econ exam two

let L represent the number of workers hired by a firm and let Q represent that firms quantity of output assume two points on the firms production function are (L= 12, Q=122) and (L=13, Q=130) then the marginal product of the 13th worker is a. 8 units of output b. 10 units of output c. 122 units of output d. 132 units of output

8 units of output

What is the marginal product of the first worker? a. 300 b. 200 c. 100 d. 50

a. 300

when a firm experiences constant returns to scale a. long-run average total cost is unchanged even when output increases b. long-run marginal cost is greater than long-run average total cost c. long-run marginal cost is less than long-run average total cost d. the firm is experiencing coordination problems

a. a long-run average total cost is unchanged, even when output increases

the average fixed cost curve a. always declines with increased levels of output b. always rises with increased levels of output c. declines as long as it is above marginal cost d. declines as long as it is below marginal cost

a. always declines with increased levels of output

the price ceiling shown in graph (a) a. in not binding b. creates a surplus c. creates a shortage d. is binding

a. in not binding

as a result of a decrease in price, a. new buyers enter the market, increasing consumer surplus b. new buyers enter the market, decreasing consumer surplus c. existing buyers exit the market, increasing consumer surplus d. existing buyers exit the market, decreasing consumer surplus

a. new buyers enter the market, increasing consumer surplus

total revenue equals a. price x quantity b. price/quantity c. (price x quantity) - total cost d. output - input

a. price x quantity

cost is a measure of the a. seller's willingness to sell b. seller's producer surplus c. producer shortage d. seller's willingness to buy

a. seller's willingness to sell

which of the following events would increase producer surplus? a. sellers' costs stay the same and the the price of the good increases b. sellers' costs increase and the price of the good stays the same c. sellers' cost increase and the price of the good decreases d. sellers' cost stay the same and the price of the good decreases

a. sellers' costs stay the same and the price of the good increases

if a price floor is not binding , then a. the equilibrium price is above the price floor b. the equilibrium price is below the price floor c. there will be a surplus in the market d. there will be a shortage in the market

a. the equilibrium price is above the price floor

each seller of a product is willing to sell as long as the price he or she can receive is greater than the opportunity cost of producing the product a. true b. false

a. true

the willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the goods a. true b. false

a. true

a seller's opportunity cost measures the a. value of everything she must give up to produce a good b. amount she is paid for a good minus her cost of providing it c. consumer surplus d. out-of-pocket expenses to produce a good but not the value of her time

a. value of everything she must give up to produce a good

if the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is a. zero b. negative, and the consumer would not purchase the product c. positive, and the consumer would purchase the product d. there is not enough information given to answer this question

a. zero

the three amigos company produced and sold 500 dogs beds. the average cost of production per dog bed is $50 each dog bed can be sold for a price of $65 the three amigos total costs are a. 7,500 b. 25,000 c. 32,500 d. 67,500

b. 25,000

if the market price is $1,000, the producer surplus in the market is a. 1000 b. 300 c. 1700 d. 700

b. 300

a price ceiling is a. often imposed on markets in which "cutthroat competition' would prevail without a price ceiling b. a legal maximum on the price at which a good can be sold c. often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling d. imposed to make sure everyone can earn a fair wage

b. a legal maximum on the price at which a good can be sold

At equilibrium, consumer surplus is represented by the area a. a b. a+b+c c. d+h+f d. a+b+c+d+h+f

b. a+b+c

on a graph, consumer surplus is represented by the area a. between the demand and supply curves b. below the demand curve and above the price c. below the price and above the supply curve d. below the demand curve and to the right of equilibrium price

b. below the demand curve and above price

in this market, a minimum wage of $7.00 is a. binding and creates a labor shortage b. binding and creates unemployment c. non-binding and creates a labor shortage d. non-binding and creates neither a labor shortage nor unemployment

b. binding and creates unemployment

a tax on the buyers of cameras encourages a. sellers to supply a smaller quantity at every price b. buyers to demand a smaller quantity at every price c. sellers to supply a larger quantity at every price d. buyers to demand a larger quantity at every price

b. buyers to demand a smaller quantity at every price

joel has a 1966 mustang, which susie, an avid car collector. susie is please since she paid $8,000 for the car but would have been will to pay $11,000 for the car. susie's consumer surplus is $2,000 a. true b. false

b. false

the lower the price, the lower the consumer surplus, all else equal a. true b. false

b. false

a binding price ceiling is shown in a. graph (a) only b. graph (b) only c. both (a) and (b) graph d. neither graph (a) nor (b)

