can triple its production of Civics by tripling its production facility for
those cars. This indicates the presence of - answers A) constant returns to scale.
6) Suppose a candy manufacturer can triple its production of fudge by doubling its
production facility for making fudge. This indicates the presence of - answers B)
economies of scale.
18) A firm will want to increase its scale of plant if - answers A) it is persistently
producing on the upward-sloping part of its short-run average total cost curve.
19) The minimum efficient scale is the smallest quantity of output at which - answers A)
the long-run average cost curve reaches its lowest level.
22) Diseconomies of scale refer to the range of output over which - answers A) long-run
average cost rises as output increases.
William Gregg owned a mill in South Carolina. In December 1862, he placed a notice in
the Edgehill Advertiser announcing his willingness to exchange cloth for food and other
items. Here is an extract: - answers buy bacon and trade it for cloth because they could
buy 8 yards of cloth for only $1.60, and use that cloth to obtain a bushel of salt.
The opportunity cost of good A in terms of good B is equal to the - answers ratio of the
money price of good A to the money price of good B.
The opportunity cost of a hot dog in terms of hamburgers is - answers the ratio of the
money price of a hot dog to the money price of a hamburger.
In April 2014, the money price of a litre of milk was $2.01 and the money price of a litre
of gasoline was $1.30. The real price of a litre of gasoline in terms of milk was - answers
0.65 litres of milk.
1) The law of demand states that, other things remaining the same, - answers A) the
higher the price of a good, the smaller is the quantity demanded.
2) Which one of the following events shifts the demand curve for grape jelly to the right?
- answers A) an increase in income if grape jelly is a normal good
3) The demand curve slopes downward to the right because - answers C) of the law of
demand.
6) A turnip is an inferior good if - answers B) an increase in income decreases the
demand for turnips.
7) If a turnip is an inferior good, then, ceteris paribus, an increase in the price of a turnip
will - answers E) decrease the quantity of turnips demanded.
17) The price of good X falls and the demand for good Y decreases. We can conclude
that - answers E) X and Y are substitutes.
20) Good A is a normal good if - answers D) the demand for A increases when income
rises.
26) Consider the market for cell phones. Suppose the price of a cell phone falls. Explain
the effect of this event on the quantity of cell phones demanded and on the demand for
cell phones. - answers C) The quantity of cell phones demanded increases and the
demand for cell phones is unchanged.
,28) Oatmeal is a normal good and cold cereal is a substitute for oatmeal. Raisins are a
complement of oatmeal. Which of the following increases the demand for oatmeal? -
answers D) an increase in the price of cold cereal
30) The Government of Canada promises to produce more defence goods without any
decrease in the production of other goods. This promise is valid - answers C) if Canada
is producing at a point inside its PPF.
32) The substitution effect influences food purchases because when the price of a
certain food rises, other things remaining the same, ________. Consumers ________. -
answers C) its relative price rises; purchase more of a different food that is less
expensive
1) The law of supply tells us that other things remaining the same, as the - answers A)
price of gasoline falls, the quantity of gasoline supplied decreases.
2) The supply curve of a good slopes upward to the right because of - answers B) the
law of supply.
3) An increase in supply is shown by - answers C) a rightward shift of the supply curve.
4) If goods X and Y are substitutes in production, then a rise in the price of good X -
answers D) decreases the supply of good Y.
5) If a producer can use its factors of production to produce either good A or good B,
then a rise in the price of A - answers D) decreases the supply of B.
20) Which of the following shifts the supply curve for good X leftward? - answers B) an
increase in the cost of the machinery used to produce X
17) Which one of the following correctly describes how price adjustment eliminates a
surplus? - answers D) As the price falls, the quantity demanded increases and the
quantity supplied decreases.
18) Which one of the following correctly describes how price adjustment eliminates a
shortage? - answers A) As the price rises, the quantity demanded decreases and the
quantity supplied increases.
Refer to Table 3.4.2. The table shows the demand and supply schedules for shampoo.
