final econ
A competitive market is a market in which A. an auctioneer helps set prices and arrange sales. B.There are only a few sellers. C. the forces of supply and demand do not apply . D. no individual buyer or seller has any significant impact on the market price.
D. no individual buyer or seller has any significant impact on the market price
Which of the graphs in the figure reflects a decrease in the price of good Y only? A. graph a B. graph b C. graph c D. Graph D
Graph d
When the absence of property rights causes a market failure, the government can potentially solve the problem a.All of the above are correct. b.through regulation. c.by supplying the good itself. d.by clearly defining property rights.
a.All of the above are correct.
If a firm uses labor to produce output, the firm's production function depicts the relationship between a.the number of workers and the quantity of output. b.the maximum quantity that the firm can produce as it adds more capital to a fixed quantity of labor. c.fixed inputs and variable inputs in the short run. d.marginal product and marginal cost.
a.the number of workers and the quantity of output.
A seller in a competitive market a.will lose all his customers to other sellers if he raises his price. b.All of the above are correct. c.can sell all he wants at the going price, so he has little reason to charge less. d.considers the market price to be a "take it or leave it" price.
b.All of the above are correct.
Consider a good to which a per-unit tax applies. The size of the deadweight that results from the tax is smaller, the a.less elastic is the demand for the good. b.All of the above are correct. c.less elastic is the supply of the good. d.smaller is the amount of the tax.
b.All of the above are correct.
The majority of economists prefer corrective taxes to regulation as a way to correct the problem of pollution because a.the market-based solution is less costly to society. b.All of the above are correct. c.the market-based solution can result in a greater reduction in pollution. d.the market-based solution raises revenue for the government.
b.All of the above are correct.
Governments can improve market outcomes for a.public goods but not common resources. b.both public goods and common resources. c.common resources but not public goods. d.neither public goods nor common resources.
b.both public goods and common resources.
Jenny grows pumpkins. If Jenny plants no seeds on her farm, she gets no harvest. If she plants 1 bag of seeds, she gets 500 pumpkins. If she plants 2 bags, she gets 800 pumpkins. If she plants 3 bags, she gets 900 pumpkins. A bag of seeds costs $100, and seeds are her only cost. Jenny's production function exhibits a.increasing marginal product. b.decreasing marginal product. c.Any of the above could be correct. d.constant marginal product.
b.decreasing marginal product.
Joe is a shrimp fisherman who could earn $5,000 as a fishing tour guide. Instead, he is a full-time shrimp fisherman. In calculating the economic profit of his shrimp business, the $5,000 that Joe gave up is counted as part of the shrimp business's a.marginal costs. b.implicit costs. c.explicit costs. d.total revenue.
b.implicit costs.
Suppose that a market is allowed to adjust freely to its equilibrium price and quantity, then an increase in demand will a.reduce producer surplus. b.increase producer surplus. c.Any of the above are possible. d.not affect producer surplus.
b.increase producer surplus.
A negative externality a.causes the product in a market to be under-produced. b.is an adverse impact on a bystander. c.is an adverse impact on market participants. d.is present in markets where the good or service does not have any impact on bystanders.
b.is an adverse impact on a bystander.
Which of the following industries is least likely to exhibit the characteristic of free entry? a.ethnic restaurants b.municipal water and sewer c.grocery stores d.corn farming
b.municipal water and sewer
Land of Many Lakes (LML) sells butter to a broker in Albert Lea, Minnesota. Because the market for butter is generally considered to be competitive, LML does not choose the a.All of the above are correct. b.price at which it sells its butter. c.quantity of butter to produce. d.profits it earns.
b.price at which it sells its butter.
Suppose a tax is imposed that the buyers of a good must pay to the government. This will raise the a.effective price received by sellers and lower the equilibrium quantity. b.price paid by buyers and raise the equilibrium quantity. c.price paid by buyers and lower the equilibrium quantity. d.effective price received by sellers and raise the equilibrium quantity.
b.price paid by buyers and raise the equilibrium quantity.
The two types of taxes that are most important to state and local governments as sources of revenue are a.social insurance taxes and property taxes. b.sales taxes and property taxes. c.individual income taxes and corporate income taxes. d.sales taxes and individual income taxes.
b.sales taxes and property taxes.
