Micro Final
Shobha has a linear production possibility frontier in bracelets and necklaces. In one hour, she can produce 5 bracelets or 10 necklaces. What is the opportunity cost to make 1 necklace? 0.5 bracelet 10 necklaces 2 necklaces You Answered 5 bracelets
0.5 bracelet
Historic examples of price ceilings include all of the following EXCEPT: A. Minimum wages B. Rent controls in major cities C. Price controls in the US during World War II D. Roman Emperor Diocletian's edict on prices
A. Minimum wages
The government has adopted an emissions tax if it: A. transfers the ownership of city air to a private firm that charges automobile drivers a profit-maximizing price, based in part on the pollution capacity of the atmosphere. B. charges automobile drivers $0.10 for each unit of automobile emissions. C. specifies the type of catalytic converter that must be used to reduce automobile emissions. D. pays automobile drivers $0.10 for each 10% reduction in automobile emissions.
B. charges automobile drivers $0.10 for each unit of automobile emissions.
Which statement describes the equity-efficiency trade‑off? A. The least efficient economic outcome is the fairest outcome. B. Government intervention can increase efficiency in a market. C. Actions intended to make economic outcomes fairer may cause efficiency to decrease. D. There is always a more equitable outcome that is also more efficient.
C. Actions intended to make economic outcomes fairer may cause efficiency to decrease.
Suppose the birth rate has dropped significantly this year compared to previous years. Assuming nothing else has changed, what do you expect to happen in the labor market two decades from now? A. The demand curve will shift to the right and the wage rate will increase. B. The demand curve will shift to the left and the wage right will decrease. C. The supply curve will shift to the left and the wage rate will increase. D. The supply curve will shift to the right and the wage rate will decrease.
C. The supply curve will shift to the left and the wage rate will increase.
The income effect will play a greater role in a consumer's spending if the good: A. is not something the consumer needs. B. is not subject to a budget constraint. C. accounts for a substantial share of the consumer's spending. D. accounts for a small share of the consumer's spending.
C. accounts for a substantial share of the consumer's spending.
Livia starts using a new baking technique, and she can now do twice as much of everything. In a single day, Livia can now make 10 cakes or 8 pies, rather than the 5 cakes and 4 pies she could previously bake. Livia's production possibility frontier has _____, and her opportunity cost of making pies _____. not changed; has decreased shifted right; has decreased shifted right; is unchanged not changed; has increased
shifted right; is unchanged
Since the ____ , ____ has grown faster than ____ , thus contradicting the simple model of wage determination. A. 1970s ; productivity ; real wages B. 1950s ; productivity ; real wages C. 2000s ; wages ; productivity D. 1960s ; productivity ; nominal wages
A. 1970s ; productivity ; real wages
Under monopoly, the firm produces the output where _____, and in perfect competition, the firm produces the output where _____. A. P > MR = MC; P = MR = MC B. P < MR = MC; P = MR = MC C. P = MR = MC; P > MR = MC D. P = MR = MC; P = MR = MC
A. P > MR = MC; P = MR = MC
Which statement is true, according to standard economic theory? A. The true cost of a choice is what you must give up when choosing between alternatives. B. Resources are scarce when they can satisfy everyone's wants. C. Rational people use trade-off analysis when making "how much" decisions. D. People typically do not make choices that will make them better off.
A. The true cost of a choice is what you must give up when choosing between alternatives.
Recalling what we learned about the cost of living in Middlesex County, New Jersey, suppose a family consists of a single adult with two children. Which of the various basic categories of costs is the most expensive for such a family. A. child care B. groceries C. medical expenses D. transportation
A. child care
A new teacher often makes less than a teacher with 20 years' experience because of: A. differences in human capital. B. efficiency wages. C. differences in physical capital. D. discrimination.
A. differences in human capital.
A decrease in the demand for autoworkers would NOT come about because of a(n): A. increase in the market wage rate. B. decrease in the supply of other factors that autoworkers use in production. C. decrease in the price of cars. D. decrease in the productivity of autoworkers.
A. increase in the market wage rate.
Cristina gets a raise at work and feels like she can finally stop eating so many frozen foods and instead eat something better. Frozen foods, for her, are ____ good. A. inferior B. substitute C. normal D. complementary
A. inferior
The equilibrium price of a travel guide book is $35 in the perfectly competitive travel guide book industry. Our firm produces 10,000 travel guide books at an average total cost of $38, marginal cost of $30, and average variable cost of $30. In the short run, our firm should A. keep output the same because the firm is producing at the minimum average variable cost. B. produce more travel guide books because the next travel guide book produced will increase profit by $5. C. raise the price of travel guide books because the firm is losing money. D. shut down because the firm is losing money.