b. graph (b) only

in the long run, a. inputs that were fixed in the short run remain fixed b. inputs that were fixed in the short run become variable c. inputs that were variable in the short run become fixed d. variable inputs are rarely used

b. inputs that were fixed in the short run become variable

firms may experience diseconomies of scale when a. they are too small to take advantage of specialization b. large management structures are bureaucratic and inefficient c. there are too few employees, and managers do not have enough to do d. average fixed costs begin to rise again

b. large management structures are bureaucratic and inefficient

economies of scale occur when a. long-run average total cost rise as output increases b. long-run average total costs fall as output increases c. average fixed costs are failing d. average fixed costs are constant

b. long-run average total costs fall as output increases

the minimum points of the average variable cost and average total cost curves occur where the a. marginal cost curve lies below the average variable cost and average total cost curves b. marginal cost curve intersects those curves c. average variable cost and average total cost curves intersect d. slope of total cost is the smallest

b. marginal cost curve intersects those curves.

a result of welfare economics is that the equilibrium price of a product is considered to be the best price because it a. maximizes both the total revenue for firms and the quantity supplied of the product b. maximizes the combined welfare fo buyers and sellers c. minimizes cost and maximizes output d. minimizes the level of welfare payments

b. maximizes the combined welfare fo buyers and sellers

rent- control laws dictate a. the exact rent that landlords must charge tenants b. only a maximum rent that landlords may charge tenants c. only a minimum rent that landlords may charge tenants b. both a minimum rent and a maximum rent that landlords may charge tenants

b. only a maximum rent that landlords may charge tenants

a legal minimum on the price at which a good can be sold is called a a. price subsidy b. price floor c. tax d. price ceiling

b. price floor

moving production from a high-cost producer to a low-cost producer will a. lower total surplus b. raise total surplus c. lower producer surplus d. raise producer surplus but lower consumer surplus

b. raise totoal surplus

which of the following statements is not correct? a. when the price is $10, quantity supplied equals quantity demanded b. when the price is $6, there is a surplus of 8 units c. when the price is $12, there is a surplus of 4 units d. when the price is $16, quantity supplied exceeds quantity demanded by 12 units

b. when the price is $6, there is a surplus of 8 units

bob purchases a book for $6, and his consumer surplus is $2. How much is bob willing to pay for the book? a. 6 b. 2 c. 8 d. 4

c. 8

the minimum wage was instituted to ensure workers a. a middle-class standard of living b. employment c. a minimally adequate standard of living d. unemployment compensation

c. a minimally adequate standard of living

a shortage results when a a. nonbinding price ceiling is imposed on a market b. nonbinding price ceiling is removed from a market c. binding price ceiling is imposed on a market d. binding price ceiling is removed from a market

c. binding price ceiling is imposed on a market

a surplus result when a a. nonbinding price floor is imposed on a market b. nonbinding price floor is removed from a market c. binding price floor is imposed on a market d. binding price floor is removed from a market

c. binding price floor is imposed on a market

if the price is $1,150, who would be willing to supply the product? a. abby and bobby b. abby, bobby, and dianne c. carlos, dianne, and evaline d. dianne and evaline only

c. carlos, dianne, and evaline

a firm's opportunity costs of production are equal to its a. explicit cost only b. implicit cost only c. explicit cost + implicit costs d. explicit costs + implicit costs + total revenue

c. explicit cost + implicit costs

a difference between explicit and implicit costs is that a. explicit costs must be greater than implicit costs b. explicit costs do not require a direct monetary outlay by the firm, whereas implicit costs do c. implicit cost do not require a direct monetary outlay by the firm, whereas explicit costs do d. implicit costs must be greater than explicit costs

c. implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do

suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital) in the short run, the firm most likely considers a. both labor ad capital to be fixed b. both labor and capital to be variable c. labor to be variable and capital to be fixed d. capital to be variable and labor to be fixed

c. labor to be variable and capital to be fixed

when a firm experiences diseconomies of scale a. short-run average total cost is minimized b. long-run average total cost is minimized c. long-run average total cost increases as output increases d. long-run average total cost decreases as output increases

c. long-run average total cost increases as output increases

minimum-wage laws dictate a. the exact wage the firms must pay workers b. only a maximum wage that firms may pay workers c. only a minimum wage that firms may pay workers d. both a minimum wage and maximum wage that firms may pay workers

c. only a minimum wage that firms may pay workers

suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages the tax would shift a. demand, raising both the equilibrium price and quantity in the market for artificially sweetened beverages. b. demand, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially sweetened beverages c. supply, raising the equilibrium price and lowering the market for artificially sweetened beverages.

