Econ Final Exam

Refer to the diagram. If this somehow was a costless product (that is, the total cost of any level of output was zero), the firm would maximize profits by: A) producing Q2 units and charging a price of P2. B) producing Q1 units and charging a price of P1. C) producing Q3 units and charging a price of P3. D) selling the product at the highest possible price at which a positive quantity will be demanded.

A) producing Q2 units and charging a price of P2.

The United States devotes about ________ percent of its gross domestic product to health care. A) 15 B) 18 C) 5 D) 8

B) 18

Approximately what percentage of U.S. health care spending is financed by public insurance? A) 33 percent. B) 50 percent. C) 83 percent. D) 17 percent.

B) 50 percent.

A moral hazard problem arises in the health care market because health insurance encourages people to overconsume health care.

True

Both collusive and noncollusive oligopoly models suggest that price changes will be relatively infrequent in these types of industries.

True

Asymmetric information always results in adverse selection.

False

Environmentalists generally support price supports because these subsidies motivate additional farm production.

False

Health care costs in the United States have risen absolutely but remained constant as a percentage of gross domestic product.

False

Which of the following is not a barrier to entry? A) X-inefficiency. C) Patents. B) Ownership of essential resources. D) Economies of scale.

A) X-inefficiency

Refer to the diagram. In equilibrium the firm: A) is realizing an economic profit of bd per unit. B) is incurring a loss. C) is realizing an economic profit of ad per unit. D) should close down in the short run.

C) is realizing an economic profit of ad per unit.

Refer to the data. The marginal revenue obtained from selling the third unit of output is: A) $6. B) $5. C) $1. D) $2.

D) $2.

In a zero-sum game, the gains by one player will be exactly offset by the losses of the other.

True

Preferred provider organizations (PPOs) are a type of managed-care organization.

True

The moral hazard problem is the tendency of some parties to a contract to alter their behavior as a result of the contract in ways that are costly to the other party.

True

The demand for agricultural products: A) has been rising more rapidly than the national income. B) has a price elasticity coefficient of about 0.20 to 0.25. C) has been decreasing about 8 percent per year. D) is elastic with respect to income but inelastic with respect to price.

has a price elasticity coefficient of about .20 to .25

The federal government in 2006 enacted limits on "pain and suffering" awards on medical malpractice lawsuits against physicians.

False

Refer to the profits-payoff table for a duopoly. If the firms are acting independently and firm X sets its price at $6, firm Y will achieve the largest profit by selecting: A) $4. B) a price higher than $6. C) a price between $5 and $6. D) $6.

A) $4.

Answer the question on the basis of the following information for a public good. Pa and Pb are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it. These people are the only two members of society. Refer to the data. The collective willingness of this society to pay for the second unit of this public good is: A) $6. B) $2. C) $4 D) $8

A) $6.

Refer to the payoff matrix. Suppose that Speedy Bike and Power Bike are the only two bicycle manufacturing firms serving the market. Both can choose large or small advertising budgets. If this is a one-time, simultaneous game, which cell represents the final outcome we would expect to occur? A) A. B) B. C) C. D) D.

A) A.

For which one of the following goods would we need to sum individual demand curves vertically to obtain the total demand curve? A) Courts of law. B) Bubble gum. C) Frozen yogurt. D) Microwave popcorn.

A) Courts of law.

Price supports in agriculture have been criticized because they: A) help large farmers more than small farmers. B) create product shortages. C) subsidize consumers at the expense of farmers. D) have hastened the exodus of labor from agriculture.

A) Help large farmers more than small farmers

Which of the following statements concerning a monopolistically competitive industry is correct? A) If there are short-run losses, firms will leave the industry and the demand curves of the remaining firms will shift to the right. B) If there are short-run losses, firms will leave the industry and the demand curves of the remaining firms will shift to the left. C) If there are short-run economic profits, firms will enter the industry and the demand curves of existing firms will shift to the right. D) If there are short-run economic profits, firms will leave the industry and the demand curves of the remaining firms will shift to the right.

