ECON Final

Suppose the cost to run the ferry for each roundtrip is $1,000. How many ferry trips should there be to maximize the total surplus of the four business owners?

1

The opportunity cost of this economy moving from point I to point F is

120 pillows.

The opportunity cost of 1 unit of bread for Spain is

2 units of cheese.

For the general population, a 10 percent increase in the price of cigarettes leads to a

4 percent reduction in the quantity demanded of cigarettes.

What is the average variable cost of producing 5 units of output?

40

What is the marginal cost of the 1st unit?

50

Suppose the market for this product is served by two firms who have formed a cartel and are colluding to set the price and quantity in this market. If the marginal cost to produce this product is constant at $40 per unit, then what price will the cartel set in this market?

70

At the equilibrium price, consumer surplus is

900.

Raymond buys a refrigerator for his new home. To which of the arrows does this transaction directly contribute?

A and B

Which of the following is an example of a barrier to entry?

Roseanne obtains a copyright for a short story that she wrote and published.

Which of the following is true when the price of a good or service rises?

Some buyers exit the market.

Examples of goods that are excludable include

mobile phones and fire protection

What is the marginal cost of the 8th pair of shoes?

$90

Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each. Which of the following statements is correct?

(i) Marginal revenue equals $3. (ii) Average revenue equals $100. (iii) Total revenue equals $300. a. (i) only

With free trade, producer surplus is

$1,620.

Suppose the cost to clean the lake is $40 per hour and that the residents have agreed to split the cost of cleaning the lake equally. If it was decided that the lake will be cleaned for the number of hours that maximizes total surplus of Widgetapolis, how much individual surplus will James receive in total?

$100

if the government imposes a price ceiling of $50 in this market, then the new producer surplus will be

$100.

At a price of $70 per unit, sellers' total revenue equals

$1050.

During the winter months, what is Sam's opportunity cost of taking an hour off work to go skiing?

$13

Jacqui decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she withdrew $20,000 from her savings, which earned 5 percent interest. She also turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jacqui's economic profit from running her own business?

$4,000

If BQ and Exxoff are able to successfully cooperate to maximize their joint profits, BQ will earn

$67 million and Exxoff will earn $67 million.

Suppose the town enacts new antitrust laws that prohibit Maria and Miguel from operating as a monopoly. What will be the price of milk once Maria and Miguel reach a Nash equilibrium?

$8

Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?

A multilateral approach requires the agreement of two or more nations.

Which of the following is not a characteristic of a perfectly competitive market?

All of the above are characteristics of a perfectly competitive market.

What is (are) the Nash equilibrium (equilibria) in this Chicken game?

Both b and c are Nash equilibria

Which of the following statements is true of both pollution permits and corrective taxes?

Both policies internalize the externality of pollution. b. Both policies require firms to pay for their pollution. c. Both policies lead to the establishment of an equilibrium price of pollution. d. All of the above are correct. D.

If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos rises?

Both the equilibrium price and quantity would increase.

Suppose that the labor market for life guards is initially in equilibrium. Whistles are an important safety tool that life guards use as a part of their jobs. A fire destroys the largest factory that produces whistles. What happens to the equilibrium wage and quantity of life guards?

Both the equilibrium wage and quantity decrease.

The average total cost curve for a monopoly firm is depicted by curve

C

Carolyn's Pottery Shop produces vases that sell for $15 each. Assume that labor is the only input that varies for the firm. If Carolyn hires 10 workers, she can produce and sell 500 vases per week. If she hires 11 workers, she can produce and sell 560 vases per week. Carolyn pays each of her workers $400 per week. Which of the following is correct?

For the 11th worker, the marginal profit is $500.

DeShawn has spent $600 purchasing and repairing an old fishing boat, which he expects to sell for $900 once the repairs are complete. DeShawn discovers that, in addition to the $600 he has already spent, he needs to make an additional repair, which will cost another $400, in order to make the boat worth $900 to potential buyers. He can sell the boat as it is now for $400. What should he do?