Suppose Phil and Miss Kay are the only consumers in the marketIf the price is $10, then the market quantity demanded is a. units. b. 2 units C. 4 units. d. 6 units
c. 4 units
If textbooks and study guides are complements, then an increase in the price of textbooks will result in a. more textbooks being sold b more study guides being sold c.fewer study guides being sold. d. no difference in the quantity sold of either good .
c. fewer study guides being sold
Which of the four panels represents the market for cars as a result of the adoption of new technology on assembly lines? a. panel a b. panel b c. panel c d. panel d
c. panel c
A family on a trip budgets $1,000 for meals and gasoline. If the price of a meal for the family is $50 and if gasoline costs $3.50 per gallon, then how many meals can the family buy if they buy 100 gallons of gasoline? A. 13 B.16 C. 19 D. 21
A. 13
Refer to Figure 4-24. All else equal, a sale on chicken would cause a move from A. DA to DB b. Db to DA c. x to y d. y to x
A. DA to DB
An increase in the price of blueberries would lead to a(n ) a. increased supply of blueberries b. a movement up and to the right along the supply curve for blueberries. C. a movement down and to the left along the supply curve for blueberries. d. Both a and b are correct .
B. a movement up and to the right along the supply curve for blueberries
If the cross -price elasticity of two goods is negative, then the two goods are A. necessities B. complements C. normal goods D. inferior goods
B. complements
Most studies indicate that alcohol and marijuana tend to be a.substitutes. b. complements C. unrelated because one good is legal while the other one is illegal d. inferior goods .
B. complements
Which of the following is the best example of a perfectly competitive market? a. tap water b. wheat c. coffee shops d . hair salons
B. wheat
A progressive tax is illustrated by tax a.A. b.B. c.C. d.D.
C.
using the midpoint method, between prices of $50 and $60, price elasticity of demand is about A.0.22 B. 0.82 C. 1.22 D. 2
C. 1.22
If the price elasticity of demand for a good is 0.5, then a 5 percent increase in price results in a a.0.1 percent decrease in the quantity demanded b. 1 percent decrease in the quantity demanded C. 2.5 percent decrease in the quantity demanded. d. 10 percent decrease in the quantity demanded.
C. 2.5 percent decrease in the quantity demanded.
Which of the following are most likely to be complementary goods for most people? a. butter and margarine b. lawnmowers and automobiles C. cereal and milk d. cola and lemonade .
C. cereal and milk
The local bakery makes such great cinnamon rolls that consumers do not respond much at all to a change in the price. If the owner is only interested in increasing revenue, she should a lower the price of the cinnamon rolls. b. leave the price of the cinnamon rolls unchanged. C. raise the price of the cinnamon rolls. d. reduce costs .
C. raise the price of the cinnamon rolls.
Sally's Super Salon earned $3,750 in total revenue last month when it sold 125 haircuts. This month it earned 3,600 in total revenue when it sold 90 haircuts. The price elasticity of demand for Sally's Super Salon is a 0.33. b 0.88 . C.1.14. d 7.98
C.1.14
Which of the following events must result in a lower price in the market for Snickers a . Demand for Snickers increases, and supply of Snickers decreases. b . Demand for Snickers and supply of Snickers both decrease. C.Demand for Snickers decreases, and supply of Snickers increases. d . Demand for Snickers and supply of Snickers both increase
C.Demand for Snickers decreases, and supply of Snickers increases.
What would happen to the equilibrium quantity and price of coffee if the wages of coffee-bean harvesters fell and the price of tea fell? a. Price would fall, and the effect on quantity would be ambiguous. b. Price would rise, and the effect on quantity would be ambiguous. C. Quantity would fall, and the effect on price would be ambiguous . d . Quantity would rise, and the effect on price would be ambiguous.
a. Price would fall, and the effect on quantity would be ambiguous.
For Ms. Vickie's potato chips, a 5 percent increase in price causes a 15 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good? a. There are many substitutes for this good. b. The good is a necessity C. The market for the good is broadly defined . d. The relevant time horizon is short.
a. There are many substitutes for this good.
Consider the market for window air conditioners in equilibrium . A summer of unseasonably cool weather would cause a. both the equilibrium price and quantity to decrease b. both the equilibrium price and quantity to increase C. the equilibrium price to increase and the equilibrium quantity to decrease . d. the equilibrium price to decrease and the equilibrium quantity to increase .
a. both the equilibrium price and quantity to decrease
A university's football stadium is never more than half -full during football games. This indicates a. the ticket price is above the equilibrium price. b. the ticket price is below the equilibrium price C. the ticket price is at equilibrium price d. nothing about the equilibrium price .
a. the ticket price is above the equilibrium price.
