Civics/economics tri 3 exam
The above table has the total revenue and total cost schedule for Omar, a perfectly competitive grower of rutabagas. When Omar maximizes his profit, Omar's profit equals
16
The figure above shows the demand, marginal revenue, and marginal cost curves for Paul's Parrot pillows, a monopoly producer of pillows stuffed with parrot feathers. When Paul maximizes his profit, Paul produces ____ pillows per hour and if the market was perfectly competitive, ____ pillows per hour would be produced.
3,000 ; 4,000
Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hugo, Oklahoma. The above figure represents the demand, marginal revenue, and marginal cost curves for this establishment. What price should the Busy Bee charge to maximize its profit?
3.00 for a hamburger
The figure above shows the market for private elementary school education in Chicago. There is no external cost of private elementary education. If the government does not intervene in this market, the equilibrium number of students being privately educated is ____ and the efficient quantity is ____.
400 students ; 600 students
The figure above shows an education market in which the government is providing households with vouchers. In total, how much do the schools receive for a student?
16,000
A financial gain earned by purchasing stock in a publically traded company and subsequently selling the investment at higher price is commonly referred to as a _____________ .
CAPITal gain
Which of the following is true?
MSB = MB + Marginal external benefit.
Refer to the table below. In this instance, confirmation that this firm is operating in a perfectly competitive market can readily be ascertained by the fact that its Q P TR MR TC MC 0 $30 0 --- $15 --- 1 $30 $30 $30 $25 $10 2 $30 $60 $30 $40 $15 3 $30 $90 $30 $60 $20 4 $30 $120 $30 $85 $25 5 $30 $150 $30 $115 $30 6 $30 $180 $30 $150 $35
Marginal revenue is constant
The term _________________ refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product.
Price taker
In order to be classified as a _______________, a firm must be owned by the people who run it on a day-to-day basis.
Private company
A private cost is a cost of production that is borne by the
Producer
If a firm's revenues do not cover its average variable costs, then that firm has reached its _________________ .
Shut down point
What do stocks, bonds, securitized mortgage assets and other financial investments all have in common?
They can only be purchased in financial markets
The government can aid in reducing pollution by using marketable permits, which means that
each polluter is assigned a pollution limit and is given tradable permits that allow this amount of pollution.
If oligopolistic firms banded together with the intention of acting like a monopoly, it would likely result in their being able to
divide up the monopoly level of profit amongst themselves.
Perfect competition is characterized by all of the following EXCEPT
considerable advertising by individual firms.
As environmental protection increases,
in addition to a and b above, the quality of environmental protection increases.
A bond is a form of ___________ through which a corporation agrees to repay the amount that was borrowed together with ___________ over a period of time in the future.
financial contract; a rate of interest
If a good has an external cost, then the marginal private cost curve
lies below then the marginal social cost curve.
If the marginal social cost of producing a ton of cement is $4,000 and the marginal private cost is $3,500, then the
marginal external cost of producing a ton of cement is $500.
If a product has zero external costs, then
marginal social costs equal marginal private costs.
A tax on a polluting industry
leads to less output in this industry
Why would a large publically traded corporation likely prefer issuing bonds as a way to raise new money as opposed to issuing more shares?
more shares will dilute the existing value of the stock, causing its market price to fall
Bill owns a lawn-care company in Windermere, Florida, whose cost curves are illustrated in the above figure. The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed. Bill's average total cost curve is ATC, so his total cost of production equals
more than $0 and less than $1,200 per week.
In the event that Only1Corp. obtains control of all the natural gas producers in the US, it would most likely
raise prices, cut production, and realize positive economic profits.
Which of the following mechanisms will increase the rate of return that can be earned by inventors of new technology?
patents, copyrights, and each of the above
XYZ Corporation plans to open a manufacturing plant in China, but the company has not retained any of its yearly profits for this purpose. How will XYZ Corporation likely raise the money to finance its offshore expansion?
sale of bonds to institutional investors
What role can advertising play with respect to differentiated products?
shapes consumers intangible preferences
The above figure shows a motel engaged in monopolistic competition with other motels. Figure shows the ____ equilibrium in which the motel is ____.
short-run; earning an economic profit
An externality can be a cost or benefit arising from the production of a good that falls upon
someone other than the consumer or producer.
In choosing between the range of alternative investments typically available to U.S. households, which of the following will play a role in influencing their selection of a particular investment type?
the interest rate and the expected rate of return
A problem with emission charges as a solution to pollution is that
the necessary information about the polluting industry is costly and usually unavailable.