He should complete the repairs and sell the boat for $900.

In a competitive market the current price is $5. The typical firm in the market has ATC = $5.50 and AVC = $5.15.

In the short run firms will shut down, and in the long run firms will leave the market.

Which industry has the lowest concentration ratio?

Industry K

If grocery store 2 sets a high price, what price should grocery store 1 set? And what will grocery store 1's payoff e

Low price, $400

You have two essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You hold an auction to sell the two tickets. Who makes the winning bids, and what do they offer to pay for the tickets?

Michael and Earvin; more than $350 but less than or equal to $400

Which of the following policies is not an example of a command-and-control policy?

None of the above is an example of a command-and-control policy.

A profit-maximizing monopoly's total cost is equal to

P5 x Q3.

If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus?

Producer surplus increases by $3,125

Efficient production is represented by which point(s)?

R, U

For a firm operating in a competitive industry, which of the following statements is not correct?

Total revenue is constant.

Turkey is an importer of wheat. The world price of a bushel of wheat is $7. Turkey imposes a $3-per-bushel tariff on wheat. Turkey is a price-taker in the wheat market. As a result of the tariff,

Turkish consumers of wheat become worse off and Turkish producers of wheat become better off.

Walter used to work as a high school teacher for $40,000 per year but quit in order to start his own painting business. To invest in his painting business, he withdrew $20,000 from his savings, which paid 3 percent interest, and borrowed $30,000 from his uncle, whom he pays 3 percent interest per year. Last year Walter paid $25,000 for supplies and had revenue of $60,000. Walter asked Tyler the accountant and Greg the economist to calculate his painting business's costs

Tyler says his costs are $25,900, and Greg says his costs are $66,500.

Which of the following changes would not shift the supply curve for a good or service?

a change in the price of the good or service

A linear, upward-sloping supply curve has

a constant slope and a changing price elasticity of supply.

Which of the following is not a common resource?

a neighborhood garden

As the figure is drawn, the firm is in

a short-run equilibrium but it is not in a long-run equilibrium

Negative externalities occur when one person's actions

adversely affect the well-being of a bystander who is not a party to the action.

The shift from Da to Db is called

an increase in demand.

As a result of a labeling mistake at the chemical factory, a farmer accidentally sprays weedkiller rather than fertilizer on half her land. As a result, she loses half of her productive farmland. If the property of diminishing returns applies to all factors of production, she should expect to see

an increase in the marginal productivity of her remaining land and a decrease in the marginal productivity of her labor.

Efficient scale is reached

beyond 133.33 units.

A shortage results when a

binding price ceiling is imposed on a market.

Building new weapons is a dominant strategy for

both Kinglandia and Rovinastan.

Prices usually reflect

both the value of a good to society and the cost to society of making the good

If player A chooses his/her best strategy, player B should

choose left and earn a payoff of 4.

To maximize its profit, a monopolistically competitive firm

chooses its quantity and price, just as a monopoly does.

Economists speaking like scientists make

claims about how the world is.

To fully understand how taxes affect economic well-being, we must

compare the reduced welfare of buyers and sellers to the amount of revenue the government raises.

To move the allocation of resources closer to the social optimum, policymakers should typically try to induce firms in an oligopoly to

compete rather than cooperate with each other.

In a long-run equilibrium, price is equal to average total cost." This statement applies to

competitive and monopolistically competitive markets, but not to monopolies.

If a firm is a price taker, it operates in a

competitive market.

Most studies indicate that tobacco and marijuana tend to be

complements.

When the nation of Isoland opens up its steel market to international trade, that change

creates winners and losers, regardless of whether Isoland ends up exporting or importing steel.

The social cost of a monopoly is equal to its

deadweight loss.

A monopolist faces a

downward-sloping demand curve.

