Econ 102 HSQ Modules

which of these is NOT an example of price discrimination?

gas stations charging more for gasoline with higher octane and additional additives

the price elasticity of supply is calculated by the percentage change in:

quantity supplied/percentage change in price

posting different prices for adults and children at a luncheon buffet is an example of third-degree price discrimination.

true

the concept of scarcity implies that people must make choices among alternatives

true

the plant size can change in the long run

true

time series graphs allow us to see trends in one variable over a set time frame

true

when the price of coffee increased from $4.50 to $5.55, the quantity demanded decreased from 185 units sold to 150 units sold. using the midpoint method, the price elasticity of demand is:

1

which factor will cause an increase in the quantity demanded for iPhones?

a decrease in the price of iPhones

sales of luxury consumer products for cats and dogs, such as pet spas and hotels, have experienced ___ over the past decade

a large increase

companies that sell products through infomercials fall under the monopoly market framework structure because they:

advertise their products as on-of-a-kind

supply refers to the:

amount of a product that sellers are willing and able to sell at various prices

before deciding on a pricing strategy, Worldwide Widgets consults with its market intelligence team to understand what discounts the Gargantuan Gizmo Company is offering. the model that BEST fits this industry is:

an oligopoly

interdependence is a key characteristic of:

an oligopoly

Mr. Smith, who knows the proposed site of a major new highway from reading the newspaper, buys a ranch from Mr.Jones, who never reads the newspapers. This is an example of:

asymmetric information

in the short run:

at least one factor of production is fixed

all of these are basic determinants of a product's elasticity of demand, EXCEPT the:

availability of complementary products

in the simplified model in the text, production in the short run varies by the amount of labor used

true

prices typically contain useful information

both for buyers and for sellers

in the short run, firms:

can hire inputs such as labor and buy more raw materials

an industry in which there is a proposed merger has an Herfindahl-Hirschman Index measurement of 3,000. The likely merger will raise the HHI by 100 points. This merger will be:

challenged because of the high initial HHI and the anticipated high postmerger increase in the HHI

which of these is a benefit that results from a prisoner's dilemma outcome?

charging low prices leads to more customers

a market has three firms, all of which are suffering losses. however, none of the firms leaves the market as each firm is hoping that another will do. as a result, all firms continue to suffer losses. what type of game is this?

chicken game

measuring elasticities in percentage terms allows us to:

compare the sensitivity of demand curves, compare characteristics of dissimilar products, and not worry about the magnitude of changes

suppose that the price of a good is $650 and equilibrium price is ^625. compared to market equilibrium:

consumer surplus is decreased and deadweight loss is increased

market forces are in balance when the quantities demanded by consumers just equal quantities supplied by producers

true

which scenario is the MOST likely effect of an increase in the price of flashlights on the market for batteries?

decreased equilibrium price and decreased equilibrium quantity

if demand is inelastic, a reduction in price:

decreases total revenue

Alfred Marshall is primarily responsible for:

developing the law of supply and demand

if a firm increases its inputs by 80% and its output increases by 60%, then this would be an example of:

diseconomies of scale

assume that this Friday you would like to go to the club. you ask your friends to go with you, but they all want to go to the movies. despite your friends not wanting to go with you, you decide to go to the club anyways because you really want to go dancing. this type of thinking BEST resembles a :

dominant strategy

in a Nash equilibrium:

each player selects the best possible strategy, given the other player's intended strategies

specialization of labor and management typically supports:

economies of scale

if a price floor is set above the market price, it is:

effective

coupons in the Sunday newspaper circular segment the market by:

elasticity of demand, because the more price-sensitive buyers will use coupons

if the surgeon general announced that wearing baseball caps will eliminate dandruff, then, ceteris paribus, the:

equilibrium price of baseball caps would increase

a sales tax applied to a specific product, such as mascara, is called an:

excise tax

another name for "economic profit" is "normal profit"

false

antitrust laws are designed to prevent firms from earning economic profits

false

by producing a number of different products that are interdependent, a firm can experience economies of scale

false

if a company is experiencing marginal returns, its average product must be declining

false

if buyers do not value a specific product, they will pay the asking price immediately

false

if the price of oil increases by 50% but consumption decreases by 25%, then oil is an elastic commodity

false

long-term shortages and surpluses are almost always the result of automatic market adjustments

false

markets operate the most efficiently when external costs are maximized

false

one of the major characteristics of a cartel is that it has a highly elastic demand curve

false

price discrimination requires complete monopoly control of the market

false

suppose that a customer's willingness to pay for a product is $120, and the seller's willingness to sell is $110. If the negotiated price is $119, consumer surplus is $9.

