BUS 302L: Micro Economics Questions and Answer

Because of scarcity, every economic decision involves Answer a trade-off. Ryan spends an hour studying instead of going for a bike ride. Assume studying and bike riding were Ryan's only options for that hour. The opportunity cost to him of studying is: Answer the enjoyment and exercise he would have received from bike riding. The gains from trade are: Answer a result of more efficient resource allocation. Which of the following would not tend to lower the price of VCRs? Answer increasing price of pay-per-view movies on cable TV In a market economy, the allocation of the quantity supplied of any good among demanders is determined by: Answer the market price. Milk can be used to make yogurt or cheese. Other things equal, if consumers start demanding more yogurt. Answer less milk will be used in cheese and more will be used in yogurt. The price elasticity of demand: Answer varies from one point to another on a typical demand curve. A firm's total cost is $10,000. Its variable cost is $5,500. What is the firm's fixed cost? Answer $4,500 Which of the following is a correct definition of marginal cost (MC)? Answer It is the added cost that results from producing one more unit of a good. A firm will shut down if: Answer P AVC at all levels of out