Identify the reasons why the quantity demanded of a product increases as the price of that product decreases.
a. as the price declines, the real income of the consumer increases
b. as the price of product A declines, it makes it more attractive than product B
c. as the price declines, the consumer will always demand more on each successive price reduction
d. a and b
e. a and c
Which of the following best represents management's objective(s) in utilizing demand analysis?
a. it provides insights necessary for the effective manipulation of demand
b. it helps to measure the efficiency of the use of company resources
c. it aids in the forecasting of sales and revenues
d. a and b
e. a and c
The demand for durable goods tends to be more price elastic than the demand for non-durables.
a. true
b. false
The basic reason(s) for the increase in quantity demanded as the result of a price reduction is (are) _____________.
a. income effect
b. substitution effect
c. complementary effect
d. a and b only
e. a, b, and c
The Identification Problem in the development of a demand function is a result of:
a. the variance of the demand elasticity
b. the consistency of quantity demanded at any given point
c. the negative slope of the demand function
d. the simultaneous relationship between the demand and supply functions
The constant or intercept term in a statistical demand study represents the quantity demanded when all independent variables are equal to:
a. 1.0
b. their minimum values
c. their average values
d. 0.0
The rate at which one input X may be substituted for another input Y in a production process, while total output remains constant, is:
a. the slope of the isoquant curve
b. the marginal rate of technical substitution (MRTS)
c. equal to MPx/MPy
d. all of the above
The rate at which one input X may be substituted for another input Y in a production process, while total output remains constant, is:
a. the slope of the isoquant curve
b. the marginal rate of technical substitution (MRTS)
c. equal to MPx/MPy
d. all of the above
The law of diminishing marginal returns:
a. states that each and every increase in the amount of the variable factor employed in the production process will yield diminishing marginal returns
b. is a mathematical theorem that can be logically proved or disproved
c. is the rate at which one input may be substituted for another input in the production process
d. none of the above
The combinations of inputs costing a constant C dollars is called:
a. isocost line
b. isoquant curve
c. MRTS
d. isorevenue line
The marginal product is defined as:
a. the ratio of total output to the amount of the variable input used in producing the output
b. the incremental change in total output that can be produced by the use of one more unit of the variable input in the production process
c. the percentage change in output resulting from a given percentage change in the amount of the variable input X employed in the production process with Y
d. a and b
In a relationship among total, average and marginal products, where TP is maximized:
a. AP is maximized
b. AP is equal to zero
c. MP is maximized
d. MP is equal to zero
Which of the following is never negative?
a. marginal product
b. average product
c. production elasticity
d. marginal rate of technical substitution
e. slope of the isocost lines
Concerning the maximization of output subject to a cost constraint, which of the following statements (if any) are true?
a. At the optimal input combination, the slope of the isoquant must equal the slope of the isocost line.
b. The optimal solution occurs at the boundary of the feasible region of input combinations.
c. The optimal solution occurs at the point where the isoquant is tangent to the isocost lines.
d. all of the above
Marginal revenue product is defined as the amount that an additional unit of the variable input adds to ____________.
a. marginal revenue
b. total output
c. total revenue
d. marginal product
The relevant cost in economic decision-making is the opportunity cost of the resources rather than the outlay of funds required to obtain the resources.
a. true
b. false