Econ

The term marginal utility denotes the amount by which ______ changes when consumption changes by __ units.

total utility, 1 unit

At his current level of consumption, Evan gets twice as much marginal utility from an additional bottle of water as that from an additional bottle of soda. If the price of soda is $1.00 per bottle, then Evan is maximizing utility if the price of a bottle of water is: This cannot be determined from the information given. $1.00 $0.50 $2.00 $1.50

$2.00

Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry's opportunity cost of attending State NoName U is: $60,000 $30,000 $20,000 $15,000

$20,000

When the price of hot dogs is $1.50 each, 500 hot dogs are sold every day. After the price falls to $1.35 each, 510 hot dogs are sold every day. At the original price, what is the price elasticity of demand for hot dogs? 0.2 66.67 2 5

0.2

The demand and supply for paper are given by the following equations (respectively): QD = 200 - 20 P QS = 20 P (Note: P stands for price) Use these equations to answer the 12 questions on the right. what is the equilibrium quantity

100

Casey earns $150 a week and consumes only fish and shrimp. The price of fish is $3 a pound and the price of shrimp is $5 a pound. Suppose the price of fish decreased to $1.50 a pound, and the price of shrimp remains $5 a pound. At Casey's original income of $150 per week, Casey can now buy a maximum of ___ pounds fish or a maximum of ___ pounds shrimp.

100,30

Suppose Island Bikes, a profit-maximizing firm, is the only bike rental company in a small resort town. The marginal cost to Island Bikes of renting out a bike is $3, and Island Bikes has no fixed costs. Each day Island Bikes has six potential customers, whose reservation prices are listed in the table. Customer Reservation Price ($/Rental) A 22 B 16 C 12 D 8 E 6 F 4 If Island Bikes charges a single price to all of its customers, then what price will it charge?

12

Suppose a firm uses workers and office space to produce output. The firm is locked into a year-long lease on its office space, but it can easily vary the number of employee-hours it uses each day. The accompanying table describes the relationship between the number of employee-hours the firm uses each day and the firm's daily output. Each unit of output sells for $2, the hourly wage rate is $14, and the rent on the office space is $50 per day. Employee-Hours Per Day Output Per Day 0 0 1 40 4 80 9 120 15 160 23 200 The firm is currently using 9 employee-hours per day. What are the firm's total variable costs?

126

The demand and supply for paper are given by the following equations (respectively): QD = 200 - 20 P QS = 20 P (Note: P stands for price) Use these equations to answer the 12 questions on the right. What is the consumer surplus after the government enacts the price floor?

160

Jamie's marginal utility from muffins and from doughnuts (in utils) is shown in the accompanying table. Jamie spends a total of $8 on muffins and/or doughnuts every morning. The price of each muffin is $2 and the price of each doughnut is $1. Doughnuts Marginal Utility Per Day Per Doughnut 2 20 4 15 5 10 Muffins Marginal Utility Per Day Per Muffin 1 40 2 30 3 20 if shes spending her money optially how may muffins and dougnuts will she buy

2,4

The demand and supply for paper are given by the following equations (respectively): QD = 200 - 20 P QS = 20 P (Note: P stands for price) Use these equations to answer the 12 questions on the right. What is the dead weight loss from the price floor?

20

Suppose a firm uses workers and office space to produce output. The firm is locked into a year-long lease on its office space, but it can easily vary the number of employee-hours it uses each day. The accompanying table describes the relationship between the number of employee-hours the firm uses each day and the firm's daily output. Each unit of output sells for $2, the hourly wage rate is $14, and the rent on the office space is $50 per day. Employee-Hours Per Day Output Per Day 0 0 1 40 4 80 9 120 15 160 23 200 The firm is currently using 9 employee-hours per day. What's the firm's total revenue (each day)?

