Econ 001 HW 1, Econ 001 HW 2, Econ 001 HW 3, Econ 001 HW 4, Homework 5 Econ 001, Homework 6 Econ 001, Econ 001 HW 7, Econ 001 HW 8, Econ 001 HW 9, Econ 001 HW 10

c. the firm's demand curve is tangent to its average total cost curve.

A monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing and becoming more elastic in the long run as new firms move into the industry until a. the original firm is driven into bankruptcy. b. the firm's demand curve is perfectly elastic. c. the firm's demand curve is tangent to its average total cost curve. d. the firm exits the market.

a. in a monopoly there are significant entry barriers but there are low barriers to entry in a monopolistically competitive market structure.

A monopoly differs from monopolistic competition in that a. in a monopoly there are significant entry barriers but there are low barriers to entry in a monopolistically competitive market structure. b. a monopoly can never make a loss but a firm in monopolistic competition can. c. a monopoly faces a perfectly inelastic demand curve while a monopolistic competitor faces an elastic demand curve. d. a monopoly has market power while a firm in monopolistic competition does not have any market power.

c. imports.

A tariff is a tax imposed by a government on a. exports. b. luxury items. c. imports. d. services.

a. an asset.

Anything of value owned by a person or a firm is a. an asset. b. a liability. c. wealth. d. owner's yield.

c. at least $125,000

Arlene quits her $125,000-a-year job to take care of her ailing parents. What is the opportunity cost of her decision? a. zero, since she will no longer be earning a salary b. It depends on the "going rate" for home-care providers. c. at least $125,000 d. the value she attributes to the satisfaction she receives from taking care of her parents

a. should be ignored since it represents a sunk cost.

Arnold Kim began blogging about Apple products during his fourth year of medical school. Kim's Website, MacRumors.com, became so successful that he decided to give up his medical career and work full time on his Website, despite the nearly $200,000 he had invested in his education. In making his decision, the $200,000 he spent on his education a. should be ignored since it represents a sunk cost. b. should be considered since it is money he has spent and needs to recoup. c. should be ignored only if Kim can earn more than $200,000 by running his Website. d. should be considered since it is money he could have used to invest in his Website.

c. cannot issue stock.

As a form of business, a partnership a. has limited liability. b. has only one owner. c. cannot issue stock. d. has the most government rules and regulations affecting it.

c. price will higher and quantity will be lower

Assume both demand and supply decreases. If the supply decrease by more than demand, then new equilibrium a. both price and quantity will be higher. b. both price and quantity will be lower c. price will higher and quantity will be lower d. price will be lower and quantity will be higher

a. both price and quantity will be higher.

Assume both demand and supply increases. If the demand increases by more than supply, then new equilibrium a. both price and quantity will be higher. b. both price and quantity will be lower c. price will higher and quantity will be lower d. price will be lower and quantity will be higher

b. increase output.

Assume price exceeds average variable cost over the relevant range of demand. If a monopolistically competitive firm is producing at an output where marginal revenue is $23 and marginal cost is $19, then to maximize profits the firm should a. continue to produce the same quantity. b. increase output. c. decrease output. d. shut down.

d. Honduras has a lower opportunity cost of producing bananas relative to Brazil.

Assume that Honduras has a comparative advantage in producing bananas and exports bananas to Brazil. We can conclude that a. Labor costs are higher for banana producers in Brazil than in Honduras. b. Honduras also has an absolute advantage in producing bananas relative to Brazil. c. Brazil has an absolute disadvantage in producing bananas relative to Honduras. d. Honduras has a lower opportunity cost of producing bananas relative to Brazil.

a. along Tomaso's production possibilities frontier.

Assume that Tomaso's Trattoria only produces pizzas and calzones. A combination of 24 pizzas and 30 calzones would appear a. along Tomaso's production possibilities frontier. b. inside Tomaso's production possibilities frontier. c. outside Tomaso's production possibilities frontier. d. at the horizontal intercept of Tomaso's production possibilities frontier.

b. You could stand to lose your personal wealth if the business goes bankrupt.

