ECON 2000 EXAM 2 LSU

Economic explanations of consumer's behavior taken into consideration

prices and income

f an individual demands a good, it means that he or she

is willing and able to purchase goods at some price

Which of the following is not a determinant of demand?

the cost of factor inputs

Utility refers to the

Satisfaction obtained from a good or service.

Marginal utility is

the change in total utility obtained by consuming one additional unit of a good or service

The additional pleasure or satisfaction from a good declines as more of it is consumed in a given period. This is the definition of the

law of diminishing marginal utility

The law of diminishing marginal utility states that

as a consumer enjoys successive units of a good, eventually marginal utility will fall

According to the law of demand, ceteris paribus,

the quantity demanded increases at lower prices

Consumer surplus measures

the difference between the maximum price a consumer is willing to pay and the price actually paid

Which of the following are factors of production?

land, labor, capital, entrepreneurship

A production function shows the

maximum output of a good attainable from different combinations of factor inputs

Technical efficiency is achieved when a firm produces

at an amount indicated by a point on the production function

The period in which at least one input is fixed in quantity is the

short run

The change in total output associated with one additional unit of input is the

marginal physical product

The marginal physical product is the

change in total output associated with one additional unit of input

Ceteris paribus, the law of diminishing returns states that beyond some point, the

marginal physical product of a factor of production diminishes as more of it is employed with a given quantity of other inputs

Profit is

the difference between total revenue and total cost

Marginal cost

is the change in total cost associated with a one-unit increase in production

The sum of fixed cost and variable cost at any rate of output is

total cost

Explicit Costs

are the sum of actual monetary payments made for the use of resources

Implicit Costs

are the value of resources used for which no direct payment is made

Economic Profit

less than accounting profit by the amount of implicit cost

Normal Profit Implies

a zero economic profit

When a producer can control the market price for the good it sells, the producer

has market power

If a firm can change market prices by altering its output, then it

has market power

Which of the following is a production decision?

whether the firm should shut down or produce

A production decision involves choosing

a rate of output and is a short-run decision

The short run is the time period

in which some costs are fixed

Which of the following is generally a fixed cost?

Property taxes on land used in production.

Wages

Property Taxes

Utilities

Definitely dont think I formatted this right lollll its #1

What represents the change in total cost that results from a one-unit increase in production?

marginal cost

The equilibrium price in a competitive market

is the price at which the quantity of a good demanded in a given time period equals the quantity supplied

To determine the market supply, the quantities

supplied at each price by each supplier are added together

The market supply curve in a perfectly competitive market is usually

upward sloping

Marginal cost is the increase in total cost associated with a one-unit

increase in production

If two products are homogeneous, then they

are identical

Profit per unit is equal to

price minus average total cost

The "$99 iPads" The Economy Tomorrow analysis indicates that the success of the iPad

created new entrants into the tablet market

Market supply is the horizontal sum of the individual MC curves above the AVC in a perfectly competitive market. True or false?

True

Barriers to entry are obstacles that make it difficult or impossible for would-be producers to enter a particular market. True or false?

True