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Eco- Test 2 - Flashcards

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Class:ECON - Microeconomics 2 - Intermediate
Subject:Economics
University:Blinn College
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One disadvantage of a sole proprietorship as a form of business organization is that? Owners of sole proprietorships can lose all their personal assests if the business is sued or fails.
Brian is the sole proprietor ownder of Long Voyage Software. He started the business with an initial investment of $80,000. A faulty map causes one customer to get hopelessly lost. after her rescue and recuperation, she sues Long Voyage for $5,000,000. which of the following is true? if $5,000,000 is awarded, brian is personally responsible for paying all of it.
all of the following are advantages of partnerships except one. which one is the exception? Their liability is limited by each partners share of the business
stockholders share in the profits of a corporation in proportion to their ownership of stock
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You own stockworth an estimated $1 million in the LPL corporation. in addition, you have personal assests worth another $2 mllion. LPL becomes insolvent, with debts exceeding assests by $15 million. your personal wealth will decline by? $1 million
in general, elasticity measures the responsiveness of decision makers to changes in prices, income or other variables
price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price
the midpoint formula of elasticity solves the problem of which price or quantity to use as a base for calculating percentage changes
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demand is said to be elastic whenever price elasticity has an absolute valur greater than 1
when demand is price elastic, total revenue is a directly related quantity demand
which of the following describes a situation in which demand mus be elastic? total revenue decreases when the price of pencils rises
an addicts demand curve for heroin is likely to be highly inelastic (no matter how expensive it gets they will still buy it)
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the demand for flounder(a specific fish) is more elastic than the demand for fish because there are more substitutes for flounder than for fish in general
if price increases from $45 to $55, the market quantity supplied increases from 20 units per week to 30 units per week. the price elasticity of supply is 2.0 Es= %changeQs/%changeP %change=difference/average
goods with an income elasticity of demand greater than 1 are called Luxuries
if a good is inferior, then the income elasticity of demand for that good is? negative
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suppose the cross-price elasticity of demand between quinces and muskmelons is 5. which of the following must be true? quinces and muskmelons are substitutes
a curve representing combinations of two goods that yield equal totaly utility is an indifference curve
a consumers indifference map is a depiction of her preferences
economists assume peoples tastes are relatively stable over time
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the law of diminishing marginal utility states that marginal utility falls as more of a good is consumed, other things constant
which of the following illustrates the law of diminishing marginal utility? the marginal utility of dianes second coke is greater than the marginal utility of her third coke, other things contsant
newspaper vending machines illustrate that newspaper publishers believe the marginal untility of a second identical newspaper is zero or less. (MU does not decrease much between the first and second unit)
if the marginal utility is positive then total utility is increasing
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if a good is offered to you free of charge, then you stop consuming it when its marginal utility equal 0
if a consumer allocates income between good A and good B, total utility is maximized when marginal utility of A/price of A = marginal utility of B/price of B
assume that you allocate you income to calzones and juice and that you have not yet spent your entire budget. if the marginal utility of a fourth calzone is 100 and the marginal utility of a third glass of juice is 50, you would consider the relative prices of calzones and juice before deciding that to consume next
suppose that fernando allocates his lunch money between pizza and coke. a coke has a price of $1 and a slice of pizza has a price of $1.50. the marginal utility of the last slice of pizza fernando ate today was 30, and the marginal utility of his last coke was 25. fernando spend all of his lunch money from this information we can conclude that fernandos total utility would have been higher if he had purchased more coke and less pizza
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if by purchasing a little more milk and a little less ice cream you could increase you total utility, the MU/P of milk must be greater than that of ice cream
firms want to maximize profit because it is the entrepreneurs source of income and it improves the firms chances of survival
which of the following is not an explicit cost? the value of the firm owners time -explicit cost is something you would write a check for
accounting profit equals economic profit plus implicit costs
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inputs that can be increased or decreased in the short run are called variable inputs
which of the following is most likely to be a fixed resource for Pauls contry fresh pies, inc? ovens
the short run is a period of time during which atleast one resource is fixed
the additional output obtained by adding another unit of labor to the production process is called the marginal product of labor
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the law of diminishing returns explains why shortrun MC and AVC curves are U-shaped
when diminishing marginal returns set in, marginal product is positive and decreasing
which of the following is a fixed cose of driving a car? license plates
what is the relationship between marginal cost and marginal product when marginal product increases, marginal cost falls.
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the toys-r-danger-us toy company can produce 500 water pistols for a total cost of $1,400. if the variable cost of producing 500 water pistols is $1,300, then a fixed cost much be $100
suppose guild produces 5,000 quiatrs per year. its average total cost is $90, and its fixed cost is $250,000. what is its variable cost? $200,000
the average total cost curve and the average variable cost curve are closer together as output increases, with average variable cost reaching its minimum level first
if marginal cost exceeds average variable cost, average variable cost is negative
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 One disadvantage of a sole proprietorship as a form of business organization is that?Owners of sole proprietorships can lose all their personal assests if the business is sued or fails.
 Brian is the sole proprietor ownder of Long Voyage Software. He started the business with an initial investment of $80,000. A faulty map causes one customer to get hopelessly lost. after her rescue and recuperation, she sues Long Voyage for $5,000,000. which of the following is true?if $5,000,000 is awarded, brian is personally responsible for paying all of it.
 all of the following are advantages of partnerships except one. which one is the exception?Their liability is limited by each partners share of the business
 stockholders share in the profits of a corporationin proportion to their ownership of stock
 You own stockworth an estimated $1 million in the LPL corporation. in addition, you have personal assests worth another $2 mllion. LPL becomes insolvent, with debts exceeding assests by $15 million. your personal wealth will decline by?$1 million
 in general, elasticity measuresthe responsiveness of decision makers to changes in prices, income or other variables
 price elasticity of demand is defined asthe percentage change in quantity demanded divided by the percentage change in price
 the midpoint formula of elasticity solves the problem ofwhich price or quantity to use as a base for calculating percentage changes
 demand is said to be elastic wheneverprice elasticity has an absolute valur greater than 1
 when demand is price elastic, total revenue isa directly related quantity demand
 which of the following describes a situation in which demand mus be elastic?total revenue decreases when the price of pencils rises
 an addicts demand curve for heroin is likely to behighly inelastic

