Micro Economics Final- PITT STATE

1. For the perfectly competitive firm, when __________ revenue is above ATC, we referred to this as good times.

Average

1. In the case of rent controls you have a legal market and a "____________" market for rental units. (Hint: the answer is not Illegal)

Black

2. Which of the following is NOT true about an increase in the minimum wage at "Wetzel Pretzel": a. Company profits went down b. Consumers paid a higher price for pretzels c. Workers got higher bonuses d. None of the above

C

3. About what percent of US production is for consumers: a. 40 b. 80 c. 60 d. None of the above

C

3. Career Article on What Recruiters Are Looking For: Which of the following was NOT mentioned a. People who are coachable b. People who can talk about what's going on with the organization c. People with high self-esteem d. None of the above (they all were)

C

3. Using, supply and demand analysis, a deadweight loss occurs: a. Only in the case of under-production b. Only in the case of over-production c. Whenever MB does not equal MC d. None of the above

C

4. According to the article on topics to avoid at work, which of the following was NOT on the list of Usually Off Limits: a. mental illness b. domestic violence c. personal financial problems d. none of the above

C

4. According to the table in your text on income elasticities, which of the following is income elastic: a. tobacco b. food c. air travel d. none of the above

C

4. Advertising costs are a: a. variable cost b. implicit cost c. fixed cost d. none of the above

C

4. Which of the following is NOT one of the ways to increase college enrollment which we discussed: a. taxpayer support to public schools b. government subsidies to private schools c. Zero interest student loans d. None of the above

C

4. Which of the following is NOT true about demand: a. it is downward sloping b. a change in the price of the product will change the quantity demand of the product c. an increase in demand would be indicated by a leftward shift of the demand curve d. none of the above

C

4. Which of the following is NOT true for the monopolist: a. demand for its product is downward sloping b. average revenue is downward sloping c. marginal revenue is u-shaped d. none of the above

C

4. Which of the following is NOT true regarding a price elasticity of demand of 4.0: a. it is price elastic b. it is likely that there is good availability of substitute products c. consumers are not very responsive to a price change for this product d. none of the above

C

4. The case of the chemical producer who owns the river the company dumps waste into and owns the homes along the river (the owning case) compared to the case where the company does not own the river and the homes along it: a. In the owning case, pollution is completely eliminated b. there is no difference in the amount of pollution in the two cases c. pollution is reduced but not eliminated in the owning case d. none of the above

C 229

T F 2. New technology lowers the perfectly competitive firm's cost curves and allows it to earn economic profits in the long run since it's competitor's cannot copy its technology.

F

T F 2. The article on interview attire argued that either long-sleeve or short-sleeve dress shirts were appropriate for men.

F

T F 2. The development of new production technology would not affect the position (distance from the point of origin) of the production possibility frontier.

F

T F 2. The savings drivers are receiving from lower gas prices has resulted in a big bump in holiday spending, just as retailers had hoped.

F

T F 2. The supply of beach front footage is perfectly elastic.

F

T F 2. When supply is perfectly inelastic and there is a tax on the seller, the market outcome is inefficient.

F

T F 3. AFC is U-shaped, decreasing at first and then turning upward

F

T F 3. The monopolist should never operate in the elastic portion of its demand curve.

F

T F 3. The products produced by monopolistically competitive firms in a particular industry are perfect substitutes for each other.

F

T F 3. When the demand curve is vertical, price elasticity of demand is perfectly elastic.

F

T F 4. A decrease in the price of a substitute good in production will lead to a decrease in the supply of the good in question. (Hint: think cargo pants and blue jeans).

F

T F 4. In order to maximize profits the monopolist should operate where total revenue is at a maximum.

F

T F 4. In the case of cell phones and cell phone factories, not building anymore factories over time would cause the production possibility frontier to stay where it presently is (ceteris paribus).

F

T F 4. In the case of our negative production externality (the public utility) we had a market outcome (no government intervention) of under-production.