A consumer's willingness to pay directly measures

how much a buyer values a good

If the price elasticity of demand is 1.5, regardless of which two points on the demand curve are used to compute the elasticity, then demand is

elastic, and the demand curve is something other than a straight, downward-sloping line.

Medicaid and food stamps are

forms of in-kind assistance.

With free trade and a $5 per unit tariff, the country

imports 40 units of the good.

If these are the only four sellers in the market for ice cream, then when the price increases from $4 to $6, the market quantity supplied

increases by 10 gallons.

You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter

increases today.

For prices below $5, demand is price

inelastic, and raising price will increase total revenue.

Consumer surplus

is the amount a consumer is willing to pay minus the amount the consumer actually pays.

Consider the labor market for computer programmers. Because of the dot.com boom in the late 1990s, a lot of workers went to school to learn how to write computer code for one of thousands of new dot.com companies. However, when these computer programming students graduated the dot.com bust took place. The dot.com bust decreased the value of the marginal product of computer programmers. Holding all else equal what effect did these two circumstances have on the equilibrium quantity in the labor market for computer programmers?

it is not possible to determine what happens to the equilibrium quantity of labor

The firm will earn a negative economic profit but remain in business in the short run if the market price is

less than $6.30 but more than $4.50.

The lower the concentration ratio, the

more competitive the industry.

The income distribution in the United States shows that the income share of the top fifth of all families is

more than 12 times the income of the bottom fifth.

If Max experiences a decrease in his income, then we would expect Max's demand for

normal goods to decrease.

The simplest way for a monopoly to arise is for a single firm to

own a key resource.

Suppose that 300 bottles of soda are demanded at a particular price. If the price of a bottle of soda rises from that price by 6 percent, the number of bottles of soda demanded falls to 275. Using the midpoint approach to calculate the price elasticity of demand, it follows that the

price elasticity of demand for bottles of soda in this price range is about 1.45.

In a long-run equilibrium, the marginal firm has

price equal to average total cost. b. total revenue equal to total cost. c. economic profit equal to zero. d. All of the above are correct. D.

Total revenue equals

price x quantity.

For private goods allocated in markets,

prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources.

The income of a typical worker in a country is most closely linked to which of the following?

productivity

The fact that different countries experience different standards of living is largely explained by differences in those countries'

productivity levels.

If a nonbinding price floor is imposed on a market, then the

quantity sold in the market will stay the same.

Which of the following combinations will minimize the deadweight loss from a tax?

supply 1 and demand 1

A tax levied on the sellers of a good shifts the

supply curve upward (or to the left).

Suppose society consists of three individuals: Phil, Jay, and Mitchell. Phil has $60,000 of income, Jay has $200,000 of income, and Mitchell has $100,000 of income. A utilitarian would argue that

taking $1 from Mitchell and giving it to Phil would increase society's total utility.

According to the Coase theorem, private parties can solve the problem of externalities if

the cost of bargaining is small.

Point K represents an outcome in which

the economy is using all of its resources to produce hammers.

The more firms an oligopoly has,

the more likely the firms will charge a price close to the perfectly competitive price.

Years ago, thousands of country music fans risked their lives by rushing to buy tickets for a Willie Nelson concert at Carnegie Hall. This behavior indicates

the ticket price was below the equilibrium price.

Additional firms often do not try to compete with a natural monopoly because

they know they cannot achieve the same low costs that the natural monopolist enjoys.

When the labor market adjusts to its new equilibrium, we would expect the

value of the marginal product of labor to be higher than it was before the increase in demand for bottled water.

In the short run, a firm incurs fixed costs

whether it produces output or not.

Based upon this information, the profit maximizing output level is

​5 units.

Which of the following is likely to have the most price inelastic demand?

lightbulbs

When a firm experiences constant returns to scale,

long-run average total cost is unchanged, even when output increases.

Liberalism aims to raise the welfare of the worst-off person in society. This rule is called the

maximin criterion.

The labor supply curve shifts when

workers change the number of hours that they want to work at any given wage.