Econ HW 1-

Consider the market for a new​ CD, where the price is initially ​$7.00 and 32 thousand copies are​sold, as indicated in the figure at point A. The music company is considering lowering the price to ​$6.00​, at which price 36 thousand copies would be sold. What is total revenue at the initial price​ (at point​ A)? Revenue is initially ​$224 thousand. What would total revenue be at the lower price​ (at point​ B)? Revenue would be ​$216 thousand. Given this change in total​ revenue, is demand between these prices elastic or​ inelastic? Demand​ (in this range of​ prices) is inelastic

$224 ; $216 ; inelastic

Refer to the table to the right which shows cost data for Lotus​ Lanterns, a producer of whimsical night lights. What is the marginal cost per unit of production when the firm produces 100​ lanterns? A. ​$32 Your answer is correct. B. ​$320 C. ​$8.1 D. ​$11.1

$32 (see photo)

(Screenshot 31) Consider a market with two​ firms, Target and​ Wal-Mart, that sell CDs in their music department. Both stores must choose whether to charge a high price ​($20​) or a low price ​($15​) for the new Miley Cyrus CD. These price strategies with corresponding profits are depicted in the payoff matrix.​ Target's profits are in red and​Wal-Mart's are in blue. ​Target's dominant strategy is to pick a price of ​$1515. ​Wal-Mart's dominant strategy is to pick a price of ​$1515. What is the Nash equilibrium for this​ game? A. The Nash equilibrium is for Target to choose a price of ​$20 and​ Wal-Mart to choose a price of ​$15. B. A Nash equilibrium does not exist for this game. C. The Nash equilibrium is for Target to choose a price of ​$15 and​ Wal-Mart to choose a price of ​$20. D. The Nash equilibrium is for Target and​ Wal-Mart to both choose a price of ​$15. Your answer is correct. E. The Nash equilibrium is for Target and​ Wal-Mart to both choose a price of ​$20.

(Screenshot 31) 15;15 D. The Nash equilibrium is for Target and​ Wal-Mart to both choose a price of ​$15.

(screenshot 14) Suppose a small town has only one artist who sells​ paintings, making that artist a monopoly. One of the​ artist's paintings is demanded at a price of ​$200​, two paintings are demanded at a price of ​$150​, three at ​$100​, four at ​$50​, and five if the paintings are given away​ (with a price of​ zero). ​1.) Use the line drawing tool to graph the demand curve for paintings. Label this line​ 'Demand'. ​2.) Use the line drawing tool to graph the corresponding marginal revenue curve. Label this line​ 'Marginal revenue'.

(screenshot 14)

(screenshot 15) Suppose the figure represents the market for diamond​ necklaces, where the company that supplies necklaces is a monopoly because it is the only firm with access to diamond mines. What is the​ firm's profit-maximizing price and​ quantity? What are​ profits? ​1.) Use the point drawing tool to indicate the​ profit-maximizing price and quantity for the monopoly. Label this point​'Profit-maximizing'. ​2.) Use the rectangle drawing tool to shade in economic profits. Label this shaded area​ 'Profit'. Carefully follow the instructions​ above, and only draw the required objects.

(screenshot 15)

(screenshot 16) What happens if a perfectly competitive industry becomes a​ monopoly? Suppose the demand curve in the figure is market demand and the corresponding market supply curve represents the marginal cost of production. Compared to perfect​ competition, a​ profit-maximizing monopoly would decrease output by 3 units. ​(Enter your response as an​ integer.) In​ addition, a monopoly would raise price by ​$3.

(screenshot 16) decrease;3 raise; 3

(screenshot 17) Are monopolies economically​ efficient? Consider the market to the right. Compared to the perfectly competitive​ outcome, what would be the change in surplus if instead the market had one supplier that was a ​ monopoly? Use the triangle drawing tool to shade in the change in surplus. Properly label this shaded area. Carefully follow the instructions​ above, and only draw the required objects.

(screenshot 17)

(screenshot 18) What happens if firms in an industry​ merge? Suppose the figure to the right represents a perfectly competitive market.​ Then, the firms in the industry​ merge, forming a monopoly. Use the line drawing tool to draw either a new marginal cost curve ​(MC2​), a new demand curve ​(D2​), or a new marginal revenue curve ​(MR2​) that shows what happens in the market if the newly merged firm is more efficient than the firms were individually. Properly label this line. Carefully follow the instructions​ above, and only draw the required objects.

(screenshot 18)

(screenshot 19) Use the graph to the right for a monopoly to answer the questions. What quantity will the monopoly​ produce, and what price will the monopoly​ charge? The monopoly will produce 48 units and charge ​$7.20 per unit. ​(Enter numeric responses using real numbers rounded to two decimal​ places.) Suppose the monopoly is regulated. If the regulatory agency wants to achieve economic​ efficiency, what price should it require the monopoly to​ charge? How much output will the monopoly produce at this​ price? The regulatory agency should regulate a price of ​$6.80. At that​ price, the monopoly will produce 56 units. Will the monopoly make a profit if it charges this​ price? At the regulated​ price, the monopoly will make profit of ​$67.2.

(screenshot 19)

(screenshot 20)The figure shows the demand​ curve, the corresponding marginal revenue​ curve, and the cost structure for a monopoly that cannot price discriminate. Now suppose the monopoly has the ability to practice perfect price discrimination How will this affect the​ market? Use either the triangle or rectangle drawing tools to shade in consumer surplus​ (Consumer surplus), if​ any, profit​ (Profit), if​ any, and deadweight loss​ (Deadweight loss), if any. Properly label the shaded​ area(s). Carefully follow the instructions​ above, and only draw the required objects.

(screenshot 20)

(screenshot 21) Suppose an airline sells tickets to two types of​ passengers: Business travelers​ (B) and Government officials​ (G). The demands for airline tickets for each type of traveler are illustrated in the figure to the right. Assume that the airline uses price discrimination to increase profits. Use the point drawing tool to indicate the​ profit-maximizing price and quantity for business travelers​ (B) and the​profit-maximizing price and quantity for government officials​ (G). Properly label the points. Carefully follow the instructions​ above, and only draw the required objects.

(screenshot 21)

(screenshot 22) Neem Products sells its ayurvedic neem toothpaste in two completely isolated markets with demand schedules as shown in the table to the right. The average cost of production is constant at​ $2 per tube. Which of the following statements is true about the two​ markets? A. The demand curve for Middle Fall is more income elastic than the demand for West Fall. B. The demand curve for Middle Fall is more income elastic than the demand for West Fall. C. The demand curve for Middle Fall is less price elastic than the demand for West Fall. Your answer is correct. D. The demand curve for Middle Fall is more price elastic than the demand for West Fall.

(screenshot 22) C. The demand curve for Middle Fall is less price elastic than the demand for West Fall.

(screenshot 23) Refer to the diagram to the right. What is the economically efficient output​ level? A. Q1 units B. Q2 units C. Q4 units D. Q3 units

(screenshot 23) D. Q3 units

(screenshot 24) Plato​ Playhouse, a theatre company in the university town of​ Wegg, caters to two groups of​ customers: students and the non−student population. The diagram shows the demand curves for the two groups of customers. Suppose Plato Playhouse price discriminates. What is the price charged in the two​ markets? A. Price in the student market​ = Pd​; Price in the non−student market​ = Pe B. Price in the student market​ = Pc​; Price in the non−student market​ = Pe Your answer is correct. C. Price in the student market​ = Price in the non−student market​ = Pb D. Price in the student market​ = Price in the non−student market​ = Pa

(screenshot 24) B. Price in the student market​ = Pc​; Price in the non−student market​ = Pe

(screenshot 25) Suppose a monopolistically competitivefirm sells a particular brand of jeans. The quantities of jeans sold per day at various prices are shown in the table below. Fill in total revenue and marginal revenue in the table below. ​(Enter your responses as​ integers.) Output Price Total Revenue Marginal Revenue 0 ​$100.00 ​$00 — 1 95.00 9595 ​$9595 2 90.00 180180 8585 3 85.00 255255 7575 4 80.00 320320 6565 5 75.00 375375 5555 The marginal revenue curve for this firm is below its demand curve.

(screenshot 25) below its curve

(screenshot 26) Suppose the figure to the right represents the market for a particular brand of​ shampoo, such as​ L'Oreal, Lancome, or Maybelline. Assume the market is monopolistically competitive. What is the​ firm's profit-maximizing price and​ quantity? The monopolistically competitive​ firm's profit-maximizing quantity is 10 thousand bottles of​ shampoo, and its​profit-maximizing price is ​$2 per bottle. ​(Enter your responses as​ integers.) What are the​ firm's profits? Profit equals ​$2 thousand.

(screenshot 26)

(screenshot 27) Suppose the market for​ fast-food value meals is monopolistically​ competitive, with many restaurants selling their own brand of food. Assume the restaurants in the industry behave optimally by maximizing profit. The figure represents the market for one monopolistically competitive​ firm's value meals. How will this figure change as the market moves toward​ long-run equilibrium? In the long​ run, A. nothing will change because the firms in this market are breaking even. B. the demand curve will shift to the right and become more elastic because the firms are currently experiencing losses. C. the average cost curve and the marginal cost curve will shift up because the firms are currently making profit. D. nothing will change because monopolistically competitive markets have barriers to new firms entering. E. the demand curve will shift to the left and become more elastic because the firms are currently making profit.

(screenshot 27) E. the demand curve will shift to the left and become more elastic because the firms are currently making profit.

(screenshot 28) Suppose the figure to the right represents the market for a particular brand of soap such as​ Zest, Dove, or Ivory. Suppose also that the market is monopolistically competitive and the firm behaves optimally to maximize profit. Use the rectangle drawing tool to shade in the​ firm's economic profit or loss. Properly label the object. Carefully follow the instructions​ above, and only draw the required objects. In the long​ run, will new firms enter the market or will existing firms​ exit?In the long​ run, A.existing firms will exit because the firm is currently experiencing losses.Your answer is correct.B.new firms will enter because the average total cost of production is decreasing.C.new firms will enter because the firm is currently making profit.D.existing firms will exit because the firm is currently making profit.E.firms will neither enter nor exit due to barriers.

(screenshot 28)

(screenshot 29( Suppose the figure to the right represents the market for a particular brand of​ shampoo, such as​ L'Oreal, Lancome, or Maybelline. Assume the market is monopolistically competitive and is in​ long-run equilibrium. How much excess capacity does the firm​ have? The monopolistically competitive​ firm's excess capacity is 44 thousand bottles of shampoo. ​(Enter your response as an​integer.) ​Instead, suppose the market is perfectly competitive and is in​ long-run equilibrium​ (with the same cost structure as that illustrated in the​ figure.) How much excess capacity does the firm​ have? The perfectly competitive​ firm's excess capacity is 00 thousand bottles of shampoo.

(screenshot 29) How much excess capacity does the firm​ have? The monopolistically competitive​ firm's excess capacity is 4 thousand bottles of shampoo. How much excess capacity does the firm​ have? The perfectly competitive​ firm's excess capacity is 0 thousand bottles of shampoo.

(screenshot 30) Consider the market for oil. Suppose for simplicity that there are only two oil producing countries—Saudi Arabia and Kuwait. Both countries must choose whether to produce a low output or a high output. These output strategies with corresponding profits are depicted in the payoff matrix ​Kuwait's profits are in red and Saudi​Arabia's are in blue. Suppose the two countries form a cartelL. What is the cooperative equilibrium​? A. The cooperative equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a low output. B. A cooperative equilibrium does not exist for this game. C. The cooperative equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a high output. D. The cooperative equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a low output. Your answer is correct. E. The cooperative equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a high output. What is the Nash equilibrium for this​ game? A. A Nash equilibrium does not exist for this game. B. The Nash equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a low output. C. The Nash equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a high output. Your answer is correct. D. The Nash equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a high output. E. The Nash equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a low output.

(screenshot 30) D. The cooperative equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a low output. C. The Nash equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a high output.

(screenshot 32) Consider a market with two​ firms, Hewlett-Packard​ (HP) and​ Dell, that sell printers. Both companies must choose whether to charge a high price ​($400​) or a low price ​($350​) for their printers. These price strategies with corresponding profits are depicted in the payoff matrix to the right.​ HP's profits are in red and​Dell's are in blue. Suppose HP and Dell are initially at the​ game's Nash equilibrium. ​Then, HP and Dell advertise that they will match any lower price of their competitors. For​ example, if HP charges ​$350​, then Dell will match that price and also charge ​$350. What effect will matching prices have on profits​ (relative to the Nash equilibrium without price​ matching)? Assuming HP and Dell can coordinate to maximize​ profits, HP's profit will change by ​$5 and​ Dell's profit will change by 5. ​(Enter either positive or negative numeric responses using​ integers.)

(screenshot 32) $5;5

(screenshot 33) Consider a market with two​ firms, Kellogg and​ Post, that sell breakfast cereals. Both companies must choose whether to charge a high price ​($4.50​) or a low price ​($3.50​) for their cereals. These price​ strategies, with corresponding​ profits, are depicted in the payoff matrix to the right.​ Kellogg's profits are in red and​ Post's are in blue. What is the cooperative equilibrium for this​ game? A. The cooperative equilibrium is for Kellogg and Post to both choose a price of ​$4.50. Your answer is correct. B. The cooperative equilibrium is for Kellogg to choose a price of ​$4.50 and Post to choose a price of ​$3.50. C. A cooperative equilibrium does not exist for this game. D. The cooperative equilibrium is for Kellogg to choose a price of ​$3.50 and Post to choose a price of ​$4.50. E. The cooperative equilibrium is for Kellogg and Post to both choose a price of ​$3.50. Is the cooperative equilibrium likely to​ occur? The cooperative equilibrium A. is unlikely to occur because the cooperative equilibrium is a Nash equilibrium. B. is likely to occur because the game does not have a Nash equilibrium. C. is likely to occur because the companies do not have dominant strategies. D. is unlikely to occur because charging ​$4.50 is not a dominant strategy. Your answer is correct. E. is likely to occur because charging ​$4.50 is a dominant strategy.

(screenshot 33) What is the cooperative equilibrium for this​ game? A. The cooperative equilibrium is for Kellogg and Post to both choose a price of ​$4.50. The cooperative equilibrium D. is unlikely to occur because charging ​$4.50 is not a dominant strategy.

(screenshot 34) Suppose Securitex is a small firm that has developed a new​ anti-theft device for automobiles. Securitex currently sells its device online and earns profit of ​$19 million per year. GM is considering installing​ Securitex's system on its automobiles. The two firms​ first, however, must bargain over what price GM will pay Securitex for its software. GM chooses how much to offer Securitex for its system and then Securitex chooses whether to accept the offer and install its system on​ GM's automobiles. The strategies and corresponding profits for GM​ (GM) and Securitex​ (SX) are depicted in the decision tree to the right. Profits are in​ millions, and​ GM's payoffs represent the additional profit it can earn on its automobiles with​ Securitex's anti-theft system. What is the​ subgame-perfect equilibrium? A. The​ subgame-perfect equilibrium is for GM to offer a low price and for Securitex to reject the offer. B. The​ subgame-perfect equilibrium is for GM to offer a high price and for Securitex to reject the offer. C. The​ subgame-perfect equilibrium is for GM to offer a high price and for Securitex to accept the offer. Your answer is correct. D. The​ subgame-perfect equilibrium is for GM to offer a low price and for Securitex to accept the offer. E. A​ subgame-perfect equilibrium does not exist for this game.