Assume you set up a sole proprietorship and your lawyer tells you that as the owner you will face unlimited liability. What does that mean? a. You are liable for organizing the business. b. You could stand to lose your personal wealth if the business goes bankrupt. c. There is no legal responsibility of the business in case a customer sues, as the business is legally untouchable. d. None of these explain what unlimited liability means.

c. the marginal benefit of reducing carbon emissions is equal to the marginal cost of reducing carbon emissions.

Conceptually, the efficient level of carbon emissions is the level for which a. the marginal benefit of reducing carbon emissions is maximized. b. the marginal cost of reducing carbon emissions is minimized. c. the marginal benefit of reducing carbon emissions is equal to the marginal cost of reducing carbon emissions. d. the marginal benefit of reducing carbon emissions is minimized and the marginal cost of reducing carbon emissions is maximized.

d. the marginal private cost of harvesting the fish is lower than the marginal social cost.

Consider the stock of ocean tuna which is massively overfished. It is rational for an individual to exploit the resource rather than to conserve the stock because a. the marginal private benefit of harvesting tuna is higher than the marginal social benefit of harvesting it. b. the marginal private benefit of harvesting tuna is lower than the marginal social benefit of harvesting it. c. the marginal social cost of harvesting the fish is lower than the marginal private cost. d. the marginal private cost of harvesting the fish is lower than the marginal social cost.

a. being able to choose from products more closely suited to their tastes.

Consumers benefit from monopolistic competition by a. being able to choose from products more closely suited to their tastes. b. paying the lowest possible price for the product. c. paying the same price as everyone else. d. being able to purchase high-quality products at low prices.

B) economic costs add the opportunity costs of a firm using its own resources while accounting costs do not.

Economic costs of production differ from accounting costs in that A) economic costs include expenditures for hired resources while accounting costs do not. B) economic costs add the opportunity costs of a firm using its own resources while accounting costs do not. C) accounting costs include expenditures for hired resources while economic costs do not. D) accounting costs are always larger than economic cost.

b. shifting inward.

Economic decline (negative growth) is represented on a production possibilities frontier model by the production possibility frontier a. shifting outward. b. shifting inward. c. becoming steeper. d. becoming flatter.

b. $1.50

Figure 4-1 shows Arnold's demand curve for burritos. Refer to Figure 4-1. Arnold's marginal benefit from consuming the third burrito is a. $1.25 b. $1.50 c. $2.50 d. $6.00

b. Q2

Figure above shows the demand and cost curves facing a monopolist. To maximize profit, the firm will produce at output level a. Q1 b. Q2 c. Q3 d. Q4

d. $0

Figure above shows the market for shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. What is dead weight loss at price $15? a. $200 b. $100 c. $40 d. $0

c. $40

Figure above shows the market for shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. What is producer surplus when the price is $13? a. $200 b. $100 c. $40 d. $0

d. The firm will experience a loss since price is less than ATC.

Figure illustrates the cost curves of a perfectly competitive firm. If the market price is P1 a. The firm will experience a loss and raise its price to P2. The firm will then break even. b. The firm will break even by producing a quantity of Q2. c. The firm may make a profit if it can increase the demand for its product. d. The firm will experience a loss since price is less than ATC.

c. zero units.

Figure shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. At price P1, the firm would produce a. Q3 units. b. Q5 units. c. zero units. d. Q1 units.

b. new firms will enter the market.

Figure shows cost and demand curves for a monopolistically competitive producer of iced tea. Based on the diagram, one can conclude that a. some existing firms will exit the market. b. new firms will enter the market. c. the industry is in long-run equilibrium. d. firms achieve productive efficiency.

a. 22 cases

Figure shows cost and demand curves for a monopolistically competitive producer of iced tea. What is the profit-maximizing output level? a. 22 cases b. 24 cases c. 30 cases d. 38 cases

c. P2

Figure shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. If the firm represented in the diagram is currently producing and selling Qa units, what is the price charged? a. P0 b. P1 c. P2 d. P3

d. 180.

