Econ 1305 Final - HW Terms Questions
In a competitive market the price is $8. A typical firm in the market has ATC = $6, AVC = $5, and MC = $8. How much economic profit is the firm earning in the short run? - $0 per unit - $1 per unit - $2 per unit - $3 per unit
$2 per unit (Profit = P-ATC)
Suppose a tax of $5 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 200 units to 100 units. The tax decreases consumer surplus by $450 and decreases producer surplus by $300. The deadweight loss from the tax is - $250. - $500. - $750. - $1,000.
$250.
Ronnie operates a lawn-care service. On each day, the cost of mowing the first lawn is $10, the cost of mowing the second lawn is $12, and the cost of mowing the third lawn is $15. His producer surplus on the first three lawns of the day is $53. If Ronnie charges all customers the same price for lawn mowing, that price is - $25 - $30 - $36 - $45
$30
Assume for the United States that the opportunity cost of each airplane is 100 cars. Which of these pairs of points could be on the United States' production possibilities frontier? - (200 airplanes, 5,000 cars) and (150 airplanes, 4,000 cars) - (200 airplanes, 10,000 cars) and (150 airplanes, 20,000 cars) - (300 airplanes, 15,000 cars) and (200 airplanes, 25,000 cars) - (300 airplanes, 25,000 cars) and (200 airplanes, 40,000 cars)
(300 airplanes, 15,000 cars) and (200 airplanes, 25,000 cars)
Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. If Firm A produces a monitor that Cassie buys but David does not, then the market outcome illustrates which of the following principles? (i) Free markets allocate the supply of goods to the buyers who value them most highly, as measured by their willingness to pay. (ii) Free markets allocate the demand for goods to the sellers who can produce them at the least cost. - (i) only - (ii) only - both (i) and (ii) - neither (i) nor (ii)
(ii) only
Mike and Sandy are two woodworkers who both make tables and chairs. In one month, Mike can make 4 tables or 20 chairs, where Sandy can make 6 tables or 18 chairs. Given this, we know that the opportunity cost of 1 chair is - 1/5 table for Mike and 1/3 table for Sandy. - 1/5 table for Mike and 3 tables for Sandy. - 5 tables for Mike and 1/3 table for Sandy. - 5 tables for Mike and 3 tables for Sandy.
1/5 table for Mike and 1/3 table for Sandy.
Two firms, A and B, each currently emit 100 tons of chemicals into the air. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution emitted into the air. The government gives each firm 40 pollution permits, which it can either use or sell to the other firm. It costs Firm A $200 for each ton of pollution that it eliminates before it is emitted into the air, and it costs Firm B $100 for each ton of pollution that it eliminates before it is emitted into the air. After the two firms buy or sell pollution permits from each other, we would expect that Firm A will emit - 20 fewer tons of pollution into the air, and Firm B will emit 100 fewer tons of pollution into the air. - 100 fewer tons of pollution into the air, and Firm B will emit 20 fewer tons of pollution into the air. - 50 fewer tons of pollution into the air, and Firm B will emit 50 fewer tons of pollution into the air. - 20 more tons of pollution into the air, and Firm B will emit 100 fewer tons of pollution into the air.
20 fewer tons of pollution into the air, and Firm B will emit 100 fewer tons of pollution into the air.
Which of the following statements about a well-maintained yard best conveys the general nature of the externality? - A well-maintained yard conveys a positive externality because it increases the home's market value. - A well-maintained yard conveys a negative externality because it increases the property tax liability of the owner. - A well-maintained yard conveys a positive externality because it increases the value of adjacent properties in the neighborhood. - A well-maintained yard cannot provide any type of externality.
A well-maintained yard conveys a positive externality because it increases the value of adjacent properties in the neighborhood.
A price floor is - a legal minimum on the price at which a good can be sold - often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor. - a source of inefficiency in a market. - All of the above are correct.
All of the above are correct.
"Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." This relationship between price and quantity demanded - applies to most goods in the economy. - is represented by a downward-sloping demand curve. - is referred to as the law of demand. - All of the other answers are correct
All of the other answers are correct
Suppose Susan can wash three windows per hour or she can iron six shirts per hour. Paul can wash two windows per hour or he can iron five shirts per hour. - Susan has an absolute advantage over Paul in washing windows. - Susan has a comparative advantage over Paul in washing windows. - Paul has a comparative advantage over Susan in ironing shirts. - All of the other answers are correct
All of the other answers are correct
Another way of defining the opportunity cost for sellers is: - the maximum price for which they would sell a given quantity of a good - the minimum price for which they would sell a given quantity of a good - the sum total of all sacrificed value, income, revenues, input and production costs resulting from sale of a given quantity of a good. - A & C are true - B & C are true
B & C are true
What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income? - Consumer surplus decreases - Consumer surplus remains unchanged - Consumer surplus increases - Consumer surplus may increase, decrease, or remain unchanged
Consumer surplus may increase, decrease, or remain unchanged
Which of the following industries is most likely to exhibit the characteristic of free entry? - Nuclear power - Municipal water and sewer - Dairy farming - Airport security
Dairy farming
Scenario 8-1 Erin would be willing to pay as much as $100 per week to have her house cleaned. Ernesto's opportunity cost of cleaning Erin's house is $70 per week. Refer to Scenario 8-1. Assume Erin is required to pay a tax of $40 if she hires Ernesto to clean her house for a week. Which of the following is correct? - Erin will now clean her own house. - Ernesto will continue to clean Erin's house, but his producer surplus will decline. - Total economic welfare (consumer surplus plus producer surplus plus tax revenue) will increase. - Erin will continue to hire Ernesto to clean her house, but her consumer surplus will decline.
Erin will now clean her own house.
"Minimum wage laws result in unemployment" is a normative statement, while "the minimum wage should be higher" is a positive statement. True False
False
"Other things equal, an increase in supply causes a decrease in price" is a normative statement, not a positive statement. True False
False
A tax on buyers shifts the demand curve to the right. True False
False
A tax on sellers increases supply. True False
False
All else equal, a decrease in demand will cause an increase in producer surplus. True False
False
If the government imposes a $3 tax in a market, the buyers and sellers will share an equal burden of the tax. True False
False
If the government imposes a binding price floor in a market, then the consumer surplus in that market will increase. True False
False
Negative externalities lead markets to produce a smaller quantity of a good than is socially desirable, while positive externalities lead markets to produce a larger quantity of a good than is socially desirable. - True - False
False
Research into new technologies conveys neither negative externalities nor positive externalities. - True - False
False
Suppose you buy an iPod for $100. If your consumer surplus is $30, your willingness to pay is $70. True False
False
When a tax is imposed on a good, the resulting decrease in consumer surplus is always larger than the resulting decrease in producer surplus. - True - False
False
Without free trade, the domestic price of a good must be equal to the world price of a good. - True - False
False
Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding? - Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans. - The number of farmers selling soybeans decreases. - Consumers' income increases, and soybeans are a normal good. - The number of consumers buying soybeans increases.
Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans.
One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this? - He fears that low rents will cause low-income people to move into the city, reducing the quality of life for other people. - He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in the city. - He fears that rent controls will cause a construction boom, which will make the city crowded and more polluted. - He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.
He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.
If Korea is capable of producing either shoes or soccer balls or some combination of the two, then - Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls. - it would be impossible for Korea to have an absolute advantage over another country in both products. - it would be difficult for Korea to benefit from trade with another country if Korea is efficient in the production of both goods. - Korea should specialize in the product in which it has an absolute advantage.
Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.
A minimum wage that is set below a market's equilibrium wage will result in an excess - demand for labor, that is, unemployment. - demand for labor, that is, a shortage of workers. - supply of labor, that is, unemployment. - None of the other answers
None of the other answers
Suppose an increase in the price of rubber coincides with an advance in the technology of tire production. As a result of these two events, the demand for tires - decreases, and the supply of tires increases. - is unaffected, and the supply of tires decreases. - is unaffected, and the supply of tires increases. - None of the other answers is necessarily correct.
None of the other answers is necessarily correct.
Which of the following is NOT a way of internalizing technology spillovers? - Subsidies - Patent protection - Industrial policy - Taxes
Taxes
Which of the following statements regarding a Laffer curve is the most plausible? - Reducing a high tax rate is less likely to increase tax revenue than is reducing a low tax rate. - Reducing a high tax rate is more likely to increase tax revenue than is reducing a low tax rate. - Reducing a high tax rate will have the same effect on tax revenue as reducing a low tax rate. - Reducing a tax rate can never increase tax revenue.
Reducing a high tax rate is more likely to increase tax revenue than is reducing a low tax rate.