240

The demand and supply for paper are given by the following equations (respectively): QD = 200 - 20 P QS = 20 P (Note: P stands for price) Use these equations to answer the 12 questions on the right. what is the consumer surplus

250

The demand and supply for paper are given by the following equations (respectively): QD = 200 - 20 P QS = 20 P (Note: P stands for price) Use these equations to answer the 12 questions on the right. what is the producer surplus

250

Suppose Island Bikes, a profit-maximizing firm, is the only bike rental company in a small resort town. The marginal cost to Island Bikes of renting out a bike is $3, and Island Bikes has no fixed costs. Each day Island Bikes has six potential customers, whose reservation prices are listed in the table. Customer Reservation Price ($/Rental) A 22 B 16 C 12 D 8 E 6 F 4 If Island Bikes charges a single price to all of its customers, then what will be its daily economic profit?

27

Suppose Island Bikes, a profit-maximizing firm, is the only bike rental company in a small resort town. The marginal cost to Island Bikes of renting out a bike is $3, and Island Bikes has no fixed costs. Each day Island Bikes has six potential customers, whose reservation prices are listed in the table. Customer Reservation Price ($/Rental) A 22 B 16 C 12 D 8 E 6 F 4 If Island Bikes charges a single price to all of its customers, then how many bikes will it rent out each day?

3

The demand and supply for paper are given by the following equations (respectively): QD = 200 - 20 P QS = 20 P (Note: P stands for price) Use these equations to answer the 12 questions on the right. What is the producer surplus after the government enacts the price floor?

320

Amy is thinking about going to the movies tonight. A movie ticket costs $15, and she'll have to cancel a $20 dog-sitting job that she would have been willing to do for free. The opportunity to Amy cost of going to the movies is: $15 $20 $5 $35.

35

You paid $35 for a ticket (which is non-refundable) to see SPAM, a local rock band, in concert on Saturday. Assume that $35 is the most you would have been willing to pay for a ticket. Your boss called, and she is looking for someone to cover a shift on Saturday at the same time as the concert. You would have to work 4 hours and she would pay you $11/hr. The psychic cost to you of working is $2/hr. What is the opportunity cost of going to the concert? $1 $36 $9 $35

36

Last year Christine worked as a consultant. She hired an administrative assistant for $15,000 per year and rented office space (utilities included) for $3,000 per month. Her total revenue for the year was $100,000. If Christine hadn't worked as a consultant, she would have worked at a real estate firm earning $40,000 a year. Last year, Christine's accounting profit was

49000

The demand and supply for paper are given by the following equations (respectively): QD = 200 - 20 P QS = 20 P (Note: P stands for price) Use these equations to answer the 12 questions on the right. what is the equilibrium price

5

Suppose a firm uses workers and office space to produce output. The firm is locked into a year-long lease on its office space, but it can easily vary the number of employee-hours it uses each day. The accompanying table describes the relationship between the number of employee-hours the firm uses each day and the firm's daily output. Each unit of output sells for $2, the hourly wage rate is $14, and the rent on the office space is $50 per day. Employee-Hours Per Day Output Per Day 0 0 1 40 4 80 9 120 15 160 23 200 The firm is currently using 9 employee-hours per day. This firm's fixed cost each day is:

50

Suppose Island Bikes, a profit-maximizing firm, is the only bike rental company in a small resort town. The marginal cost to Island Bikes of renting out a bike is $3, and Island Bikes has no fixed costs. Each day Island Bikes has six potential customers, whose reservation prices are listed in the table. Customer Reservation Price ($/Rental) A 22 B 16 C 12 D 8 E 6 F 4 What is the socially optimal number of bikes for Island Bikes to rent out each day?

6

The demand and supply for paper are given by the following equations (respectively): QD = 200 - 20 P QS = 20 P (Note: P stands for price) Use these equations to answer the 12 questions on the right. To save the dying paper industry, the government decides to institute a price floor of $6. They are hoping to raise producer revenue by $100 (= change in price * quantity). (for all the questions below, assume that the price floor has been instituted). What will consumers now pay?

6

The demand and supply for paper are given by the following equations (respectively): QD = 200 - 20 P QS = 20 P (Note: P stands for price) Use these equations to answer the 12 questions on the right. With the price floor of $6, how much quantity will be transacted (sold by producers to consumers)?

