Micro/Midterm II Name
Example Choose the best answer.
GOOD LUCK!

 
 
 
 
1. Typically, the larger the firm becomes:
A. the better the team spirit.
B. the better the communication between workers and owners.
C. the lower the monitoring costs.
D. the higher the monitoring costs.

 
2. In the long run:
A. some inputs are fixed.
B. the firm is constrained in regard to what production decisions it can make.
C. there are no fixed inputs.
D. some inputs, but not all, are variable.

 
3. In the short run:
A. all inputs are variable.
B. the firm can vary the inputs as much as it wants.
C. the firm makes decisions in which it can choose among all possible production techniques.
D. some inputs are fixed and some inputs are variable.

 
4.
R-1 Figure 23-2

Refer to the graph above. Marginal product is zero:
A. at point A.
B. at point B.
C. at point C.
D. never on the graph.


 
5. Marginal product is:
A. the output per unit of variable input.
B. the number of workers it takes to produce one more unit of output.
C. the additional output produced when one more unit of the variable input is employed.
D. the total production of a group of workers.

 
6. The law of diminishing marginal productivity states that as more units of a variable input are added to a fixed input, the marginal product obtained from one more unit of the variable input:
A. will be constant.
B. will eventually decrease.
C. will eventually increase.
D. will always be positive.

 
7.
R-2 Figure 23-3

Marginal product is increasing in region(s):
A. A.
B. B.
C. C.
D. A and B.


 
8.
R-2 Figure 23-3

Marginal product is falling, but still positive, in region(s):
A. A.
B. B.
C. C.
D. B and C.


 
9. Costs that do not change when output changes are called:
A. variable costs.
B. total costs.
C. marginal costs.
D. fixed costs.

 
10. Costs that change as output changes are:
A. variable costs.
B. total costs.
C. marginal costs.
D. fixed costs.

 
11.
R-3 Figure 23-4

The average variable cost curve is labeled:
A. I.
B. II.
C. III.
D. IV.


 
12.
R-3 Figure 23-4

The marginal cost curve is labeled:
A. I.
B. II.
C. III.
D. IV.


 
13.
R-3 Figure 23-4

The average fixed cost curve is labeled:
A. I.
B. II.
C. III.
D. IV.


 
14. The marginal cost will intersect the average total cost:
A. at its maximum point.
B. at the point where marginal cost is zero.
C. where the average total cost begins to decrease.
D. at its minimum point.

 
15. To achieve economic efficiency, managers should:
A. try to get the maximum amount of output from a given combination of inputs.
B. use the combination of inputs that involves the lowest cost.
C. hire only employees that have previous experience.
D. use the most up-to-date technology.

 
16. When there are economies of scale, as output increases:
A. per-unit cost decreases.
B. per-unit cost increases.
C. per-unit cost is unchanged.
D. the number of inputs required decreases.

 
17.
R-4 Figure 24-1

The average total cost curve in region "c" is associated with:
A. diminishing marginal productivity.
B. increasing marginal productivity.
C. economies of scale.
D. diseconomies of scale.


 
18.
R-4 Figure 24-1

Economies of scale are exhibited:
A. in region a.
B. in region b.
C. in region c.
D. over the entire range of output.


 
19. A firm has increased all of its inputs proportionally and found that its per-unit costs rose as a result. The firm's owners blame this on diminishing marginal productivity. A more likely explanation would be:
A. diminishing marginal utility.
B. lower team spirit and higher monitoring costs.
C. higher team spirit and lower monitoring costs.
D. economies of scale.

 
20. Which of the following provides the best illustration of the concept of economies of scope?
A. A firm switches production from an unpopular product line to a popular product line.
B. New capital is brought in to increase labor productivity.
C. The cost of producing one good lowers the cost of producing another for a multi-product firm.
D. A large firm separates its operations into several independent divisions.

 
21. The formula for calculating price elasticity of demand is:
A. the change in quantity demanded divided by the change in price.
B. the percentage change in quantity demanded divided by percentage change in price.
C. the change in price divided by the change in quantity.
D. the percentage change in price divided by the percentage change in quantity.

 
22. The percentage change in the quantity demanded divided by percentage change in price is the formula for:
A. income elasticity of demand.
B. price elasticity of demand.
C. price elasticity of supply.
D. income elasticity of supply.

 
23. An elasticity of demand of 1.5 means that:
A. demand is elastic.
B. quantity demanded changes 1.5 units for each 1% change in price.
C. quantity demanded changes .5% for each 1% change in price.
D. quantity demanded changes 5% for each 1% change in price.

 
24. If the price of a good goes up by 5% and in response the quantity falls by 20%, the price elasticity of demand would be:
A. .05.
B. 4.
C. .25.
D. .20.