Figure shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. If the market price is $30, the firm's profit-maximizing output level is a. 240. b. 130. c. 0. d. 180.

b. 5/8 of a pound of cashews

Figure the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. What is the opportunity cost of producing 1 bolt of cotton in Pakistan? a. 3/8 of a pound of cashews b. 5/8 of a pound of cashews c. 1 3/5 pounds of cashews d. 150 pounds of cashews

d. We do not have enough information to determine how many sandwiches Mabel will buy to maximize her utility.

For steak and cheese sandwiches and grilled chicken sandwiches, the table contains the values of the marginal utility (MU) and marginal utility per dollar (MU/P) for Mabel Jarvis. Mabel has $14 to spend on steak and cheese sandwiches and grilled chicken sandwiches. Which of the following statements is false? a. The price of steak and cheese sandwiches is $4. The price of grilled chicken sandwiches is $2. b. If Mabel maximizes her utility she will buy three grilled chicken sandwiches. c. If Mabel maximizes her utility she will buy two steak and cheese sandwiches. d. We do not have enough information to determine how many sandwiches Mabel will buy to maximize her utility.

b. raises; increasing

Free trade ________ living standards by ________ economic efficiency. a. lowers; decreasing b. raises; increasing c. lowers; eliminating d. raises; equalizing

a. compensate firms for research and development costs.

GOVERNMENTS GRANTS PATENTS TO a. compensate firms for research and development costs. b. encourage competition. c. encourage low prices. d. encourage firms to reveal secret production techniques.

b. Some people are overly optimistic about their future behavior.

Health clubs typically experience an increase in one-year memberships in January, but many new customers cancel their memberships before the end of the year. Which of the following is the best explanation for this behavior? a. Some health club members suffer minor injuries that prevent them from working out. b. Some people are overly optimistic about their future behavior. c. Some people fail to treat their membership fees as sunk costs. d. Some members receive utility from activities they believe are popular.

b. to reduce moral hazard problems.

Health insurance companies impose deductibles on policies and co-payments on claims a. to increase sales. b. to reduce moral hazard problems. c. to reduces sunk costs. d. to increase prices.

b. people with health insurance are more likely to be overweight than people without health insurance.

Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that a. people with health insurance are less likely to be overweight than people without health insurance. b. people with health insurance are more likely to be overweight than people without health insurance. c. people with health insurance are equally likely to be overweight as people without health insurance. d. there is no correlation between having health insurance and being overweight.

b. 15 bird houses

Horatio can produce either a combination of 15 bird houses and 25 wind chimes or a combination of 30 bird houses and 15 wind chimes. If he now produces 30 bird houses and 15 wind chimes, what is the opportunity cost of producing an additional 10 wind chimes? a. 2 bird houses b. 15 bird houses c. 30 bird houses d. 45 bird houses

b. should buy more apples and fewer oranges.

If Marlowe obtains 9 units of utility per dollar spent on apples and 6 units of utility per dollar spent on oranges, then Marlowe a. is maximizing total utility. b. should buy more apples and fewer oranges. c. should buy more oranges and fewer apples. d. should buy fewer oranges and fewer apples.

b. 0.67

If a 6 percent increase in income leads to a 4 percent increase in quantity demanded for audio books, the income elasticity of demand is a. -0.67 b. 0.67 c. 1.5 d. 2

a. 57 utils

If a consumer receives 22 units of marginal utility for consuming the first can of soda, 20 units from consuming the second, and 15 from the third, the total utility of consuming the three units is a. 57 utils b. 35 utils c. 15 utils d. unknown as more information is needed to determine the answer.

b. the firm is not producing its minimum efficient scale of output.

If a firm has excess capacity, then a. the firm expends too much of its resources on advertising its product without seeing an appreciable increase in sales. b. the firm is not producing its minimum efficient scale of output. c. the firm's long-run average cost of producing a given quantity exceeds its short-run cost of producing that same quantity. d. the firm's quantity supplied exceeds its quantity demanded.

a. its loss equals its fixed cost.