80

Last year Christine worked as a consultant. She hired an administrative assistant for $15,000 per year and rented office space (utilities included) for $3,000 per month. Her total revenue for the year was $100,000. If Christine hadn't worked as a consultant, she would have worked at a real estate firm earning $40,000 a year. Last year, Christine's economic profit was

9000

Which of the following describes a surplus-enhancing transaction? The Federal government taxes the wealthy to pay for programs to help the poor. A firm lays off 25 workers in order to cut costs. A person pays $10.00 to buy a scoop of ice cream at a baseball game. Your state government imposes a higher minimum wage than the one set by federal law.

A person pays $10.00 to buy a scoop of ice cream at a baseball game.

Which of the following is an example of the rationing function of price? Switching from a Ph.D. in economics to one in finance because finance salaries are higher Bill Gates purchasing the Mona Lisa for $5 billion A firm attempting to lower its explicit costs Government price controls

Bill Gates purchasing the Mona Lisa for $5 billion

Which of the following is NOT necessarily true in a market equilibrium? Price represents the value of an extra unit of consumption. Both rich and poor have adequate access to the good. Price represents the cost of an extra unit of production. All mutually beneficial trades have been made.

Both rich and poor have adequate access to the good.

In exchange for a lump sum of cash and share of the revenues earned in Dunder Mifflin's office, Dunder Mifflin has granted "Pizza by Alfredo" the exclusive right to sell pizza to the employees, and is the exclusive partner for all office parties. Prior to the deal, multiple pizza companies sold pizza (including the sometimes confusingly named "Alfredo's pizza"); now no other company is allowed to sell or deliver pizza to the office. (Note: While there might be a lot of differences in pizza quality, assume the pizza places sell identical products) Use the above info to answer the 3 questions on the right. The beneficiaries of this deal is/are (select all that apply, select none if nobody benefits) Dunder Mifflin the employees of Dunder Mifflin The other pizza companies (like Alfredo's pizza) Pizza by Alfredo

Dunder Mifflin Pizza by Alfredo

Sally eats out at the local burger joint quite frequently. The burger joint suddenly lowers its prices. In response, Sally goes to the burger joint less often. How could this happen? The substitution effect would be zero, so this should happen. The magic of the market If burgers are very inferior, and she was spending a lot of money on them Perfect competition

If burgers are very inferior, and she was spending a lot of money on them

Which of the following are true of a perfectly competitive firm? It faces a perfectly elastic demand curve. It is unable to influence the price of the good it sells. It seeks to maximize revenue. It sells only a small fraction of the total quantity exchanged in the market.

It faces a perfectly elastic demand curve. It is unable to influence the price of the good it sells. It sells only a small fraction of the total quantity exchanged in the market.

Josh wants to go to the football game this weekend, but he has a paper due on Monday. It will take him the whole weekend to write the paper. Josh decides to stay home and work on the paper. According to the Scarcity Principle, the reason Josh doesn't go to the game is that: Josh prefers schoolwork to football games. writing the paper is easier than going to the game. going to the game won't be fun. Josh can't go the game and finish the paper.

Josh can't go the game and finish the paper.

Suppose that Fiona spends all of her income on 10 units of good X and 14 units of good Y. Fiona's marginal utility from the 10th unit of good X is 24 utils, and her marginal utility from the 14th unit of good Y is 20 utils. The price of good X is $8 per unit and the price of good Y is $5 per unit. Is Fiona currently complying with the rational spending rule? ____. To optimize her utility (with her budget constraint), Fiona should ____ her consumption of good X, and ____ her consumption of good Y.

No, decrease, increase

You own a business operating in a perfectly competitive market. Fixed costs are higher than expected. Will this impact your profit maximizing quantity of production in the short run? Yes (but only if the fixed cost is sunk) Yes (but only if the fixed cost is NOT sunk) No. Because marginal costs are not impacted by fixed costs. No. Because total costs are not impacted by fixed costs.

No. Because marginal costs are not impacted by fixed costs.

Which of the following is NOT an example of an explicit cost? The income the owner could have earned in his or her next best employment opportunity. The salaries paid to the managers who help run the business. The overtime wages paid to workers. The rent the owner pays each month to lease office space.

