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Implicit costs can be defined as A. the non-monetary opportunity cost of using the firm's own resources. B. the deferred cost of production. C. accounting profit minus explicit cost. D. total cost minus fixed costs.

A .the non-monetary opportunity cost of using the firm's own resources.

A. $0

Table 12-1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases. Assume that output can only be increased in batches of 100 units.Refer to Table 12-1. What is the fixed cost of production? A. $1,000 B. $500 C. It cannot be determined. D. $0

A. $1,000

Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights.Refer to Table 11-7. What is the variable cost of production when the firm produces 115 lanterns? A. $1,157 B. $956 C. $10.05 D. $1,556

A. $1,157

DeShawn's Detailing is a service that details cars at the customers' homes or places of work. DeShawn's cost for a basic detailing package is $40, and he charges $75 for this service. For a total price of $90, DeShawn will also detail the car's engine, a service that adds an additional $20 to the total cost of the package. What is the marginal cost of adding the engine detailing to the basic detailing package? A. $20 B. $60 plus the value of his time C. $60 D. $30

A. $20

If the market price is $25 in a perfectly competitive market, the marginal revenue from selling the fifth unit is A. $25. B. $12.50. C. $5. D. $125.

A. $25.

Figure 4-8 shows the market for beer. The government plans to impose a per-unit tax in this market.Refer to Figure 4-8. The price buyers pay after the tax is A. $27. B. $22. C. $7. D. $20.

A. $27.

Refer to Figure 4-1. What is the total amount that Arnold is willing to pay for 2 burritos? A. $4.50 B. $7.50 C. $10.00 D. $2.00

A. $4.50

Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon, Goldilocks. She gave up a salary of $40,000 per year, invested her savings of $30,000 (which was earning 5 percent interest) and borrowed $10,000 from a close friend, agreeing to pay 5 percent interest per year. In her first year, Golda spent $18,000 to rent a salon, hired a part-time assistant for $12,000 and incurred another $15,000 in expenses on equipment and hairdressing material. Based on this information, what is the amount of her implicit costs for the first year? A. $41,500 B. $42,000 C. $70,000 D. $80,000

A. $41,500

Table 12-2 lists the various pounds (lbs.) of apples that Margie Stattler can sell. Assume that Margie operates in a perfectly competitive market.Refer to Table 12-2. What is Margie's total revenue if she sells 250 pounds of apples? A. $750 B. There is not enough information in the table to determine Margie's total revenue. C. $500 D. $250

A. $750

Calculate the income elasticity if an 8 percent increase in income leads to a 4 percent increase in quantity demanded for organic produce. A. 0.5 B. 2 C. 1.5 D. -0.66

A. 0.5

Figure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables.Refer to Figure 2-2. What is the opportunity cost of one pound of meat? A. 1 1/3 pounds of vegetables B. 16 pounds of vegetables C. 1.6 pounds of vegetables D. 3/4 pound of vegetables

A. 1 1/3 pounds of vegetables

Figure 9-1 shows the U.S. demand and supply for leather footwear.Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the domestic quantity supplied? A. 10 units B. 20 units C. 5 units D. 15 units

A. 10 units

Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market.Refer to Figure 12-4. If the market price is $30, the firm's profit-maximizing output level is A. 180. B. 0. C. 240. D. 130.

A. 180.

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a cappuccino? A. 2 1/2 Russian tea cakes B. $1.00 C. 2/5 of a Russian tea cake D. $2.50

A. 2 1/2 Russian tea cakes

If four workers can produce 18 chairs a day and five can produce 20 chairs a day, the marginal product of the fifth worker is A. 2 chairs. B. 38 chairs. C. 4 chairs. D. 3 chairs.

A. 2 chairs.

Suppose that when the price per ream of recycled printer paper rises from $4 to $4.50, the quantity demanded falls from 800 to 600 reams per day. Using the midpoint formula, what is the price elasticity of demand (in absolute value) over this range? A. 2.43 B. 0.003 C. 0.41 D. 4

A. 2.43

Figure 9-1 shows the U.S. demand and supply for leather footwear.Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the quantity demanded? A. 20 units B. 5 units C. 10 units D. 15 units

A. 20 units

Table 10-2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods.Refer to Table 10-2. If Keira maximizes her utility, how many units of each good should she buy? A. 3 cups of soup and 4 sandwiches B. 6 cups of soup and 2 sandwiches C. 4 cups of soup and 3.5 sandwiches D. 1 cup of soup and 5 sandwiches

A. 3 cups of soup and 4 sandwiches

Table 2-7 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces.Refer to Table 2-7. What is Haley's opportunity cost of making a necklace? A. 3/4 of a bracelet B. 1 1/3 necklaces C. 3 bracelets D. 2 necklaces

A. 3/4 of a bracelet

Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of cowboy hats is $50, how many hats will be produced? A. 4 B. 2 C. 0 D. 1

A. 4

Lydia runs a small nail salon in the town of New Hope. She is debating whether she should extend her hours of operation. Lydia figures that her sales revenue will depend on the number of extra hours the nail salon is open as shown in the table above. She would have to hire a worker for those extra hours at a wage rate of $10 per hour.Refer to Table 1-1. Using marginal analysis, by how many hours should Lydia extend her nail salon's hours of operations? A. 5 hours B. 2 hours C. 4 hours D. 3 hours

A. 5 hours

Refer to Figure 2-5. If the economy is currently producing at point W, what is the opportunity cost of moving to point X? A. 5 million tons of paper B. 9 million tons of paper C. 3 million tons of steel D. 19 million tons of steel

A. 5 million tons of paper

Refer to Table 3-3. The table above shows the demand schedules for caviar of two individuals (Ari and Sonia) and the rest of the market. At a price of $75, the quantity demanded in the market would be A. 52 oz. B. 127 oz. C. 6 oz. D. 46 oz.

A. 52 oz.

Refer to Table 3-1. The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia) and the rest of the market. At a price of $5, the quantity demanded in the market would be A. 63 lbs. B. 76 lbs C. 51 lbs. D. 146 lbs.

A. 63 lbs.

What is the difference between an "increase in demand" and an "increase in quantity demanded"? A. An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve. B. There is no difference between the two terms; they both refer to a movement downward along a given demand curve. C. There is no difference between the two terms; they both refer to a shift of the demand curve. D. An "increase in demand" is represented by a movement along a given demand curve, while an "increase in quantity demanded" is represented by a rightward shift of the demand curve.

A. An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve.

If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23, what will happen to the average cost of production if the 15th unit is produced? A. Average cost will fall. B. Average cost could increase or decrease depending on what happens to fixed cost. C. Average cost could increase or decrease depending on what happens to variable cost. D. Average cost increases as more is produced.

A. Average cost will fall.

Table 10-2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods.Refer to Table 10-2. Holding prices constant, when Keira's income changed from $18 to $23, her utility maximizing bundle changed. Based on your answers to her optimal choices at the two income levels, what type of goods are soup and sandwiches? A. Both soup and sandwiches are normal goods. B. Soup is a normal good and sandwiches are an inferior good. C. Soup is an inferior good and sandwiches are a normal good. D. Both soup and sandwiches are inferior goods.

A. Both soup and sandwiches are normal goods.

Which of the following statements about competition in a market is true? A. Competition forces firms to produce and sell products as long as the marginal benefit to consumers exceeds the marginal cost of production. B. Competition forces firms to outsource the production of their labor-intensive products. C. Competition forces firms to add only low profit margins to their costs of production. D. Competition forces firms to undercut their selling price, thus benefiting consumers who will be able to purchase products at the lowest price possible.

A. Competition forces firms to produce and sell products as long as the marginal benefit to consumers exceeds the marginal cost of production.

Which of the following statements is true? A. Consumer surplus measures the net benefit from participating in a market. B. Producer surplus measures the total benefit received by producers from participating in a market. C. Consumer surplus measures the total benefit from participating in a market. D. When a market is in equilibrium consumer surplus equals producer surplus.

A. Consumer surplus measures the net benefit from participating in a market.

How will an increase in population affect the labor market? A. It will shift the market supply curve. B. It will cause a decrease in the quantity of labor demanded. C. It will increase the opportunity cost of leisure. D. It will increase the supply of jobs.

A. It will shift the market supply curve.

Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week.Refer to Table 9-1. Select the statement that accurately interprets the data in the table. A. Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming. B. Linda has an absolute advantage in dog bathing and dog grooming. C. Sandy has an absolute advantage in dog bathing and Linda has an absolute advantage in dog grooming. D. Sandy has an absolute advantage in dog bathing and dog grooming.

A. Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming.

Coal burning utilities release sulfur dioxide and nitric acid which react with water to produce acid rain. Acid rain damages trees and crops and kills fish. Because the utilities do not bear the cost of the acid rain, they overproduce the quantity of electricity. This is illustrated in Figure 5-11.Refer to Figure 5-11. S1 represents the supply curve that reflects the marginal private cost of production and S2 represents the supply curve that reflects the marginal social cost of production. One way to internalize the external cost generated by utilities is to impose a Pigovian tax on the production of electricity. What is the size of the Pigovian tax that will internalize the cost of the externality? A. P2-P0 B. P0 C. P1-P0 D. P2-P1

A. P2-P0

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for women's clothing. Which panel best describes what happens in this market when the wages of seamstresses rise? A. Panel (b) B. Panel (c) C. Panel (d) D. Panel (a)

A. Panel (b)

Which of the following is a normative economic statement? A. Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable. B. With rising mortgage rates and rising unemployment rates, the number of unsold homes has increased. C. Rising global demand for coal has led to increases in the price of coal. D. The state of Texas is considering increasing funds for light-rail development to promote the use of public transportation.

A. Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.

Refer to Figure 12-20. If the market price is P1, what is the allocatively efficient output level? A. Q1 B. There is no allocatively efficient output level because the firm is making a loss. C. Q2 D. Q0

A. Q1

When Nablom's Bakery raised the price of its breads by 10 percent, the quantity demanded fell by 15 percent. What was the effect on sales revenue? A. Sales revenue decreased. B. Sales revenue remained unchanged. C. It cannot be determined without information on prices. D. Sales revenue increased.

A. Sales revenue decreased.

Figure 16-2 shows the marginal revenue product for Becca's Baubles, a producer of hand-beaded bracelets.Refer to Figure 16-2. Suppose the market price of bracelets falls to $2. What happens to the curve given in the diagram? A. The curve shifts to the left. B. There will be a movement along the curve. C. Nothing, because labor's productivity has not changed. D. We cannot answer the question without knowing if Becca would want to hire more workers.

A. The curve shifts to the left.

Which of the following is a normative economic statement? A. The price of gasoline is too high. B. When the price of gasoline rises, the quantity of gasoline purchased falls. C. When the price of gasoline rises, transportation costs rise. D. The current high price of gasoline is the result of strong worldwide demand.

A. The price of gasoline is too high.

Refer to Table 4-1. The table above lists the highest prices three consumers, Tom, Dick, and Harriet, are willing to pay for a short-sleeved polo shirt. If the price of one of the shirts is $28 dollars, A. Tom will receive $12 of consumer surplus from buying one shirt. B. Tom will buy two shirts, Dick will buy one shirt and Harriet will buy no shirts. C. Tom and Dick receive a total of $70 of consumer surplus from buying one shirt each. Harriet will buy no shirts. D. Harriet will receive $25 of consumer surplus since she will buy no shirts.

A. Tom will receive $12 of consumer surplus from buying one shirt.

Suppose OPEC has only two producers, Saudi Arabia and Ecuador. Saudi Arabia has far more oil reserves and is the lower-cost producer compared to Ecuador. The payoff matrix in Table 14-3 shows the profits earned per day by each country. "Low output" corresponds to producing the OPEC assigned quota and "high output" corresponds to producing the maximum capacity beyond the assigned quota.Refer to Table 14-3. Is there a dominant strategy for Saudi Arabia and, if so, what is it? A. Yes, the dominant strategy is to produce a low output. B. No, there is no dominant strategy. C. Yes, it has a dominant strategy depending on what Ecuador does. D. Yes, the dominant strategy is to produce a high output.

A. Yes, the dominant strategy is to produce a low output.

A monopoly is a firm that is the only seller of a good or service that does not have A. a close substitute. B. a patent. C. a barrier to entry. D. a close complement.

A. a close substitute.

If, in response to an increase in the price of chocolate the quantity of chocolate demanded decreases, then economists would describe this as A. a decrease in quantity demanded. B. a decrease in demand. C. a change in consumer income. D. a decrease in consumers' taste for chocolate.

A. a decrease in quantity demanded.

A cartel is A. a group of firms that enter into a formal agreement to fix prices to maximize joint profits. B. a group of firms that enter into an informal agreement to fix prices to maximize joint profits. C. an example of a group of firms that collectively regulate a competitive industry. D. a temporary storage facility for automobiles.

A. a group of firms that enter into a formal agreement to fix prices to maximize joint profits.

If opportunity costs are constant, the production possibilities frontier would be graphed as A. a negatively sloped straight line. B. a positively sloped straight line. C. a ray from the origin. D. a negatively sloped curve bowed in toward the origin.

A. a negatively sloped straight line.

If the price of orchids falls, the substitution effect due to the price change will cause A. an increase in the quantity of orchids demanded. B. an increase in the demand for orchids. C. an increase in the demand for roses, a substitute for orchids. D. an increase in the quantity of orchids supplied.

A. an increase in the quantity of orchids demanded.

Which of the following is a factor of production? A. an oven in a bakery B. a share of General Motors' stock C. a credit card D. a $500 Treasury bond

A. an oven in a bakery

Whenever a buyer and a seller agree to trade, A. both must believe they will be made better off. B. they must have identical opportunity costs in producing their respective products. C. the agreement is made based on absolute advantage. D. one party will always be worse off.

A. both must believe they will be made better off.

If the cross-price elasticity of demand for computers and software is negative, this means the two goods are A. complements. B. inferior. C. normal. D. substitutes.

A. complements.

Figure 2-4 shows various points on three different production possibilities frontiers for a nation. Refer to Figure 2-4. A movement from X to Y A. could occur because of an influx of immigrant labor. B. is the result of advancements in food production technology only, with no change in the technology for plastic production. C. is the result of advancements in plastic production technology only, with no change in food production technology. D. could be due to a change in consumers' tastes and preferences.