If a firm shuts down in the short run a. its loss equals its fixed cost. b. it makes zero economic profit. c. its loss equals zero. d. its total revenue is not large enough to cover its fixed cost.

B) less than 8 chairs.

If diminishing marginal returns have already set in for Golden Lark Woodworks, and the marginal product of the 6th carpenter is 8 chairs, then the marginal product of the 7th carpenter is A) negative. B) less than 8 chairs. C) more than 8 chairs. D) zero.

c. make a profit.

If the firm's average total cost curve is ATC1, the firm will a. suffer a loss. b. break even. c. make a profit. d. face competition.

b. average variable cost is decreasing.

If the marginal cost curve is below the average variable cost curve, then a. average variable cost is increasing. b. average variable cost is decreasing. c. marginal cost must be decreasing. d. average variable cost could either be increasing or decreasing.

d. $25.

If the market price is $25 in a perfectly competitive market, the marginal revenue from selling the fifth unit is a. $125. b. $5. c. $12.50. d. $25.

c. will decrease by 45 percent.

If the percentage increase in price is 15 percent and the value of the price elasticity of demand is -3, then quantity demanded a. will increase by 45 percent. b. will increase by 5 percent. c. will decrease by 45 percent. d. will decrease by 5 percent.

d. linear

If the production possibilities frontier is ________, then opportunity costs are constant as more of one good is produced. a. bowed out b. bowed in c. non-linear d. linear

a. the supply of walkie-talkies is inelastic.

If the quantity of walkie-talkies supplied increases by 5 percent when price increases by 12 percent, then a. the supply of walkie-talkies is inelastic. b. the supply of walkie-talkies is elastic. c. the walkie-talkie supply curve will shift to the right. d. the walkie-talkie supply curve will shift to the left.

d. is too low and equilibrium quantity is too high.

If there is pollution in producing a product, then the market equilibrium price a. is too high and equilibrium quantity is too low. b. and equilibrium quantity are too low. c. and equilibrium quantity are too high. d. is too low and equilibrium quantity is too high.

c. decrease.

If total utility increases at a decreasing rate as a consumer consumes more coffee, then marginal utility must a. remains constant. b. increase also. c. decrease. d. be negative.

B) economies of scale.

If, when a firm doubles all its inputs, its average cost of production decreases, then production displays A) diminishing returns. B) economies of scale. C) diseconomies of scale. D) declining fixed costs.

d. landlords have an incentive to rent more apartments than they would without rent control.

In a city with rent-controlled apartments, all of the following are true except a. apartments usually rent for rates lower than the market rate. b. apartments are often in shorter supply than they would be without rent control. c. it usually takes more time to find an apartment than it would without rent control. d. landlords have an incentive to rent more apartments than they would without rent control.

d. one who waits for others to produce a good and then enjoys its benefits without paying for it.

In economics, the term "free rider" refers to a. a person who evades taxes. b. a supervisor who delegates menial time-consuming activities to others. c. one who volunteers her services. d. one who waits for others to produce a good and then enjoys its benefits without paying for it.

a. cross-price elasticity; positive number

In order to prove that Motrin and Ibuprofen are substitutes, one should measure the ________ and get a ________. a. cross-price elasticity; positive number b. cross-price elasticity; negative number c. price elasticity of demand; number greater than 1 (in absolute value) d. price elasticity of demand; number less than 1 (in absolute value)

b. It is perfectly elastic.

Jenna runs a small boutique in Capitola. She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more. On the basis of this information, what can you conclude about her price elasticity of demand for wool hand warmers? a. It is elastic. b. It is perfectly elastic. c. It is perfectly inelastic. d. The price elasticity coefficient is 0.

c. criticize; causes losses to; eliminates

Many economists ________ protectionism because it ________ consumers and ________ jobs in domestic industries that use protected products. a. support; lowers prices for; raises wages for b. criticize; unfairly rewards; relocates c. criticize; causes losses to; eliminates d. support; benefits; creates

c. until its marginal benefits equal marginal costs.

