Microeconomics Exam #4

If the poverty threshold for a family of four is $24,000 and the Shoenfelds earned $21,000, their income deficit is _____ and their ratio of income to poverty is _____.

$3,000; 0.875

In the market for surfboards in the graph, with a $100 tariff per imported surfboard, the government collects a total of _____ in tariff revenues.

$4000

Based on this table, the opportunity cost of one kilogram of coffee in Kenya is:

0.33 kilograms of cocoa.

In the figure, the opportunity cost of one ton of steel in terms of aluminum is:

0.5

Which Gini coefficient corresponds to a Lorenz curve that is bowed furthest away from the 45-degree line?

0.71

In the market for surfboards seen in the graph, in autarky this country imports _____ units, while with free trade the country imports _____ units.

0; 60

Suppose that the five residents of a small village have the following incomes: $10,000; $20,000; $30,000; $40,000; $50,000. The proportion of total income earned by the lowest two quintiles is _____ and the proportion earned by the highest two quintiles is _____.

20%;60%

If the amount of emissions being produced is E1, what would be the area representing the deadweight loss to society?

Area eba

In international trade, when we say that Brazil is "dumping" in the United States, this is indicating that:

Brazil's firms are selling goods at prices below what they charge in Brazil or below their production costs.

Based on this table, which statement is true?

Cambodia has a comparative advantage in maize production.

Which of these typically occurs when a new tariff is imposed on the import of foreignmade steel as a result of a national defense argument?

Consumers will pay higher prices while deadweight loss is created.

If Costa Rica is able to produce 50,000 pounds of bananas a day, while Nicaragua can produce 30,000 pounds of bananas a day, which statement must be true?

Costa Rica has a comparative advantage over Nicaragua in banana production.

When an activity has a private marginal benefit of D1, a private marginal cost of S1, and a positive externality, which curve best represents the social marginal benefit?

D2

Suppose your bank opens up a dozen more branches throughout the city, making it much easier to find an ATM. What happens to the demand and supply curves for this network as it expands?

Demand and supply both shift right.

Which statement is generally NOT true with regard to the effect of trade on wages in developing countries?

Foreign companies generally pay lower wages in developing countries than they do back home.

Which statement is not a common argument against free trade?

It causes prices of imported goods to rise.

Which statement describes a public good?

It is nonrival in consumption and non excludable.

Mara gets a free flu shot from her campus clinic. As a result, she and her roommates avoid the flu all season. Which statement is true?

The externality is created by producers for producers

When people place a high value on ensuring a cleaner environment for future generations, which statement is true?

The present value of future environmental benefits is lower

Which statement is most likely to be a true one?

The richest quintile of Americans control about three times as much wealth as the lowest quintile.

Some of the mangos from your neighbor's mango tree drop into your yard. You don't like mangos and the fallen mangos make it harder to mow your lawn. Your neighbor values the tree at $300, and your cost of dealing with it is $500. If your neighbor has the legal right to keep the tree, what would be an efficient outcome according to the Coase theorem?

Your neighbor pays you $400 to not have the tree cut down

Which statement would describe a network effect?

Your workout partner cancels her gym membership, so you end up doing so as well.

Which of these is nonexcludable but rival?

a common property resource

Poverty is least likely to be eliminated when using which form of measurement?

a relative poverty threshold

In order for someone to cancel cable service, the cable company requires customers to either stand in line to return their modem boxes or pay for the cost of the device. This is an example of:

a switching cost

Where would be the range where the network effect dominates the price effect?

a-c

A tariff of 15% on imported artwork is an example of a(n):

ad valorem tariff

Which policy would a Rawlsian economist not support?

an increase in government spending programs aimed at the poor

All of these are consequences of global warming EXCEPT:

an increase in the natural carbon absorption system

The tipping point from which a virtuous cycle may generate occurs at which point on a network demand curve?

b

Suppose Canada forms a free-trade agreement with the Netherlands and increases the quantity of tulips it imports. Canadian tulip consumers will be _____ and Canadian tulip producers will be _____.

better off; better off

Most new smartphones come pre-installed with a selection of free apps, including a weather app, health app, and news app. Which marketing strategy is the phone provider using?

bundling

Which point would represent a vicious cycle if a firm stays there too long?

c

Which of these is not a market-based policy to reduce pollution?

carbon credits

The largest form of greenhouse gases caused by human activity is:

carbon dioxide from the use of fossil fuel.