(screenshot 34)C. The​ subgame-perfect equilibrium is for GM to offer a high price and for Securitex to accept the offer.

(screenshot 35)Suppose Best Buy is the only electronics store in a particular​ market, but RadioShack is thinking about entering the market. Best Buy chooses how much to produce first and then RadioShack chooses whether to enter the industry. The strategies and corresponding profits for Best Buy​ (BB) and RadioShack​ (RS) are depicted in the decision tree to the right. What will the firms​ do? A. Best Buy will choose the small quantity and RadioShack will enter. B. Best Buy will choose the large quantity and RadioShack will not enter. Your answer is correct. C. Best Buy will choose the small quantity and RadioShack will not enter. D. Best Buy will choose the large quantity and RadioShack will enter.

(screenshot 35) B. Best Buy will choose the large quantity and RadioShack will not enter.

(screenshot 37) Match the following definition with one of the terms​ below: "A situation where each firm chooses the best​ strategy, given the strategies chosen by other​ firms." A. Collusion B. Payoff matrix C. Nash equilibrium Your answer is correct. D. Dominant strategy Suppose that​ Wal-Mart and Target are selling Sony​ flat-screen computer monitors for a price of either​ $150 or​ $200 each. Based on the information in the payoff​ matrix, what is the likeliest​ outcome? A. Both firms will charge​ $150. Your answer is correct. B. ​Wal-Mart will charge​ $200, and Target will charge​ $150. C. ​Wal-Mart will charge​ $150, and Target will charge​ $200. D. Both firms will charge​ $200.

(screenshot 37) C. Nash equilibrium A. Both firms will charge​ $150.

(screenshot 38) The table below shows the relationship between the number of movies seen per month and the total utility received. Fill in marginal utility in the table below. ​(Enter your responses as​ integers.) Movies Total Utility Marginal Utility 0 0 ​- 1 36 3636 2 60 2424 3 72 1212 4 78 66 5 81 33 In this​ example, consuming additional movies illustrates the law of diminishing marginal utility.

(screenshot 38) illustrates

Suppose the United States and Mexico both produce hamburgers and tacos. The combinations of the two goods that each country can produce in one day are presented in the table below. Which country has an absolute advantage in producing​ tacos? Which country has a comparative advantage in producing​ tacos? Suppose the United States is currently producing 160 tons of hamburgers and 48 tons of tacos and Mexico is currently producing 16 tons of hamburgers and 40 tons of tacos.

(see screenshot) The United States- absolute advantage Mexico-comparative advantage If the United States and Mexico each specialize in producing only one good​ (the good for which each has a comparative​ advantage), then a total of 64 additional​ ton(s) of hamburgers can be produced for the two countries combined ​(enter a numeric response using an​ integer) and a total of 32 additional​ ton(s) of tacos can be produced.

From the PPFs shown above it can be determined that the opportunity cost of oil is lower in Given the comparative opportunity costs as revealed by the PPFs shown​ above, the comparative advantage for country B After these two countries specialize and trade with each​ other, country A will be importing

(see screenshot) country A. country B lies in corn. country A will be importing corn.

Suppose the price of pepper increases by 20 percent​ and, as a​ result, the quantity of salt demanded​ (holding the price of salt ​constant) decreases by 7 percent. The​ cross-price elasticity of demand between pepper and salt is negative 0.35−0.35. ​(Enter your response rounded to two decimal places and include a minus sign if​ appropriate.) In this​ example, pepper and salt are complementscomplements. ​Instead, suppose pepper and salt were substitutes. If​ so, then the​ cross-price elasticity of demand between pepper and salt would be A. less than 1. B. greater than −1. C. zero. D. positive. E. negative.

-0.35; complements; positive.

Consider the market for a new DVD​ movie, where the price is initially ​$22 and 16 copies are sold per day at a​ superstore, as indicated in the figure to the right. The superstore is considering lowering the price to ​$20. What is the price elasticity of demand between these two prices ​(use the Midpoint Formula​)? The price elasticity of demand is −2.32.

-2.32

Suppose income increases by 25 percent​ and, as a​ result, the quantity of a particular brand of automobile demanded​ (holding the price for this particular automobile​ constant) increases by 32 percent. The income elasticity of demand for this brand of car is 1.281.28. ​(Enter your response rounded to two decimal places and include a minus sign if​ appropriate.) This particular brand of automobile is​ a(n) normalnormal good. In another​ example, suppose market research shows that a particular brand of truck is a normal good and a luxury. If​ so, then the income elasticity of demand for this truck is A. less than 1 but greater than 0. B. zero. C. negative. D. positive. E. greater than 1.

1.28; normal; greater than 1.

The figure to the right represents the market for vaccinations. Vaccinations are considered a benefit to​ society, and the figure shows both the marginal private benefit and the marginal social benefit from vaccinations. The market equilibrium quantity is​ ________ thousand vaccinations. A. 100 B. 200 Your answer is correct. C. 300 D. ​>300

200

The figure to the right represents the market for vaccinations. Vaccinations are considered a benefit to​ society, and the figure shows both the marginal private benefit and the marginal social benefit from vaccinations. The efficient equilibrium quantity is​ ________ thousand vaccinations. A. 100 B. 200 C. 300 Your answer is correct. D. ​>300

300

The following table shows​ Madison's utility from consuming popcorn and Coke. Suppose that Madison has income of ​$28.00​, the price of popcorn is ​$4.00​, and the price of Coke is ​$3.00. If Madison wants to maximize her​ utility, how much popcorn and Coke should she​ buy? Popcorn Coke Quantity Marginal Utility Marginal Utility 1 192 144 2 144 108 3 96 72 4 48 36 5 24 18 6 12 9 Madison should buy 44 boxes of popcorn and 44 cans of Coke. ​(Enter your responses as​ integers.)

4;4

The figure to the right represents the market for medical services with and without​ insurance, and the effect of a third−party payer system on the demand for medical services. If consumers paid the full price of medical​ services, the equilibrium quantity would be A. 200. B. 500. Your answer is correct. C. 700. D. ​>700.

500.

Suppose the United States has two​ utilities, Commonweath Utilities and Consolidated Electric. Both produce 20 million tons of sulfur dioxide pollution per year.​ However, the marginal cost of reducing a ton of pollution for Consolidated Electric is ​$325 per ton and the marginal cost of reducing a ton of pollution for Commonwealth Utilities is ​$425 per ton. The​ government's goal is to cut sulfur dioxide pollution in half​ (by 20 million tons per​ year). If the government issues 10 million tradable pollution permits to each​ utility, what will be the cost of eliminating half of the pollution to​ society? Using a cap-and-trade system of tradable emission allowances will eliminate half of the sulfur dioxide pollution at a cost of ​$6500 million per year. If the permits are not​ tradable, what will be the cost of eliminating half of the​ pollution? If permits cannot be​ traded, then the cost of the pollution reduction will be ​$7500 million per year.

6500; 7500

Suppose the figure to the right illustrates the marginal cost and marginal benefit from reducing sulfur dioxide pollution. Suppose also that the United States is currently generating 12.0 million tons of pollution per year. What is the optimal level of pollution​ reduction? The optimal level of pollution reduction is 7 million tons per year. ​(Enter your response rounded to one decimal​ place.)

7 million

According to the law of​ supply, A. there is a positive relationship between price and quantity supplied. B. as the price of a product​ increases, firms will supply less of it to the market. C. as the price of a product​ increases, firms will supply more of it to the market. D. A and C only

A and C only

A price ceiling is a legally determined maximum price that sellers may charge. A price floor is a legally determined minimum price that sellers may receive.

A price ceiling is a legally determined maximum price that sellers may charge. A price floor is a legally determined minimum price that sellers may receive.

In an interview with ​Barron's​, Ron Johnson reflected on his time as CEO at J.C.​ Penney: "Young people​ didn't shop at J.C. Penney. So how do you appeal to the next generation​ customer? You've got to reinvent how they experienced the store...A young person wants the best price every day. So we went to everyday​ pricing." ​Source: Avi​ Salzman, "A​ Q&A with Retail Executive Ron​ Johnson," barrons.com​, January​ 4, 2019. What problems did Johnson encounter in trying to implement this​ policy? A. The everyday pricing left consumers without a reference​ point, or​ anchor, to interpret the prices being offered. Your answer is correct. B. By eliminating​ coupons, it increased the opportunity cost of shopping since customers now had to compare prices. C. People are well aware of prices and knew that J.C. Penney was raising prices before applying the everyday pricing. D. He failed to recognize that consumers are rational and were able to evaluate the prices being offered.

A. The everyday pricing left consumers without a reference​ point, or​ anchor, to interpret the prices being offered.

Suppose a consumer is trying to decide how much to spend on transportation and how much to spend on all other ​(non-transportation​) consumption. The economic model of consumer behavior predicts that the consumer will A. choose the combination of transportation and ​non-transportation consumption that makes her as well off as possible from among the combinations of transportation and ​non-transportation items she can afford. Your answer is correct. B. consume an infinite amount of transportation and ​non-transportation consumption. C. consume as much transportation as she can afford without any ​non-transportation consumption. D. consume as much transportation and as much ​non-transportation consumption as she wants. E. consume any combination of transportation and ​non-transportation consumption from among the combinations of transportation and ​non-transportation items she can afford.

A. choose the combination of transportation and ​non-transportation consumption that makes her as well off as possible from among the combinations of transportation and ​non-transportation items she can afford.

Do airlines practice price discrimination? Explain. Airlines A. engage in price discrimination by reducing the price on seats that they expect will not be sold. Your answer is correct. B. do not engage in price discrimination because their passengers have similar demands. C. do not engage in price discrimination because they charge lower prices to passengers who will stay at their destination over a Saturday night. D. do not engage in price discrimination because the marginal cost of flying one additional passenger is low. E. engage in price discrimination by charging the same price for tickets regardless of when the ticket was purchased. For​ example, business travelers have a more inelastic demand than leisure​ travelers, so airlines charge business travelers a higher price.

A. engage in price discrimination by reducing the price on seats that they expect will not be sold. For​ example, business travelers have a more inelastic demand than leisure​ travelers, so airlines charge business travelers a higher price.

Ocean Spray has faced limited competition in the market for fresh and frozen cranberries. What barrier has kept new firms from entering the market for fresh and frozen cranberries​? Ocean Spray A. has had almost exclusive ownership of cranberries​, which is a key input. Your answer is correct. B. has enjoyed economies of scope from producing multiple types of products. C. has had lower​ long-run average costs than competitors. D. has had a patent on fresh and frozen cranberries. E. has been able to convince customers that its brand of fresh and frozen cranberries has extra value.

A. has had almost exclusive ownership of cranberries​, which is a key input.

Which are more economically​ efficient, perfectly competitive markets or​ monopolies? Compared to​ monopolies, perfectly competitive markets are A. more economically efficient because they result in more economic surplus. Your answer is correct. B. more economically efficient because they produce at lower average total cost. C. more economically efficient because they produce where marginal revenue equals marginal cost. D. less economically efficient because they result in more deadweight loss. E. less economically efficient because they result in more economic surplus.

A. more economically efficient because they result in more economic surplus. Your answer is correct.

What determines entry and exit of firms in a perfectly competitive industry in the long​ run? In a perfectly competitive industry in the long​ run, A. new firms will enter if existing firms are making a profit and existing firms will exit if they are experiencing losses. Your answer is correct. B. new firms will enter if price is above the shutdown point and existing firms will exit if price is below the shutdown point. C. new firms will enter if market demand exceeds market supply and existing firms will exit if market supply exceeds market demand. D. new firms will enter if existing firms are making a profit and existing firms will exit if they are breaking even or experiencing losses. E. new firms cannot enter the market due to barriers but existing firms will exit if they are experiencing losses.

A. new firms will enter if existing firms are making a profit and existing firms will exit if they are experiencing losses.

What is the​ government's policy on collusion in the United​ States? Explain the rationale for this policy. In the United States A. the government makes collusion illegal with antitrust laws because monopolies create deadweight loss. Your answer is correct. B. the government promotes collusion with the Federal Trade Commission because perfectly competitive markets result in no deadweight loss. C. the government makes collusion legal with antitrust laws because monopolies create no deadweight loss. D. the government encourages collusion with subsidies because resulting profits can be used to develop new products. E. the government makes collusion unnecessary with​ government-imposed barriers to entry because monopolies enhance economic efficiency.

A. the government makes collusion illegal with antitrust laws because monopolies create deadweight loss.

Assume the market for oranges is perfectly competitive. If the demand for oranges​ increases, will the market supply additional​ oranges? If the demand for oranges​ increases, then the market A. will supply additional oranges because producers seek the highest return on their investments. Your answer is correct. B. will supply additional oranges because government bureaucrats will order additional orange production. C. will not supply additional oranges because producers are price takers. D. will not supply additional oranges because oranges produced by different sellers are identical. E. will not supply additional oranges because consumers are not willing to pay higher prices for fruit.

A. will supply additional oranges because producers seek the highest return on their investments.

In perfect​ competition, long-run equilibrium occurs when the economic profit is A. zero. Your answer is correct. B. positive. C. negative. D. None of the above.

A. zero.

Price discrimination is possible in which of the following market​ structures? a. perfect competition b. monopoly c. oligopoly d. monopolistic competition A. ​b, c, and d only Your answer is correct. B. c and d only C. b and c only D. ​a, b,​ c, and d

A. ​b, c, and d only

Which of the following equations is incorrect​? A. AFC​ = ATC − AVC B. AVC​ + AFC​ = ATC C. ATC − AFC​ = AVC D. ATC​ = AVC − AFC

ATC​ = AVC − AFC

Alzania produces and consumes​ 500,000 tons of cotton during a year. Reports indicate that​ Alzania's neighbor, which also employs the same number of people in the cotton​ industry, consumed​ 400,000 tons of cotton. This led industry experts to believe that Alzania had an absolute advantage in the production of cotton over its neighbor. Which of the​ following, if​ true, could weaken this​ view? A. ​Alzania's neighbor has been producing cotton longer than Alzania. B. Workers in Alzania have higher productivity due to better education and training. C. The cotton industry in Alzania is heavily regulated by the government. D. Alzania is a closed economy. E. ​Alzania's neighbor exported half its production of cotton that year.

Alzania's neighbor exported half its production of cotton that year.

Which of the following events would cause the supply curve to decrease from S1 to S2​? A. An increase in the number of firms in the market. B. An increase in the price of inputs. C. A decrease in the price of inputs. D. Lower expected future prices.

An increase in the price of inputs.

What is the impact of an increase in worker productivity when demand is relatively more​ elastic? A. A large increase in the price received by the firm. B. A decline in sales revenue received by the firm. C. An increase in sales revenue received by the firm. D. A small increase in the price received by the firm.

An increase in sales revenue received by the firm.

Which of the following is not a characteristic of a perfectly competitive market​ structure? A. There are no restrictions to entry by new firms. B. There are restrictions on exit of firms. Your answer is correct. C. There are a very large number of firms that are small compared to the market. D. All firms sell identical products.

B. There are restrictions on exit of firms.

The Department of Justice and the Federal Trade Commission must define the relevant market when determining whether to allow a merger. How do economists identify the relevant​ market? The relevant market has been identified if A. a technological advance results in lower​ prices; otherwise, the market is too broad. B. a price increase results in higher​ profits; otherwise, the market is too narrow. Your answer is correct. C. an increase in output results in a decrease in average​ costs; otherwise, the market is too narrow. D. a price increase results in lower​ sales; otherwise, the market is too narrow. E. an increase in profits results in new firms​ entering; otherwise, the market is too broad.

