Economic models:

Multiple Choice

• are abstractions of reality and are, therefore, of no use to economists
• are useless because they are not based upon laboratory experiments
• deal with a multitude of details
• are generalizations of economic reality
• are more effective the more complex they are

Which of the following causes the demand curve for product A to shift to the left?

Multiple Choice

• a decrease in consumer incomes if A is an inferior product
• population growth that increases the number of persons consuming A
• a general expectation that the price of A will decrease in the near future
• an increase in consumer incomes if A is a normal product

Marginal cost:

Multiple Choice

• intersects the average fixed cost curve at its minimum point
• declines so long as output increases
• is defined as the difference between total cost and variable cost
• intersects both the average variable cost and the average cost curves at their minimum points
• rises for a time, but then begins to decline once the law of diminishing marginal returns begins to apply

In the product market:

Multiple Choice

• businesses sell consumer products to households
• businesses buy economic resources from households
• businesses sell economic resources to households
• businesses buy consumer products from households
• business and households both sell consumer products to each other

The law of demand states that:

Multiple Choice

• price and quantity demanded are directly related
• the larger the number of buyers in a market, the higher the price of the product
• consumers buy more of a given product at high prices than they buy at low prices
• the larger the number of buyers in a market, the lower the price of the product
• price and quantity demanded are inversely related

If businesses offer a lower quantity supplied than previously at every possible price, the result is a(n):

Multiple Choice

• increase in supply
• an increase in supply and a simultaneous decrease in demand
• decrease in demand
• increase in demand
• decrease in supply

The profit-maximizing output rule applies:

Multiple Choice

• only to monopolies
• only when the business is a "price-taker"
• only to monopolistically competitive businesses
• to businesses in all types of industries
• only to perfectly competitive businesses

The money payments made to owners of human resources are:

Multiple Choice

• interest or profit
• wages, salaries, or interest
• rent or profit
• wages, salaries, or rent
• wages, salaries, or profit

Marginal cost:

Multiple Choice

• is average product divided by the change in total cost
• rises as long as marginal product continues to fall
• is the total cost of producing each unit of output
• is the change in total cost divided by the change in average product
• is marginal product divided by the change in total cost