Microeconomics Final

For which pairs of goods is the cross-price elasticity most likely to be negative? a. peanut butter and jelly b. automobile tires and coffee c. pens and pencils d. paperback novels and electronic books for e-readers

a

One of the determinants of the price elasticity of supply is a. time horizon b. income of consumers c. price elasticity of demand d. importance of the good in a consumers' budget

a

Refer to Table 4-6. Which combination would produce an increase in equilibrium quantity and an indeterminate change in equilibrium price? a. A b. B c. C d. D

a

Refer to figure 14-14. When the market is in long-run equilibrium at point A in panel (b), the firm represented in panel (a) will a. have a zero economic profit b. have a negative accounting profit c. exit the market d. choose to increase production to increase profit

a

Refer to figure 3-2. If the production possibilities frontier shown is for 40 hours of production, then how long does it take Peru to make one ruby? a. 1/6 hour b. 1/5 hour c. 5 hours d. 6 hours

a

Refer to figure 5-13. Over which range is the supply curve in this figure the most elastic a. $16 to $40 b. $40 to $100 c. $100 to $220 d. $220 to 430

a

Refer to figure 5-3. Mark says he would buy one mt. dew per day regardless of the price. If this is true, then marks demand for mt. dew is represented by demand curve a. A b. B c. C d. D

a

Refer to figure 6-14. The per-unit burden of the tax on sellers is a. $6 b. $8 c. $10 d. $14

a

Refer to figure 6-20. The price paid by buyers after the tax is imposed is a. $24 b. $21 c. $18 d. $16

a

Refer to figure 6-20. What is the amount of the tax per unit? a. $8 b. $6 c. $4 d. $2

a

Refer to table 3-9. Jim has absolute advantage in a. both setting up and testing computers and a comparative advantage in setting up computers b. both setting up and testing computers and a comparative advantage in testing computers c. neither setting up nor testing computers and a comparative advantage in setting up computers d. neither setting up nor testing computers and a comparative advantage in testing computers

a

Suppose that 50 ice cream cones are demanded at a particular price. If the price of ice cream cones rises from that price by 4 percent, the number of ice cream cones demanded falls to 46. Using the midpoint approach to calculate the price elasticity of demand, it follows that the a. demand for ice cream cones in this price range is elastic b. demand for ice cream cones in this price price range is inelastic c. demand for ice cream cones in this price range is unit elastic d. price elasticity of demand for ice cream cones in this price range is 0

a

The size of the deadweight loss generated from a tax is affected by the a. elasticities of both supply and demand b. elasticity of demand only c. elasticity of supply only d. total revenue collected by the government

a

refer to table 13-10. What is the total cost associated with making 890 boxes of earrings per week? a. $1, 250 b. $1,325 c. $1,400 d. $1,575

a

A decrease in the price of a good would a. increase the supply of the good b. increase the quantity demanded of the good c. give producers an incentive to produce more to keep profits from failing d. shift the supply cure for the good to the left

b

Economist assume that the goal of the firm is to maximize total a. revenue b. profits c. costs d. satisfaction

b

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then a. a one-unit increase in output will increase the firm's profit b. a one-unit decrease in output will increase the firm's profit c. total revenue exceeds total cost d. total cost exceeds total revenue

b

If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would happen to the equilibrium price and quantity of lattés if the price of muffins rises? a. Both the equilibrium price and quantity price would increase b. Both the equilibrium price and quantity price would decrease c. The equilibrium price would increase, and the equilibrium quantity would decrease d. The equilibrium price would decrease, and the equilibrium quantity would increase

b

If the demand for textbooks is inelastic, then a decrease in the price of textbooks will a. increase total revenue of textbook sellers b. decrease total revenue of textbook sellers c. not change total revenue of textbook sellers d. there is not enough evidence to answer this question

b

In the long run, each firm in a competitive industry earns a. zero accounting profits b. zero economic profits c. positive economic profits d. positive, negative, or zero economic profits

b

Refer to Table 4-7. The equilibrium price and quantity, respectively, are a. $2 and 50 units b. $6 and 30 units c. $6 and 60 units d. $12 and 30 units

b

Refer to figure 14-13. If the price is P1 in the short run, what will happen in the long run? a. Nothing. the price is constant with zero economic profit, so there is no incentive for firms to enter the industry b. Individual firms will earn positive economic profits in the short run, which will entice other firms to enter c. Individual firms will earn negative economic profits in the short run, which cause some firms to exit the industry d. because the price is below the firms average variable costs, the firm will shut down