If a government wants to establish a marketable permit program, it must begin by determining
the overall quantity of a certain pollutant that will be allowed.
If one firm operating in an oligopoly raises its price and other firms do not do so,
the sales of the firm that increased its price will decline sharply.
Which of the following are devices that the government uses to achieve a more efficient allocation of resources in the presence of external benefits?
vouchers, patents, and subsidiesThis is the correct answer.
If a monopolistic competitor raises its price, it _________ customers than a perfectly competitive firm, but ________________ customers compared to the number that a monopoly that raised its prices would.
will lose fewer; it will lose more
M The above figure shows a perfectly competitive firm. If the market price is $20 per unit, the firm
will stay open to produce and will earn a normal profit.
______________________ refers to the additional revenue gained from selling one more unit.
Marginal revenue
Which of the following is a feature that typically distinguishes a savings account from a checking account?
Pays interest
As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left.
Technology
As the _____________ complement for high-skill labor becomes cheaper, the demand curve for high-skill labor will shift to the right.
Technology
The old proverb: "Don't put all your eggs in one basket" is synonymous with which of the following?
Diversified investments
A ________ is a direct payment from a firm to its shareholders.
Dividend
Oligopoly is a market structure in which
a small number of firms compete.
Which one of the following is the most accurate description of a monopolist?
a sole producer of a product for which good substitutes are lacking in a market with high barriers to entry
Given the data provided in the table below, the total revenue (TR) for production at quantity (Q) level 4 equals Q P TC TR MR MC Profit 0 $5 $9 1 $5 $10 2 $5 $12 3 $5 $15 4 $5 $19 5 $5 $24 6 $5 $30 7 $5 $45
$20
Given the data provided in the table below, what will the marginal revenue equal for production at quantity (Q) level 4? Q P TC TR MR MC Profit 0 $5 $9 1 $5 $10 2 $5 $12 3 $5 $15 4 $5 $19 5 $5 $24 6 $5 $30 7 $5 $45
$5
Education has an external benefit. So to achieve the efficient level of education, an education voucher must equal the difference between the
. marginal (private) benefit and the marginal social benefit.
A competitive, unregulated market would
. produce too much pollution because pollution is an external cost.This answer is incorrect. produce too little education because education has an external benefit.
The figure above shows the market for private elementary school education in Chicago. There is no external cost of private elementary education. If the marginal social benefit of private elementary education equaled the marginal social cost, the deadweight loss in Chicago's private education market would equal
0
The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered. It also illustrates the marginal private benefit. There is no external benefit. The efficient number of concerts in Seattle is
10
The figure above illustrates the gasoline market. There is no external benefit from gasoline. If a tax on gasoline is imposed as shown in the figure, then the quantity of gasoline produced and consumed equals
10 million gallons
Given the data provided in the table below, what will the marginal cost equal for production at quantity (Q) level 4? Q P TC TR MR MC Profit 0 $5 $9 1 $5 $10 2 $5 $12 3 $5 $15 4 $5 $19 5 $5 $24 6 $5 $30 7 $5 $45
4
If the marginal private benefit of attending college for Shelly is $40,000 and the marginal external benefit is $15,000, she will attend college if the cost of attendance is no more than
40,000
The figure above shows the market for education, a good possessing an external benefit. In order to attain the efficient number of students, a government subsidy must equal ____ per student.
6,000
The table below shows the demand curve and cost information for a firm that is a monopoly. Price Quantity TC $1,000 0 $500 $800 5 $1,200 $600 10 $3,100 $400 15 $7,000 $200 20 $11,500 If they maximize their profits, what price will they charge?
600
The figure above shows the demand, marginal revenue, and marginal cost curves for Paul's Parrot Pillows, a single-price monopoly producer of pillows stuffed with parrot feathers. When Paul maximizes his profit, the price per pillow is
70
The figure above shows an education market in which the government is providing households with vouchers. What is the dollar value of a voucher in this market?
8,000
A straightforward example of a _______________, often used for simplicity, is the interest rate.
A rate of return
The imposition of a price ceiling on a market often results in: Selected:
A shortage
____________________ the market demand curve.
Always lies beneath
When the benefits of producing a good or service spill over to other people, rather than just the buyer, the spillover is referred to as
An external benefit
When logging in the Pacific Northwest destroys forests that hikers would have used for eco-tourism, the destruction of the trails is an example of
An external cost
Which of the following results in a rightward shift of the market demand curve for labor?