c. supply, raising the equilibrium price and lowering the market for artificially sweetened beverages

producer surplus is a. measured using the demand curve for a good b. always a negative number for sellers in a competitive market c. the amount a seller is paid minus the cost of production d. the opportunity cost of production minus the cost of producing goods that go unsold

c. the amount a seller is paid minus the cost of production

the term tax incidence refers to a. whether buyers or sellers of a good are required to send tax payments to the government b. whether the demand curve or the supply curve shifts when the tax is imposed c. the distribution of the tax burden between buyers and sellers d. widespread view that taxes (and death) are the only certainties in life.

c. the distribution of the tax burden between buyers and sellers

which of the following is an example of an implicit cost? a. interest paid on the firm's debt b. rent paid by the firm to lease office space c. the owner of a firm forgoing an opportunity to earn a large salary working for a wall street brokerage firm d. wages paid to workers

c. the owner of a firm forgoing an opportunity to earn a large salary working for a wall street brokerage firm

if a price floor is not binding, then a. there will be a surplus in the market b. there will be a shortage in the market c. there will be no effect on the market price or quantity sold d. the market will be less efficient than it would be without the price floor

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

consider the market for gasoline. buyers... a. and sellers would lobby for a price ceiling b. and sellers would lobby for a price floor c. would lobby for a price ceiling, whereas sellers would lobby for a price floor d. would lobby for a price floor, whereas sellers would lobby for a price ceiling

c. would lobby for a price ceiling, whereas sellers would lobby for a price floor

toms tent company has total fixed costs of 3,000 per year. the firms average variable cost is 80 for 10,000 tents at that level of output, the firms average total costs equal a. 80 b. 90 c. 100 d. 110

d. 110

cindys car wash has average variable cost of $2 and average fixed costs of $3 when it produces 100 units of output (car washes) the firms total cost is a. $100 b. 200 c. 300 d. 500

d. 500

Total surplus can be measured as the area a. JNK b. JNML c. JRL d. JNL

d. JNL

when a tax is placed on the sellers of cell phones, the size of the cell phone market a. and the effective pice received by sellers both increase b. increases, but the effective price received by sellers decreases c. decreases, but the effective price received by sellers increases d. and the effective price received by sellers both decrease

d. and the effective price received by sellers both decrease

curve a represents which type of cost curve? a. marginal cost b. average total cost c. average variable cost d. average fixed cost

d. average fixed cost

when a tax is placed on the buyers of lemonade, the a. sellers bear the entire burden of the tax b. buyers bear the entire burden of the tax c. burden of the tax will always be equal divided between the buyers and the sellers d. burden of the tax will be shared by the buyers and the sellers, but the division fo the burden is not always equal

d. burden of the tax will be shared by the buyers and the sellers, buy the division of the burden is not always equal

if the price of the product is $110, then who would be willing to purchase the product? a. calvin and sam b. calvin c. calvin, sam, andrew, and lori d. calvin, sam, and andrew

d. calvin, sam, and andrew

a drought in california destroys many red grapes causing the prices of both red grapes and red wine to rise. as a result, the consumer surplus in the market for red grapes a. increases and the consumer surplus in the market for red wine decreases b. increases, and the consumer surplus in the market for red wine decreases c. decreases, and the consumer surplus in the market for red wine increases d. decreases, and the consumer surplus in the market for red wine decreases

d. decreases and the consumer surplus int he market for red wine decreases

in the long run a company that produces and sells popcorn incurs total costs of $1,050 when output is 90 canisters and $1,200 when output is 120 canisters. the popcorn company exhibits a. diseconomies of scale because total cost is rising as output rises b. diseconomies of scale because average total cost is rising as output rises c. economies of scale because total cost is rising as output rises d. economies of scale because average total costs is falling as output rises.

d. economies of scale because average total cost is falling as output rises

the goal of rent control is to a. facilitate controlled economic experiments in urban areas b. help landlords by assuring them a low vacancy rate for their apartments c. help the poor by assuring them an adequate supply of apartments d. help the poor by making housing more affordable

d. help the poor by making housing more affordable

when a factory is operating in the short run a. it cannot alter variable costs b. total cost and variable cost are usually the same c. average fixed cost rises as output increases d. it cannot adjust the quantity of fixed inputs

d. it cannot adjust the quantity of fixed inputs

if a price ceiling is not binding, then a. there will be a surplus in the market b. there will be a shortage in the market c. the market will be less efficient than it would be without the price ceiling d. there will be no effect on the market price or quantity sold.

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

if a firm produces nothing which of the following costs will be zero? a. total cost b. fixed cost c. opportunity cost d. variable cost

d. variable cost