b

Refer to figure 14-14. If the market starts in equilibrium at point C in panel (b), a decrease in demand will ultimately lead to a. more firms in the industry but lower levels of output for each firm b. fewer firms in the market c. a new long-run equilibrium at point D in panel (b) d. lower price once the new long-run equilibrium is reached

b

Refer to figure 4-15. At what price would there be an excess demand of 200 units of the good? a. $15 b. $20 c. $30 d. $35

b

Refer to figure 4-19. All else equal, buyers expecting turkey to be more expensive in the future would cause a current move from a. D a to D b b. B b to D a c. x to y d. y to x

b

Refer to figure 4-21. Which of the following movements would illustrate the effect in the market for paper napkins as a result of a "Go Green" advertising campaign encouraging people to use cloth napkins? a. Point A to Point B b. Point C to Point B c. Point C to Point D d. Point A to Point D

b

Refer to figure 7-12. When the price falls from P2 to P1, producer surplus a. decreases by an amount equal to C b. decreases by an amount equal to A + B c. decreases by an amount equal to A + C d. increases by an amount qual to A + B

b

Refer to table 14-3. For a firm operating in a competitive market, the marginal revenue is a. $0 b. $7 c. $14 d. $21

b

Refer to table 3-1. At which of the following prices would both Andia and Zardia accept to trade with each other? a. 6 bushels of wheat for 10.5 pounds of beef b. 12 bushels of wheat for 19 pounds of beef c. 24 bushels of wheat for 34 pounds of beef d. trade wouldn't be efficient for either party

b

Refer to table 3-8. Assume that Haung and Min each has 36 labor hours available. If each person divides his/ her time equally between the production of parasols and plates, then total production is a. 18 parasols and 6 plates b. 18 parasols and 7.5 plates c. 16 parasols and 12 plates d. 36 parasols and 15 plates

b

Suppose a firm in a competitive market reduces its output by 20 percent. As a result, the price of its output is likely to a. increase b. remain unchanged c. decrease by less than 20% d. decrease by more than 20%

b

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and a long-run total costs of $24 million if it produces 6 jets. The big Blue Sky jet company is experiencing a. economies of scale b. constant returns to scale c. diseconomies of scale d. negative profits

b

When marginal cost exceeds average total cost, a. average fixed cost must be rising b. average total cost must be rising c. average total cost must be falling d. marginal cost must be falling

b

When new firms have an incentive to enter a competitive market, their entry will a. increase the price of the product b. drive down profits of existing firms in the market c. shift the market supply curve to the left d. increase demand for the product

b

refer to table 13-10. During the week of July 4th, Eileen doesn't produce any earnings. What are her costs during the week? a. $0 b. $150 c. $275 d. $425

b

At Nick's bakery, the cost to make homemade chocolate cake is $3 per cake. As a result of selling three cakes, Nick experiences a producer surplus in the amount of $19.50. Nick must be selling his cakes for a. $6.50 each b. $7.50 each c. $9.50 each d. $10.50 each

c

Currently, you purchase ten frozen pizza per month. You will graduate from college in December, and you will start a new job (with a higher income) in January. You have no plans to purchase frozen pizzas in January. For you, frozen pizzas are a(n) a. substitute good b. normal good c. inferior good d. complementary good

c

Mrs. Smith operates a business in a competitive market. The current market price is $8.50. At her profit-maximizing level of production, the average variable cost is $8.00, and the average total cost is $8.25. Mrs. Smith should a. shut down her buissness in the short run but continue to operate in the long run b. continue to operate in the short run but shut down in the long run c. continue to operate in the short run and long run d. shut down in both the short run and long run

c

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to a. fall in six months but not now b. increase in six months when the price goes up c. fall now d. increase now to meet as much demand as possible

c

Refer to Table 13-7. What is the value of B? a. $25 b. $50 c. $100 d. $200

c

Refer to Table 13-7. What is the value of C? a. $25 b. $50 c. $100 d. $200

c

Refer to Table 13-7. What is the value of R? a. $16.67 b. $50 c. $136.67 d. $360

c

Refer to figure 4-3. If these are the only two consumers in the market, then the market quantity demanded at a price of $6 is a. 12 units b. 14 units c. 19 units d. 21 units

c

Refer to figure 4-9. The movement from point A to point B on the graph is called a. a decrease in supply b. an increase in supply c. an increase in the quantity supplied d. a decrease in the quantity supplied

c

Refer to figure 5-13. Using the midpoint method, what is the price elasticity of supply between $16 and $40 a. 0.125 b. 0.86 c. 1.0 d. 2.5

