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11 Cards in this Set

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Marginal cost may be defined as:

a.) the change in average total cost which results from producing one more unit of output
b.) the change in average variable cost which results from producing one more unit of output
c.) the change in the total cost which results from producing one more unit of output
d.) the rate of change in total fixed cost which results from producing one more unit of output
c.) the change in the total cost which results from producing one more unit of output
Marginal cost is actually the slope of the ___________ curve.

a.) average variable cost
b.) total variable cost
c.) average fixed cost
d.) average total cost
b.) total variable cost
In the long run:

a.) fixed costs tend to be greater than variable costs.
b.) variable costs tend to be greater than fixed csts
c.) all costs are fixed costs
d.) all costs are variable costs
d.) all costs are variable costs
If the government imposed a per-uinit or excise tax of 20 cents upon a product and the market price of the product rose by the full amount of the tax, it can be concluded that:

a.) producers will bear the entire burden of the excise tax
b.) consumers and producers wll share equally the burden of the excise tax.
c.) consumers will bear the entire burden of the excise tax
d.) not enough information has been given to determine how much of the burden is borne by consumers and producers
c.) consumers will bear the entire burden of the excise tax
Assume that you are the owner and only employee of a company that writes computer software that is used by gamblers to collect sports data. Last year you earned a total revenue of $90k. Your costs for quip., rent, and supplies were $60k. To start the business you quit a job at another computer software firm that paid $40k/yr. During this year your economic costs were:

a.) 40k
b.) 60k
c.) 100k
d.) 130k
c.) 100k
The demand for a good tends to be more price sensitive:

a.) the greater the availability of close substitutes
b.) the narrowers the definition of the market
c.) the longer the period of time
d.) all of the above are correct
e.) none of the above are correct
d.) all of the above are correct
Suppose that Adam Smith is currently buying a quantity of cereal and pop tarts at which the marginal utility per dollar's worth of cereal is greater than the marginal utility per dollar's worth of pop tarts. In order to maximize his total utility, he should:

a.) reduce his cereal consumption, thus raising it's MU/Pc to the level where MU/Pc = Mu/Ppt.
b.) increase his pop tart consumption, thus rainsing its MU/Ppt to the level where MU/Pc = MU/Ppt.
c.) reduce his pop tar consumption, thus lowering its MU/Ppt to the level where MU/Pc = NU/Ppt.
d.) increase his cereal consumption, thus lowering its MU/Pc to the level where Mu/Pc = MU/Ppt.
d.) increase his cereal consumption, thus lowering its MU/Pc to the level where Mu/Pc = MU/Ppt.
Which of the following costs keep getting smaller as the level of output increases?

a.) Marginal cost
b.) Total Fixed cost
c.) Average fixed cost
d.) Average variable cost
c.) Average fixed cost
A consumer buys only food and clothing. If the quantity of food bought increases while that of clothing remains the same, the marginal utiltiy of food will:

a.) fall, but not as fast as the marginal utiltiy of clothing falls
b.) rise, but not as fast as the marginal utility of clothing rises
c.) rise relative to the marginal utility of clothing
d.) fall relative to the marginal utility of clothing
d.) fall relative to the marginal utility of clothing
In the presence of positive externalities, a free market will choose a price which is too __________, and produce and output which is too ______ compared with the social optimum.

a.) high, low
b.) low, low
c.) high, high
d.) low, high
e.) marginal, inequitable
b.) low, low
When marginal cost is less than average cost:

a.) opportunity cost must have been excluded from the calculation of marginal cost
b.) marginal cost must be falling
c.) marignal cost must be rising
d.) marginal cost may be rising, falling, or at it's minimum
d.) marginal cost may be rising, falling, or at it's minimum