The income the owner could have earned in his or her next best employment opportunity.

for a perfectly competitive market, what would happen in the long run according to economic theory (if firm is not making profits) The number of firms would increase The number of firms would decrease The quantity each firm makes would increase The quantity each firm makes would decrease Market prices would rise Market prices would fall Demand would shift left Demand would shift right Quantity demanded would increase Quantity demanded would decrease

The number of firms would decrease The quantity each firm makes would decrease Market prices would rise Quantity demanded would decrease

for a perfectly competitive market, what would happen in the long run according to economic theory (if firm is making profits) The number of firms would increase The number of firms would decrease The quantity each firm makes would increase The quantity each firm makes would decrease Market prices would rise Market prices would fall Demand would shift left Demand would shift right Quantity demanded would increase Quantity demanded would decrease

The number of firms would increase The quantity each firm makes would decrease Market prices would fall Quantity demanded would increase

Which of the following determines whether a firm will earn higher revenues when it raises its price? The price elasticity of demand. None of these, because companies always earn higher revenues when they increase price. The cost of the firm's inputs. Government regulation of the industry.

The price elasticity of demand.

Which of the following would not be included in the calculation of accounting profit? The medical insurance coverage for the company's workers. The wages paid to the company's workers. The salary the owner could have earned working elsewhere. The rent paid by the owner for the use of a building.

The salary the owner could have earned working elsewhere.

Assume consumers eat either rice or pasta for dinner every night. If the price of rice increases, then one would expect to see: a decrease in the demand for pasta. an increase in the quantity of pasta demanded. a decrease in the quantity of pasta demanded. an increase in the demand for pasta.

an increase in the demand for pasta.

Suppose that the equilibrium price of pickles falls while the equilibrium quantity rises. The most likely explanation for these changes is: a decrease in the supply of pickles. an increase in the supply of pickles. a decrease in demand for pickles. an increase in demand for pickles.

an increase in the supply of pickles.

As one moves down along a linear demand curve (i.e., from high price, low quantity pairs to low price, high quantity pairs), demand: decreases becomes more elastic. increases. becomes less elastic.

becomes less elastic.

A good is characterized by network economies if it: can be used by more than one person at a time. becomes cheaper to produce as more people buy it. is widely advertised on television. becomes more valuable as more people own it.

becomes more valuable as more people own it.

A good is characterized by network economies if it: is widely advertised on television. can be used by more than one person at a time. becomes more valuable as more people own it. becomes cheaper to produce as more people buy it.

becomes more valuable as more people own it.

a good is characterized by network economies if it... becomes cheaper to produce as more people buy it. can be used by more than one person at a time. becomes more valuable as more people own it. is widely advertised on television.

becomes more valuable as more people own it.

The allocative function of price cannot operate unless there is: a significant barrier to entry. both free entry and free exit. either free entry or free exit. neither free entry no free exit.

both free entry and free exit.

If resources are misallocated in a perfectly competitive market, then, in the long run, profit opportunities will: bring about a more efficient allocation of resources. bring about a less efficient allocation of resources. not bring about a reallocation of resources unless there is government regulation. not bring about a reallocation of resources unless firms are subsidized.

bring about a more efficient allocation of resources.

Economics is can be broadly characterized as the study of: choice in the face of limited resources. the financial concerns of businesses and individuals. whether we will have enough resources in the future. the role of government in limiting the choices people make.

choice in the face of limited resources.

Suppose you camped out in front of an electronics store to be one of the 200 lucky people able to purchase the latest gaming system. You bought the system for $350. Two weeks later you see that the same system can be sold on e-Bay for $600, so you sell your system. Your market role was as a: consumer at the electronics store and a seller on e-Bay. consumer in both markets. seller in both markets. consumer at the electronics store; the e-Bay transaction did not occur in a market.

consumer at the electronics store and a seller on e-Bay.

Suppose a market is in equilibrium. The area below the demand curve and above the market price is: total economic surplus. producer surplus. consumer surplus. the loss in total economic surplus.

consumer surplus.

If two products are substitutes, then the: price elasticity of demand for both will be positive. cross-price elasticity of demand between them will be positive. income elasticity of demand for both will be high. cross-price elasticity of demand between them will be negative.

cross-price elasticity of demand between them will be positive.

