Economics 3030 Study Guide - Midterm Guide: Marginal Cost, Economic Equilibrium, Normal Good

344 views6 pages

coffeesalmon272

8 Feb 2013

School

Department

Course

Professor

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

The tractor will reduce costs by ,000 in the first year, ,500 in the second and ,000 in the third and final year of usefulness. The tractor costs ,000 today, while the above cost savings will be realized at the end of each year. The cross price elasticity of demand between goods x and y is: 4. 0, the cross price elasticity of demand for textbooks and copies of old exams is. We would expect the qty demanded of good x to: decrease by 5, assume that the price elasticity of demand is -0. 75 for a certain firm"s product. If the firm lowers price, the firm"s managers can expect total revenue to: either increase or remain constant depending upon the size of price decrease, decrease, increase, remain constant. The demand function in the above table is qxd = 100 - 2px.

Related Questions

26. To the economist total cost includes

A. explicit and implicit costs.

B neither implicit nor explicit costs.

C. implicit, but not explicit, costs.

D. explicit, but not implicit, costs.

27. Accounting profits are typically

A. greater than economic profits because the former do not take explicit costs into account

B. equal to economic profits because accounting costs include all opportunity costs.

C. smaller than economic profits because the former do not take implicit costs into account.

D. greater than economic profits because the former do not take implicit costs into account.

28. Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sold 4,000 units of its output at $300 per unit, its accounting profits were

A. $100,000 and its economic profits were $0.

B. $200,000 and its economic profits were $0.

C. $100,000 and its economic profits were $100,000.

D. $0 and its economic loss was $200,000.

29. The basic difference between the short run and the long run is that

A. all costs are fixed in the short run, but all costs are variable in the long run.

B. the law of diminishing returns applies in the long run but not in the short run.

C. at least one resource is fixed in the short run, while all resources are variable in the long run.

D. economies of scale may be present in the short run but not in the long run.

30. The law of diminishing returns indicates that

A. as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point.

B. because of economies and diseconomies of scale, a competitive firm's long-run average total cost curve will be U-shaped.

C. the demand for goods produced by purely competitive industries is downsloping.

D. beyond some point, the extra utility derived from additional units of a product will yield the consumer smaller and smaller extra amounts of satisfaction.

sapphirecrow883

1. At any given rate of output, the difference between total cost and fixed cost is:

A. Marginal cost.

B. Average variable cost.

C. Zero in the short run.

D. Variable cost.

2. Accounting costs and economic costs differ because

A. Economic costs include implicit costs and accounting costs do not.

B. Accounting costs include implicit costs and economic costs do not.

C. Economic costs include explicit costs and accounting costs do not.

D. Accounting costs include explicit costs and economic costs do not.

3. In the short run, which of the following is most likely a variable cost?

A. Contractual lease payments.

B. Labor and raw materials costs.

C. Property taxes.

D. Interest payments on borrowed funds.

ceruleanwoodchuck902

1. âTotal compensationâ includes:

a. Wages and salaries and all fringe benefits

b. Wages and salaries and public (legally mandated) fringe benefits only

c. Wages and salaries and private (nonmandatory) fringe benefits only

d. Wages and salaries and all fringe benefits net of all personal taxes

2. Fringe benefits currently account for approximately what percentage of total compensation?

a. 5% â 10%

c. 25% â 30%

b. 15% â 20%

d. 35% â 40%

3. As a percentage of benefits, the largest share goes to:

a. retirement and savings

c. paid leave

b. insurance

d. legally required benefits

4. The proportion of total compensation paid out as fringe benefits tends to be larger in:

a. high-paid industries compared to low-paid industries

b. service industries compared to manufacturing industries

c. white-collar occupations compared to blue-collar occupations

d. retail trade compared to transportation and public utilities

5. The share of fringe benefits in total employee compensation:

a. grew steadily in the 1960s and 1970s but has fallen since 1980

b. was unchanged in the 1960s and 1970s and has fallen since 1980

c. shrank in the 1960s and 1970s and has remained constant since then

d. grew steadily from 1960 through the mid-1990s

6. Which one of the following is not a valid explanation for why workers may prefer an extra dollarâs worth of fringe benefits to an extra dollarâs worth of cash?

