marginal cost minus marginal benefit. the time spent on an economic activity. the value of the best forgone alternative. the money cost of an economic decision. 2. (TCO1) Which is not a factor of production? Money Land Labor Capital 3. (TCO1) A point outside the production possibilities curve is attainable, but there is not full employment attainable, but there is not optimal allocation unattainable because the economy is inefficient unattainable because of limited resources 4. (TCO1) A basic characteristic of a command system is that wages paid to labor are higher government owns most economic resources free markets are never permitted in a command economy government planners play a limited role in deciding what goods will be produced 5. (TCO 2) Which is consistent with the law of demand? A decrease in the price of tacos causes no change in the quantity of tacos demanded An increase in the price of pizza causes an increase in the quantity of pizza demanded An increase in the price of hamburgers causes a decrease in the quantity of hamburgers demanded A decrease in the price of turkey sandwiches causes a decrease in the quantity of turkey sandwiches demanded 6. (TCO 2) A decrease in supply and a decrease in demand will increase price and affect the equilibrium quantity in an indeterminate way decrease the equilibrium quantity and decrease price increase the equilibrium quantity and affect price in an indeterminate way decrease the equilibrium quantity and affect price in an indeterminate way 7. (TCO 2) You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than one. To increase total revenues, you should increase the price of the software decrease the price of the software hold the price of the software constant increase the supply of the software 8. (TCO 2) The price elasticity of demand increases with the length of the period considered because consumers' incomes will increase over time the demand curve will shift outward as time passes all prices will increase over time consumers will be better able to find substitutes. 9. (TCO 2) A profit-maximizing firm in the short run will expand output (Points : 4) until marginal cost begins to rise until total revenue equals total cost until marginal cost equals average variable cost as long as marginal revenue is greater than marginal cost 10. (TCO 2) Which case below best represents a case of price discrimination? An insurance company offers discounts to safe drivers. A major airline sells tickets to senior citizens at lower prices than to other passengers. A professional baseball team pays two players with identical batting averages different salaries. A utility company charges less for electricity used during "off-peak" hours, when it does not have to operate its less-efficient generating plants. 11. (TCO 3) A major reason that firms form a cartel is to reduce the elasticity of demand for the product enlarge the market share for each producer minimize the costs of production maximize joint profits 12. (TCO 3) The main difference between the short run and the long run is that firms earn zero profits in the long run the long run always refers to a time period of one year or longer in the short run, some inputs are fixed in the long run, all inputs are fixed
marginal cost minus marginal benefit.
the time spent on an economic activity.
the value of the best forgone alternative.
the money cost of an economic decision.
2. (TCO1) Which is not a factor of production?
Money
Land
Labor
Capital
3. (TCO1) A point outside the
attainable, but there is not full employment
attainable, but there is not optimal allocation
unattainable because the economy is inefficient
unattainable because of limited resources
4. (TCO1) A basic characteristic of a command system is that
wages paid to labor are higher
government owns most economic resources
free markets are never permitted in a command economy
government planners play a limited role in deciding what goods will be produced
5. (TCO 2) Which is consistent with the
A decrease in the price of tacos causes no change in the quantity of tacos demanded
An increase in the price of pizza causes an increase in the quantity of pizza demanded
An increase in the price of hamburgers causes a decrease in the quantity of hamburgers demanded
A decrease in the price of turkey sandwiches causes a decrease in the quantity of turkey sandwiches demanded
6. (TCO 2) A decrease in supply and a decrease in demand will
increase price and affect the equilibrium quantity in an indeterminate way
decrease the equilibrium quantity and decrease price
increase the equilibrium quantity and affect price in an indeterminate way
decrease the equilibrium quantity and affect price in an indeterminate way
7. (TCO 2) You are the sales manager for a software company and have been informed that the
decrease the price of the software
hold the price of the software constant
increase the supply of the software
8. (TCO 2) The price elasticity of demand increases with the length of the period considered because
consumers' incomes will increase over time
the demand curve will shift outward as time passes
all prices will increase over time
consumers will be better able to find substitutes.
9. (TCO 2) A profit-maximizing firm in the short run will expand output (Points : 4)
until marginal cost begins to rise
until total revenue equals total cost
until marginal cost equals
as long as marginal revenue is greater than marginal cost
10. (TCO 2) Which case below best represents a case of
An insurance company offers discounts to safe drivers.
A major airline sells tickets to senior citizens at lower prices than to other passengers.
A professional baseball team pays two players with identical batting averages different salaries.
A utility company charges less for electricity used during "off-peak" hours, when it does not have to operate its less-efficient generating plants.
11. (TCO 3) A major reason that firms form a cartel is to reduce the elasticity of demand for the product
enlarge the market share for each producer
minimize the costs of production
maximize joint profits
12. (TCO 3) The main difference between the short run and the long run is that firms earn zero profits in the long run
the long run always refers to a time period of one year or longer
in the short run, some inputs are fixed
in the long run, all inputs are fixed
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