A) If there are short-run losses, firms will leave the industry and the demand curves of the remaining firms will shift to the right.

Which of the following is a provision of the Patient Protection and Affordable Care Act? A) Insurance companies may not legally deny coverage to anyone on the basis of a preexisting medical condition. B) Adult children of parents with employer-provided health insurance can remain covered by their parents' insurance through age 35. C) Every individual must purchase their own health insurance for themselves and their dependents or pay a fine. D) Every firm must purchase health insurance for their employees or face a $2,000 fine per employee.

A) Insurance companies may not legally deny coverage to anyone on the basis of a preexisting medical condition.

Owners of defective used cars have more information about the condition of their vehicles than potential buyers of those used cars. This is an example of: A) asymmetric information. B) a spillover cost. C) the moral hazard problem. D) a positive externality.

A) asymmetric information.

99) Other things equal, increased emphasis on providing the best possible medical care for 99) all, regardless of income, will: A) increase the demand for health care. B) have no effect. C) decrease the demand for health care. D) increase the supply of health care.

A) increase the demand for health care.

A public good: A) is available to all and cannot be denied to anyone. B) is characterized by rivalry and excludability. C) produces no positive or negative externalities. D) can be profitably produced by private firms.

A) is available to all and cannot be denied to anyone

Upon buying a car with airbags, Indy begins to drive recklessly. This is an example of the: A) moral hazard problem. B) free-rider problem. C) adverse selection problem. D) principal-agent problem.

A) moral hazard problem.

There is some evidence to suggest that X-inefficiency is: A) more likely to occur in monopolistic firms than in competitive firms. B) more likely to occur in competitive firms than in monopolistic firms. C) not encountered in either competitive or monopolistic firms. D) absent whenever two or more producers are competing with one another.

A) more likely to occur in monopolistic firms than in competitive firms.

When critics of U.S. farm policy say that it treats symptoms rather than causes, they mean that the: A) policy attempts to bolster low farm income, while the real problem is an overallocation of resources to agriculture. B) restriction of output in the short run may reduce productive capacity in agriculture in the long run. C) policy deals with the overallocation of resources to agriculture, while the basic farm problem is low incomes. D) policy attempts to bolster low farm incomes, while the real problem is an underallocation of resources to agriculture.

A) policy attempts to bolster low farm income, while the real problem is an overallocation of resources to agriculture.

Refer to the diagrams for two separate product markets. Assume that society's optimal level of output in each market is Q0 and that government purposely shifts the market supply curve from S to S1 in diagram (a) on the left and from S to S2 in diagram (b) on the right. The shift of the supply curve from S to S2 in diagram (b) might be caused by a per-unit: A) subsidy paid to the producers of this product. B) subsidy paid to the buyers of this product. C) tax on the producers of this product. D) tax on the buyers of this product.

A) subsidy paid to the producers of this product.

The growing importance of export demand for American agriculture has: A) destabilized the total demand for farm products. B) had no significant effect on the stability of the demand for farm products. C) stabilized the total demand for farm products. D) reduced the international value of the dollar.

A)Destabilized the total demand for farm products.

Consider This) Which of the following methods is commonly used by farmers to "smooth" income over time? A) Entering contracts with buyers of their farm output to assure themselves of a fixed price. B) Producing only one crop to benefit from specialization. C) Renting land from other farmers to increase production. D) All of these risk-management techniques are used to hedge against short-run price and output fluctuations.

A)Entering contracts with buyers of their farm output to assure themselves of a fixed price.

Some sellers of used cars provide warranties to buyers, with the aim of reassuring buyers that the car is of good quality. These warranties help reduce the chance of what occurring? A) Moral hazard. B) Adverse selection. C) Spillover benefits. D) Negative externalities.

B) Adverse selection.

Which of the following statements is correct? A) Purely monopolistic sellers earn only normal profits in the long run. B) In seeking the profit-maximizing output, the pure monopolist underallocates resources to its production. C) The pure monopolist will maximize profit by producing at that point on the demand curve where elasticity is zero. D) The pure monopolist maximizes profits by producing that output at which the differential between price and average cost is the greatest.