For which of the following goods is the income elasticity of demand likely lowest? a. water b . sapphire pendant necklaces C. filet mignon steaks ad. fresh fruit
a. water
Carly sharpens knives in her spare time for extra income. Buyers of her service are willing to pay $2.95 per knife for as many knives as Carly is willing to sharpen. On a particular day, she is willing to sharpen the first knife for $2.00, the second knife for $2.25, the third knife for $2.75, and the fourth knife for $3.50. Assume Carly is rational in deciding how many knives to sharpen. Her producer surplus is a.$1.85. b.$1.15. c.$0.95. d.$1.30.
a.$1.85.
Consider the market shown in the graph above. If the equilibrium price rises from $60 to $120, what is the additional producer surplus to initial producers in the market? a.$4,800 b.$3,600 c.$2,400 d.$1,200
a.$4,800
Paul purchases a hamburger, and his consumer surplus is $3. If Paul is willing to pay $8 for the hamburger, then the price of the hamburger must be a.$5. b.$11. c.$3. d.$8.
a.$5.
Anya has decided to start her own hair-styling salon. To purchase the necessary equipment, Anya withdrew $10,000 from her savings account, which was earning 3% interest, and borrowed an additional $5,000 from the bank at an interest rate of 8%. What is Anya's annual opportunity cost of the financial capital that has been invested in the business? a.$700 b.$300 c.$400 d.$1,650
a.$700
Refer to Figure above. What area measures the monopolist's profit? a.(K-B)*W b.(L-A)*T c.(K-C)*W d.0.5[(K-C)*(Z-T)]
a.(K-B)*W
Granting a pharmaceutical company a patent for a new medicine will lead to (i) a product that is priced higher than it would be without the exclusive rights. (ii) incentives for pharmaceutical companies to invest in research and development. (iii) higher quantities of output than without the patent. a.(i) and (ii) only b.(i), (ii), and (iii) c.(ii) and (iii) only d.(i) and (iii) only
a.(i) and (ii) only
If the market price is $8, how many units of output should the firm produce to maximize profit? a.6 units b.7 units c.8 units d.5 units
a.6 units
Refer to Table above. What is the marginal product of the third worker? a.60 units b.80 units c.40 units d.20 units Feedback
a.60 units
Which of the following statements is not correct? a.Government policies cannot improve upon private market outcomes. b.A patent is a way for the government to encourage the production of a good with technology spillovers. c.A tax is a way for the government to reduce the production of a good with a negative externality. d.A tax that accurately reflects social costs produces the socially optimal outcome.
a.Government policies cannot improve upon private market outcomes.
A regional lobster management board recently proposed a five-year moratorium on lobster fishing in the Atlantic waters south of Cape Cod based on a study of the lobster population. Which of the following statements is not correct? a.If left unregulated, the lobster population will likely increase. b.Lobsters are rival but not excludable. c.The lobster population is an example of the tragedy of the commons. d.Reducing the quota on the number of lobsters any fisher can catch would have a protective effect on the lobster population.
a.If left unregulated, the lobster population will likely increase.
A fundamental source of monopoly market power arises from a.barriers to entry. b.availability of "free" natural resources, such as water or air. c.perfectly inelastic demand. d.perfectly elastic demand. Feedback
a.barriers to entry.
What is the average tax rate for a person who makes $60,000? a.40% b.30% c.20% d.50%
b.30%
Consider a competitive market with a large number of identical firms. The firms in this market do not use any resources that are available only in limited quantities. In this market, an increase in demand will a.increase price in the short run but not in the long run. b.not affect price in either the short or the long run. c.increase price both in the short and the long run. d.increase price in the long run but not in the short run.
a.increase price in the short run but not in the long run.
Gretchen is a writer who works from her home. Gretchen lives next door to Randall, the trumpet player for a local band. Randall needs lots of practice to earn his share of the band's profit, which will amount to $350. Gretchen gets distracted by Randall's trumpet playing but she needs to get her writing done to earn $570 for her current article. If Randall owns the right to play his music and Gretchen needs to hire a lawyer to help her reach an agreement with Randall, then what price is Gretchen willing to pay the lawyer? a.less than $220 b.less than $920 c.less than $350 d.less than $570
a.less than $220
A tornado siren is a a.public good. b.club good. c.common resource. d.private good. Feedback
a.public good.