A. keep output the same because the firm is producing at the minimum average variable cost.
Larry bought some stock 10 years ago that has hovered at half its purchase price over the last 5 years. However, he refuses to sell the stock, thinking that if he waits long enough, he will recover his investment. What is the likeliest type of behavior this represents? A. loss aversion B. risk aversion C. bounded rationality D. mental accounting
A. loss aversion
Juliana owns a small hotel in San Francisco near the Embarcadero. She pays $30,000 per year in insurance, $418,000 in wages, and $43,000 in supplies. She forgoes $30,000 per year she could make as a police officer. Her total revenue last year equaled $560,000. That means her economic _____ equaled _____. A. profit; $39,000 B. losses; $9,000 C. losses; $39,000 D. profit; $9,000
A. profit; $39,000
An increase in wealth will cause the labor supply curve to A. shift leftward if leisure is a normal good. B. bend backward if the income effect outweighs the substitution effect of a change in wealth and if leisure is a normal good. C. slope downward if the substitution effect dominates the income effect. D. slope upward only if leisure is an inferior good.
A. shift leftward if leisure is a normal good.
Public goods should be produced up to the point at which the marginal cost of production equals: A. the sum of the individual marginal benefits enjoyed by all consumers of that unit. B. the price that maximizes the total surplus. C. the marginal cost of allowing another individual to consume the good. D. the highest marginal benefit enjoyed by any individual consumer of the good.
A. the sum of the individual marginal benefits enjoyed by all consumers of that unit.
The demand for a good will increase if: A. there is an increase in the number of consumers in this market. B. the price of inputs needed in the production of the good decrease. C. there is a decrease in the price of the good. D. the price of a complementary good increases.
A. there is an increase in the number of consumers in this market.
The Gini coefficient A. varies between 0 and 1. B. is seldom used, since it does not help one understand income inequality. C. is also equal to the mean household income for a country. D. is the same for most industrially developed countries.
A. varies between 0 and 1.
Suppose a government wishes to regulate an electric utility company's prices. Suppose further that in the short run, this utility company is earning positive economic profits. If the government wanted to achieve an outcome equivalent to what we'd normally see in a perfectly competitive industry in the long run with respect to profits, the government should require the company set the price of electricity equal to A. where the ATC curve meets the demand curve. B. where price is determined by the demand curve at the quantity at which MC = MR for the firm. C. whatever each individual customer's willingness to pay would be. D. where the MC curve meets the demand curve.
A. where the ATC curve meets the demand curve.
When a new medical report extols the health advantages of grapefruit, assuming an upward-sloping supply curve, producer surplus in the grapefruit market: A. will increase. B. will remain the same. C. may change, but we can't tell how. D. will decrease.
A. will increase.
The number of seats in a football stadium is fixed at 70,000. The team raises the price of a ticket from $30, at which 70,000 are sold, to $40, and it sells 60,000 tickets. Assume a straight-line downward-sloping demand curve. The price change caused a change in the consumer surplus of: A. -$10 B. -$100,000 C. -$650,000 D. -$65,000
B. -$100,000
Which of the following would shift the labor supply curve to the right? A. An increase in household wealth B. An increase in the labor force participation rate C. A reduction in the age at which one is eligible for retirement benefits D. A decline in the birth rate
B. An increase in the labor force participation rate
Which of the following is not a good example of a fixed cost? A. Interest on current debt B. Cost of wood used in manufacturing C. Industrial equipment costs D. Lease on building
B. Cost of wood used in manufacturing
In general, when consumers wish to purchase more goods and services than are readily available, the economy tends to see inflation. Which economic principle does this statement best represent? A. There are gains from trade. B. Overall spending sometimes gets out of line with the economy's productive capacity. C. When markets don't achieve efficiency, government intervention can improve society's welfare. D. Government policies can change spending.
B. Overall spending sometimes gets out of line with the economy's productive capacity.
Which of the choices illustrates the law of demand? A. None of the choices. B. Sue wants to buy more candy bars at $1 than at $2. C. Kathy offers for sale more candy bars at $2 than at $1. D. Joe wants to buy more candy bars at $2 than at $1.