A. could occur because of an influx of immigrant labor.

economics, the term "equity" means A. economic benefits are distributed fairly. B. everyone has an equal standard of living. C. the hardest working individuals consume all they want. D. only elected officials have high standards of living.

A. economic benefits are distributed fairly.

When a firm produces more output using the same inputs or the same output using fewer inputs we say that the firm A. experiences positive technological change. B. experiences an increase in demand. C. will hire more workers in order to produce more output. D. is operating in the short run.

A. experiences positive technological change.

Trade between countries that is without restrictions is called A. free trade. B. unencumbered trade. C. unobstructed commerce. D. unabated trade.

A. free trade.

able 3-4 represents the supply schedule for surfboards.Assume that the market for surfboards has an upward-sloping supply curve.Refer to Table 3-4. At a price of $600, the quantity of surfboards supplied per week will be A. greater than 175 per week. B. equal to 175 per week. C. less than 175 per week. D. either greater than or less than 175 per week, but will not be equal to 175 per week.

A. greater than 175 per week.

Perfect competition is characterized by all of the following except A. heavy advertising by individual sellers. B. a horizontal demand curve for individual sellers. C. homogeneous products. D. sellers are price takers.

A. heavy advertising by individual sellers.

Price elasticity of demand measures A. how responsive quantity demanded is to a change in price. B. how responsive sales are to a change in buyers' incomes. C. how responsive sales are to changes in the price of a related good. D. how responsive suppliers are to price changes.

A. how responsive quantity demanded is to a change in price.

The Coase theorem states that A. if transactions costs are low, private bargaining will result in an efficient solution to the problem of externalities. B. a free-market equilibrium is the best solution to address externalities. C. government intervention is always needed if externalities are present. D. assigning property rights is the only thing the government should do in a market economy.

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

If the amount of athletic shoes purchased by millennials and members of generation Z increase as they choose to purchase these types of shoes compared to other types such as sandals and hiking boots, this will likely A. increase the demand for athletic shoes, because athletic shoes, sandals, and hiking boots are considered substitutes. B. decrease the demand for athletic shoes, because athletic shoes are considered normal goods and sandals and hiking boots are considered inferior goods. C. increase the demand for athletic shoes, because athletic shoes, sandals, and hiking boots are considered complements. D. decrease the demand for athletic shoes, because athletic shoes are considered inferior goods and sandals and hiking boots are considered normal goods.

A. increase the demand for athletic shoes, because athletic shoes, sandals, and hiking boots are considered substitutes.

If the labor supply is unchanged, an increase in the demand for labor will A. increase the equilibrium wage and increase the number of workers employed. B. increase the equilibrium wage and increase the quantity of jobs demanded. C. decrease the equilibrium wage and increase the number of workers employed. D. increase the equilibrium wage and decrease the number of workers employed.

A. increase the equilibrium wage and increase the number of workers employed.

Total utility A. is equal to the sum of the marginal utilities of all units consumed. B. has a constant rate of increase as a person consumes more and more of a good. C. is negative when marginal utility is declining. D. cannot decrease as a person consumes more and more of a good.

A. is equal to the sum of the marginal utilities of all units consumed.

An advantage of imposing a tax on the producer that generates pollution is that A. it forces the polluting producer to internalize the external cost of the pollution. B. the government can keep tabs on exactly what is produced in an industry. C. it will eliminate pollution. D. a producer can pass the cost of the pollution to consumers.

A. it forces the polluting producer to internalize the external cost of the pollution.

The long run refers to a time period A. long enough for a firm to vary all of its inputs, to adopt new technology, and change the size of its physical plant. B. long enough for a firm to change the use of its variable inputs. C. during which a firm is able to purchase all of its inputs, including its plant and equipment. D. long enough for a firm to pay all of its creditors in full.

A. long enough for a firm to vary all of its inputs, to adopt new technology, and change the size of its physical plant.

Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market.Refer to Figure 12-4. If the market price is $30 and the firm is producing output, what is the amount of the firm's profit or loss? A. loss of $1,080 B. loss of $2,520 C. profit of $1,440 D. profit of $1,300

A. loss of $1,080

In a perfectly competitive market, there are ________ buyers and ________ sellers. A. many; many B. few; many C. many; few D. few; few

A. many; many

Suppose a cell phone manufacturer currently sells 20,000 cell phones per week and makes a profit of $5,000 per week. A manager at the plant observes, "Although the last 3,000 cell phones we produced and sold increased our revenue by $6,000 and our costs by $6,700, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of cell phones."Refer to Scenario 1-1. Using marginal analysis terminology, what is another economic term for the incremental cost of producing the last 3,000 cell phones? A. marginal cost B. explicit cost C. operating cost D. Any of the above terms are correct.

A. marginal cost

The extra cost associated with undertaking an activity is called A. marginal cost. B. opportunity cost. C. foregone cost. D. net loss.

A. marginal cost.

A market supply curve reflects the A. marginal private costs of producing a good or service. B. external benefits of producing a good or service. C. marginal social costs of producing a good or service. D. external costs of producing a good or service.

A. marginal private costs of producing a good or service.

To maximize profit a monopolist will produce where A. marginal revenue is equal to marginal cost. B. revenue per unit is maximized. C. demand for its product is unit elastic. D. average total cost is equal to average revenue.

A. marginal revenue is equal to marginal cost.

A firm's demand for labor curve is also called its A. marginal revenue product of labor curve. B. marginal benefit of labor curve. C. marginal factor cost of labor curve. D. marginal valuation curve.

A. marginal revenue product of labor curve.

The production possibilities frontier shows the ________ combinations of two products that can be produced in a particular time period with available resources. A. maximum attainable B. minimum attainable C. equitable D. only

A. maximum attainable

Refer to Table 2-1. Assume that Tomaso's Trattoria only produces pizzas and calzones. A combination of 24 pizzas and 30 calzones would appear A. on Tomaso's production possibilities frontier. B. inside Tomaso's production possibilities frontier. C. at the horizontal intercept of Tomaso's production possibilities frontier. D. outside Tomaso's production possibilities frontier.

A. on Tomaso's production possibilities frontier.

The highest-valued alternative that must be given up to engage in an activity is the definition of A. opportunity cost. B. economic equity. C. marginal cost. D. marginal benefit.

A. opportunity cost.

The DeBeers Company of South Africa was able to block competition through A. ownership of an essential input. B. differentiating its product. C. economies of scale. D. government-imposed barriers.

A. ownership of an essential input.

Cross-price elasticity of demand is calculated as the A. percentage change in quantity demanded of one good divided by percentage change in price of a different good. B. percentage change in quantity demanded divided by percentage change in price of a good. C. percentage change in quantity sold divided by percentage change in buyers' incomes. D. percentage change in quantity supplied divided by percentage change in price of a good.

A. percentage change in quantity demanded of one good divided by percentage change in price of a different good.

The cross-price elasticity of demand measures the A. percentage change in the quantity demanded of one good divided by the percentage change in the price of another good. B. percentage change in the quantity demanded of one good in one location divided by the price of the same good in another location. C. absolute change in the quantity demanded of one good divided by the absolute change in the price of another good. D. percentage change in the price of one good divided by the percentage change in the quantity demanded of another good.

A. percentage change in the quantity demanded of one good divided by the percentage change in the price of another good.

The machines that workers have to work with are considered A. physical capital. B. financial capital. C. entrepreneurship. D. human capital.

A. physical capital.

If a firm charges different consumers different prices for the same product and the difference cannot be attributed to cost variations, then it is engaging in A. price discrimination. B. cost-plus pricing. C. odd pricing. D. markup pricing.

A. price discrimination.

Plato Playhouse, a theatre company in the university town of Wegg, caters to two groups of customers:students and the non-student population.Figure 15-16 shows the demand curves for the two groups of customers.Refer to Figure 15-16. Suppose Plato Playhouse price discriminates. What is the price charged in the two markets? A. price in the student market = Pc; price in the non-student market = Pe B. price in the student market = Pd; price in the non-student market = Pe 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

A. price in the student market = Pc; price in the non-student market = Pe

Assume that price is greater than average variable cost. If a perfectly competitive seller is producing at an output where price is $11 and the marginal cost is $14.54, then to maximize profits the firm should A. produce a smaller level of output. B. produce a larger level of output. C. There is not enough information given to answer the question. D. continue producing at the current output.

A. produce a smaller level of output.

Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of The Waco Kid's cowboy hats is $40, A. producer surplus will equal $28. B. The Waco Kid will produce four hats. C. producer surplus from the first hat is $40. D. there will be a surplus; as a result, the price will fall to $24.

A. producer surplus will equal $28.

When you purchase a new pair of jeans you do so in the A. product market. B. factor market. C. resource market. D. input market.

A. product market.

Which of the following displays these two characteristics: nonrivalry and nonexcludability in consumption? A. public goods B. quasi-public goods C. common resources D. private goods

A. public goods

The income effect of an increase in the price of salmon A. refers to the effect on a consumer's purchasing power which causes the consumer to buy less salmon, holding all other factors constant. B. is the change in the demand for other types of fish, say trout, that results from a decrease in purchasing power. C. refers to the relative price effect—salmon is more expensive compared to other types of fish—which causes the consumer to buy less salmon. D. is the change in the demand for salmon when income increases.

A. refers to the effect on a consumer's purchasing power which causes the consumer to buy less salmon, holding all other factors constant.

Which of the following is an implicit cost of production? A. rent that could have been earned on a building owned and used by the firm B. wages paid to labor plus the cost of carrying benefits for workers C. interest paid on a loan to a bank D. the utility bill paid to water, electricity, and natural gas companies

A. rent that could have been earned on a building owned and used by the firm

The key characteristics of a monopolistically competitive market structure include A. sellers selling similar but differentiated products. B. sellers acting to maximize revenue. C. high barriers to entry. D. few sellers.

A. sellers selling similar but differentiated products.

If a perfectly competitive firm's total revenue is less than its total variable cost, the firm A. should stop production by shutting down temporarily. B. should raise its price above its average variable cost. C. should adopt new technology in order to lower its costs of production. D. should continue to produce and increase its demand.

A. should stop production by shutting down temporarily.

In general, the labor supply curve A. slopes upward because as the wage rises, the opportunity cost of leisure increases. B. is vertical at the equilibrium wage rate. C. is perfectly elastic at the equilibrium wage rate. D. slopes downward because firms will hire fewer workers at higher wages.

A. slopes upward because as the wage rises, the opportunity cost of leisure increases.

Exports are domestically produced goods and services A. sold to other countries. B. which are used to produce other goods and services. C. sold at home. D. sold to the government.

A. sold to other countries.

Households ________ factors of production and ________ goods and services. A. supply; demand B. demand; supply C. supply; supply D. demand; demand

A. supply; demand

Table 4-5 shows the demand and supply schedules for the labor market in the city of Pixley.Refer to Table 4-5. If a minimum wage of $11.50 is mandated, there will be a A. surplus of 40,000 units of labor. B. shortage of 40,000 units of labor. C. surplus of 20,000 units of labor. D. shortage of 20,000 units of labor.

A. surplus of 40,000 units of labor.

Refer to Figure 2-1. Point B is A. technically efficient. B. the equilibrium output combination. C. inefficient in that not all resources are being used. D. unattainable with current resources.

A. technically efficient.

Marginal cost is A. the additional cost to a firm of producing one more unit of a good or service. B. the total cost of producing one unit of a good or service. C. the difference between the lowest price a firm would have been willing to accept and the price it actually receives. D. the average cost of producing a good or service.

A. the additional cost to a firm of producing one more unit of a good or service.

Consumer surplus in a market for a product would be equal to ________ if the market price was zero. A. the area under the demand curve B. the area between the supply curve and the demand curve C. zero D. the area above the supply curve

A. the area under the demand curve

Refer to Figure 4-4. The figure above represents the market for pecans. Assume that this is a competitive market. If 4,000 pounds of pecans are sold A. the deadweight loss is equal to $12,000. B. the marginal benefit of each of the 4,000 pounds of pecans equals $3. C. marginal benefit is equal to marginal cost. D. consumer surplus equals zero.

A. the deadweight loss is equal to $12,000.

The equilibrium wage and quantity of labor in the market for skilled workers is determined by A. the demand and supply of labor. B. the strength of labor unions. C. the monopsony power of firms. D. the market value created by the output of these skilled workers.

A. the demand and supply of labor.

A very large number of small sellers who sell identical products imply A. the inability of one seller to influence the price B. a downward sloping demand curve for each seller's product. C. a multitude of vastly different selling prices. D. chaos in the market.

A. the inability of one seller to influence the price

Economic efficiency in a competitive market is achieved when A. the marginal benefit equals the marginal cost from the last unit sold. B. consumers and producers are satisfied. C. producer surplus equals the total amount firms receive from consumers minus the cost of production. D. economic surplus is equal to consumer surplus.

A. the marginal benefit equals the marginal cost from the last unit sold.

Marginal revenue product falls as more labor is hired because A. the marginal product of labor falls as a result of the law of diminishing returns. B. the price of the product must fall for a perfectly competitive firm to sell more. C. the wage rate rises as more workers work more hours. D. the marginal product of labor is negative as additional units of labor are hired.

A. the marginal product of labor falls as a result of the law of diminishing returns.

A positive externality causes A. the marginal social benefit to exceed the marginal private cost at the market equilibrium. B. the marginal social benefit to be equal to the marginal private cost at the market equilibrium. C. the marginal social benefit to be less than the marginal private cost at the market equilibrium. D. the marginal private benefit to exceed the marginal social cost at the market equilibrium.

A. the marginal social benefit to exceed the marginal private cost at the market equilibrium.

Figure 5-1 shows a market with an externality. The current market equilibrium output of Q1 is not the economically efficient output. The economically efficient output is Q2.Refer to Figure 5-1. If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does S2 represent? A. the market supply curve reflecting marginal social cost B. the market supply curve reflecting implicit cost C. the market supply curve reflecting external cost D. the market supply curve reflecting marginal private cost

A. the market supply curve reflecting marginal social cost

Which of the following costs will not change as output changes? A. total fixed cost B. average fixed cost C. marginal cost D. total variable cost

A. total fixed cost

If Valerie purchases ankle socks at $5 and gets 25 units of marginal utility from the last unit, and bandanas at $3 and gets 12 units of marginal utility from the last bandana purchased, she A. wants to consume more ankle socks and fewer bandanas. B. wants to consume less of both ankle sock and bandanas. C. wants to consume more bandanas and fewer ankle socks. D. is maximizing total utility and does not want to change her consumption of ankle socks or bandanas.