An increase in demand for the firms product
Which of the following will not result in a rightward shift of the market supply curve for labor?
An increase in labor productivity
Which of the following will not result in a leftward shift of the market demand curve for labor?
An increase in the wage rate
If the price that a firm charges is lower than its ____________ of production, the firm will suffer losses.
Average cost
The demand curve as perceived by a monopolistic competitor is ______________ .
Downward sloping
The above figure shows a restaurant engaged in monopolistic competition with other restaurants. The equilibrium quantity at this restaurant is ____ meals per day.
Between 151 and 250
The term __________ refers to the __________ that a bond is expected to pay at the time of purchase.
Bond yield; rate of return
On April 1, 2009, in the middle of a recession, the government of the province of Ontario, Canada increased the provincial minimum wage from $8.75 to $9.50. What will the likely effect of this policy be?
Both the leftward shift in the labor demand curve and the higher minimum wage will lead to an increase in the unemployment rate.
Copyright protection legislation provides protection for original works
During the authors life plus 70 years
_________ arises when firms act together to reduce output and keep prices high.
Collusion
In the investment industry, the principle of _______________ supports investing in a wide range of companies to reduce the level of risk.
Diversification
The labor ____________ curve(s) will shift _______________ if there is an increase in productivity or an increase in the demand for the final product.
Demand ; right
Firm A and Firm B emit 300 tons of pollution each and each have marketable permits that allow each to emit 100 tons of pollution. If it costs $5,000 for Firm A to eliminate 100 tons of pollution and it costs Firm B $6,000 to eliminate 100 tons of pollution, then
Firm A sells its permits to Firm B for a price below $6,000.
The stock of a business firm is divided into
INDIvidual shares
Improvements in the productivity of labor will tend to:
Increase wages
If the demand for software engineers __________ slower than does supply, then wages of software engineers will __________.
Increases; fall
The City of Washington needs to upgrade its levies and its water drainage systems. The cost will exceed the amount of tax revenue the City expects to receive over the next 10 years. How will the City be able to raise the funds needed to finance this upgrade?
Issue municipal bonds
________________ are a form of _______ bonds that offer relatively high interest rates to compensate for their relatively high chance of default.
Junk bonds ; corporate
Other things being equal, a __________ supply of workers tends to __________ real wages.
LARger; decrease
The _________ of an investment is determined by how easy it is to sell an asset at any given time.
Liquidity
A checking account typically pays __________________, but gives easy access to your money, either by writing a check or by using ______________.
Little or no interest; a debit card
Which of the following is most likely to be a monopoly?
Local electricity distributor
Which of the following have historically been more willing to sacrifice their environmental quality for some additional economic output?
Low income and command economics
In order for taxes to be effective in eliminating the deadweight loss resulting from pollution, the tax must be set equal to the
Marginal external cost
The additional benefit that Marvin gets from being vaccinated against the flu is known as the
Marginal private benefit
The marginal social cost, MSC, of producing a good or service equals
Mc + marginal external cost
Stock markets often experience a frenzy of buying or selling when investors are ___________________ by following the current trend in a very actively traded company.
Momentum trading
Shopping malls typically lease retail space to a large number of clothing stores. When this group of retailers competes to sell similar but not identical products, they engage in what economists call ________________________
Monopolistic competition
Producing leather creates external costs in the form of water pollution. The figure above illustrates the market for leather. In the absence of any government regulation, how many tons of leather will be produced?
More than 300 tons
Briefly describe what is meant by the term "diversification" with respect to the investment industry. Identify and briefly explain two investment vehicles that offer investors a convenient way to diversify their investments.
Mutual funds and index funds, help diversification, as it refers to the practice of investing in companies in order to reduce the level of risk.
_______________ of well-to-do individuals often put their own money into small new companies at an early stage of development, in exchange for owning some portion of the firm.
Network
Are markets always in equilibrium?
No, but if there is no outside interference, they tend to move toward equilibrium.
A public good is a good that is ____________________ , and thus is difficult for market producers to sell to individual consumers.
Nonexcludable and nonrivalrious
Which of the following will provide an investor with a legally valid claim of partial ownership of a firm?
OWnership of stock
Perfect competition and monopoly stand at _____________ of the spectrum of competition.
