AREC 202 EXAM QUESTIONS WITH 100%
VERIFIED CORRECT ANSWERS!!
the tendency for consumers to purchase more of a good or service as its price falls is
captured by:
The law of demand
The law of demand indicates that as the cost of an activity :
rises, less of the activity will occur
The additional utility received from consuming an additional unit of a good is called:
marginal utility
the ________ combination of goods is combination that yields the highest total utility giver
a consumers income
Optimal
If a consumer buys two goods, the rational spending rule requires that the:
ratio of marginal utility to price be equal for the two goods
Individual supply curves generally slope _______ because _______
upward; of increasing opportunity costs
the primary objective of most private firms is to:
Maximize profit
A firms profit equals:
(P-ATC) x Q {price minus avg total cost) times the quantity sold}
which of the following is a defining characteristic of all perfectly competitive markets?
all firms sell the same standardized product
A price-taker faces a demand curve that is:
, horizontal at the market price
a profit-maximizing perfectly competitive firm must decide:
only on how much to produce, taking price as fixed
Adam Smith coined the term "invisible hand" to describe the process by which the actions
of independent, self-interested buyers and sellers will:
often lead to the most efficient allocation of resources
Accounting profit is equal to:
total revenue minus explicit costs
If a firm is earning a negative economic profit, it means that:
the firms accounting profit is equal to the firms implicit costs
Which of the following statements about explicit costs is true?
they appear on the firms balance sheet
Scarcity principle:
Although we have boundless needs and wants, the resources available to us are limited. So
having more of one good thing usually means having less of another.
Cost-Benefit Principle
An individual (or a firm or a society) should take an action if, and only if, the extra benefits from
taking the action are at least as great as the extra costs.
compartative advantage
substitution effect
when consumers react to an increase in a good's price by consuming less of that good and more
of other goods
income effect
the change in consumption that results when a price increase causes real income to decline
VERIFIED CORRECT ANSWERS!!
the tendency for consumers to purchase more of a good or service as its price falls is
captured by:
The law of demand
The law of demand indicates that as the cost of an activity :
rises, less of the activity will occur
The additional utility received from consuming an additional unit of a good is called:
marginal utility
the ________ combination of goods is combination that yields the highest total utility giver
a consumers income
Optimal
If a consumer buys two goods, the rational spending rule requires that the:
ratio of marginal utility to price be equal for the two goods
Individual supply curves generally slope _______ because _______
upward; of increasing opportunity costs
the primary objective of most private firms is to:
Maximize profit
A firms profit equals:
(P-ATC) x Q {price minus avg total cost) times the quantity sold}
which of the following is a defining characteristic of all perfectly competitive markets?
all firms sell the same standardized product
A price-taker faces a demand curve that is:
, horizontal at the market price
a profit-maximizing perfectly competitive firm must decide:
only on how much to produce, taking price as fixed
Adam Smith coined the term "invisible hand" to describe the process by which the actions
of independent, self-interested buyers and sellers will:
often lead to the most efficient allocation of resources
Accounting profit is equal to:
total revenue minus explicit costs
If a firm is earning a negative economic profit, it means that:
the firms accounting profit is equal to the firms implicit costs
Which of the following statements about explicit costs is true?
they appear on the firms balance sheet
Scarcity principle:
Although we have boundless needs and wants, the resources available to us are limited. So
having more of one good thing usually means having less of another.
Cost-Benefit Principle
An individual (or a firm or a society) should take an action if, and only if, the extra benefits from
taking the action are at least as great as the extra costs.
compartative advantage
substitution effect
when consumers react to an increase in a good's price by consuming less of that good and more
of other goods
income effect
the change in consumption that results when a price increase causes real income to decline
