8. An increase in supply:
a. will cause the supply curve to shift to the left.
b. could be caused by a decrease in the price of a necessary factor of production.
c. means sellers will produce less at any price.
d. will cause the quantity demand to fall.
10. An increase in demand:
a. will create a higher equilibrium price.
b. will create a smaller equilibrium quantity.
c. is reflected as a leftward shift in demand.
d. could be caused by an increase in the price of a substitute good or service.
12. A decrease in supply will:
a. decrease the equilibrium price.
b. increase the equilibrium quantity.
c. will create a temporary surplus that will be eliminated as the price rises.
d. be reflected graphically as a leftward shift of the supply curve.
16. Prices for artificial flowers have fallen by 10 percent and the quantity the public demands has risen by 10 percent. This is an example of __________ demand.
a. elastic
b. inelastic
c. unitary elastic
d. inverse
21. Regarding utility:
a. the total satisfaction one gets from one’s consumption is called marginal utility.
b. if you buy one Big Mac that gives you marginal utility of 400 and a second one that gives you marginal utility of 250, total utility of eating two Big Macs is 650.
c. according to the law of diminishing marginal utility the more we consume of something, the smaller the total satisfaction received from that good.
d. total utility received from the consumption of a good will be maximized when marginal utility is at a maximum.
22. Which correctly predicts how the rational consumer reacts to the given situation?
a. If MUx/Px MUy/Py then the rational consumer will buy more of y.
c. If MUx/Px = MUy/Py then the rational consumer will buy more of x.
d. If MUx/Px > MUy/Py then the rational consumer will buy more of x.
24. Economists assume that consumers will choose to buy and consume:
a. those goods that cost the least.
b. those goods with the highest utility.
c. that combination of goods which causes the marginal utilities per dollar to be equal.
d. that combination of goods in which the total utility of each good equals its price.
25. The economic institution that transforms factors of production into consumer goods is:
a. a firm.
b. the government.
c. lending institutions such as banks and credit unions.
d. the stock market.
26. Virtual firms:
a. are those in which the factors of production are organized while all production is contracted out.
b. have no permanent address.
c. exist only in cyberspace, that is, on the Internet.
d. are a fad that is fast disappearing from economic scene.
27. Transaction costs are those:
a. that appear under capitalism but not under socialism.
b. that appear under socialism but not under capitalism.
c. of undertaking trades through the market.
d. that are the same whether under capitalism or socialism.
28. Regarding accounting profit and economic profit:
a. economic profit = total revenue – total cost.
b. a calculation for economic profit is required when filling out an income tax return.
c. accounting profit includes owners’opportunity costs while economic profit does not.
d. economic profit = explicit and implicit revenue – explicit and implicit cost.
30. Technical efficiency:
a. means the same thing as economic efficiency.
b. means that as few inputs as possible are used to produce a given output.
c. is that method that produces a given level of output at the lowest possible cost.
d. has nothing to do with labor-intensive inputs.
33. Which of the following is an example of diseconomies of scale?
a. Producing 200 lightbulbs costs $100, while producing 2000 lawn mowers costs $1,200.
b. Using 5 workers and 5 machines produces 800 units of output while 10 workers and 10 machines produces 200 units of output.
c. Using 20 workers and one factory produces 800 socks a day while 40 workers and one machine produces 1,800 socks.
d. Using 100 workers and 50 sewing machines produces 75 shirts a day while using 200 workers and 50 sewing machines produces 100 shirts a day.
35. If the wage rate in the market increases, then:
a. the opportunity cost of an hour of leisure decreases.
b. a greater quantity of labor will be demanded.
c. a greater quantity of labor will be supplied.
d. you know that either demand decreased or supply increased.
37. Which of the following will likely increase the supply of labor in a nation?
a. An increase in the value placed on leisure by workers.
b. An increase in population.
c. A decrease in labor productivity.
d. A higher marginal tax rate.