A. wants to consume more ankle socks and fewer bandanas.

If Japanese workers are more productive than French workers then trade between Japan and France A. will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want. B. can take place only if France has an absolute advantage in producing a good or service Japanese buyers want. C. cannot take place because Japanese goods and services will be less expensive than French goods and services. D. cannot take place until French workers become more productive

A. will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want.

A product is considered to be nonexcludable if A. you cannot keep those who did not pay for the item from enjoying its benefits. B. you can keep those who did not pay for the item from enjoying its benefits. C. your consumption of the product reduces the quantity available for others to consume. D. it is jointly owned by all members of a community.

A. you cannot keep those who did not pay for the item from enjoying its benefits.

Refer to Figure 2-5. If the economy is currently producing at point Y, what is the opportunity cost of moving to point W? A. zero B. 9 million tons of paper C. 16 million tons of paper D. 2 million tons of steel

A. zero

Figure 15-6 shows the cost and demand curves for a monopolist. Refer to Figure 15-6. The monopolist's total cost is A. $1,660. B. $1,240. C. $1,116. D. $1,726.40.

B. $1,240.

Figure 13-8 shows cost and demand curves for a monopolistically competitive producer of iced tea.Refer to Figure 13-8. What is the firm's profit-maximizing price? A. $14 B. $16 C. $12 D. $13

B. $16

B. $160

Figure 4-8 shows the market for beer. The government plans to impose a per-unit tax in this market.Refer to Figure 4-8. How much of the tax is paid by sellers? A. $12 B. $2 C. $5 D. $7

B. $2

If the market price is $25, the average revenue of selling five units is A. $12.50. B. $25. C. $5. D. $125.

B. $25.

Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry.Refer to Figure 12-5. If the market price is $20, what is the amount of the firm's profit? A. $8,100 B. $6,750 C. $5,400 D. $16,200

B. $6,750

Figure 4-8 shows the market for beer. The government plans to impose a per-unit tax in this market.Refer to Figure 4-8. What is the size of the per-unit tax? A. $2 B. $7 C. $12 D. $5

B. $7

Paul goes to Dick's Sporting Goods to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus from the purchase is A. $200. B. $75. C. $325. D. $125.

B. $75.

Refer to Figure 11-7. When the output level is 100 units average fixed cost is A. $12. B. $8. C. This cannot be determined from the diagram. D. $4.

B. $8.

Table 2-7 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces.Refer to Table 2-7. What is Haley's opportunity cost of making a bracelet? A. 3 bracelets B. 1 1/3 necklaces C. 2 necklaces D. 3/4 of a bracelet

B. 1 1/3 necklaces

Figure 16-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies.Refer to Figure 16-1. If Dale can sell her doilies at $2 each, what is the marginal product of the 5th worker? A. 28 doilies B. 14 doilies C. $28 D. $56

B. 14 doilies

Refer to Figure 11-1. The marginal product of the 3rd worker is A. 19. B. 15. C. 57. D. 11.

B. 15.

Denmark and Belize can produce both clocks and hats. Each country has a total of 200 available labor hours for the production of clocks and hats. Table 9-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade. Refer to Table 9-6. With trade, what is the total gain in clock production? A. 2,250 clocks B. 150 clocks C. 2,100 clocks D. 300 clocks

B. 150 clocks

Figure 13-8 shows cost and demand curves for a monopolistically competitive producer of iced tea.Refer to Figure 13-8. What is the profit-maximizing output level? A. 30 cases B. 22 cases C. 24 cases D. 38 cases

B. 22 cases

Keegan has $30 to spend on Pita Wraps and Bubble Tea. The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. Table 10-1 shows his total utility from different quantities of the two items.Refer to Table 10-1. What is Keegan's optimal consumption bundle? A. 4 pita wraps and 2 bubble teas B. 3 pita wraps and 4 bubble teas C. 3 pita wraps and 3 bubble teas D. 5 pita wraps and 0 bubble teas

B. 3 pita wraps and 4 bubble teas

When the average total cost is $16 and the total cost is $800, then the number of units the firm is producing is A. impossible to determine with the information given. B. 50. C. 12,800. D. 784.

B. 50

If a consumer receives 22 units of marginal utility for consuming the first can of soda, 20 units from consuming the second, and 15 from the third, the total utility of consuming the three units is A. unknown as more information is needed to determine the answer. B. 57 utils C. 35 utils. D. 15 utils.

B. 57 utils

Consider a chemical plant that discharges toxic fumes over a nearby community. To reduce the emissions of toxic fumes the firm can install pollution abatement devices. Figure 5-8 shows the marginal benefit and the marginal cost from reducing the toxic fumes emissions.Refer to Figure 5-8. What is the economically efficient level of pollution reduction? A. 12.5 million tons B. 9 million tons C. 0 tons D. 8 million tons

B. 9 million tons

Figure 4-6 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf.Refer to Figure 4-6. What area represents consumer surplus after the imposition of the price floor? A. A + B B. A C. A + B + E + F D. A + B + E

B. A

Refer to Figure 3-1. A decrease in the price of the product would be represented by a movement from A. D1 to D2. B. A to B. C. B to A. D. D2 to D1.

B. A to B.

Which of the following equations is correct? A. AVC + ATC = AFC B. AFC + AVC = ATC C. ATC + AVC = AFC D. AVC - ATC = AFC

B. AFC + AVC = ATC

Figure 4-6 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf.Refer to Figure 4-6. What is the area that represents producer surplus after the imposition of the price floor? A. B + E + F B. B + E C. B + C + D + E D. A + B + E

B. B + E

Alpha and Beta are the only firms selling gyros in the upscale town of Delphi. Each firm must decide on whether to offer a discount to students to compete for customers. If one firm offers a discount but the other does not, then the firm that offers the discount will increase its profit. Table 14-4 shows the payoff matrix for this game.Refer to Table 14-4. What is the Nash equilibrium in this game? A. Alpha offers a student discount but Beta does not. B. Both Alpha and Beta offer a student discount. C. Beta offers a student discount but Alpha does not. D. There is no Nash equilibrium.

B. Both Alpha and Beta offer a student discount.

As a percentage of GDP, exports are greater than imports for which of the following countries? A. the United States B. China C. Italy D. the United Kingdom

B. China

Refer to Figure 3-1. A decrease in taste or preference would be represented by a movement from A. A to B. B. D2 to D1. C. D1 to D2. D. B to A.

B. D2 to D1.

Refer to Figure 11-5. Identify the curves in the diagram. A. E = average fixed cost curve; F = variable cost curve; G = total cost curve, H = marginal cost curve B. E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve. C. E = average fixed cost curve; F = average total cost curve; G = average variable cost curve, H = marginal cost curve D. E = marginal cost curve; F = total cost curve; G = variable cost curve, H = average fixed cost curve

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

________ is maximized in a competitive market when marginal benefit equals marginal cost. A. Marginal profit B. Economic surplus C. Deadweight loss D. Selling price

B. Economic surplus

Table 2-10 shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras.Refer to Table 2-10. If the two countries specialize and trade, who should export canoes? A. They should both be exporting canoes. B. Guatemala C. There is no basis for trade between the two countries. D. Honduras

B. Guatemala

Which of the following is a positive economic statement? A. The government should revamp the health care system. B. If the price of iPhones falls, a larger quantity of iPhones will be purchased. C. The U.S. government should not have bailed out U.S. auto manufacturers. D. The standard of living in the United States should be higher.

B. If the price of iPhones falls, a larger quantity of iPhones will be purchased.

Which of the following explains why the marginal cost curve has a U shape? A. Initially, the marginal product of labor falls, then rises. B. Initially, the marginal product of labor rises, then falls. C. Initially, the average cost of production rises, then falls. D. Initially, the average product of labor rises, then falls.

B. Initially, the marginal product of labor rises, then falls.

Suppose the price elasticity of demand for canned soup is estimated at -1.62. What happens to sales revenue if the price of canned soup rises? A. It rises. B. It falls. C. It falls by 162 percent. D. It rises by 1.62 percent.

B. It falls.

Which of the following statements best describes the economic short run? A. It is a period of one year or less. B. It is a period during which at least one of the firm's inputs is fixed. C. It is a period during which fixed inputs become variable inputs because of depreciation. D. It is a period during which firms are free to vary all of their inputs.

B. It is a period during which at least one of the firm's inputs is fixed.

Seth is a competitive body builder. He says he has to have his 12-oz package of protein powder to "feed his muscles" every day. On the basis of this information, what can you conclude about his price elasticity of demand for protein powder? A. It is elastic. B. It is perfectly inelastic. C. The price elasticity coefficient is 1. D. It is perfectly elastic.

B. It is perfectly inelastic.

What is a market failure? A. It refers to a breakdown in a market economy because of widespread corruption in government. B. It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal social cost. C. It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal private cost. D. It refers to a situation where an entire sector of the economy (for example, the airline industry) collapses because of some unforeseen event.

B. It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal social cost.

The price elasticity of demand for bread is estimated at -0.40. What happens to sales revenue if the price of bread rises? A. It falls. B. It rises. C. It drops to zero. D. It stays the same.

B. It rises.

Refer to Figure 2-14. Which two arrows in the diagram depict the following transaction: Myrna earns $450 for working at HempHill's Drug Store. A. K and M B. J and M C. J and G D. K and G

B. J and M

Refer to Figure 2-11. One segment of the circular flow diagram in the figure shows the flow of labor services from market K to economic agents J. What is market K and who are economic agents J? A. K = factor markets; J = households B. K = factor markets; J = firms C. K = product markets; J = households D. K = product markets; J = firms

B. K = factor markets; J = firms

Refer to Figure 2-11. One segment of the circular flow diagram in the figure shows the flow of wages and salaries from market K to economic agents M. What is market K and who are economic agents M? A. K = product markets; M = firms B. K = factor markets; M = households C. K = factor markets; M = firms D. K = product markets; M = households

B. K = factor markets; M = households

Which of the following is true at the output level where average total cost is at its minimum? A. Average total cost equals average fixed cost. B. Marginal cost equals average total cost. C. Average variable cost equals fixed cost. D. Marginal cost equals average variable cost.

B. Marginal cost equals average total cost.

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit-maximizing outputs? A. Marginal revenue equals marginal cost. B. Marginal revenue is less than price. C. Average revenue equals average cost. D. Price equals marginal cost.

B. Marginal revenue is less than price.

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets. Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles? A. Panel (b) B. Panel (d) C. Panel (c) D. Panel (a)

B. Panel (d)

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for rice. What happens in this market if buyers expect the price of rice to fall? A. Panel (a) B. Panel (d) C. Panel (c) D. Panel (b)

B. Panel (d)

Refer to Figure 6-1. A perfectly elastic demand curve is shown in A. Panel D. B. Panel B. C. Panel C. D. Panel A.

B. Panel B.

Refer to Figure 3-2. An increase in the number of firms in the market would be represented by a movement from A. S2 to S1. B. S1 to S2. C. A to B. D. B to A.

B. S1 to S2.

Refer to Figure 3-2. An increase in price of inputs would be represented by a movement from A. B to A. B. S2 to S1. C. A to B. D. S1 to S2.

B. S2 to S1.

Which of the following statements about scarcity is true? A. Scarcity is only a problem when a country has too large a population. B. Scarcity refers to the situation in which unlimited wants exceed limited resources. C. Scarcity is not a problem for the wealthy. D. Scarcity only arises when there is a wide disparity in income distribution

B. Scarcity refers to the situation in which unlimited wants exceed limited resources.

Refer to Figure 6-4. Which of the following statements about price elasticity of demand is true? A. At the midpoint of the demand curve, the elasticity coefficient is zero. B. The elastic portion of a straight-line, downward-sloping demand curve corresponds to the segment above the midpoint. C. The inelastic portion of the demand curve corresponds to the segment above the midpoint. D. The elasticity coefficient is constant along the demand curve.

B. The elastic portion of a straight-line, downward-sloping demand curve corresponds to the segment above the midpoint.

What is the difference between labor's marginal product and marginal revenue product? A. Labor's marginal product is a measure of labor's productivity while labor's marginal revenue product is a measure of labor's ability to sell the firm's products. B. The marginal product of labor is the additional labor's contribution to the firm's total output while the marginal revenue product is the additional labor's contribution to the firm's total sales revenue. C. The marginal product of labor is the increase in output as a result of hiring an additional worker while the marginal revenue product of labor is the increase in profit as a result of hiring an additional worker. D. The marginal revenue product of labor is the dollar value of hiring an additional worker while the marginal product of labor is the increase in the firm's physical output as a result of hiring an additional worker.

B. The marginal product of labor is the additional labor's contribution to the firm's total output while the marginal revenue product is the additional labor's contribution to the firm's total sales revenue.

Which of the following correctly describes the relationship between economic efficiency and economic equity? A. There is no conflict between the two goals. B. There is often a trade-off between the two. C. They are both automatically achieved in a free market economy. D. They always call for opposite outcomes.

B. There is often a trade-off between the two.

Figure 4-8 shows the market for beer. The government plans to impose a per-unit tax in this market. Refer to Figure 4-8. As a result of the tax, is there a loss in consumer surplus? A. No, because the market reaches a new equilibrium. B. Yes, because consumers pay a price above the economically efficient price. C. No, because the producer pays the tax. D. No, because consumers are charged a lower price to cover their tax burden.

B. Yes, because consumers pay a price above the economically efficient price.

Which of the following is the best example of a short-run adjustment? A. Smith University completed negotiations to acquire a large piece of land to build its new library. B. Your local Walmart hires two more associates. C. Toyota builds a new assembly plant in Texas. D. A local bakery purchases another commercial oven as part of its capacity expansion.

B. Your local Walmart hires two more associates.

Assume that production from an electric utility caused acid rain and that the government imposed a tax on the utility equal to the cost of the acid rain. This is an example of A. a transactions cost. B. a Pigovian tax. C. the Coase Theorem. D. a Pigovian subsidy.

