Introduction to Economics 1

Yanıt Açıklaması: Total Product of Labor is the amount of maximum output that a firm can produce with different levels of labor for a given capital amount used.

Yanıt Açıklaması: If the output increases by the same percentage as the increase in all inputs, this is named constant returns to scale. The correct answer is D.

Yanıt Açıklaması: Oligopoly is a market structure with few firms. Each firm in the market produces a large share of the total market quantity and hence can influence the market price.

Yanıt Açıklaması: Total utility: The total satisfaction you derive from consumption; this could refer to either your total utility of consuming a particular good or your total utility from all consumption.

Yanıt Açıklaması: Everyone has to give up something in order to get one thing that she wants. In other words, there is a “price” for everything we get even when no money changes hands. The opportunity cost of a desired item or outcome to a person is what that person has to give up to get that item or to achieve that outcome. When making decisions, individuals should recognize the opportunity costs of each action that they can take. The answer is E.

Yanıt Açıklaması: The total cost is the economic cost of all the resources, including the cost of entrepreneurship which is called normal profit . To keep the analysis simple, however, we have assumed the firm uses only two resources, labor ( L ) and a given amount of capital ( K ), in the short run. The production technology is represented by the following production function: Q = f (L, K) Total Cost (TC) The total fixed cost plus the total variable cost.

Yanıt Açıklaması: Marginal Product of Labor Marginal Product of Labor (MPL) is the additional output produced when a small amount of additional labor is employed with all other inputs remaining the same. More formally, it is the ratio of change in total product to the change in the amount of labor used.

Yanıt Açıklaması: Sunk Cost: an expenditure that was incurred in the past and is irreversible in the short-run. Therefore, the correct option is B.

Yanıt Açıklaması: Monopolistic competition differs from perfect competition because the products sold in monopolistic competition are slightly differentiated. Therefore, the correct option is D.

Yanıt Açıklaması: Balancing Choices and Scarcity: Subject Matter of Economics Economics is the study of how individuals and societies choose to use scarce resources at their disposal. The needs and desires of individuals are unlimited. Satisfying those needs and desires requires the production of goods and services. All the goods that are not sufficiently abundant to be available to everyone for free are said to be scarce. Their scarcity follows from the scarcity of resources we use to produce them. If scarcity of resources were not a problem, it would be possible to produce all goods and services in sufficiently large quantities to make them available to everyone for free. This is not possible because material inputs and factors of production needed to produce goods are not available in unlimited quantities. The economic problem arises because of this scarcity.

Yanıt Açıklaması: Because a firm cannot change the amounts of its fixed inputs used in the short run, it has to use more of its variable inputs to increase production. That means that the firm has to pay more for variable inputs to increase output. The sum of all variable costs a firm pays for variable inputs is called the total variable cost (TVC). Since labor is the only variable input for our representative firm, its total variable cost will be the wage rate times the amount of labor used. Thus the formula would be this: Total Variable (TVC) = Wage (w) x Labor (L). The correct answer is B.

Yanıt Açıklaması: A monopolist is the only producer in the market. It faces the market demand curve and hence has to reduce price to sell more units. As a result; its marginal revenue from the last unit sold is less than the price of that unit. Profit maximizing level of output for a monopolist is the output level where the MR is equal to MC and at the same time P>MR=MC.

Yanıt Açıklaması: The determinants of the capital demand are the price have to be paid to obtain the capital good (the purchasing price of a specific piece of capital), the marginal revenue product received by having it (its expected marginal revenue product), the operating costs of it (the expected cost of its use), the price we could receive eventually by selling the same machine (its selling price) and the interest rate. However, the ratio of the marginal product of capital to its price is not one of them. The correct answer is C.

Yanıt Açıklaması: Indifference curves cannot cross each other.

Yanıt Açıklaması: The Average cost (AC) tells us the cost per unit. It is equal to the total cost divided by the amount of output produced. The correct answer is A.

Yanıt Açıklaması: A market, whether a physical place or a Web site, not only brings people together but also enables contact among people, thus creating a social relation. The correct answer is E.

Yanıt Açıklaması: (7347839-7349872)/(11-10)=-2033 Additional worker decreases productivity

Yanıt Açıklaması: The net present value of an asset expected to last for t years can be calculated by the following formula: Here, P p stands for the purchasing price of an asset, NR is the difference between the revenue received from an asset and the operating costs per period, P s is the selling price of an asset and i is the annual interest rate. Therefore the machine's net present value will be calculated as NPV=-8000+[(10000-4000)/(1+5)] = - 7000 The answer is B.

Yanıt Açıklaması: The effect of an increase in interest rates on saving is ambiguous. An increase in interest rates causes saving to increase due to substitution effect but to decrease due to income effect. Since both effects work in opposite directions, the total effect is ambiguous. The answer is B.

Yanıt Açıklaması: The determinants of the capital demand are the price have to be paid to obtain the capital good, the marginal revenue product received by having it, the operating costs of it, the price we could receive eventually by selling the same machine and the interest rate. The answer is D.