Microeconomics Final Exam 2019
Adam Smith's invisible hand is now called
the market mechanism
Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question. Assume the price of Y is $1 per unit. If the price per unit of good X is $3, the consumer would maximize utility by consuming
21 units of Y
For a perfectly competitive market, long-run equilibrium is characterized by all of the following but which one?
P= Maximum ATC
If output growth exceeds population growth for a country
average living standards will increase
When the average total cost curve is decreasing, the marginal cost curve will be
below the average total cost curve
If a price ceiling is to be effective, it should be set
below the equilibrium price, and it will create a market shortage
If a perfectly competitive firm is producing a rate of output at which MC exceeds price, then the firm
can increase its profit by decreasing output
Assume the price elasticity of demand for U.S. Frisbee Co. Frisbees is 0.5. If the company increases the price of each Frisbee from $12 to $16, the number of Frisbees demanded will
decrease by 14.3 percent
Define equilibrium in a product market
equilibrium in a product market is when the quantity supplied equals the quantity demanded
If the cross-price elasticity of demand for SUVs with respect to the price of gasoline is -0.10, and gasoline prices rise by 18 percent, then SUV sales should, ceteris paribus,
fall by 1.8 percent
Which of the following explains what would likely happen if public goods were marketed like private goods?
government failure would result
A rightward shift in a demand curve and a leftward shift in a supply curve result in a
higher equilibrium price
According to the law of increasing opportunity costs
in order to produce additional units of a particular good, it is necessary for society to sacrifice increasingly larger amounts of alternative goods
Assume the price elasticity of demand for MC Pretzel Co. pretzels is 0.8. If the company increases the price of each bag of pretzels, total revenue will
increase because the percentage increase in price is greater than the percentage change in quantity demanded
A good is inferior if the value of the income elasticity of demand is
negative
Government intervention to reduce the level of pollution is prompted by the existence of
negative externalities
In order to maximize his utility Caesar should
not change anything because he has made the choice that gives him the most total utility
A catfish farmer will shut down production when
price falls below AVC
A perfectly competitive market results in production efficiency because
price is driven down to minimum ATC
If the price is reduced from $100 to $80 in Figure 20.1, ceteris paribus,
total revenue will decrease
All of the possible combinations of two goods that lie on one indifference curve
yield the same level of utility