F

T F 4. The head of Container Stores tried paying front-line workers well above the industry average and found that it was not profitable to do so.

F

T F 4. There is no deadweight loss in the case of farm price supports since the government buys up surplus production.

F

T F 4. Those parts of the country with the smallest income gaps (low income inequality) have higher unemployment than those parts with the highest income gaps.

F

T F 4. When P is greater than AVC but less than ATC, the firm will make an economic loss and will minimize those losses by shutting down.

F

T F 3. In the case where individuals choose whether or not to go to college without outside help (no taxpayer support, subsidies, etc.) the market outcome would give us an enrollment where MC is greater than MSB.

F 237

T F 2. When total product is increasing at an increasing rate, marginal product is decreasing.

F 257

2. The cost of rent, property taxes, building insurance and the like make up the firm's ______________ costs.

Fixed

2. The Burger King article covered in class was about the so-called _________ War.

Fries

1. Economists refer to all gifts of nature as ____________.

land

4. The 20% of the population with the highest incomes have what percent of total income: a. 25 b. 35 c. 40 d. none of the above

d

1. Which of the following is NOT true about "Cap and Trade": a. All of the pollution permits add up to the overall quota on pollution b. Some will pollute (dump) more than others c. It pays a firm to clean up its own waste if the cost is less than the price of a pollution permit d. None of the above/all are true

D

1. Which of the following is NOT true: a. A decrease in the price of a complement good will increase the demand for the good in question b. An increase in income will decrease the demand for an inferior good c. An increase in the price of a substitute good will increase the demand for the good in question d. None of the above (all are true)

D

1. Which of the following was NOT mentioned as an employer reaction to a 15$ minimum wage: a. Cutting hours b. Substituting labor-saving technology c. Cutting vacation time d. None of the above

D

2. Increasing marginal returns is explained by: a. Adding more plant and equipment b. Crowding plant and equipment c. Successful marketing and advertising d. None of the above

D

2. Where supply and demand intersect, we have a. An equilibrium b. Balance of forces c. Resting place d. All of the above

D

2. Which of the following is NOT true about monopolistic competition: a. Large number of firms b. Product differentiation c. Free entry and exit d. None of the above/all are true

D

2. Which of the following is a source of constant returns to scale: a. Failure to innovate b. Bureaucracy c. Status quo management d. None of the above

D

2. Who lost in the Amazon e-book price reduction: a. publishers b. authors c. Amazon d. None of the above

D

3. In the case of a natural monopoly, monopoly status is derived from: a. Ownership of key resources b. Patent and copyright laws c. Public franchises d. None of the above

D

3. Which of the following would lead to an increase in supply of X: a. An increase in the price of X b. A decrease in the price of a complement to X in production c. An increase in the price of a substitute to X in production d. None of the above

D

T F 1. A tax on the seller shifts the supply curve upward by the amount of the tax.

T

T F 1. Coordination and control problems lead to diseconomies of scale.

T

T F 1. Greece is now in the Euro zone, but is on very shaky economic footing (e.g., very large government debt).

T

T F 1. If the increase in the wage is greater than the increase in worker productivity, the supply curve would shift up/leftward some.

T

T F 1. In the article "What Employers Are Looking For," Honesty and Integrity was ranked near the top of what employers desire in their employees.

T

T F 1. In the article on What Recruiters Are Looking For, being Collegial was on the Top Ten List.

T

T F 1. In the case of a downward sloping demand curve and an upward sloping supply curve, a tax on the seller decreases both consumer and producer surplus. (Hint: draw the diagram if it helps)

T

T F 1. John Lowe, in his presentation, said the biggest challenge he faced in his career was work-family balance.

T

T F 1. On the Production Possibility Frontier allocative efficiency occurs where MB = MC for the good in question.

T

T F 1. Public utilities typically have monopoly status.

T

T F 1. The LRATC curve is horizontal where constant returns to scale exist.

T

T F 1. The Trans-Pacific Partnership not only covers tariffs, but also e-commerce and business practices.