Which of the following would cause the demand curve to shift from Demand B to Demand C in the market for mattresses ? a. a decrease in the price of mattresses b a decrease in the price of custom wooden sleigh bed frames C.a change in consumer tastes away from wooden bedroom furniture d. a decrease in the number of people in the United States
b. a decrease in the price of. custom wooden sleigh bed frames
Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply B to Supply A in the market for beer? a decrease in the price of beer b. an expectation by firms that the price of beer will increase in the very near future c. a decrease in the price of hops d. an improvement in technology that allows firms to use less labor in the production of beer
b. an expectation by firms that the price of beer will increase in the very near future
Suppose you make jewelry. If the price of gold falls, then we would expect you to a. be willing and able to produce less jewelry than before at each possible price b. be willing and able to produce more jewelry than before at each possible price. C. face a greater demand for your jewelry d . face a weaker demand for your jewelry .
b. be willing and able to produce more jewelry than before at each possible price.
A good will have a more inelastic demand a. greater the availability of close substitutes b. broader the definition of the market. C. longer the period of time. d. more it is regarded as a luxury.
b. broader the definition of the market.
If the price is $25, then there would be an excess A.a. supply of 100 units, and price would fall. b. supply of 300 units , and price would fall. C. demand of 100 units , and price would fall. d. demand of 300 units , and price would fall .
b. supply of 300 units , and price would fall.
If the price were $8, a a. shortage of 20 units would exist, and price would tend to rise. b. surplus of 25 units would exist, and price would tend to fall C.shortage of 25 units would exist, and price would tend to rise. d. surplus of 45 units would exist, and price would tend to fall .
b. surplus of 25 units would exist, and price would tend to fall
Generally, a firm is more willing and able to increase quantity supplied in response to a price change when a . the relevant time period is short rather than long. b. the relevant time period is long rather than short. C.supply is inelastic. d. the firm is experiencing capacity problems .
b. the relevant time period is long rather than short.
Alanna is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Alanna helps people organize their houses. Due to the popularity of her home-organization services, Farmer Alanna has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Alanna charges $25 an hour for her home-organization services. One spring day, Alanna spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce. Alanna's economic profit from farming equals a.$130. b.$-80. c.$-130. d.$170.
b.$-80.
What is the amount of deadweight loss caused by the tax shown in the graph above? a.$6,000. b.$5,000. c.$10,000. d.$4,000.
b.$5,000.
Suppose the government places a $5 per-unit tax on this good. The amount of tax revenue collected by the government is a.$30. b.$50. c.$80. d.$120.
b.$50.
Which of the following price floors would be binding in this market? a.$3 b.$6 c.$4 d.$5
b.$6
Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each. Which of the following statements is correct? (i) Marginal revenue equals $3. (ii) Average revenue equals $3. (iii) Total revenue equals $900. a.(i) only b.(i), (ii), and (iii) c.(i) and (ii) only d.(iii) only
b.(i), (ii), and (iii)
Refer to Figure above. In order to maximize profits, the monopolist should produce a.15 units. b.12 units. c.more than 15 units. d.9 units.
b.12 units.
The price that buyers pay after the tax is imposed is a.$8. b.$16. c.$24. d.$10.
c.$24.
When the tax is imposed in this market, buyers effectively pay what amount of the $10 tax? a.$4 b.$0 c.$6 d.$10
c.$6
Refer to Table 12-10. If Jace has $33,000 in taxable income, his marginal tax rate is a.28%. b.25%. c.15%. d.10%.
c.15%.
In the market depicted in the graph above, a benevolent social planner would prefer a.a subsidy of $24 per unit to a subsidy of $27 per unit. b.a $24 price to any other price. c.420 units to any other quantity of output. d.All of the above are correct.
c.420 units to any other quantity of output.
A positive externality occurs when a.Jack's benefit exceeds John's benefit when they each consume the same good. b.Jack receives personal benefits from his own consumption of a certain good. c.Jack receives a benefit from John's consumption of a certain good. d.Jack's receives a loss from John's consumption of a certain good.
c.Jack receives a benefit from John's consumption of a certain good.
