Micro Final

Refer to Figure 8-23. If the economy is at point B on the curve, then an increase in the tax rate will

increase the deadweight loss of the tax and decrease tax revenue.

Refer to Figure 2-6. The opportunity cost of this economy moving from point K to point H is

zero

Eileen's Elegant Earrings produces pairs of earrings for its mail order catalogue business. Each pair is shipped in a separate box. She rents a small room for $150 a week in the downtown business district that serves as her factory. She can hire workers for $275 a week. There are no implicit costs. Refer to Table 13-12. During the week of July 4th, Eileen doesn't produce any earrings. What are her costs during the week?

$150

A small island off the coast of Cape Cod contains two restaurants and two retail stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown in the economy, tourists are less willing to pay for the boat ride to visit the island. The owners of the restaurants and stores on the island — Restaurants 1 and 2, and Stores A and B — think that if tourists could ride the ferry for free, they would be happy to visit the island, eat and shop. The business owners are considering contributing to a pool of money that will be used to pay for roundtrip ferry service each day. The table represents their willingness to pay, that is, the maximum amount that each business owner is willing to contribute, per day, to pay for each ferry trip. Refer to Table 11-5. Suppose the cost to run the ferry for each roundtrip is $750. How many ferry trips should there be to maximize the total surplus of the four business owners?

2

Refer to Figure 6-13. Which of the following statements is not correct?

A price ceiling set at $3.50 would result in a surplus.

Suppose a firm operating in a competitive market has the following cost curves: Refer to Figure 14-5. When market price is P2, a profit-maximizing firm's losses can be represented by the area

At a market price of P2 the firm has losses, but the reference points in the figure don't identify the losses.

Refer to Figure 15-3. Which panel could represent the demand curve facing a local cable television provider if that firm in a monopolist?

Panel A

The Chicken Game is named for a contest in which drivers test their courage by driving straight at each other. John and Paul have a common interest to avoid crashing into each other, but they also have a personal, competing interest to not turn first to demonstrate their courage to those observing the contest. The payoff table for this situation is provided below. The payoffs are shown as (John, Paul). What is Paul's dominant strategy?

Paul has no dominant strategy.

Refer to Figure 10-4. If all external costs were internalized, then the market's equilibrium output would be

Q2

Refer to Figure 4-27. Panel (d) shows which of the following?

a decrease in quantity demanded and a decrease in supply

In the graph below, Sp is the supply curve based on producers costs, & St is the supply curve based on social or total cost. The government policy that would bring the market to socially optimal quantity of production & consumption of the good or services would be:

a tax in the amount EG

The figure is drawn for a monopolistically-competitive firm. Refer to Figure 16-9. Efficient scale is reached

beyond 133.33 units.

Chrissy and Marvin are competitors in a local market and each is trying to decide if it is worthwhile to advertise. If both of them advertise, each will earn a profit of $10,000. If neither of them advertise, each will earn a profit of $20,000. If one advertises and the other doesn't, then the one who advertises will earn a profit of $30,000 and the other will earn $14,000. To earn the highest profit, Chrissy

has no dominant strategy.