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

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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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

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