Microeconomics Test 2 (Quizzes and iClicker)

Dan's Car Wash produces $150,000 in revenues and incurs $120,000 in labor wages, materials, rent, and other explicit costs. Moreover, Dan gave up a $40,000-a-year job as a hotel valet to start his car wash business. Dan's economic profit is _____, and he _____ earning a normal profit. - 30,000; is - 30,000; is not - -10,000; is - -10,000; is not

-10,000; is not

In the market for surfboards seen in the graph, in autarky this country imports _____ units, while with free trade the country imports _____ units. (Q216) - 0; 80 - 0; 60 - 50; 80 - 50; 60

0; 60

In the following figure, what is the value of the external cost imposed by the activity generating the negative externality? (Q13) - 10 - 20 - 25 - 30

10

If the total variable cost of producing three wickets is $30, while the average fixed cost of producing three wickets is $25, then the total cost of producing three wickets is - 55 - 105 - 115 - 165

105

Consider the following information about a monopolist producing at the level of output where MR=MC: quantity=20, price=9, atc=6. What is the total revenue and profit? - 180, 60 - 200, 192 - 160, 200 - 360, 200

180, 60

Using the utility maximization rule, if Vicky's marginal utility of the last orange consumed is 20 and her marginal utility of the last pineapple consumed is 80, what is the price of pineapples if the price of oranges is $1 and Vicky has maximized her utility? - 4 - 2 - 1 - 0.25

4

A wedding planner determines that one waiter can serve 30 guests, two waiters can serve 70 guests, three waiters can serve 120 guests, four waiters can serve 160 guests, and five waiters can serve 180 guests. The marginal product of the third waiter is _____ guests. - 36 - 40 - 50 - 120

50

If Jamaican Hot Pies Café generates $200,000 in revenues and $150,000 in explicit costs, and incurs $30,000 in implicit costs, the café is earning _____ in accounting profits and _____ in economic profits. - 50,000; 20,000 - 20,000; 50,000 - 20,000; 20,000 - 50,000; 50,000

50,000; 20,000

AJ plans to attend a retreat on mindfulness. He paid a $500 nonrefundable registration fee, made a reservation at a hotel that costs $200, and budgeted $150 for gas and food. Two days before the retreat, he becomes ill. Assuming he is able to cancel the hotel without penalty, AJ's sunk cost equals - 150 - 500 - 650 - 850

500

Travis's Basketball Training Camp currently has five trainers and a total product of 38 personal training sessions per day. When Travis hires its sixth trainer, total product rises to 42 sessions per day. What is the average product and marginal product when the sixth trainer is hired? - Average product is four sessions and marginal product is seven sessions - Average product is four sessions and marginal product is four sessions - Average product is seven sessions and marginal product is four sessions - Average product is seven sessions and marginal product is forty-two sessions

Average product is seven sessions and marginal product is four sessions

In international trade, when we say that Brazil is "dumping" in the United States, this indicates that - Brazil is profiting from tariffs placed on U.S. goods - Brazil's firms can produce goods at lower cost than U.S. firms can - Brazil's firms are selling goods at prices below what they charge in Brazil or below their production costs - Brazil's firms are selling goods at prices below the cost by which U.S. firms can produce those same goods

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

Which of these typically occurs when a new tariff is imposed on the import of foreign-made steel as a result of a national defense argument? - Consumers will pay lower prices while deadweight loss is reduced - Consumers will pay lower prices while deadweight loss is created - Consumers will pay higher prices while deadweight loss is reduced - Consumers will pay higher prices while deadweight loss is created

Consumers will pay higher prices while deadweight loss is created

Which headline would least likely be studied in macroeconomics? - economic growth rises slow and steady - GM expands care sales in China - the fed raises interest rates - unemployment falls to a 7 year low

GM expands care sales in China

If Jeremy's budget line shifts inward in a parallel manner, what may have happened? - Jeremy has less money to spend on the two goods - Jeremy has more money to spend on the two goods - The price of both goods decreases by the same amount - The price of one good decreases while the price of the other good stays the same

Jeremy has less money to spend on the two goods

Which situation would best describe a long-run production decision? - Brooke's Diner decides to stay open 24 hours per day to accommodate late-night club goers - Lizzy's Deli hires an additional eight workers due to an increase in customers during the peak season - Evan's baseball shop introduces free pitching lessons on Wednesday evenings - Jonah's Golf 'n' Fun Center opens a second location across town due to its popularity

Jonah's Golf 'n' Fun Center opens a second location across town due to its popularity

What is a common behavioral factor that causes people to spend more when using credit cards (and running up debt) as opposed to using cash? - It's easier to return items when using credit cards versus cash - Paying for the purchases in the future seems less burdensome than paying for it now - It's easier to keep track of spending by receiving a monthly statement of all charges - Paying with cash requires more trips to the ATM

Paying for the purchases in the future seems less burdensome than paying for it now

In the long run, which statement is true for a monopolistically competitive firm? - price equals average total cost, and MR>MC - price is greater than average total cost, and MR=MC - Price equals ATC, and MR=MC - Price is less than ATC, and MR=MC

Price equals ATC, and MR=MC

Where is the profit-maximizing price and quantity for a monopolistically competitive firm?

