Econ final

alters both the quantity demanded of labor and the quantity supplied of labor.

A binding minimum wage -alters both the demand for and supply of labor. -affects only the demand for labor; it does not affect the supply of labor. -affects only the supply of labor; it does not affect the demand for labor. -alters both the quantity demanded of labor and the quantity supplied of labor.

false

A celebrity endorsement for a product that provides no information for the good is useless to consumers. True False

false

A characteristic of monopolistic competition is a small number of firms. True False

false

A firm in a competitive market can change the market price by changing its own production level. true or false

a command-and-control policy

A fuel economy standard that would require all vehicles to achieve at least 20 miles per gallon is an example of -a command-and-control policy. -the Coase Theorem. -a market-based policy. -the Golden Rule.

not rival in consumption

A mathematical theorem can be used by anyone without diminishing its use by someone else. For this reason, we say that a mathematical theorem is -not rival in consumption -excludable -rival in consumption -not excludable

public good

A meadow that is so lightly used that it regenerates after every use in a national park for which there is no entry fee would be an example of a -private good -public good -club good -common resource

at excess capacity.

A monopolistically competitive firm in the long run will operate -at the intersection of average total cost and marginal cost. -at the minimum of average total cost. -at excess capacity. -at a socially efficient level.

-there are many firms in the market -they're only a few firms in the market - firms produce a nearly identical product -firms produce a differentiated product

A monopolistically competitive firm observes a downward sloping demand curve because

Increasing the wages received by firms and decreasing the wages received by workers

A payroll tax has the effect of -Increasing the wages paid by firms and decreasing the wages received the workers - decreasing the wages paid by firms and received by workers - increasing The wages paid by firms and received by workers -decreasing the wages paid by firms and increasing the wages received by workers

not buy any wheat, at all, with any increase in price above the demand curve.

A perfectly elastic demand implies that buyers of wheat would -buy infinitely more wheat when the price of wheat increases by 1%. -not buy any wheat, at all, with any increase in price above the demand curve. -buy 5% more wheat when the price of wheat decreases by 10%. -buy 100% more wheat when the price of wheat decreases by 10%.

inadequate enforcement of property rights.

A record company went out of business because too many of its customers downloaded its music illegally from the internet rather than purchasing the digital copy from the record company. This instance serves as an example of: -inefficient trade. -inadequate enforcement of property rights. -market power. -the invisible hand at work.

Upward by the size of the tax and cause the industry to decrease the quantity it supplies to the market

A tax on the producer of a polluting product would shift the private Cost curve -Upward by the size of the tax and cause the industry to increase the quantity it supplies to the market -downward by the size of the tax and cause the industry to decrease the quantity it's supplies to the market - upward by the size of the tax and cause the industry to decrease the quantity it supplies to the market -downward by the size of the tax and cause the industry to increase the quantity it supplies to the market

the ability to produce a good using fewer inputs than another producer.

Absolute advantage is -the ability to produce a good at a lower opportunity cost than another producer. -a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology. -whatever must be given up to obtain some item. -the ability to produce a good using fewer inputs than another producer.

Beatrice enjoys the efforts of a local charity but has never made a contribution to it, despite frequent solicitations.

According to an economist, who among the following is a free rider? -Dennis rides his mountain bike on trails with jumps and obstacles. -Abigail takes free samples at the grocery store without intending to buy the product being sampled. -Carl skies for free at a ski resort because he won a lifetime pass in a raffle. -Beatrice enjoys the efforts of a local charity but has never made a contribution to it, despite frequent solicitations.

the market supply curve for oranges to shift to the right

An increase in the number of orange growers causes -a movement downward and to the left along the current market supply curve for oranges. -the market supply curve for oranges to shift to the left. -a movement up and to the right along the current market supply curve for oranges. -the market supply curve for oranges to shift to the right.

true

An uncongested toll bridge is an example of a club good. True False

the price effect decreases, giving firms more of an incentive to increase output.

As the number of firms in an oligopoly increases, -the output effect increases, giving firms more of an incentive to increase output. -the price effect decreases, giving firms more of an incentive to increase output. -the output effect increases, giving firms less of an incentive to increase output. -the price effect decreases, giving firms less of an incentive to increase output.

true

Because pollution permits and corrective taxes typically reduce the cost of environmental protection relative to command-and-control policies, the public's desire for a clean environment should increase when permits and taxes replace command-and-control policies. True False

cost of producing backpacks.

Celia manufactures backpacks for a living. Celia's out-of-pocket expenses (for fabric, zippers, etc.) plus the value that she places on her own time amount to her -profit. -cost of producing backpacks. -producer surplus. -efficiency level.

social value curve lies above the private value curve.

Consider the market for vaccines. When one person is vaccinated, other people are protected from illness because the vaccinated person will not transmit the illness. We would expect that in this market, the -social value curve lies above the private value curve. -private value curve lies above the social value curve. -social cost curve lies above the private cost curve. -external cost exceeds the external benefit.

ignore implicit costs.