 
25. As the manager of a ski resort, you want to increase the number of lift tickets sold by 8%. Your staff economist has determined that the price elasticity of demand for lift tickets is .5. To increase sales by the desired amount, you should decrease the price of a lift ticket by:
A. 2%.
B. 4%.
C. 8%.
D. 16%.

 
26. The price elasticity of demand for restaurant meals is 2.27. If the price of restaurant meals falls by 5% then the quantity demanded will:
A. increase by 5%.
B. fall by 5%.
C. increase by 11.35%.
D. increase by 2.27%.

 
27. An elasticity of supply of 4.5 means that:
A. supply is inelastic.
B. quantity supplied changes 4.5 units for each 1% change in price.
C. quantity supplied changes 4.5% for each 1% change in price.
D. price changes by 4.5% for each 1% change in quantity produced.

 
28. The percentage change in quantity supplied divided by the percentage change in price is the:
A. slope of the supply curve.
B. price elasticity of supply.
C. slope of the demand curve.
D. price elasticity of demand.

 
29. If the quantity of light bulbs supplied increases 40% when the price goes up 10%, the elasticity of supply would be:
A. 10.
B. 40.
C. 4.
D. 0.25.

 
30. What corrects for the end-point problem when calculating elasticity?
A. the arc convention.
B. the price convention
C. the quantity convention.
D. the income convention.

 
31. If the elasticity of supply is equal to one, supply:
A. is elastic.
B. is inelastic.
C. has unit elasticity.
D. is perfectly elastic.

 
32. If the percentage increase in the price is smaller than the percentage increase in the quantity supplied, the supply:
A. is elastic.
B. is inelastic.
C. has unit elasticity.
D. is perfectly elastic.

 
33. When a supply curve is perfectly horizontal, it is:
A. perfectly inelastic.
B. perfectly elastic.
C. unit elasticity.
D. inelastic.

 
34.
R-5 Figure 21-7

Refer to the above graph. Which of the following curves demonstrates a perfectly inelastic demand curve?
A. A.
B. B.
C. C.
D. None of the above.


 
35.
R-5 Figure 21-7

Refer to the above graph. Which of the following curves demonstrates a perfectly elastic demand curve?
A. A.
B. B.
C. C.
D. None of the above.


 
36.
R-6 Figure 21-12

Refer to the above graph. Which point has an elasticity greater than one?
A. A
B. B
C. C
D. D


 
37.
R-6 Figure 21-12

Refer to the above graph. Which point has an elasticity less than one?
A. B
B. C
C. D
D. E


 
38. A supply curve that intersects the horizontal (quantity) axis:
A. is inelastic.
B. is elastic.
C. is perfectly elastic.
D. is of unitary elasticity.

 
39. The supply curve is likely to be most elastic over what time period?
A. One month.
B. One year.
C. Ten years.
D. One-hundred years.

 
40. If elasticity is ___________ than one a decline in price _______ total revenue.
A. greater; lowers
B. greater; increases
C. less; does nothing to
D. less; increases

 
41. If elasticity is ___________ than one a rise in price _______ total revenue.
A. greater; does nothing to
B. greater; increases
C. less; decreases
D. less; increases

 
42.
R-7 Figure 21-19

Refer to the graph above. When price is $30, revenue equals areas:
A. A only.
B. A and B only.
C. A, B, and D only.
D. B, C, D, and E.


 
43. For substitutes, cross price elasticity is:
A. negative.
B. positive.
C. between zero and one only.
D. zero.

 
44. For complements, cross price elasticity is:
A. negative.
B. positive.
C. between zero and one only.
D. zero.

 
45. Income elasticity is _______ for necessities.
A. positive.
B. greater than 1.
C. negative.
D. between 0 and 1.

 
46. Income elasticity is ________ for inferior goods.
A. positive
B. greater than 1.
C. negative.
D. equal to 1.

 
47. Income elasticity is ________ for luxuries.
A. positive but less than one
B. greater than 1.
C. negative.
D. equal to 1.

 
48. Income elasticity is _________ for normal goods.
A. positive.
B. greater than 1.
C. negative.
D. equal to 1.

 
49. The percentage change in quantity demanded divided by percentage change in income is:
A. income elasticity.
B. demand elasticity.
C. supply elasticity.
D. price elasticity.

 
50. What is the reason for the U shape of the marginal cost curve, the average variable cost curve and the average total cost curve? A) The law of all costs
B) diseconomies of scale
C) The law of dininishing marginal productivity
D) All cost curves have a U shape

 

This is the end of the test. When you have completed all the questions and reviewed your answers, press the button below to grade the test.

mic2f99
Micro/Midterm II Name
Example Choose the best answer.
GOOD LUCK!

