economics final
total output to each person can be expanded
. According to the law of comparative advantage, when one country sells goods for which it has the comparative advantage in production and buys goods for which it does not have the comparative advantage in production:
leaving a coffee cup in a classroom.
A college student can create a negative externality by:
Consumers of public goods will:
Consumers of public goods will:
true
Economies of scale in an industry can be so large that demand is able to support only one firm.
be able to prevent the resale of its product
For a firm to price discriminate, it must:
true
If Kim's marginal utility per dollar for hot dogs is less than her marginal utility per dollar for French fries, she should buy more French fries and fewer hot dogs to maximize her total utility.
the price will change and, in response, market participants will move along the existing supply and demand curves until the market reaches equilibrium.
If a market is NOT at equilibrium:
true
If firms in a monopolistically competitive industry are experiencing economic losses in the short run, some firms will exit the industry, increasing demand until each firm earns a normal profit.
true
If price exceeds marginal cost at a competitive firm's current level of output, then the firm can increase profit if it increases the quantity it produces and sells.
true
If the government sets a price ceiling below the equilibrium market price, then we can expect that there will be shortages of the good (i.e., quantity demanded will exceed quantity supplied).
a higher price for the business traveler and a lower price for the vacation traveler.
If the price elasticity of demand for airline tickets is 3.0 for a vacation traveler and 0.4 for a business traveler, then a monopolist interested in price discrimination would charge:
Average variable cost for the fifth shoe is $10.
If the variable cost for five shoes is $50 and the variable cost of six shoes is $80, which statement is true?
there are no barriers to entry
In a perfectly competitive industry, long-run economic profits cannot be sustained because:
Down, Left = (6, 5)
In the game table represented above, the dominant strategies are: Katy jesse left | Right up | 4,8 | 3,7 down | 6,5 | 5,2
Jesse plays Down and Katy plays Left.
In the game table represented above, the dominant strategies are: Katy jesse left | Right up | 4,8 | 3,7 down | 6,5 | 5,2
price and quantity will be stable.
In the short run, once a market has reached equilibrium:
the market price exceeds the average variable cost.
In the short run, the perfectly competitive firm will continue to produce even though it might experience an economic loss if
demand is large.
It can be cost-effective to pursue economies of scale only if:
asymmetric information
Jessica lists her faulty treadmill for sale on craigslist but does not disclose the problems with it. If Blake buys the treadmill believing that it's problem-free, this is an example of market failure due to:
using resources for one activity means that their use elsewhere must be given up.
Opportunity costs exist because
marginal revenue is greater than marginal cost
Perfectly competitive firms and monopoly firms should increase production when:
underproduction
Positive externalities result in _____ of a good.
false
Public goods are characterized by the ability to exclude non-payers and the fact that consumption of the good does not preclude others from consuming it.
supply of flour to decrease.
Wheat is the main input in the production of flour. If the price of wheat increases, all else equal, we would expect the:
true
A country's comparative advantage is determined by an assessment of its opportunity costs of production relative to the opportunity costs of other countries.
A change in the market price affects the quantity supplied, but not the supply.
What is the difference between a change in quantity supplied and a change in supply?
the addition to total utility per dollar is the same for every commodity.
A consumer is in equilibrium when:
the firm should decrease its output.
A firm operates in a perfectly competitive industry. At the current level of output, the marginal cost is $26 and the average cost is $23. If the firm can sell its product for $25:
true
A firm should (at least temporarily) shut down its production facility if variable costs are greater than revenues.
false
A network good is one with which the benefit to the user rises if there is a small number of other users of the good.
nonrival (non-depletable) and excludable.
A news website that can be accessed by many paid subscribers simultaneously is MOST likely:
below; shortage
An effective price ceiling occurs at a price _____ the equilibrium price and causes a _____.
true
An important lesson from the prisoner's dilemma game is that the interests of individuals will not always align with the collective interests of people.
false
An increase in price will cause a decrease in demand. This is the law of demand.
dominant strategy
Assume that this Friday you would like to go to the club. You ask your friends to go with you, but they all want to go to the movies. Despite your friends not wanting to go with you, you decide to go to the club anyway because you really want to go dancing. This type of thinking BEST resembles a:
higher; lower
Compared with competitive markets, monopolies charge ______ prices and produce a ______ output.
There is an increase in the number of firms selling breakfast cereal.
Consider the market for breakfast cereal. Which of the following will cause lower prices and a greater quantity of breakfast cereal exchanged?
A disease significantly reduces the sheep population (wool comes from sheep).
Consider the market for wool sweaters. Which of the following will cause higher prices and a lower quantity of wool sweaters exchanged?
true
Consumer loyalty to existing brands may be a formidable barrier to entry for new companies.
true
Network goods differ from other types of markets studied in economics because the demand curve is different
lower average fixed costs.
Sam's Club can sell identical items at a lower price than Macy's because of Sam's Club's:
increase production
Serena sells soybeans in a perfectly competitive market. If her MC = $3, her MR = $4, her ATC = $5, and her AVC = $2, then she should:
tit-for-tat.
