MicroEcon QUIZZES - final 22

(Table) According to the table, the equilibrium price is _____, and the equilibrium output is _____ units.

$10; 60

Jeremy's level of satisfaction from consuming the first cookie was 25 utils. The second cookie increased the level of satisfaction by 20 utils. Jeremy's total level of satisfaction after three cookies was 60. Thus, the marginal utility for the third cookie is

15

Staci's Sign Shoppe makes signs for businesses. Staci is currently producing 210 signs per week with three employees. She hires an additional worker and total output per week rises to 292 signs. The marginal product of the last worker is _____ signs.

82

A perfectly competitive firm has total revenues equal to $360 when it produces forty units. What is the marginal revenue for the forty-first unit?

$9

If price increases by 100% and quantity demanded decreases by 50%, then the price elasticity of demand is equal to

0.5.

If a product's price rises by 6% and its quantity demanded falls by 8%, then its elasticity is equal to

1.33.

(Figure: Individual and Market Demand Curves) According to the graph, the market quantity demanded at $20 is

10 units.

(Table) The table shows the total utility and marginal utility for ice cream consumption. In the table, the value for C is

13.

Which of these is an example of consumers creating a negative externality?

Litter is found in an area around a fast-food restaurant.

For firms in perfect competition, profit maximization will always occur where

MC = P.

If Tamara is given a $3-per-hour pay increase, and in response, she decides to work more hours, then

Tamara's work hours are represented on the upward-sloping portion of her labor supply curve.

Parami volunteers at a homeless shelter. It takes a lot of her time, and thus she sometimes takes off time from her job to do the volunteer work. Parami's behavior can be explained by

altruism.

When the Stay Connected Cell Phone Company is at full capacity, it incurs costs of $230,000. During the December shutdown period, when no cell phones are produced, it incurs costs of $76,000. It can be concluded that

at full capacity, variable costs are $154,000.

In the short run

at least one factor of production is fixed.

In the model of short-run costs, the vertical distance between the average total cost (ATC) curve and the average variable cost (AVC) curve is

average fixed cost (AFC).

Which curve is NOT U-shaped?

average fixed cost curve

(Table) Based on the table, as long as marginal product is greater than average product the

average product rises.

(Figure: Determining Consumer and Producer Surplus) Based on the graph, area _____ represents producer surplus.

b

(Figure: Labor Supply Curve) Based on the graph, the income effect is shown by segment

bc.

All other things equal, if the prices of the two goods the consumer buys decrease, the

budget line shifts to the right.

(Figure: Interpreting Demand Curves) In the demand curve shown, an increase in price from $1 to $2 will

cause quantity demanded to fall from 30 to 20 units.

(Figure: Determining Marginal Returns) Based on both the table and the figure, adding a third worker leads to _____ marginal returns.

increasing

What types of industries have been outsourced from the United States because of international trade?

industries that require a large amount of labor

Home heating gas tends to have _____ demand because _____.

inelastic; people do not have time to adjust their consumption patterns

In recent years, the United States has produced a growing share of

intangible services.

Farmer Ted sells wheat in a perfectly competitive market. The market price for a bushel of wheat is $9. Ted has 270 bushels of wheat to sell. If his total variable cost is $2,000 and his total fixed cost is $500, then Ted

is minimizing his losses.

Total utility

is the total satisfaction derived from the consumption of given quantity of a good.

The Coase theorem claims that in the case of tobacco

it does not matter who is given the property rights to the air, as long as the parties involved are allowed to bargain.

Derived demand suggests that

labor demand is derived from demand for the product a firm produces.

One of the reasons that competition may fail to eliminate gender wage discrimination is

lack of mobility.

In which period can firms decide to leave an industry?

long run

(Figure: Determining Long-Run Adjustments) If the current price is $36 in this perfectly competitive industry

losses in the short run will persuade some firms to leave the industry.

Jim Delaney sold his pizza firm to an investor who then sold stock to the public. Jim now earns a salary of $5,000 a month and all the profits are distributed to the stockholders. This firm is an example of a

corporation.

Marginal utility analysis and indifference curve analysis are both used to

derive demand curves.

Corn is a perfectly competitive commodity. In the marketplace, the demand curve for corn is

downward sloping.