T

T F 1. The demand for table salt is price inelastic.

T

T F 1. When Total Revenue equals Total Cost, the firm is making a normal profit.

T

T F 2. A monopolist may have lower ATC than the perfectly competitive firm by capturing economies of scale.

T

T F 2. According to "The Finer Points of Salary Negotiations," the one who mentions money first loses.

T

T F 2. Career article on corporate culture: how employees interact is an element of corporate culture.

T

T F 2. If the price is below the equilibrium price, a shortage will occur.

T

T F 2. If the production possibility frontier was linear (a straight line), there would be constant opportunity costs in moving along it.

T

T F 2. If we expect the price of a good that we consume to increase in the future, our demand for it would now increase.

T

T F 2. In the case of a public good, the market outcome (no government intervention) would give us under-production.

T

T F 2. Producers get producer surplus whenever the price they receive for suppling a particular quantity of output exceeds the minimum price they require as indicated by the supply curve.

T

T F 2. SRATC 1 intersects SRATC 2 at 100 units of output—to produce say 90 units of output at lowest ATC, plant size 1 should be used.

T

T F 2. The college wage premium ratio is now well above 1.5.

T

T F 2. The cover letter article described a cover letter as being essentially a "sales pitch" for your job application.

T

T F 2. The four-firm concentration ratio range for monopolistic competition is greater than zero percent and less than forty percent.

T

T F 3. A downward shift in the supply curve indicates an increase in supply.

T

T F 3. As we do more of something (e.g., searching for a job), typically the marginal benefits decrease and the marginal costs increase.

T

T F 3. Goods that are expensive to store tend to be more supply price elastic than goods that are inexpensive to store.

T

T F 3. In New York City, due to rent controls, there are some very wealthy people who live in nice apartments that pay very low rent, rent that is actually well below the current rent control prices in the city.

T

T F 3. In the case of the minimum wage you have a price floor and in terms of MB and MC too few workers are employed.

T

T F 3. One of the reasons flight prices are down is that demand is down this time of the year.

T

T F 3. Producers facing import competition have more incentive to lobby for a trade restriction than consumers have to fight such legislation.

T

T F 3. The demand curve for the perfectly competitive firm is horizontal at the market price.

T

T F 4. Accounting profit is not based on the opportunity costs of self-owned, self- used resources by the firm.

T

T F 4. As expensive as advertising costs often are, they can actually result in lower ATC.

T

T F 4. One definition of economic efficiency: producing a given amount of output with the least amount of inputs.

T

T F 4. The demand for Starbucks coffee will be more price elastic than the demand for coffee in general.

T

T F 4. When firm efficiency is increasing, MC is decreasing.

T

T F 1. In going from no trade to free trade of T-shirts, there is a net gain in total surplus (producer plus consumer surplus).

T (202)

T F 1. A tariff on imported T-shirts reduces imports of T-shirts.

T 206

T F 2. A quota shifts the supply curve to the right by the amount of the quota.

T 209

T F 2. The AVC curve is the mirror image of the AP curve.

T 267

1. In the case of a tax on the polluter, the MSC curve equals the firm's MC plus the ____________.

Tax 232

2. When people spend more because the value of their home increased, we refer to this as the _____________ effect.

Wealth

1. A tax on the buyer shifts the: a. Demand curve downward by the amount of the tax b. Demand curve upward by the amount of the tax c. Supply curve upward by one half of the amount of the tax d. None of the above

A

1. In the case of economies of scale, a 10% increase in labor in capital would result in which of the following increases in output: a. > 10% b. = 10% c. < 10% d. 0.0%

A

1. The marginal cost curve is upward sloping: a. Because the inputs for the good in question are not perfect substitutes in production b. Because the inputs for the good in question are not perfect complements in production c. Because of the relative scarcity of the inputs for the good in question d. None of the above

A

1. The perfectly competitive firm's supply curve is that portion of the MC curve which: a. Is at and above AVC b. Is at and above ATC c. At first decreases and then increases d. The firm's supply curve has nothing to do with MC