B. a price increase results in higher​ profits; otherwise, the market is too narrow.

(screenshot 11) Refer to the diagram to the right which shows cost and demand curves facing a profit−maximizing perfectly competitive firm. Identify the short run shut down point for the firm. A. a B. b Your answer is correct. C. c D. d

B. b

What effect does a network externality have on the market for a​ product? If a network externality is present for a​ product, then A. producers may be less likely to supply the product because it is less unique. B. consumers may be more likely to buy the product because it is more useful. Your answer is correct. C. consumers may be less likely to buy the product to avoid switching costs. D. producers may be more likely to supply the product to avoid market failure. E. producers may be more likely to supply the product to create path dependence.

B. consumers may be more likely to buy the product because it is more useful.

To have a​ monopoly, barriers to entering the market must be so high that no other firms can enter. Do network externalites create or remove barriers to​ entry? Explain. Network externalities A. remove barriers to entry because consumption of a​ firm's product increases the value of goods and services produced by other firms. B. create barriers to entry because if a firm can attract enough customers​ initially, it can attract additional customers as its​ product's value increases by more people using​ it, which attracts even more customers. Your answer is correct. C. remove barriers to entry because diseconomies of scale are so large that one firm can supply the entire market at higher average total cost than can two or more firms. D. create barriers to entry because a firm efficiently offers products that satisfy consumer preferences. E. remove barriers to entry because such externalities require multiple firms to provide the goods and services in the network.

B. create barriers to entry because if a firm can attract enough customers​ initially, it can attract additional customers as its​ product's value increases by more people using​ it, which attracts even more customers.

Many firms advertise. What effect does advertising have on firm​ profits? One possible effect of advertising is to A. increase profits by making the demand curve for the product more elastic. B. decrease profits by increasing the cost of production. Your answer is correct. C. increase profits by allowing the firm to produce the same amount of output with fewer inputs. D. increase profits by shifting the demand curve for the product to the left. E. increase profits by making the supply curve for the product more inelastic.

B. decrease profits by increasing the cost of production.

What effect might the government have on​ oligopolies? In​ oligopolies, the government might A. impose barriers to entry with a​ copyright, which allows only the government to supply a good or service. B. impose barriers to entry with a tariff to limit foreign competition. Your answer is correct. C. promote competition with occupational licensing, where a license is required to provide a good or service. D. impose barriers to entry with a​ free-trade agreement with another country to promote competition. E. promote competition by allowing large firms to lobby state legislators and members of Congress for favorable laws.

B. impose barriers to entry with a tariff to limit foreign competition.

A perfectly competitive firm produces​ 3,000 units of a good at a total cost of​ $36,000. The price of each good is​ $10. Calculate the​ firm's short run profit or loss. A. profit of​ $6,000 B. loss of​ $6,000 Your answer is correct. C. profit of​ $30,000 D. There is insufficient information to answer the question

B. loss of​ $6,000

Is zero economic profit inevitable in the long run for monopolistically competitive​ firms? In the long​ run, monopolistically competitive firms A. will continue to earn profit due to barriers to new firms entering the market. B. may continue to earn profit by convincing consumers their products are different. Your answer is correct. C. will not continue to earn profit because the cost of production will rise as new firms enter the market. D. will not continue to earn profit because monopolistically competitive firms produce identical products. E. may continue to earn profit by instead beginning to produce a product identical to competitors.

B. may continue to earn profit by convincing consumers their products are different.

Suppose a local​ McDonald's hamburger restaurant raises the price of its cheeseburgers from​ $2.00 to​ $2.50. What will happen to the quantity of​ McDonald's cheeseburgers​ demanded? If​ McDonald's raises the price of​ it's cheeseburgers, then A. some of​ McDonald's customers, but not all of​ them, will still demand​ McDonald's cheeseburgers because cheeseburgers from​ fast-food restaurants are identical. B. some of​ McDonald's customers, but not all of​ them, will still demand​ McDonald's cheeseburgers because this restaurant may be closer to them. Your answer is correct. C. all of​ McDonald's customers will continue to demand​ McDonald's cheeseburgers because cheeseburgers from other​ fast-food restaurants are at least slightly differentiated. D. none of​ McDonald's customers will continue to demand​ McDonald's cheeseburgers because they can buy comparable cheeseburgers from other​ fast-food restaurants. E. all of​ McDonald's customers will continue to demand​ McDonald's cheeseburgers because​ McDonald's faces no competition.

B. some of​ McDonald's customers, but not all of​ them, will still demand​ McDonald's cheeseburgers because this restaurant may be closer to them.

Do consumers benefit in any way from monopolistic competition relative to perfect​ competition? Compared to perfect​ competition, when a consumer purchases a product from a monopolistically competitive​ firm, the consumer benefits from purchasing a product A. whose marginal benefit to that consumer equals its marginal cost of production. B. that is appealing because it is differentiated. Your answer is correct. C. whose price equals marginal cost. D. without coercion from advertising. E. produced according to government standards.

B. that is appealing because it is differentiated.

Marvin visits his aunt and uncle who live in Milwaukee. The Milwaukee Bucks basketball team is scheduled to play a home game against the Golden State Warriors during​ Marvin's visit. An online broker has a ticket for sale in Section 212 of the arena where the game will be played but the​ price, $75, is more than Marvin is willing to pay. From another online ticket broker he buys a ticket for​ $50 for a seat in Section 212 of the arena. On the day of the​ game, a friend of​ Marvin's uncle offers to pay Marvin​ $75 for his ticket. He declines the offer. ​Marvin's refusal to sell his ticket can be explained by A. his failure to ignore the sunk costs of the ticket. B. the endowment effect in which Marvin is not considering the nonmonetary opportunity cost of the ticket. Your answer is correct. C. his inclusion of the sunk costs of the ticket in his decision. D. his unrealistic view of his future behavior.

B. the endowment effect in which Marvin is not considering the nonmonetary opportunity cost of the ticket.

What factors under the control of owners and managers make a firm successful and allow it to earn economic​ profits? Owners and managers control some of the factors that make a firm successful such as A. the firm's ability to produce a product identical to that produced by competitors. B. the firm's ability to produce its product at a lower average cost than competitors. Your answer is correct. C. the role foreign oil plays in determining transportation costs. D. sheer chance. E. the​ government's ability to promote economic growth.

B. the firm's ability to produce its product at a lower average cost than competitors.

What explanation might an economist provide why some people smoke cigarettes when such behavior can lead to health​ consequences? Some people likely smoke cigarettes because A. they undervalue the utility from current choices. B. they overvalue the utility from current choices. Your answer is correct. C. they overvalue the utility to be received in the future from not getting lung cancer. D. their preferences are consistent over time. E. they overestimate the future costs of current choices.

B. they overvalue the utility from current choices.

Neem Products sells its ayurvedic neem toothpaste in two completely isolated markets with demand schedules as shown in the table to the right. The average cost of production is constant at​ $2 per tube. What is the total profits from both markets​ combined? A. ​$48 B. ​$18 Your answer is correct. C. ​$50 D. ​$15

B. ​$18 (info from screenshot 22)

In the diagram to the​ right, illustrating a binding price floor at P1​, the amount of consumer surplus transferred to producers is represented by area B and the deadweight loss is equal to areas C and E .

B; C and E

Which of the following is a necessary condition for successful price​ discrimination? A. Transactions costs must be zero. B. The buyer must possess market power. C. The seller must possess market power. Your answer is correct. D. Buyers must have identical inelastic demands.

C. The seller must possess market power.

Firms are sometimes able to engage in price discrimination over time. Give an example of this form of price discrimination. A typical example of price discrimination over time would be when a company A. charges lower prices for hardcover editions of books than for paperback editions that are published months later. B. buys iPods in one market at a low price and resells them in another market at a higher price. C. charges higher prices for digital cameras when they are first introduced and lower prices later. Your answer is correct. D. charges men higher prices for flat−screen plasma televisions than women. E. segments the market to charge more​ price-sensitive customers higher prices for DVD players than less​ price-sensitive customers.

C. charges higher prices for digital cameras when they are first introduced and lower prices later.

How do firms use​ marketing? A firm might use marketing to A. reduce differentiation between their product and that produced by competitors. B. identify the​ long-run equilibrium price where firms break even. C. design their product. Your answer is correct. D. eliminate things that keep new firms from entering an industry. E. shift the demand curve for their product to the left through advertising.

C. design their product.

How does the​ long-run equilibrium for a monopolistically competitive market differ from the​ long-run equilibrium for a perfectly competitive​ market? One way in which monopolistically competitive markets and perfectly competitive markets differ is that in​ long-run equilibrium, monopolistically competitive firms A. produce at minimum marginal cost. B. produce where marginal revenue is greater than marginal cost. C. do not produce at minimum average total cost. Your answer is correct. D. do not earn zero economic profits. E. charge a price equal to marginal revenue.

C. do not produce at minimum average total cost.

Anchoring is relating a value to some other known value A. only when the second value is irrelevant. B. except when the second value is irrelevant. C. even if the second value is irrelevant. Your answer is correct. D. that the customer has previously experienced. A firm can use anchoring to influence consumer choices so as to increase sales by marking A. a low​ "regular price" on a​ product, which makes the discounted​ "sale price" appear to be a bargain. B. a high​ "regular price" on a​ product, which makes the discounted​ "sale price" appear to be a bargain. Your answer is correct. C. a high​ "sale price" on a​ product, which makes the regular price appear to be a bargain. D. a low​ "sale price" on a​ product, which makes the regular price appear to be a bargain.

C. even if the second value is irrelevant. B. a high​ "regular price" on a​ product, which makes the discounted​ "sale price" appear to be a bargain.

A perfectly competitive industry achieves allocative efficiency when A. goods and services are produced at the lowest possible cost. B. it produces where market price equals marginal production cost. C. goods and services are produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it. Your answer is correct. D. firms carry production surpluses.

C. goods and services are produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it.

Bubba's Hula Shack Bar and Bistro has begun giving customers who can show proof that they arrived at the establishment by public transportation a 10 percent discount on their total bill. All else​ equal, customers who arrive by public transportation to take advantage of​ Bubba's Hula Shack discount have a​ ________ for the services of the establishment than customers who drive to the establishment. A. higher price elasticity of supply B. lower price elasticity of demand C. higher price elasticity of demand Your answer is correct. D. lower price elasticity of supply

C. higher price elasticity of demand Your answer is correct.

From an economic​ perspective, price discrimination is desirable because A. it redistributes wealth from wealthy consumers to highly innovative firms. B. the increase in profits results in higher corporate tax revenues received by the government which could be used to subsidize consumption for low−income individuals. C. it enables firms to increase profits with no loss in economic​ surplus, and in​ turn, this could provide firms with incentives to engage in beneficial product innovation. Your answer is correct. D. the increase in profits is more than offset by the loss in consumer​ surplus, resulting in a net increase in economic surplus.

C. it enables firms to increase profits with no loss in economic​ surplus, and in​ turn, this could provide firms with incentives to engage in beneficial product innovation.

What conditions make a market perfectly​ competitive? A market is perfectly competitive if A. it has many buyers and many​ sellers, all of whom are selling differentiated​ products, with no barriers to new firms entering the market. B. it has many buyers and one​ firm, which produces a product with no close​ substitutes, with barriers to new firms entering the market. C. it has many buyers and many​ sellers, all of whom are selling identical​ products, with no barriers to new firms entering the market. Your answer is correct. D. it has many buyers and a few​ sellers, all of whom are selling identical ​products, with no barriers to new firms entering the market. E. it has many buyers and a few​ sellers, all of whom are selling differentiated ​products, with barriers to new firms entering the market.

C. it has many buyers and many​ sellers, all of whom are selling identical​ products, with no barriers to new firms entering the market.

Suppose ham is a normal good. How will consumers adjust their buying decisions if the price of ham​ changes? If the price of ham​ increases, then consumers will demand A. more ham due to the income effect because their purchasing power decreases and less ham due to the substitution effect because the opportunity cost of consuming ham is higher. B. less ham due to the income effect because the opportunity cost of consuming ham is higher and less ham due to the substitution effect because their purchasing power decreases. C. less ham due to the income effect because their purchasing power decreases and less ham due to the substitution effect because the opportunity cost of consuming ham is higher. Your answer is correct. D. more ham due to the income effect because the opportunity cost of consuming ham is lower and less ham due to the substitution effect because their purchasing power decreases. E. more ham due to the income effect because their purchasing power increases and less ham due to the substitution effect because the opportunity cost of consuming ham is higher. ​Instead, suppose ham is an inferior good. If the price of ham​ increases, then consumers will demand moremore ham due to the income effect and less ham due to the substitution effect.

C. less ham due to the income effect because their purchasing power decreases and less ham due to the substitution effect because the opportunity cost of consuming ham is higher. more ham due to the income effect and less ham due to the substitution effect.

What is the supply curve for a perfectly competitive firm in the short​ run? The supply curve for a firm in a perfectly competitive market in the short run is A. a horizontal line equal to the market price. B. that​ firm's marginal revenue curve for prices at or above average fixed cost. C. that​ firm's marginal cost curve for prices at or above average variable cost. Your answer is correct. D. that​ firm's marginal cost curve for prices at or above average total cost. E. that​ firm's marginal cost curve.

C. that​ firm's marginal cost curve for prices at or above average variable cost.

Refer to the diagram to the right which shows cost and demand curves facing a profit−maximizing perfectly competitive firm. Identify the​ firm's short run supply curve. A. the marginal cost curve. B. the marginal cost curve from a and above. C. the marginal cost curve from b and above. Your answer is correct. D. the marginal cost curve from d and above.

C. the marginal cost curve from b and above. Your answer is correct.

s price discrimination​ illegal? In recent​ years, the courts have interpreted the A. ​Robinson-Patman Act such that all forms of price discrimination are illegal. B. Federal Trade Commission Act such that price discrimination is legal if it increases competition. C. ​Robinson-Patman Act such that price discrimination is illegal if it reduces competition. Your answer is correct. D. Federal Trade Commission Act such that price discrimination is illegal if it is based on race and gender. E. Cellar−Kefauver Act such that price discrimination is legal if it is not based on differences in cost.

C. ​Robinson-Patman Act such that price discrimination is illegal if it reduces competition.

In the diagram to the​ right, illustrating a binding price ceiling at P3​, the amount of producer surplus transferred to consumers is represented by area C and the deadweight loss is equal to areas B and D .

C; B and D

Using the same amount of​ resources, the United States and Canada can both produce lumberjack shirts and lumberjack​boots, as shown in the production possibilities frontiers in the figure to the right. Canada has a comparative advantage in producing lumberjack boots. The United States has a comparative advantage in producing lumberjack shirts. Does either country have an absolute advantage in producing both​ goods? A. Neither country has an absolute advantage in both goods because Canada can produce more boots but the United States can produce more shirts. B. Neither country has an absolute advantage in both goods because the United States can produce more boots but Canada can produce more shirts. C. Canada has an absolute advantage in both goods because it can produce more boots and more shirts. D. The United States has an absolute advantage in both goods because it can produce more boots and more shirts. E. Both countries have an absolute advantage in both goods because they both produce boots and shirts. Suppose initially that the United States is consuming 2 boots and 12 shirts and Canada is consuming 8 boots and 4 ​shirts, as indicated in the figure. ​ Then, suppose the United States and Canada specialize by each only producing the good for which they have a comparative advantage and then trade. In​ particular, suppose the United States trades Canada half of its production for half of what Canada produces.