The price of a mango is $2 and a farmer sells 2,000 mangos. However, the costs to the farmer are $400 for labor; $1,600 for rent; and $2,000 for advertising. Based on the above information, the farmer

makes $4,000 in total revenue.

At an all-you-can eat buffet, a person will stop eating when

marginal utility is equal to zero.

When quantity demanded in a market equals quantity supplied, then the

market is in equilibrium.

A utility-maximizing consumer will always choose to

maximize total utility.

Supply is defined as the _____ over a particular time period at various prices, holding all other relevant factors constant.

maximum amount of a product that sellers are willing and able to provide for sale

Mike constructed a beautiful backyard landscape. He also built a tall wooden fence around his yard. With the fence in place, the good that the landscape brings to the neighborhood becomes a

private good because Mike can exclude people from enjoying the landscape.

Other factors held constant, as the price of an iPad rises, the

quantity demanded of iPads falls.

A bicycle factory finds that it can lower costs if it also produces tricycles and unicycles. This is an example of

economies of scope.

If the price of a product falls by 15% and the quantity supplied falls by 25%, the supply of the product is

elastic.

Gary Becker's theory of economic discrimination argues that

employers who discriminate against women will lose profit opportunities.

Amtrak exhibits _____, and a can of Budweiser is a _____ product.

excludability; rival

(Figure: Supply and Demand for Shoes) If the price of shoes is $60, then the market

experiences a surplus of shoes.

(Table) Based on the table, diminishing marginal returns begin with the _____ worker.

fifth

Alvaro pays $40 in tax on a $120 item. Nurul pays $80 in tax on a $240 item. We can conclude that this is a _____ tax.

flat

A price taker is a firm that

has no control over the market price.

Which of these circumstances would NOT affect the supply of new automobiles?

higher interest rates for new car financing

The cost incurred by a firm through the foregone earnings on capital invested is a(n) _____ cost.

implicit

(Figure: Interpreting Supply Shifts 2) A shift to the right of the supply curve could be caused by a(n)

improvement in production technology.

A tax in which the percentage of income tax rises as income falls is known as a _____ tax.

regressive

Suppose the demand for toxic waste disposal is very elastic. The government imposes an excise tax on waste disposal. The deadweight loss associated with the production of toxic waste disposal will be

relatively large.

Indifference curves

represent a set of product bundles to which a consumer is indifferent.

The tragedy of the commons applies to goods that are

rival and nonexcludable.

If demand is extremely elastic, it is likely that _____ will bear most of the burden of a tax and that the deadweight loss will be relatively _____.

sellers; large

If the United States experiences an inflationary episode in which prices of goods and services rise faster than incomes, budget lines for U.S. consumers will

shift inward.

If the price of diesel fuel increases, the MRP curve for truck drivers will

shift to the left.

(Table) If the toy-making firm in the table faces a market price of $20 in the short run, it should

shut down

Which sequence describes the long-run adjustment process in a competitive market when firms experience short-run economic losses?

some firms exit, industry supply decreases, market price rises

If the cross elasticity of demand for good A with respect to good B is 2.3, then good A is a(n)

substitute for good B.

When the individual labor supply curve is positively sloped, the _____ effect dominates and higher wages lead to _____ hours worked.

substitution; more

A consumer is in equilibrium when

the addition to total utility per dollar is the same for every commodity.

(Figure: Interpreting a Market Graph) The graph represents

the law of supply.

At any price below the equilibrium price

the quantity demanded exceeds the quantity supplied in the market.

In a competitive labor market, if a new manufacturing plant seeks to build its labor force, it is assumed that

the quantity of workers available is greater than the quantity of workers that are required.

The primary determinant of the elasticity of supply is

time.

If a firm sells a product that has a perfectly inelastic demand curve, then if price doubles, it can be expected that

total revenue will double.

A gas station owner in a large city learned in his microeconomics class that buyers are relatively unresponsive to changes in the price of gasoline. If that assumption is correct, when he increases the price of gas at his station

total revenue will increase.

If air pollution comes from multiple sources and causes many people to suffer, then an efficient agreement among the parties is difficult to achieve because

transaction costs are high.

Normal profit is equal to

zero economic profit.

