Matching
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Identifying Key Terms
Match each term with
the correct statement below. a. | subsidy | h. | increasing marginal returns | b. | supply
schedule | i. | diminishing marginal
returns | c. | supply curve | j. | marginal revenue | d. | elasticity of
supply | k. | marginal product of
labor | e. | excise tax | l. | marginal cost | f. | law of
supply | m. | market supply
schedule | g. | variable cost | | | | |
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1.
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a chart that
lists how much of a good a supplier will offer at various prices
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2.
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a government
payment that supports a business or market
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3.
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the cost of
producing one more unit of a good
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4.
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the
additional income from selling one more unit of a good
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5.
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a measure of
the way a quantity supplied reacts to a change in price
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6.
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a payment to
the government on the production or sale of a good
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7.
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a level of
production in which the marginal production decreases with new investment
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8.
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the tendency
of suppliers to offer more of a good at a higher price
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9.
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the change
in output from hiring one additional unit of labor
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Factors of Production
Match each
factor with its description or example from “Mrs. Peabody’s Beach.” All factors will
be used twice. a. | land | e. | fire | b. | labor | f. | water | c. | capital | g. | earth | d. | entrepreneurship | h. | air | | | | |
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10.
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a
good used to produce another good
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11.
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Jerry
clearing the road to the beach
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12.
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a
bullldozer
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13.
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creative combining of the other factors of production
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14.
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idea
of selling lunches to the crowd at the beach
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15.
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human
productive input
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16.
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ocean
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17.
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a
natural resource or “gift of God”
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True/False
Indicate whether the sentence or statement is true
or false.
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18.
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A
technological improvement, like Uncle Stevie’s Ant Evictor, raises the cost of production and
reduces supply.
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19.
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If
Uncle Stevie can make $30,000 working for someone else, that $30,000 is a cost to him of continuing
to operate his ant form manufacturing business.
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20.
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A
large special order, like that of the exterminators’ convention, results in lower average costs
of production.
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21.
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The
price of plastic for ant farms is determined by the value of that plastic in the manufacture of, for
example, baby rattles.
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Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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22.
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What factor
has the greatest influence on elasticity and inelasticity of supply? a. | financing | c. | labor | b. | profit | d. | time | | | | |
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23.
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What
is the quantity supplied at $5?
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24.
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At
what price will 60 widgets be offered
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25.
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Which of the
following is an example of a good with an inelastic supply? a. | beanbags | c. | toothbrushes | b. | apples | d. | hats | | | | |
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26.
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Which of the
following is the best example of the law of supply? a. | A catering company buys
a new dishwasher to make their work easier. | b. | A milling company
builds a new factory to process flour to export. | c. | A food producer
increases the number of acres of wheat he grows to supply a milling
company. | d. | A sandwich shop increases the number of sandwiches they supply every
day when the price is increased. | | |
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27.
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Total
cost includes the sum of a. | revenue and fixed costs. | c. | average cost and variable cost. | b. | fixed
costs and variable costs. | d. | marginal cost and total product. | | | | |
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28.
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A
technological improvement that lowers the cost of production is likely to cause the supply curve to
_______. a. | become more
elastic | c. | shift to the
left | b. | become less
elastic | d. | shift to the
right | | | | |
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29.
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Costs
that have already been incurred are called ________. a. | variable
costs | c. | fixed
costs | b. | sunk costs | d. | marginal costs | | | | |
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30.
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Which of the
following is an example of lower production costs brought about by the use of
technology? a. | the delivery costs of
gasoline to the consumer by diesel trucks | b. | the importing of fresh vegetables from South America rather than using
canned vegetables | c. | the use of e-mail to replace slower surface
mail | d. | the making of breads
and pastries in local shops rather than large bakeries | | |
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31.
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Which of the
following is a fixed cost for a store? a. | short-term workers | c. | inventory | b. | advertising | d. | rent | | | | |
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32.
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When the
selling price of a good goes up, what is the relationship to the quantity supplied? a. | The cost of production
goes down. | b. | It becomes practical to produce more goods. | c. | There is no
relationship between the two. | d. | The profit made on each item goes down. | | |
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33.
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______ can cause a change is supply. a. | Improvements in
technology | c. | Changes in the
price of inputs | b. | all of the above | d. | Increased efficiency | | | | |
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34.
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What do
sellers do if they expect the price of goods they have for sale to increase dramatically in the near
future? a. | sell the goods now but
try to get the higher price for them | b. | store the goods indefinitely regardless of when the price
rises | c. | sell the goods now and try to invest the money instead of
resupplying | d. | store the goods until the price rises | | |
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Marginal
Product of Labor | Labor
(number
of
workers) | Output
(beanbags
per
hour) | Marginal
product
of
labor | 0 | 0 | — | 1 | 4 | 4 | 2 | 10 | 6 | 3 | 17 | 7 | 4 | 23 | 6 | 5 | 28 | 5 | 6 | 31 | 3 | 7 | 32 | 1 | 8 | 31 | –1 | | | |
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35.
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According to the chart, which of the following happens when an eighth person is hired
at the beanbag company? a. | The output of beanbags stays the
same. | b. | A positive marginal product of labor is
created. | c. | The output of beanbags is 28 per
hour. | d. | A negative marginal return is
created. | | |
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36.
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According to the chart of marginal product of labor for a company that makes beanbags,
which of the following situations is created when the fourth through seventh workers are
hired? a. | diminishing
marginal returns | b. | negative marginal returns | c. | increasing
marginal returns | d. | marginal product of labor
specialization | | |
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37.
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Increased taxes have the same effect on a change in supply as an increase in
a. | diminishing
returns. | c. | demand. | b. | cost of inputs. | d. | productivity. | | | | |
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38.
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If it
costs you $60 to produce 3 widgets and $64 to produce 4 widgets, the marginal cost to you of
producing a 4th widget is ___.
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39.
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If
the price of a product increases modestly, and if producers respond with a substantial increase in
output, then supply is a. | unit elastic. | c. | elastic. | b. | fixed.
| d. | inelastic. | | | | |
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40.
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The
factor that would cause the supply curve to shift to the right is a. | a decrease in
government subsidies. | c. | higher
taxes. | b. | an increase in the number of
sellers. | d. | an increase in
the cost of inputs. | | | | |
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41.
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A
shift in the supply curve is a _______. a. | change in demand | c. | change in supply | b. | change in the
quantity supplied | d. | none of the
above | | | | |
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42.
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Costs
that remain the same regardless of the level of production are called ______. a. | marginal
costs | c. | fixed
costs | b. | variable costs | | | | |
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43.
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The
Department of Defense awards you a cost-plus-10% contract to build missiles in your garage.
Which of the following may you legitimately include in your costs? a. | cost of the
tetanus shot you received when you were three years old, which saved your life and thereby enabled
you to become a successful defense contractor | b. | cost of the math
course you took years ago which turned out to be the prerequisite for the course in missile
making | c. | original cost of constructing the garage, adjusted for
inflation and depreciation | d. | cost of the course you took in community college to qualify as
a missile maker so you could win the government contract | e. | weather damage
to your car from parking it outside because your garage is full of missile-making
machinery | | |
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44.
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If
you pay $35 for a sticker that entitles you to park on campus for the entire 35 week school year, the
marginal parking cost to you of parking your car on campus on any given weekday is
_____.
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