Canada- boot United States- shirts Neither country has an absolute advantage in both goods because Canada can produce more boots but the United States can produce more shirts. The United States will have 0 additional​ shirt(s) after the trade ​(enter a numeric response using an​ integer) and 10 additional​ boot(s). At the same​ time, Canada will be able to consume 8 additional​ shirt(s) as a result of the trade and 4 additional​ boot(s). (see screenshot)

Deadweight loss is the reduction in economic surplus resulting from a market not being in competitive equilibrium. In the​ diagram, deadweight loss is equal to the​ area(s): A. C​ & E. Your answer is correct. B. B​ & D. C. ​A, B,​ & C. D. A.

C​ & E.

In the diagram to the​ right, illustrating a​ per-unit tax equal to P2 minus P3​, tax revenue is represented by the areas D and F and the excess burden of the tax is represented by areas E and G

D and F; E and G

Which of the following would cause a shift in the demand curve from point A to point​ B? A. An increase in income​ (normal good). B. A decrease in income​ (inferior good). C. An increase in the price of a substitute good. D All of the above.

D. All of the above.

Which of the following is an example of price​ discrimination? An example of price discrimination is A. an airline charging higher prices for business travelers than for leisure travelers. B. a golf course charging higher prices for weekend tee−times than for weekday tee−times. C. an apartment complex charging higher rent to African−Americans than to whites. D. Both a and b. Your answer is correct. E. All of the above.

D. Both a and b.

In long−run perfectly competitive​ equilibrium, which of the following is​ false? A. Economies of scale are exhausted. B. Economic surplus is maximized. C. There is​ efficient, low−cost production at the minimum efficient scale. D. Firms earn economic profit.

D. Firms earn economic profit.

Which of the following is an expression of profit for a perfectly competitive​ firm? Profit for a perfectly competitive firm can be expressed as A. Profit=P−​ATC, where P is price and ATC is average total cost. B. Profit=P×​Q, where P is price and Q is output. C. Profit=P−​MC, where P is price and MC is marginal cost. D. Profit=(P×Q)−(ATC×Q)​, where P is​ price, Q is​ output, and ATC is average total cost. This is the correct answer. E. Profit=(P−TC)×Q​, where P is​ price, Q is​ output, and TC is total cost.

D. Profit=(P×Q)−(ATC×Q)​, where P is​ price, Q is​ output, and ATC is average total cost.

(screenshot 12) Suppose the market price is​ $120. Which of the following is true​? A. The firm earns a profit equal to the area A. B. The firm earns a profit equal to the area A​ + B. C. The firm will break even. D. The firm suffers a loss equal to the area A.

D. The firm suffers a loss equal to the area A.

If the firm is producing 500​ units, what is the amount of its profit or​ loss? A. profit of​ $280 B. loss equivalent to the area A C. profit equivalent to the area A D. There is insufficient information to answer the question.

D. There is insufficient information to answer the question.

Xavier is an accountant who provides tax services through his own firm. To provide these services he must rent an office for ​$12,000 per​ year, hire a secretary for ​$30,000​, and spend ​$8,000 per year in advertising. Explicit Costs Amount Office rent ​$12,000 Secretary ​$30,000 Advertising ​$8,000 ​Xavier's total revenue from his tax services is ​$94,000 per year. Suppose​ Xavier's firm is in a perfectly competitive industry and that he could otherwise earn ​$44,000 per year working as an accountant in another firm. Assuming​ Xavier's profits are representative of the​ industry, describe what will likely happen to​ Xavier's profits in the long run. A. Xavier is incurring losses and should shut down in the long run. B. Xavier is earning an economic profit and should continue to produce to earn these profits in the long run. C. Xavier is earning an economic profit and should expect to break even in the long run after the entry of new firms. D. Xavier is breaking even and should continue to produce to continue breaking even in the long run. Your answer is correct. E. Xavier is breaking even and should shut down in the long run.

D. Xavier is breaking even and should continue to produce to continue breaking even in the long run.

ow should sunk costs be used in consumer​ decision-making? In consumer​ decision-making, sunk costs should A. be treated as nonmonetary costs. B. be treated as opportunity costs. C. be included in the budget constraint. D. be ignored. Your answer is correct. E. be treated as monetary costs. Suppose you bought a ticket to a musical. The ticket is nonrefundable​ (and can't be​ resold) and must be used on Saturday.​ Then, a friend calls and invites you to a football game on Saturday. You only have time to attend one of the​ events, and your friend offers to pay the cost of going to the football game. If you prefer football games over musicals​, then you should attend the football gamefootball game.

D. be ignored. If you prefer football games over musicals​, then you should attend the football gamefootball game.

For many​ years, the Aluminum Company of America (Alcoa) essentially operated as a monopoly. What made this company a monopoly? The Aluminum Company of America (Alcoa) was essentially a monopoly because A. Bauxite​, used to make aluminum​, has many close substitutes that can also be used to produce aluminum. B. the suppliers of bauxite​, used to make aluminum​, had substantial bargaining power. C. the buyers of aluminum had virtually no bargaining power. D. it had almost exclusive control of the​ world's supply of bauxite​, used to make aluminum. Your answer is correct. E. the input market for bauxite​, used to make aluminum​, was perfectly competitive.

D. it had almost exclusive control of the​ world's supply of bauxite​, used to make aluminum.

The government indirectly influences the level of industry competition with its own barriers to entry. ​ How? The government can restrict entry by A. regulating the size of profits that firms can earn. B. reducing the duration of patents on inventions. C. eliminating quotas to promote free trade. D. requiring licenses for a firm to produce. Your answer is correct. E. preventing lobbyists from influencing policymakers.

D. requiring licenses for a firm to produce.

Suppose a firm introduces a new product. How might that firm use brand management? Such a firm might use brand management to A. increase productive efficiency by producing the good at lower average cost. B. increase profits in the short run by making their demand curve more elastic. C. inspire competitors to copy the product. D. to postpone the time when they will no longer be able to earn economic profits. Your answer is correct. E. produce the same amount of output using fewer inputs.

D. to postpone the time when they will no longer be able to earn economic profits.

Suppose the firm produces​ 4,000 units. What does the shaded area labeled A​ represent? A. profit B. total variable cost C. total revenue D. total fixed cost

D. total fixed cost

The following table shows the market shares during the first three months of 2017 for companies in the U.S. personal computer​ (PC) market, which includes desktop PCs and​ laptops, but not tablet​ computers, such as​ iPads: Company Market Share Lenovo ​ 20% ​Hewlett-Packard 20 Dell 15 ASUS 7 Apple 7 Acer 6 Other 25 ​Source: Juli​ Clover, "Worldwide Mac Sales up Slightly as PC Market Continues to Decline in Q1​ 2017," www.macrumors.com, April​ 11, 2017. Use the information in the section​ "The Department of Justice and FTC Merger​ Guidelines" to predict whether the Department of Justice and the FTC would be likely to oppose a merger between any of the five firms listed in the table. Assume that​ "Other" in the table consists of five firms, each of which has a five percent market share. Considering mergers between any two of the five named​ firms, the Department of Justice and the FTC A. would only challenge a merger between​ Hewlett-Packard and Lenovo. B. would challenge all mergers except mergers between Acer and Apple and Dell and​ Acer, which might be​ challenged, and a merger of Acer and​ Hewlett-Packard, which would not be challenged. C. would only challenge a merger between​ Hewlett-Packard and Lenovo and might also challenge a merger between Lenovo and Dell. D. would not challenge any mergers. Your answer is correct. E. would challenge all mergers except mergers between Acer and​ Apple, Hewlett-Packard and​ Acer, and ASUS and​ Hewlett-Packard, which may be challenged.

D. would not challenge any mergers.

Insurance companies typically charge women lower prices than men for automobile insurance. Is this an example of price​ discrimination? A. ​Yes, because insurance companies can prevent​ arbitrage; that​ is, women cannot transfer their insurance coverage to men. B. ​No, because there are too many insurance companies for any one company to have market power. A firm must possess market power in order to practice price discrimination. C. ​Yes, because the costs of selling insurance to men and women are the same. D. ​No, because, on​ average, women have better driving records than men and the costs of insuring men are greater than the costs of insuring women.

D. ​No, because, on​ average, women have better driving records than men and the costs of insuring men are greater than the costs of insuring women.

Consider the two demand curves illustrated in the figure. Which of the two is relatively more elastic Upper D 2

D2 is more elastic.

Consider the demand curve illustrated in the figure to the right. Is demand elastic or​ inelastic? A. Demand is elastic at all prices above ​$5.00 and inelastic at all prices below ​$5.00. B. Demand is elastic​ (at all​ prices). C. Demand is inelastic at all prices above ​$7.00 and elastic at all prices below ​$7.00. D. Demand is elastic at all prices above ​$7.00 and inelastic at all prices below ​$7.00. E. Demand is inelastic​ (at all​ prices). At what price is total revenue​ maximized? Total revenue is maximized when price equals ​$7. ​(Enter your response as a real number rounded to two decimal​ places.)

Demand is elastic at all prices above ​$7.00 and inelastic at all prices below ​$7.00. $7

What is the difference between​ "diminishing marginal​ returns" and​ "diseconomies of​ scale"? A. Diminishing marginal returns which applies only in the short​ run, when at least one factor is​ fixed, explains why marginal cost​ increases, while diseconomies of scale which applies in the long​ run, when all factors are​ variable, explains why average cost increases. Your answer is correct. B. Both concepts explain why marginal cost increases after some point but diminishing marginal returns applies only in the short run when there is at least one fixed​ factor, while diseconomies of scale applies in the long run when all factors are variable. C. Diminishing marginal returns which applies only in the short​ run, when at least one factor is​ fixed, explains why average variable cost​ increases, while diseconomies of scale which applies in the long​ run, when all factors are​ variable, explains why average total cost increases. D. Both concepts explain why average total cost increases after some point but diminishing marginal returns applies only in the short run when there is at least one fixed​ factor, while diseconomies of scale applies in the long run when all factors are variable.

Diminishing marginal returns which applies only in the short​ run, when at least one factor is​ fixed, explains why marginal cost​ increases, while diseconomies of scale which applies in the long​ run, when all factors are​ variable, explains why average cost increases.

Briefly explain whether you agree with the following​ statement: ​"The reluctance of healthy young adults to buy medical insurance creates a moral hazard problem for insurance​ companies." A. Disagree. Moral hazard becomes a problem after one purchases insurance. In this​ case, the reluctance of​ young, healthy adults to purchase insurance in the first place leads to an adverse selection problem. Your answer is correct. B. Agree. The only way for insurance companies to get​ young, healthy adults to buy insurance is to lower the price. ​ However, this is a form of price​ discrimination, which is often referred to as a moral hazard problem. C. Disagree.​ Young, healthy adults do not need insurance.​ Thus, selling insurance to someone who​ doesn't need it would be a moral hazard. D. Agree. We have a moral obligation to be covered by insurance so that in the event we do become sick or injured taxpayers​ won't be stuck paying our bills.

Disagree. Moral hazard becomes a problem after one purchases insurance. In this​ case, the reluctance of​ young, healthy adults to purchase insurance in the first place leads to an adverse selection problem.

Someone who owns a townhouse wrote to a real estate advice columnist to ask whether he should sell his townhouse or wait and sell it in the future when he hoped that prices would be higher. The columnist​ replied: "Ask​ yourself: would you buy this townhouse today as an​ investment? Because every day you​ don't sell​ it, you're buying​ it." ​Source: Edith​ Lane, "Contract Exclusion​ OK?" (Allentown,​ PA) Morning Call​, May​ 22, 2011. Do you agree with the​ columnist? In what sense are you buying something if you​ don't sell​ it? A. Agree. The owner should not consider the cost of buying the house since it is a sunk cost. B. Disagree. The owner may want this townhouse more than any other townhouse that he​ doesn't own. C. Disagree. If the owner​ doesn't sell the​ house, he is not incurring any cost from living in it. D. Agree. Every day the owner uses the​ house, there is an opportunity cost involved that is equal to the cost of not selling the house. Your answer is correct. Should the​ owner's decision about whether or not to sell depend on what price he originally paid for the​ townhouse? The​ owner's decision about whether or not to sell should A. not depend on the price he originally paid for the townhouse because that is a sunk cost he incurred. B. only depend on the capital gain that he can enjoy from selling it at the highest possible price. C. only depend on the opportunity costs incurred from using the house for himself.

Do you agree with the​ columnist? In what sense are you buying something if you​ don't sell​ it? D. Agree. Every day the owner uses the​ house, there is an opportunity cost involved that is equal to the cost of not selling the house. The​ owner's decision about whether or not to sell should D. depend on the price he originally paid for the townhouse because that is a relevant monetary cost.

Refer to the diagram to the right. Identify the curves in the diagram. A. E ​= marginal cost​ curve; F ​= total cost​ curve; G ​= variable cost​ curve, H​ = average fixed cost curve B. E ​= average fixed cost​ curve; F ​= variable cost​ curve; G ​= total cost​ curve, H​ = marginal cost curve C. E ​= marginal cost​ curve; F ​= average total cost​ curve; G ​= average variable cost​curve; H​ = average fixed cost curve. Your answer is correct. D. E ​= average fixed cost​ curve; F ​= average total cost​ curve; G ​= average variable cost​curve, H​ = marginal cost curve

E ​= marginal cost​ curve; F ​= average total cost​ curve; G ​= average variable cost​curve; H​ = average fixed cost curve.

Are monopolistically competitive firms efficient in​ long-run equilibrium? Monopolistically competitive firms A. are not productively efficient because they do not produce at minimum marginal cost and they are allocatively efficient because they produce where marginal cost equals marginal revenue. B. are not productively efficient because they do not produce at minimum average total cost and they are allocatively efficient because they produce where price is less than marginal cost. C. are productively efficient because they produce at minimum average total cost and they are not allocatively efficient because they produce where price is equal to marginal revenue. D. are not productively efficient because they do not produce at minimum marginal cost and they are allocatively efficient because they produce where price is equal to marginal revenue. E. are not productively efficient because they do not produce at minimum average total cost and they are not allocatively efficient because they produce where price is greater than marginal cost.

E. are not productively efficient because they do not produce at minimum average total cost and they are not allocatively efficient because they produce where price is greater than marginal cost.

Behavioral economists attribute some consumer behavior to the endowment effect. Which of the following is an example of the endowment​ effect? An example of the endowment effect is A. being willing to will your descendents a vase upon your death that you otherwise could have sold for a substantial price. B. buying lottery tickets with an expected value that is less than their price. C. taking into account nonmonetary opportunity costs such as the value of your time. D. being unwilling to sell a house that you already own. E. being unwilling to sell a car for a price that is greater than the price you would be willing to pay to buy the car if you​ didn't already own it.

E. being unwilling to sell a car for a price that is greater than the price you would be willing to pay to buy the car if you​ didn't already own it.

What is the difference between a horizontal merger and a vertical​ merger? A horizontal merger is a merger A. that would increase ​efficiency, while a vertical merger is a merger that would decrease efficiency. B. between firms in different​ industries, while a vertical merger is a merger between firms in the same industry. C. between firms of the same size​, while a vertical merger is a merger between firms of different sizes. D. between firms that are price takers​, while a vertical merger is a merger between firms that have market power. E. between firms in the same​ industry, while a vertical merger is a merger between firms at different stages of the production of a good. Your answer is correct. Which type of merger is more likely to increase the market power of a newly merged​ firm? Horizontal mergers are more likely to increase market power.

