micro quizzes
Refer to Figure 7-19. At the equilibrium price, producer surplus is
150
A 10 percent increase in gasoline prices reduces gasoline consumption by about
2.5 percent after one year and 6 percent after five years
Refer to Figure 15-22. Given that Bearclaws chooses the profit maximizing price and quantity, what profit level will it obtain?
280
At Nick's Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling five cakes, Nick experiences a producer surplus in the amount of $17.50. Nick must be selling his cakes for a.$7.50 each.b.$6.50 each.c.$10.50 each.d.$9.50 each.
7.50
A binding minimum wage tends to
all the above
"In a long-run equilibrium, price is equal to average total cost." This statement applies to
competitive and monopolistically competitive markets, but not to monopolies.
If the cross-price elasticity of two goods is negative, then the two goods are
complements
A surplus exists in a market if
the current price is above its equilibrium
Which of following statements is true based upon the conditions in the market?
a surplus will develop when a price floor is imposed at a price of $12
Assume that the farmer and the rancher can switch between producing pork and producing tomatoes at a constant rate.
1 pound of pork
Refer to Figure 15-22. Based upon the information shown, what price will Bearclaws charge to maximize profits?
14
The price paid by buyers after the tax is imposed is
5
figure 16-11
500
Which of the following combinations of wheat and beef could Andrea produce in one 8-hour day?
7 bushels of wheat and 15 pounds of meat
Refer to Figure 15-22. Based up on the information shown, what is total revenue for Bearclaws, given that it maximizes profits?
980
Since restored historic buildings convey a positive externality, local governments may choose to
D)! Both a and b are correct a. regulate the demolition of them b. provide tax breaks to owners who restore them
figure 16-14
LM
Juanita and Shantala run a business that programs and tests cellular phones. Assume that Juanita and Shantala can switch between programming and testing cellular phones at a constant rate. The following table applies.
WRONG 7.5 cellular phones and 2.5 NEXT GUESS:.133 and .4
An decrease in the price of oranges would lead to a(n)
a movement down and to the left along the supply curve for oranges.
Josiah installed a metal sculpture in his front yard. A negative externality arises if the sculpture
creates a safety hazard for neighborhood children WRONG: increases the value of other properties in the neighborhood
Deadweight losses are associated with monopolistic competition:
in both short and long run
a very hot summer in Atlanta will cause
the demand for jackets to decrease
If Uzbekistan and Azerbaijan each divides its time equally between making bolts and making nails, then total production is
25 bolts and 70 nails
figure 16-12
28 unites
Refer to Figure 7-3. When the price is P1, consumer surplus is
A+B+C
a patent is used to
assign property rights WRONG:protect inventors for as long as they live
Total output in an economy increases when each person specializes because
each person spends more time producing that product in which he or she has a comparative advantage
A benefit to society of the patent and copyright laws is that those laws
encourage creative activity
A good will have a more elastic demand, the
greater the availability of close substitutes. WRONG: more broad the definition of the market.
A profit-maximizing monopolist will produce the level of output at which
marginal revenue is equal to marginal cost
Figure 17-2. Two companies, Acme and Pinnacle, each decide whether to produce a good quality product or a poor quality product. In the figure, the dollar amounts are payoffs and they represent annual profits for the two companies Refer to Figure 17-2. Acme and Pinnacle agree to cooperate so as to maximize total profit. If this game is played repeatedly and Acme uses a tit-for-tat strategy, it will choose a
poor quality product in the first round and in subsequent rounds it will choose whatever Pinnacle chose in the previous round.
A drug interdiction program that successfully reduces the supply of illegal drugs in the United States likely will
raise the price, reduce the quantity, increase total revenues, and increase crime
In the game in which two oil companies own adjacent oil fields, the companies will not use the oil efficiently because
the pool from which they recover the oil is a common resource
A firm in a monopolistically competitive market is similar to a monopoly in the sense that (i) they both face downward-sloping demand curves. (ii) they both charge a price that exceeds marginal cost. (iii) free entry and exit determines the long-run equilibrium.
(i) and (iii)
Refer to Figure 7-12. If the equilibrium price rises from $200 to $350, what is the additional producer surplus to initial producers?
15000
Refer to Figure 10-20 . The graph depicts the market for fertilizer. Without any government regulation, what is the equilibrium price of fertilizer?
250
Refer to Figure 7-1. If the price of the good is $150, then consumer surplus amounts to
250
Refer to Figure 7-1. If the price of the good is $250, then consumer surplus amounts to
50
Suppose that a worker in Boatland can produce either 5 units of wheat or 25 units of fish per year, and a worker in Farmland can produce either 25 units of wheat or 5 units of fish per year. There are 30 workers in each country. No trade occurs between the two countries. Boatland produces and consumes 75 units of wheat and 375 units of fish per year while Farmland produces and consumes 375 units of wheat and 75 units of fish per year. If trade were to occur, Boatland would trade 90 units of fish to Farmland in exchange for 80 units of wheat. If Boatland now completely specializes in fish production, how many units of fish could it now consume along with the 80 units of imported wheat?
660 units
A binding price floor will reduce a firm's total revenue
when a demand is elastic
a shortage is eliminated when
a binding price ceiling is removed
Suppose that a $4 per unit tax is imposed on the sellers of DVDs. The effect of the tax will be to
shift the supply curve up by exactly $4 and the price paid by buyers will rise by less than $4.