B) In seeking the profit-maximizing output, the pure monopolist underallocates resources to its production.

Which of the following statements is correct? A) Purely competitive firms, monopolistically competitive firms, and pure monopolies all earn zero economic profits in the long run. B) In the long run, purely competitive firms and monopolistically competitive firms earn zero economic profits, while pure monopolies may or may not earn economic profits. C) Purely competitive firms, monopolistically competitive firms, and pure monopolies all earn positive economic profits in the long run. D) Monopolistically competitive firms earn zero economic profits in both the short run and the long run.

B) In the long run, purely competitive firms and monopolistically competitive firms

Which of the following statements best describes the demand for agricultural commodities? A) It takes a small decline in price to induce a large increase in the amount of agricultural products demanded. B) The marginal utility of additional units of agricultural output diminishes very rapidly. C) When price declines, the resulting substitution effect is very large. D) Small increases in income cause demand to increase by a proportionately larger amount.

B) The marginal utility of additional units of agricultural output diminishes very rapidly.

Which of the following industries is an illustration of homogeneous oligopoly? A) The auto industry. B) Aluminum. C) Personal computers. D) Household laundry products.

B) aluminum

Irving Tiller exclusively grew wheat in each of the past three years. Under the Food, Conservation, and Energy Act of 2008, Tiller: A) can grow whatever crop he wants to in the current year but will only receive direct payments from the federal government if the price of wheat falls below a targeted price. B) can grow whatever crop he wants in the current year and will still receive direct payments from the federal government based on his previously grown wheat crops. C) must grow wheat in the current year in order to receive direct payments from the federal government. D) must grow something other than wheat to qualify for direct payments from the federal government.

B) can grow whatever crop he wants in the current year and will still receive direct payments from the federal government based on his previously grown wheat crops.

From society's perspective, in the presence of a supply-side market failure, the last unit of a good produced typically: A) generates more of a benefit than it costs to produce. B) costs more to produce than it provides in benefits. C) produces a benefit exactly equal to the cost of producing the last unit. D) maximizes the net benefit to society.

B) costs more to produce than it provides in benefits.

The employer mandate of the PPACA requires that A) every firm with 500 or more employees must establish their own on-site medical facilities to provide employees with basic medical care. B) every firm with 50 or more full-time employees must purchase health insurance for their full-time employees or pay a $2,000 fine per employee. C) every firm must purchase health insurance for their full-time employees or pay a $2,000 fine per employee. D) every firm with fewer than 50 full-time employees must purchase health insurance for their full-time employees or pay a $2,000 fine per employee.

B) every firm with 50 or more full-time employees must purchase health insurance for their full-time employees or pay a $2,000 fine per employee.

In game theory, the credibility of a threat: A) determines whether or not a firm has a dominant strategy. B) influences the degree of cooperation between two rivals. C) is relevant only in simultaneous games. D) determines whether or not a Nash equilibrium to a game exists.

B) influences the degree of cooperation between two rivals.

An industry having a four-firm concentration ratio of 85 percent: A) is monopolistically competitive. C) approximates pure competition. B) is an oligopoly. D) is a pure monopoly.

B) is an oligopoly.

In the short run, the price charged by a monopolistically competitive firm attempting to maximize profits: A) must be equal to ATC. B) may be either equal to ATC, less than ATC, or more than ATC. C) must be less than ATC. D) must be more than ATC.

B) may be either equal to ATC, less than ATC, or more than ATC.

In a television advertisement for AFLAC supplemental health insurance, an ice skater says to his skating partner, "Do you want to try a triple jump?" She responds, "Why not, I have AFLAC." This response illustrates the: A) adverse selection problem. C) free-rider problem. B) moral hazard problem. D) principal-agent problem.

B) moral hazard problem.

Refer to the data. This industry illustrates: A) monopolistic competition. C) pure competition. B) oligopoly. D) pure monopoly.

B) oligopoly.