E. between firms in the same​ industry, while a vertical merger is a merger between firms at different stages of the production of a good. Your answer is correct. Which type of merger is more likely to increase the market power of a newly merged​ firm? Horizontal

According to behavioral​ economics, consumers A. always behave rationally because they are overly optimistic about their future behavior. B. always behave rationally because they take into account monetary costs and nonmonetary opportunity costs. C. do not always behave rationally because they take into account nonmonetary opportunity costs. D. always behave rationally because they account for sunk costs. E. do not always behave rationally because they fail to ignore sunk costs.

E. do not always behave rationally because they fail to ignore sunk costs.

Governments often have the potential to influence whether firms are monopolies How might the government affect whether a firm is a​ monopoly? The government could A. grant a firm a public​ enterprise, allowing it to benefit from network externalities. B. grant a copyright to a firm​, making it a natural monopoly. C. reduce taxes so that a firm benefits from diseconomies of scale. D. grant a patent to a​ firm, making it a natural monopoly. E. grant a firm a public franchise, making it the exclusive legal provider of a good or service.

E. grant a firm a public franchise, making it the exclusive legal provider of a good or service.

Describe a​ monopoly's demand curve. A​ monopoly's demand curve A. is infinitely elastic and equal to the market price. B. is the same as its marginal revenue curve. C. is above the demand curve for the product. D. is vertical at the​ profit-maximizing quantity. E. is the same as the demand curve for the product.

E. is the same as the demand curve for the product.

Suppose you have a monthly entertainment budget that you use to rent movies and purchase CDs. You currently use your income to rent 5 movies per month at a cost of​ $5.00 per movie and to purchase 5 CDs per month at a cost of​ $10.00 per CD. Your marginal utility from the fifth movie is 20 and your marginal utility from the fifth CD is 36. Are you maximizing​ utility? You are A. not maximizing utility because the price of movies is not equal to the price of CDs. B. maximizing utility because you are spending all of your entertainment budget. C. not maximizing utility because the marginal utility of movies is not equal to the marginal utility of CDs. D. maximizing utility because you are consuming an equal number of movies and CDs. E. not maximizing utility because the marginal utility per dollar spent on movies is not equal to the marginal utility per dollar spent on CDs. Your answer is correct. What could you do to increase​ utility? You could increase utility by consuming more movies and fewer CDs.

E. not maximizing utility because the marginal utility per dollar spent on movies is not equal to the marginal utility per dollar spent on CDs.What could you do to increase​ utility? You could increase utility by consuming more movies and fewer CDs.

Many firms might like to be monopolies because such firms earn economic profits in the long run. What might cause a​ monopoly? A firm is likely to be a monopoly if A. the market is not regulated by the government. B. its product has complementary goods or services that are in high demand. C. it experiences diseconomies of scale. D. its buyers have no bargaining power. E. there are important network externalities in supplying the good or service.

E. there are important network externalities in supplying the good or service.

How do property rights affect externalities and market​ failure? A. Externalities and market failure will result from the difficulty of enforcing property rights. Your answer is correct. B. Externalities will be positive and market failure will not occur when property rights are divided equally among market participants. C. Externalities and market failure will result from producers having all the property rights. D. Externalities will be positive and market failure will not occur when property rights are enforced. E. Externalities and market failure will not occur when property rights are incomplete.

Externalities and market failure will result from the difficulty of enforcing property rights.

(screenshot 36). The figure to the right illustrates the average total cost curves for two automobile manufacturing​ firms: LittleAuto and BigAuto. Under which conditions would you expect to see the market composed of firms like LittleAuto and under which conditions would you expect to see the market dominated by firms like​ BigAuto? a. When the market demand curve intersects the quantity axis at less than​ 1,000 units. Firms like LittleAuto Your answer is correct. Firms like BigAuto b. When the market demand curve intersects the quantity axis at more than​ 1,000 units but less than​ 10,000 units. Firms like LittleAuto Firms like BigAuto Your answer is correct. c. When the market demand curve intersects the quantity axis at more than​ 10,000 units. Firms like BigAuto Your answer is correct. Firms like LittleAuto

Firms like LittleAuto;Firms like BigAuto;Firms like BigAuto

Suppose that France and Germany both produce wine and cheese. The table below shows combinations of the goods that each country can produce in a day. Who has the comparative advantage in producing wine and who has the comparative advantage in producing​ cheese? A. France has a comparative advantage producing wine and Germany has a comparative advantage producing cheese. B. France has a comparative advantage producing wine and cheese. C. Germany has a comparative advantage producing wine and cheese. D. Neither has a comparative advantage producing wine or cheese. E. France has a comparative advantage producing cheese and Germany has a comparative advantage producing wine. Suppose that France is currently producing 1 bottle of wine and 6 pounds of cheese and Germany is currently producing 3 bottles of wine and 10 pounds of cheese. ​ Then, assume instead that France and Germany specialize by producing only the good for which they have a comparative advantage and then trade 3 bottles of wine for 10 pounds of cheese.

France has a comparative advantage producing wine and Germany has a comparative advantage producing cheese. After specialization and​ trade, France gains by consuming the same amount of wine and 4 additional​ pound(s) of cheese ​(enter a numeric response using an​ integer) and Germany gains by consuming the same amount of wine and 5 additional​ pound(s) of cheese.

A large corporation that runs nursing homes estimates that changes to Medicare will result in lower payments by Medicare to nursing homes for​ short-term stays by patients that require therapy or care upon leaving hospitals. Assume the corporation is considering expanding the number of​ "beds" it offers at its nursing homes. Given the changes to​ Medicare, if the marginal benefit of offering an additional bed is ​$6,000 and the marginal cost is ​$8,000 per​ bed, then the corporation blank offer additional beds.

Given the changes to​ Medicare, if the marginal benefit of offering an additional bed is ​$6,000 and the marginal cost is ​$8,000 per​ bed, then the corporation should not offer additional beds.

In England during the Middle​ Ages, each village had an area of​ pasture, known as a​ commons, on which any family in the village was allowed to graze its cows or sheep without charge. Was the common land used​ optimally? A. The commons was underused due to free riding. B. Grazing created no​ externality, resulting in the commons being used optimally. C. The commons was overused because the commons was an excludable good. D. The commons was underused because the commons was a rival good. E. Grazing created a negative​ externality, resulting in the commons being overused.

Grazing created a negative​ externality, resulting in the commons being overused.

How are games in game theory​ played? In game​ theory, A. players determine their objectives and then payoffs are randomly assigned. B. players employ strategies to attain their objectives sequentially so that they are not affected by the actions of other players. C. a natural experiment is used to determine the effect of a factor by treating a portion of​ participants, with remaining untreated participants becoming the control group. D. rules determine what actions are​ allowable, players employ strategies to attain their​ objectives, and payoffs are the results of the interaction among the​ players' strategies. Your answer is correct. E. agents determine their​ objectives, and principals are hired by contract to achieve those objectives. How is game theory used in​ economics? In​ economics, A. the rules of the game include a firm's production function​, a strategy is a firm's actions to achieve a goal​, and the payoffs are profits. Your answer is correct. B. the rules of the game include​ technology, a strategy is the​ government, and the payoffs are output levels. C. the rules of the game include matters beyond a firm's control​, a strategy is a firm's actions to achieve a goal​, and the payoffs are the cost of production. D. the rules of the game include a firm's production function​, a strategy is a firm's actions to achieve a goal​, and the payoffs are output levels. E. the rules of the game include​ technology, a strategy is the​ firm, and the payoffs are profits.

How are games in game theory​ played? In game​ theory, D. rules determine what actions are​ allowable, players employ strategies to attain their​ objectives, and payoffs are the results of the interaction among the​ players' strategies. How is game theory used in​ economics? In​ economics, A. the rules of the game include a firm's production function​, a strategy is a firm's actions to achieve a goal​, and the payoffs are profits. Your answer is correct.

(screenshot 9) The figure represents the cost structure for a perfectly competitive firm with its average total cost​ (ATC) curve, average variable​ (AVC) curve, and marginal cost​ (MC) curve. Suppose the market price is ​$14.00 per unit. Will firms enter or exit the industry in the long​ run? If market price is ​$14.00​, then firms will enter the market in the long run. What effect will firms entering have on the market​ price? When firms enter​, A. market supply will increase​, decreasing price. Your answer is correct. B. market demand will decrease​, decreasing price. C. market supply will increase​, increasing price. D. the average total cost of production will increase​, increasing price. E. the marginal cost of production will increase​, increasing price.

If market price is ​$14.00​, then firms will enter the market in the long run. When firms enter​, A. market supply will increase​, decreasing price.

An article in the New York Times about J.C.​ Penney's pricing strategy under former CEO Ron Johnson​ observes: ​"Penney had pulled up the​ anchor, only to see many of its customers sail​ away." ​Source: Stephanie Clifford and Katherine​ Rampell, "Sometimes We Want Prices to Fool​ Us," New York Times​, April​ 13, 2013. In behavioral​ economics, an​ "anchor" is A. setting the lowest possible price for a product. B. setting the highest possible price for a product. C. relating an unknown value or price to another similar known value or price. Your answer is correct. D. linking the price of one product to another product. In what sense did J.C. Penney​ "pull up the​ anchor"? J.C. Penney A. created the reward status based on purchases. B. began setting their prices at the equivalent of​ WalMart's. C. eliminated coupons and created the​ 'club status'. D. began charging​ 'everyday low​ prices' instead of the typical marking down process. Your answer is correct. Penney followed this strategy because A. it sold almost​ three-quarters of its products at prices marked down by at least 50 percent. Your answer is correct. B. their major​ competitor, WalMart, introduced this new policy also. C. their major​ competitor, K-Mart, realized higher sales with this policy. D. it sold almost​ one-half of its products at prices marked down by at least 35 percent. The result of the strategy was A. a gain in market​ share, but a drop in​ short-run revenue. B. a fall in market​ share, but a rise in​ short-run revenue. C. a signficant increase in sales and a bonus for Johnson. D. a signficant drop in sales and the firing of Johnson.

In behavioral​ economics, an​ "anchor" is C. relating an unknown value or price to another similar known value or price. In what sense did J.C. Penney​ "pull up the​ anchor"? J.C. Penney D. began charging​ 'everyday low​ prices' instead of the typical marking down process. Penney followed this strategy because A. it sold almost​ three-quarters of its products at prices marked down by at least 50 percent. The result of the strategy was D. a signficant drop in sales and the firing of Johnson.

Consider the figure to the right and assume that it is the market for​ health-care services. When the​ "baby boomer" generation​ retires, the number of people who require health care increases by​ 30%, and, as a​ result, the number of​ health-care providers also​ increases, but by only​ 25%. What is the effect on the price of​ health-care services over​ time? A. It increases because demand increased by less than supply. B. It decreases because demand increased by more than supply. C. It decreases because demand increased by less than supply. D. It increases because demand increased by more than supply.

It increases because demand increased by more than supply.

If Jill expects to produce 900 pizzas per​ week, should she build a smaller restaurant or a larger​restaurant? Briefly explain. A. Jill should build a larger restaurant because average total costs will be lower than for a smaller restaurant. Your answer is correct. B. Jill should build a larger restaurant because a smaller restaurant is unable to produce 900 pizzas per week. C. Jill should build a smaller restaurant because average total costs will be lower than for a larger restaurant. D. It does not matter which size restaurant Jill builds because they both can produce 900 pizzas per week. E. Jill should build a smaller restaurant because a larger restaurant is unable to produce 900 pizzas per week.

Jill should build a larger restaurant because average total costs will be lower than for a smaller restaurant.

Suppose that Jill Johnson has to choose between building a smaller restaurant and a larger restaurant. In the​ graph, the relationship between costs and output for the smaller restaurant is represented by the curve ATC1​, and the relationship between costs and output for the larger restaurant is represented by the curve ATC2. If Jill expects to produce 200 pizzas per​ week, should she build a smaller restaurant or a larger​restaurant? Briefly explain. A. Jill should build a larger restaurant because a smaller restaurant is unable to produce 200 pizzas per week. B. Jill should build a larger restaurant because average total costs will be lower than for a smaller restaurant. C. It does not matter which size restaurant Jill builds because they both can produce 200 pizzas per week. D. Jill should build a smaller restaurant because average total costs will be lower than for a larger restaurant. Your answer is correct. E. Jill should build a smaller restaurant because a larger restaurant is unable to produce 200 pizzas per week.

Jill should build a smaller restaurant because average total costs will be lower than for a larger restaurant.

How can marginal cost be expressed​ mathematically? Marginal cost​ (MC) can be expressed as A. MC=ΔACΔQ​, where AC is average cost and Q is output. B. MC=ΔFCΔQ​, where FC is fixed cost and Q is output. C. MC=TCQ​, where TC is total cost and Q is output. D. MC=ΔTCΔQ​, where TC is total cost and Q is output. Your answer is correct. E. MC=TC−​FC, where TC is total cost and FC is fixed cost. For​ example, if the total cost of producing three units of output is ​$2,153 and the total cost of producing four units of output is ​$3,008​, then the marginal cost of the fourth unit is ​$855. ​(Enter your response as an​ integer.)

MC=ΔTC/ΔQ​, where TC is total cost and Q is output. 855

Why do oligopolies​ exist? Oligopolies exist due to barriers to entry.

Oligopolies exist due to barriers to entry.

Match the terms below on the left with the definitions to their right. Do this by inserting into each​ term's response box the number associated with its correct definition. 2 ​ Principal-agent problem 1. Refers to actions people take after they have entered into a transaction that make the other party to the transaction worse off. 3 Adverse selection 2. Results from agents pursuing their own interests rather than the interests of the principals who hired them. 4 Asymmetric information 3. Is the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction. 1 Moral hazard 4. Occurs when one party to an economic transaction has less information than the other party.

Principal-agent problem- 2. Results from agents pursuing their own interests rather than the interests of the principals who hired them. Adverse selection- 3. Is the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction. Asymmetric information- 4. Occurs when one party to an economic transaction has less information than the other party. Moral hazard- 1. Refers to actions people take after they have entered into a transaction that make the other party to the transaction worse off.

Suppose that in a market for used​ cars, there are good used cars and bad used cars​ (lemons). Consumers are willing to pay as much as​ $6,000 for a good used car but only​ $1,000 for a lemon. Sellers of good used cars value their cars at​ $5,000 each and sellers of lemons value their cars at​ $800 each. Buyers cannot tell if a used car is reliable or is a lemon. Based on this​ information, what is the likely outcome in the market for used​ cars? A. Sellers of good used cars will drop out of the market. Your answer is correct. B. Sellers of good used cars will incur losses. C. Sellers of lemons will drop out of the market. D. Used cars will sell for​ $3,000.

Sellers of good used cars will drop out of the market.

The figure illustrates the​ short-run cost curves for a company that produces cell phones. Identify the average total cost curve​ (ATC), the average variable cost curve​ (AVC), the average fixed cost curve​ (AFC), and the marginal cost curve​ (MC) in the figure. The ATC curve is Upper C 3​, the AVC curve is Upper C 2​, the AFC curve is Upper C 1, and the MC curve is Upper C 4

The ATC curve is Upper C 3​, the AVC curve is Upper C 2​, the AFC curve is Upper C 1, and the MC curve is Upper C 4

Look again at the section​ "The Department of Justice and the Federal Trade Commission Merger​ Guidelines" in the textbook. Evaluate the following​ situations: A market initially has 20​ firms, each with a 5 percent market share. Of the​ firms, 4 propose to​ merge, leaving a total of 17 firms in the industry. Are the Department of Justice and the Federal Trade Commission likely to oppose the​ merger? The Department of Justice and the Federal Trade Commission would not challengewould not challenge such a merger. A market initially has 5​ firms, each with a 20 percent market share. Of the​ firms, 4 propose to​ merge, leaving a total of 2 firms in the industry. Are the Department of Justice and the Federal Trade Commission likely to oppose the​ merger? The Department of Justice and the Federal Trade Commission would challengewould challenge such a merger.