B. a Pigovian tax.

Which of the following will shift the demand curve for a good? A. a decrease in the price of the good B. a decrease in the price of a complementary good C. an increase in the price of the good D. a change in the technology used to produce the good

B. a decrease in the price of a complementary good

When every good or service is produced up to the point where the last unit provides ________, allocative efficiency occurs. A. a marginal benefit to society greater than the marginal cost of producing it B. a marginal benefit to society equal to the marginal cost of producing it C. a marginal benefit to society less than the marginal cost of producing it D. a marginal benefit to society equal to zero

B. a marginal benefit to society equal to the marginal cost of producing it

Refer to Figure 3-5. In a free market such as that depicted above, a surplus is eliminated by A. a price decrease, decreasing the supply and increasing the demand. B. a price decrease, decreasing the quantity supplied and increasing the quantity demanded. C. a price increase, increasing the quantity supplied and decreasing the quantity demanded. D. a price increase, increasing the supply and decreasing the demand.

B. a price decrease, decreasing the quantity supplied and increasing the quantity demanded

Which of the following items is likely to have the highest income elasticity of demand? A. a tank of gasoline B. a vacation home in the Swiss Alps C. a meal at Taco Bell D. a bus ride

B. a vacation home in the Swiss Alps

Consider the following statements:a.Car owners purchase more gasoline from a gas station that sells gasoline at a lower price thanother rival gas stations in the area.b.Banks do not take steps to increase security since they believe it is less costly to allow some bankrobberies than to install expensive security monitoring equipment.c.Firms produce more of a particular DVD when its selling price rises.Which of the above statements demonstrates that economic agents respond to incentives? A. a only B. a, b, and c C. c only D. b only

B. a, b, and c

Figure 5-2 shows a market with a negative externality.Refer to Figure 5-2. The deadweight loss due to the externality is represented by the area A. abc. B. abf. C. abd. D. ade.

B. abf.

The explicit cost of production is also called A. direct cost. B. accounting cost. C. variable cost. D. overhead cost.

B. accounting cost.

Which of the following is an example of a way in which an oligopolistic firm can escape the prisoner's dilemma? A. reneging on a previous tacit agreement with rival firms to charge identical high prices B. advertising that it will match its rival's price C. producing more of its product D. ignoring the pricing decisions of the other firms

B. advertising that it will match its rival's price

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

B. all inputs can be changed.

If an increase in income leads to a decrease in the demand for popcorn, then popcorn is A. a necessity. B. an inferior good. C. a normal good. D. a neutral good.

B. an inferior good.

Economists assume that individuals A. will never take actions to help others. B. are rational and respond to incentives. behave in unpredictable ways. prefer to live in a society that values fairness above all else.

B. are rational and respond to incentives.

A situation in which a country does not trade with other countries is called A. self-actualization. B. autarky. C. independence. D. autonomy.

B. autarky.

As more output is produced, the marginal product of labor declines A. if the firm's output supply curve is inelastic. B. because of the law of diminishing returns. C. if firms reduce the wage paid to labor. D. because the firm's marginal revenue declines.

B. because of the law of diminishing returns.

Consumers maximize total utility within their budget constraint by A. buying whatever they like the best. B. buying the goods with the largest marginal utility per dollar spent. C. spending the same dollar amount for each good. D. buying the cheapest goods they can find.

B. buying the goods with the largest marginal utility per dollar spent.

A market comprised of only two firms is called a A. monopolistically competitive market. B. duopoly. C. competitive market. D. monopoly.

B. duopoly.

The demand curve for each seller's product in perfect competition is horizontal at the market price because A. the price is set by the government. B. each seller is too small to affect the market price. C. all the demanders get together and set the price. D. all the sellers get together and set the price.

B. each seller is too small to affect the market price.

Economic costs of production differ from accounting costs in that A. accounting costs include expenditures for hired resources while economic costs do not. B. economic costs add the opportunity costs of a firm using its own resources while accounting costs do not. C. economic costs include expenditures for hired resources while accounting costs do not. D. accounting costs are always larger than economic cost.

B. economic costs add the opportunity costs of a firm using its own resources while accounting costs do not.

Marginal revenue product of labor for a competitive seller is A. the output price multiplied by the quantity sold. B. equal to the marginal product of labor multiplied by the output price. C. the change in total product from hiring one more worker. D. the marginal revenue of the product multiplied by the output price.

B. equal to the marginal product of labor multiplied by the output price.

Marginal utility is the A. total satisfaction received from consuming a given number of units of a product. B. extra satisfaction received from consuming one more unit of a product. C. satisfaction achieved when a consumer has had enough of a product. D. average satisfaction received from consuming a product.

B. extra satisfaction received from consuming one more unit of a product.

A patent or copyright is a barrier to entry based on A. ownership of a key necessary raw material. B. government action to protect a producer. C. large economies of scale as output increases. D. widespread network externalities.

B. government action to protect a producer.

Suppose a competitive firm pays a wage of $12 an hour and sells its product at $3 per unit. Assume that labor is the only input. If hiring another worker would increase output by five units per hour, then to maximize profits the firm should A. not change the number of workers it currently hires. B. hire the additional worker. C. lay off some of its workers. D. There is not enough information to answer the question.

B. hire the additional worker.

Oligopolies are difficult to analyze because A. the firms are so large. B. how firms respond to a price change by a rival is uncertain. C. oligopolies are a recent development so economists have not had time to develop models. D. demand and cost curves do not exist for these types of industries.

B. how firms respond to a price change by a rival is uncertain.

The production possibilities frontier model shows that A. a market economy is more efficient in producing goods and services than is a centrally planned economy. B. if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good. C. economic growth can only be achieved by free market economies. D. if consumers decide to buy more of a product, its price will increase.

B. if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good.

If a good has a negative income elasticity of demand, this indicates that the good is A. a complement with another good. B. inferior. C. normal. D. a substitute with another good.

B. inferior.

A characteristic found only in oligopolies is A. break-even level of profits. B. interdependence of firms. C. independence of firms. D. products that are slightly different.

B. interdependence of firms.

When there is a negative externality, the marginal private cost of production ________ the marginal social cost of production. A. eliminates B. is less than C. is greater than D. is equal to

B. is less than

For a monopolistically competitive firm, marginal revenue A. is greater than the price. B. is less than the price. C. and the price are unrelated. D. equals the price.

B. is less than the price.

Figure 2-4 shows various points on three different production possibilities frontiers for a nation.Refer to Figure 2-4. A movement from Y to Z A. is the result of advancements in food production technology. B. is the result of advancements in plastic production technology. C. is the result of a decrease in preference for food products. D. represents an increase in the demand for plastic products.

B. is the result of advancements in plastic production technology.

If a firm faces a downward-sloping demand curve, A. it will always make a profit. B. it must reduce its price to sell more units. C. it has no control over the price or the quantity sold. D. the demand for its product must be inelastic.

B. it must reduce its price to sell more units.

Table 3-2 represents the demand schedule for surfboards.Assume that the market for surfboards has a downward-sloping demand curve.Refer to Table 3-2. At a price of $650, the quantity of surfboards demanded will be A. equal to 340 per week. B. less than 340 per week. C. either greater than or less than 340 per week, but will not be equal to 340 per week. D. greater than or equal to 340 per week.

B. less than 340 per week.

If demand is inelastic, the absolute value of the price elasticity of demand is A. greater than the absolute value of the slope of the demand curve. B. less than one. C. one. D. greater than one.

B. less than one.

The difference between the ________ and the ________ from the sale of a product is called producer surplus. A. cost to produce a product; price a firm actually receives B. lowest price a firm would have been willing to accept; price it actually receives C. cost to produce a product; profit received D. highest price a firm would have been willing to accept; lowest price it was willing to accept

B. lowest price a firm would have been willing to accept; price it actually receives

The slope of a production possibilities frontier A. is always constant. B. measures the opportunity cost of producing one more unit of a good. C. has no economic relevance or meaning. D. is always varying.

B. measures the opportunity cost of producing one more unit of a good.

In San Francisco there are many restaurants that specialize in a wide variety of cuisines. Patronage at these restaurants is influenced by factors such as tastes, price, and location. This market is A. monopolistic. B. monopolistically competitive. C. perfectly competitive. D. oligopolistic.

B. monopolistically competitive.

Refer to Figure 6-4. The absolute value of the price elasticity of demand at A. the midpoint of the demand curve is A. at a maximum. B. one. C. at a minimum. D. zero.

B. one.

Refer to Table 2-1. Assume that Tomaso's Trattoria only produces pizzas and calzones. A combination of 36 pizzas and 30 calzones would appear A. on Tomaso's production possibilities frontier. B. outside Tomaso's production possibilities frontier. C. inside Tomaso's production possibilities frontier. D. at the horizontal intercept of Tomaso's production possibilities frontier.

B. outside Tomaso's production possibilities frontier.

The price elasticity of an upward-sloping supply curve is always A. greater than one. B. positive. C. impossible to determine. D. negative.

B. positive.

When there few close substitutes available for a good, demand tends to be A. perfectly elastic. B. relatively inelastic. C. relatively elastic. D. perfectly inelastic.

B. relatively inelastic.

In economics, choices must be made because we live in a world of A. greed. B. scarcity. C. unlimited resources. D. unemployment.

B. scarcity.

The supply curve for watches A. is downward sloping. B. shows the relationship between the price of watches and the quantity of watches supplied. C. shows the relationship between the quantity of watches firms are willing and able to supply and the quantity of watches consumers are willing and able to purchase. D. shows the supply of watches consumers are willing and able to buy at any given price.

B. shows the relationship between the price of watches and the quantity of watches supplied.

Governments can increase the consumption of a product that creates positive externalities by A. convincing everyone to consume the product. B. subsidizing the production of the product so that the supply is increased and market price is reduced. C. taxing the production and consumption of the product. D. assigning property rights to the producers of the product.

B. subsidizing the production of the product so that the supply is increased and market price is reduced.

The athletic shoe industry is highly competitive. In recent years, companies like Allbirds and Skechers began offering shoes made of different materials or in different styles to better compete with industry giants Nike and Adidas. These new styles of athletic shoes that are being marketed to compete with shoes by Nike and Adidas would be considered A. inferior goods compared to the shoes by Nike and Adidas. B. substitutes for shoes by Nike and Adidas. C. complements to shoes by Nike and Adidas. D. normal goods compared to shoes by Nike and Adidas.

B. substitutes for shoes by Nike and Adidas.

The processes a firm uses to turn inputs into outputs of goods and services is called A. technological change. B. technology. C. positive economic analysis. D. marginal analysis.

B. technology.

Allocative efficiency is achieved when firms produce goods and services A. at a marginal cost of zero. B. that consumers value most. C. at the lowest opportunity cost. D. at the lowest possible cost.

B. that consumers value most.

Figure 5-5 shows a market with an externality. The current market equilibrium output of Q1 is not the economically efficient output. The economically efficient output is Q2.Refer to Figure 5-5. If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does D2 represent? A. the demand curve reflecting the sum of social and external benefits B. the demand curve reflecting social benefits C. the demand curve reflecting private benefits D. the demand curve reflecting external benefits

B. the demand curve reflecting social benefits

The law of diminishing marginal utility states that A. the extra satisfaction from consuming a good increases slowly as more of a good is consumed, other things constant. B. the extra satisfaction from consuming a good decreases as more of a good is consumed, other things constant. C. when the extra satisfaction from consuming a good becomes negative, total utility starts falling, other things constant. D. eventually total utility falls as more of a good is consumed, other things constant.

B. the extra satisfaction from consuming a good decreases as more of a good is consumed, other things constant.

If a consumer always buys goods rationally, then A. the total utilities of the different goods consumed will be equal. B. the marginal utility per dollar spent on all goods will be equal. C. the average utilities of the different goods consumed will be equal. D. the marginal utility of the different goods consumed will be equal.

B. the marginal utility per dollar spent on all goods will be equal.

Suppose there are several paper mills producing paper for a market. These mills, located upstream from a fishing village, discharge a large amount of wastewater into the river. The waste material affects the number of fish in the river and the use of the river for recreation and as a public water supply source. Figure 5-4 shows the paper market. Use this Figure to answer the following question(s).Refer to Figure 5-4. What does S1 represent? A. the market supply curve that reflects only private benefit B. the market supply curve that reflects private cost C. the market supply curve that reflects social cost D. the market supply curve that reflects only external cost

B. the market supply curve that reflects private cost

The production function shows A. the total cost of producing a given quantity of output. B. the maximum output that can be produced from a set of inputs. C. the incremental output gained by improving the production process. D. the technology used to produce output.

B. the maximum output that can be produced from a set of inputs.

he price elasticity of supply is equal to A. the change in quantity supplied divided by the change in price. B. the percentage change in quantity supplied divided by the percentage change in price. C. the value of the slope of the supply curve. D. the percentage change in price divided by the percentage change in quantity supplied.

B. the percentage change in quantity supplied divided by the percentage change in price.

Suppliers will be willing to supply a product only if A. the price received is at least double the additional cost of producing the product. B. the price received is at least equal to the additional cost of producing the product. C. the price received is less than the additional cost of producing the product. D. the price is higher than the average cost of producing the product.

B. the price received is at least equal to the additional cost of producing the product.

An individual's labor supply curve shows A. the relationship between wages and the quantity of labor that a firm is willing to employ. B. the relationship between wages and the quantity of labor that she is willing to supply. C. the maximum wage rates offered to that individual by various potential employers. D. the relationship between the quantity of hours worked and total income earned by that individual.

B. the relationship between wages and the quantity of labor that she is willing to supply.

Who receives the most of what is produced in a market economy? A. lawmakers and other politically favored groups B. those who are most willing and able to buy them C. people who earn the highest incomes D. everyone receives an equal amount

B. those who are most willing and able to buy them

If a monopolist's marginal revenue is $25 a unit and its marginal cost is $25, then A. to maximize profit the firm should decrease output. B. to maximize profit the firm should continue to produce the output it is producing. C. Not enough information is given to say what the firm should do to maximize profit. D. to maximize profit the firm should increase output.

B. to maximize profit the firm should continue to produce the output it is producing.

The basic activity of a firm is A. to provide jobs for its employees. B. to use inputs to produce outputs of goods and services. C. to compete with other firms that produce similar products. D. to set the prices of its products as high as possible.

B. to use inputs to produce outputs of goods and services.

The points outside the production possibilities frontier are A. inefficient. B. unattainable. C. attainable. D. efficient.

