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Econ 203 – Q4 key
Titanic State University raises tuition for the purpose of increasing its revenue so that more faculty
can be hired. TSU is assuming that the demand for education at TSU is
relatively inelastic.
A firm experiences diminishing marginal returns because:
at least one factor of production is fixed.
Which of the following is an example of something that economists would consider a cost but
accountants would not?
the wages that the owner of a firm could have earned in some alternative job
What is the total surplus of a market?
the sum of consumer surplus and producer surplus.
A principle agent relationship is only a problem within a firm when
incentives and objectives of the principle and the agent differ.
For which pairs of goods is the cross-price elasticity of demand likely to be negative?
razors and blades
The income elasticity of demand is likely to be lowest for which of the following goods?
milk
The demand for emergency medical care (within a range of prices the person can afford) is
probably:
perfectly inelastic.
A good will tend to be more elastic if:
it has close substitutes.
Paul's marginal product of the fourth hour of studying is
5 problems.
Deborah’s total product of studying 5 hours is
32 problems
Suppose economists estimate that a 10 percent increase in the price of tobacco would reduce the
quantity demanded by 5 percent. This means that the elasticity of demand for cigarettes is:
-0.5
Suppose the oil companies plan a 10 percent increase in the price of gasoline. If the elasticity of
demand for gasoline is 0.2, the quantity demanded of gasoline would:
fall 2 percent.
The short run is
a period of time in which some inputs are fixed.
Suppose the price of a liter of soda is $2. If Sara is willing to pay $3 for that liter of soda, her
consumer surplus is:
$1.
Accountants include ________ costs as part of a firm's costs, while economists include ________
costs.
explicit; explicit and implicit
The difference between the price a producer receives for a product and the minimum amount a
producer is willing to accept for that product is:
producer surplus.
Other things being equal, if the demand for a taxed good is relatively elastic, that is, the demand
curve is relatively ________ consumers pay a ________ part of the tax.
flat; small
If your city imposes a tax of $100 per apartment, new monthly rent landlords receive after the tax
is:
$460.