Biology Forums - Study Force

As the economy recovers from a recession, we should expect that demand for:
 a. inferior goods will fall and demand for non-inferior goods will rise.
  b. all goods will rise.
  c. inferior goods will rise and demand for non-inferior goods will fall.
  d. all goods will fall.
  e. complements will fall.

QUESTION 2

A sandwich shop owner has the following information: P = MR = 4, ATC = 2, AVC = 1, MC = 4, and Q = 500 . From this, she can determine:
 a. her profits are not being maximized.
  b. she has earned zero economic profits.
  c. she has earned economic profits of 1,000.
  d. she has earned economic profits of 1,500.
  e. she should sell fewer sandwiches.

QUESTION 3

If the economy is in recession and the number of used baby clothing stores increases, then:
 a. used baby clothes are a necessity.
  b. used baby clothes are an inferior good.
  c. used baby clothes are a normal good.
  d. new baby clothes are a luxury.
  e. used baby clothes have price-elastic demand.

QUESTION 4

The marginal approach to profit maximization means that a firm should produce until:
 a. marginal revenue equals zero.
  b. marginal revenue equals marginal cost.
  c. marginal cost becomes negatively sloped.
  d. marginal revenue equals price.
  e. price equals average total cost.

QUESTION 5

As cities prospered and per-capita incomes increased, the demand for bus travel diminished. This suggests that:
 a. cities could raise revenue by increasing bus fares.
  b. the demand for bus travel is price elastic.
  c. bus travel and automobile travel are complements.
  d. bus travel is an inferior good.

QUESTION 6

The fundamental rule of profit maximization for firms is to produce where:
 a. MR = MC.
  b. ATC is minimized.
  c. quantity of output is maximized.
  d. price is maximized.
  e. total revenue is maximized.

QUESTION 7

An inferior good is:
 a. any good of low quality.
  b. one that consumers buy less of at a higher price.
  c. one that consumers buy less of as their income rises.
  d. one that has few substitutes.
  e. any good made with inexpensive labor.

QUESTION 8

If ABC Printing is producing an output level of 100, where MR is 5 and MC is 3, then the firm is:
 a. maximizing total profit.
  b. making too much profit.
  c. making 200 total profit.
  d. making 200 total loss.
  e. making an unknown amount of profit or loss.

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