(no matter how expensive it gets they will still buy it)
 the demand for flounder(a specific fish) ismore elastic than the demand for fish because there are more substitutes for flounder than for fish in general
 if price increases from $45 to $55, the market quantity supplied increases from 20 units per week to 30 units per week. the price elasticity of supply is2.0

Es= %changeQs/%changeP

%change=difference/average
 goods with an income elasticity of demand greater than 1 are calledLuxuries
 if a good is inferior, then the income elasticity of demand for that good is?negative
 suppose the cross-price elasticity of demand between quinces and muskmelons is 5. which of the following must be true?quinces and muskmelons are substitutes
 a curve representing combinations of two goods that yield equal totaly utility is anindifference curve
 a consumers indifference map is a depiction ofher preferences
 economists assume peoples tastes arerelatively stable over time
 the law of diminishing marginal utility states thatmarginal utility falls as more of a good is consumed, other things constant
 which of the following illustrates the law of diminishing marginal utility?the marginal utility of dianes second coke is greater than the marginal utility of her third coke, other things contsant
 newspaper vending machines illustrate that newspaper publishers believethe marginal untility of a second identical newspaper is zero or less.

(MU does not decrease much between the first and second unit)
 if the marginal utility is positive then total utility isincreasing
 if a good is offered to you free of charge, then youstop consuming it when its marginal utility equal 0
 if a consumer allocates income between good A and good B, total utility is maximized whenmarginal utility of A/price of A = marginal utility of B/price of B
 assume that you allocate you income to calzones and juice and that you have not yet spent your entire budget. if the marginal utility of a fourth calzone is 100 and the marginal utility of a third glass of juice is 50, you wouldconsider the relative prices of calzones and juice before deciding that to consume next
 suppose that fernando allocates his lunch money between pizza and coke. a coke has a price of $1 and a slice of pizza has a price of $1.50. the marginal utility of the last slice of pizza fernando ate today was 30, and the marginal utility of his last coke was 25. fernando spend all of his lunch money from this information we can conclude thatfernandos total utility would have been higher if he had purchased more coke and less pizza
 if by purchasing a little more milk and a little less ice cream you could increase you total utility,the MU/P of milk must be greater than that of ice cream
 firms want to maximize profit becauseit is the entrepreneurs source of income and it improves the firms chances of survival
 which of the following is not an explicit cost?the value of the firm owners time

-explicit cost is something you would write a check for
 accounting profit equalseconomic profit plus implicit costs
 inputs that can be increased or decreased in the short run are calledvariable inputs
 which of the following is most likely to be a fixed resource for Pauls contry fresh pies, inc?ovens
 the short run is a period of timeduring which atleast one resource is fixed
 the additional output obtained by adding another unit of labor to the production process is calledthe marginal product of labor
 the law of diminishing returns explains whyshortrun MC and AVC curves are U-shaped
 when diminishing marginal returns set in, marginal product is positive and decreasing
 which of the following is a fixed cose of driving a car?license plates
 what is the relationship between marginal cost and marginal productwhen marginal product increases, marginal cost falls.
 the toys-r-danger-us toy company can produce 500 water pistols for a total cost of $1,400. if the variable cost of producing 500 water pistols is $1,300, thena fixed cost much be $100
 suppose guild produces 5,000 quiatrs per year. its average total cost is $90, and its fixed cost is $250,000. what is its variable cost?$200,000
 the average total cost curve and the average variable cost curveare closer together as output increases, with average variable cost reaching its minimum level first
 if marginal cost exceeds average variable cost,average variable cost is negative
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