B. Sue wants to buy more candy bars at $1 than at $2.
One day, a local theme park charges $40 per person for admission, and 10,000 people visit the park. On another day, the park charges $60 per person, and 20,000 people pay to enter the park. Which explanation best describes why the park sees an increase in attendance when the price is higher? A. The higher price gives the park an incentive to expand capacity and permit more visitors. B. The low-attendance day falls on an autumn Wednesday, while the high-attendance day falls on a summer Saturday. C. High prices signal a high quality park experience. D. Theme-park tickets are part of a rare class of goods which do not follow the Law of Demand.
B. The low-attendance day falls on an autumn Wednesday, while the high-attendance day falls on a summer Saturday.
f the income elasticity of demand for aspirin is 0.55 then it is A. an inferior good B. a normal good C. a luxury good D. a complementary good
B. a normal good
Consider the market online music. Suppose that an economic downturn decreases household wealth and erodes consumer confidence. What would be the primary impact of this on equilibrium price? Assume that online music is a normal good. A. increases B. decreases C. change is ambiguous D. remains constant
B. decreases
China is relatively labor-abundant compared with European Union member nations. Therefore, China has a comparative advantage in _____ compared with European Union member nations. A. goods that are capital-intensive in production B. goods that are labor-intensive in production C. all goods D. goods that are land-intensive in production
B. goods that are labor-intensive in production
If demand _____ and Rutgers University increases the price of football tickets, revenues will increase. A. is perfectly price-elastic B. is price-inelastic C. is price-elastic D. has price elasticity equal to 1
B. is price-inelastic
The _____ of a good or service is the additional benefit derived from producing one more unit of that good or service. A. marginal cost B. marginal benefit C. net benefit D.utility
B. marginal benefit
The harvesting of corn generates external costs in the form of methane gas emissions. Without government regulation: A. the price of a bushel of corn will be less than the marginal cost of the last bushel of corn sold to the corn farmer who sold it. B. the price of a bushel of corn will be less than the marginal social cost of the last bushel of corn sold. C. too little corn will be harvested. D. the price of a bushel of corn will be less than the marginal social benefit of the last bushel of corn sold.
B. the price of a bushel of corn will be less than the marginal social cost of the last bushel of corn sold.
In economic analysis, at the optimal quantity of an activity: A. marginal benefit equals the total benefit. B. the total benefit exceeds the total cost by the greatest amount, and marginal benefit equals marginal cost. C. marginal benefit exceeds marginal cost by the greatest amount. D. the total benefit equals the total cost.
B. the total benefit exceeds the total cost by the greatest amount, and marginal benefit equals marginal cost.
A firm's ____ are costs that increase as quantity produced increases. These costs often show ____ illustrated by the increasingly steeper slope of the total cost curve. A. fixed costs; technological changes B. variable costs; diminishing marginal returns C. variable costs; constant returns to scale D. fixed costs; opportunity costs
B. variable costs; diminishing marginal returns
The cross‑price elasticity of popcorn and butter is −0.3 , where the percentage change in quantity is for popcorn and the percentage change in price is measured for butter. Calculate the percentage that the quantity demanded of popcorn will change if the price of butter decreases by 12%. A. -3.6% B. -36% C. +3.6% D. +36%
C. +3.6%
Mark is three years old and his grandparents have given him money to spend at the toy store as a birthday present. Mark's number one favorite thing to play with is building blocks. Assume that Mark's utility will increase by 100 units if he purchases a new set of building blocks and and it will cost him $50. His second favorite thing to play with is fire trucks. Fire trucks cost $20 and each new fire truck improves Mark's utility by 80 units. His third favorite toy is trains. Trains improve his utility by 15 units and cost $5 each. Mark does not have to spend all of his money at once, but wants to get as much happiness as possible from his money. If Mark buys only one toy, which should he buy to maximize his utility? A. building blocks B. a train C. a fire truck D. any choice he makes is rational
C. a fire truck
A beneficial technological change is developed in the production of cranberries. At the same time, scientists discover that cranberries have significant health benefits. This will result in: A. a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of cranberries. B. a decrease in both the equilibrium price and quantity in the cranberry market. C. an increase in both the equilibrium price and quantity in the cranberry market. D. an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of cranberries.
C. an increase in both the equilibrium price and quantity in the cranberry market.
Determine how the equilibrium price and equilibrium quantity in the market for coffee changes if the following two occur: - the price of tea, a substitute for coffee, decreases - due to better weather, the price of coffee beans used to make coffee decreases Equilibrium price will ____ while equilibrium quantity ____ . A. might increase, decrease or stay the same ; increase B. increase ; might increase, decrease or stay the same C. decrease ; increase D. decrease ; might increase, decrease or stay the same
C. decrease ; increase
A firm's long-run average total costs increase as it produces more output. This firm has: A. a spreading effect. B. diseconomies of scale. C. economies of scale. D. constant returns to scale.