Economists include both explicit and implicit costs when measuring a firm's cost. Accountants often -include implicit costs but not explicit costs. -ignore implicit costs. -ignore explicit costs. -include both explicit and implicit costs.

sunk cost

Fixed costs that are not relevant to production decisions are known as -sunk cost -opportunity costs. -implicit costs -explicit costs

the $25,000 per year salary paid to the company's bookkeeper

For a yogurt shop, which of the following would be a fixed cost? -the $25,000 per year salary paid to the company's bookkeeper -the cost of disposable yogurt bowls -the cost of yogurt toppings -the $10 per hour wage paid to the cashier

false

For all firm types price equals marginal revenue, and for competitive firms price equals average revenue. True False

for furniture increases when income increases.

Furniture is a normal good if the demand -for furniture increases when income increases. -for furniture increases when the price of furniture decreases. -curve for furniture shifts to the left when income increases. -curve for furniture changes its slope when the price of a complement increases.

true

Historically, real income in the United States has risen about 2 percent per year. True False

variable; fixed

If a firm produces nothing, _____ costs are zero, and the firm will incur _____ costs. -fixed and variable; no -variable; fixed -opportunity; variable -fixed; variable

substitutes

If the cross-price elasticity of demand for two goods is 0.88, then the two goods are -complements. -normal. -inelastic. -substitutes.

The firm will earn positive profits.

If the government regulates the price that a natural monopoly can charge to be equal to the firm's average total cost, which of the following is not true? -There will be deadweight loss in this market. -The firm will earn zero profits. -The firm will not have an incentive to lower its production costs. -The firm will earn positive profits.

true

If the social cost of a good is greater than the private cost of the good, the market produces too much of the good. True False

cost to the producer of the last unit sold.

In a market with no externalities, the height of the supply curve at any given quantity shows the -cost to the producer of the last unit sold. -public cost of the last unit sold. -benefit to consumers from the last unit sold. -cost to bystanders of the last unit sold.

the Congress and the Federal Reserve used all of these methods in an attempt to stimulate the economy.

In response to the Great Recession of 2007-2009, the US Congress and the Federal Reserve attempted to stimulate the economy by -the Congress and the Federal Reserve used all of these methods in an attempt to stimulate the economy. -reducing taxes. -increasing the supply of money. -increasing government spending.

Produce goods and services

In the circular flow diagram, which of the following do households not do? -Buy goods and services that firms produce - sell their labor to firms -own the factors of production -produce goods and services

sellers, buyers

In the markets for factors of production in the circular-flow diagram, households are _________ and firms are __________. -buyers, buyers -sellers, buyers -sellers, sellers -buyers, sellers

true

In the short run a monopolistically competitive firm operates like a monopoly True False

false

Installation of a sufficient number of bat houses in a neighborhood can help control the mosquito population and, therefore, reduce the transmission of serious illnesses carried by mosquitoes. We should expect that neighbors will install an efficient number of bat houses. True or fals?

imperfectly competitive.

Most firms in the U.S. would be characterized as -a monopolist. -perfectly competitive. -a duopoly. -imperfectly competitive.

- natural forces of supply and demand than by the cartel's actions because of a lack of cooperation.

OPEC countries control about 75 percent of the world's oil reserves and meet regularly to try to raise the price of oil. In recent years, changes in oil prices have been driven more by - natural forces of supply and demand than by the cartel's actions because of a lack of cooperation. - the cartel's actions than by natural forces of supply and demand because of the cartel's success with cooperation. -the actions of the cartel than by noncartel oil producers. - cooperation than self-interest.

the inputs in production are only available in limited quantities

One explanation for why the market long-run supply curve slopes upward is because -firms in a competitive market cannot freely enter or exit. -firms have identical cost structures. -the inputs in production are only available in limited quantities. -prices to adjust efficiently in competitive markets.

Rhinoceros are not excludable while pigs are excludable

Pigs are not endangered while rhinoceros are primarily because -Rhinoceros are not rival in consumption, while pigs are rival in consumption -Pigs are not as valuable as rhinoceros -Pigs are cute while rhinoceros are not -Rhinoceros are not excludable while pigs are excludable

excludable; private goods are rival and club goods are not

Private goods and club goods are similar because they are both ____________, but they are different because ____________________. -excludable; private goods are rival and club goods are not -excludable; club goods are rival and private goods are not -rival; private goods are excludable and club goods are not -rival; club goods are excludable and private goods are not

false

Private solutions produce efficient solutions to the problem of externalities, whereas public solutions do not. True False

All of these answers are correct

Public policy such as changes in the amount of taxes and subsidies can alter people's behavior by: -offering an incentive or a disincentive to engage in an activity -changing the benefits and the costs of an activity. -changing the opportunity cost of an activity. -All of these answers are correct.