If the price is $6 a bottle, there is a ________ of shampoo. So the price of a bottle of
shampoo ________, the quantity demanded ________ and the quantity supplied
________. The market moves to equilibrium. - answers A) shortage; rises; decreases;
increases
,27) If the quantity of textbooks supplied is 10,000 per year and the quantity of textbooks
demanded is 8,000 per year, there is a ________ in the market and the price will
________. - answers D) surplus; fall
31) The kitchen manager at an Italian restaurant is deciding what assignments he
should give to his two cooks, John and David. John can make 25 pizzas or 40 servings
of pasta per hour and David can make 20 pizzas or 30 servings of pasta per hour.
Which is the manager's best choice? - answers B) David will make pizza because he
has a comparative advantage in making pizza.2) If the demand curve is in Figure 3.5.1,
5) The price of a good will rise if - answers B) supply of the good decreases.
6) The price of a good will fall if - answers C) there is a surplus of the good.
9) When the demand for electricity peaks during the hottest days of summer, Hydro One
can generate more electricity by using more fuel and increasing the working hours of
many of its employees. The company cannot, however, increase electric power
production by building additional generating capacity. This means that the company is
operating in the - answers short run
7) Marginal product of labour is the increase in total product that results from a -
answers A) one-unit increase in the quantity of labour employed, other inputs remaining
the same.
21) The steeper the slope of the total product curve, - answers E) the greater the
marginal product.
24) Diminishing marginal returns refers to a situation where the ________ of an
additional worker is less than the ________ of the previous worker. - answers C)
marginal product; marginal product
25) The law of diminishing marginal returns states: - answers C) As a firm uses more of
a variable factor of production, with a given quantity of the fixed factor of production, the
marginal product of the variable factor eventually diminishes.
26) The law of diminishing marginal returns refers to the tendency for the ________ to
eventually decrease as more labour is employed, everything else remaining the same. -
answers D) marginal product of labour
8) Marginal cost is equal to - answers B) the increase in total cost divided by the
increase in output.
18) As soon as diminishing returns set in, a firm's - answers D) marginal cost increases.
28) A rise in the price of a fixed input shifts a firm's - answers B) average total cost
curve upward.
, 30) A firm's total fixed cost is $100. If total cost is $200 for one unit of output and $310
for two units, what is the marginal cost of the second unit? - answers $110
31) If ATC is falling, then MC must be - answers below ATC
44) Marginal cost - answers C) decreases at low outputs and increases at high outputs.
45) The marginal cost curve slopes downward at low outputs because of ________.
The marginal cost curve eventually slopes upward because of ________. - answers A)
greater specialization and division of labour; the law of diminishing returns
46) Which type of cost does not change as the quantity of output produced changes? -
answers total fixed cost
47) Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400
of this cost is fixed. What is Ernie's total variable cost? - answers $1,600
48) Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400
of this cost is fixed. What is Ernie's average variable cost? - answers $8
51) Marginal cost ________ as the quantity produced increases. - answers A) initially
decreases and then decreases
Fluctuations in the price of corn and in transportation costs shift all of the following
except the - answers B) average fixed cost and total fixed cost curves.
4) The marginal product of capital is the - answers B) change in total product resulting
from a 1-unit increase in the quantity of capital employed, holding the quantity of the
labour constant.
5) Suppose Honda can triple its production of Civics by tripling its production facility for
those cars. This indicates the presence of - answers A) constant returns to scale.
6) Suppose a candy manufacturer can triple its production of fudge by doubling its
production facility for making fudge. This indicates the presence of - answers B)
economies of scale.
18) A firm will want to increase its scale of plant if - answers A) it is persistently
producing on the upward-sloping part of its short-run average total cost curve.
19) The minimum efficient scale is the smallest quantity of output at which - answers A)
the long-run average cost curve reaches its lowest level.
22) Diseconomies of scale refer to the range of output over which - answers A) long-run
average cost rises as output increases.