Scenario 8-2 Roland mows Karla's lawn for $25. Roland's opportunity cost of mowing Karla's lawn is $20, and Karla's willingness to pay Roland to mow her lawn is $28. Refer to Scenario 8-2. Assume Roland is required to pay a tax of $3 each time he mows a lawn. Which of the following results is most likely? - Karla now will decide to mow her own lawn, and Roland will decide it is no longer in his interest to mow Karla's lawn. - Karla is willing to pay Roland to mow her lawn, but Roland will decline her offer. - Roland is willing to mow Karla's lawn, but Karla will decide to mow her own lawn. - Roland and Karla still can engage in a mutually-agreeable trade.
Roland and Karla still can engage in a mutually-agreeable trade.
Which of the following quantities decrease in response to a tax on a good? - The equilibrium quantity in the market for the good, the effective price of the good paid by buyers, and consumer surplus - The equilibrium quantity in the market for the good, producer surplus, and the well-being of buyers of the good - The effective price received by sellers of the good, the wedge between the effective price paid by buyers and the effective price received by sellers, and consumer surplus - It depends on whether the tax is levied on buyers or on sellers.
The equilibrium quantity in the market for the good, producer surplus, and the well-being of buyers of the good
Suppose that cookie producers create a positive externality equal to $2 per dozen. What is the relationship between the equilibrium quantity and the socially optimal quantity of cookies to be produced? - They are equal. - The equilibrium quantity is greater than the socially optimal quantity. - The equilibrium quantity is less than the socially optimal quantity. - There is not enough information to answer the question.
The equilibrium quantity is less than the socially optimal quantity.
Suppose Yolanda needs a dog sitter so that she can travel to her sister's wedding. Yolanda values dog sitting for the weekend at $200. Rebecca is willing to dog sit for Yolanda so long as she receives at least $175. Yolanda and Rebecca agree on a price of $185. Suppose the government imposes a tax of $30 on dog sitting. What is the deadweight loss of the tax? - The maximum value that Yolanda would pay for dog sitting - The $30 tax - The lost benefit to Yolanda and Rebecca because after the tax, Rebecca will not dog sit for Yolanda - The lost benefit to Yolanda of being unable to hire a dog sitter because Yolanda is the one who would pay the tax
The lost benefit to Yolanda and Rebecca because after the tax, Rebecca will not dog sit for Yolanda
Quantity Supplied can best be defined as: - Supply by sellers at every possible P - The minimum quantity sellers will sell at a particular price - The number of units actually sold at a particular price - The maximum quantity sellers will sell at a particular price
The maximum quantity sellers will sell at a particular price
Suppose that Company A's railroad cars pass through Farmer B's corn fields. The railroad causes an externality to the farmer because the railroad cars emit sparks that cause $1,500 in damage to the farmer's crops. There is a special soy-based grease that the railroad could purchase that would eliminate the damaging sparks. The grease costs $1,200. Suppose that the farmer has the right to compensation for any damage that his crops suffer. Assume that there are no transaction costs. Which of the following characterizes the efficient outcome? - The railroad will continue to operate but will pay the farmer $1,500 in damages. - The railroad will purchase the grease for $1,200 and pay the farmer nothing because no crop damage will occur. - The farmer will incur $1,500 in damages to his crops. - The farmer will pay the railroad $1,200 to purchase the grease so that no crop damage will occur.
The railroad will purchase the grease for $1,200 and pay the farmer nothing because no crop damage will occur.
What generally happens to the total surplus in a market when the government imposes a tax? - Total surplus increases by the amount of the tax. - Total surplus increases but by less than the amount of the tax. - Total surplus decreases. - Total surplus is unaffected by the tax.
Total surplus decreases.