Marginal analysis involves undertaking an activity a. until its marginal costs start declining. b. only when its marginal benefits are positive. c. until its marginal benefits equal marginal costs. d. only if its marginal costs are greater than its marginal benefits.

c. the marginal utility per dollar spent on the less expensive car is higher than that spent on luxury cars.

Most people would prefer to drive a luxury car that has all the options, but more people buy less expensive cars even though they could afford the luxury car because a. car buyers are irrational. b. the total utility of less expensive cars is greater than that of luxury cars. c. the marginal utility per dollar spent on the less expensive car is higher than that spent on luxury cars. d. luxury cars cost a lot more than non-luxury cars.

b. heavy advertising by individual sellers

Perfect competition is characterized by all of the following except a. sellers are price takers. b. heavy advertising by individual sellers. c. homogeneous products. d. a horizontal demand curve for individual sellers.

b. the demand for bottled water is elastic in the price range considered.

Suppose a decrease in the supply of bottled water results in a decrease in revenue. This indicates that a. the demand for bottled water is inelastic in the price range considered. b. the demand for bottled water is elastic in the price range considered. c. the supply of bottled water is inelastic in the price range considered. d. the supply of bottled water is elastic in the price range considered.

c. $95.70.

Suppose a monopolistically competitive firm's output where marginal revenue equals marginal cost is 66 units and the price corresponding to this quantity is $18. If the average total cost at this output is $16.55, then its total profit is a. $1,188. b. $1,092.30. c. $95.70. d. $1.45.

c. E.

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. The figure shows the impact of this tariff. The tariff revenue collected by the government equals the area a. B + D + E + F. b. D + E + F. c. E. d. C + D + E + F.

d. imports 16 million pounds of coffee.

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. The figure shows the impact of this tariff. With the tariff in place, the United States a. exports 42 million pounds of coffee. b. imports 31 million pounds of coffee. c. exports 16 million pounds of coffee. d. imports 16 million pounds of coffee.

d. both demand and supply are elastic.

Suppose the demand curve for hybrid cars shifts to the right. This will cause a relatively small increase in the price of hybrid cars if a. demand is elastic and supply is inelastic. b. demand is inelastic and supply is perfectly inelastic. c. both demand and supply are inelastic. d. both demand and supply are elastic.

b. The firm will not sell any output.

Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in the industry charges $21. Which of the following will happen? a. The firm's revenue will increase. b. The firm will not sell any output. c. The firm's profits will increase. d. The firm will sell more output than its competitors.

d. P3cbP1

Suppose the prevailing price is P1 and the firm is currently producing its loss-minimizing quantity. Identify the area that represents the loss. a. 0P1 bQ1 b. P3caP0 c. P2 deP1 d. P3cbP1

b. 2 burgers and 3 cans of Pepsi

Table 10-6 lists Jay's marginal utilities for burgers and Pepsi. Jay has $7 to spend on these two goods. The price of a burger is $2 and the price of a can of Pepsi is $1. Refer to Table 10-6. What is Jay's optimal consumption bundle? a. 1 burger and 2 cans of Pepsi b. 2 burgers and 3 cans of Pepsi c. 3 burgers and 1 can of Pepsi d. 3 burgers and 2 cans of Pepsi

c. South Korea has an absolute advantage in both products.

Table shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. Does either China or South Korea have an absolute advantage and if so, in what product? a. South Korea only has an absolute advantage in wheat. b. China only has an absolute advantage in wheat. c. South Korea has an absolute advantage in both products. d. China only has an absolute advantage in digital cameras.

d. convert some consumer surplus to deadweight loss.

The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods, effectively acting as a quota of zero imports when stimulus money was being spent. In the U.S. steel market, the "Buy American" provision in the 2009 stimulus package would a. transfer some deadweight loss to producer surplus. b. transfer some producer surplus to consumer surplus. c. reduce the producer surplus received by foreign manufacturers. d. convert some consumer surplus to deadweight loss.

b. the income effect which causes you to increase your canned peas purchases is smaller than the substitution effect which causes you to reduce your purchases, resulting in a net decrease in quantity demanded.