All else equal, a decrease in the demand for oranges will lead to a(n) ________ in equilibrium price and a(n) ________ in equilibrium quantity. increase; decrease decrease; decrease increase; increase decrease; increase

decrease; decrease

When Joe's Gas raises its price for regular unleaded gasoline, total revenue from regular unleaded gas falls to zero. It must be the case that consumers are switching to premium grades of gasoline. there are not many good substitutes for Joe's regular unleaded gasoline. the demand for Joe's regular unleaded is inelastic. demand for Joe's regular unleaded gasoline is perfectly elastic.

demand for Joe's regular unleaded gasoline is perfectly elastic.

price discrimination means... different prices for different products because production costs are different. the same price to all buyers even if production costs are different. different prices to different buyers for essentially the same good or service. higher prices to women and minorities.

different prices to different buyers for essentially the same good or service.

In the long run, in a perfectly competitive industry: economic profit tends to persist. the number of firms in the industry will increase. economic loss tends to persist. economic profit and loss are driven to zero by entry and exit.

economic profit and loss are driven to zero by entry and exit.

In the long run, in a perfectly competitive industry: economic profit tends to persist. the number of firms in the industry will increase. economic loss tends to persist. economic profit and loss are driven to zero by entry and exit.

economic profit and loss are driven to zero by entry and exit.

An increase in the price a firm receives for its output will lead the firm to expand output. leave output unchanged and earn greater profits. leave output unchanged and earn smaller losses. reduce output.

expand output

The marginal benefit of an activity is the: same as the total benefit of an activity. total benefit of an activity divided by the level of the activity. extra benefit associated with an extra unit of the activity total benefit associated with an extra unit of the activity

extra benefit associated with an extra unit of the activity

As the price of a good rises: government regulation becomes more justified. more firms can cover their opportunity cost of producing the good. firms generally decrease the supply of the good. firms generally increase the supply of the good.

firms generally decrease the supply of the good.

Suppose that the market price for hot dogs sold by street vendors has just risen from $4.50 to $5.00, and that in response Curly has now begun operating a hot dog cart. We can assume that Curly's reservation price for hot dogs is: greater than $4.50 but no more than $5.00. $5.00. $4.50. at least $5.00.

greater than $4.50 but no more than $5.00.

A decrease in the price of pizza will lead to a(n): increase in the demand for pizza. decrease in the quantity of pizza demanded. increase in the quantity of pizza demanded. decrease in the number of consumers.

increase in the quantity of pizza demanded.

If a monopolist's marginal revenue exceeds its marginal cost at its current level of output, then to maximize its profit the monopolist should: increase output until price equals marginal cost. increase output until marginal revenue equals marginal cost. decrease output in order to increase the gap between marginal revenue and marginal cost. do nothing.

increase output until marginal revenue equals marginal cost.

In exchange for a lump sum of cash and share of the revenues earned in Dunder Mifflin's office, Dunder Mifflin has granted "Pizza by Alfredo" the exclusive right to sell pizza to the employees, and is the exclusive partner for all office parties. Prior to the deal, multiple pizza companies sold pizza (including the sometimes confusingly named "Alfredo's pizza"); now no other company is allowed to sell or deliver pizza to the office. (Note: While there might be a lot of differences in pizza quality, assume the pizza places sell identical products) Use the above info to answer the 3 questions on the right. "Pizza by Alfredo" now has market power due to: its exclusive ownership of an input. economies of scale in the production of pizza. its exclusive license to sell pizza. network economies in the consumption of pizza.

its exclusive license to sell pizza.

Relative to a single price monopolist, a price discriminating monopolist generates (select all that apply): more consumer surplus. the same consumer surplus. less consumer surplus. more producer surplus. the same producer surplus. less producer surplus. more total surplus. the same total surplus (just re-distributing) less total surplus.

less consumer surplus. more producer surplus. more total surplus.

