Micro Final

A government-created monopoly arises when a) the government gives a firm the exclusive right to sell some good or service b) government spending in a certain industry gives rise to monopoly power c) the government exercises its market control by encouraging competition among sellers d) the government collects taxes in a particular industry

A

Ashlyn installed a wooden sculpture in her front yard. A positive externality arises if the sculpture a) increases the value of others properties in the neighborhood b) increases the value of Ashyln's home c) is visually unappealing to the Ashlyn's neighbors d) creates a safety hazard for neighborhood children

A

At Bubba's Bubble Gum Company adds workers while using the same amount of machinery, some worker may be underutilized because they have little work to do while waiting in line to use the machinery. When this occurs, Bubba's Bubble Gum Company encounters a) diminishing marginal product b) economies of scale c) diseconomies of scale d) increasing marginal product

A

Negative externalities lead markets to produce a) greater than efficient output levels and positive externalities lead markets to produce smaller than efficient output levels b) smaller than efficient output levels and positive externalities lead markets to produce greater than efficient output levels c) greater than efficient output levels and positive externalities lead markets to produce efficient output levels d) efficient output levels and positive externalities lead markets to produce greater than efficient output levels

A

The accountants hired by Forever Fitness have determined total fixed cost to be $75,000, total variable cost to be $130,000, and total revenue to be $125,000. Because of this information, in the short run, Forever Fitness should a) shut down because staying open would be more expensive b) lower their prices to increase their profits c) stay open because shutting down would be more expensive d) stay open because the firm is making an economic profit

A

In order to sell more of its product, a monopolist must a) lobby the government for a subsidy b) lower its price c) advertise d) enact barriers to entry in related markets

B

Suppose that for a particular business there are no implicit costs. Then a) accounting profit will be greater than economic profit b) accounting profit will be the same as economic profit c) accounting profit will be less than economic profit d) the relationship between accounting profit and economic profit cannot be determined without more information

B

The Bow Wow company produced and sold 350 dog beds. The average cost of production per dog bed was $35. Each dog bed can be sold for a price of $45. Bow Wow's total costs are a) $5,000 b) $12,250 c) $15,750 d) $28,000

B

The nation of Wheatland forbids international trade. In Wheatland, you can buy 1 pound of corn for 3 pounds of fish. In other countries, you can buy 1 pound of corn for 2 pounds of fish. These facts indicate that a) Wheatland has a comparative advantage, relative to other countries, in producing corn b) other countries have a comparative advantage, relative to Wheatland, in producing fish c) the price of fish in Wheatland exceeds the world price of fish d) if Wheatland were to allow trade, it would import corn

B

When a market is monopolistically competitive, the typical firm in the market is likely to experience a a) positive profit in the short run and in the long run b) positive or negative profit in the short run and a zero profit in the long run c) zero profit in the short run and a positive or negative profit in the long run d) zero profit in the short run and in the long run

B

If the distribution of water is a natural monopoly, then a) a single firm cannot serve the market at the lowest possible average total cost b) allowing for competition among different firms in the water-distribution industry is efficient c) multiple firms would likely each have to pay large fixed costs to develop their own network of pipes d) average cost increases as the quantity of water produced increases

C

In a long-run equilibrium a) only a monopolistic competitive firm operates at its efficient sale b) neither a competitive firm nor a monopolistically competitive firm charges a markup over marginal cost c) only a perfectly competitive firm operates at its efficient scale d) both a perfectly competitive firm and a monopolistically competitive firm operate at their efficient scale of production

C

Kate is a florist. Kate can arrange 15 bouquets per day. She is considering hiring her husband Amir to work for her. Together Kate and William can arrange 23 bouquets per day. What is Amir's marginal product? a) 38 bouquets b) 23 bouquets c) 8 bouquets d) 17 bouquets

C

Ms. Joplin sells colored pencils. The colored-pencil industry is competitive. Ms. Joplin hires a business consultant to analyze her company's financial records. The consultant recommends that Ms. Joplin increase her production. The consultant must have concluded that , at her current level of production, Ms. Joplin's a) total revenues equal her total economic costs b) marginal revenue exceeds her total cost c) marginal revenue exceeds her marginal cost d) marginal cost exceeds her marginal revenue

C

Suppose India exports televisions to Italy and imports sugar from Argentina. This situation suggests a) India has a comparative advantage relative to Argentina in producing sugar, and Italy has a comparative advantage to India producing televisions b) India has an absolute advantage relative to Italy in producing televisions, and Argentina has an absolute advantage relative to India in producing sugar c) India has a comparative advantage relative to Italy in producing televisions, and Argentina has a comparative advantage relative to India in producing sugar d) India has an absolute advantage relative to Argentina in producing sugar, and Italy has an absolute advantage relative to India in producing televisions

C

In both perfect competition and monopolistic competition, each firm a) sells identical products b) faces a downward-sloping demand curve its product c) has some monopoly power d) has many competitors

D

The world price of a ton of steel is $650. Before Russia allowed trade in steel, the price of a ton of steel there was $1,000. Once Russia is allowed trade in steel with other countries, Russia began a) importing steel and the price per ton in Russia remained at $1,000 b) exporting steel and the price per ton in Russia remained at $1,000 c) exporting steel and the price per ton in Russia decreased to $650 d) importing steel and the price per ton in Russia decreased to $650

D

When externality is present, the market equilibrium is a) efficient, and the equilibrium maximizes the total benefit to society as a whole b) efficient, but the equilibrium does not maximize the total benefit to society as a whole c) inefficient, but the equilibrium maximizes the total benefit to society as a whole d) inefficient, and the equilibrium does not maximize the total benefit to society as a whole

D

Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium? a) MR is greater than MC b) P is less than MC c) P is less than ATC d) P is greater than MC

D

Which of the following statements regarding a competitive firm is correct? a) Because each firm faces a downward sloping demand, if a firm increases its level of output, the firm will have to charge a lower price to sell the additional output b) If a firm raises its price, the firm may be able to increase its total revenue even though it will sell fewer units c) By lowering its price below the market price, the firm will benefit from selling more units at the lower price than it could have sold by charging the market price d) For all firms, average revenue equals the price of the good

D