Income redistribution efforts such as progressive taxation and transfer payments will typically _____ income inequality, which means that the Gini coefficient will _____.

decrease, fall

Which of these is a pure public good?

environmental protection

Countries can gain from trade as long as the differences in the prices of a trade good between two countries is:

equal to the cost of transporting it between the countries.

Paying $5 on Amazon to stream a movie is an example of a service that is:

excludable and nonrival in consumption.

Unlike positive externalities from physical goods, network externalities affect:

existing and potential users.

The speed by which a network good can enter into a virtuous or vicious cycle is generally _____ that of a non-network good.

faster than

The poverty thresholds in the United States are largely based on an adjusted measure of prices of which category or categories of goods?

food

If a government creates a market of tradable permits for greenhouse gases, the price of these permits would _____ if environmentalists buy up permits to reduce the total amount of greenhouse gases.

increase

In order to ensure that no firm has exclusive access to a set of customers, governments try to promote:

industry standards

The argument that industries should be temporarily protected by tariffs or quotas to allow firms to develop a competitive product is called the:

infant industry argument

The reason someone can open up a text document with Microsoft Word or Google Docs is because of:

interconnection

When one makes a call to someone using a different cellular provider, what must occur between the two networks in order for the call to be connected?

interconnection

Movies are typically only shown in theaters for months before they are released on online streaming sites at a lower price. This is an example of:

intertemporal pricing

Global warming is described as a _____ negative externality with a _____ time horizon.

large; long

The free rider problem typically results in a production of output that is:

less than the social optimal quantity

If an unregulated industry generates pollution, the market price is _____ than the socially optimal price, and the market quantity is _____ than the socially optimal quantity.

less; greater

During the upward sloping part of a network good demand curve, which type of customer is likely to drive the sale of the good?

market leader

If the poverty threshold for a household of 3 persons is $20,000 and the Shermans earn $22,000, they would be classified as:

near poor

The value of cloud storage has risen as more people use it. This effect is best described as a:

network effect

Your grandma finally buys an iPad only after being convinced of the benefits of using it to communicate with the rest of her family who already have iPads. Her demand for an iPad would be represented:

on the downward-sloping portion of the network demand curve

A country in autarky would consume at a point _____ its PPF, while a country that engages in trade would consume at a point _____ its PPF.

on; to the right of

Which of the following is NOT one of the three main types of networks?

optical

A hotel room at a ski resort might be priced at $319 per night during the months of December to March but priced at $199 per night the rest of the year. This type of pricing is called:

peak-load pricing

If, due to externalities, marginal social costs exceed marginal private costs at a particular quantity in the production of a good, then:

production of the good is efficient as long as marginal private costs equal marginal social benefit.

Which of these is an example of interconnection?

sharing patent technology between iPhone and Galaxy

Which of these is not a major cause of greenhouse gas emissions?

soybean farming

What type of government policy is generally used when a positive externality is present?

subsides

AT&T offers high-speed Internet service to new subscribers for $29.99 per month for the first six months and then raises the price to $49.99 per month. This offer is an example of a(n):

teaser strategy

Which of these is not a common cause of income inequality?

the numbers or earners in the household

The equilibrium point created by a virtuous cycle will occur on which part of the network demand curve?

the upward sloping section

When a new gym opens up in town with the capacity of serving 500 new members, the supply curve for this network would be:

vertical

As more people rely on a travel app to book reservations, the quality of the app improves, encouraging more people to use the app. This type of network is best described as a _____ network.

virtual

Facebook experienced a _____ when a large increase in subscribers made the network more appealing, encouraging even more members to join the network.

virtuous cycle

In which situation would regulation be most likely to be effective?

when a dominant network firm can prevent interconnection with smaller firms