Econ Exam II

Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. Refer to Table 7-5. The market quantity of oranges demanded per day is exactly 7 if the price of an orange, P, satisfies

$0.25 < P < $0.60

Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

Buyers and sellers share the burden of the tax

If the government levies a $5 tax per MP3 player on buyers of MP3 players, then the price paid by buyers of MP3 players would likely

Increase by less than $5

When a government imposes a subsidy who gains more from the subsidy

The person with the relatively more inelastic curve

A good is excludable if

people can be prevented from using it

A tax on an imported good is called a

tariff

A view of a spectacular sunset along a private beach is an example of a

nonrival but excludable good.

The total cost to the firm of producing zero units of output is

its fixed cost in the short run and zero in the long run.

A textbook is a

private good and the knowledge that one gains from reading the book is a public good.

Refer to Figure 14-14. Suppose a firm in a competitive market, like the one depicted in panel (a), observes market price rising from P1 to P2. Which of the following could explain this observation?

An increase in market demand from D0 to D1.

Given the figure which of the following is NOT true. http://docs.google.com/file/d/0B4cvOO41GvQrVjdreEhnTUtBYk0/edit?usp=sharing

In the case of a binding price floor the green box belongs to consumers

In analyzing the gains and losses from international trade, to say that Moldova is a small country is to say that

Moldova is a price taker

Which of the following best describes an allocation that is Pareto Efficient?

None of the above describe a Pareto Efficient allocation.

Which of the following policies is not an example of a command-and-control policy?

None of the above is an example of a command-and-control policy.

Refer to Figure 14-2. Which of the four prices corresponds to a firm earning positive economic profits in the short run?

Pa

Refer to Figure 10-9. Which graph represents a market with a positive externality? (#36)

Panel (c)

Refer to Figure 14-2. Which of the four prices corresponds to a firm earning negative economic profits in the short run but trying to remain open?

Pc

Refer to Figure 10-12. Which of the following is an appropriate label for Line 1? (#35)

Private Value

At present, the United States uses a system of quotas to limit the amount of sugar imported into the country. Which of the following statements is most likely true?

The quotas are probably the result of lobbying from U.S. producers of sugar. The quotas increase producer surplus for the United States, reduce consumer surplus for the United States, and harm foreign sugar producers

Refer to Figure 6-22. Buyers pay how much of the tax per unit?(#5)

$1.50.

Refer to Figure 7-19. At the equilibrium price, consumer surplus is (#9)

$100.

Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. Refer to Table 7-5. If the market price of an orange is $0.65, then consumer surplus amounts to (#10)

$3.60.

Refer to Figure 9-21. Producer surplus with free trade is (#23)

$32,000.

Refer to Figure 8-6. Total surplus with the tax in place is (#12)

$4,500

Bubba is a shrimp fisherman who catches 4,000 pounds of shrimp per year. He can sell the shrimp for $5 per pound. His average total cost of catching shrimp is $3 per pound. Bubba's annual total profit is

$8,000.

Table 11-5 A small island off the coast of Cape Cod contains two restaurants and two retail stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown in the economy, tourists are less willing to pay for the boat ride to visit the island. The owners of the restaurants and stores on the island — Restaurants 1 and 2, and Stores A and B — think that if tourists could ride the ferry for free, they would be happy to visit the island, eat and shop. The business owners are considering contributing to a pool of money that will be used to pay for roundtrip ferry service each day. The table represents their willingness to pay, that is, the maximum amount that each business owner is willing to contribute, per day, to pay for each ferry trip. Refer to Table 11-5. Suppose the cost to run the ferry for each roundtrip is $1,000 per day and the 4 business owners have agreed to split the costs of the ferry trips equally. How many ferry trips would the owner of Store A prefer to have? (#34)

0

The quotas are probably the result of lobbying from U.S. producers of sugar. The quotas increase producer surplus for the United States, reduce consumer surplus for the United States, and harm foreign sugar producers (#22)

1,600 and 800.

Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L=6,Q=147) and (L=7,Q=184). The marginal product of the seventh worker is

37 units of output.

In the case of a subsidy which of the following is true?

All of the above are not true

A country has a comparative advantage in a product if the world price is

higher than that country's domestic price without trade.

Which of the following statements is not correct about a market in equilibrium?

Consumer surplus will be equal to producer surplus.

Refer to Figure 9-1. When trade is allowed, (#18)

Guatemalan producers of coffee become better off and Guatemalan consumers of coffee become worse off

The average fixed cost curve

always declines with increased levels of output.

Producer surplus equals the

amount received by sellers minus the cost to sellers

A firm produces 400 units of output at a total cost of $1,200. If fixed costs are $200,

average variable cost is $2.50.

Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed? (#7)

between $5 and $7

Governments can improve market outcomes for

both public goods and common resources.

In setting the production level, a firm's cost curves

by themselves do not tell us what decisions the firm will make.

Refer to Figure 10-13. Each unit of plastics that is produced results in an external (#38)

cost of $8.

When a tax is placed on the sellers of cell phones, the size of the cell phone market

decreases, but the price paid by buyers increases

In the short run, there are 500 identical firms in a competitive market. The firms do not use any resources that are available in limited quantities, and each of them has the following cost structure: The long-run supply curve for this market is (#41)

horizontal at a price of $5.

Refer to Figure 9-20. With trade, Vietnam will (#17)

export 1,500 units of rice

Refer to Figure 9-21. With free trade allowed, this country (#24)

exports 800 units of the good

Refer to Figure 14-14. If the market starts in equilibrium at point Z in panel (b), a decrease in demand will ultimately lead to

fewer firms in the market.

Economies of scale occur when

long-run average total costs fall as output increases.

It would always be a mistake to view

national defense as a common resource.

Research into new technologies provides a

positive externality, and too few resources are devoted to research as a result.

Each of the following would be considered a common resource except a

streetlight.

Suppose that a steel factory emits a certain amount of air pollution, which constitutes a negative externality. If the market does not internalize the externality,

the market equilibrium quantity will not be the socially optimal quantity.

If a price floor is not binding, then

there will be no effect on the market price or quantity sold.