Preferred provider organizations (PPOs): A) require that their members give up the right to file medical malpractice suits. B) require physicians and hospitals to provide discounted prices for their services as a condition for being included in the insurance plan. C) charge a fixed amount per member, hire many of their own physicians, and provide health services only to members. D) are illegal in several states.

B) require physicians and hospitals to provide discounted prices for their services as a condition for being included in the insurance plan.

If the four-firm concentration ratio for industry X is 80: A) each of the four largest firms accounts for 20 percent of total sales. B) the four largest firms account for 80 percent of total sales. C) the industry is monopolistically competitive. D) the four largest firms account for 20 percent of total sales.

B) the four largest firms account for 80 percent of total sales.

If the prices paid by farmers increase and the prices received by farmers decrease, then the parity ratio: A) may either increase or decrease. B) will necessarily decrease. C) will necessarily increase. D) will be unaffected.

B)Will necessarily decrease.

Currently (2009) farm employment is about: A) 1.8 percent of total employment. B) 9.4 percent of total employment C) 1.1 percent of total employment. D) 15.8 percent of total employment.

C) 1.1 Percent of total employment

Refer to the data. If all the firms in the industry merged into a single firm, the Herfindah index would become: A) 1,000. B) 100,000. C) 10,000. D) 100.

C) 10,000.

Total U.S. health care spending in 2011 was approximately: A) $847 billion. B) $4.1 trillion. C) $2.7 trillion. D)1.1 trillion

C) 2.7 Trillion

If the given profit-maximizing monopolist is able to price discriminate, charging each customer the price associated with each given level of output, how many units will the firm produce? A) 2. B) 3. C) 4. D) 5.

C) 4.

Refer to the diagram for the corn market. What effect will a price support of B have on the gross income of farmers? A) Gross income will be unchanged, although profits will rise. B) Gross income will decrease from 0BCG to 0BKL. C) Gross income will increase from 0AJH to 0BCG. D) Gross income will increase from 0MFG to 0BKL.

C) Gross income will increase from 0AJH to 0BCG.

Refer to the diagram. If this industry is purely monopolistic, the profit-maximizing price and quantity will be: A) P2 and Q2. B) indeterminate on the basis of the information given. C) P3 and Q3. D) P1 and Q1.

C) P3 and Q3.

(Last Word) Which of the following statements best describes the Internet market structure? A) There are a few large firms, such as Google, Facebook, and Amazon, but they each occupy their own niche and don't infringe on the others' territories. B) It is highly competitive, with many providers and no firms in a dominant position. C) There are a few large firms, such as Google, Facebook, and Amazon, each dominating a particular sector but always trying to gain market share in another sector. D) It is comprised of firms that have been granted monopolies by the government and are highly regulated.

C) There are a few large firms, such as Google, Facebook, and Amazon, each dominating a particular sector but always trying to gain market share in another sector.

Refer to the demand and supply diagram that relates to the health care market. The efficiency loss caused by the availability of health insurance is shown by area: A) abc. B) P1abP2. C) adc. D) Q1acQ2.

C) adc.

Refer to the diagram. Economists would argue that health care should be provided to patients in: A) some amount between Q1 and Q2. B) some amount less than Q1. C) amount Q1. D) amount Q2.

C) amount Q1.

Refer to the diagram in which S is the market supply curve and S1 is a supply curve comprising all costs of production, including external costs. Assume that the number of people affected by these external costs is large. Without government interference, this market will reach: A) a higher price than is consistent with an optimal allocation of resources. B) an underallocation of resources to this product. C) an overallocation of resources to this product. D) an optimal allocation of society's resources.

C) an overallocation of resources to this product.

Last Word) The U.S. sugar price support program has:) A) cost U.S. consumers much less than it has benefited U.S. sugar producers. B) reduced the price of sugar to U.S. consumers. C) cost U.S. consumers much more than it has benefited U.S. sugar producers. D) increased sugar imports as a percentage of U.S. sugar consumption.

C) cost U.S. consumers much more than it has benefited U.S. sugar producers.