A

2. In the case of individuals choosing whether or not to go to college based solely on their own private benefits (i.e., no taxpayer support, subsidies, etc.), which of the following is NOT true: a. Over-consumption of education b. Existence of a deadweight loss c. Inefficient market outcome d. None of the above

A

2. Which of the following is NOT true about the production possibility frontier: a. Any point on or below the frontier is efficient b. Discovery of more oil would shift the frontier outward ' c. A "free lunch" is possible only below the frontier d. None of the above

A

2. Which of the following would NOT decrease the demand for X: a. Decrease in the price of a complement b. Decrease in the price of a substitute c. New technology that leads to a better alternative to X d. None of the above

A

3. Efficient scale of firm operation is where: a. ATC is at a minimum b. Profit is maximized for the monopolistic competitive firm c. TR is at a maximum d. None of the above

A

3. The formula for price elasticity of supply is: a. Percent change in quantity supplied divided by percent change in price b. Percent change in price divided by percent change in quantity supplied c. Percent change in price times percent change in quantity supplied d. None of the above

A

4. If output = 10 and if AVC = 10 and TFC = 80, ATC must equal: a. 18 b. 90 c. 70 d. none of the above

A

1. Which of the following is NOT true about the case of going from no trade to free trade of airplanes: a. Part of producer surplus is redistributed to consumers b. There is a net gain in total surplus c. US airplane production increases d. None of the above

A 203

3. Which of the following is NOT true about going from free trade to a trade quota on T-shirts: a. Price of US T-shirts decreases b. US production of T-shirts increases c. The number of T-shirts imported equals the size of the quota d. None of the above

A 209

1. The Total Product curve: a. First increases at an increasing rate b. First increases at a decreasing rate c. First increases at a constant rate d. Continually increases as more and more labor is employed

A 257

1. Federal expenditures peaked as a percent of GDP during: a. WWI b. WWII c. President Obama's fiscal stimulus d. None of the above

B

1. We should run a sale: a. When demand is price inelastic b. When demand is price elastic c. Only if price elasticity of demand is greater than 4.0 d. None of the above

B

1. Which of the following is NOT one of the three basic questions (we covered) that every society/economy must answer: a. What to produce b. How many to produce c. How to produce d. For whom to produce

B

1. Which of the following is NOT true about price discrimination: a. Identification and separation of different types/groups of buyers b. Different products or services sold at different prices c. The product or service cannot be resold by consumers d. None of the above

B

2. Consumer surplus equals: a. MB plus price b. MB minus price c. MB divided by price d. None of the above

B

2. In the case of a tax on the seller and demand is perfectly inelastic: a. All of the tax falls on the seller b. All of the tax falls on the buyer c. The market outcome is inefficient d. None of the above

B

2. Suppose the perfectly competitive firm is making a normal profit and then product demand increases—for a short period of time the firm will now: a. Make an economic loss b. Make an economic profit c. Want to exit the industry d. None of the above

B

2. The most recent proposed free trade proposed is: a. NAFTA b. PPF c. GATT d. None of the above

B

3. Suppose supply and demand both increase and the increase of supply is greater: a. Quantity increases and price increases b. Quantity increases and price decreases c. Not possible to know what happens to price d. Not possible to know what happens to quantity

B

3. Which of the following is NOT true about farm price supports: a. The price support is also a price floor b. Helps farmers in other countries that also produce this product c. Higher prices for US consumers d. None of the above

B

3. Which of the following is not one of our four main market structures: a. Perfect Competition b. Duopoly c. Monopoly d. Monopolistic Competition

B

4. A decrease in the wage rate of workers who make X will have what effect on the supply of X: a. shift it leftward b. shift it rightward c. a movement along the supply of X d. no impact on the supply of X

B

4. Which of the following is NOT a characteristic of Perfect Competition: a. sellers well informed about prices b. product differentiation c. no restrictions of market entry d. None of the above/all are