 
 
 
 
1. Typically, the larger the firm becomes:
A. the better the team spirit.
B. the better the communication between workers and owners.
C. the lower the monitoring costs.
D. the higher the monitoring costs.

 
2. In the long run:
A. some inputs are fixed.
B. the firm is constrained in regard to what production decisions it can make.
C. there are no fixed inputs.
D. some inputs, but not all, are variable.

 
3. In the short run:
A. all inputs are variable.
B. the firm can vary the inputs as much as it wants.
C. the firm makes decisions in which it can choose among all possible production techniques.
D. some inputs are fixed and some inputs are variable.

 
4.
R-1 Figure 23-2

Refer to the graph above. Marginal product is zero:
A. at point A.
B. at point B.
C. at point C.
D. never on the graph.


 
5. Marginal product is:
A. the output per unit of variable input.
B. the number of workers it takes to produce one more unit of output.
C. the additional output produced when one more unit of the variable input is employed.
D. the total production of a group of workers.

 
6. The law of diminishing marginal productivity states that as more units of a variable input are added to a fixed input, the marginal product obtained from one more unit of the variable input:
A. will be constant.
B. will eventually decrease.
C. will eventually increase.
D. will always be positive.

 
7.
R-2 Figure 23-3

Marginal product is increasing in region(s):
A. A.
B. B.
C. C.
D. A and B.


 
8.
R-2 Figure 23-3

Marginal product is falling, but still positive, in region(s):
A. A.
B. B.
C. C.
D. B and C.


 
9. Costs that do not change when output changes are called:
A. variable costs.
B. total costs.
C. marginal costs.
D. fixed costs.

 
10. Costs that change as output changes are:
A. variable costs.
B. total costs.
C. marginal costs.
D. fixed costs.

 
11.
R-3 Figure 23-4

The average variable cost curve is labeled:
A. I.
B. II.
C. III.
D. IV.


 
12.
R-3 Figure 23-4

The marginal cost curve is labeled:
A. I.
B. II.
C. III.
D. IV.


 
13.
R-3 Figure 23-4

The average fixed cost curve is labeled:
A. I.
B. II.
C. III.
D. IV.


 
14. The marginal cost will intersect the average total cost:
A. at its maximum point.
B. at the point where marginal cost is zero.
C. where the average total cost begins to decrease.
D. at its minimum point.

 
15. To achieve economic efficiency, managers should:
A. try to get the maximum amount of output from a given combination of inputs.
B. use the combination of inputs that involves the lowest cost.
C. hire only employees that have previous experience.
D. use the most up-to-date technology.

 
16. When there are economies of scale, as output increases:
A. per-unit cost decreases.
B. per-unit cost increases.
C. per-unit cost is unchanged.
D. the number of inputs required decreases.

 
17.
R-4 Figure 24-1

The average total cost curve in region "c" is associated with:
A. diminishing marginal productivity.
B. increasing marginal productivity.
C. economies of scale.
D. diseconomies of scale.


 
18.
R-4 Figure 24-1

Economies of scale are exhibited:
A. in region a.
B. in region b.
C. in region c.
D. over the entire range of output.


 
19. A firm has increased all of its inputs proportionally and found that its per-unit costs rose as a result. The firm's owners blame this on diminishing marginal productivity. A more likely explanation would be:
A. diminishing marginal utility.
B. lower team spirit and higher monitoring costs.
C. higher team spirit and lower monitoring costs.
D. economies of scale.

 
20. Which of the following provides the best illustration of the concept of economies of scope?
A. A firm switches production from an unpopular product line to a popular product line.
B. New capital is brought in to increase labor productivity.
C. The cost of producing one good lowers the cost of producing another for a multi-product firm.
D. A large firm separates its operations into several independent divisions.

 
21. The formula for calculating price elasticity of demand is:
A. the change in quantity demanded divided by the change in price.
B. the percentage change in quantity demanded divided by percentage change in price.
C. the change in price divided by the change in quantity.
D. the percentage change in price divided by the percentage change in quantity.

 
22. The percentage change in the quantity demanded divided by percentage change in price is the formula for:
A. income elasticity of demand.
B. price elasticity of demand.
C. price elasticity of supply.
D. income elasticity of supply.

 
23. An elasticity of demand of 1.5 means that:
A. demand is elastic.
B. quantity demanded changes 1.5 units for each 1% change in price.
C. quantity demanded changes .5% for each 1% change in price.
D. quantity demanded changes 5% for each 1% change in price.

 
24. If the price of a good goes up by 5% and in response the quantity falls by 20%, the price elasticity of demand would be:
A. .05.
B. 4.
C. .25.
D. .20.

