____26.After John's income rose by 8 percent, the amount of chicken he consumed fell by 2 percent. This means that

a. / his income elasticity for chicken is positive
b. / chicken is a normal good for John
c. / his demand curve for chicken shifted to the left
d. / his demand curve for chicken shifted to the right
e. / John is spending more of his income on chicken than before

____27.Economic necessities and luxuries are categorized by

a. / our judgment of the good's importance to human survival
b. / income elasticities
c. / cross-price elasticities
d. / product attributes
e. / by the number of producers in the economy producing a given good

____28.If the cross-price elasticity of demand between two goods is negative, then

a. / the two goods are complements
b. / the two goods are substitutes
c. / as price of one good rises, the quantity demanded of the other good also rises
d. / one of the goods must be inferior
e. / the two goods are rarely used together by consumers

____29.For dessert, Mac has the choice between cheesecake and apple pie. The cheesecake has a marginal utility of 50 and a price of $5, and the apple pie has a marginal utility of 30 and a price of $3. Therefore, Mac should buy

a. / the cheesecake since the marginal utility is greater
b. / the apple pie because its price is lower
c. / two servings of apple pie and no cheesecake
d. / four servings of cheesecake
e. / either the apple pie or the cheesecake, it makes no difference

____30.If the physical plant for a corporation is considered to be a fixed input, then

a. / it is held constant in the long run
b. / it can be changed in the long run
c. / labor must be a variable input
d. / technology must be changing
e. / the firm will lose money in the short run except under perfect competition

____31.Variable inputs are those whose

a. / quantity changes as the level of output changes
b. / costs are irreversible
c. / quantity remains constant regardless of the level of output
d. / quantity determines the level of profit
e. / price is in a continuous state of change

____32.The marginal product of labor is the

a. / additional output produced when one more worker is hired
b. / amount of output associated with labor inputs
c. / maximum amount of output produced by a given set of inputs
d. / maximum profit "produced" by selling a firm's output
e. / additional cost associated with an additional unit of labor

____33.A firm's explicit costs are

a. / the opportunity cost of the owners
b. / its depreciation costs
c. / the money paid for use of inputs
d. / its main source of depreciation costs
e. / irrelevant to the determination of economic profit

____34.Total cost is

a. / fixed costs plus variable costs
b. / irrelevant to decision making
c. / marginal costs plus fixed costs
d. / total product minus total input
e. / the additional cost associated with producing an additional unit

____35.The firms' cost of variable inputs per unit of output is known as

a. / average total cost
b. / average fixed cost
c. / marginal cost
d. / total variable cost
e. / average variable cost

____36.Marginal revenue is defined as the

a. / total revenue minus total cost
b. / change in total revenue divided by the change in the quantity of output
c. / price minus average total cost
d. / total revenue over the quantity of output
e. / quantity times price

____37.If a firm chooses to produce output at the point where MR equals MC,

a. / then TR - TC will be maximized if there is a profit
b. / economic profits will be zero
c. / there will be positive accounting profits
d. / there will be positive economic profits
e. / average cost must equal average revenue

____38.The economic theory of the firm can be used to explain how the firm decides

a. / all of the following
b. / what output level to produce
c. / the size of its advertising budget
d. / whether to stay open late on weekends
e. / whether to offer rebates to new customers who try its product

____39.If the demand curve is a straight line and has the normal downward slope, then as quantity demanded increases, demand

a. / becomes more elastic
b. / becomes more inelastic
c. / is unitary elastic
d. / rises and then falls
e. / is an inverse function of supply

____40.When demand is price inelastic,

a. / price and total revenue change in opposite directions
b. / a seller should decrease the price to increase total revenue
c. / too few goods are being produced from society's point of view
d. / price and total revenue change in the same direction
e. / the market can never be in equilibrium

____41.Which of the following goods is likely to have the most price inelastic demand?

a. / margarine
b. / Tide detergent
c. / cigarettes
d. / Coca-Cola
e. / ground beef

____42.If demand for higher education rises by 5 percent when incomes rise by 10 percent,

a. / higher education is a normal good
b. / higher education is an inferior good
c. / the demand for higher education is price elastic
d. / the law of demand applies to higher education
e. / the demand for higher education is price inelastic

____43.If income and the prices of both goods all double, the budget line will

a. / become flatter
b. / become steeper
c. / remain unchanged
d. / experience a parallel outward shift
e. / experience a parallel inward shift

____44.A rational consumer who prefers one apple to two oranges, and two oranges to one orange,

a. / must prefer two oranges to one apple
b. / must prefer one apple to one orange
c. / must prefer two oranges to two apples
d. / must be indifferent between two oranges and two apples
e. / might prefer one orange to one apple

____45.Suppose that Janis is maximizing her total utility from chairs and tables. If the marginal utility of the last table she purchased is 200 utils, and the prices of chairs and tables are $50 and $100, respectively, then the marginal utility of the last chair she purchased

a. / is 100 utils
b. / is 400 utils
c. / is 200 utils
d. / is 50 utils
e. / cannot be determined without more information