C. economies of scale.
Suppose the United States auctioned off all import quotas, the auctions were perfectly competitive, and the government received the revenues from the auction. In this case, the deadweight loss from a quota would be _____ the deadweight loss from an equivalent tariff. A. greater than B. less than C. equal to D. in the case of demand being elastic, greater than
C. equal to
Because of large up-front R&D (research and development) costs, pharmaceutical companies typically face high fixed costs when developing new drugs. The marginal cost of producing a drug after development is very low, often close to zero. When these companies set their price and output to maximize profit, patients pay a _____ price for a _____ quantity of the drug than is socially optimal. A. lower; larger B. higher; larger C. higher; smaller D. lower; smaller
C. higher; smaller
According to the infant industry argument, import protection is needed because: A. it provides consumers with more and better goods in the long run. B. foreign workers are often paid less than U.S. workers. C. it enables our protected industries to achieve technological efficiency and thus become competitive with mature foreign industries. D. the nation's security depends on a strong industrial base.
C. it enables our protected industries to achieve technological efficiency and thus become competitive with mature foreign industries.
The percentage of the population that falls below the poverty threshold is called the A. poor rate. B. absolute number of people in poverty. C. poverty rate. D. homelessness rate.
C. poverty rate.
A perfectly competitive farm produces 1,000 broccoli heads per week in the short run. At this quantity, ATC = $6 and AFC = $2. The market price is $3 per head and is equal to MC. To maximize profits or minimize losses, the farm should A. do nothing because it is already maximizing profits. B. reduce output but continue to produce in the short run. C. shut down in the short run. D. increase output in the short run.
C. shut down in the short run.
According to the theory of comparative advantage, a country should A. specialize and export goods with the highest opportunity cost. B. specialize and export goods with the lowest fixed cost. C. specialize and export goods with the lowest opportunity cost. D. specialize and export goods with the lowest average cost.
C. specialize and export goods with the lowest opportunity cost.
You notice that the price of Blu-ray players falls and the quantity of Blu-ray players sold increases. You suspect that _____ Blu-ray players shifts to the _____. A. demand for; right. B. demand for; left. C. supply of; right. D. supply of; left.
C. supply of; right.
The marginal cost curve intersects the average variable cost curve at A. at the point of profit maximization. B. at the AVC's endpoint. C. the AVC's lowest point. D. at the maximum average variable costs.
C. the AVC's lowest point.
Coffee and tea are substitutes in consumption. If there is an increase in the price of coffee, assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus in the tea market: A. may change, but we cannot determine the change without more information. B. will decrease. C. will increase. D. will not change.
C. will increase.
If Good C increases in price by 50% a pound, and this causes the quantity demanded for Good D to increase by 60%, what is the cross-price elasticity of the two goods? A. 12 B. 0.83 C. 8.3 D. 1.2
D. 1.2
Which of these is not a characteristic of monopolies? A. Firms can earn positive economic profit in the long run. B. The price is higher than under perfect competition. C. There are barriers to entry. D. An efficient quantity of the good is produced.
D. An efficient quantity of the good is produced.
According to the ______ theory, a country has a comparative advantage in a good whose production is intensive in the factors that are abundantly available in that country. A. sweatshop labor B. pauper labor C. comparative advantage D. Heckscher-Ohlin
D. Heckscher-Ohlin
In which occupational categories workers least likely to be represented by a union negotiating salaries on their behalf? A. Government B. Manufacturing C. Healthcare D. Leisure, hospitality, and trade
D. Leisure, hospitality, and trade
In which job category do women account for a majority of the labor force yet still earn less than men on average? A. Lawyers B. Installation, maintenance, and repair C. Chief executives D. Registered nurses
D. Registered nurses
Consider the market for corn. What happens if there is an increased demand for corn tortillas and, at the same time, a new corn seed becomes available that dramatically increases the yield per acre? A. Price increases; the change in quantity is indeterminate. B. The change in price is indeterminate; quantity decreases. C. Price and quantity decrease. D. The change in price is indeterminate; quantity increases.
D. The change in price is indeterminate; quantity increases.
Suppose New Jersey produces only pharmaceutical products and medical treatments, with fixed amounts of land, labor, and capital resources. Which scenario best sets the stage for economic growth? A. The United States imports more and more low-cost pharmaceutical products from Canada. B. The unemployment rate in Pennsylvania rises from 5% to 6%. C. The state experiences a devastating drought. D. The percentage of New Jersey residents with a university degree rises from 15% to 23%.