Sun's Pizza lowered its price on a one-topping pizza. Taylor Pizzeria lowered its price on a one-topping pizza. Sun created a secret sauce for its combination pizza. Taylor created a secret sauce for its combination pizza. The strategy used by Taylor Pizzeria is known as:
increase in demand.
Suppose it is discovered that consuming Greek yogurt leads to a longer life. This information would lead to a(n):
shortage; rise; fall
Suppose that a major drought causes a 30 percent reduction in the peanut harvest. If there is no change in demand, this event would cause a _____ at the original equilibrium price, and the equilibrium price will therefore _____ and the equilibrium quantity will _____.
No. You need to buy more paper and fewer pencils.
Suppose the marginal utility for the last pencil you buy is 36 and each costs $1, whereas the marginal utility of the last pad of paper you buy is 300 and costs $2. Are you maximizing utility?
both players would be better off by cooperating, but not cooperating is a dominant strategy.
The "dilemma" in the Prisoner's Dilemma is that:
right; fall
The development of solar panels for home installation has improved due to technological advances and subsidies. These factors shift the supply curve to the _____ and result in the equilibrium price of solar panel installations to _____.
true
The free rider problem typically results in a production of output that is less than the social optimal quantity.
true
The income distribution in the United States is generally less equally distributed than in European countries and is more equally distributed than in many South American countries.
consumers are denied output for which they are willing to pay more than the cost of producing it
The reason a monopoly imposes a deadweight loss on society is that:
where the marginal benefits of pollution abatement equal its marginal costs.
The socially optimal pollution is:
true
The speed by which a network good can enter into a virtuous or vicious cycle is generally faster that of a non-network good.
cheating is likely to occur due to profitability.
The success rate of cartels is low because:
false
When negative externalities exist, an unregulated market will produce too little of the good and the price will be too high when compared to the socially optimal production.
shortage; up
When quantity demanded exceeds quantity supplied, a _____ occurs and prices are pushed _____ toward equilibrium.
surplus; down
When quantity supplied exceeds quantity demanded, a _____ occurs and prices are pushed _____ toward equilibrium.
false
When the price elasticity of demand for a product is inelastic, that product is likely to have many good substitutes.
an increase in demand
When there is a positive network externality to a network good, a larger network is associated with:
0.21
Which Gini coefficient represents the highest level of income equality?
an increase in the number of tablet brands being offered
Which factor would increase elasticity the most?
We cannot tell which is the better buy without knowing their prices or the utility derived from each.
Which is the BETTER purchase: a new top-quality motorcycle or an old, used motorcycle?
garments sold to a retail customer
Which of the following products is likely to be the MOST differentiated?
a research patent awarded to an inventor of a product
Which of these BEST represents a barrier to entry?
hospital services
Which of these is NOT a network good?
high economies of scale
Which of these is a characteristic of a natural monopoly?
an extermination company giving customers a 10% discount if they pay for one year's worth of service in advance rather than paying after each quarterly extermination service
Which of these is an example of a lock-in strategy?
Lock-in strategies try to keep current customers, while teaser strategies aim to gain new customers.
Which statement describes a basic difference between a teaser strategy and a lock-in strategy?
The more a person works at her job, the more leisure time she has.
Which statement is NOT an illustration of opportunity cost?
A firm is deciding how much of its equipment to sell so that it can reduce its monthly loan payments for equipment.
Which statement is descriptive of the long run rather than the short run?
Nonexcludability
_____ is when once a good or service is provided, it is not feasible to exclude others from enjoying that good or service.
if the game is repeated over and over under the same conditions
In which situation can a Prisoner's Dilemma outcome most likely be avoided?
oligopoly
Kellogg, General Mills, Post, and Quaker Oats dominate the cereal market. This industry, which has consistently displayed profits in the long run is also difficult to enter due to brand recognition. The cereal industry is an example of what type of market structure?
monopolistic competition.
Large cities typically have many grocery stores and most sell similar products of various brands and quality. The grocery store market in a big city can be BEST classified as:
false
Many entrepreneurs are moving into the food truck industry in major cities. This movement into the industry suggests existing firms are earning normal profits.
Canada has a comparative advantage in producing steel.
based on the table Canada's production possibilities tons steel | Planes 15 | 0 10 | 4 5 | 8 0 | 12 Mexico's Production Possibilities tons steel | Planes 6 | 0 4 | 2 2 | 4 0 | 6
both countries can gain from trade
based on the table Canada's production possibilities tons steel | Planes 15 | 0 10 | 4 5 | 8 0 | 12 Mexico's Production Possibilities tons steel | Planes 6 | 0 4 | 2 2 | 4 0 | 6
$10; 60
(Table) According to the table, the equilibrium price is _____, and the equilibrium output is _____ units. Price | QD | QS $15 | 40 | 80 $12 | 50 | 70 $10 | 60 | 60 $7 | 70 | 50 $5 | 80 | 40