The Department of Justice and the Federal Trade Commission would not challengewould not challenge such a merger. The Department of Justice and the Federal Trade Commission would challengewould challenge such a merger.

Which of the following is not an argument used by economists and policymakers who are in favor of moving toward a Medicare for All system of health​ care? A. A​ single-payer plan would reduce the paperwork caused by the current system. B. Medicare for All would potentially reduce the administrative cost of coordinating a decentralized system. C. The Medicare for All structure would save costs due to the bargaining power of the federal government. D. The Medicare for All structure would ultimately increase competition in the health insurance​ industry, and this would reduce health care costs and increase economic efficiency.

The Medicare for All structure would ultimately increase competition in the health insurance​ industry, and this would reduce health care costs and increase economic efficiency.

MIT economist Jerry Hausman has estimated the price elasticity of demand for Post Raisin Bran cereal to be −2.5 and the price elasticity of demand for all types of breakfast cereals to be −0.9.

The demand for Post Raisin Bran cereal is elastic​, and the demand for all types of breakfast cereals is inelastic.

(screenshot 13) The figure illustrates market demand for a monopoly along with its average total cost​ (ATC) curve. Is the monopoly a natural monopoly? The firm A. is not a natural monopoly because its demand curve is not infinitely elastic. B. is not a natural monopoly because it experiences diseconomies of scale. C. is a natural monopoly because its demand curve is downward sloping. D. is a natural monopoly because it can supply the entire market at lower average total cost than can two or more firms. Your answer is correct. E. is a natural monopoly because it has the potential to earn economic profits. Suppose 18 units of output are supplied in the market. How much lower is the average total cost of production for one firm compared to two​ firms? One firm can supply 18 units of output for ​$1 less per unit in average total cost than two firms. ​(Enter your response as an​ integer.)

The firm D. is a natural monopoly because it can supply the entire market at lower average total cost than can two or more firms. $1

A student​ asks, "If the average cost of producing pizzas is lower in the larger restaurant when Jill produces​ 1,100 pizzas per​ week, why​ isn't it also lower when Jill produces 500 per​ week?" Give a brief answer to the​ student's question. A. The smaller restaurant benefits more from division of labor. B. The larger restaurant experiences diminishing returns sooner than the smaller restaurant. C. The smaller restaurant has no fixed costs. D. The larger restaurant has higher fixed costs than the smaller restaurant. Your answer is correct. E. Both a and b.

The larger restaurant has higher fixed costs than the smaller restaurant.

Which of the following is a threat to a trademarked company​ name? Trademarked brands are threatened by A. foreign courts enforcing the trademarks of U.S. companies. B. the government imposing barriers to new firms entering certain markets with patents and copyrights. C. their names becoming so widely used for a type of product that they no longer are associated with a specific company. Your answer is correct. D. advertising by other companies to differentiate their​ brand's name. E. other firms refusing to use trademarked names and instead using their own​ brand's name. Which of the following is an example of a trademarked name that has become so widely used for a type of product that it is no longer associated with the product of a specific​ company? A. Sears. B. Gap. C. Pontiac. D. Thermos. Your answer is correct. E. Delta.

Trademarked brands are threatened by C. their names becoming so widely used for a type of product that they no longer are associated with a specific company. Which of the following is an example of a trademarked name that has become so widely used for a type of product that it is no longer associated with the product of a specific​ company? D. Thermos.

Which of the following is an example of a​ long-run adjustment? A. A soybean farmer turns on the irrigation system after a month long dry spell. B. Ford Motor Company lays off​ 2,000 assembly line workers. C. Walmart builds another Supercenter. Your answer is correct. D. Your university offers Saturday morning classes next fall.

Walmart builds another Supercenter.

(screenshot 10) Refer to the graphs. What do you expect to happen in this market as it approaches​ long-run equilibrium? A. a shift to the right of the market demand curve as new firms enter B. a shift to the right of the market supply curve as new firms enter Your answer is correct. C. an upward shift of the​ firm's demand curve as new firms enter D. a shift to the left of the market demand curve as new firms enter If the market demand curve shifts to the​ right, how will a competitive​ firm's level of output​ change? A. The firm will keep its output​ constant, but its profits will increase. B. The firm will decrease its​ output, which will increase its profit. C. The firm will increase its​ output, and its profits will increase. Your answer is correct. D. The firm will need to decrease its output and therefore suffer losses. A perfectly competitive firm is losing money in the short​ run, and its price is less than its average variable cost. In order to minimize its losses in the short​ run, this firm should A. increase its level of output. B. shut down. Your answer is correct. C. continue producing its current level of output. D. do none of the above.

What do you expect to happen in this market as it approaches​ long-run equilibrium? B. a shift to the right of the market supply curve as new firms enter If the market demand curve shifts to the​ right, how will a competitive​ firm's level of output​ change? C. The firm will increase its​ output, and its profits will increase. A perfectly competitive firm is losing money in the short​ run, and its price is less than its average variable cost. In order to minimize its losses in the short​ run, this firm should B. shut down.

What is the purpose of the antitrust​ laws? Antitrust laws are intended to A. make illegal any attempts to form a monopoly or to collude. Your answer is correct. B. exempt natural monopolies from government regulations. C. allow firms to buy stock in competitors. D. allow firms to charge buyers different prices. E. both a and b. Who is in charge of enforcing​ them? A. The Federal Trade Commission. B. The Antitrust Division of the U.S. Department of Justice. C. The U.S. Department of Transportation. D. Both a and b. Your answer is correct. E. All of the above.

What is the purpose of the antitrust​ laws? A. make illegal any attempts to form a monopoly or to collude. Who is in charge of enforcing​ them? D. Both a and b.

Suppose a farmer in Georgia begins to grow peaches. He uses​ $1,000,000 in savings to purchase​ land, he rents equipment for ​$80,000 a​ year, and he pays workers ​$130,000 in wages. In​ return, he produces 100,000 baskets of peaches per​year, which sell for ​$3.00 each. Suppose the interest rate on savings is 5 percent and that the farmer could otherwise have earned ​$25,000 as a shoe salesman. What is the​ farmer's economic​ profit? The peach farmer earns economic profit of ​$1500015000. ​(Enter your response as an​ integer.) What is the​ farmer's accounting​ profit? The peach farmer earns accounting profit of ​$9000090000. ​(Enter your response as an​ integer.)

What is the​ farmer's economic​ profit? The peach farmer earns economic profit of ​$15000 What is the​ farmer's accounting​ profit? The peach farmer earns accounting profit of ​$90000

Microsoft charges a price of​ $599 for a copy of Windows 7. Is this pricing decision​ rational? A. We cannot assume that this pricing decision was rational because we do not have enough information to make an assumption. B. ​Microsoft's choice was​ rational: the price will maximize profit. C. ​Microsoft's choice cannot be​ rational: the price is clearly more than most people are willing and able to pay. D. When we assume the managers at Microsoft have used all available information and have weighed all known benefits and​ costs, we are assuming rationality.

When we assume the managers at Microsoft have used all available information and have weighed all known benefits and​ costs, we are assuming rationality.

Why would it be economically efficient to require a natural monopoly to charge a price equal to marginal​ cost? A. Economic efficiency requires the last unit of a good produced to provide an additional benefit to consumers equal to the average cost of producing it. B. Economic efficiency requires the last unit of a good produced to provide an additional benefit to consumers greater than the additional cost of producing it. C. Economic efficiency requires natural monopolies to earn zero economic profits. D. Economic efficiency requires the total benefit of producing a good to equal the total cost of producing it. E. Economic efficiency requires the last unit of a good produced to provide an additional benefit to consumers equal to the additional cost of producing it. Your answer is correct. Why do most regulatory agencies require natural monopolies to charge a price equal to average cost​ instead? A. Regulating price instead to equal marginal cost would result in the firm suffering a loss. Your answer is correct. B. Regulating price to equal average cost results in no deadweight loss. C. Regulating price instead to equal marginal cost would result in deadweight loss. D. Regulating price to equal average cost maximizes consumer surplus. E. Both a and b.

Why would it be economically efficient to require a natural monopoly to charge a price equal to marginal​ cost? E. Economic efficiency requires the last unit of a good produced to provide an additional benefit to consumers equal to the additional cost of producing it. Why do most regulatory agencies require natural monopolies to charge a price equal to average cost​ instead? A. Regulating price instead to equal marginal cost would result in the firm suffering a loss.

The marginal cost of production shows the change in a​ firm's total cost from producing one more unit of a good or service. What is the shape of the marginal cost​ curve? ​Graphically, the marginal cost curve is A. a U​ shape, initially falling when the marginal product of labor is below marginal cost and then eventually rising when the marginal product of labor is above marginal cost. B. a U​ shape, initially falling due to diminishing returns and then eventually rising due to division of labor. C. shaped like a​ hill, rising when the average cost of production is rising and then eventually falling when the average cost of production is falling. D. shaped like a​ hill, initially rising when the marginal product of labor is falling and then eventually falling when the marginal product of labor is rising. E. a U​ shape, initially falling when the marginal product of labor is rising and then eventually rising when the marginal product of labor is falling.

a U​ shape, initially falling when the marginal product of labor is rising and then eventually rising when the marginal product of labor is falling.

Panel a Price ​(dollars per​ player) Quantity ​(millions of players per​ month) ​$300 30 250 35 200 40 150 45 100 50 The diagram in panel a is an example of A. a demand schedule. B. the income effect. C. the substitution effect. D. a demand curve.

a demand schedule.

A black market is A. very similar to a​ "gray" market except that the goods and services exchanged are imported. B. a market in which buying and selling take place at prices consistent with government price regulations. C. a market in which all transactions involve activities​ (such illicit​ drugs, prostitution,​ etc.) many in the population find morally offensive. D. a market in which buying and selling take place at prices that violate government price regulations.

a market in which buying and selling take place at prices that violate government price regulations.

Economic efficiency is A. a market outcome in which the marginal benefit to consumers of the last unit produced is greater than its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum. B. a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum. Your answer is correct. C. a government outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum. D. a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is not at a maximum.

a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum.

Consider the consumption of electricity. What type of good is electricity​? Electricity is A. a quasi−public good. Your answer is correct. B. a common resource. C. a private good. D. a public good. E. an externality.

a quasi−public good.

Panel a Price ​(dollars per​ player) Quantity ​(millions of players per​ month) ​$300 50 250 45 200 40 150 35 100 30 The diagram in panel b is an example of A. the substitution effect. B. a supply schedule. C. the income effect. D. a supply curve.

a supply curve.

An article in the Wall Street Journal refers to​ "the basic principle of insurance—pooling risk in order to minimize liability from unforeseen​ dangers." ​Source: Amanda​ Foreman, "Insuring against​ Disaster," Wall Street Journal​, February​ 20, 2019. The problem of (blank) adverse selection is that it undermines the ability of insurance to provide the benefit of sharing risk.

adverse selection

Consider a used car market in which half the cars are good and half are bad​ (lemons). Suppose the average price of a good car is​ $9,000 and the average price of a lemon is​ $3,000. If rational buyers are willing to pay​ $6,000 for a used​ car, then sellers will agree to sell mostly lemons at this price. What is the term used to describe this​ situation? A. economic irrationality B. moral hazard C. adverse selection Your answer is correct. D. an efficient market

adverse selection

Which of the following terms refers to the situation in which one party to an economic transaction takes advantage of knowing more than the other party to the​ transaction? A. moral hazard B. ​principal-agent problem C. ​co-payment D. adverse selection

adverse selection

The​ "lemons problem" refers to the observation that the presence of asymmetric information in the used car market leads to the problem of adverse selection​, causing the cars offered for sale to be predominantly poor in quality. In the case of health​ insurance, a lemons problem exists since those more likely to want health insurance are sick people.

adverse selection; poor; sick

A characteristic of the long run is A. there are fixed inputs. B. all inputs can be varied. Your answer is correct. C. plant capacity cannot be increased or decreased. D. there are both fixed and variable inputs.

all inputs can be varied.

When are we likely to see private solutions to the problem of​ externalities? A. When the parties involved have information about the externality. B. When transaction costs are low. C. When the number of parties involved is small. D. both a and b. E. all of the above.

all of the above.

What must be true for the Coase Theorem to​ hold? For the Coase Theorem to​ hold, A. transaction costs to obtain an agreement must be high. B. the parties to an agreement cannot know the full cost of the externality. C. the externality must be created by the production of a good or service. D. the government must monitor the negotiations to obtain an agreement. E. all parties to an agreement must be willing to accept a reasonable agreement.

all parties to an agreement must be willing to accept a reasonable agreement.

Does the production of flowers experience the effects of the law of diminishing returns? The effects of the law of diminishing returns A. are never experienced. B. are experienced when the fifth worker is hired. C. are experienced when the fourth worker is hired. D. are experienced when the second worker is hired. E. are experienced when the third worker is hired.

are experienced when the third worker is hired.

The president of​ Toyota's Georgetown plant was quoted as​ saying, 'Demand for high volumes saps your energy. Over a period of​ time, it eroded our focus​ [and] thinned out the expertise and knowledge we painstakingly built up over the​ years.' This quote suggests that A. as Toyota expanded its​ capacity, it experienced diseconomies of scale. Your answer is correct. B. high demand for​ Toyota's cars prevented the company from focusing on its​ strength: auto design. C. Toyota was experiencing an excess demand for its automobiles which it had difficulty keeping up with. D. Toyota was focused on​ "churning" out cars that it did not invest sufficiently in training its workers.

as Toyota expanded its​ capacity, it experienced diseconomies of scale.

Firms experience economies of scale for several reasons. What is one such​ reason? A firm might experience economies of scale because A. workers experience diminishing returns, decreasing their marginal productivity as output expands. B. managers begin to have difficulty coordinating the operation of the firm. C. a​ firm's technology may make it impossible to increase production without a larger proportional increase input usage. D. as a firm expands, it may be able to borrow money more inexpensively. Your answer is correct. E. large firms may be required to purchase inputs at higher costs than smaller competitors.

as a firm expands, it may be able to borrow money more inexpensively.

The term that is used to refer to a situation in which one party to an economic transaction has less information than the other party is A. moral hazard. B. asymmetric information. Your answer is correct. C. information disparity. D. inefficient market hypothesis.

asymmetric information.

What is the difference in the short run and the long​ run? In the short​ run, A. all of the​ firm's inputs are​ variable, while in the long​ run, the firm is able to vary all its inputs as well as adopt new technology and change the size of its physical plant. B. at least one of the​ firm's inputs is​ fixed, while in the long​ run, at least one of the​ firm's inputs is variable. C. at least one of the​ firm's inputs is​ fixed, while in the long​ run, the firm is able to vary all its​ inputs, adopt new​ technology, and change the size of its physical plant. Your answer is correct. D. at least one of the​ firm's inputs is​ fixed, while in the long​ run, the firm is either able to vary all its​ inputs, adopt new​ technology, or change the size of its physical plant. E. all of the​ firm's inputs are​ fixed, while in the long​ run, the firm is able to vary all its​ inputs, adopt new​ technology, and change the size of its physical plant.

at least one of the​ firm's inputs is​ fixed, while in the long​ run, the firm is able to vary all its​ inputs, adopt new​ technology, and change the size of its physical plant.

