Econ 2000 final Scott Abraham's
Suppose a firm in a competitive market earned $1,000 in total revenue and had a marginal revenue of $10 for the last unit produced and sold. What is the average revenue per unit, and how many units were sold?
$10 and 100 units
If the government imposed a corrective tax that successfully moved to the market from equilibrium to the social optimum then tax revenue for the government would amount
$2000
Refer to Figure 7-5.If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus to existing producers?
$2500
Refer to Figure 16-5. When the firm is maximizing its profit, the markup over marginal cost amounts to
$50
Refer to Figure 5-3. The maximum value of total revenue corresponds to a price of
$50
Suppose a firm operating in a competitive market has the following cost curves:
$50
Refer to Figure 16-2.What price will the monopolistically competitive firm charge in this market?
$80
Refer to Figure 8-3. The deadweight loss associated with this tax amounts to
$80, and this figure represents the surplus that is lost because the tax discourages mutually advantageous trades between buyers and sellers.
Refer to Figure 4-9. All else equal, an increase in the use of laptop computers for note-taking would cause a move from
(-y,x)
Scenario 10-1 The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 1,000 gallon of gasoline entails the following: • a private cost of $3.10; • a social cost of $3.55; • a value to consumers of $3.70. Refer to Scenario 10-1. Let QMARKET represent the equilibrium quantity of gasoline, and let oPTIMUM represent the socially optimal quantity of gasoline. Which of the following inequalities is correct?
1,000 < OPTIMUM< QMARKET
The following figure depicts average total cost functions for a firm that produces automobiles.
12. Constant returns to scale
Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in Felinia can produce either 5 blankets or 1 meal per day. Each nation has 10 workers. For many years, the two countries traded, each completely specializing according to their respective comparative advantages. Now war has broken out between them and all trade has stopped. Without trade, Caninia produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day. The war has caused the combined daily output of the two countries to decline by
15 blankets and 35 meals
Refer to Figure 15-7.To maximize total surplus, a benevolent social planner would choose which of the following outcomes?
18. Q=45 and P=45
Using the midpoint method, if the price falls from $200 to $150, the absolute value of the price elasticity of demand is
2.8
If the price elasticity of demand for a good is 2.0, then a 10 percent increase in price results in a
20 percent decrease in the quantity demanded.
Refer to figure 10-5 the socially optimal quantity of output is
420 units since the value to the society of the 420th unit is = to the cost incurred by the 420th unit
The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit. If the monopolist were able to perfectly price discriminate, how many units would it sell?
900
What happens to consumer surplus in the cell phone market if cell phones are normal goods and buyers of cell phones experience an increase in income?
Consumer surplus may increase, decrease, or remain unchanged.
Suppose that a firm in a competitive market faces the following revenues and costs:
Continue to operate at 14 units
At equilibrium, producer surplus is represented by the area
D+H+F
Equilibrium price must decrease when demand
Decreases and supply does not change when demand does not change and supply increases, and when demand decreases and supply increases simultaneously
Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?
Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
Refer to Figure 15-4. What price will the monopolist charge in order to maximize profit?
K
An example of an explicit cost of production would be the
Lease payments for land in which the factory stands
Refer to figure 13-3 which of the following can be inferred from the figure above
Marginal product is 📈 at low level of output and 📉 at high level of output
In which of the following market structures can firms earn economic profits in the long run?
Monopoly only
Refer to Figure 6-11.Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?
One-half of the burden of the tax will fall on buyers, and one-half of the burden
Suppose a firm operating in a competitive market has the following cost curves:
P^4
For which pairs of goods is the cross-price elasticity most likely to be positive?
Pen and pencil
Refer to Figure 14-7. Assume that the market starts in equilibrium at point W in graph (b) and that graph (a) illustrates the cost curves facing individual firms. Suppose that demand increases from Do to D. Which of the following statements is correct?
Points W and Z represent long run equilibrium
Refer to Figure 15-3. A profit-maximizing monopoly will produce an output level of
Q3
Refer to Figure 16-5. As the figure is drawn, the firm is in
a short-run equilibrium as well as a long-run equilibrium.
Refer to Figure 6-3.A government-imposed price of $24 in this market is an example of a
binding price floor that creates a surplus.
A tax on the buyers of cameras encourages
buyers to demand a smaller quantity at every price
Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the
buyers will bear a greater burden of the tax than the sellers
A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it
can prevent children from buying the lower-priced tickets and selling them to adults.
Which of the following costs of publishing a book is a fixed cost?
composition, typesetting, and jacket design for the book
Refer to Figure 4-1.It is apparent from the figure that the
demand for the good conforms to the law of demand.
If government regulation sets the maximum price for a natural monopoly equal to its marginal cost, then the natural monopolist will
earn economic losses
Refer to Figure 4-6.The shift from S to S' could be caused by an
improvement in production technology
If the government removes a binding price ceiling from a market, then the price paid by buyers will
increase, and the quantity sold in the market will increase
Private decisions about consumption of common resources and production of public goods usually lead to an
inefficient allocation of resources and external effects
The deadweight loss from a tax per unit of good will be smallest in a market with
inelastic supply and inelastic demand
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 average total cost is less than $10.
A firm that shuts down temporarily has to pay
its fixed costs but not its variable costs
Motor oil and gasoline are complements. If the price of motor oil increases, consumer surplus in the gasoline market
may increase, decrease, or remain unchanged.
For a monopoly, the socially efficient level of output occurs where
price equals marginal cost
If duopoly firms that are not colluding were able to successfully collude, then
price would rise and quantity would fall.
Scenario 10-1 The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 1,000th gallon of gasoline entails the following: • a private cost of $3.10; • a social cost of $3.55; • a value to consumers of $3.70. Refer to Scenario 10-1. Suppose the dollar amount of the externality, per gallon of gasoline, is constant, regardless of how much gasoline is produced. Then the externality could be internalized if producers of gasoline were
required to pay a tax of $0.45 per gallon of gasoline sold.
Refer to Table 4-6.If the price were $8, a
surplus of 25 units would exist, and price would tend to fall.
For a good that is a luxury, demand
tends to be elastic
If a price floor is not binding, then
the equilibrium price is above the price floor
If a sawmill creates too much noise for local residents,
the government can raise economic well-being through noise-control regulations.
In some cases, tradable pollution permits may be better than a corrective tax because
the government can set a maximum level of pollution using permits
You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that
the mayor thinks demand is inelastic, and the city manager thinks demand is elastic.
Producers have little incentive to produce a public good because
there is a free-rider problem.
Refer to Figure 16-5.The firm's maximum profit is
$0