Econ Final Exam

Refer to figure 21.5. Economies of scale occur in the following range of factory sizes

#1 through #3

Refer to table 21.5. The marginal cost of the third unit of output in table 21.5 is

$3

Suppose the quantity demanded of ski boats falls from 4.0 million to 3.0 million as a result of an average price increase from $20,000 to $25,000 per boat. The absolute value of the price elasticity of demand is closest to

1.29

Table 1.2 shows the hypothetical trade off between different combinations of stealth bombers and B1 bomber's that might be produced in a year with the limited US capacity. Complete the table by calculating the required opportunity cost for both the B1 and stealth bombers

10 stealth bomber per B1

Referred to figure 19.2. The total utility of two apples is

11 utils

In table 3.1, the equilibrium market quantity is

30

Refer to table 21.3 below. How many units of output can be produced when one unit of labor is employed

30

Assume the price of cola is eight dollars per unit in the price of pretzels is four dollars per unit. The marginal utility per dollar of the third pretzel is

4

Referred to table 19.1. What is joshes total utility from consuming the third slice of pizza

54 utils

Refer to figure 23.6 for a perfectly competitive firm. If this firm produces the level of output corresponding to point B in the short run, it will earn

A loss greater than necessary

Which of the following would most likely have a price elasticity coefficient greater than one

Airline travel in the long run

In providing legal framework, the government

All of the choices are correct.

In a perfectly competitive market where firms are currently experiencing economic profits in the short run, which of the following is least likely to occur during the long run

An increase in marginal revenue

Assume that pencils and pens are substitutes. If the price of pencils rises, then we will see

An increase in the demand for pens.

In the short run, the law of diminishing returns

Can be observed in every production process

Hi profits in a particular industry indicate that

Consumers want more of that industry's goods

An increase in the number of sellers of running shoes causes equilibrium price to

Decrease and equilibrium quantity to increase

The demand curve confronting a competitive firm

Equals the marginal revenue curve

If the government places a price ceiling on cancer treating drugs, then

Fewer cancer treating drugs will be available.

Which of the following is an example of a public good

Flood control

Which of the following is a factor of production for the little biscuit bread Company

Flour

The demand curve confronting a competitive firm is

Horizontal, while market demand is downward sloping

As compared to sociologist and psychologist, economist except consumer tastes as given and instead focus on

How price will affect actual consumer purchases

Assume the price elasticity of demand for JT Chipco chips is 4.0. If the company decreases the price of each bag of chips from $1.89 to $1.49, the number of bags sold will

Increase by 95%

Referred to the data and figure 22.1. The price of this good

Is $1 per unit

Which of the following products will have a more inelastic demand

Medicines

Refer to figure 20.2. If the area 0P1AB is less than the area 0P2CD, we can conclude that the price elasticity of demand between point A and point C is

NOT: Inelastic

Refer to figure 21.3. The vertical difference between the total cost curve and the total fixed cost curve represents

NOT: average fixed costs

Which of the following is consistent with long run equilibrium for a perfectly competitive firm

NOT: average total costs of production are maximized

If a perfectly competitive firm is producing a rate of output at which MC exceeds price, then the firm

NOT: can increase its profit by increasing output

The shape of the marginal cost curve reflects the

NOT: law of diminishing marginal utility

If the firm and figure 23.4 raised the price of its product above $4, the firm would

Reduce its total revenue to zero

Local property taxes are a

Regressive tax because poorer people spend a larger portion of their income on property taxes

How will an increase in the level of human capital affect in economies production possibilities curve

Shift the curve outward

In the news article titled men versus women how they spend, differentiates the spending habits of women and men; men spent almost twice as much as women do an electronica equipment, young women spend twice as much money on clothing, personal care items, and their pets. Which determinant of demand is most likely involved

Tastes

Refer to figure 23.5 for a perfectly competitive firm. If more efficient production techniques were developed in this market, which of the following changes would we expect to occur

The ATC, MC, and market price would all decrease

If demand is elastic, then

The elasticity number E is greater than 1

Refer to figure 22.3 for a perfectly competitive firm. If the market price is $23,

The firm will have above normal profits

Referred to figure 19.2. The diminishing marginal utility begins after

The first apple

Which of the following is the slope of the production function with respect to an input

The marginal physical product of the input

In real terms, the cost of government spending is measured by

The private sector output sacrificed when the government employees scarce resources

Suppose both the demand for and supply of salsa increase. What can we conclude about changes in the price and quantity of salsa

The quantity increases but the change in price cannot be determined

The theory of public choice examines

The role of self-interest in public decisions.