B

3. When average product is increasing: a. Marginal product must be below it b. Marginal product must be above it c. Marginal product must be increasing d. None of the above

B 258

3. To obtain an efficient market outcome in the case of a private college, we would: a. Provide taxpayer support b. Do nothing, since the market is efficient without help in this case c. Provide a subsidy per student d. None of the above

C 239

1. Specialization of labor and specialization of _____________ explains economies of scale.

Capital

2. If the coefficient of cross price elasticity is negative the goods in question must be _____________.

Complements

2. In your textbook, skim milk and dairy cream are referred to as _____________ in production.

Complements

1. Smoking in a public place results in a negative ______________ externality.

Consumption

4. Which of the following did NOT happen in the case of going from no trade to free trade of T-shirts: a. We imported T-shirts b. Price of T-shirts to the US consumer went down c. US production of T-shirts went down d. None of the above

D

1. The monopolist does not produce an efficient rate of output and thus causes a ________________ loss.

Deadweight

2. Market ______________ occurs where supply (MC) and demand (MB) intersect. (Hint: not Equilibrium)

Efficiency

2. When it is not possible to increase production of one good without decreasing the production of another good, we have ______________ production.

Efficient

T F 1. (Background information which is correct and not part of the question: Lipitor is the brand name for atorvastatin.) Question: After Pfizer's patent on Lipitor expired, atorvastatin was no longer available to consumers.

F

T F 1. According to the career article on being willing to say you are sorry, those that are more willing appear weak and earn less than those less willing.

F

T F 1. According to the video on the price of oil, the price of oil has been decreasing because people are driving more fuel efficient cars in the US and Europe.

F

T F 1. According to the video showed in class, Uber is now moving into the air passenger business.

F

T F 1. At the state level, highway expenditures represent the largest source of government expenditures.

F

T F 1. Chicken wings and hamburgers are substitutes: a decrease in the price of chicken wings would increase the demand for hamburgers.

F

T F 1. Compared to the industry as if it were perfectly competitive, the monopolist charges a higher price than the perfectly competitive price and produces more than the perfectly competitive output.

F

T F 1. The book I recommended by Dale Carnegie is entitled How to Deal With Difficult People in the Workplace.

F

T F 1. The majority of people employed today are in manufacturing and agriculture.

F

T F 2. According to the article on Interview Etiquette, a job candidate should wait at least a month before inquiring about their decision.

F

T F 2. Economic depreciation is the same as accounting depreciation.

F

T F 2. Halibut fish and Halibut fish heads are substitutes in production.

F

T F 2. Interest on the national debt is one of the big three sources of federal expenditures.

F

T F 2. Negotiating A Salary Article: It is suggested that you bring up salary during your first meeting so as to not waste each other's time in case it is well below your expectations.

F

1. The demand for a ________________ good tends to be more price elastic than the demand for a necessity.

Luxury

2. Profit is maximized at that rate of output where MR equals (just the letters/notation)____________.

MC

1. When you purchase more of a good as your income rises, we classify that good as a ______________ good.

Normal

2. In the long run, resource mobility results in only _______________ profits for the perfectly competitive firm.

Normal

1. Marginal cost represents an ______________ cost. (Hint: a very important type of cost in economics)

Opportunity

1. We use the Production Possibility Frontier to illustrate _____________costs and tradeoffs (in Ch. 3).

Opportunity

1. We define _______________ as output per unit of input.

Productivity

2. One way for the government to help US farmers is to isolate the domestic market in question by imposing tariffs and ___________ on other countries that produce the product.

Quotas

2. Income from natural resources in fixed supply is referred to as ______________.

Rent

1. In the ____________-run, at least one factor of production is fixed.

Short

2. Marginal private costs plus marginal external costs equals marginal ___________ costs.

Social

T F 1. A change in the price of a good unrelated to X has no impact on the demand for X.

T

2. School ________________ foster competition among schools.

Vouchers