Econ Final

Suppose the price of local cable TV service increased from $16.20 to $19.80 and as a result the number of cable subscribers decreased from 22400 to 176000. Along this portion of the demand curve, price elasticity of demand is

1.2

Refer to the above table. If demand is represented by columns (3) and (1) and supply is represented by columns (3) and (4), equilibrium price and quantity will be:

$9 and 60 units

Refer to the above diagram. At output level Q total fixed cost is:

0CDQ--0BEQ

Refer to the above data. If the firm's minimum average variable cost is $10, the firms profit-maximizing level of output would be:

4

The basic purpose of the other-things-equal assumption is to:

Allow one to reason about the relationship between variables X and Y without the intrusion of variable Z

The main determinant of elasticity of supply is the:

Amount of time the producer has to adjust inputs in response to a price change

Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity?

An increase in supply

What do economies of scale, the ownership of essential raw materials, and patents have in common?

The must all be present before discrimination can be practiced

Cross elasticity of demand measures how sensitive purchases of a specific product are to changes in:

The price of some other product

Which of the following conditions is not required for discrimination?

The seller must be able to segment the market, that is, to distinguish buyers with different buyers elasticities of demand

Refer to the above data.Diminishing marginal return become evident with the addition of the:

Third worker

In the short run, which of the following statements is correct?

Total cost will exceed variable cost

Suupose the price elasticity coefficients of demand are 1.43, 0.67, 1.11 and 0.29 for products W, X, Y, and Z respectively. A 1 percent decrease in price will increase total revenue in the cases of:

W and Y

Refer to the above data. If the price in this market was $4:

Farmers would not be able to sell all their wheat

Suppose that, when producing 10 units of output, a firm's AVC is $22, its AFC is $5, and its MC is $30 this:

Firm's total cost is $270

Which of the following is characteristics of a purely competitive seller's demand curve?

It is the same as the market demand curve

Other things equal, which of the following might shift the demand curve for gasoline to the left?

The development of a low-cost electric automobile

The market system's answer to the fundamental question "How will the goods and services be produced?" is essentially:

"Using the least-cost production techniques."

Refer to the above data for a non-discriminating monopolists. At its profit-maximizing output, the firm's price will exceed its marginal cost by _________ and its average total cost by ________

$30; $20.50

Refer to the above data. If the firm closed down in the short run and produced zero units of output, its total cost would be

$50

Refer to the above data. Total fixed cost is:

$50

The kinked-demand curve model of oligopoly:

Embodies the possibility that changes in unit costs will have no effect on equilibrium price and output

Refer to the above diagram. Between prices of $5.70 and $6.30:

D1 is more elastic than D2

Suppose an excise tax is imposed on product X. We expect this tax to:

Decrease the demand for complementary good Y and increase the demand for substitute product Z

Refer to the above diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market:

Demand has increased and equilibrium price has decreased

Refer to the above information. Over the $11-$9 price range, demand is:

Elastic

If marginal cost is:

Falling, then average total cost must also be falling (rising, then average total cost could be either falling or rising)

Which of the following distinguishes the short run from the long run in pure competition

Firms can enter and exit the market in the long run, but not in the short run

The monopolistic competition model assumes that:

Firms will engage in nonprice competition

Refer to the above diagram for a non-discriminating monopolist. Demand is elastic:

For all levels of output greater than Q2

Most demand curves are relatively elastic in the upper-left portion because the original price:

From which the percentage price change is calculated is large and the original quantity from which the percentage change in quantity is calculate is small

For a purely competitive firm total revenue:

Has all of these characteristics

In the resource market

Households sell resources to businesses

The production possibilities curve illustrates the basic principle that:

If all the resources of an economy are in use, more of one good can be produced only if less of another good is produced

Which of the following statements is correct

If supply increases and demand decrease, equilibrium price will fall

Refer to the above diagram, which shows demand and supply conditions in the competitive market for product X. Other things equal, a shift of the supply curve S0 to S1 might be caused by a(n)

Increase in the wage rates paid to laborers employed in the production of X

Assume product A is an input in the production of product B. In turn product B is a complement to product C. We can expect a decrease in the price of A to:

Increase the supply of B and increase the demand for C

Refer to the above diagram. The decline in price from P1 to P2 will:

Increase total revenue by D-A

If the oligopoly is faced with a kinked-demand curve is relatively elastic above, and relatively inelastic below, the going price, then it will:

Increase total revenue by decreasing price, but lower total revenue by increasing price

College students living off-campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese. When they finish school and start careers, their consumption of both goods frequently declines. This suggests that ramen noodles and boxed macaroni and cheese are:

Inferior goods

If a firm wanted to know how much it would save by producing one less unit of output, it would look to

MC

If in the short run a firm's total product is increasing , then its:

Marginal product could be either increasing or decreasing

In the video on monopolies that I showed in class which of the following firms was not included?

Microsoft

Refer to the above diagram, An increase in quantity supplied is depicted by a:

Move from point y to point x

Suppose the price of product rises and the total revenue of sellers increases

No conclusion can be reached with respect to the elasticity of supply

The invisible hand refers to the:

Notion that, under competition, decisions motivated by self-interest promote the social interest

Pure monopolists may obtain economic profits in the long run because:

Of rising average fixed costs

Refer to the above diagram. A government-set price floor is best illustrated by:

Price C

Which of the following is not a valid generalization concerning the relationship between price and costs for a purely competitive seller in the short run?

