Micro 4/3

read local food inefficiency article for quiz (quiz only over the article) / get homework


Profit sharing is a way firms attempt to control shirking (true)
There are no fixed costs in the long run (true)
Economies of Scale occur when per unit costs rise as output rises (false: lowers)
If the demand for tobacco is highly inelastic, then the burden of a tax on tobacco production would be born almost entirely by consumers (true)
The law of diminishing marginal utility states that as consumption increases the marginal utility of consumption increases (false: decreases)
The elasticity of demand remains constant along a linear demand curve, while the slope changes along a linear demand curve (false)
Implementing an excise tax in a market with a highly elastic demand curve would cause a smaller than average deadweight loss (true)
The goal of every rational individual is to maximize utility subject to their income and the prices they face (true)
If the cross price elasticity of supply between two goods is 1.1, then these two products are compliments in production (true)

In order to maximize profits firms set: Marginal revenue equal to Marginal Cost
Which of the following is typically defined as a variable input? Labor
Laura has a marginal utility of 5 for shirts and a marginal utility of 25 for guns. The price of a shirt is $10 and the price of a gun is $100. What does Laura need to do to maximize her utility? Increase her consumption of shirts
Which of the following is not a shift factor for a firm’s cost curves? Demand (its on the curve)
If the income elasticity (Yd) of a good is 0.8 then the good is a(n): Necessity
Which of the following is a form of taxation that follows the ability-to-pay principle of taxation? United States Income tax
A significant increase in equilibrium price with virtually no change in equilibrium quantity would most likely be caused by a market with: a highly inelastic demand curve in which supply has just fallen
Suppose a firm, interested in raising revenues, comes to you for economic advice. You calculate the price elasticity of demand for a good is 0.3. What advice would you give this firm? “Increase prices to raise revenues since your customers are not likely to change their buying habits”


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