4-The three fundamental economic questions of what, how, and for whom:
a-exist because of scarcity.
b-are much more serious in a socialist system.
c-are not serious in a capitalistic system.
d-are not relevant in the industrialized world of today.
5-When the market price is established where demand and supply curves intersect:
a-consumer buying tends to exceed the quantity producers supply.
b-the quantity consumers demand generally fall short of the quantity producers supply.
c-the quantity demanded and the quantity supplied are equal.
d-all of the above will result.
8-The costs incurred by a firm in its use of variable factors of production are:
a-total costs.
b-marginal costs.
c-variable costs.
d-fixed costs.
9-An example of capital is:
a-cash.
b-a factory building.
c-money in a checking account.
d-the existing state of technology.
15-In a perfectly competitive labor market, each firm can hire:
a- only a fixed amount of labor at the going wage.
b-all the labor it wants, but only by outbidding its competitors.
c- larger quantities of labor at rising wages per worker.
d-larger quantities of labor at going market wages per worker.
25-The fact that a Giffen good might exist:
a-negates the law of demand.
b-does not negate the law of demand.
c-meas that the law of demand is fine in theory but not valid in the real world.
d-negates the law of increasing cost.
26-When supply and demand are in equilibrium, the price of a good is:
a-greater than the marginal utility of the good.
b-equal to the marginal utility of the good.
c-less than the marginal utility of the good.
d-not necessarily any of the above.
30-A monopolist is a:
a-price taker.
b-price setter.
c-cost maximizer.
d-quantity taker.
38-In perfectly competitive markets, if the price is _______ , the firm will _______ .
a-greater than ATC; make an economic profit
b-less than the minimum AVC; shut down
c-greater than the minimum AVC but less than ATC; continue to produce and incur a loss.
d-all of the above are true.
40- variable that responds to a change in another variable is called a(n) _______ variable.
a-independent
b-dependent
c-theoretical
d-all of the above are true
42-In dealing with utility, we assume that the ability of consumers to purchase goods and services is:
a-infinite.
b-irrelevant.
c-limited.
d-infinitesimal.
44-The scientific method is more difficult for economists than, say, chemists, because:
a-controlled laboratory conditions are more problematic in economics.
b-it is difficult to hold other factors that may affect the variables being studied constant in economics.
c-economic conditions may change quickly and unexpectedly.
d-all of the above.
49-A determinant of the demand for a factor of production is the:
a-price of the factor.
b-marginal cost of the factor.
c-productivity of the factor.
d-quantity of the factor supplied
44. a
42 A
1: A
4- The three fundamental economic questions of what, how, and for whom exist because of scarcity. This means that resources are limited and not enough to satisfy all human wants and needs. To answer these questions, societies must make choices about what goods and services to produce, how to produce them, and who will receive them.
5- When the market price is established where demand and supply curves intersect, the quantity demanded and the quantity supplied are equal. This is called the equilibrium price and quantity. At this point, there is no shortage or surplus of the product in the market.
8- The costs incurred by a firm in its use of variable factors of production are variable costs. Variable factors of production refer to inputs that can be easily adjusted in the short run, such as labor and raw materials. These costs are directly related to the level of production and can change as the firm increases or decreases its output.
9- An example of capital is a factory building. Capital refers to the physical assets used in production, such as machinery, buildings, and equipment. It is one of the factors of production along with labor and land.
15- In a perfectly competitive labor market, each firm can hire larger quantities of labor at going market wages per worker. Perfectly competitive labor markets are characterized by many firms and workers, so no single firm or worker has the power to influence wages. Firms are able to hire as much labor as they need at the prevailing market wage.
25- The fact that a Giffen good might exist does not negate the law of demand. The law of demand states that as the price of a good increases, the quantity demanded decreases, and vice versa. A Giffen good is a rare exception to this law, where the quantity demanded increases as the price rises. However, the existence of this exceptional case does not invalidate the general pattern of demand.
26- When supply and demand are in equilibrium, the price of a good is equal to the marginal utility of the good. Marginal utility refers to the additional satisfaction or benefit that a consumer derives from consuming one more unit of a good. In equilibrium, the price matches the level of consumer's willingness to pay, which is determined by the marginal utility of the good.
30- A monopolist is a price setter. Unlike in perfect competition, where firms are price takers and must accept the market price, a monopolist has market power and can set the price for its product. A monopolist can choose to maximize its profits by setting a price that maximizes the difference between total revenue and total cost.
38- In perfectly competitive markets, if the price is less than the minimum average variable cost (AVC), the firm will shut down. The firm would incur a loss by producing and selling at a price below the minimum AVC because it would not be able to cover its variable costs. If the price is greater than the average total cost (ATC), the firm will make an economic profit. If the price is greater than the minimum AVC but less than ATC, the firm will continue to produce and incur a loss.
40- A variable that responds to a change in another variable is called a dependent variable. In statistical analysis, the dependent variable is the one that is being studied or predicted and is expected to change in response to changes in the independent variable. The independent variable, on the other hand, is the variable that is manipulated or controlled to observe its effect on the dependent variable.
42- In dealing with utility, we assume that the ability of consumers to purchase goods and services is limited. Utility refers to the satisfaction or usefulness that individuals derive from consuming goods and services. However, consumers face limited incomes or budgets, which means they cannot purchase an unlimited quantity of goods and services. Therefore, we must consider the trade-offs and choices that consumers make in allocating their limited resources.
44- The scientific method is more difficult for economists than, say, chemists, because it is difficult to hold other factors that may affect the variables being studied constant in economics. Unlike in controlled laboratory conditions in natural sciences like chemistry, economics deals with complex systems involving human behavior and interactions. It is challenging to isolate and control all the variables that may influence economic phenomena, as the real world is full of constantly changing and interconnected factors.
49- A determinant of the demand for a factor of production is the productivity of the factor. The productivity of a factor refers to its effectiveness or efficiency in producing output. When a factor is more productive, it can increase the quantity of goods or services that can be produced using a given amount of that factor. Higher productivity leads to greater demand for the factor as firms seek to maximize their output using more productive inputs.