Q is where MR=MC P is where MR=MC but then up to the demand

Each of these is an example of third-degree price discrimination except... - bed bath and beyond offering coupons for 20% off any item - Szechwan Gardens offering an early bird dinner menu - Sperry shoe outlet offering a 50% discount off of the second pair of shoes - Hilton hotels offering a 10% senior discount

Sperry shoe outlet offering a 50% discount off of the second pair of shoes

Which statement is TRUE regarding the total product and marginal product curves? - The total product curve reaches its peak when marginal product is zero. - The total product curve begins to fall when marginal product begins to fall. - The marginal product curve is upward sloping whenever total product is rising. - The total product and marginal product curves both reach their maximum point at the same level of labor.

The total product curve reaches its peak when marginal product is zero.

Which would not be a benefit that consumers would experience from trade? - the ability to consumer goods that are not produced domestically - lower prices for imported goods - a greater variety of goods to choose from - a greater supply of domestically produced goods for sale

a greater supply of domestically produced goods for sale

When a cartel member produces more than the agreed-upon quota, the net gain for that firm is calculated as the revenue earned from - a higher market price plus the revenue earned from producing more output - a higher market price minus the revenue lost from producing more output - producing more output minus the revenue lost from a lower market price - producing more output divided by the revenue lost from a lower market price

a higher market price plus the revenue earned from producing more output

What is the primary reason a natural monopoly is allowed to exist? - a natural monopoly is more cost conscious in its decision making - a natural monopoly can produce at a lower cost due to economies of scale - governments always prefer natural monopolies over competitive industries - it can only be publicly owned and therefore is profitable to the government

a natural monopoly can produce at a lower cost due to economies of scale

Which of these is NOT an example of a sunk cost that is subject to poor economic decision making? - a registration fee for a local 10K race - tuition that you paid for an economics course - a new laptop that you purchased for school - an appraisal fee to determine the value of a house you are thinking of buying

a new laptop that you purchased for school

which of these is NOT a consequence of climate change? - diminishing arctic sea ice and coral reefs - melting ice sheets leading to rising sea levels - a significant reduction in precipitation and coastal flooding - extensive biodiversity loss

a significant reduction in precipitation and coastal flooding

All of these are reasons a pharmaceutical company may have a monopoly on a life-saving drug EXCEPT - a patent providing legal protection against imitators - economies of scale (large fixed costs) preventing two companies from being profitable - control over a significant factor of production - a very low marginal cost of producing each additional pill

a very low marginal cost of producing each additional pill

Which strategy makes price discrimination more difficult for a firm? - making airline tickets nontransferable - requiring student ID to qualify for movie ticket discounts - using a local language instead of English for textbooks - allowing unwanted concert tickets to be sold on StubHub

allowing unwanted concert tickets to be sold on StubHub

Helping a friend struggling to pass a math class despite it taking valuable time away from your own studies is an example of... - framing - sunk cost - overconfidence - altruism

altruism

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; worse off - better off; better off - worse off; better off - worse off; worse off

better off; worse off

The additional producer surplus that a monopolist gains causes which of these? - reduction in consumer surplus only - creation of deadweight loss - neither reduction in consumer surplus or creation of deadweight loss - both reduction in consumer surplus and creation of deadweight loss

both reduction in consumer surplus and creation of deadweight loss

Suppose you have upcoming exams in chemistry, economics, and psychology. How would you use the utility-maximizing rule to allocate your study time to each subject? - by devoting most of your study time to the hardest subject - by devoting more study time to the subject you enjoy the most - by ensuring the last hour spent on each subject results in the same marginal utility - by ensuring that the last hour spent on the hardest subject generates more marginal utility than the last hour spent on the easiest subject

by ensuring the last hour spent on each subject results in the same marginal utility

the largest form of greenhouse gases caused by human activity is... - carbon dioxide from the use of fossil fuel - carbon dioxide from deforestation - methane gases from livestock farming - nitrous oxides from synthetic fertilizer usage

carbon dioxide from the use of fossil fuel

An increase in the price of one product but not the other - shifts the budget line parallel to the left - shifts the budget line parallel to the right - changes the slope of the budget line - doesn't affect the budget line because income remains constant