B. unattainable.

If the percentage increase in price is 15 percent and the value of the price elasticity of demand is -3, then quantity demanded A. will decrease by 5 percent. B. will decrease by 45 percent. C. will increase by 5 percent. D. will increase by 45 percent.

B. will decrease by 45 percent.

Figure 12-9 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm.Refer to Figure 12-9. At price P1, the firm would produce A. Q1 units B. zero units. C. Q3 units. D. Q5 units.

B. zero units.

Figure 4-1 shows Arnold's demand curve for burritos.Refer to Figure 4-1. If the market price is $1.00, what is the consumer surplus on the third burrito? A. $7.50 B. $1.00 C. $0.50 D. $1.50

C. $0.50

Refer to Table 11-8. What is the marginal cost per unit of production when the firm produces 450 garden gnomes? A. $0.87 B. $2.01 C. $1.38 D. $1.94

C. $1.38

Refer to Table 16-1. If the output price is $3, what is the marginal revenue product of the fifth unit of labor? A. $210 B. $1,050 C. $150 D. $360

C. $150

Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Under autarky, the consumer surplus is A. $260. B. $555. C. $195. D. $300.

C. $195.

Figure 11-7 shows the cost structure for a firm.Refer to Figure 11-7. When output level is 100, what is the total cost of production? A. $1,200 B. $20 C. $2,000 D. $800

C. $2,000

Figure 15-4 shows the demand and cost curves for a monopolist.Refer to Figure 15-4. What is the amount of the monopoly's profit? A. $10,400 B. $12,600 C. $2,700 D. $4,200

C. $2,700

Figure 4-8 shows the market for beer. The government plans to impose a per-unit tax in this market.Refer to Figure 4-8. For each unit sold, the price sellers receive after the tax (net of tax) is A. $32. B. $22. C. $20. D. $27.

C. $20.

C. $240

If a monopolist's price is $50 at 63 units of output and average total cost equals $43, then the firm's total profit is A. $7. B. $2,709. C. $441. D. $3,150.

C. $441.

Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon, Goldilocks. She gave up a salary of $40,000 per year, invested her savings of $30,000 (which was earning 5 percent interest) and borrowed $10,000 from a close friend, agreeing to pay 5 percent interest per year. In her first year, Golda spent $18,000 to rent a salon, hired a part-time assistant for $12,000 and incurred another $15,000 in expenses on equipment and hairdressing material. Based on this information, what is the amount of her explicit costs for the first year? A. $45,000 B. $87,000 C. $45,500 D. $47,000

C. $45,500

Refer to Table 11-8. What is the variable cost of production when the firm produces 520 garden gnomes? A. $622 B. $267 C. $664 D. $1,014

C. $664

Figure 9-1 shows the U.S. demand and supply for leather footwear.Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the quantity of imports? A. 20 units B. 5 units C. 10 units 15 units

C. 10 units

Figure 16-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies. Refer to Figure 16-1. If the wage rate is $40, how many workers should Dale hire? A. 5 B. 4 C. 3 D. 6

C. 3

Keegan has $30 to spend on Pita Wraps and Bubble Tea. The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. Table 10-1 shows his total utility from different quantities of the two items.Refer to Table 10-1. If Keegan can drink all the bubble tea he wants for free, how many glasses will he consume? A. He would consume an infinite amount of bubble tea if it is free. B. 5 glasses C. 6 glasses D. 4 glasses

C. 6 glasses

C. 6 utils

Refer to Table 16-1. The marginal product of the fourth unit of labor is A. 75. B. 300. C. 60. D. 15.

C. 60.

Suppose Joe is maximizing total utility within his budget constraint. If the price of the last pair of jeans purchased is $25 and it yields 100 units of extra satisfaction and the price of the last shirt purchased is $20, then, using the rule of equal marginal utility per dollar spent, the extra satisfaction received from the last shirt must be A. 100 units of utility. B. 2,000 units of utility. C. 80 units of utility. D. 500 units of utility.

C. 80 units of utility.

Which of the following is an example of positive technological change? A. A firm buys an additional machine that it uses to make surf boards. As a result, the firm is able to increase its weekly production of surf boards. B. A firm conducts a new advertising campaign. As a result, the demand for the firm's surf boards increases. C. A firm's workers participate in a training program designed to increase the number of surf boards they can produce per day. D. A firm offers workers a higher wage to work on weekends and at night. As a result, the firm is able to increase its weekly production of surf boards.

C. A firm's workers participate in a training program designed to increase the number of surf boards they can produce per day.

What is the difference between an "increase in supply" and an "increase in quantity supplied"? A. There is no difference between the two terms; they both refer to a movement along a given supply curve. B. There is no difference between the two terms; they both refer to a shift of the supply curve. C. An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price. D. An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" means at any given price supply has increased.

C. An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.

Which of the following is the correct way to describe equilibrium in a market? A. At equilibrium, market forces no longer apply. B. At equilibrium, demand equals supply. C. At equilibrium, quantity demanded equals quantity supplied. D. At equilibrium, scarcity is eliminated.

C. At equilibrium, quantity demanded equals quantity supplied.

Which of the following statements about the price elasticity of demand is correct? A. The absolute value of the elasticity of demand ranges from zero to one. B. Demand is more elastic the smaller the percentage of the consumer's budget the item takes up. C. Demand is more elastic in the long run than it is in the short run. D. The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good.

C. Demand is more elastic in the long run than it is in the short run.

Which of the following statements is true? A. Within each country, some individuals are made better off as a result of international trade, but one of the countries will be worse off overall. B. Although some individuals are made better off as a result of international trade, both countries may be made worse off overall. C. Each country as a whole is made better off as a result of international trade, but individuals within each country may be made worse off. D. All individuals in both countries are made better off as a result of international trade.

C. Each country as a whole is made better off as a result of international trade, but individuals within each country may be made worse off.

Which of the following is not a characteristic of monopolistic competition? A. There are many buyers and sellers. B. Firms sell similar, but not identical, products. C. Firms are price takers. D. Barriers to entry are low.

C. Firms are price takers.

Refer to Figure 2-3. Sergio Vignetto raises cattle and llamas on his land. A portion of his land is more suitable for raising cattle, and the other portion is better suited for raising llamas. Which of the graphs in Figure 2-3 represent his production possibilities frontier that displays increasing opportunity costs? A. either Graph A or Graph C B. Graph B C. Graph C D. Graph A

C. Graph C

Figure 2-9 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews.Refer to Figure 2-9. Which country has a comparative advantage in the production of cotton? A. Pakistan B. They have equal productive abilities. C. Indonesia D. neither country

C. Indonesia

Which of the following statements about the price elasticity of demand along a downward-sloping linear demand curve is true? A. It is inelastic at high prices and elastic at low prices. B. It is unit elastic throughout the demand curve. C. It is elastic at the highest prices and inelastic at the lowest prices. D. It is perfectly elastic at very high prices and perfectly inelastic at very low prices.

C. It is elastic at the highest prices and inelastic at the lowest prices.

Jenna runs a small boutique in Capitola. She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more. On the basis of this information, what can you conclude about her price elasticity of demand for wool hand warmers? A. The price elasticity coefficient is 0. B. It is elastic. C. It is perfectly elastic. D. It is perfectly inelastic.

C. It is perfectly elastic.

Jennifer Borts moves her office from the premises she rents at a local mall to her home. As a result of this move A. Jennifer's total costs fall. B. Jennifer's opportunity costs fall. C. Jennifer's explicit costs fall and her implicit costs rise. D. Jennifer's implicit costs fall.

C. Jennifer's explicit costs fall and her implicit costs rise.

An example of a monopoly based on control of a key resource is A. NASA. B. Microsoft's Windows operating system. C. Major League Baseball. D. the U.S. Food and Drug Administration.

C. Major League Baseball.

Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18.Refer to Figure 4-3. At a price of $18 consumers are willing to buy 40 pounds of tiger shrimp. Is this an economically efficient quantity? A. Yes, because $18 shows what consumers are willing to pay for the product. B. Yes, otherwise consumers would not buy 40 units. C. No, the marginal benefit of the 40th unit exceeds the marginal cost of that 40th unit. D. No, the marginal cost of the 40th unit exceeds the marginal benefit of the 40th unit.

C. No, the marginal benefit of the 40th unit exceeds the marginal cost of that 40th unit

For the monopolistically competitive firm, A. P > MR = AR. B. Price (P) = Marginal Revenue (MR) = Average Revenue (AR). C. P = AR > MR. D. P = MR > AR.

C. P = AR > MR.

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements. What panel describes what happens in this market when the price of steak rises? A. Panel (b) B. Panel (c) C. Panel (d) D. Panel (a)

C. Panel (d)

Refer to Figure 6-1. A perfectly inelastic demand curve is shown in A. Panel B. B. Panel C. C. Panel A. D. Panel D.

C. Panel A.

Refer to Figure 6-10. A perfectly elastic supply curve is shown in A. Panel C. B. Panel D. C. Panel B. D. Panel A.

C. Panel B.

Refer to Figure 5-3. The efficient output level is A. Qm. B. Qo. C. Qn. D. Qo - Qm.

C. Qn.

refer to Figure 3-2. A decrease in the expected future price of the product would be represented by a movement from A. A to B. B. S2 to S1. C. S1 to S2. D. B to A.

C. S1 to S2.

Which of the following is a positive economic statement? A. Foreign workers should not be allowed to work for lower wages than the citizens of a country. B. The government should mandate electric automobiles. C. Scarcity necessitates that people make trade-offs. D. People should not buy SUVs.

C. Scarcity necessitates that people make trade-offs.

Consider the market for pilots. What is likely to happen to the equilibrium wage and quantity of pilots if the government enforces a lower mandatory retirement age, say from age 65 to age 62? A. The equilibrium wage falls and the equilibrium quantity of pilots rises. B. The equilibrium wage and the equilibrium quantity of pilots fall. C. The equilibrium wage rises and the equilibrium quantity of pilots falls. D. The equilibrium wage and the equilibrium quantity of pilots rise.

C. The equilibrium wage rises and the equilibrium quantity of pilots falls.

Refer to Figure 15-1. Which of the following statements about the firm depicted in the diagram is true? A. The fact that this firm is a natural monopoly is shown by the fact that marginal cost lies below the long-run average total cost where the firm maximizes its profits. B. The fact that this firm is a natural monopoly is shown by the continually declining marginal revenue curve as output rises. C. The fact that this firm is a natural monopoly is shown by the long-run average total cost curve still falling when it crosses the demand curve. D. The fact that this firm is a natural monopoly is shown by the continually declining market demand curve as output rises.

C. The fact that this firm is a natural monopoly is shown by the long-run average total cost curve still falling when it crosses the demand curve.

How does the construction of a market demand curve for a private good differ from that for a public good? A. The market demand curve for a private good is determined by adding up the price each consumer is willing to pay for each quantity of the good but the market demand curve for a public good is determined by adding up the quantities demanded by each consumer at each price. B. There is no difference; in both cases the demand curve is determined by adding up the price each consumer is willing to pay for each quantity of the good. C. The market demand curve for a private good is determined by adding up the quantities demanded by each consumer at each price but the market demand curve for a public good is determined by adding up the price each consumer is willing to pay for each quantity of the good. D. There is no difference; in both cases the demand curve is determined by adding up the quantities demanded by each c

C. The market demand curve for a private good is determined by adding up the quantities demanded by each consumer at each price but the market demand curve for a public good is determined by adding up the price each consumer is willing to pay for each quantity of the good.

Table 13-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to universities and private research laboratories.Refer to Table 13-4. Based on the data in the table, which of the following statements is true? A. Victoria could be either a monopolistically competitive or a perfectly competitive firm. B. Victoria should shut down temporarily. C. The table summarizes Victoria's short-run, rather than long-run, market for plastic vials. D. Victoria should advertise more in order to increase the demand for plastic vials.

C. The table summarizes Victoria's short-run, rather than long-run, market for plastic vials.

Which of the following must be present to reach a private solution to an externality problem? A. The government must approve the solution for it to be a legal solution. B. A majority of the parties affected by the externality must agree to a solution. C. The transactions costs to negotiate a solution must be relatively low. D. The total number of people, creators of the problem and those affected, must be relatively large to justify negotiating a solution.

C. The transactions costs to negotiate a solution must be relatively low.

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

C. Walmart builds another Supercenter.

The three fundamental questions that any economy must address are: A. How much will be saved; what will be produced; and how can these goods and services be fairly distributed? B. Who gets jobs; what wages do workers earn; and who owns what property? C. What goods and services to produce; how will these goods and services be produced; and who receives them? D. What will be the prices of goods and services; how will these goods and services be produced; and who will receive them?

C. What goods and services to produce; how will these goods and services be produced; and who receives them?

LimoZeenz and AirPorter and are the only two airport shuttle and limousine rental service companies in the mid-sized town of Shady Shores. Each firm must decide on whether to offer its customers a mid-week discount for airport transportation. Table 14-1 shows the payoff matrix for profits earned by each company based on either offering or not offering the discount.Refer to Table 14-1. Is there a dominant strategy for LimoZeenz and if so, what is it? A. No, its outcome depends on what AirPorter does. B. Yes, LimoZeenz dominant strategy is to collude with AirPorter. C. Yes, LimoZeenz should not offer the mid-week discount. D. Yes, LimoZeenz should offer the mid-week discount.

C. Yes, LimoZeenz should not offer the mid-week discount.

Assume that Lexus (L) is the first automobile company to produce a luxury class hybrid automobile and is the only such company for the past four years. BMW is now considering producing its own luxury hybrid automobile and Lexus must decide whether or not to lower the price of its luxury hybrid to counter BMW's entry into the luxury hybrid niche.Refer to Figure 14-1. If Lexus lowers its price, will this deter BMW from entering the market? A. No, because BMW will still make a profit of $120 if it competes with Lexus. B. No, because BMW will be able to break Lexus' first-mover advantage. C. Yes, because BMW stands to lose $100 million if it competes with Lexus. D. Yes, because BMW will make a smaller profit than Lexus if it chooses to compete.

C. Yes, because BMW stands to lose $100 million if it competes with Lexus.

Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market.Refer to Figure 12-4. If the market price is $30, should the firm represented in the diagram continue to stay open? A. Yes, because it is making a profit. B. No, it should shut down because it is making a loss. C. Yes, because it is covering part of its fixed cost. D. No, it should shut down because it cannot cover its variable cost.