Your company incurs a cost for machinery​, ​which, in the short​ run, is fixed. What happens to this cost in the long​ run? In the long​ run, the cost of machinery A. remains a fixed cost. B. becomes a variable cost. Your answer is correct. C. becomes a nonmonetary opportunity cost. D. becomes zero. E. becomes an accounting cost.

becomes a variable cost.

The parties involved in an externality have an incentive to reach an efficient solution because A. government regulations compel private parties. B. the party that causes negative externality does not have any legal right to do so. C. it is morally the right thing to do. D. both parties become better off when an efficient solution is reached.

both parties become better off when an efficient solution is reached.

The production possibilities frontiers depicted in the diagram to the right illustrate (look at pic on your phone) A. technological advances in the tank industry. B. both the labor force and capital stock decreasing. C. the likely result of a ground war. D. both the labor force and capital stock increasing.

both the labor force and capital stock increasing.

A market is a group of blank of a good or service and the institution or arrangement by which they come together to trade.

buyers and sellers

Consumer surplus is the difference between the highest price a consumer is willing to pay and the price the consumer actually pays. This component of economic surplus is illustrated in the diagram by area A

consumer; A

Suppose Wendy's hamburgers have many close substitutes available. If​ so, then an increase in the price of Wendy's hamburgers will likely A. increase the quantity of Wendy's hamburgers demanded by a relatively small amount. B. decrease the quantity of Wendy's hamburgers demanded by a relatively small amount. C. increase the quantity of Wendy's hamburgers demanded by a relatively large amount. D. not change the quantity of Wendy's hamburgers demanded. E. decrease the quantity of Wendy's hamburgers demanded by a relatively large amount.

decrease the quantity of Wendy's hamburgers demanded by a relatively large amount.

Consider the demand for cigarettes. Suppose the government increases the price of cigarettes by raising cigarette taxes. How will this affect the demand for cigarettes over​ time? If the price of cigarettes increases​, then the quantity of cigarettes demanded will A. likely never change either initially or over time. B. decrease​, and this effect will likely remain constant over time. C. increase​, and this effect will likely become larger​ (in absolute​ value) over time. D. decrease​, but this effect will likely become smaller​ (in absolute​ value) over time. E. decrease​, and this effect will likely become larger​ (in absolute​ value) over time.

decrease​,and this effect will likely become larger​ (in absolute​ value) over time.

The figure to the right illustrates the​ long-run average cost curve for a company that makes motors. Suppose the company produces 15 thousand motors per month. Is it experiencing economies of​scale, diseconomies of​ scale, or constant returns to​ scale? If the company produces 15 thousand​ motors, then it experiences diseconomies of scale. At what level of output does the firm experience the minimum efficient​ scale? The minimum efficient scale occurs when the firm produces 5 thousand motors. ​(Enter your response as an​ integer.)

diseconomies of scale; 5

In addition to covering the costs of unpredictable​ events, health insurance typically covers many planned​ expenses, such as routine​ checkups, annual​ physicals, and the cost of vaccinations. Because of​ this, health insurance A. generates an efficient quantity of health care services. B. encourages overuse of health care services. Your answer is correct. C. is not accepted by most doctors and hospitals. D. discourages overuse of health care services.

encourages overuse of health care services.

In the​ diagram, point A provides the​ _____, point B the​ _____, and point C the​ _____. A. equilibrium​ price; surplus or​ shortage; equilibrium quantity B. equilibrium​ price; market​ equilibrium; surplus C. market clearing​ price; equilibrium​ point; shortage D. equilibrium​ price; market​ equilibrium; equilibrium quantity

equilibrium​ price; market​ equilibrium; equilibrium quantity

Consider firms that introduce new​ products, such as DVDs in 2001. When firms introduce new​ products, how do they typically determine the price elasticity of demand for those​ products? Firms with new products often A. estimate price elasticity of demand by experimenting with different prices. B. guess price elasticity of demand based on market competition. C. approximate price elasticity of demand with market signals such as shortages. D. identify price elasticity of demand by using price controls to set price ceilings. E. identify price elasticity of demand by asking for government assistance.

estimate price elasticity of demand by experimenting with different prices.

Suppose that your local police department recovers 100 tickets to a big NASCAR race in a drug raid. It decides to distribute these to residents and announces that tickets will be given away at 10 A.M. Monday morning at City Hall. Suppose that your college decides to give away​ 1,000 tickets to the football game against your​ school's biggest rival. The athletic department elects to distribute the tickets by giving them away to the first​ 1,000 students who show up at the​department's office at 10 a.m. the following Monday. a. The groups of people that are most likely to get the tickets will be those for whom the expected marginal benefits of going to the​ department's office on Monday morning are greater than the expected marginal costs. b. What is the actual cost and also the opportunity cost of distributing the tickets this​ way? A. The activities that cannot be done​ (such as earning money at​ work) when one is standing in line. B. The cost of travel to the​ department's office. C. The cost of people blocking traffic in and around the​ department's office building. D. All of the above. Your answer is correct. E. A and B only. c. Productive efficiency occurs when a good or service​ (such as the distribution of​ tickets) is produced at the lowest possible cost. Is this an efficient way to distribute the​ tickets? No. d. This is A. an equitable way to distribute the tickets because the students who really want them will be able to go and get them. B. not an equitable way to distribute the tickets because some students who really want them may be unable to go and get them. Your answer is correct. C. not an equitable way to distribute the tickets because there may be enough tickets for faculty and staff. D. an equitable way to distribute the tickets because everyone has an equal chance of getting a ticket.

first blank- benefits second blank- costs b- all the above c- no d- not an equitable way to distribute the tickets because some students who really want them may be unable to go and get them.

Societies organize their economies in two main ways to answer the three questions of​ what, how, and who. A society can have a blank economy in which the government decides how economic resources will be allocated. Or a society can have a blank economy in which the decisions of households and firms interacting in markets allocate economic resources.

first blank- centrally planned second blank- market

For Jill​ Johnson's pizza​ restaurant, explain whether each of the following is a fixed or variable cost. The payment she makes on her fire insurance policy is a fixed cost. The payment she makes to buy pizza dough is a variable cost. The wages she pays her workers is a variable cost. The lease payment she makes to her landlord who owns the building where her store is located is a fixed cost. The​ $300-per-month payment she makes to her local newspaper for running her weekly advertisements is a fixed cost.

fixed; variable;variable;fixed;fixed

One measure of the extent of competition in an industry is the concentration ratio. What level of concentration indicates that an industry is an​ oligopoly? Most economists believe that a​ four-firm concentration ratio of greater than 4040 percent indicates that an industry is an oligopoly. ​(Enter your response as an​ integer.) Is the concentration ratio an accurate measure of the extent of​ competition? The​ four-firm concentration ratio A. is flawed in that it is calculated for the national market even though competition in some industries is local. Your answer is correct. B. is accurate because it is based on estimates from the U.S. Census Bureau. C. is accurate because it is based on national and global competition. D. is flawed in that it includes sales in the U.S. by foreign firms. E. is flawed in that it includes competition between industries.

greater; 40 Is the concentration ratio an accurate measure of the extent of​ competition? The​ four-firm concentration ratio A. is flawed in that it is calculated for the national market even though competition in some industries is local.

(screenshot 8) The figure to the right represents the cost structure for a perfectly competitive firm with its average total cost​ (ATC) curve, average variable​ (AVC) curve, and marginal cost​ (MC) curve. Fixed costs are​ $50.00. Suppose the market price is ​$13.00 per unit. Characterize the​ firm's profit. If the firm produces​ output, then it will experience losses. Should the firm instead shut down in the short​ run? In the short​ run, the firm should A. shut down because price is less than average total cost. B. continue to produce because price is greater than average fixed cost. C. continue to produce because price is less than average variable cost. Your answer is not correct. D. shut down because price is less than average variable cost. This is the correct answer. E. shut down because price is less than fixed costs.

if the firm produces​ output, then it will experience losses In the short​ run, the firm should D. shut down because price is less than average variable cost.

The Coase Theorem states that A. if transaction costs are​ low, the government will regulate an efficient solution to the problem of externalities. B. if transaction costs are​ low, private bargaining will result in an efficient solution to the problem of externalities. Your answer is correct. C. if transaction costs are​ low, private markets will create externalities and result in efficient outcomes. D. if transaction costs are​ low, private deals will create externalities and result in inefficient outcomes. E. if imposed on free​ markets, government regulations will result in inefficient outcomes and create deadweight loss.

if transaction costs are​ low, private bargaining will result in an efficient solution to the problem of externalities.

Between 1950 and​ 2017, the price of wheat fell dramatically from​ $19.23 per bushel to​ $3.85 per bushel. Suppose between 1950 and​ 2017, the supply of wheat increased substantially due to increases in​ productivity, shifting the wheat supply curve to the right. With this supply​ shift, the amount by which the price of wheat falls will be larger the more inelastic the demand for wheat. In​ addition, assume that between 1950 and 2017 the income of the average American increased substantially and that wheat is a normal good. With this increase in​ income, A. the amount by which the price of wheat falls will be larger the higher the income elasticity of wheat. B. the amount by which the price of wheat rises will be smaller the higher the income elasticity of wheat. C. the price of wheat will be unaffected. D. the amount by which the price of wheat rises will be smaller the lower the income elasticity of wheat. Your answer is correct. E. the amount by which the price of wheat falls will be smaller the higher the income elasticity of wheat.

inelastic; the amount by which the price of wheat rises will be smaller the lower the income elasticity of wheat.

Why might the demand for Post Raisin Bran cereal be more elastic than the demand for all types of breakfast​ cereals? Post Raisin Bran cereal A. is a smaller share of a​ consumer's budget. B. has fewer substitutes available. C. is consumed over a shorter period of time. D. is more of a necessity. E. is defined more narrowly.

is defined more narrowly.

In the​ diagram, marginal benefit is equal to marginal cost at output level Q2. This output level is considered economically efficient.

is equal to; efficient

When consumers pay only a fraction of the true cost of medical​ services, their demand increases. The marginal cost of producing these extra services A. is greater than the marginal benefit consumers receive from them. B. is zero due to the insurance payments. C. is equal to the marginal benefit consumers receive from them. D. is less than the marginal benefit consumers receive from them.

is greater than the marginal benefit consumers receive from them.

Suppose the government requires each firm to reduce sulfur dioxide emissions by an equal amount such that total emissions are reduced by 7.0 million tons per year. Is this approach necessarily economically​ efficient? This​ command-and-control approach A. is not efficient because some firms may still be generating pollution. B. is not efficient because firms can have different costs of reducing pollution. Your answer is correct. C. is efficient because reducing sulfur dioxide pollution by 7.0 million tons per year is where the marginal cost and marginal benefit of pollution reduction are equal. D. is efficient because it does not require the government to know the​ firms' cost of reducing pollution. E. is efficient because each firm is reducing pollution by the same amount.

is not efficient because firms can have different costs of reducing pollution.

Suppose the figure to the right illustrates the marginal cost and marginal benefit from reducing sulfur dioxide pollution. How could the government use a command-and-control approach to reduce pollution to the optimal level for​ society? The government could A. prohibit sulfur dioxide pollution entirely. B. tax each ton of sulfur dioxide pollution. C. limit sulfur dioxide pollution to a particular quantity per year. Your answer is correct. D. reduce transaction costs to encourage private solutions to the problems associated with sulfur dioxide pollution. E. subsidize each ton of sulfur dioxide pollution.

limit sulfur dioxide pollution to a particular quantity per year.

Consider a production process where flowers are grown​ (the output) using gardeners​ (labor) and greenhouses​ (capital). The quantity of flowers grown per day with various combinations of labor and capital are shown in the table below. Suppose that each gardener is paid ​$240 per day and the greenhouse is rented for ​$400 per day.

look at photo

In the short​ run, if the marginal product is at its​ maximum, then the A. average variable cost is at its minimum. B. marginal cost is at its minimum. Your answer is correct. C. total cost is at its maximum. D. average cost is at its minimum.

marginal cost is at its minimum.

Compare the demand for pencils with demand for food. The demand for pencils is likely A. more inelastic because pencils tend to be purchased more frequently. B. more elastic because pencils tend to represent a larger fraction of a​ consumer's budget. C. more inelastic because pencils tend to represent a smaller fraction of a​ consumer's budget. D. more elastic because pencils tend to represent a smaller fraction of a​ consumer's budget. E. more elastic because pencils tend to be purchased in larger quantities.

more inelastic because pencils tend to represent a smaller fraction of a​ consumer's budget.

​"Rent controls, government farm​ programs, and other price ceilings and price floors are​ bad." This is an example of a A. normative statement. The statement is concerned with what should be. B. positive statement. The statement is concerned with what is. C. normative statement. The statement is concerned with what is. D. positive statement. The statement is concerned with what should be.

normative statement. The statement is concerned with what should be.

Suppose the production of electricity by a utility generates pollution that harms others. Suppose also that Coase bargaining can occur between the utility and the victims of pollution but that the utility has not been legally liable for the damages from its pollution. How would making the utility legally liable for the damages from its pollution affect pollution​ reduction? If the electric utility and the people suffering the effects of the​ utility's pollution can​ bargain, then making the utility legally liable for the damages from its pollution will A. not change the amount of pollution reduction because the marginal benefit and marginal cost of pollution reduction will not change. Your answer is correct. B. increase the amount of pollution reduction by decreasing the marginal cost of pollution reduction to the utility. C. increase the amount of pollution reduction by increasing the marginal benefit of pollution reduction to the utility. D. increase the amount of pollution reduction by increasing the marginal cost and increasing the marginal benefit of pollution reduction to the utility. E. decrease the amount of pollution reduction by decreasing the marginal benefit of pollution reduction to the victims of pollution.

not change the amount of pollution reduction because the marginal benefit and marginal cost of pollution reduction will not change.

Asymmetric information is a situation in which one party to an economic transaction has less information than the other party. Two types of problems associated with asymmetric information are adverse selection and moral hazard. Which of the following is an example of adverse selection​? An example of adverse selection is A. those without health insurance using illegal drugs. B. those with health insurance smoking cigarettes. C. old people being more likely to purchase health insurance than young people. Your answer is correct. D. those without​ pre-existing health problems being more likely to purchase health insurance than those with​ pre-existing health problems. E. doctors prescribing unnecessary tests for those with health insurance.

old people being more likely to purchase health insurance than young people.

How might society solve problems associated with externalities and market failure? If an externality is​ present, resulting in market​ failure, then A. private solutions may reduce or correct market failure. Your answer is correct. B. additional competition will reduce problems associated with market failure. C. government intervention will further reduce the well−being of society. D. only government intervention can increase economic efficiency. E. it is not possible to enhance the well−being of society.

private solutions may reduce or correct market failure.