Jeans in general have fewer close substitutes than a specific brand of jeans. Therefore, the demand for jeans in general will be ________ than the demand for a specific brand of jeans. more elastic less inelastic less elastic more unit elastic without more information you cannot know this

less elastic

Suppose you believe that plaid flannel shirts are an inferior good, and want to test this with economic data. You expect to find that the income elasticity for plaid flannel shirts is: close to zero. greater than one. greater than zero, but less than one. less than zero.

less than zero.

Given the demand curve it faces, if an imperfectly competitive firm wants to sell another unit of output, it must: increase its advertising. lower its price. lower its quality. increase the value of its product.

lower its price.

Given the demand curve it faces, if an imperfectly competitive firm wants to sell another unit of output, it must: increase the value of its product. increase its advertising. lower its quality. lower its price.

lower its price.

In most of their models, economists operate under the assumption that the primary objective of most private firms is to: maximize profit maximize output maximize revenue minimize cost

maximize profit

Explicit costs: are variable in the short run. measure the opportunity costs of the resources supplied by the firm's owners. measure the payments made to the firm's factors of production. are fixed in the short run.

measure the payments made to the firm's factors of production.

In deciding how many guitars to buy for his shop before the Christmas season, Mark is making a(n) ________ decision. macroeconomic normative irrational microeconomic

microeconomic

If a firm collects $90 in revenue when it sells 4 units, $100 in revenue when it sells 5 units, and $105 in revenue when it sells 6 units, then one can infer the firm is a: perfect competitor. monopolist. price taker. profit maximizer.

monopolist.

In exchange for a lump sum of cash and share of the revenues earned in Dunder Mifflin's office, Dunder Mifflin has granted "Pizza by Alfredo" the exclusive right to sell pizza to the employees, and is the exclusive partner for all office parties. Prior to the deal, multiple pizza companies sold pizza (including the sometimes confusingly named "Alfredo's pizza"); now no other company is allowed to sell or deliver pizza to the office. (Note: While there might be a lot of differences in pizza quality, assume the pizza places sell identical products) Use the above info to answer the 3 questions on the right. Prior to the deal, you could get a medium pizza delivered for $10 (similar price from every pizza place). After the deal you would expect a medium pizza from "Pizza by Alredo" to cost: less than $10 because "Pizza by Alfredo" will have greater volume and so can lower its price. more than $10 because "Pizza by Alfredo" is the only company that can sell pizza in the office $10 because that is the market price. more than $10 because the demand curve for pizza will shift to the left. less than $10 because marginal revenue is now less than price.

more than $10 because "Pizza by Alfredo" is the only company that can sell pizza in the office

If a firm's production process exhibits increasing returns to scale, then doubling all the firm's inputs will lead output to ________. more than double. double. fall by one-half. less than double.

more than double.

Pat's total utility after eating 99 Reese's Peanut Butter Cups was greater than his total utility after eating 100 Reese's Peanut Butter Cups. Therefore, Pat's marginal utility from the 100th peanut butter cup was: positive, but less than one. positive, but less than his marginal utility for the 99th peanut butter cup. zero. negative.

negative.

One thing that distinguishes normative economic principles from positive economic principles is that: normative principles tell us how people will behave, and positive principles tell us how people should behave. normative principles tell us how people should behave, and positive principles tell us how people will behave. normative principles reflect social norms, and positive principles reflect universal truths. normative principles are pessimistic and positive principles are optimistic.

normative principles tell us how people should behave, and positive principles tell us how people will behave.

A situation is pareto efficient if it is: possible to find a transaction that will make at least one person better off, even if others are made worse off. possible to find a transaction that will make everyone better off. possible to find a transaction that will make at least one person better off without harming others. not possible to find a transaction that will make at least one person better off without harming others.

not possible to find a transaction that will make at least one person better off without harming others.

The demand and supply for paper are given by the following equations (respectively): QD = 200 - 20 P QS = 20 P (Note: P stands for price) Use these equations to answer the 12 questions on the right. How did the government do in achieve their aim? Fully accomplished (revenue went up as much as expected) Partially accomplished (revenue went up, but not as much as expected) Total failure (there's a deadweight loss) Cannot be determined

partially accomplished but there is a deadweight loss so the total failure one was ok

If consumers completely cease purchasing a product when its price increases by any amount, then demand is: perfectly elastic. perfectly inelastic. inelastic. unit elastic.

perfectly elastic.