C. Yes, because it is covering part of its fixed cost.

At the start of the game each firm charges a low price and each earns a profit of $7,000.Refer to Table 14-2. Is the current strategy in which each firm charges the low price and earns a profit of $7,000 a Nash equilibrium? If not, why and what is the Nash equilibrium? A. No, the current situation is not a Nash equilibrium; it is a dominant strategy equilibrium. There is no Nash equilibrium in this game. B. No, it is not a Nash equilibrium because each firm can do better by charging the high price. The Nash equilibrium occurs when each firm charges the high price and earns a profit of $10,000. C. Yes, the current situation is a Nash equilibrium. D. No, the current situation is not a Nash equilibrium. The Nash equilibrium for each firm is to have the other charge a high price and for the firm in question charge a low price.

C. Yes, the current situation is a Nash equilibrium.

Offering to pay the passenger in front of you to keep her from reclining her airplane seat is an example of A. a tradable exchange contract. B. a Pigovian solution to an externality situation. C. a Coasian solution to an externality situation. D. command-and-control policy.

C. a Coasian solution to an externality situation.

When BMW, an German company, purchases a welding machine that was made in Toronto, the purchase is A. neither an export nor an import for either country. B. both a German and a Canadian import. C. a German import and a Canadian export. D. a German export and a Canadian import.

C. a German import and a Canadian export.

Consider the following pairs of items : a. shampoo and conditioner b. iPhones and earbuds c. a laptop computer and a desktop computer d. beef and pork e. air travel and weed killer Which of the pairs listed will have a negative cross-price elasticity? A. e only B. c and d only C. a and b only D. a, b, and c only

C. a and b only

Ranchers can raise either cattle or sheep on their land. Which of the following would cause the supply of sheep to increase? A. an increase in the price of sheep B. an increase in the demand for cattle C. a decrease in the price of cattle D. an increase in the price of sheep feed

C. a decrease in the price of cattle

A monopolist faces A. a perfectly elastic demand curve. B. a horizontal demand curve. C. a downward-sloping demand curve. D. a perfectly inelastic demand curve.

C. a downward-sloping demand curve.

Which of the following is a factor of production that generally is fixed in the short run? A. water B. raw materials C. a factory building D. labor

C. a factory building

The income effect due to a price decrease will result in an increase in the quantity demanded for A. a Giffen good. B. a public good. C. a normal good. D. an inferior good.

C. a normal good.

A decrease in the price of dashboard cameras will result in A. an increase in the supply of dashboard cameras. B. a decrease in the demand for dashboard cameras. C. a smaller quantity of dashboard cameras supplied. D. a larger quantity of dashboard cameras supplied.

C. a smaller quantity of dashboard cameras supplied.

The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of A. efficiency. B. optimization. C. a trade-off. D. equity.

C. a trade-off.

Marginal benefit is equal to the ________ benefit a consumer receives from consuming one more unit of a good or service. A. unintended B. total C. additional D. surplus

C. additional

Which of the following would shift the supply curve for MP3 players to the left? A. an increase in the productivity of the workers who produce MP3 players B. a decrease in consumer tastes for MP3 players C. an increase in the price of an input used to produce MP3 players D. an increase in the number of firms that produce MP3 players

C. an increase in the price of an input used to produce MP3 players

Monopolistic competition is a market structure in which A. firms cannot influence the market price. B. firms produce and sell products for which there are no close substitutes. C. barriers to entry are low. D. the demand curve for a typical firm is horizontal.

C. barriers to entry are low.

Marginal cost is equal to the A. change in average product divided by the change in output. B. change in total product divided by the change in output. C. change in total cost divided by the change in output. D. change in average total costs divided by the change in output.

C. change in total cost divided by the change in output.

Which of the following products comes closest to having a perfectly inelastic demand? A. iPhones B. bus rides C. cholesterol medication in general D. gasoline

C. cholesterol medication in general

Elvira decreased her consumption of bananas when the price of peanut butter increased. For Elvira, peanut butter and bananas are A. both inferior goods. B. substitutes. C. complements. D. both luxury goods.

C. complements.

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called A. producer surplus. B. the substitution effect. C. consumer surplus. D. the income effect.

C. consumer surplus.

The decision about what goods and services will be produced in a market economy is made by A. producers deciding what society wants most. B. lawmakers in the government voting on what will be produced. C. consumers and firms choosing which goods and services to buy or produce. D. workers deciding to produce only what the boss says must be produced.

C. consumers and firms choosing which goods and services to buy or produce.

If a demand curve shifts to the right, then A. demand has decreased. B. quantity demanded has increased. C. demand has increased. D. quantity demanded has decreased.

C. demand has increased.

Figure 13-8 shows cost and demand curves for a monopolistically competitive producer of iced tea.Refer to Figure 13-8. At the profit-maximizing output level the firm will A. break even. B. earn a profit of $176. C. earn a profit of $88. D. earn a profit of $60.

C. earn a profit of $88.

In 2017, Tesla Motors introduced the Model 3, its first low cost model which it had hoped to sell for $35,000 but realized that it would lose several thousand dollars per car at that price. Prior to the introduction of the Model 3, Tesla's two existing models had starting prices of over $70,000 and at those prices, the company was earning a profit on each car sold. In deciding to increase volume and improve manufacturing design for the Model 3, Tesla A. had no choice but to increase the selling prices of its Model S sedan and Model X SUV. B. faced no trade-offs because it was already making a profit selling its Model S and Model X vehicles. C. faced a trade-off between devoting additional resources to the production of the Model 3 and devoting additional resources to producing its other models. D. was guaranteed to be able to reduce costs on its Model 3 to a point where it could sell the Model 3 at a price of $35,000

C. faced a trade-off between devoting additional resources to the production of the Model 3 and devoting additional resources to producing its other models.

Both individual buyers and sellers in perfect competition A. can influence the market price by joining with a few of their competitors. B. have the market price dictated to them by government. C. have to take the market price as a given. D. can influence the market price by their own individual actions.

C. have to take the market price as a given.

The demand for gasoline in the short run is A. perfectly inelastic because people have no choice but to buy gasoline. B. unit elastic because people tend to consume a stable amount of gasoline per period. C. inelastic because there are very few good substitutes for gasoline. D. elastic because people can easily switch to public transportation.

C. inelastic because there are very few good substitutes for gasoline.

A supply schedule A. is a curve that shows the relationship between the price of a product and the quantity of the product supplied. B. is the relationship between the supply of a product and the cost of producing the product. C. is a table that shows the relationship between the price of a product and the quantity of the product supplied. D. is a table that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange.

C. is a table that shows the relationship between the price of a product and the quantity of the product supplied.

Economic surplus A. is the difference between quantity demanded and quantity supplied when B. the market price for a product is greater than the equilibrium price. C. is equal to the sum of consumer surplus and producer surplus. D. is equal to the difference between consumer surplus and producer surplus. does not exist when a competitive market is in equilibrium.

C. is equal to the sum of consumer surplus and producer surplus.

A dominant strategy A. is one that a firm is forced into following by government policy. B. involves colluding with rivals to maximize joint profits. C. is one that is the best for a firm, no matter what strategies other firms use. D. involves deciding what to do after all rivals have chosen their own strategies.

C. is one that is the best for a firm, no matter what strategies other firms use.

The demand for labor is described as a derived demand because A .it is derived by workers seeking to earn income to fund the consumption of goods and services. B. it is derived from government institutions which rely on labor markets for the purpose of raising tax revenue. C. it is derived from the demand for products that use labor in the production process. D. it is derived by producers seeking to make profits by starting new businesses.

C. it is derived from the demand for products that use labor in the production process.

Refer to Figure 12-1. If the firm is producing 200 units A. it should cut back its output to maximize profit. B. it is making a loss. C. it should increase its output to maximize profit. D. it breaks even.

C. it should increase its output to maximize profit.

Which of the following activities create a negative externality? A. graduating from college B. cleaning up the sidewalk on your block C. keeping a junked car parked on your front lawn D. repainting the house you live in to improve its appearance

C. keeping a junked car parked on your front lawn

The demand for all carbonated beverages as a whole is likely to be ________ the demand for Dr. Pepper. A. perfectly elastic compared to B. more elastic than C. less elastic than D. perfectly inelastic compared to

C. less elastic than

If the production possibilities frontier is ________, then opportunity costs are constant as more of one good is produced. A. bowed out B. non-linear C. linear D. bowed in

C. linear

Refer to Figure 12-10. The firm's short-run supply curve is its A. marginal cost curve from d and above. B. marginal cost curve from c and above. C. marginal cost curve from b and above. D. marginal cost curve.

C. marginal cost curve from b and above.

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

C. marginal cost is at its minimum.

A market demand curve reflects the A. sum of private and social benefits of consuming a product. B. external benefits of consuming a product. C. marginal private benefits of consuming a product. D. marginal social benefits of consuming a product.

C. marginal private benefits of consuming a product.

In economics, the term ________ refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade. A. collective B. trade-off C. market D. cooperative

C. market

In economics, all of the following is counted as "capital" except A. warehouses. B. factory buildings. C. money. D. machine tools.

C. money.

When a negative externality exists, the private market produces A. products at a low opportunity cost. B. products at a high opportunity cost. C. more than the economically efficient output level. D. less than the economically efficient output level.

C. more than the economically efficient output level.

Figure 13-8 shows cost and demand curves for a monopolistically competitive producer of iced tea.Refer to Figure 13-8. Based on the diagram, one can conclude that A. firms achieve productive efficiency. B. some existing firms will exit the market. C. new firms will enter the market. D. the industry is in long-run equilibrium.

C. new firms will enter the market.

Public goods are distinguished by two primary characteristics. What are they? A. rivalry and exclusivity B. market failure and high prices C. nonrivalry and nonexcludability D. government intervention and low prices

C. nonrivalry and nonexcludability

Figure 15-6 shows the cost and demand curves for a monopolist.Refer to Figure 15-6. The profit-maximizing output and price for the monopolist are A. output = 83; price = $22. B. output = 104; price = $20.80. C. output = 62; price = $24. D. output = 62; price = $18.

C. output = 62; price = $24.

Painters who paint water towers earn higher wages relative to painters who paint houses because A. the supply of water tower painters exceeds the supply of house painters. B. the demand for tower painters is greater than the demand for residential painters. C. painting water towers is more risky than painting houses. D. the tower painters' union is probably more powerful than the house painters' union.

C. painting water towers is more risky than painting houses.

Which of the following displays rivalry and excludability in consumption? A. common resources B. quasi-public goods C. private goods D. public goods

C. private goods

The relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs is the firm's A. average product of labor. B. supply curve, or supply schedule. C. production function. D. marginal product of labor.

C. production function.

Which of the following describes a situation in which a good or service is produced at the lowest possible cost? A. profit maximization B. marginal efficiency C. productive efficiency D. allocative efficiency

C. productive efficiency

A Nash equilibrium is A. an equilibrium comprising non-dominant strategies only. B. reached when each player chooses the best strategy for himself and for the group. C. reached when each player chooses the best strategy for himself, given the other strategies chosen by the other players in the group. D. reached when an oligopoly's market demand and supply intersect.

C. reached when each player chooses the best strategy for himself, given the other strategies chosen by the other players in the group.

Economists argue that the level of pollution should be A. reduced completely to zero because by definition, it has a negative external effect. B. best determined by elected officials who can speak on behalf of the public. C. reduced to the point where the marginal benefit of pollution reduction is equal to the marginal cost of pollution reduction to society. D. ignored because it has always been present since the beginning of history.

C. reduced to the point where the marginal benefit of pollution reduction is equal to the marginal cost of pollution reduction to society.

If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded, then the demand for golf balls is A. perfectly elastic. B. relatively inelastic. C. relatively elastic. D. unit elastic.

C. relatively elastic.

The law of diminishing marginal returns states A. that in the presence of a fixed factor, at some point average product of labor starts to fall as more and more variable inputs are added. B. average total costs of production initially fall and after some point starts to rise at a decreasing rate as output increases. C. that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline. D. that at some point, adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline.

C. that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline.

Absolute advantage is A. the ability to produce a good or service at a higher opportunity cost than one's competitors. B. the ability to produce higher quality goods compared to one's competitors. C. the ability to produce more of a good or service than competitors when using the same amount of resources. D. the ability to produce more of a good or service than competitors that have fewer resources.

C. the ability to produce more of a good or service than competitors when using the same amount of resources.

The marginal product of labor is defined as A. the cost of hiring one more worker. B. the additional sales revenue that results when one more worker is hired. C. the additional output that results when one more worker is hired, holding all other resources constant. D. the additional number of workers required to produce one more unit of output.

C. the additional output that results when one more worker is hired, holding all other resources constant.

The term "derived demand" refers to A. a demand curve that derives from the availability of resources. B. a firm's estimated demand curve derived from sales data. C. the demand for a factor of production that is derived from the demand for the good the factor produces. D. the demand for financial products called derivatives.

C. the demand for a factor of production that is derived from the demand for the good the factor produces.

Figure 5-1 shows a market with an externality. The current market equilibrium output of Q1 is not the economically efficient output. The economically efficient output is Q2.Refer to Figure 5-1. Suppose the current market equilibrium output of Q1 is not the economically efficient output because of an externality. The economically efficient output is Q2. In that case, the diagram shows A. the effect of an external benefit such as a subsidy granted to consumers of a good. B. the effect of a positive externality in the production of a good. C. the effect of a negative externality in the production of a good. D. the effect of an external cost imposed on a producer.

C. the effect of a negative externality in the production of a good.

The substitution effect of an increase in the price of Raisin Bran refers to A. the result that consumers will now switch to a substitute good such as Cheerios, and the demand curve for Raisin Bran shifts to the left. B. the decrease in the demand for Raisin Bran when its price rises. C. the fact that the higher price of Raisin Bran relative to its substitutes, such as Cheerios, causes consumers to buy less Raisin Bran. D. the fact that the higher price of Raisin Bran lowers consumer's purchasing power, holding money income constant.

C. the fact that the higher price of Raisin Bran relative to its substitutes, such as Cheerios, causes consumers to buy less Raisin Bran.