Producer surplus is the difference between the lowest price a firm would be willing to accept and the price it actually receives. This component of economic surplus is illustrated in the diagram by area B .

producer;B

How do externalities in the production of electricity result in market failure​? Because of​ externalities, the market for electricity will A. provide too much electricity. B. result in a surplus of electricity. C. provide insufficient electricity. D. generate too much economic surplus. E. result in a price for electricity that is inefficiently high.

provide too much electricity.

consider the market for dams along a river​, illustrated in the figure to the​ right, where S1 is marginal private cost and D1 is marginal private benefit. Dams are an example of a public good. Suppose that the consumption of dams along a river generates a positive externality of ​$50 per unit. If​ so, then according to the​ figure, the optimal quantity of dams along a river for society is 8 units. ​(Enter your response as an​ integer.)

public good; 8

Compare the demand for water with the demand for wine. The demand for wine is likely A. relatively more elastic because wine is a luxury. B. relatively more inelastic because wine is a luxury. C. equally elastic as the demand for water. D. relatively more inelastic because wine is a necessity. E. relatively more elastic because wine is a necessity.

relatively more elastic because wine is a luxury.

What can health insurance companies do to minimize problems associated with asymmetric information such as adverse selection or moral​ hazard? To deal with asymmetric​ information, insurance companies can A. prevent applicants from submitting medical records. B. reduce costs by eliminating their own medical examinations. C. eliminate coinsurance from their policies. D. require policyholders to pay deductibles. Your answer is correct. E. extend coverage for​ pre-existing conditions.

require policyholders to pay deductibles.

Consider a pair of Gap Jeans. Is the consumption of Gap Jeans rival and excludable​? The consumption of Gap Jeans is A. nonrival and nonexcludable. B. rival and nonexcludable. C. nonrival and excludable. D. rival and excludable. Your answer is correct. E. ​quasi-rival and​ quasi-excludable.

rival and excludable.

One of the basic facts of life is that people must make choices as they try to attain their goals. This unavoidable fact comes from a reality an economist calls A. the market. B. scarcity. C. rationality. D. economics.

scarcity.

A small town provides a fireworks​ display, which is a public​ good, every fourth of July. For​simplicity, assume the town only has two​ residents: Hayden and Madison. Their demands for the fireworks display are illustrated in the figure to the right. Construct the market demand curve for this public good. Use the line drawing tool to draw the market demand curve ​(DMarket​) for the fireworks display. Properly label this line.

see photo

onsider a production process where flowers are grown​ (the output) using gardeners​ (labor) and greenhouses​ (capital). The quantity of flowers grown per day with various combinations of labor and capital are shown in the table. Fill in the marginal product of labor in the table below. ​(Enter your responses as​ integers.)

see photo

In the table​ below, fill in the missing blanks to complete the summary of the effects of changes in demand and supply on equilibrium price and quantity. Supply Curve Unchanged Supply Curve Shifts to the Right Supply Curve Shifts to the Left Demand Curve Unchanged Q unchanged P unchanged Q increases P decreases Q decreases P increases Demand Curve Shifts to the Right Q increases P increases Q increases P indeterminant Q indeterminant P increases Demand Curve Shifts to the Left Q decreases P decreases Q indeterminate P decreases Q decreases P indeterminant

see photo of graph

When the government imposes price floors or price​ ceilings, A. everyone​ wins, goods and services distribution is more​ just, and there is an increase in economic efficiency. B. everyone​ wins, goods and services distribution is more​ just, and there is a loss of economic efficiency. C. some people​ win, some people​ lose, and there is a loss of economic efficiency. D. some people​ win, some people​ lose, and there is an increase in economic efficiency.

some people​ win, some people​ lose, and there is a loss of economic efficiency.

The distinction between substitutes and complements is A. substitute goods are used together while complementary goods are used for the same purposes. B. when income​ increases, demand for a complementary good decreases while demand for a substitute good increases. C. substitute goods are used for the same purposes while complementary goods are used together. D. when income​ increases, demand for a substitute good increases while demand for a complementary good falls.

substitute goods are used for the same purposes while complementary goods are used together.

Economist X. M. Gao and two colleagues have estimated that the​ cross-price elasticity of demand between beer and wine is 0.31. If​ so, then beer and wine are substitutes. Gao and colleagues have estimated that the​ cross-price elasticity of demand between beer and spirits is 0.15. If the price of spirits increases by 10​ percent, then the quantity of beer demanded will increase by 1.5 percent. ​(Enter your response rounded to one decimal​ place.) In​ addition, Gao and colleagues have estimated the income elasticity of demand for beer to be −0.09. If​ so, then beer is A. an inferior good. Your answer is correct. B. a normal good that may be a luxury or a necessity. C. a normal good that is a luxury. D. a luxury that may be a normal good or an inferior good. E. a normal good that is a necessity.

substitutes; increase; 1.5; an inferior good.

In the diagram to the​ right, when the price is ​$65 per​ player, the amount of the surplus is 40 million players per month.

surplus; 40 million

The figure to the right illustrates the U.S. market for rugs made in a particular foreign country. Suppose the market price of rugs is ​$1,750. At a price of ​$1,750​, there will be a surplus of rugs. To reach an​ equilibrium, the price of rugs in this market must fall.

surplus; fall

In the​ diagram, when supply increases​, a surplus develops at the original price. Equilibrium price will fall and equilibrium quantity will rise as a new equilibrium is established.

surplus; fall;rise

In the diagram to the​ right, when demand decreases​, a surplus develops at the original price. Equilibrium price will fall and equilibrium quantity will fall as a new equilibrium is established.

surplus;fall;fall

suppose the figure to the right illustrates the market for toilet​ paper, where S1 represents the marginal private cost of production and D1 represents the marginal private benefit from consumption. Companies that produce toilet paper bleach the paper to make it white. Some paper plants discharge the bleach into rivers and​ lakes, causing substantial environmental damage. Assume that S2 represents the marginal social cost of producing toilet paper​(incorporating the​ externality). What could the government do to internalize the​ externality? In the presence of a negative​ externality, the government could tax toilet paper production. In​ particular, the government should set a Pigovian tax. of ​$150 per ton of toilet paper produced.

tax; 150

The production possibilities frontiers depicted in the diagram to the right illustrate A. technological advances in both the tank and automobile industries. B. increases in both the labor force and capital stock. C. technological advances in the automobile industry. D. technological advances in the tank industry.

technological advances in the tank industry.

Tax incidence is A. the actual division of the burden of a tax between buyers and government in a market. B. the actual division of the burden of a tax between buyers and sellers in a market. C. the potential division of the burden of a tax between buyers and government in a market. D. the potential division of the burden of a tax between buyers and sellers in a market.

the actual division of the burden of a tax between buyers and sellers in a market.

Suppose a common resource—wood in a public forest—is being overused because residents consider the benefits of gaining firewood or wood for building but do not account for the cost of deforestation when chopping down trees. What could be done to prevent wood in the forest from being​ overused? To prevent overuse of the common​ resource, A. the community could create transaction costs to private bargaining. B. the community could establish norms where social pressure limits deforestation. Your answer is correct. C. the government could make a binding commitment to keep the forest lands public. D. the government could subsidize chopping down trees. E. the community could establish social customs prohibiting the use of permits required to chop down trees.

the community could establish norms where social pressure limits deforestation.

A. the cost of drafting a contract or agreement. Your answer is correct. B. the time required to negotiate an agreement. Your answer is correct. C. the cost of monitoring an agreement. Your answer is correct. D. the difference between the private costs and social costs of production. E. the cost of the externality.

the cost of drafting a contract or agreement. the time required to negotiate an agreement. the cost of monitoring an agreement

What information must economists have to estimate the price elasticity of​ demand? To estimate the price elasticity of​ demand, economists need to know A. total revenue. B. the supply curve for a product. C. the change in price. D. the demand curve for a product. E. the market price and quantity sold.

the demand curve for a product.

Which provision of the Affordable Care Act​ (ACA) was repealed by Congress in​ 2017? A. the individual mandate Your answer is correct. B. the state health insurance marketplace C. the employer mandate D. the regulation of health insurance

the individual mandate

Prepping for a​ next-day exam over the course of an evening​ (and possibly into the wee hours of test​ day) poses increasing costs since A. studying productivity declines sharply as the effort extends through the evening. B. the longer you choose to study will result in an increase in the number and value of foregone activities. C. tutors charge higher rates after 7 p.m. D. evenings are a less productive time to study compared to daylight hours.

the longer you choose to study will result in an increase in the number and value of foregone activities.

What do economists mean by​ "an economically efficient level of​ pollution"? The economically efficient level of pollution is that amount where A. the marginal cost of pollution reduction is zero and the marginal benefit of pollution reduction is very high. B. the marginal cost of pollution reduction equals the marginal benefit of pollution reduction. Your answer is correct. C. pollution is eliminated. D. the marginal cost of pollution reduction and the marginal benefit of pollution reduction equal zero. E. the total benefit of pollution reduction is maximized.

the marginal cost of pollution reduction equals the marginal benefit of pollution reduction.

If a fire insurance company requires firms buying fire insurance to install automatic sprinkler​ systems, the insurance company is trying to reduce A. asymmetric information. B. the moral hazard problem. Your answer is correct. C. sunk costs. D. the problem of adverse selection.

the moral hazard problem.

Which of the following is a primary determinant of the price elasticity of supply? The price elasticity of supply is affected by A. whether the good produced has close substitutes available. B. the definition of the market. C. whether the good produced is a luxury or a necessity. D. the passage of time. Your answer is correct. E. the share of the good in consumer budgets. In​ particular, the supply curve for a particular product will be increasingly more elastic over a longer period of time.

the passage of time; over a longer period of time.

How is the price elasticity of demand​ measured? The price elasticity of demand is measured as A. the change in the quantity demanded divided by the change in price. B. the quantity demanded divided by price. C. the percentage change in the quantity demanded divided by the percentage change in price. D. the slope of the demand curve. E. the percentage change in the quantity demanded divided by the percentage change in the quantity supplied.

the percentage change in the quantity demanded divided by the percentage change in price.

How do externalities affect​ markets? If a positive externality in consumption is present in a​ market, then A. the private benefit from consumption will be different than the social benefit from consumption. B. the social cost of production will be equal to the social benefit from consumption. C. consumer and producer surplus will be maximized. D. the private cost of production will be different than the social cost of production. E. the private cost of production will be equal to the private benefit from consumption.

the private benefit from consumption will be different than the social benefit from consumption.

Property rights are A. the rights individuals or firms have to the exclusive use of their property within individual culturally defined norms which are inconsistent in each area of the United States. B. the rights individuals or firms have to the exclusive use of their​ property, excluding the right to buy or sell it. C. the rights individuals or firms have to the exclusive use of their​ property, including the right to buy or sell it. D. the rights government has to the exclusive use of all​ property, including the right to buy or sell it.

the rights individuals or firms have to the exclusive use of their​ property, including the right to buy or sell it.

Over the past 30​ years, the price of oil has been relatively​ unstable, fluctuating between​ $11.00 and well over​ $100 per barrel. Which of the following potentially contributes to​ oil-price instability? Oil prices are relatively unstable because A. OPEC has been successful in controlling the quantity of oil its members supply. B. the supply of oil is inelastic. Your answer is correct. C. the market for oil is relatively competitive. D. the demand for oil is elastic. E. the income elasticity of demand for oil is negative.

the supply of oil is inelastic.

Suppose a professional basketball game is to be played at a suburban ​arena, which increases demand for parking on the night of the game. If the suburban area has the ability to create additional parking during periods of peak​ demand, then A. the supply of parking will be more inelastic and the price of parking will not change the night of the game. B. the supply of parking will be more elastic and the price of parking will increase by a relatively large amount the night of the game. C. the supply of parking will be more inelastic and the price of parking will increase by a relatively small amount the night of the game. D. the supply of parking will be more elastic and the price of parking will increase by a relatively small amount the night of the game. Your answer is correct. E. the supply of parking will be perfectly elastic and the price of parking will increase by a relatively large amount the night of the game.

the supply of parking will be more elastic and the price of parking will increase by a relatively small amount the night of the game.

Because consumers who have insurance provided by their employers usually only pay a deductible for a visit to the​ doctor's office, A. the insurance companies provide a larger quantity of health care services than they would if the consumer paid a price that better represented the true cost of providing the service. B. they demand a smaller quantity of health care services than they would if they paid a price that better represented the true cost of providing the service. C. they demand a larger quantity of health care services than they would if they paid a price that better represented the true cost of providing the service. Your answer is correct. D. the doctors supply a smaller quantity of health care services than they would if the consumer paid a price that better represented the true cost of providing the service.

they demand a larger quantity of health care services than they would if they paid a price that better represented the true cost of providing the service.

Which of the following cost will not change as output​ changes? A. marginal cost B. total fixed cost Your answer is correct. C. total variable cost D. average fixed cost

total fixed cost

The distinction between a normal and an inferior good is A. when income​ increases, demand for a normal good decreases while demand for an inferior good increases. B. when income​ increases, demand for a normal good increases while demand for an inferior good falls. C. normal goods are used for the same purposes while inferior goods are used together. D. normal goods are used together while inferior goods are used for the same purposes.

when income​ increases, demand for a normal good increases while demand for an inferior good falls

Suppose a new recreational neighborhood park would cost​ $20,000, including opportunity​ costs, to construct and maintain. If​ built, the park would be a public good For​ simplicity, assume the neighborhood park would be used by three​ families, each of whom would derive a marginal benefit equivalent to​ $8,000 from the park. Should the neighborhood park be​ built? It would be optimal for the park to be built. If left to the private​ market, without private bargaining or government​ intervention, would the park be​ built? Without private bargaining or government​ intervention, the park would not be built.

would be optimal; would not be built

Economic surplus in a market is the sum of​ _____ surplus and​ _____ surplus. In a competitive​ market, with many buyers and sellers and no government​ restrictions, economic surplus is at a​_____ when the market is in​ _____. A. ​consumer; government;​ maximum; equilibrium B. ​consumer; producer;​ maximum; equilibrium Your answer is correct. C. ​consumer; producer;​ maximum; disequilibrium D. ​consumer; producer;​ minimum; equilibrium

​consumer; producer;​ maximum; equilibrium

Consider the following​ statement: ​"An increase in supply decreases the equilibrium price. The decrease in price increases​ demand." The statement is A. ​false: increases in supply decrease price. B. ​true: increases in supply decrease price. Decreases in price increase demand. C. ​false: increases in supply increase price. Decreases in price increase demand. D. ​false: decreases in price affect the quantity​ demanded, not demand.

​false: decreases in price affect the quantity​ demanded, not demand.

A report from the Center for American Progress states that administration costs for health care in the United States are well above those in other​ high-income countries, accounting for 8.3 percent of spending in the health care​ sector, compared to a global average of about 3 percent. According to the​ report, average billing and​ insurance-related costs per patient encounter include​ $215 for inpatient​ surgery, $62 for an emergency room​ visit, and​ $20 for a primary care visit. The report noted that a structural overhaul of finance and pricing in the health care industry would greatly help in eliminating excess administrative​ costs, but moving to a complete​ single-payer health care system is not mandatory. According to the​ report, setting uniform rates where all health insurers pay the same price for services would go a long way to reducing administrative costs. ​Source: Sarah​ Kilff, "2 charts that show our health care administrative costs are really​ high," vox.com, April​ 8, 2019. The article discusses the high administrative costs of health care in the United States. Even if private insurance companies were more efficient and brought administrative costs down by paying uniform​ rates, consumers would still pay less than the full cost of medical treatment. This would result in the market equilibrium price of medical services being​ ________ than the efficient equilibrium​ price, and the market equilibrium quantity of medical services being​ ________ than the efficient equilibrium quantity. A. ​less; less Your answer is correct. B. ​greater; less C. ​less; greater D. ​greater; greater

​less; less

Consumer and producer surplus measure the​ _____ benefit rather than the​ _____ benefit. A. ​total; net B. ​marginal; additional C. ​subjective; objective D. ​net; total

​net; total