D. The percentage of New Jersey residents with a university degree rises from 15% to 23%.
Which of these factors increases the likelihood of collusion among firms? A. Firms have substantial excess production capacity. B. US antitrust laws are strictly enforced. C. Products are differentiated and change frequently. D. There are very few firms in the industry.
D. There are very few firms in the industry.
Which is the best example of a good that generates a positive consumption externality? A. Use of an electric scooter on a college campus B. Undeveloped forests C. A power plant D. Vaccination
D. Vaccination
Which is the best definition of efficiency? A. When everyone can be made better off by using resources more wisely B. When the only way somebody can be made better off is by making another better off C. When somebody can be made better off without making someone worse off D. When nobody can be made better off without making someone worse off
D. When nobody can be made better off without making someone worse off
If a nation's Gini coefficient is falling over time, it means the country is experiencing A. a decrease in the poverty rate. B. an increase in the poverty rate. C. an increase in income inequality. D. a decrease in income inequality.
D. a decrease in income inequality.
The reason utility companies are not broken up under the Sherman Anti-Trust Act is because A. they will profit maximize at a price similar to that of perfect competition without regulation. B. they face enough competition without the need for government intervention. C. they operate as oligopolists and do not overtly collude. D. doing so would raise ATC assuming those companies are natural monopolists.
D. doing so would raise ATC assuming those companies are natural monopolists.
Above-equilibrium wages paid by some employers as an incentive for better performance are called: A. market power wages. B. discrimination. C. compensating differentials. D. efficiency wages.
D. efficiency wages.
Some of the major causes of poverty in the US are racial and gender discrimination, bad luck, a lack of proficiency in English, and A. proximity to the ocean. B. government restrictions. C. differences in religious preference. D. inadequate education and training.
D. inadequate education and training.
Suppose the U.S. government imposes a binding quota on the number of Japanese-made cars allowed into the United States. Assuming that Japanese-made cars and U.S.-made cars are substitutes in consumption, we would expect the price of Japanese cars to _____ and the price of U.S.-made cars to _____. A. decrease; increase B. increase; decrease C. decrease; decrease D. increase; increase
D. increase; increase
An objective of the European Union is the promotion of "four freedoms" which include all except A. free movement of people B. movement of goods without tariffs C. ability of businesses to offer services in fellow EU countries without tariffs D. political unification
D. political unification
In a perfectly competitive market, tastes and preferences lead to an increase in the demand for the good. Holding everything else constant, this will lead to an increase in price that will result in _____ in the short run, which will in turn _____, which will _____. A. economic losses; attract new firms; reduce the price B. positive economic profits; lead some firms to leave the industry; further increase the price C. economic losses; lead some firms to leave the industry; further increase the price D. positive economic profits; attract new firms; reduce the price
D. positive economic profits; attract new firms; reduce the price
People are willing to buy insurance because of A. status quo bias. B. a bandwagon effect. C. a miscalculation of opportunity costs. D. risk aversion.
D. risk aversion.
Goods A and B have a positive cross-price elasticity of demand. This means that goods A and B are: A. inferior. B. complements. C. normal. D. substitutes.
D. substitutes.
Which of the following is a factor of production at Rutgers? A. the students B. electricity C. the food at the Atrium D. the faculty
D. the faculty
In general, because of the nature of opportunity costs, the price of an extra hour of leisure is: A. the total utility of labor. B. the marginal utility of labor. C. the same as the price of money. D. the hourly wage rate.
D. the hourly wage rate.
If the technology of producing peanut butter improves, total surplus in the peanut butter market: A. will not change. B. will decrease. C. may change, but we cannot determine the change without more information. D. will increase.
D. will increase.
Suppose that Paulie and Vinny each can produce ice cream or t-shirts. The table shows the quantity of each good that Paulie and Vinny each can produce in 1 hour, respectively, if they devote all of their time and effort into making the good. Paulie has a comparative advantage in ____ and Vinny has a comparative advantage in ____. Ice Cream T-shirts Paulie - 3.00 19.00 Vinny - 8.00 15.00 Ice cream; T-shirts T-shirts; T-shirts T-shirts; Ice cream ice cream; Ice cream
T-shirts; Ice cream
Which of the following explains why a production possibilities frontier or curve is often represented as concave (bowed out) from the origin? constant returns to scale increasing opportunity costs the law of supply the law of demand
increasing opportunity costs