Because taxes distort incentives, they cause markets to allocate resources inefficiently. - True - False
True
Because there are many buyers and sellers in a perfectly competitive market, no one seller can influence the market price. - True - False
True
Consumer surplus can be measured as the area between the demand curve and the equilibrium price. True False
True
Evaluating normative statements involves values as well as facts. True False
True
Even if possible, it would be inefficient to prohibit all polluting activity. - True - False
True
Even with market power, monopolists cannot achieve any level of profit they desire because they will sell lower quantities at higher prices. - True - False
True
In a market characterized by externalities, the market equilibrium fails to maximize the total benefit to society as a whole. - True - False
True
In the long run, a firm should exit the industry if its total costs exceed its total revenues. - True - False
True
Like competitive firms, monopolies choose to produce a quantity in which marginal revenue equals marginal cost. - True - False
True
Markets sometimes fail to allocate resources efficiently. - True - False
True
Positive statements are descriptive, while normative statements are prescriptive. True False
True
Suppose you sell a kayak for $600, but you were willing to sell it for $450. The buyer was willing to pay $650. The total surplus is $200. True False
True
Taxes create deadweight losses. True False
True
The government can internalize externalities by taxing goods that have negative externalities and subsidizing goods that have positive externalities. - True - False
True
Suppose economists are warning that the price of a specific medicine, that everyone in the economy currently consumes, has been increasing more rapidly than the prices of other goods and will likely continue to increase in the near future. Which of the following statements is most likely to be true. - When the price gets higher the first buyer to switch from having a positive quantity demanded to having a zero units demanded of the good will be the buyer with the highest willingness and ability to pay for the good. - When the price gets higher the first buyer to switch from having a positive quantity demanded to having a zero units demanded of the good will be the buyer who has a willingness (or ability) to pay for the good that is less than every other buyers willingness and less than every other buyers ability to pay for the good. - When the price gets higher the first buyer to switch from having a positive quantity demanded to having a zero units demanded of the good will be the buyer who has a willingness to pay for the good that is less than every other buyers willingness to pay for the good. - When the price gets higher the first buyer to switch from having a positive quantity demanded to having a zero units demanded of the good will be the buyer who has an ability to pay for the good that is less than every other buyers ability to pay for the good.
When the price gets higher the first buyer to switch from having a positive quantity demanded to having a zero units demanded of the good will be the buyer who has a willingness (or ability) to pay for the good that is less than every other buyers willingness and less than every other buyers ability to pay for the good.
Zaria and Hannah are roommates. Zaria assigns a $30 value to smoking cigarettes. Hannah values smoke-free air at $15. Which of the following scenarios is a successful example of the Coase theorem? - Hannah offers Zaria $20 not to smoke. Zaria accepts and does not smoke. - Zaria pays Hannah $16 so that Zaria can smoke. - Zaria pays Hannah $14 so that Zaria can smoke. - Hannah offers Zaria $15 not to smoke. Zaria accepts and does not smoke.
Zaria pays Hannah $16 so that Zaria can smoke.
The demand curve can be thought of as: - a graphical illustration of opportunity cost of sellers - a graphical illustration of how a buyers willingness and ability to pay for product changes as the quantity demanded changes - a graphical illustration of how a buyers willingness and ability to pay for product changes as the quantity supplied changes - None of the other answers
a graphical illustration of how a buyers willingness and ability to pay for product changes as the quantity demanded changes
If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then - a one-unit increase in output will increase the firm's profit. - a one-unit decrease in output will increase the firm's profit. - total revenue exceeds total cost. - total cost exceeds total revenue.
a one-unit decrease in output will increase the firm's profit.
Employing a lawyer to draft and enforce a private contract between parties wishing to solve an externality problem is an example of - an opportunity cost. - an implicit cost. - a sunk cost. - a transaction cost.
a transaction cost.
A Price increase in the market for raisins results in: - an increase in supply - an increase in quantity supplied - a decrease in supply - a decrease in quantity supplied
an increase in quantity supplied
Long lines - and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. - and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. - are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. - are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time.
are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly.
A shortage results when a - nonbinding price ceiling is imposed on a market. - nonbinding price ceiling is removed from a market. - binding price ceiling is imposed on a market. - binding price ceiling is removed from a market.
binding price ceiling is imposed on a market.
Under rent control, bribery is a mechanism to - bring the total price of an apartment (including the bribe) closer to the equilibrium price. - allocate housing to the poorest individuals in the market. - force the total price of an apartment (including the bribe) to be less than the market price. - allocate housing to the most deserving tenants.
bring the total price of an apartment (including the bribe) closer to the equilibrium price.
When a country that imports a particular good imposes an import quota on that good, - consumer surplus increases and total surplus increases in the market for that good. - consumer surplus increases and total surplus decreases in the market for that good. - consumer surplus decreases and total surplus increases in the market for that good. - consumer surplus decreases and total surplus decreases in the market for that good.
consumer surplus decreases and total surplus decreases in the market for that good.
The decrease in total surplus that results from a market distortion, such as a tax, is called a - wedge loss. - revenue loss. - deadweight loss. - consumer surplus loss.
deadweight loss.
A leftward shift of a supply curve is called a(n) - increase in supply. - decrease in supply. - decrease in quantity supplied. - increase in quantity supplied.
decrease in supply.
If the government removes a binding price floor from a market, then the price received by sellers will - decrease, and the quantity sold in the market will decrease. - decrease, and the quantity sold in the market will increase. - increase, and the quantity sold in the market will decrease. - increase, and the quantity sold in the market will increase.
decrease, and the quantity sold in the market will increase.
