4. Decisions made “at the margin” entail a choice based upon of a decision. a. the additional benefits b. the total costs c. comparing the total benefits and costs d. comparing the additional benefits...

4. Decisions made “at the margin” entail a choice based upon of a decision. a. the additional benefits b. the total costs c. comparing the total benefits and costs d. comparing the additional benefits and costs 5. 100 units of Good X are available but individuals desire 500 units. will determine who attains Good X, and who does not. a. A rationing device b. Opportunity Cost c. Utility d. Natural Selection 6. Individuals will continue consuming so long as: a. The price of a good continues to decrease b. The marginal costs of consuming are outweighed by the marginal benefits c. The individual seeks additional utility d. The individual is willing and able 8. If the cross-price elasticity of two goods is positive, then those two goods are a. substitutes. b. complements. c. normal goods. d. inferior goods. 11. The basic reason most supply curves are upward sloping is that: a. More firms are in the market, therefore more goods are produced. b. Because more quantity is being demanded, suppliers raise the price. c. Producers face higher opportunity costs when producing higher levels of quantity, so they must receive a higher price. d. Producers seek to maximize total revenue. 18. When the price of bubble gum is $0.60, the quantity demanded is 500 packs per day. When the price falls to $0.50, the quantity demanded increases to 900. The demand for gum would be considered: a. inelastic. b. elastic. c. unit elastic. d. perfectly inelastic. 20. Inefficient Production implies which of the following: a. it is impossible to produce more of one good without producing less of another b. there are too few resources c. there are too many resources d. it is possible to produce more of one good without producing less of another 21. Workers at a bicycle assembly plant currently make minimum wage. If the federal government increases the minimum wage by $1.00 an hour it is likely that the a. demand for bicycle assembly workers will increase. b. supply of bicycles will shift to the right. c. supply of bicycles will shift to the left. d. firm must increase output to maintain profit levels. 24. Suppose at a price of $5 and at a price of $9, John purchases 40 units of good X. Given this information, we know that John’s demand for good X is a. perfectly elastic at all prices. b. inelastic at all prices. c. unit elastic between the prices of $5 and $9. d. perfectly elastic between the prices of $5 and $9. e. perfectly inelastic between the prices of $5 and $9. 25. If the price of good A decreases by 10 percent and the quantity demanded of good B decreases by 10 percent, this is evidence that A and B are a. substitute goods. b. complement goods. c. inferior goods. d. normal goods. e. not related. 6. For an individual to achieve consumer equilibrium when consuming two goods, A and B, the individual must satisfy the following condition: a. TUA = TUB b. TUA/PA = TUB/PB c. MUA = MUB d. MUA/PA = MUB/PB e. MUA/PB = MUB/PA 7. Which of the following statements is correct regarding a firm's decision making? a. The decision to shut down and the decision to exit are both short-run decisions. b. The decision to shut down and the decision to exit are both long-run decisions. c. The decision to shut down is a short-run decision, whereas the decision to exit is a long-run decision. d. The decision to exit is a short-run decision, whereas the decision to shut down is a long-run decision. Table 1 Output Total Cost 0 $20 1 $30 2 $41 3 $51 4 $65 5 $75 6 $84 7 $105 13. Refer to Table 1. The marginal cost of producing the fifth unit of output is a. $55.00 b. $15.00 c. $9.00 d. $10.00 21. A perfectly competitive firm can produce its current level of output at an average total cost of $10 and a marginal cost of $8. If the market price of the product is currently $8, what should the firm do? a. The firm should definitely shut down since average total cost exceeds price. b. The firm should shut down if average variable cost is $8 or greater, but the firm should continue to produce the current level of output if average variable cost is less than $8. c. The firm should increase production in order to increase profit. d. The firm should continue to produce, but it should decrease production in order to increase profit. 24. In the long run all costs are variable. Thus, a profit-maximizing firm may exit: a. When Price b. When Price > Average Total Cost c. When Average Revenue > Average Fixed Cost d. When Average Revenue > Marginal Cost 25. Marginal cost tells us the a. value of all resources used in a production process. b. marginal increment to profitability when price is constant. c. amount by which total cost rises when output is increased by one unit. d. amount by which output rises when labor is increased by one unit. 26. For a perfectly competitive firm: a. marginal revenue is equal to price. b. price is equal to marginal cost at the output level that maximizes profit. c. selling an additional unit of the good it produces increases total revenue by the price of the good. d. a and b e. a, b, and c