changes the slope of the budget line

Which producer would MOST likely be harmed from free trade? - domestic manufacturers that use a lot of imported raw materials - domestic manufacturers that compete against foreign imports - domestic manufacturers that produce goods primarily for export - domestic manufacturers that face no foreign competitors

domestic manufacturers that compete against foreign imports

If a perfectly competitive industry experiences economies of scale as it expands, the long-run industry supply curve would be _______ and this industry would be classified as a(n) ________. - upward sloping; increasing cost industry - upward sloping; decreasing cost industry - downward sloping; increasing cost industry - downward sloping; decreasing cost industry

downward sloping; decreasing cost industry

Based on the figure, combination _____ is preferred to combination _____. (Q6) - c;b - d;a - e;b - b;e

e;b

The word "monopolistic" in the label "monopolistic competition" refers to the fact that: - there is only one firm producing in the market - firms have no control over the price they charge - each firm produces a unique version of the product - firms earn a normal profit in the long run

each firm produces a unique version of the product

Both monopolistically competitive firms and perfectly competitive firms... - earn normal profits in the long run - achieve productive efficiency - achieve allocative efficiency - face downward sloping demand curves

earn normal profits in the long run

In the long run, firms in a monopolistically competitive industry will... - achieve a price equal to the minimum point on the LRATC curve - generate no deadweight loss - achieve profits equal to a monopoly firm - earn zero economic profit

earn zero economic profit

If firms in a monopolistically competitive market are experiencing economic losses in the short run, some firms will _____ the industry, ________ demand for each individual firm until each firm earns a normal profit - exit; reducing - enter; reducing - enter; increasing - exit; increasing

exit; increasing

each of these factors play an important role in determining market structure except the... - extent of barriers to entry - extent of foreign ownership - ability to set prices - number of firms in the industry

extent of foreign ownership

The deciding factor that determines whether a firm is operating in the short run versus in the long run is whether the... - firm has been operating for at least 6 months - firm has been operating for at least 12 months - firm is able to change all factors, including its plant size - firm's fixed costs are smaller in value than its variable costs

firm is able to change all factors, including its plant size

The provision of public goods is generally made by _____ because of the problem of _____. - private markets; free riders - private markets; misallocation of resources - governments; free riders - governments; overfunding of projects

governments; free riders

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... - greater than the socially efficient amount - less than the socially efficient amount - efficient as long as marginal private costs equal marginal social benefit - efficient as long as marginal private costs exceed marginal social benefit

greater than the socially efficient amount

In the table, as Samuel's consumption of ice cream cones increases (Q6) - both his total utility and his marginal utility increase. - his total utility increases, but his marginal utility decreases. - his total utility decreases, but his marginal utility increases. - his total utility increases, and his marginal utility decreases then increases.

his total utility increases, but his marginal utility decreases.

In a perfectly competitive industry, if the D=MR line is below the ATC curve but above the AVC curve the firm is... - earning an economic profit - incurring an economic loss - earning a normal profit - operating at its shut-down point

incurring an economic loss

Amy decides to open a bakery that will specialize in delicious gourmet brownies. Her explicit costs would include all of these EXCEPT the... - business taxes paid on her earnings - monthly lease payment on the building - health insurance premiums that she pays for her employees - interest earnings Amy forgoes from selling her savings bonds to finance her store

interest earnings Amy forgoes from selling her savings bonds to finance her store

The free rider problem typically results in a production of output that is... - equal to social optimal quantity - greater than the social optimal quantity - less than the social optimal quantity - undetermined without further information

less than the social optimal quantity

When a country imposes a new tariff on imported rice to protect its rice farmers, which of these amounts would be the largest in value? - tariff revenue generated from the rice tariffs - gain in producer surplus by domestic rice farmers - loss of consumer surplus by domestic rice consumers - deadweight loss resulting from the inefficiency of the tariff

loss of consumer surplus by domestic rice consumers

Which form of regulated pricing is MOST likely to generate losses to firms operating in the industry - marginal cost pricing - average cost pricing - rate of return regulation - price caps

marginal cost pricing

What happens when, in the short run, the demand (MR) curve is above the ATC in the long run? - market supply will increase, pushing prices lower - market supply will increase, pushing prices higher - market supply will decrease, pushing prices lower - market supply will decrease, pushing prices higher

market supply will increase, pushing prices lower

The concern that certain key domestic industries need to be protected with trade barriers is an argument centered on... - infant industries - antidumping - national defense - domestic employment

national defense

If a firm is producing in the downward-sloping portion of its total product curve, this means that the firm is experiencing _____ marginal returns. - increasing - constant - diminishing - negative

negative

What happens in a perfectly competitive firm when the demand/MR line is above the ATC in the long run? - some firms will exit the industry, reducing the market price - some firms will exit the industry, raising the market price - new firms will enter the industry, reducing the market price - new firms will enter the industry, raising the market price