Over the past several decades, farm employment has: A) increased both absolutely and as a percentage of total employment. B) declined absolutely but increased as a percentage of total employment. C) declined both absolutely and as a percentage of total employment. D) grown absolutely but declined as a percentage of total employment.

C) declined both absolutely and as a percentage of total employment

Employer-provided private health insurance began in the United States because: A) the rising threat of socialism prompted U.S. companies to provide insurance to dampen enthusiasm for socialist reform. B) the American Medical Association successfully lobbied the U.S. government to provide subsidies to companies offering private health insurance to employees. C) during World War II, wage and price controls forced employers to use nonwage forms of compensation to attract workers. D) poor health conditions at the beginning of the 20th century prompted the U.S. government to require new companies to offer health insurance to employees.

C) during World War II, wage and price controls forced employers to use nonwage forms of compensation to attract workers.

What was the primary goal of the proponents of the Patient Protection and Affordable Care Act? A) Make all U.S. health care publicly (government) provided. B) Improve the quality of care by reducing medical malpractice. C) Extend health insurance coverage to all Americans. D) Reduce health care costs in the United States by 50 percent.

C) extend health insurance coverage to all americans

Refer to the diagram. If output changes from a poor crop, Qp, to a bumper crop, Qb: A) farm incomes will increase. B) farm incomes may either rise or fall. C) farm incomes will decrease. D) price and quantity will both increase.

C) farm incomes will decrease.

A simultaneous game is said to exist when: A) firms are playing pricing games in different markets at the same time. B) strategies are set without regard to possible interactions in future time periods. C) firms choose their strategies at the same time as their rivals. D) firms can set multiple prices for the same good at the same time.

C) firms choose their strategies at the same time as their rivals

Employer-provided private health insurance in the United States has resulted in: A) lower costs of health care as providers better achieve economies of scale. B) comprehensive coverage of the U.S. population, with few lacking access to adequate health care. C) incentives that encourage the overuse of health care. D) incentives that discourage the use of health care, and overall poorer health.

C) incentives that encourage the overuse of health care.

Refer to the long-run cost diagram for a firm. If the firm produces output Q2 at an average cost of ATC2, then the firm is: A) producing that output with the most efficient combination of inputs and is realizing all existing economies of scale. B) producing the profit-maximizing output but is failing to minimize production costs. C) incurring X-inefficiency but is producing that output at which all existing economies of scale might be realized. D) incurring X-inefficiency and is failing to produce the output at which all economies of scale might be realized. 74)

C) incurring X-inefficiency but is producing that output at which all existing economies of scale might be realized.

An efficiency loss (or deadweight loss) declines in size when a unit of output is produced for which: A) producer surplus exceeds consumer surplus. B) consumer surplus exceeds producer surplus. C) maximum willingness to pay exceeds minimum acceptable price. D) marginal cost exceeds marginal benefit.

C) maximum willingness to pay exceeds minimum acceptable price.

In the short run, a monopolist's economic profits: A) are always zero because consumers prefer to buy B) are usually negative because of government price C) may be positive or negative depending on market D) are always positive because the monopolist is a price-maker.

C) may be positive or negative depending on market

Refer to the data. The profit-maximizing monopolist will realize a: A) profit of $7.50. C) profit of $16. B) profit of $8.50. D) loss of $14.

C) profit of $16.

Refer to the game theory matrix where the numerical data show the profits resulting from alternative combinations of advertising strategies for Ajax and Acme. Ajax's profits are shown in the upper right part of each cell; Acme's profits are shown in the lower left. Without collusion, the outcome of the game: A) results in greater economic efficiency. B) maximizes joint profits for the firms. C) results in a prisoner's dilemma. D) forces one or more firms out of the industry.

C) results in a prisoner's dilemma.

A nondiscriminating pure monopolist finds that it can sell its 50th unit of output for $50. We can surmise that the marginal: A) revenue of the 50th unit is greater than $50. B) revenue of the 50th unit is also $50. C) revenue of the 50th unit is less than $50. D) cost of the 50th unit is also $50.