Suppose that policymakers are considering placing a tax on either of two markets. In Market A, the tax will have a significant effect on the price consumers pay, but it will not affect equilibrium quantity very much. In Market B, the same tax will have only a small effect on the price consumers pay, but it will have a large effect on the equilibrium quantity. Other factors are held constant. In which market will the tax have a larger deadweight loss? a.The deadweight loss will be the same in both markets. b.Market A c.Market B d.There is not enough information to answer the question. Feedback
c.Market B
Which of the following is an example of a positive externality? a.A college student buys a new car when she graduates. b.Local high school teachers have pizza delivered every Friday for lunch. c.The mayor of a small town plants flowers in the city park. d.An avid fisherman buys new fishing gear for his next fishing trip.
c.The mayor of a small town plants flowers in the city park.
A surplus of a good would result when a a.nonbinding price floor is removed from a market. b.nonbinding price floor is imposed on a market. c.binding price floor is imposed on a market. d.binding price floor is removed from a market.
c.binding price floor is imposed on a market.
Suppose the government puts a tax on a market with inelastic demand and elastic supply, then a.sellers will bear most of the burden of the tax. b.it is impossible to determine how the burden of the tax will be shared. c.buyers will bear most of the burden of the tax. d.the burden of the tax will be shared equally between buyers and sellers.
c.buyers will bear most of the burden of the tax.
The Great Lakes are a.public goods. b.private goods. c.common resources. d.club goods.
c.common resources.
In the long run a company that produces and sells candy bars incurs total costs of $1,200 when output is 2,400 candy bars and $1,400 when output is 2,900 candy bars. The candy bar company exhibits a.economies of scale because total cost is rising as output rises. b.diseconomies of scale because total cost is rising as output rises. c.economies of scale because average total cost is falling as output rises. d.diseconomies of scale because average total cost is rising as output rises.
c.economies of scale because average total cost is falling as output rises.
In the United States, the marginal tax rate on individual federal income tax a.decreases as income increases. b.is constant at all income levels. c.increases as income increases. d.applies only to payroll taxes.
c.increases as income increases.
Quantity C represents the output level where the firm a.maximizes profits. b.minimizes total costs. c.produces at the efficient scale. d.minimizes marginal costs.
c.produces at the efficient scale.
For a construction company that builds houses, which of the following costs would be a fixed cost? a.the $2 per worker-hour paid to the state government for workers' compensation insurance b.All of the above are correct. c.the $30,000 per year salary paid to the company's bookkeeper d.the $20 per hour wage paid to a construction foreman
c.the $30,000 per year salary paid to the company's bookkeeper
Refer to Figure above. Based upon the information shown, what price will MuffinHaus charge to maximize profits? a.$7. b.$10.50. c.$14. d.$12.
c.$14.
Consider the market for new DVDS. If DVD players became cheaper, buyers expected DVD prices to fall next year, used DVDs became more expensive, and DVD production improved then the equilibrium price of a new DVD would a rise b. fall c. stay the same d could rise, fall, or remain unchanged.
d could rise, fall, or remain unchanged.
On a graph we draw a consumer's budget constraint , measuring the number of pineapples on the horizontal axis and the number of pencils on the vertical axis. If the slope of the budget constraint is -6, then a. a pineapple costs six times as much as a pencil. b. the opportunity cost of a pineapple is 6 pencils C.the opportunity cost of a pencil is one-sixth of a pineapple. d. All of the above are correct .
d. All of the above are correct .
Which of the following events would cause a movement upward and to the right along the supply curve for mangos? a. The number of sellers of mangos increases b. There is an advance in technology that reduces the cost of producing mangos. C.The price of fertilizer decreases, and fertilizer is an input in the production of mangos. d. The price of mangos rises.
d. The price of mangos rises.
If the demand for a product decreases, then we would expect equilibrium price a . to increase and equilibrium quantity to decrease. b. to decrease and equilibrium quantity to increase . C.and equilibrium quantity to both increase. d. and equilibrium quantity to both decrease.
d. and equilibrium quantity to both decrease.
Kara receives a promotion at work, which increases her income We would expect Kara's demand for a each good she purchases to remain unchanged b normal goods to decrease c. substitute goods to increase d inferior goods to decrease
d. inferior goods to decrease
At a price of $8, there is a a . surplus of 4 units b. surplus of 8 units c.shortage of 4 units . d. shortage of 8 units.
d. shortage of 8 units.