 
25. As the manager of a ski resort, you want to increase the number of lift tickets sold by 8%. Your staff economist has determined that the price elasticity of demand for lift tickets is .5. To increase sales by the desired amount, you should decrease the price of a lift ticket by:
A. 2%.
B. 4%.
C. 8%.
D. 16%.

 
26. The price elasticity of demand for restaurant meals is 2.27. If the price of restaurant meals falls by 5% then the quantity demanded will:
A. increase by 5%.
B. fall by 5%.
C. increase by 11.35%.
D. increase by 2.27%.

 
27. An elasticity of supply of 4.5 means that:
A. supply is inelastic.
B. quantity supplied changes 4.5 units for each 1% change in price.
C. quantity supplied changes 4.5% for each 1% change in price.
D. price changes by 4.5% for each 1% change in quantity produced.

 
28. The percentage change in quantity supplied divided by the percentage change in price is the:
A. slope of the supply curve.
B. price elasticity of supply.
C. slope of the demand curve.
D. price elasticity of demand.

 
29. If the quantity of light bulbs supplied increases 40% when the price goes up 10%, the elasticity of supply would be:
A. 10.
B. 40.
C. 4.
D. 0.25.

 
30. What corrects for the end-point problem when calculating elasticity?
A. the arc convention.
B. the price convention
C. the quantity convention.
D. the income convention.

 
31. If the elasticity of supply is equal to one, supply:
A. is elastic.
B. is inelastic.
C. has unit elasticity.
D. is perfectly elastic.

 
32. If the percentage increase in the price is smaller than the percentage increase in the quantity supplied, the supply:
A. is elastic.
B. is inelastic.
C. has unit elasticity.
D. is perfectly elastic.

 
33. When a supply curve is perfectly horizontal, it is:
A. perfectly inelastic.
B. perfectly elastic.
C. unit elasticity.
D. inelastic.

 
34.
R-5 Figure 21-7

Refer to the above graph. Which of the following curves demonstrates a perfectly inelastic demand curve?
A. A.
B. B.
C. C.
D. None of the above.


 
35.
R-5 Figure 21-7

Refer to the above graph. Which of the following curves demonstrates a perfectly elastic demand curve?
A. A.
B. B.
C. C.
D. None of the above.


 
36.
R-6 Figure 21-12

Refer to the above graph. Which point has an elasticity greater than one?
A. A
B. B
C. C
D. D


 
37.
R-6 Figure 21-12

Refer to the above graph. Which point has an elasticity less than one?
A. B
B. C
C. D
D. E


 
38. A supply curve that intersects the horizontal (quantity) axis:
A. is inelastic.
B. is elastic.
C. is perfectly elastic.
D. is of unitary elasticity.

 
39. The supply curve is likely to be most elastic over what time period?
A. One month.
B. One year.
C. Ten years.
D. One-hundred years.

 
40. If elasticity is ___________ than one a decline in price _______ total revenue.
A. greater; lowers
B. greater; increases
C. less; does nothing to
D. less; increases

 
41. If elasticity is ___________ than one a rise in price _______ total revenue.
A. greater; does nothing to
B. greater; increases
C. less; decreases
D. less; increases

 
42.
R-7 Figure 21-19

Refer to the graph above. When price is $30, revenue equals areas:
A. A only.
B. A and B only.
C. A, B, and D only.
D. B, C, D, and E.


 
43. For substitutes, cross price elasticity is:
A. negative.
B. positive.
C. between zero and one only.
D. zero.

 
44. For complements, cross price elasticity is:
A. negative.
B. positive.
C. between zero and one only.
D. zero.

 
45. Income elasticity is _______ for necessities.
A. positive.
B. greater than 1.
C. negative.
D. between 0 and 1.

 
46. Income elasticity is ________ for inferior goods.
A. positive
B. greater than 1.
C. negative.
D. equal to 1.

 
47. Income elasticity is ________ for luxuries.
A. positive but less than one
B. greater than 1.
C. negative.
D. equal to 1.

 
48. Income elasticity is _________ for normal goods.
A. positive.
B. greater than 1.
C. negative.
D. equal to 1.

 
49. The percentage change in quantity demanded divided by percentage change in income is:
A. income elasticity.
B. demand elasticity.
C. supply elasticity.
D. price elasticity.

 
50. What is the reason for the U shape of the marginal cost curve, the average variable cost curve and the average total cost curve? A) The law of all costs
B) diseconomies of scale
C) The law of dininishing marginal productivity
D) All cost curves have a U shape

 

This is the end of the test. When you have completed all the questions and reviewed your answers, press the button below to grade the test.