The market demand for a product is

The sum of all of the individual demands for that product

Perfect competition is a situation in which

There are many firms and no buyer or seller has market power

When the economy experiences abnormally high unemployment

There is macro instability

Which of the following industries is perfectly competitive

Wholesale fresh flowers

If the price of "x" increases as you buy more "y", then

X and Y are substitutes, and the price of Y will increase

All of the possible combinations of two guides that lie on one indifference curve

Yield the same level of utility

Given that resources are scarce,

b) Opportunity costs are experienced whenever choices are made.

Antitrust activity addresses

market power

Cities and other local governments receive most of their tax revenues from

property taxes

The federal governments role as the provider of national defense is justified by the considerations of

public goods

Suppose computer prices at an office supply store fall from &1000 to $900 and as a result the quantity demanded of typewriters decreases from 40 to 20 per month. The cross price elasticity of demand is closest to

6.3

Using figure 1.5, if an economy is currently producing on PP2, which of the following would shift the production possibilities curve towards PP1

A decrease in the amount of capital available

Peanut butter and jelly are compliments. A decrease in the price of one will result in

An increase in the demand for the other.

Which of the following is a consequence of competition

An unrelenting squeeze on prices and profit

If a price ceiling is to be affective, it should be set

Below the equilibrium price, and it will create a market shortage

When external costs result from the production of a good,

Both producers and consumers have an incentive to produce and consume too much.

Suppose Cesar allocates his entire budget to the purchase of soft drinks and chips. The marginal utility of the last bottle of soft drink purchased is 12 U tails, and each bottle cost $1.20. The marginal utility of the last bag of chips purchased is eight you tills, and each bag cost $1. In order to maximize his utility, Cesar should

Buy more soft drinks and fewer chips since he gets more marginal utility per dollar from soft drinks

Sellers can gain profits from price discrimination because

Charging different prices based on willingness to pay can increase revenues without increasing costs

For the owner of a sawmill, lumber and the sawdust that go into particle board are

Complements in production; byproducts

In figure 1.9 the slope of the line is

Creator at point M then point L

Refer to figure 22.2 for a perfectly competitive firm. The profit maximizing quantity of output is

D

A competitive firm

Is a price taker

The market tends to under produce public goods because

Joint consumption allows those who do not pay for the good to still benefit from the good.

Technological improvements cause

NOT: New firms to enter by existing firms to continue producing their old output levels

A perfectly competitive market results in efficiency because

NOT: Price rises high enough to equal marginal cost

When the demand for coffee increases, the equilibrium price will also increase because

NOT: The market supply and demand curves do not intersect

In figure 23.3, diagram "a" represents the cost curves that are relevant to a firms production decision, and diagram "b" shows the market demand and supply curves for the market. Use both diagrams to answer the following question: at a price p2 in the long run

NOT: firms will exit the market

If income falls by 5% in the quantity demanded for new cars falls by 10%,

New cars are a normal good, and the income elasticity is +2.0

The most desired goods and services that are foregone gone in order to obtain something else are the

Opportunity cost

Those who are interested in assessing the relative standard of living of different countries over a given Time. Are most likely to look at

Per capita GDP

When unregulated monopolies exist,

Prices tend to be higher than with a competitive market.

A grocery store put salt on sale but found that total revenues fell. This can be explained by which of the following

The demand for salt is inelastic

The average variable cost curve slopes upward with a higher rate of output in the short run because of

The effect of diminishing returns

Which of the following products will have Elastic demand

Travel souvenirs

Which of the following is not a macro economic statement

Jennys wage rate Rose, and in response, she's decided to work more hours

Market structure is determined by the

Number and relative size of the firms in an industry

Income inequality is

Often greatest in the poorest countries