Micro Final Exam

Refer to Table 17-13. When this game reaches a Nash equilibrium, annual profit will grow by

$1.5 million for HomeMax and by $1.0 million for Lopes.

Refer to Table 14-2.For this firm, the marginal revenue from selling the 3rd unit is

$3.

Refer to Figure 4-17: At a price of

$7, there is a surplus of 4 units

Refer to Figure 15-6.What area measures the monopolist's profit?

(K-B)*W

Refer to Figure 15-5. A profit-maximizing monopoly's profit is equal to

(P2-P5) x Q3.

Refer to table 3-25: The opportunity cost of 1 mixer for Maya is

1.6 toasters

Refer to Table 13-2. What is the marginal product of the third worker?

100 units

Refer to Table 3-25: The opportunity cost of 1 mixer for Miguel is

2 toasters

Refer to Table 12-10. If Willie has $170,000 in taxable income, his average tax rate is

24.3%.

It is possible for this economy to produce

60 dryers and 50 washers

Refer to Figure 4-8: Suppose the figure shows the market demand for laptop computers. Suppose the price of wireless printers, a complementary good, decreases. Which of the following changes would occur?

A shift from D2 to D1

Refer to Figure 7-15: When the price is P2, producer surplus is

A+B+C

If your local gasoline station raised its price by 20 percent, its sales of gasoline would decrease substantially because your local gas station

All of the above are correct.

Refer to Figure 15-4. The demand curve for a monopoly firm is depicted by curve

B.

The market for soybeans in Canada consists solely of domestic buyers of soybeans and domestic sellers of soybeans if

Canada forbids international trade in soybeans.

Refer to table 4-2: Whose demand does not obey the law of demand

Carrie's

Refer to figure 5-2: As price falls from Pa to Pb, which demand curve represents the most elastic demand?

D1

Refer to Figure 9-1. Relative to the no-trade situation, trade with the rest of the world results in

Guatemalan consumers paying a higher price for coffee.

Refer to Figure 16-9.In response to the situation represented by the figure, we would expect

None of the above are correct.

Refer to Figure 4-6: Suppose that the federal government is concerned about obesity in the US. Congress is considering two plans. One would require "junk food" producers to include warning labels on all junk food. The other would impose a tax on all products considered to be junk food. If the warning labels are successful, we could illustrate the plan as producing a movement from

Point Ato Point B in Panel 1

Economics deals primarily with the concept of

Scarcity

Refer to figure 3: Which of the following events would explain the shift of the production possibilities frontier from A to B

The economy experienced a technological advance in the production of books

The term market failure refers to

a market that fails to allocate resources efficiently.

Elasticity is

a measure fo how much buyers and sellers respond to changes in market conditions

A market structure with barriers to entry is

a monopoly.

Excludability is the property of a good whereby

a person can be prevented from using it.

The term market failure refers to

a situation in which the market on its own fails to allocate resources efficiently

Tax systems that impose recordkeeping requirements on taxpayers are said to have a(n)

administrative burden.

If the law of demand applies to these pizzas then A could be

all of the above could be correct

Productivity is defined as the

amount of goods and services produced from each unit of labor input

A supply curve slopes upward because

an increase in price gives producers an incentive to supply a larger quantity

You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. You still enjoy Ramen noodles very much and buy even more, but your roommate plans to buy fewer Ramen noodles in favor of foods she prefers more. When looking at income elasticity of demand for Ramen noodles, yours would

be negative and your roommate's would be positive.

A price ceiling is binding when it is set

below the equilibrium price, causing a shortage

Private markets fail to account for externalities because

decisionmakers in the market fail to include the costs of their behavior to third parties. the government cannot easily estimate the optimal quantity of pollution.

If the quantity demanded of a certain good responds only slightly to a change in the price of the good, the the

demand for the good is said to be inelastic

When a country allows trade and becomes an importer of a good,

domestic producers become worse off, and domestic consumers become better off.

In a market characterized by monopoly, the market demand curve is

downward sloping.

When society gets the most it can from its scarce resources, then the outcome is called

efficient

Competitive markets are characterized by

free entry and exit by firms.

The basic principles of economics suggest that

government should become involved in markets when those markets fail to produce efficient or fair outcomes

Negative externalities lead markets to produce (Choose A or B)

greater than efficient output levels and positive externalities lead markets to produce smaller than efficient output levels.

Industrial organization is the study of

how firms' decisions regarding prices and quantities depend on the market conditions they face.

A movement downward and to the right along a demand curve is called an

increase in quality demanded

An increase in the number of college scholarships issued by private foundations would

increase the demand for education

Refer to Table 17-13. Pursuing its own best interest, Lopes will

increase the size of its store and parking lot regardless of the decision made by HomeMax.

The largest source of income for the federal government is

individual income taxes.

"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the

infant-industry argument.

You lose your job and, as a result, you buy more frozen pizzas. For you, frozen pizza are a(n)

inferior good

Factors of production are

inputs into the production process

A competitive firm

is a price taker, whereas a monopolist is a price maker.

A dominant strategy is one that

is best for the player, regardless of what strategies other players follow.

A monopolistically competitive industry is characterized by

many firms, differentiated products, and free entry.

Profit-maximizing firms in a competitive market produce an output level where

marginal cost equals marginal revenue.

Refer to Table 3-25: Maya should specialize in the production of

mixers and Miguel should specialize in the production of toasters

Refer to Figure 9: Maxine has an absolute advantage in the production of

neither good and a comparative advantage in the production of pies

As a result of a decrease in price

new buyers enter the market, increasing consumer surplus

Both public goods and common resources are

nonexcludable.

If Max experiences a decrease in his income, then we would expect Max's demand for

normla goods to decrease

Market power refers to the

power of a single person or small group to influence market prices

Refer to Figure 13-2.The graph illustrates a typical

production function.

Refer to Table 12-15. The tax system is

progressive.

State and local governments receive the largest portion of their tax revenues from

property taxes and sales taxes.

Efficiency

refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society

If Levi Strauss & Co. were to require every retailer that carried its clothing to charge customers $42 for each pair of jeans, Levi Strauss & Co. would be practicing

resale price maintenance.

A tax on an imported good is called a?

tarriff

Suppose that when the price of ginger ale is $2 per bottle, firms can sell 4 million bottles. When the price of ginger ale is $3 per bottle, firms can sell 2 million bottles. Which of the following statements is true?

the demand for ginger ale is price elastic, so an increase in the price of ginger ale will decrease the total revenue of ginger ale producers.

A production possibilities frontier is a straight line when

the rate of tradeoff between the two goods being produced is constant

An externality is

the uncompensated impact of one person's actions on the well-being of a bystander.

Profit is defined as

total revenue minus total cost.

Private solutions may not be possible due to the costs of negotiating and enforcing these solutions. Such costs are called

transaction costs.