C) revenue of the 50th unit is less than $50.

A dilemma of regulation is that: A) regulated pricing always conflicts with the "due process" provision of the Constitution. B) the regulated price that results in a "fair return" restricts output by more than would unregulated monopoly. C) the regulated price that achieves allocative efficiency is also likely to result in losses. D) the regulated price that achieves allocative efficiency is also likely to result in persistent economic profits.

C) the regulated price that achieves allocative efficiency is also likely to result in losses.

Consider This) Children are charged less than adults for admission to professional baseball games but are charged the same prices as adults at the concession stands. This pricing system occurs because: A) children have an elastic demand for game tickets but an inelastic demand for concession items. B) children can personally "consume" only a single game ticket but can personally consume more than one concession item. C) the seller can prevent children from buying game tickets for adults but cannot prevent children from buying concession items for adults. D) children have an inelastic demand for game tickets but an elastic demand for concession items.

C) the seller can prevent children from buying game tickets for adults but cannot prevent children from buying concession items for adults.

A nondiscriminating profit-maximizing monopolist: A) will never produce in the output range where marginal revenue is positive. B) will never produce in the output range where demand is elastic. C) will never produce in the output range where demand is inelastic. D) may produce where demand is either elastic or inelastic, depending on the level of production costs.

C) will never produce in the output range where demand is inelastic.

Which of the following statements best describes the parity concept? A) Because of productivity increases, farmers are entitled to the same real income for a smaller volume of output. B) The money incomes of farmers should always be the same, regardless of increases or decreases in the prices of the products they buy. C) The production of a given real output entitles the producer to the same real income over time. D) The prices of farm commodities should vary inversely with changes in the prices-paid index for farmers.

C)The production of a given real output entitles the producer to the same real income over time.

Since 1950, farm productivity has: A) doubled. B) lagged behind productivity advances in the nonfarm economy. C) advanced twice as fast as in nonfarm sectors of the economy. D) almost exactly matched productivity increases in the rest of the economy.

C)advanced twice as fast as in non farm sectors of the economy

Which of the following is the best example of oligopoly? A) Cotton farming. C) Automobile manufacturing. B) Restaurants. D) Women's dress manufacturing.

C)automobile manufacturing

In repeated games, credible threats are necessary for the players to reach a Nash equilibrium.

False

Increases in incomes usually result in more than proportionate increases in the demand for agricultural products in a growing economy.

False

Refer to the diagram, Both firms are selling their products in purely competitive market

False

Refer to the figure. Suppose the graphs represent the demand for use of a local golf course for which there is no significant competition (it has a local monopoly); P denotes the price of a round of golf; Q is the quantity of rounds "sold" each day. If the left graph represents the demand during weekdays and the right graph the weekend demand, this profit-maximizing golf course will earn how much economic profit over the course of a full seven-day week? A) $2,700. B) $3,700. C) $3,400. D) $4,200.

D) $4,200.

Refer to the supply and demand data for a certain elective surgical procedure. If supplier provide the quantity of health care demanded and insurance pays 50 percent of the remaining equilibrium price after a $1,000 deductible is satisfied, the quantity of health care demanded will be: A) 7,000. B) 4,000. C) 16,000. D) 11,000.

D) 11,000.

Which of the following persons is most likely to be insured for health care? A) An unemployed retail clerk. B) A minimum-wage teenager working for a fast-food restaurant. C) A part-time groundskeeper for a small manufacturing plant. D) A skilled worker employed by a large multinational corporation.

D) A skilled worker employed by a large multinational corporation.

Which of the following is an example of market failure? A) Public goods. C) Positive externalities. B) Negative externalities. D) All of these.

D) All of these

Which of the following is a law passed in the last 15 years relating to health care? A) Establishment of fixed Medicare payment to hospitals based on one of several hundred diagnostic categories. B) Establishment of deductibles and copayments in health insurance policies. C) Establishment of health maintenance organizations to reduce health care costs. D) Establishment of health savings accounts (HSAs) to promote saving for routine medical expenses.