The Surgeon General announces that eating chocolate increases tooth decay. As a result, the equilibrium price of chocolate - increases, and producer surplus increases - increases, and producer surplus decreases. - decreases, and producer surplus increases. - decreases, and producer surplus decreases.
decreases, and producer surplus decreases.
Whenever a perfectly competitive firm chooses to change its level of output, its marginal revenue - increases if MR < ATC and decreases if MR > ATC. - does not change. - always increases. - always decreases.
does not change.
The world price of a pound of almonds is $4.50. Before Uruguay allowed trade in almonds, the price of a pound of almonds there was $3.00. Once Uruguay began allowing trade in almonds with other countries, Uruguay began - exporting almonds and the price per pound in Uruguay remained at $3.00. - exporting almonds and the price per pound in Uruguay increased to $4.50. - importing almonds and the price per pound in Uruguay remained at $3.00. - importing almonds and the price per pound in Uruguay increased to $4.50.
exporting almonds and the price per pound in Uruguay increased to $4.50.
A competitive market is in long-run equilibrium. If demand decreases, we can be fairly certain that price will - fall in the short run. All firms will shut down, and some of them will exit the industry. Price will then rise to reach the new long-run equilibrium. - fall in the short run. No firms will shut down, but some of them will exit the industry. Price will then rise to reach the new long-run equilibrium. - fall in the short run. All, some, or no firms will shut down, and some of them will exit the industry. Price will then rise to reach the new long-run equilibrium. - not fall in the short run because firms will exit to maintain the price.
fall in the short run. All, some, or no firms will shut down, and some of them will exit the industry. Price will then rise to reach the new long-run equilibrium.
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 - fall in six months but not now. - increase in six months when the price goes up. - increase now to meet as much demand as possible. - fall now.
fall now.
The nation of Wheatland forbids international trade. In Wheatland, you can buy 1 pound of corn for 3 pounds of fish. In other countries, you can buy 1 pound of corn for 2 pounds of fish. These facts indicate that - Wheatland has a comparative advantage, relative to other countries, in producing corn. - other countries have a comparative advantage, relative to Wheatland, in producing fish. - the price of fish in Wheatland exceeds the world price of fish. - if Wheatland were to allow trade, it would import corn.
if Wheatland were to allow trade, it would import corn.
When the supply of a good increases and the demand for the good remains unchanged, consumer surplus decreases is unchanged increases may increase, decrease, or remain unchanged
increases
When Monique drives to work every morning, she drives on a congested highway. What Monique does not realize is that when she enters the highway each morning she increases the travel time of all other drivers on the highway. In this case, the external cost of Monique's highway trip - increases the social cost above the private cost. - lowers the social cost below the private cost. - increases the social value above the private benefit. - decreases the social value below the private benefit.
increases the social cost above the private cost.
Most economists prefer corrective taxes to regulation as a way to correct the problem of pollution because the market-based solution - is less efficient. - can result in a greater increase in pollution. - lowers revenue for the government. - is less costly to society.
is less costly to society.
If a competitive firm is selling 900 units of its product at a price of $10 per unit and earning a positive profit, then - its total cost is more than $9,000. - its marginal revenue is less than $10. - its average total cost is less than $10. - the firm cannot be a competitive firm because competitive firms cannot earn positive profits.
its average total cost is less than $10.
A person can benefit from specialization and trade by obtaining a good at a price that is - lower than his or her opportunity cost of that good. - the same as his or her opportunity cost of that good. - higher than his or her opportunity cost of that good. - different than his or her opportunity cost of that good.
lower than his or her opportunity cost of that good.
When marginal revenue equals marginal cost, the firm - should increase the level of production to maximize its profit. - may be minimizing its losses rather than maximizing its profit. - must be generating positive economic profits. - must be generating positive accounting profits.
may be minimizing its losses rather than maximizing its profit.
Motor oil and gasoline are complements. If the price of motor oil decreases, consumer surplus in the gasoline market - decreases - is unchanged - increases - may increase, decrease, or remain unchanged
may increase, decrease, or remain unchanged
Jane's reduced willingness to pay for microwave tv-dinners after getting a promotion at work is likely due to: - microwave tv-dinners being a normal good - microwave tv-dinners being an inferior good - microwave tv-dinners being a complement to income - None of the other answers
microwave tv-dinners being an inferior good
When a tax is placed on the sellers of a product, generally, buyers pay - more, and sellers receive more than they did before the tax. - more, and sellers receive less than they did before the tax. - less, and sellers receive more than they did before the tax. - less, and sellers receive less than they did before the tax.
more, and sellers receive less than they did before the tax.
