econ final review

When a country allows trade and becomes an importer of a good,

domestic producers become worse off, and domestic consumers become better off.

Gloria has decided to start her own snow removal business. To purchase the necessary equipment, Gloria withdrew $2,000 from her savings account, which was earning 3% interest, and borrowed an additional $4,000 from the bank at an interest rate of 7%. What is Gloria's annual opportunity cost of the financial capital that has been invested in the business?

$340

Which of the following statements is correct? Assuming that explicit costs are positive, economic profit is greater than accounting profit. Assuming that implicit costs are positive, accounting profit is greater than economic profit. Assuming that explicit costs are positive, accounting profit is equal to economic profit. Assuming that implicit costs are positive, economic profit is positive.

Assuming that implicit costs are positive, accounting profit is greater than economic profit.

Which of the following statements is not correct? In the long run, there are no fixed costs. Marginal cost is independent of fixed costs. Economies of scale is a short-run concept. Diminishing marginal product explains increasing marginal cost.

Economies of scale is a short-run concept.

Suppose England exports cars to Australia and imports cheese from Mexico. This situation suggests that

England has a comparative advantage relative to Australia in producing cars, and Mexico has a comparative advantage relative to England in producing cheese.

At what level of output will average variable cost equal average total cost?

There is no level of output where this occurs, as long as fixed costs are positive.

Which of the following arguments for trade restrictions is often advanced?

Trade restrictions are sometimes necessary for national security.

Walter used to work as a high school teacher for $40,000 per year but quit in order to start his own painting business. To invest in his painting business, he withdrew $20,000 from his savings, which paid 3 percent interest, and borrowed $30,000 from his uncle, whom he pays 3 percent interest per year. Last year Walter paid $25,000 for supplies and had revenue of $60,000. Walter asked Tyler the accountant and Greg the economist to calculate his painting business's profit.

Tyler says his profit is $34,100, and Greg says he lost $6,500.

The average fixed cost curve

always declines with increased levels of output.

When a firm is experiencing economies of scale, long-run

average total cost is greater than long-run marginal cost.

Whenever marginal cost is greater than average total cost,

average total cost is rising.

In the long run, when marginal cost is above average total cost, the average total cost curve exhibits

diseconomies of scale.

In the long run Firm A incurs total costs of $1,200 when output is 30 units and $1,600 when output is 40 units. Firm A exhibits

constant returns to scale because average total cost is constant as output rises.

When a country that imports a particular good imposes a tariff on that good,

consumer surplus decreases and total surplus decreases in the market for that good.

A monopolistically competitive market is like a competitive market in that

firms in both market structures set price above marginal cost.

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

higher than that country's domestic price without trade.

In the short run, a firm that produces and sells cell phones can adjust

how many workers to hire.

When a factory is operating in the short run,

it cannot adjust the quantity of fixed inputs.

Assume, for Singapore, that the domestic price of soybeans without international trade is higher than the world price of soybeans. This suggests that, in the production of soybeans,

other countries have a comparative advantage over Singapore and Singapore will import soybeans.

If the United States imports televisions and the U.S. government imposes a tariff on televisions, then

total surplus in the American television market decreases.

Trade enhances the economic well-being of a nation in the sense that

trade results in an increase in total surplus.

Suppose Guatemala has an absolute advantage over other countries in producing sugar, but other countries have a comparative advantage over Guatemala in producing sugar. If trade in sugar is allowed, Guatemala

will import sugar.