MicroEcon

Table 13-9 Refer to Table 13-9. For the firm whose production function and costs are specified in the table, its average-variable-cost curve is

a)constant. b)decreasing. c)Correct: increasing. d)U-shaped

Warrensburg is a small college town in Missouri. At the end of August each year, the market demand for fast food in Warrensburg

a)increases(correct) b)decreases c)remains constant, but we observe a movement downward and to the right along the demand curve. d)remains constant, but we observe a movement upward and to the left along the demand curve.

Refer to Figure 5-3. The maximum value of total revenue corresponds to a price of

a)$20. b)$50.(Correct) c)$70. d)$100.

The Three Amigo's company produced and sold 500 dog beds. The average cost of production per dog bed was $50. Each dog bed can be sold for a price of $65. The Three Amigo's total costs are

a)$7,500. b)$25,000.(correct) c)$32,500 d)$67,500.

Refer to Figure 5-3. At a price of $70 per unit, sellers' total revenue equals

a)$700. b)$1,050.(correct) c)$1,250. d)$1,400.

Refer to Figure 2-1. Morgan buys a refrigerator for his new home. To which of the arrows does this transaction directly contribute?

a)A only b)A and B(correct) c)C only d)C and D

Figure 6-14 Suppose the government imposes a $2 tax on this market. Refer to Figure 6-14. The buyers will bear the highest share of the tax burden compared to sellers if the demand is

a)D1, and the supply is S1. b)D2, and the supply is S1. c)D1, and the supply is S2. d)D2, and the supply is S2.(correct)

Refer to Figure 5-4. If rectangle D is larger than rectangle A, then which of the following is not correct?

a)Demand is elastic between prices P1 and P2. b)A decrease in price from P2 to P1 will cause an increase in total revenue. c)The magnitude of the percentage change in price between P1 and P2 is smaller than the magnitude of the corresponding percent change in quantity demanded. d)An increase in price from P1 to P2 will cause an increase in total revenue.(Correct)

If the price of natural gas rises, when is the price elasticity of demand likely to be the highest?

a)Immediately after the price increase b)One month after the price increase c)Three months after the price increase d)One year after the price increase(correct)

Refer to Figure 7-5. If the demand curve is D and the supply curve shifts from S' to S, what is the change in producer surplus?

a)Producer surplus increases by $625. b)Producer surplus increases by $1,875.(correct) c)Producer surplus decreases by $625. d)Producer surplus decreases by $1,875.

If T represents the size of the tax on a good and Q represents the quantity of the good that is sold, total tax revenue received by government can be expressed as

a)T/Q. b)T × Q.(correct) c)T+Q d)(T × Q)/Q

Which of the following is not correct?

a)Taxes levied on sellers and taxes levied on buyers are not equivalent.(correct) b)A tax places a wedge between the price that buyers pay and the price that sellers receive c)The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers. d)In the new after-tax equilibrium, buyers and sellers share the burden of the tax.

Walter used to work as a high school teacher for $40,000 per year but quit in order to start his own painting business. To invest in his painting business, he withdrew $20,000 from his savings, which paid 3 percent interest, and borrowed $30,000 from his uncle, whom he pays 3 percent interest per year. Last year Walter paid $25,000 for supplies and had revenue of $60,000. Walter asked Tyler the accountant and Greg the economist to calculate his painting business's costs.

a)Tyler says his costs are $25,900, and Greg says his costs are $66,500.(correct) b)Tyler says his costs are $25,000, and Greg says his costs are $65,000. c)Tyler says his costs are $66,500, and Greg says his costs are $66,500. d)Tyler says his costs are $75,000, and Greg says his costs are $41,500.

When a tax is placed on the sellers of cell phones, the size of the cell phone market

a)and the effective price received by sellers both increase. b)increases, but the effective price received by sellers decreases. c)decreases, but the effective price received by sellers increases. d)and the effective price received by sellers both decrease.(correct)

Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by M represents

a)consumer surplus after the tax. b)consumer surplus before the tax. c)producer surplus after the tax.(correct) d)producer surplus before the tax.

The terms equality and efficiency are similar in that they both refer to benefits to society. However, they are different in that

a)equality refers to uniform distribution of those benefits, and efficiency refers to maximizing benefits from scarce resources.(correct) b)equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits. c)equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits. d)equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs.

Refer to Figure 7-1. When the price rises from P1 to P2, consumer surplus

a)increases by an amount equal to A. b)decreases by an amount equal to B+C.(correct) c)increases by an amount equal to B+C. d)decreases by an amount equal to C.

The less freedom young mothers have to work outside the home, the

a)more elastic the supply of labor will be. b)less elastic the supply of labor will be.(correct) c)more horizontal the labor supply curve will be. d)larger is the decrease in employment that will result from a tax on labor.

As a result of a decrease in price,

a)new buyers enter the market, increasing consumer surplus.(correct) b)new buyers enter the market, decreasing consumer surplus. c)existing buyers exit the market, increasing consumer surplus. d)existing buyers exit the market, decreasing consumer surplus

Refer to Figure 6-6. When a certain price control is imposed on this market, the resulting quantity of the good that is actually bought and sold is such that buyers are willing and able to pay a maximum of P1 dollars per unit for that quantity and sellers are willing and able to accept a minimum of P2 dollars per unit for that quantity. If P1 − P2 = $3, then the price control is

a)only a price ceiling of $3.00. b)only a price ceiling of $6.00. c)only a price floor of $6.00. d)either a price ceiling of $3.00 or a price floor of $6.00.(correct)

A supply schedule is a table that shows the relationship between

a)price and quantity supplied.(correct) b)input costs and quantity supplied. c)quantity demanded and quantity supplied. d)profit and quantity supplied

Refer to Figure 7-6. Area A represents

a)producer surplus to new producers entering the market as the result of an increase in price from P1 to P2. b)the increase in consumer surplus that results from an upward-sloping supply curve. c)the increase in total surplus when sellers are willing and able to increase supply from Q1 to Q2. d)the increase in producer surplus to those producers already in the market when the price increases from P1 to P2.(correct)

The line that relates the price of a good and the quantity demanded of that good is called the demand

a)schedule, and it usually slopes upward. b)schedule, and it usually slopes downward. c)curve, and it usually slopes upward. d)curve, and it usually slopes downward.(correct)

If something happens to alter the quantity supplied at any given price, then

a)we move along the supply curve. b)the supply curve shifts(correct) c)the supply curve becomes steeper. d)the supply curve becomes flatter.

The decrease in total surplus that results from a market distortion, such as a tax, is called a

a)wedge loss. b)revenue loss. c)deadweight loss.(correct) d)consumer surplus loss.