Consider the following economic agents: a.the government b.consumers c.producers Who, in a centrally planned economy, decides what goods and services will be produced with the scarce resources available in that economy? A. consumers and producers B. consumers C. the government D. producers

C. the government

Refer to Figure 4-4. The figure above represents the market for pecans. Assume that this is a competitive market. At a quantity of 4,000 pounds A. producers should raise the price to $9 in order to sell the quantity demanded of 4,000. B. the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high. C. the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low. D. the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently low.

C. the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low.

In perfect competition A. the market demand curve is perfectly inelastic while demand for an individual seller's product is perfectly elastic. B. the market demand curve and the individual's demand curve are identical. C. the market demand curve is downward sloping while demand for an individual seller's product is perfectly elastic. D. the market demand curve is perfectly elastic while demand for an individual seller's product is perfectly inelastic.

C. the market demand curve is downward sloping while demand for an individual seller's product is perfectly elastic.

Suppose there are several paper mills producing paper for a market. These mills, located upstream from a fishing village, discharge a large amount of wastewater into the river. The waste material affects the number of fish in the river and the use of the river for recreation and as a public water supply source. Figure 5-4 shows the paper market. Use this Figure to answer the following question(s).Refer to Figure 5-4. What does S2 represent? A. the market supply curve that reflect private cost B. the market supply curve that reflects social benefit C. the market supply curve that reflects social cost D. the market supply curve that reflects external cost

C. the market supply curve that reflects social cost

Technology is defined as A. the process of developing and revising models. B. the process of recycling products. C. the processes used to produce goods and services. D. new innovations and creations.

C. the processes used to produce goods and services.

The law of demand implies, holding everything else constant, that as the price of bagels increases A. the quantity of bagels demanded will increase. B. the demand for bagels will decrease. C. the quantity of bagels demanded will decrease. D. the demand for bagels will increase.

C. the quantity of bagels demanded will decrease.

When a competitive equilibrium is achieved in a market A. economic surplus equals the deadweight loss. B. all individuals are better off than they would be if a price ceiling or price floor was imposed by government. C. the total net benefit to society is maximized. D. the total benefits to consumers are equal to the total benefits to producers.

C. the total net benefit to society is maximized.

Refer to Figure 3-4. If the price is $10, A. there would be a shortage of 200 units. B. there would be a surplus of 600 units. C. there would be a shortage of 600 units. D. there would be a surplus of 200 units.

C. there would be a shortage of 600 units.

Refer to Figure 3-5. At a price of $15, A. there would be a surplus of 6 units. B. there would be a shortage of 4 units. C. there would be a surplus of 4 units. D. there would be a shortage of 2 units.

C. there would be a surplus of 4 units.

Consumers have to make tradeoffs in deciding what to consume because A. there are not enough of all goods produced. B. the prices of goods vary. C. they are limited by a budget constraint. D. not all goods give them the same amount of satisfaction.

C. they are limited by a budget constraint.

An oligopolist's demand curve is A. identical to that of a perfectly competitive firm. B. identical to that of a monopolistically competitive firm. C. unknown because a response of firms to price changes by rivals is uncertain. D. vertical on a price-quantity diagram.

C. unknown because a response of firms to price changes by rivals is uncertain.

If the demand for a product is perfectly inelastic, a decrease in the price of the product A. will increase total revenue. B. any of the above are possible. C. will decrease total revenue. D. will not change total revenue.

C. will decrease total revenue.

Figure 15-6 shows the cost and demand curves for a monopolist.Refer to Figure 15-6. The monopolist earns a profit of A. $170. B. $372. C.$248. D. $0.

C.$248.

Figure 15-6 shows the cost and demand curves for a monopolist.Refer to Figure 15-6. The monopolist's total revenue is A. $1,116. B. $1,826. C. $1,726.40 D. $1,488.

D. $1,488.

Figure 4-1 shows Arnold's demand curve for burritos. Refer to Figure 4-1. Arnold's marginal benefit from consuming the third burrito is A. $2.50. B. $6.00. C. $1.25. D. $1.50.

D. $1.50.

Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Under autarky, the producer surplus is A. $40. B. $195. C. $285. D. $105.

D. $105.

When a firm produces 50,000 units of output, its total cost equals $6.5 million. When it increases its production to 70,000 units of output, its total cost increases to $9.4 million. Within this range, the marginal cost of term-6an additional unit of output is A. $135. B. $41.43. C. $134.29. D. $145.

D. $145.

Figure 4-8 shows the market for beer. The government plans to impose a per-unit tax in this market.Refer to Figure 4-8. How much of the tax is paid by buyers? A. $2 B. $12 C. $7 D. $5

D. $5

DeShawn's Detailing is a service that details cars at the customers' homes or places of work. DeShawn's cost for a basic detailing package is $40, and he charges $75 for this service. For a total price of $90, DeShawn will also detail the car's engine, a service that adds an additional $20 to the total cost of the package. What is DeShawn's marginal benefit if he sells a basic detailing package? A. He makes a marginal loss of $15, not a marginal benefit. B. $35 C. The marginal benefit cannot be determined. D. $75

D. $75

Figure 11-7 shows the cost structure for a firm. Refer to Figure 11-7. If output is 100 units what is the fixed cost of production? A. This cannot be determined from the diagram. B. $1,200 C. $1,600 D. $800

D. $800

If 50 units are sold at a price of $20 and 80 units are sold at a price of $15, what is the absolute value of the price elasticity of demand? Use the midpoint formula. A. 0.17 B. 5 C. 0.62 D. 1.62

D. 1.62

Refer to Figure 3-4. At a price of $10, how many units will be sold? A. 400 B. 600 C. 800 D. 200

D. 200

Figure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. Refer to Figure 2-2. What is the opportunity cost of one pound of vegetables? A. 12 pounds of meat B. 1.2 pounds of meat C. 1 1/3 pounds of meat D. 3/4 pound of meat

D. 3/4 pound of meat

Table 10-2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods.Refer to Table 10-2. Suppose Keira's income increases from $18 to $23 but prices have not changed. What is her utility maximizing bundle now? A. 5 cups of soup and 5 sandwiches B. 6 cups of soup and 5 sandwiches C. 5 cups of soup and 4 sandwiches D. 4 cups of soup and 5 sandwiches

D. 4 cups of soup and 5 sandwiches

Figure 2-9 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews.Refer to Figure 2-9. What is the opportunity cost of producing 1 bolt of cotton in Pakistan? A. 1 3/5 pounds of cashews B. 3/8 of a pound of cashews C. 150 pounds of cashews D. 5/8 of a pound of cashews

D. 5/8 of a pound of cashews

Figure 16-2 shows the marginal revenue product for Becca's Baubles, a producer of hand-beaded bracelets.Refer to Figure 16-2. If the wage rate is $20, how many workers should Becca hire? A. 4 B. 5 C. 3 D. 6

D. 6

Refer to Figure 4-2. What area represents producer surplus at a price of P2? A. A + B + C + D + E B. A + B C. B + D D. A + B + C

D. A + B + C

Suppose the value of the price elasticity of supply is 4. What does this mean? A. For every $1 increase in price, quantity supplied increases by 4 units. B. A 4 percent increase in the price of the good causes quantity supplied to increase by 1 percent. C. A 1 percent increase in the price of the good causes the supply curve to shift upward by 4 percent. D. A 1 percent increase in the price of the good causes quantity supplied to increase by 4 percent.

D. A 1 percent increase in the price of the good causes quantity supplied to increase by 4 percent.

Refer to Figure 3-2. A decrease in the price of the product would be represented by a movement from A. S2 to S1. B. S1 to S2. C. A to B. D. B to A.

D. B to A.

Linesha, a college student working part-time received a wage increase. An avid movie buff, she increased her purchases of Blu-ray discs and reduced her purchases of DVDs. Based on this information A. DVDs and Blu-ray discs are normal goods. B. DVDs and Blu-ray discs are substitutes. C. the cross-price elasticity between DVDs and Blu-ray discs is negative. D. Blu-ray discs are normal goods and DVDs are inferior goods.

D. Blu-ray discs are normal goods and DVDs are inferior goods.

Figure 4-6 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf.Refer to Figure 4-6. What area represents the deadweight loss after the imposition of the price floor? A. F + G B. C + D + G C. C + D + F + G D. C + D

D. C + D

Refer to Figure 2-12. One segment of the circular flow diagram in the figure shows the flow of goods and services from market C to economic agents A. What is market C and who are economic agents A? A. C = factor markets; A = households B. C= product markets; A = firms C. C = factor markets; A = firms D. C = product markets; A = households

D. C = product markets; A = households

The largest exporter in the world is A. Japan. B. Germany. C. the United States. D. China.

D. China.

________ is the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors. A. Absolute advantage B. Autarky C. Specialization D. Comparative advantage

D. Comparative advantage

Refer to Figure 6-6. As price falls from PA to PB, the quantity demanded increases the most along D1; therefore A. D1 is more inelastic than D2 or D3. B. D1 is elastic at PA but inelastic at PB. C. D1 is unit elastic. D. D1 is more elastic than D2 or D3.

D. D1 is more elastic than D2 or D3.

Denmark and Belize can produce both clocks and hats. Each country has a total of 200 available labor hours for the production of clocks and hats. Table 9-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade. Refer to Table 9-6. Which country has an absolute advantage in producing clocks? A. both countries B. Belize C. neither country D. Denmark

D. Denmark

Denmark and Belize can produce both clocks and hats. Each country has a total of 200 available labor hours for the production of clocks and hats. Table 9-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. Which country has a comparative advantage in producing clocks? A. Belize B. neither country C. both countries D. Denmark

D. Denmark

Refer to Figure 15-10. The deadweight loss due to a monopoly is represented by the area A. GEH. B. FGE. C. FQ1Q2E. D. FHE.

D. FHE.

Table 2-7 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces.Refer to Table 2-7. Which of the following statements is true? A. Haley has a comparative advantage in making necklaces and Serena in making bracelets. B. Haley has a comparative advantage in making both products. C. Serena has a comparative advantage in making both products. D. Haley has a comparative advantage in making bracelets and Serena in making necklaces.

D. Haley has a comparative advantage in making bracelets and Serena in making necklaces.

Table 2-7 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. Refer to Table 2-7. Which of the following statements is true? A. Serena has an absolute advantage in making both products. B. Haley has an absolute advantage in making both products. C. Haley has an absolute advantage in making necklaces and Serena in making bracelets. D. Haley has an absolute advantage in making bracelets and Serena in making necklaces.

D. Haley has an absolute advantage in making bracelets and Serena in making necklaces.

________ marginal opportunity cost implies that the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts. A. Negative B. Constant C. Decreasing D. Increasing

D. Increasing

Figure 2-9 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews.Refer to Figure 2-9. If the two countries have the same amount of resources and the same technological knowledge, which country has an absolute advantage in the production of cotton? A. They have the same advantage. B. Pakistan C. cannot be determined D. Indonesia

D. Indonesia

Suppose a cell phone manufacturer currently sells 20,000 cell phones per week and makes a profit of $5,000 per week. A manager at the plant observes, "Although the last 3,000 cell phones we produced and sold increased our revenue by $6,000 and our costs by $6,700, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of cell phones."Refer to Scenario 1-1. Had the firm not produced and sold the last 3,000 cell phones, would its profit be higher or lower, and by how much? A. Its profit will be $700 lower. B. Its profit will be $6,700 higher. C. Its profit will be $6,000 lower. D. Its profit will be $700 higher.

D. Its profit will be $700 higher.

If Ewan is consuming his utility maximizing bundle and the price of one good falls, what happens to the marginal utility per dollar spent on this good (MU/P), and what should Ewan do? A. MU/P has decreased and Ewan should buy more of this good. B. MU/P has increased and Ewan should buy less of this good. C. MU/P has decreased and Ewan should buy less of this good. D. MU/P has increased and Ewan should buy more of this good.

D. MU/P has increased and Ewan should buy more of this good.

Refer to Figure 13-6. Suppose Dell finds the relationship between the average total cost of producing notebook computers and the quantity of notebook computers produced is as shown by Figure 13-2. Dell will maximize profits if it produces ________ notebook computers per month. A. 100,000 B. 200,000 C. 300,000 D. Not enough information is given to determine the profit-maximizing quantity.

D. Not enough information is given to determine the profit-maximizing quantity.

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for Fruitopia, a soft drink. Which panel describes what happens in the market for Fruitopia when the price of Snapple, a substitute product, decreases? A. Panel (b) B. Panel (a) C. Panel (c) D. Panel (d)

D. Panel (d)

Refer to Figure 6-10. A perfectly inelastic supply curve is shown in A. Panel B. B. Panel D. C. Panel C. D. Panel A.

D. Panel A.

_______ is a situation in which a good or service is produced at the lowest possible cost. A. Allocative efficiency B. Optimal marginalism C. Equity D. Productive efficiency

D. Productive efficiency

Refer to Figure 5-3. The market equilibrium output level is A. Qo - Qm. B. Qn. C. Qo. D. Qm.

D. Qm.

Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week.Refer to Table 9-1. Select the statement that accurately interprets the data in the table. A. Sandy has a comparative advantage in dog bathing. B. Linda has a comparative advantage in dog grooming. C. Linda has a comparative advantage in dog grooming and dog bathing. D. Sandy has a comparative advantage in dog grooming.

D. Sandy has a comparative advantage in dog grooming.

In June, buyers of titanium expect that the price of titanium will fall in July. What happens in the titanium market in June, holding everything else constant? A. The quantity demanded increases. B. The quantity demanded decreases. C. The demand curve shifts to the right. D. The demand curve shifts to the left.

D. The demand curve shifts to the left.

Which of the following statements about the economically efficient level of air pollution is correct? A. The economically efficient level of pollution occurs where all social costs equal all social benefits. B. The economically efficient level of pollution occurs where total benefits of pollution reduction are maximized. C. The economically efficient level of pollution is zero. D. The economically efficient level of pollution occurs where the marginal cost of pollution reduction equals the marginal social benefit of reduction.

D. The economically efficient level of pollution occurs where the marginal cost of pollution reduction equals the marginal social benefit of reduction.

What happens to the equilibrium wage and quantity of labor if output price rises? A. The equilibrium wage rises and the equilibrium quantity of labor falls. B. The equilibrium wage and the equilibrium quantity of labor fall. C. The equilibrium wage falls and the equilibrium quantity of labor rises. D. The equilibrium wage and the equilibrium quantity of labor rise.