Suppose a tax of $5 per unit is imposed on video game systems, and the tax causes the equilibrium quantity of gaming systems to decrease from 200 units to 100 units. The tax decreases consumer surplus by $450 and decreases producer surplus by $300. The deadweight loss from the tax is a.$500. b.$1,000. c.$750. d.$250.
d.$250.
Use the graph above to analyze the effect of a $6 tax. How much will sellers receive per unit after the tax is imposed? a.between $4 and $7 b.between $7 and $10 c.$10 d.$4
d.$4
Refer to Table 7-2. If the market price is $5.50, the consumer surplus in the market will be a.$15.50. b.$3.00. c.$21.00. d.$4.50.
d.$4.50.
The equilibrium price is a.$8.00. b.$4.00. c.$10.00. d.$6.00.
d.$6.00.
Suppose a competitive market is comprised of firms that face identical cost curves. The firms experience an increase in demand that results in positive profits for the firms. Which of the following events are then most likely to occur? (i) New firms will enter the market. (ii) In the short run, price will rise; in the long run, price will rise further. (iii) In the long run, all firms will be producing at their efficient scale. a.(i), (ii) and (iii) b.(i) and (ii) only c.(ii) and (iii) only d.(i) and (iii) only
d.(i) and (iii) only
When the government places a new tax on a good, a.government collects revenues which might justify the loss in total welfare. b.there is a decrease in the quantity of the good bought and sold in the market. c.a wedge is placed between the price buyers pay and the price sellers effectively receive. d.All of the above are correct.
d.All of the above are correct.
Refer to Figure above. If the price is $3.50 in the short run, what will happen in the long run? a.Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry. b.Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry. c.Because the price is below the firm's average variable costs, the firms will shut down. d.Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry.
d.Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry.
Which of the following is not an example of a barrier to entry? a.Caroline owns the patent for a new running shoe. She receives payments from the company who manufactures the shoes. b.Jackie owns the copyright to a popular song. She receives royalties every time a radio station plays her song. c.John owns the only parcel of lakeside property with a beach that is safe for swimming. He charges admission to neighbors who want to use the beach. d.John Jr. owns the best seafood restaurant in a popular resort area. He charges high prices because the quality of the food is so good.
d.John Jr. owns the best seafood restaurant in a popular resort area. He charges high prices because the quality of the food is so good.
Refer to Figure above. Assume that the market starts in equilibrium at point W in panel (b) and that panel (a) illustrates the cost curves facing individual firms. Suppose that demand increases from D0 to D1. Which of the following statements is not correct? a.Point Z is a long-run equilibrium point. b.Points W, Y, and Z are short-run equilibria points. c.Point W is a long-run equilibrium point. d.Point Y is a long-run equilibrium point.
d.Point Y is a long-run equilibrium point.
Suppose that COVID shots create a positive externality equal to $8 per shot. Further suppose that the government offers a $6-per-shot subsidy to producers. What is the relationship between the equilibrium quantity and the socially optimal quantity of COVID shots produced? a.They are equal. b.There is not enough information to answer the question. c.The equilibrium quantity is greater than the socially optimal quantity. d.The equilibrium quantity is less than the socially optimal quantity.
d.The equilibrium quantity is less than the socially optimal quantity.
Imagine a 2,000-acre park with picnic benches, trees, and a pond. Suppose it is publicly owned, and people are invited to enjoy its beauty. When the weather is nice, it is difficult to find parking on summer afternoons. Otherwise, it is a great place. An efficient solution to the parking problem would be to a.police the parking area and ticket cars that are parked illegally. b.do nothing. c.prohibit parking in the vicinity of the park. d.charge higher prices for parking at busy times.
d.charge higher prices for parking at busy times.
When the price rises from P1 to P2, consumer surplus a.increases by an amount equal to B+C. b.increases by an amount equal to A. c.decreases by an amount equal to C. d.decreases by an amount equal to B+C.
d.decreases by an amount equal to B+C.
National defense is provided by the government because a.products provided by the government are produced more efficiently. b.public goods increase government revenues. c.it is impossible for private markets to produce public goods. d.free-riders make it difficult for private markets to supply the socially optimal quantity.
d.free-riders make it difficult for private markets to supply the socially optimal quantity.
A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than its a.total costs. b.opportunity costs. c.fixed costs. d.variable costs.
d.variable costs.