D) Establishment of health savings accounts (HSAs) to promote saving for routine medical expenses.

Which of the following conditions does not need to occur for a market to achieve allocative efficiency? A) The sum of producer and consumer surplus is maximized. B) Consumers' maximum willingness to pay equals producers' minimum acceptable price for the last unit of output. C) The marginal benefit of the last unit produced equals the marginal cost of producing that unit. D) The total revenue received by producers equals the total cost of production.

D) The total revenue received by producers equals the total cost of production.

An international agreement reached in 1994 by the world's trading nations provides for: A) an increase in export subsidies on agricultural products. B) an international research organization designed to discover nonfood uses of agricultural output. C) an increase in agricultural price supports. D) a reduction of tariffs on agricultural products.

D) a reduction of tariffs on agricultural products

Refer to the diagram. Assuming equilibrium price P1, producer surplus is represented by areas: A) a + c. B) a + b. C) a + b + c + d. D) c + d.

D) c + d.

Refer to the diagram for a pure monopolist. Monopoly price will be: A) e. B) a. C) b. D) c.

D) c.

Farm share of U.S. GDP has: A) declined from about 12 percent in 1950 to 1 percent today. B) remained relatively stable over the past 50 years. C) declined from about 12 percent in 1950 to 7 percent today. D) declined from about 7 percent in 1950 to 1 percent today.

D) declined from about 7 percent in 1950 to 1 percent today

Farm share of U.S. GDP has: A) remained relatively stable over the past 50 years. B) declined from about 12 percent in 1950 to 1 percent today. C) declined from about 12 percent in 1950 to 7 percent today. D) declined from about 7 percent in 1950 to 1 percent today.

D) declined from about 7 percent in 1950 to 1 percent today

Refer to the diagram. If actual production and consumption occur at Q2: A) an efficiency loss (or deadweight loss) of e + f occurs. B) an efficiency loss (or deadweight loss) of a + c occurs. C) an efficiency loss (or deadweight loss) of a + b + c + d occurs. D) efficiency is achieved.

D) efficiency is achieved.

The demand curve faced by a pure monopolist: A) may be either more or less elastic than that faced by a single purely competitive firm. B) has the same elasticity as that faced by a single purely competitive firm. C) is more elastic than that faced by a single purely competitive firm. D) is less elastic than that faced by a single purely competitive firm.

D) is less elastic than that faced by a single purely competitive firm.

Refer to the data. Suppose that entry into this industry changes this firm's demand schedule from columns (1) and (3) shown to columns (2) and (3). We can conclude that this industry is: A) purely competitive. C) a pure monopoly. B) a constant cost industry. D) monopolistically competitive.

D) monopolistically competitive.

Pure monopolists may obtain economic profits in the long run because: A) of advertising. B) of rising average fixed costs. C) marginal revenue is constant as sales increase. D) of barriers to entry.

D) of barriers to entry.

Refer to the diagram for a natural monopolist. If a regulatory commission set a maximum price of P2, the monopolist would: A) close down in the short run. B) produce output Q1 and realize an economic profit. C) produce output Q3 and realize an economic profit. D) produce output Q3 and realize a normal profit.

D) produce output Q3 and realize a normal profit.

Society's optimal amount of pollution abatement is where society's marginal benefit of abatement is zero.

False

Which of the following was not an objection raised by opponents of the Patient Protection and Affordable Care Act? A) The revenue generated by the new taxes in the PPACA would be insufficient to cover costs of the program. B) The subsidies would lead to higher prices and increased consumption of health care. C) The PPACA moves the United States closer to creating a national health insurance system with nonprice rationing of health care. D) The percentage of health care spending coming directly out of consumers' pockets would increase.

D) the percentage of health care spending coming directly out of consumers pockets would increase

Public goods are those for which there: A) is no free-rider problem. B) are rivalry and excludability. C) are no externalities. D)rivalry and excludability. nonrivalry and nonexcludability.

D)rivalry and excludability. nonrivalry and nonexcludability.