01:220:102 Final: final exam review session notes

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lemoneel914

4 Jan 2019

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01:220:102 Full Course Notes

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Review session notes for final ignored in decisions about future actions. Costs: sunk cost a cost that has already been incurred and is nonrecoverable. A sunk cost should be: marginal cost - producing a good or service is the additional cost incurred by producing one more unit of that good or service, change in total cost/change in quantity. Inferior good when a rise in income decreases the demand for a good, it is an inferior good (ex. buy generic brand when you don"t have money and the good/preferred brand when you do). Income down, q demand up: generic brands, etc . Less substitutes more inelastic: harder for consumers to adjust in the short-term, more substitutes more elastic change is easy and you have many choices, luxury or necessity. Luxury more sensitive to price changes: necessity less sensitive to price change, tends to be inelastic, do not change quantity much when price changes, share/proportion of income spent on good matters.

Related Questions

5) Complete the following sentence. Marginal cost A) is the opportunity cost of producing one more unit of a good or service. B) is always greater than marginal benefit. C) is unrelated to the production possibilities frontier. D) remains constant. E) always equals marginal benefit.

1. the marginal cost curve is

A. Downward sloping to reflect the bowed out PPF.

B. Downward sloping as marginal benefits increase.

C. Upward sloping because marginal cost falls as more of a good or service is produced.

D. Upward sloping to reflect the increasing opportunity cost of producing one more unit.

E. U-shaped to reflect the bowed out PPF.

2. Allocative efficiency occurs

A. Anywhere inside or on the production possibilities frontier.

B. When the total cost of production is minimized

C. At all points on the production possibilities frontier.

D. At only one point on the production possibilities frontier.

E. At the points where the production possibilities frontier crosses the horizontal or vertical axis.

3. Auditors working for a large accounting firm are often away from the office. When they are in the office, they are allowed to use any desk that is available. Which method is used to allocate desks?

A. lottery

B. first-come, first-served

C. Command

D. Contest

E. Sharing equally

4. The marginal cost of a good or service

A. Can be calculated from the marginal benefit of that good or service.

B. decreases as more of the good or service is produced.

C. Can be derived from the production possibilities frontier.

D. Graphs as a positively sloped curve, so it cannot be derived from the production possibilities frontier, which is downward sloping.

E. None of the above answers is correct.

5. The maximum amount of other goods and services that people are willing to give up in order to get one more unit of a good is defined as the good's

A. Marginal benefit.

B. Total benefit.

C. Marginal cost

D. Total cost.

E. Price.

Which of the following would cause the market supply curve of a good or service to shift?

Select one:

a. A change in the quantity demanded of the product

b. A change in the cost of labor to make the product

c. A change in the number of consumers

d. a change in the selling price of the product

Question 2

Question text

Which of the following generally decreases the supply of a product?

Select one:

a. The cost of making the product decreases

b. The selling price of the product increases.

c. More and more producers of the product enter the market

d. The tax on the product increases

Question 3

Question text

When considering the stages of production, which of the following is true?

Select one:

a. When marginal product becomes negative, the workers are getting in each othersâ way.

b. in producing a good, it is always a good idea to have at least 4 or 5 people at every level of production.

c. The more workers that are hired, the more efficient the production

d. The principle of diminishing returns explains that the fewer workers in a factory, the more likely the company is to be successful

Question 4

Question text

Total cost is the sum of

Select one:

a. fixed and variable costs

b. Marginal costs and marginal product

c. Fixed costs and marginal product

d. Marginal costs and income tax costs

Question 5

Question text

A company is maximizing profit when marginal revenue

Select one:

a. Equal to marginal cost

b. Is two times the marginal cost

c. Is one â half of marginal cost

d. Less than marginal cost

01:220:102 Final: final exam review session notes

01:220:102 Full Course Notes

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