A competitive market is a market in which - an auctioneer helps set prices and arrange sales. - there are only a few sellers. - the forces of supply and demand do not apply. - no individual buyer or seller has any significant impact on the market price.
no individual buyer or seller has any significant impact on the market price.
If a tax is levied on the sellers of a product, then the demand curve will - shift down. - shift up. - become flatter. - not shift.
not shift.
What must be given up to obtain an item is called - out-of-pocket cost. - comparative worth. - opportunity cost. - absolute value.
opportunity cost.
Assume, for Vietnam, that the domestic price of textiles without international trade is higher than the world price of textiles. This suggests that, in the production of textiles, - Vietnam has a comparative advantage over other countries and Vietnam will import textiles. - Vietnam has a comparative advantage over other countries and Vietnam will export textiles. - other countries have a comparative advantage over Vietnam and Vietnam will import textiles. - other countries have a comparative advantage over Vietnam and Vietnam will export textiles.
other countries have a comparative advantage over Vietnam and Vietnam will import textiles.
Zelzar has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. Which groups in Zelzar are better off as a result of the new free-trade policy? - producers of incense and consumers of steel - consumers of all three goods - consumers of incense and producers of rugs - producers of steel and consumers of incense
producers of steel and consumers of incense
A key characteristic of a competitive market is that - government antitrust laws regulate competition. - producers sell nearly identical products. - firms minimize total costs. - firms have price setting power.
producers sell nearly identical products.
When the nation of Worldova allows trade and becomes an exporter of silk, - residents of Worldova who produce silk become worse off; residents of Worldova who buy silk become better off; and the economic well-being of Worldova rises. - residents of Worldova who produce silk become worse off; residents of Worldova who buy silk become better off; and the economic well-being of Worldova falls. - residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova rises. - residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova falls.
residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova rises.
An increase in quantity demanded - results in a movement downward and to the right along a demand curve. - results in a movement upward and to the left along a demand curve. - shifts the demand curve to the left. - shifts the demand curve to the right.
results in a movement downward and to the right along a demand curve.
Ford Motor Company announces that next month it will offer $3,000 rebates on new Mustangs. As a result of this information, today's demand curve for Mustangs - shifts to the right. - shifts to the left. - shifts either to the right or to the left, but we cannot determine the direction of the shift from the given information. - will not shift; rather, the demand curve for Mustangs will shift to the right next month.
shifts to the left.
Which of the following would be the most likely result of a binding price ceiling imposed on the market for rental cars? - slow replacement of old rental cars with newer ones - enhanced maintenance programs to promote the high quality of the cars - free gasoline given to people as an incentive to a rent a car - frequent rental programs such as "Rent nine times and the tenth rental is free!"
slow replacement of old rental cars with newer ones
A tax levied on the sellers of a good shifts the - supply curve upward by the size of the tax. - supply curve downward by the size of the tax. - demand curve upward by the size of the tax. - demand curve downward by the size of the tax.
supply curve upward by the size of the tax.
Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the - demand for flour to increase. - demand for flour to decrease. - supply of flour to increase. - supply of flour to decrease.
supply of flour to increase.
A tax on an imported good is called a - quota. - tariff. - supply tax. - trade tax.
tariff.
The government's benefit from a tax can be measured by - consumer surplus. - producer surplus. - tax revenue. - consumer surplus plus producer surplus.
tax revenue.
According to the Coase theorem, private parties can solve the problem of externalities if - the cost of bargaining is small. - the initial distribution of legal rights favors the person being adversely affected by the externality. - the number of parties involved is sufficiently large. - property rights aren't clearly defined.
the cost of bargaining is small.
An alternative to rent-control laws that would not reduce the quantity of housing supplied is - the payment by government of a fraction of a poor family's rent. - higher taxes on rental income earned by landlords. - a policy that prevents landlords from evicting tenants - a policy that allows government to confiscate residential property for the purpose of commercial development.
the payment by government of a fraction of a poor family's rent.
Suppose there are only two people in the world. Each person's production possibilities frontier also represents his or her consumption possibilities when - neither person faces trade-offs. - the frontiers are straight lines. - the frontiers are bowed out. - they choose not to trade with one another.
they choose not to trade with one another.