new firms will enter the industry, reducing the market price

Which characteristic is NOT typical of monopolistic competition? - easy entry into the market - one seller - product differentiation - easy exit from the market

one seller

A firm in a perfectly competitive industry would exhibit which characteristic? 1. An ability to produce as much output as the firm desires at the market price 2. No economic profits in the short run but possible economic profits in the long run - only 1 - only 2 - neither 1 or 2 - both 1 and 2

only 1

A company specializing in foreign language lessons sells one set of lessons for $199, but all five sets of lessons purchased upfront sell for $499, a discount of nearly 50%. The company is offering this large discount in hopes that its consumers experience - a sense of altruism - a sunk cost fallacy - a framing bias - overconfidence

overconfidence

The taxi industry in many cities has lobbied politicians to increase driver requirements for ride sharing companies. the money spent by the taxi industry for this purpose demonstrates - producer surplus - x inefficiency - deadweight loss - rent-seeking

rent-seeking

The most common way in which economists model a problem is by... - avoiding assumptions as much as possible in order to avoid misrepresenting reality - making sure as many details and facts are included - using case studies to analyze individual real-life examples of problems - simplifying the model down to its basic relevant elements

simplifying the model down to its basic relevant elements

which of these is NOT a major cause of greenhouse gas emissions? - deforestation - burning fossil fuels - livestock production - soybean farming

soybean farming

Constance manages a lumber mill in a perfectly competitive market. If the market price per piece is 5 and Constance's ATC is 4, what will happen in the lumber industry in the long run? - supply will increase and market price will decrease - supply will increase and market price will be unchanged - supply will decrease and market price will increase - supply will decrease and market price will be unchanged

supply will increase and market price will decrease

Suppose a South Korean company wishes to produce motorcycles, but faces difficult competition from imported motorcycles from Japan, which has a very mature and efficient motorcycle industry. What type of trade protectionism might the South Korean company seek? - antidumping duties - countervailing duties - tariffs based on national defense - tariffs based on infant industry protection

tariffs based on infant industry protection

Each of these are possible benefits from a monopoly except - new innovations in technology and in the creative arts - potential economies of scale from production - the ability to minimize deadweight loss from production - more jobs in research and development

the ability to minimize deadweight loss from production

Assume that in a monopolistically competitive firm faces the following situation: P=16; output=9000 units; MC=11; ATC=7; and MR=14. Which statement is correct regarding profit maximization? - the firm is maximizing profit - the firm would earn higher profit by increasing output - the firm is minimizing its losses - the firm would earn higher profit by decreasing output

the firm would earn higher profit by increasing output

When people place a high value on ensuring a cleaner environment for future generations, which statement is TRUE? - the future is discounted at a relatively low rate - The present value of future environmental benefits is lower - The present value of future environmental benefits would equal the discount rate - Environmental damage suffered in the future would be of less concern today

the future is discounted at a relatively low rate

The reason that oligopoly firms may have a kinked demand curve is due to... - the greater likelihood of price matching when a firm chooses to raise prices - the greater likelihood of price matching when a firm chooses to lower prices - wildly fluctuating prices for the product on the market - very consistent elasticity of demand for a firm's product regardless of price

the greater likelihood of price matching when a firm chooses to lower prices

Melanie grows long-stem roses in her garden and sells them at the local flower market at the perfectly competitive market price of 3. If Melanie decides to increase the number of roses she grows, what will happen to the market price and Melanie's marginal revenue? - the market price will decrease and Melanie's marginal revenue per rose also decreases - the market price will decrease and Melanie's marginal revenue per rose is unchanged - the market price is unchanged and Melanie's marginal revenue per rose decreases - the market price is unchanged and Melanie's marginal revenue per rose is also unchanged

the market price is unchanged and Melanie's marginal revenue per rose is also unchanged

The claim that international trade promotes sweatshop working conditions in developing nations is frequently refuted by economists based on evidence that... - wages in developing countries are now almost as high as in developed countries - these may be the only job opportunities people have; therefore, they are better off than without these jobs - working conditions are not bad at all in developing countries - international trade has led the creation of an international governing body requiring all factories to meet minimum working condition standards

these may be the only job opportunities people have; therefore, they are better off than without these jobs

Which of these policies would NOT require the government to know the approximate cost of pollution abatement to implement effectively? - user charges - emission taxes - tradable permits - federal subsidies

tradable permits

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? - you call city officials to have the tree cut down - you pay your neighbor 400 to cut down the tree - your neighbor pays you 400 to not have the tree cut down - your neighbor pays you 200 to not have the tree cut down

you pay your neighbor 400 to cut the tree down