Suppose rice is a normal good. If consumers' incomes fall, and a new technology is introduced that lowers the marginal cost of producing rice, then the equilibrium: quantity of rice will decrease, but we cannot say for sure what will happen to the equilibrium price. price of rice will increase, but we cannot say for sure what will happen to the equilibrium quantity. price of rice will fall, but we cannot say for sure what will happen to the equilibrium quantity. quantity of rice will increase, but we cannot say for sure what will happen to the equilibrium price.

price of rice will fall, but we cannot say for sure what will happen to the equilibrium quantity.

The reason economists consider monopoly to be socially undesirable is that monopolists: produce less than the socially optimal level of output. can charge any price they want. earn too much economic profit. exploit the inelastic nature of demand.The reason economists

produce less than the socially optimal level of output.

Suppose a firm uses workers and office space to produce output. The firm is locked into a year-long lease on its office space, but it can easily vary the number of employee-hours it uses each day. The accompanying table describes the relationship between the number of employee-hours the firm uses each day and the firm's daily output. Each unit of output sells for $2, the hourly wage rate is $14, and the rent on the office space is $50 per day. Employee-Hours Per Day Output Per Day 0 0 1 40 4 80 9 120 15 160 23 200 The firm is currently using 9 employee-hours per day. the firm earns a daily (profit/loss) of ______

profit, 64

If the supply curve and the demand curve both shift to the left, then the new equilibrium: price will be higher, but the direction of the change in quantity is uncertain. quantity will be higher, but the direction of the price change is uncertain. quantity will be lower, but the direction of the price change is uncertain. price will be lower, but the direction of the change in quantity is uncertain.

quantity will be lower, but the direction of the price change is uncertain.

"Market power" refers to a firm's ability to: raise its price without losing all of its sales. undercut its competitors' prices. force consumers to buy high-priced products. influence the price its competitors charge.

raise its price without losing all of its sales.

In a free market, if the price of a good is above the equilibrium price, then; buyers, hoping to ensure they acquire the good, will bid the price lower. sellers, dissatisfied with growing inventories, will lower their prices. sellers, dissatisfied with growing inventories, will raise their prices. the government will set a lower price to reestablish the market equilibrium.

sellers, dissatisfied with growing inventories, will lower their prices.

The price elasticity of demand is a measure of the change in price of a good that results from a change in its quantity demanded. the change in quantity demanded of a good that results from a change in its price. how consumers respond to excess demand. the demand for a good.

the change in quantity demanded of a good that results from a change in its price.

Once a firm has determined the quantity of output it wishes to sell, the maximum price it can charge for each unit is determined by: the average cost of making the product. the demand curve facing the firm. the firm's marginal revenue curve. the marginal cost of making the product.

the demand curve facing the firm.

Once a firm has determined the quantity of output it wishes to sell, the maximum price it can charge for each unit is determined by: the marginal cost of making the product. the average cost of making the product. the firm's marginal revenue curve. the demand curve facing the firm.

the demand curve facing the firm.

Consumer surplus measures: the increase in a buyer's total utility when the buyer purchases additional units of a good. the difference between the quantity demanded and the quantity supplied at a given price. the difference between a buyer's marginal utility from consuming a product and the price actually paid. the difference between the most a buyer would be willing to pay for a product and the price actually paid.

the difference between the most a buyer would be willing to pay for a product and the price actually paid.

As the price of computers falls, the quantity of computers demanded increases. This is an application of: the law of demand. the law of supply. the production possibilities curve. needs versus wants.

the law of demand.

Ginger bought a phone that came with a $10 rebate. Ginger should fill out and mail in the rebate form if: Ginger's surplus from purchasing the phone was less than $10. the opportunity cost of the time and trouble of sending in the rebate form is more than $10. she would have bought the phone without the rebate, and so sending in the rebate form involves no opportunity cost. the opportunity cost of the time and trouble of sending in the rebate form is less than $10.

the opportunity cost of the time and trouble of sending in the rebate form is less than $10.