false

suppose that an industry has a pre-merger HHI of 2,000 and two firms in that industry are trying to merge. the postmerger HHI is expected to be 2,300. This merger is likely to be approved.

false

the French term for "let it be" is ceteris paribus

false

the entry and exit of firms occur in the short run

false

the marginal cost curve is always equal to the demand curve in the short run

false

trigger strategies are actions taken that are contingent on your opponent's future decisions

false

when economies of scale are present, the average cost is increasing

false

when quantity demanded exceeds quantity supplied, a shortage occurs and prices are pushed down toward equilibrium

false

total costs are a combination of:

fixed costs plus variable costs

for a given supply of a product, the ___ the price elasticity of demand, the ___ the share of the total tax burden borne by consumers, and the ___ the share borne by sellers

greater; smaller; greater

if a competitive firm in the short run finds that its average total costs exceed its price, the firm:

has an economic loss

students who never miss class and study hard generally earn higher grades than those who do not. this is an example of:

incentives

one of the key ingredients in making rational choices is access to:

information

a firm increases its price for a good and total revenues increase. from this, we can conclude that its demand:

is price inelastic

the market-clearing price:

is the price at which quantity demanded equals quantity supplied

price discrimination is more likely in the case of services than in the case of goods because:

it is easier to resell goods than services

economists assume that firms try to ___. other theories suggest that firms might, among other things, try to___

maximize profits; maximize sales

a good example of a government-imposed price floor is:

minimum wage

a theory composed of a number of assumptions and facts boiled down to their basic relevant elements is called a:

model

all else equal, consumers prefer market outcomes with:

more consumer surplus

which of these is the BEST example of a pure public good?

national defense

which of these would be considered a public good?

national defense

a constantly declining long-run average cost curve is a characteristic of what type of industrial structure?

natural monopoly

in the long run, perfectly competitive firms earn:

normal profits

the market structure that maximizes consumer surplus is:

perfect competition

price elasticity of demand is a measure of how responsive a change in quantity demanded is to a change in:

price

what drives and disciplines markets?

prices and profits

a firm will have a "kinked" demand curve if its decision to raise prices is ___ matched by competitors, whereas its decision to lower prices is ___ matched by competitors

rarely; always

firms that strive to avoid competition are called:

rent seekers

to say that economics is a way of thinking about how people make rational decisions means that people:

respond to incentives

the economist Henry George proposed that all tax revenue be collected by taxes on land. If land were perfectly inelastic in supply, then a property tax on land would:

result in no deadweight loss

Eve runs a yoga studio. she is considering exanding her operation, but to do so, she needs to double the size of her existing building. she is concerned that her insurance will increase significantly due to the increased exposure to liability. and, she alone would bear the burden of that if an accident were to occur. based on the above information, Eve's studio should be considered a ___ and the decision to expand a ___ decision

sole proprietor; long-run

which sequence describes the long-run adjustment process in a competitive market when firms are experiencing short-run economic losses?

some firms exit, industry supply decreases, market price rises

the shift from supply curve 1 to supply curve 2 might be caused by an increase in:

subsidies

wheat is the main input in the production of flour. if the price of wheat increases, all else equal, we would expect the:

supply of flour to decrease

because people make decisions at the margin, when deciding whether to purchase a second car, they would therefore compare:

the additional benefits expected from a second car with the additional costs of the second car

suppose a perfectly competitive firms is in the following situation: P=$10, output= 3,000, ATC= $11, MC=$10, and AVC=$7.50. which statement is an accurate description of the firm's situation?

the firm incurs losses but is also minimizing its losses

if the market price is $60, a firm's minimum average total cost is $70, and minimum average variable cost is $50, what should the firm do in this perfectly competitive market?

the firm should continue producing in the short run in order to minimize losses

if a firm can change all of its factors of production, then it is operating in:

the long run

as a result of the assumptions of a kinked demand curve model:

the portion of the demand curve above the kink is more elastic than below the kink

if there is a surplus in a given market, then:

the price will decrease

which statement about a perfect competitor is NOT correct?

the products made by a perfectly competitive firm have no close substitutes

which statement about the price that a monopolist charges is TRUE?

the value that society places on the last unit produced in a monopoly is greater than its cost

if the price of gasoline rises, then:

there is an upward movement along the demand curve for gasoline

a firm that can unilaterally raise its price and still sell its product cannot be in a perfectly competitive industry

true

according to the average cost-pricing rule, monopolists should produce at the quantity where the demand curve intersects the average total cost curve

true

an increase in production subsidies causes an increase in supply

true

entrepreneurs provide goods and services to markets

true

firms within a perfectly competitive market structure are considered to be price takers

true

for most goods, as their prices rise, fewer units are sold

true

if the cross elasticity of two goods is negative, then the two goods are complements

true