The act that makes it unlawful to refuse to hire a person based on his or her race, color, religion, sex, or national origin is the

Civil Rights Act of 1964.

Suppose the demand for gasoline is rising. Which statement describes a possible cause?

Consumers expect prices to rise in the near future.

(Figure: Determining Long Run Adjustments) The figure depicts the cost curves for a firm in a perfectly competitive industry. In the long run, the market price of this product will be

$40.

If wages increase at a 5% rate and the quantity demanded of labor decreases by 10%, then the elasticity of demand for labor is

2

(Table) Based on the table, if the marginal benefit increased by $300,000 at each level, the new optimal quantity would be

2,500

(Figure: Interpreting Supply Shifts) When the supply shifts from S0 to S1, the equilibrium quantity changes from

20 units to 15 units.

(Figure: Quarts of Milk and Jars of Honey 2) Based on the graph, what is the quantity of milk that maximizes a consumer's satisfaction?

200

Which is equivalent to average variable cost (AVC)?

ATC - AFC

Which example represents the short run?

Ford asks its workers to work overtime.

The price of gold increases by 200%. If the price elasticity of demand for gold is 0.4, what will happen in the market?

Gold sales will decrease by 80%.

Which of these is both finite and nonrenewable?

Helium, gold, and copper are all finite and nonrenewable.

Figure: Nail Polish Externalities) Based on the figure, Sp (MPC) represents the private supply curve of a particular type of nail polish, the manufacture of which is associated with the release of toxic chemicals into the atmosphere. SS (MSC) includes the cost of that toxicity borne by others. What is the socially optimal price of this nail polish?

P2

_____ are more numerous, but _____ sell more goods and services.

Sole proprietorships; corporations

If a store sells a good that has a unitary elastic demand, what would be the net result on their total revenue from an increase in price?

There would be no change in total revenue.

Which of these is NOT a reason standards for reducing pollution are popular?

They lead each firm to have the same abatement costs.

Which item is most likely an inferior good?

a city bus ticket

Which firm is MOST likely to operate in a perfectly competitive market?

a maple syrup company

(Figure: Predicting Demand Shifts 2) What would cause a shift from D1 to D2?

a new study that shows that honey reduces the risk of cancer

In a 2008 case before the Supreme Court regarding older power plants and how best to protect fish and aquatic organisms, Justice David Souter remarked, "The difficulty that I have is if you are going to apply . . . a cost-benefit analysis, I'm not sure how it would work. Are a thousand plankton worth a million dollars?" Justice Souter's question points out the difficulty of

measuring nonmarket or intangible aspects of public projects.

In general, the flatter the supply curve is, the

more elastic is supply.

Factory jobs are no longer plentiful in the United States. This is due to all of these EXCEPT

more foreign direct investment into the United States.

What percentage of families with small children are two-income households?

more than 50%

When hiring additional workers reduces total output, the firm faces

negative marginal returns.

A right-to-work state is one in which

new employees hired by a company with union representation do not have to join the union.

Spraying for mosquito control in a local community is an example of a public good because it is

nonrival and exhibits nonexcludability.

Which is an implicit cost?

opportunity cost

Because they are so sure of their ability to pick winners, some people hang on to a stock even in the face of overwhelming evidence that its price is going to drop. These people are subject to

overconfidence.

All of these are considered negative externalities EXCEPT

overstock of a flu vaccine.

Reece stayed out late last night and is very tired. He plans to skip his 8 A.M. economics class, even though he knows his professor will cover material that will be on the final exam. Reece is subject to

overvaluing the present relative to the future.

Which type of payment would NOT be considered a market transaction?

payment made to a victim of a natural disaster

A market exists when

people exchange money for goods and services.

When firm X sells 3 units of product Z, its marginal revenue is $4.67. When it sells 100 units, marginal revenue is $4.67. The firm most likely operates in which market structure?

perfect competition

What is the correct market structures in order from the highest number of sellers to the lowest?

perfect competition, monopolistic competition, oligopoly, monopoly

Firms in all market structures experience some type of control over price, EXCEPT firms whose market structure is

perfect competition.

(Figure: Interpreting Elasticity of Supply) How would you describe supply as shown in the graph?

perfectly elastic