D. The equilibrium wage and the equilibrium quantity of labor rise.

Which of the following describes a difference between the marginal revenue and demand curves of a perfectly competitive firm and a monopolistically competitive firm? A. The perfectly competitive firm's marginal revenue and demand curves are the same; the marginal revenue curve of a monopolistically competitive firm lies above its demand curve. B. The monopolistically competitive firm's marginal revenue and demand curves are the same; the marginal revenue curve of a perfectly competitive firm lies below its demand curve. C. The marginal revenue curve of a monopolistically competitive firm lies below its demand curve; the marginal revenue curve of a perfectly competitive firm lies above its demand curve. D. The perfectly competitive firm's marginal revenue and demand curves are the same; the marginal revenue curve of a monopolistically competitive firm lies below its demand curve.

D. The perfectly competitive firm's marginal revenue and demand curves are the same; the marginal revenue curve of a monopolistically competitive firm lies below its demand curve.

Table 4-5 shows the demand and supply schedules for the labor market in the city of Pixley.Refer to Table 4-5. What is the equilibrium hourly wage (W*) and the equilibrium quantity of labor (Q*)? A. W* = $10.50; Q* = 1,180,000 B. W* = $11.50; Q* = 570,000 C. W* = $9.50; Q* = 570,000 D. W* = $10.50; Q* = 590,000

D. W* = $10.50; Q* = 590,000

Which of the following is likely to occur as the result of the law of diminishing marginal utility? A. Sabine's utility from her first granola bar is greater than Rachel's utility from her second granola bar. B. Hudson enjoyed his second slice of pizza more than his first. C. Petra's utility from her second apple was less than her satisfaction from her first orange. D. Wesley enjoyed his second bottle of iced tea less than his first bottle, other things constant.

D. Wesley enjoyed his second bottle of iced tea less than his first bottle, other things constant.

Alpha and Beta are the only firms selling gyros in the upscale town of Delphi. Each firm must decide on whether to offer a discount to students to compete for customers. If one firm offers a discount but the other does not, then the firm that offers the discount will increase its profit. Table 14-4 shows the payoff matrix for this game.Refer to Table 14-4. Does Beta have a dominant strategy and if so, what is it? A. No, there is no dominant strategy. B. Yes, Beta should not offer a student discount. C. There are two dominant strategies: if Alpha offers a student discount then Beta's best bet is to not offer a student discount, but if Alpha does not offer a student discount then Beta should offer a student discount. D. Yes, Beta should offer a student discount.

D. Yes, Beta should offer a student discount.

An externality is A. anything that is external or not relevant to the production of a good or service. B. a benefit realized by the purchaser of a good or service. C. a cost paid for by the producer of a good or service. D. a benefit or cost experienced by someone who is not a producer or consumer of a good or service.

D. a benefit or cost experienced by someone who is not a producer or consumer of a good or service.

An increase in the wage rate causes A. an increase in labor's marginal productivity. B. a leftward shift of the firm's labor demand curve. C. a rightward shift of the firm's labor demand curve. D. a decrease in the quantity of labor demanded.

D. a decrease in the quantity of labor demanded.

Rent control is an example of A. an illicit market. B. a subsidy for low-skilled workers. C. a price floor. D. a price ceiling.

D. a price ceiling.

If, in response to a decrease in the price of grapes, the quantity of grapes demanded increases, then economists would describe this as A. an increase in consumers' taste for grapes. B. an increase in demand. C. a change in consumer income. D. an increase in quantity demanded.

D. an increase in quantity demanded.

Arlene quits her $125,000-a-year job to take care of her ailing parents. What is the opportunity cost of her decision? A. zero, since she will no longer be earning a salary B. the value she attributes to the satisfaction she receives from taking care of her parents C. It depends on the "going rate" for home-care providers. D. at least $125,000

D. at least $125,000

Which of the following explains why talented major league baseball players command much higher salaries than neurosurgeons? A. because the supply of talented major league baseball players is relatively low compared to the supply of neurosurgeons. Therefore, major league baseball players exert far more market power than neurosurgeons. B. because the total value of baseball games is much higher than the total value of neurosurgery C. because it takes far more skill and training to be a major league baseball player than to be a neurosurgeon D. because the supply of talented major league baseball players is low relative to its demand compared to the supply of neurosurgeons. Therefore, adding another player yields far greater marginal benefit than adding another neurosurgeon

D. because the supply of talented major league baseball players is low relative to its demand compared to the supply of neurosurgeons. Therefore, adding another player yields far greater marginal benefit than adding another neurosurgeon

We can derive the market demand curve for gold earrings A. by adding vertically the quantity demanded of each gold earring consumed at each price. B. by adding the prices each gold earring consumer is willing to pay for each quantity. C. only if the tastes of all gold earring consumers are similar. D. by adding horizontally the individual demand curves of each gold earring consumer.

D. by adding horizontally the individual demand curves of each gold earring consumer.

Both monopolistically competitive firms and perfectly competitive firms maximize profits A. by producing where marginal revenue equals average revenue. B. by producing where price equals average variable cost. C. by producing where price equals average total cost. D. by producing where marginal revenue equals marginal cost.

D. by producing where marginal revenue equals marginal cost.

Income elasticity measures how a good's quantity demanded responds to A. producers' incomes. B. change in the goods price. C. change in the price of another good. D. change in buyers' incomes.

D. change in buyers' incomes.

The concept of ________ explains how trade between two countries can make each better off. A. autarky B. trade barriers C. absolute advantage D. comparative advantage

D. comparative advantage

If total utility increases at a decreasing rate as a consumer consumes more coffee, then marginal utility must A. be negative. B. remains constant. C. increase also. D. decrease.

D. decrease.

Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices. A. supply B. marginal cost C. production possibilities D. demand

D. demand

Marginal revenue for an oligopolist is A. horizontal on a price-quantity diagram. B. identical to the demand for the firm's product. C. downward sloping beneath the firm's demand curve. D. difficult to determine because the firm's demand curve is typically unknown.

D. difficult to determine because the firm's demand curve is typically unknown.

Parents who do not have their children immunized and attempt to benefit from other parents who did have their own children immunized are exhibiting an economic behavior known as A. internalizing an external cost. B. excludability. C. public rivalry. D. free riding.

D. free riding.

The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called A. the prisoner's dilemma. B. dominant strategy equilibrium. C. Nash equilibrium. D. game theory.

D. game theory.

Patents, tariffs, and quotas are all examples of A. economic regulations that increase efficiency. B. entry barriers that protect consumers. C. entry barriers that improve a country's standard of living. D. government-imposed barriers.

D. government-imposed barriers.

A tariff is a tax imposed by a government on A. services. B. exports. C. luxury items. D. imports.

D. imports.

Goods and services bought domestically but produced in other countries are referred to as A. transfer payments. B. exports. C. foreign consumption. D. imports.

D. imports.

Refer to Figure 2-1. Point A is A. unattainable with current resources. B. technically efficient. C. the equilibrium output combination. D. inefficient in that not all resources are being used.

D. inefficient in that not all resources are being used.

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. profit of $30,000 C. There is insufficient information to answer the question. D. loss of $6,000

D. loss of $6,000

In economics, the term ________ means "additional" or "extra." A. allocative B. equity C. optimal D. marginal

D. marginal

Suppose a cell phone manufacturer currently sells 20,000 cell phones per week and makes a profit of $5,000 per week. A manager at the plant observes, "Although the last 3,000 cell phones we produced and sold increased our revenue by $6,000 and our costs by $6,700, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of cell phones."Refer to Scenario 1-1. Using marginal analysis terminology, what is another economic term for the incremental revenue received from the sale of the last 3,000 cell phones? A. gross earnings B. gross profit C. sales revenue D. marginal revenue

D. marginal revenue

The demand by all the consumers of a given good or service is the ________ for the good or service. A. law of demand B. quantity demanded C. scheduled demand D. market demand

D. market demand

Refer to Figure 5-3. The deadweight loss due to the externality is represented by the area A. nso. B. mso. C. mtn. D. msn.

D. msn.

Pollution is an example of a A. public good. B. positive externality. C. private cost. D. negative externality

D. negative externality

A monopolistically competitive firm faces a downward-sloping demand curve because A. there are few substitutes for its product. B. its market decisions are affected by the decisions of its rivals. C. it is able to control price and quantity demanded. D. of product differentiation.

D. of product differentiation.

Private producers have no incentive to provide public goods because A. production of huge quantities of public goods entails huge fixed costs. B. they cannot avoid the tragedy of the commons. C. the government subsidy granted is usually insufficient to enable private producers to make a profit. D. once produced, it will not be possible to exclude those who do not pay for the good.

D. once produced, it will not be possible to exclude those who do not pay for the good.

In economics, the term "free rider" refers to A. one who volunteers her services. B. a supervisor who delegates menial time-consuming activities to others. C. a person who evades taxes. D. one who waits for others to produce a good and then enjoys its benefits without paying for it.

D. one who waits for others to produce a good and then enjoys its benefits without paying for it.

Households ________ final goods and services in the ________ market. A. sell; product B. purchase; factor C. sell; factor D. purchase; product

D. purchase; product

When production generates a negative externality, the true cost of production is the A. public cost of production. B. average cost of production. C. private cost of production. D. social cost of production.

D. social cost of production.

If the cross-price elasticity of demand for two goods is positive, this implies that the two goods are A. complements. B. inferior. C. normal. D. substitutes.

D. substitutes.

The actual division of the burden of a tax between buyers and sellers in a market is called A. tax liability. B. tax bearer. C. tax parity. D. tax incidence.

D. tax incidence.

Refer to Figure 11-1. Diminishing marginal productivity sets in after A. the 3rd worker is hired. B. the 4th worker is hired. C. the 5th worker is hired. D. the 2nd worker is hired.

D. the 2nd worker is hired.

The term "property rights" refers to A. the physical possession of a house or any other property which the owner legally purchased. B. the government's right to appropriate land from wealthy land owners to redistribute to peasants. C. the right of a business not to have its assets confiscated by the government in the event that the business is accused of committing fraud. D. the ability to exercise control over one's own resources within the confines of the law.

D. the ability to exercise control over one's own resources within the confines of the law.

The concept of opportunity cost is that A. taking advantage of investment opportunities involves costs. B. the cost of production varies depending on the opportunity for technological application. C. in a market economy, taking advantage of profitable opportunities involves some money cost. D. the economic cost of using a factor of production is the alternative use of that factor that is given up.

D. the economic cost of using a factor of production is the alternative use of that factor that is given up.

Refer to Figure 10-1. When the price of hoagies increases from $5.00 to $5.75, quantity demanded decreases from Q1 to Q0. This change in quantity demanded is due to A. the price and output effects. B. the fact that marginal willingness to pay falls. C. the law of diminishing marginal utility. D. the income and substitution effects.

D. the income and substitution effects

efer to Figure 4-4. The figure above represents the market for pecans. Assume that this is a competitive market. At a quantity of 12,000 pounds A. producers should lower the price to $3 in order to sell the quantity demanded of 12,000. B. the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high. C. the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently low. D. the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently high.

D. the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently high.

A negative externality exists if A. there are price controls in a market. B. the marginal private cost of producing a good or service exceeds the social cost. C. there are quantity controls in a market. D. the marginal social cost of producing a good or service exceeds the private cost.

D. the marginal social cost of producing a good or service exceeds the private cost.

Figure 5-1 shows a market with an externality. The current market equilibrium output of Q1 is not the economically efficient output. The economically efficient output is Q2.Refer to Figure 5-1. If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does S1 represent? A. the market supply curve reflecting external cost B. the market supply curve reflecting implicit cost C. the market supply curve reflecting marginal social cost D. the market supply curve reflecting marginal private cost

D. the market supply curve reflecting marginal private cost

Because a monopoly's demand curve is the same as the market demand curve for its product A. the monopoly's marginal revenue equals its price. B. the monopoly's average total cost always falls as it increases its output. C. the monopoly is a price taker. D. the monopoly must lower its price to sell more of its product.

D. the monopoly must lower its price to sell more of its product.

In order to derive an individual's demand curve for salmon, we would observe what happens to the utility-maximizing bundle when we change A. income and hold everything else constant. B. tastes and preferences and hold everything else constant. C. the price of a close substitute and hold everything else constant. D. the price of the product and hold everything else constant.

D. the price of the product and hold everything else constant.

If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25, then A. Not enough information is given to say what the firm should do to maximize profit. B. to maximize profit the firm should decrease output. C. to maximize profit the firm should continue to produce the output it is producing. D. to maximize profit the firm should increase output.

D. to maximize profit the firm should increase output.

What is the profit-maximizing rule for a monopolistically competitive firm? A. to produce a quantity that maximizes total revenue B. to produce a quantity such that price equals marginal cost C. to produce a quantity that maximizes market share D. to produce a quantity such that marginal revenue equals marginal cost

D. to produce a quantity such that marginal revenue equals marginal cost

Refer to Figure 2-1. Point C is A. inefficient in that not all resources are being used. B. technically efficient. C. is the equilibrium output combination. D. unattainable with current resources.

D. unattainable with current resources.

Marginal analysis involves undertaking an activity A. only if its marginal costs are greater than its marginal benefits. B. only when its marginal benefits are positive. C. until its marginal costs start declining. D. until its marginal benefits equal marginal costs.

D. until its marginal benefits equal marginal costs.

A product is considered to be rival if A. it is jointly owned by all members of a community. B. you can keep those who did not pay for the item from enjoying its benefits. C. you cannot keep those who did not pay for the item from enjoying its benefits. D. your consumption of the product reduces the quantity available for others to consume.

D. your consumption of the product reduces the quantity available for others to consume.

If demand is perfectly inelastic, the absolute value of the price elasticity of demand is A. more than one. B. less than one. C. equal to the absolute value of the slope of the demand curve. D. zero.

D. zero.

After selling 1,000 three-ring binders Tony DiFulvio realizes that the marginal revenue from selling the last binder was less than the marginal cost. From this we can conclude that a. Tony's profit fell after selling his 1,000th three-ring binder. B. Tony's business earns a short-run economic profit. C. Tony should shut down his business temporarily. D. Tony's profit would be greater if he sold an additional three-ring binder.

a. Tony's profit fell after selling his 1,000th three-ring binder.

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