Quiz 3 Flashcards
(15 cards)
Which of the following most likely represents a short-run business decision?
Aaron hires two additional workers to help cover the holiday rush at his shop.
Marginal cost is the slope of ___________.
the total cost curve
What does diminishing marginal productivity mean?
As you increase the amount of a variable input, its marginal product eventually gets smaller.
Marcus has four employees. The four employees produce 55 floral arrangements in a day. Marcus hires a fifth employee. The five employees produce 60 floral arrangements in a day. The fifth employee’s marginal product is __________.
5 floral arrangements in a day
If the country enters a period of prosperity, resulting in consumer incomes increasing by 4% and the income elasticity of a good is 0.8, what will happen to the demand for that good as a result?
Demand will increase by 3.2%
An increase in an effective minimum legal price will do what to prices and quantities actually sold in a market? Prices will __________ and the quantities actually sold will ___________.
increase; decrease
An example of price controls given in your text concerns minimum wage increases. On a supply and demand diagram (with wages on the vertical axis and number of workers on the horizontal), would minimum wage be considered a price ceiling or a price floor?
Price floor
If a man spends approximately 45% of his income on air travel and his sister only spends about 2% of her income on air travel (and that is the only difference), would the man’s demand for air travel be less or more elastic than his sister’s?
More
If population increases in a city with effective rent controls (and nothing else changes), which of the following describes what will happen in the market for rental housing?
An increase in demand, but no change in quantity supplied.
A pizza parlor can make 100 pizzas in an evening. They make 40 pepperoni pizzas and 60 extra cheese pizzas. They are producing each pizza at the lowest possible cost. 100 people order pizza, but 50 people would like a pepperoni pizza and 50 would like an extra cheese pizza. This pizza parlor is what?
Technically efficient, but not allocatively efficient nor economically efficient
For any firm, which of the following is true about the long-run average cost curve?
It is a function which shows the lowest average cost of producing any output level.
The marginal product of labor (MPL) can be defined as which of the following?
The change in output level as the result of hiring another worker
Which of the following is an example of a long-run decision for a firm?
A car manufacturer builds a new factory
For a firm, the short run is defined as being __________.
a period of time in which at least one of the firm’s inputs is unchangeable
Suppose an additional worker can handle an additional 10 orders per hour, at a cost of $15 per hour. A telephone answering machine will handle an additional 20 calls per hour, at a cost of $10 per hour. Which of the following is correct?
The firm should increase capital and decrease labor because labor produces less per dollar spent.