a. workers may prefer to bind themselves against their own tendencies toward immediate gratification

b. certain fringe benefits effectively trade current taxes for future taxes

c. people generally prefer in-kind benefits to cash

d. certain fringe benefits are untaxed

7. Because there is a _______ marginal rate of substitution of fringe benefits for wages, a workerâs wage-fringe indifference curves are typically _______:

a. diminishing; convex to the origin

b. constant; straight lines

c. diminishing; concave to the origin

d. negative; straight lines

8. The slope of a wage-fringe indifference curve reflects:

a. the overall utility level of a person

b. a workerâs willingness to give up an extra dollar of wages in exchange for an extra dollar of fringe benefits

c. the firmâs cost of paying an extra dollar of compensation as wages rather than fringe benefits

d. an increasing marginal rate of substitution of fringe benefits for cash 2

9. An individual wage-fringe isoprofit line shows:

a. combinations of wages and fringe benefits that result in constant dollar values of total compensation

b. combinations of wages and fringe benefits that result in the same profit to the firm

c. the greatest possible profit attainable from a given level of fringe benefits

d. the greatest possible profit attainable from a given level of wages

10. The slope of a wage-fringe isoprofit curve reflects:

a. the overall profitability of the firm

b. a workerâs willingness to give up an extra dollar of wages in exchange for an extra dollar of fringe benefits

c. the relative âpriceâ of fringe benefits compared to wages

d. an increasing marginal rate of substitution of fringe benefits for cash

11. The firmâs wage-fringe isoprofit curve typically has a slope less than 1 (absolute value) because:

a. fringe benefits confer tax advantages on workers

b. on average, it costs firms more to purchase fringe benefits than workers

c. the composition of fringe benefits may increase worker productivity

d. increasing the proportion of compensation received as fringe benefits reduces a firmâs profit level

12. If a firm can offer fringe benefits worth more than one dollar for a one dollar reduction in wages:

a. the wage-fringe isoprofit line will be upward-sloping

b. the wage-fringe isoprofit line will have a slope less than one in absolute value

c. the marginal rate of substitution between wages and fringe benefits will be greater than one at the wage-fringe optimum

d. as a proportion of total compensation, fringe benefits will likely exceed one half

13. The employerâs share of the Social Security and Medicare components of the payroll tax has increased, from 6.13% in 1980 to its current rate of 7.65%. Because employers pay no payroll tax on many fringe benefits, this change in tax rates has effectively:

a. reduced the âpriceâ of fringe benefits, increasing the slope of the wage-fringe isoprofit line

b. increased the âpriceâ of fringe benefits, increasing the slope of the wage-fringe isoprofit line

c. reduced the âpriceâ of fringe benefits, reducing the slope of the wage-fringe isoprofit line

d. increased the âpriceâ of fringe benefits, reducing the slope of the wage-fringe isoprofit line

14. The trend of fringe benefits as a percentage of total compensation can be partially explained by the fact that:

a. tax reform has rendered many types of fringe benefits fully taxable

b. âin-kindâ benefits restrict workersâ consumption choices

c. the firm may be able to purchase fringe benefits more cheaply than workers

d. many types of fringe benefits are income inelastic

15. Fringe benefits will tend to be a greater proportion of total compensation, the:

a. more income elastic are fringe benefits

b. more they increase worker turnover

c. lower the employerâs share of the Social Security tax

d. less there are economies of scale in purchasing fringe benefits 3

16. Which of the following is not a cause of fringe benefit growth?

a. Tax advantages to the employer

b. Efficiency considerations

c. Economies of scale

d. Fringe benefits are income inelastic

mauvemammoth846

Economics 3030 Study Guide - Midterm Guide: Marginal Cost, Economic Equilibrium, Normal Good

Document Summary

Get access

Related Documents

Economics 3030 Study Guide - Midterm Guide: Quarter Pounder, Indifference Curve, Demand Curve

Economics 3030 Study Guide - Comprehensive Final Guide: Quarter Pounder, Indifference Curve, Demand Curve

Economics 2163A/B Chapter Notes - Chapter 1: Form 10-Q, Net Present Value, Opportunity Cost

Related Questions