Opposite ends
Roughly speaking, patent law covers __________ and __________ law protects an author's original books
Original inventive creations ; copyright
Following the assumption that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency?
Output will be too small and it's price too high
Investors who believe that the stock is _____________ , relative to the fundamental value of its future expected profits, will sell their shares to those who believe that the stock is __________.
Overvalued; undervalued
In economic terms, when I'mASoftwareCo. invests in new technology innovations,
Positive externalities arise
Legally established titles to ownership, use, and disposal of factors of production and goods and services, are called ____ rights.
Property
A _____________ is a firm that has sold its stock by making it available to be bought and sold by outside investors.
Public company
Most societies ____ natural monopolies.
Regulate
There is a skating rink in your city that is open to anybody to use at any time. They even provide skates for people who don't own any. This is an example of a good that is
Rivalrous and nonexcludable
Whenever there is a surplus at a particular price, the quantity sold at that price will equal:
THE quantity doesn't demanded at that price
Whenever there is a shortage at a particular price, the quantity sold at that price will equal: Selected:
THE quantity supplied at that price
The figure above shows the market for college education. Left to itself without any government intervention, a competitive market would create a deadweight loss equal to
The area a + c
If a perfectly competitive firm raised the price of its product,
The output it sells will decrease to zero
Why do business firms need financial capital?
To make real physical capital investments
Food stamps provided by the government to households are an example of
Vouchers
In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. Which of the following correctly sets out that choice?
What quantity to produce
A subsidy is
a payment that the government makes to private producers of goods and services.
The refundable charge of 5 or 10 cents for returning recyclable cans and bottles works like
a pollution tax incentive to avoid littering
A barrier to entry is
anything that protects a firm from the arrival of new competitors.
Explain how it is possible for most Americans to accumulate considerable financial wealth during their lifetimes.
bank accounts -certificates of deposit -bonds -stocks -mutual funds -housing -tangible assets like gold. *Considerations -the expected rate of return -risk -liquidity of each kind of investment
Education leads to external benefits because
better educated people commit fewer crimes.
Which of the following would legally qualify you to be registered as a shareholder of Microsoft Corporation?
buying the stock on the New York Stock Exchange
In contrast to competitive firms, single-price monopolies
can earn economic profit indefinitely.
Several types of economic events can cause a shift in labor demand, so that a higher or lower quantity of labor is hired at every salary or wage. List four of these events.
education and training -technology -government regulations -number of workers -required education -government policies
The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered. At 10 concerts, the marginal
external cost equals $60,000.
Market failure describes a situation in which the market itself ______________________ in a way that balances social costs and benefits.
fails to allocate resources efficientlyThis
A firm dumps dioxin in a river, thereby severely polluting the river. The cost of the water pollution is i. zero for the firm. ii. an external cost. iii. part of the marginal social cost
i ii iii
Government taxation of an industry that creates pollution i. decreases the pollution. ii. increases the price of the product produced by the firms. iii. decreases the quantity of the good produced.
i ii iii
A government subsidy paid to a firm i. increases the demand for the good. ii. has no effect on the supply of the good. iii. leads to an increase in the equilibrium quantity.
iii only
Because economic profits are eliminated in the long run in monopolistic competition, to earn an economic profit firms continuously
innovate and develop new products.
The main categories of market-oriented approaches to pollution control are
marketable permits; better-defined property rights; pollution charges.
The perceived demand curve for a group of competing oligopoly firms will appear kinked as a result of their commitment to
match price cuts, but not price increases.
Each year banks typically offer a wide range of ____________ comprised of ______________________from a variety of different companies.
mutual funds; a range of stocks or bonds
A firm is discriminating among groups of buyers when it
offers different prices to different groups of buyers.
When a firm invests in new technology, the ________________ that the firm receives are _____________________________ .
private benefits; only a portion of the overall social benefits
Monopolistic competitors can make a _____________ in the short-run, but in the long run, ______________ will drive these firms toward _______________________ .
profit or loss; entry and exit; a zero-profit outcome
When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________.
the quantity demanded of financial capital at any given interest rate will shift to the right.
If a producer must pay his pollution costs because property rights have been assigned, then
the supply curve will shift leftward as the new costs are added.
The figure above shows a tax imposed on a good with an external cost. The area of the rectangle abcd equals
the total tax revenue collected by the government.
One difficulty with direct government support of R&D is that it inevitably involves government decisions about ___________________.
which of the vast number of proposed projects are worthwhile