A rain barrel is a container that captures and stores rainwater for landscape and garden use during dry periods. As a result, rain barrels benefit the community through water conservation. If homeowners do not consider this external benefit of rain barrels, then
the socially optimal quantity of rain barrels will be larger than the equilibrium quantity of rain barrels.
Alex is willing to pay $10, and Bella is willing to pay $8, for 1 pound of ribeye steak. When the price of ribeye steak increases from $9 to $11,
Alex experiences a decrease in consumer surplus, but Bella does not
If Shawn can produce donuts at a lower opportunity cost than Sue, then
Shawn has a comparative advantage in the production of donuts
A city wants to raise revenues to build a new municipal swimming pool next year. The mayor suggests that the city raise the price of admission to the current municipal pools this year to raise revenues. The city manager suggests that the city lower the price of admission to raise revenues. Who is correct?
The answer depends on the price elasticity of demand
Suppose that flower gardens create a positive externality equal to $1 per plant. What is the relationship between the equilibrium quantity and the socially optimal quantity of plants grown?
The equilibrium quantity is less than the socially optimal quantity
Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 chair is
WRONG 6 tables for ken and 3 tables for traci NEXT GUESS:1/6 1/3
What is the amount of the tax per unit?
WRONG: $6 8
The burden of the tax on sellers is
WRONG:$3 WRONG: $2
Using the midpoint method, the price elasticity of demand between point Y and point Z is
WRONG:1.3
Figure 17-4. Aaron and Ed are roommates. After a big snowstorm, their driveway needs to be shoveled. Each person has to decide whether to take part in shoveling the driveway. At the end of the day, either the driveway will be shoveled (if one or both roommates take part in shoveling), or it will remain unshoveled (if neither roommate shovels). With happiness measured on a scale of 1 (very unhappy) to 10 (very happy), the possible outcomes are as follows: Refer to Figure 17-4. In pursuing his own self-interest, Aaron will
WRONG:refrain from shoveling whether or not Aaron shovels RIGHT:shovel only if Ed refrains from shoveling.
Suppose your own demand curve for tomatoes slopes downward. Suppose also that, for the last tomato you bought this week, you paid a price exactly equal to your willingness to pay. Then
Your consumer surplus on the last tomato you bought is zero
A positive externality arises when a person engages in an activity that has
a beneficial effect on a bystander who does not pay the person who causes the effect.
A seller's willingness to sell is
all the above
In the prisoners' dilemma game, self-interest leads
all the above
The incidence of a tax is
always determined by the interaction of the demand and supply side of the market..
A key determinant of the price elasticity of supply is a.the ability of sellers to change the price of the good they produce. b.how responsive buyers are to changes in sellers' prices. c.the slope of the demand curve. d.the ability of sellers to change the amount of the good they produce.
d. the ability of sellers to change the amount of the good they produce.
The discovery of a new hybrid wheat would increase the supply of wheat. As a result, wheat farmers would realize an increase in total revenue if the
demand for wheat is elastic
Drug companies are allowed to be monopolists in the drugs they discover in order to
encourage research
The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good,
has an absolute advantage in the production of that good
A downward-sloping demand curve
is a feature of all monopolistically competitive firms
A firm that is a natural monopoly
is not likely to be concerned about new entrants eroding its monopoly power.
Assume that a 4 percent decrease in income results in a 6 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is
negative, and the good is an inferior good
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
Suppose the government imposes a tax in a certain market in order to internalize an externality. This type of policy is based on which of the Ten Principles of Economics?
people respond to incentives
Because many good substitutes exist for a competitive firm's product, the demand curve that it faces is
perfectly elastic
A monopolistically competitive market could be considered inefficient because
price exceed marginal cost
A perfectly inelastic demand implies that buyers
purchase the same amount as before when the price rises or falls
Figure 17-3. Hector and Bart are roommates. On a particular day, their apartment needs to be cleaned. Each person has to decide whether to take part in cleaning. At the end of the day, either the apartment will be completely clean (if one or both roommates take part in cleaning), or it will remain dirty (if neither roommate cleans). With happiness measured on a scale of 1 (very unhappy) to 10 (very happy), the possible outcomes are as follows: Refer to Figure 17-3. The dominant strategy for Hector is to
refrain from cleaning, and the dominant strategy for Bart is to refrain from cleaning.
A similarity between monopoly and monopolistic competition is that in both market structures
sellers are price makers rather than price takers
The production possibilities frontier illustrates
the combinations of output that an economy can produce.
Refer to Figure 10-3. The difference between the social cost curve and the supply curve reflects the
the cost of spillover effects from the concert (e.g., noise and traffic)
Suppose that a steel factory emits a certain amount of air pollution, which constitutes a negative externality. If the market does not internalize the externality,
the market equilibrium quantity will not be the socially optimal quantity
Bob's Butcher Shop is the only place within 100 miles that sells bison burgers. Assuming that Bob is maximizing his profit, which of the following statements is true?
the price of bobs burgers will exceed bobs marginal cost
A university's football stadium is always sold out, and students who wait in line for hours may be turned away. This indicates
the ticket price is below the equilibrium price
For every unit of the good that is sold, sellers are required to send
three dollars to the government, and buyers are required to send nothing to the government.
As competitors enter a monopolistically competitive industry, the incumbent firms demand curves shift
to the LEFT and become MORE elastic
Efficiency is attained when
total surplus is maximized