The demand curve for canned peas is downward sloping. If the price of canned peas, an inferior good, rises, then a. the income effect which causes you to reduce your canned peas purchases is smaller than the substitution effect which causes you to increase your purchases, resulting in a net increase in quantity demanded. b. the income effect which causes you to increase your canned peas purchases is smaller than the substitution effect which causes you to reduce your purchases, resulting in a net decrease in quantity demanded. c. both the income and substitution effects reinforce each other to decrease the quantity demanded. d. the income and substitution effects offset each other but the price effect of an inferior good leads you to buy more canned peas.

a. technology refers to the processes used by a firm to transform inputs into output while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs.

The difference between technology and technological change is that a. technology refers to the processes used by a firm to transform inputs into output while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs. b. technology is carried out by firms producing physical goods but technological change is an intellectual exercise into seeking ways to improve production. c. technology is product-centered, that is, developing new products with our limited resources while technological change is process-centered in that it focuses on developing new production techniques. d. technology involves the use of capital equipment while technological change requires the use of brain power.

a. have a strong attachment to their property, regardless of whether they paid to acquire it.

The endowment effect suggests that that people a. have a strong attachment to their property, regardless of whether they paid to acquire it. b. have a strong sense of fairness. c. are concerned about the welfare of others. d. act in ways to distort market prices.

C

The figure contains information about the short run cost structure of a firm. In the figure above which letter represents the average variable cost curve? A B C D

a. A shift from D2 to D1

The graph above is for a good that is inferior. An increase in income would cause: a. A shift from D2 to D1 b. A shift from D1 to D2 c. A move from A to B d. A move from B to A

b. physical capital.

The machines that workers have to work with are considered a. human capital. b. physical capital. c. entrepreneurship. d. financial capital.

c. the shutdown point.

The minimum point on the average variable cost curve is called a. the point of diminishing returns. b. the break-even point. c. the shutdown point. d. the loss-minimizing point.

b. 15 percent.

The price elasticity of supply of hot dog buns is estimated to be 1.5. Holding everything else constant, this means that a 10 percent decrease in the price of hot dog buns will cause the quantity of hot dog buns supplied to decrease by a. 1.5 percent. b. 15 percent. c. approximately 25 percent. d. approximately 5 percent.

b. market demand and market supply.

The price of a seller's product in perfect competition is determined by a. the individual seller. b. market demand and market supply. c. a few of the sellers. d. the individual demander.

a. Japan

This table shows the number of labor hours required to produce a wristwatch and a bushel of rice in Japan and Thailand. If each country specializes in the production of the product in which it has a comparative advantage, who should produce wristwatches? a. Japan b. Thailand c. Neither d. Both

b. 1/5 of an angelfish

Trina's Tropical Fish Store sells goldfish for $2 each and angelfish for $10 each. What is the opportunity cost of buying a goldfish? a. 5 angelfish b. 1/5 of an angelfish c. $10 d. $2

d. above the supply curve and below the equilibrium price.

Under autarky, domestic producer surplus is represented by the area a. above the demand curve and below the supply curve. b. above the supply curve and below the demand curve. c. below the demand curve and above the equilibrium price. d. above the supply curve and below the equilibrium price.

C) $220

Vipsana's Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is $2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day. Calculate Vipsana's variable cost per day when she produces 50 gyros using two workers? A) $100 B) $124.40 C) $220 D) $240

c. It refers to a situation in which a product's usefulness increases with the number of people using it.

What is a network externality? a. It refers to having a network of suppliers and buyers for a good or service. b. It refers to lobbying to form a public enterprise. c. It refers to a situation in which a product's usefulness increases with the number of people using it. d. It refers to a product that requires connection to a network for it to be useful.

b. It refers to the actions people take after they have entered into a transaction that makes the other party to the transaction worse off.