Price may be equal to, greater than, or less than average total cost

Market failure is said to occur whenever:

Private markets do not allocate resources in the most economically desirable way

A firm is producing an output such that the benefit from one more unit is more than the cost of producing that additional unit. This means the firm is:

Producing less output than allocative efficiency requires

Which of the following is most likely to be a fixed cost?

Property insurance premiums

Refer to the above data. This firm is selling its output in a(n)

Purely competitive market

If the supply and demand curves for a product both decrease, then equilibrium:

Quantity must decline, but equilibrium price may rise, fall, or remain unchanged

Refer to the above diagram for a purely competitive producer. The firm's short-run supply curve is

The abcd segment and above on the MC curve

Refer to the above diagram. The vertical distance between ATC and AVC reflects:

The average fixed cost at each level of output

Which of the following statements is correct?

The demand curves are downsloping for both a purely competitive firm and a purely competitive industry

Refer to the above diagrams, which pertain to a purely competitive firm producing output q and the industry in which it operates. Which of the following is correct?

The diagrams portray both long-run and short-run equilibrium

Assume that a change in government policy results in greater production of both consumer goods and investment goods. We can conclude that:

The economy was not employing all of its resources before the policy change

Which of the following is NOT characteristic of the demand for a commodity that is elastic

The elasticity coefficient is less than one

The price of old baseball cards rises rapidly with increases in demand because:

The supply of old baseball cards is price inelastic

A negative externality or spillover cost occurs when:

The total cost of producing a good exceeds the cost borne by the producer

Which of the following is true concerning purely competitive industries?

There will be economic losses in the long run because of cut-throat competition

A competitive firm will maximize profits at that output at which

Total revenue exceeds total cost by the greatest amount

Normative statements are concerned primarily with:

What ought to be

If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue

may be either greater or less than $5

If a legal ceiling price is set above the equilibrium price:

neither the equilibrium price nor equilibrium quantity will be affected

Refer to the above data. The average total cost of producing 3 units of output is:

$16

Refer to the above data. Which of the following is the firm's short-run supply schedule ?

A

Refer to the Above diagram. Other things equal, which of the following positions relative to PP1 would be the most likely to result in a future production possibilities curve of PP3 rather than PP2?

A (Because its the highest in capitol goods)

Which of the following is not a basic characteristic of pure competition?

A standardized or homogeneous product

Which of the following is an example of a public good?

A weather warning system

The vertical distance between a firm's ATC and AVC curves represents:

AFC, which decreases as output increases

Refer to the above data. In the long run the firm should use plant size "C" for:

All units of output greater than 80

If a technological advance increases a firm's labor productivity, we would expect its

Average total cost curve to fall

A perfectly inelastic demand schedule:

Can be represented by a line parallel to the vertical axis

The study of economics is primarily concerned with:

Choices that are made in seeking the best use of resources

The demand for a product is inelastic with respect to price if:

Consumers are largely unresponsive to a per unit price change

Suppose that the MR=MC condition cannot be completely met for a firm because there is no level of output at which MR and MC are equal. In that case the firm should:

Continue to produce as long as MR is postive

Refer to the above diagrams. In which case would the coefficient of cross elasticity of demand be positive?

D

Which of the the above diagrams illustrate(s) the effect of an increase in automobile worker wages on the market of automobiles?

D only

Refer to the above diagram for a pure monopolist. Suppose a regulatory commission is created to determine a legal price for the monopoly. If the commission seeks to provide the monopolist with a "fair return," it will set price at:

P3

When total product is increasing at a decreasing rate, marginal product is:

Positive and decreasing

Refer to the above diagram. In the P1P2 price range demand is:

Relatively Elastic

Refer to the above diagram. Arrows (1) and (2) represent:

Resources and goods respectively

Long-run equilibrium for a monopolistic-ally competitive firm where economic profits are zero results:

Rising marginal costs

In deciding whether to study for an economics quiz or go to a movie, one is confirmed by the idea(s) of:

Scarcity and opportunity costs-

Refer to the above diagram. The short run supply curve for this firm is the:

Segment of the AVC curve lying to the right of the MC curve

In 2007, the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are

Substitute goods and the higher price for oil increased the demand for natural gas

The short-run supply curve for a purely competitive industry can be found by:

Summing horizontally the segments of the MC curves lying above the AVC curve for all firms

If price is above the equilibrium level, competition among sellers to reduce the resulting:

Surplus will increase quantity demanded and decrease quantity supplied

In the short run a purely competitive firm that seeks to maximize profit will produce:

Where the demand and the ATC curves intersect

Refer to the above data. We can infer that, at zero output, this firm's total fixed, total variable, and total costs are:

zero, zero, and zero, respectively

An industry comprised of a very large number of sellers producing a standardized product is known as:

Oligopoly

"In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X, (2) the equilibrium price (P) of X and (3) the equilibrium quantity (Q) of X." Refer to the above. An increase in the prices of resources used to produce X will:

decrease S, increase P, and decrease Q

Refer to the above data. The average total cost of five units of output is

$78

Refer to the above diagram. The marginal cost of the fifth unit of output is:

$80

Refer to the above diagram. Starting at point E, the production of successive units of bread will cost:

1/8, 1/6, 1/4, and 1/2 units of tractors

Refer to the above table. The monopolists will select its profit-maximizing level of somewhere within:

3-5 unit range of output

The supply of product X is elastic if the price of X rises by:

5 percent and quantity supplied rises by 7 percent

Refer to the above data. If the market price for this firm's product is $86.95, it will produce:

9 units at an economic profit of $281.52