Nationalu ECON607 Midterm 1

•             Question 1Below-normal profits signal a need for industry

•             Question 2The value of the firm will fall following a rise in

•             Question 3Freely competitive markets

•             Question 4To maximize value, management must

•             Question 5Value maximization is broader than profit maximization because it considers

•             Question 6Unfriendly takeovers have the greatest potential to enhance the market price of companies whose managers

•             Question 7The breakeven level of output occurs where

•             Question 8The incremental profit earned from the production and sale of a new product will be higher if

•             Question 9Marginal cost is

•             Question 10At the profit-maximizing level of output

•             Question 11If demand increases while supply decreases for a particular good

•             Question 12Shortage is a condition of

 •            Question 13The quantity of product X supplied can be expected to rise with a fall in

•             Question 14A demand curve expresses the relation between the quantity demanded and

•             Question 15Change in the quantity demanded is

•             Question 16A supply curve expresses the relation between the quantity supplied and

•             Question 17Change in the quantity supplied reflects a

•             Question 18Holding all else equal, an unnecessary increase in federally-mandated auto safety requirements leads to a decrease in

•             Question 19If the production of two goods is complementary a decrease in the price of one will

 Question 20Farmers in certain areas of the U.S. can grow either wheat or corn. If the price of corn increases the

•             Question 21The increase in overall consumption made possible by a price cut is the

•             Question 22If P1 = $5, Q1 = 10,000, P2 = $6 and Q2 = 5,000, then at point P2 the point price elasticity Ep equals

•             Question 23The concept of cross-price elasticity is used to examine the responsiveness of demand

 •            Question 24When the cross-price elasticity EPX = 3

•             Question 25With elastic demand, a price increase will

 •            Question 26A direct relation between the price of one product and the demand for another holds for all

•             Question 27According to the law of diminishing marginal utility

 

•             Question 28The demand for a product tends to be inelastic if Selected   2.

 •            Question 29Two products are complements if the

 •            Question 30The law of diminishing returns

•             Question 31The returns to scale characteristic of a production system

•             Question 32The marginal product concept is

•             Question 33Total product divided by the number of units of variable input employed equals

•             Question 34Marginal revenue product equals

•             Question 35The foregone value associated with the current rather than next-best use of a given asset is called

•             Question 36Unlike the marginal cost concept, the incremental cost concept

 •            Question 37The long-run is a period of time

•             Question 38Marginal cost equals

•             Question 39Minimum efficient scale is the output level where

 •            Question 40For a firm in perfectly competitive market equilibrium

                Question 41For a firm in perfectly competitive market equilibrium

•             Question 42In a perfectly competitive market

•             Question 43In the short run, a perfectly competitive firm will shut down and produce nothing if

Question 44Answer the following questions. Use supply and demand analysis where appropriate. Describe what will happen to the market clearing price and quantity. Make sure you explain your answers. As a part of your analyses, you should describe what happens to the supply and/or demand curves.

a)            What will happen in the market for an inferior good when consumer income increases?

b)            What will happen in the market for beef if the American Heart Association issues a report saying red meat causes heart disease? What will happen in the market for chicken?

c)            If technology advances in the computer hardware industry, what happens in the market for computer hardware? What about the market for computer software?

d)            How can supply and demand analysis be used by managers to aid them in the decision-making process?