What is moral hazard? a. It refers to the private, self-interested actions that people pursue, which when taken collectively leads to a loss in economic surplus. b. It refers to the actions people take after they have entered into a transaction that makes the other party to the transaction worse off. c. It refers to the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction. d. It refers to the actions people take before they enter into a transaction so as to mislead the other party to the transaction.

b. asymmetric information

What is the term that describes a situation in which one party to an economic transaction has less information than the other party? a. inefficient market hypothesis b. asymmetric information c. unequal market structure d. monopsony

a. a U.S. import and an Italian export.

When Roxanne, a U.S. citizen, purchases a designer dress from Barneys of New York that was made in Milan, the purchase is a. a U.S. import and an Italian export. b. neither an export nor an import for either the United States or Italy. c. a U.S. export and an Italian import. d. both a U.S. and an Italian import.

c. -0.8; complements

When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent, and the sale of dips (like salsa and bean dip) fell 8 percent. This set of facts indicates that the cross-price elasticity between tortilla chips and dips is ________, so the two are ________. a. 0.8; substitutes b. -0.4; complements c. -0.8; complements d. 0.4; substitutes

a. inelastic.

When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent. This indicates that the demand for tortilla chips is a. inelastic. b. elastic. c. unit elastic. d. perfectly inelastic.

d. Markets promote competition and voluntary exchange.

Which of the following contributes to the efficiency of markets? a. Governments play an active role in the day-to-day operations of markets. b. Markets are able to bring about an equitable distribution of goods and services. c. Markets promote equal standards of living. d. Markets promote competition and voluntary exchange.

c. C) a factory building

Which of the following is a factor of production that generally is fixed in the short run? a. A) raw materials b. B) labor c. C) a factory building d. D) water

d. pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.

Which of the following is a normative economic statement? a. Rising global demand for coal has led to increases in the price of coal. b. With rising mortgage rates and rising unemployment rates, the number of unsold homes has increased. c. The state of Texas is considering increasing funds for light-rail development to promote the use of public transportation. d. Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.

b. If the price of iPhones falls, a larger quantity of iPhones will be purchased.

Which of the following is a positive economic statement? a. The standard of living in the United States should be higher. b. If the price of iPhones falls, a larger quantity of iPhones will be purchased. c. The government should revamp the health care system. d. The U.S. government should not have bailed out U.S. auto manufacturers.

a. access to the commons can be restricted through community norms and laws

Which of the following is a possible solution when a scarce resource is subject to the tragedy of the commons? a. access to the commons can be restricted through community norms and laws b. offer subsidies to consumers c. force people to move away from the commons d. persuade people to use less of the scarce resource through an advertising campaign

b. a public library

Which of the following is an example of a nonexcludable product? a. college education b. a public library c. public transportation d. Internet service for your home computer

d. outsourcing some aspect of production

Which of the following is not a source of technological advancement for a producer? a. better trained workers b. more efficient physical capital c. higher skill level of managers d. outsourcing some aspect of production

A) As output increases, average fixed cost becomes smaller and smaller.

Which of the following statements is true? A) As output increases, average fixed cost becomes smaller and smaller. B) Average fixed cost does not change as output increases. C) The marginal cost curve intersects the average fixed cost curve at its minimum point. D) When marginal cost is greater than average fixed cost, average fixed cost increases.

b. The U.S. economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

Which of the following statements is true? a. Eliminating its tariffs and quotas unilaterally would not benefit the United States because this would remove the leverage it would have to persuade other countries to eliminate their trade restrictions. b. The U.S. economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas. c. Economic efficiency would be increased if the United States eliminated all of its trade restrictions, but only if all other countries eliminated their trade restrictions too. d. The U. S. economy would gain from the elimination of its tariffs but not from the elimination of its quotas.

c. A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly.

Which one of the following about a monopoly is false? a. A monopoly could make profits in the long run. b. A monopoly could break even in the long run. c. A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly. d. A monopoly status could be temporary.

c. the owner

Who controls a sole proprietorship? a. stockholders b. bondholders c. the owner d. all of these

d. management

Who operates and controls a corporation in its day-to-day activities? a. the board of directors b. stockholders c. employees d. management