c

Refer to figure 6-20. The per-unit burden of the tax on buyers of the good is a. $2 b. $4 c. $6 d. $8

c

Refer to figure 6-20. Which of the following statements is correct? a. the amount of the tax per unit is $6 b. the tax leaves the size of the market unchanged c. The tax levied on buyers of the good, rather than on sellers d. All of the above are correct

c

Refer to figure 6-4. A government imposed price of $6 in this market could be an example of a (i) binding price ceiling (ii) non-boning price ceiling (iii) binding price floor (iv) non-binding price floor a. (i) only b. (ii) only c. (i) and (iv) only d. (ii) and (iii) only

c

Refer to figure 7-12. When the price is P2, the producer surplus is a. A b. A + C c. A + B + C d. D + G

c

Refer to table 3-6. The opportunity cost of 1 mixer for Maya is a. 0.625 toasters b. 5 hours of labor c. 1.6 toasters d. 20 hours of labor

c

Refer to table 3-9. The number of minutes needed by Barb to test a computer is a. 36 b. 48 c. 60 d. 64

c

Refer to table 5-5. Using the midpoint method, at a price of 16$, what is the income elasticity of demand when income rises from $5,000 to $10,000? a. 0 b. 0.50 c. 1.00 d. 1.50

c

When we move along a given demand curve, a. only price is held constant. b. technology and price are held constant c. all nonprice determinants of supply are held constant. d. all determinants of quantity supplied are held constant.

c

refer to figure 13-8. Quantity C represents the output level where the firm a. maximizes profits b. minimizes total costs c. produces at the efficient scale d. minimizes marginal costs

c

refer to figure 6-5. If the horizontal line on the graph represents a price floor, then the price floor is a. binding and creates a shortage of 40 units b. binding and creates a surplus of 50 units c. binding and creates a surplus of 90 units d. not binding but creates a surplus of 40 units

c

refer to table 14-13. What is Diana's economic profit at the profit-maximizing point? a. $78 b. $243 c. $278 d. $375

c

Danita rescues dogs from her local animal shelter. When Danita's income rises by 7 percent, her quantity demanded of dog biscuits increases by 12 percent. For Danita, the income elasticity of demand for dog biscuits is a. negative, and dog biscuits are a normal good b. negative, and dog biscuits are an inferior good c. positive, and dog biscuits are an inferior good d. positive, and dog biscuits are a normal good

d

Refer to Table 13-7. What is the value of M? a. $50 b. $140 c. $360 d. $410

d

Refer to figure 14-9. If there are 200 identical firms in this markets, wha level of output will be supplied to the market when price is $1 a. 2,000 b. 5,000 c. 10,000 d. 20,000

d

Refer to figure 3-2. If the production possibilities frontier shown is for one month of production, then which of the following combinations of emeralds and rubies could Peru produce in a given month? a. 7 emeralds and 40 rubies b. 5 emeralds and 92 rubies c. 3 emeralds and 165 rubies d. 2 emeralds and 180 rubies

d

Refer to table 14-7. Of the firm is currently producing 14 units, what would you advise the owners? a. decrease quantity to 13 units b. increase quantity to 17 units c. continue to operate at 14 units d. increase quantity by 16 units

d

Refer to table 3-8. Which of the following points would not be on Huang's production possibilities frontier, based on the 36 hour production period? a. 18 parasols, 0 plates b. 12 parasols, 2 plates c. 6 parasols, 4 plates d. 2 parasols, 6 plates

d

Refer to table 5-5. Using the midpoint method, when income equals $7,500, what is the price elasticity of demand between $16 and $20? a. 0.56 b. 0.75 c. 1.33 d. 1.80

d

The following table contains a supply schedule for a good Price I Quantity Supplied $10 I 100 $20 I Q1 If the law of supply applies to this good, then Q1 could be a. 0 b. 50 c. 100 d. 150

d

Which of the following would cause price to increase? a. an increase in supply b. a decrease in demand c. a surplus of the good d. a shortage of the good

d

refer to figure 6-5. If the horizontal line on the graph represents a price ceiling, then the price ceiling is a. binding and creates a surplus of 40 units b. binding and creates a surplus of 90 units c. not binding but creates a surplus of 40 units d. not binding and there will be no surplus or shortage

d

refer to table 13-10. What is the marginal product of the second worker? a. 110 b. 200 c. 260 d. 300

d

refer to table 14-13. In order to maximize profits, how many units should Diana's Dress Emporium produce? a. 5 b. 6 c. 7 d. 8

d