Firms cannot easily change the size of their factories over short periods of time

Supply is usually more elastic in the long run then in the short run because -firms cannot easily change the size of their factories over short periods of time -New firms can enter the industry in the short run but not in the long run -consumers are less responsive to price changes in the long run -Price changes tend to be more dramatic in the long run

more gasoline and fewer Ramen noodles.

Suppose that Ariana consumes two goods, Ramen noodles and gasoline. Ramen noodles are an inferior good, and gasoline is a normal good. Suppose the price of gasoline decreases, while the price of Ramen noodles remains unchanged. The overall effect suggests that Ariana will consume -less gasoline, and the effect on Ramen noodle consumption is ambiguous. -more gasoline and fewer Ramen noodles. -fewer Ramen noodles, and the effect on gasoline consumption is ambiguous. -less gasoline and fewer Ramen noodles.

sellers will bear a greater burden of the tax than the buyers.

Suppose that in a particular market, the supply curve is relatively inelastic and the demand curve is relatively elastic. If a tax is imposed in this market, then the -size of the market will not change. -buyers will bear a greater burden of the tax than the sellers. -size of the market will increase. -sellers will bear a greater burden of the tax than the buyers.

centrally-planned economy.

The economy of the North Korea is best described as a -market economy. -centrally-planned economy. -hybrid economy. -primitive economy.

the slope of the indifference curve

The marginal rate of substitution is -constant. -the slope of the indifference curve. -always equal to the slope of the budget constraint. -inversely proportional to the ratio of the prices.

What determines the price at which trade takes place?

The principle of comparative advantage does not provide answers to certain questions. One of those questions is -What determines the price at which trade takes place? -Is it possible for specialization and trade to increase total output of traded goods? -Is it absolute advantage or comparative advantage that really matters? -Is it possible for specialization and trade to benefit more than one party to a trade?

false

The production possibilities frontier is a graph that shows the various combinations of output that an economy should produce. True False

true

The theory of consumer choice provides the foundation for understanding demand curves. True False

false

There is no need for a government in a market economy. True False

True

To move the allocation of resources closer to the social optimum policymakers should encourage firms in an oligopoly to compete rather than cooperate with each other. True or false

it avoids paying both fixed and variable costs.

When a firm exits a competitive market in the long run -it avoids paying both fixed and variable costs. -it avoids paying variable costs but not fixed costs. -it does not avoid paying either fixed or variable costs. -it avoids paying fixed costs but not variable costs.

true

When the economy is self-sufficient, an economy's production possibilities frontier is also its consumption possibilities frontier. True False

barriers to entry

Which of the following is a characteristic of a monopoly - One buyer -barriers to entry -free entry and exit -rising average total cost

Monopolistic competition

Which of the following is a market where consumers are exposed to many differentiated products? -Monopsony -Competitive market -Monopolistic competition -Duopoly

Dove® moisturizing body wash

Which of the following is likely to have the most price elastic demand? -Moisturizing body wash -Dove® moisturizing body wash -body wash -Soap

an uncongested toll highway

Which of the following is not a common resource? -the atmosphere -the cleanliness of a house where cleaning is a shared duty -open grazing land -an uncongested toll highway

Mandate that the firm release more stock options

Which of the following is not a possible strategy for the government to follow to remedy the inefficient allocation of resources associated with monopolies? -Prevent mergers through antitrust laws -Regulate the prices that monopolies can charge -Do nothing -Mandate that the firm release more stock options

Indifference curves are bowed outward away from the origin.

Which of the following is not a typical property of an indifference curve? -Indifference curves are downward sloping. -Higher indifference curves are preferred to lower indifference curves. -Indifference curves do not intersect. -Indifference curves are bowed outward away from the origin.

marginal revenue is less than marginal cost

Which of the following is true if a firm increases its level of output by one unit and profits decrease? -marginal revenue is less than marginal cost -marginal revenue is equal to marginal cost -marginal revenue is greater than marginal cost -price is greater than average total cost

the content of the advertisement is not relevant to consumers

Which of the following is true if advertising is believed to send a signal about the quality of a good to consumers? -The quality of the product is inconsequential to consumers. -The spending on advertising is socially inefficient. -The endorsements made by celebrities are wasteful to the company. -The content of the advertisement is not relevant to consumers.

Models assume away irrelevant details, allowing us to see what is truly important.

Which of the following statements about economic models is correct? -Models are not helpful in solving public policy debates. -The more details a model includes, the better the model. -It is not appropriate for models to incorporate equations or diagrams. -Models assume away irrelevant details, allowing us to see what is truly important.

It incorporates all aspects of the real economy.

Which of the following statements about the circular-flow diagram is NOT correct? -It incorporates all aspects of the real economy. -It is an economic model. -It represents the flows of inputs, outputs, and dollars. -It helps explain how participants in the economy interact with one another.

International trade has the potential to make all countries better off.

Which of the following statements about trade is the most accurate? -International trade can only make a country better off if the country cannot produce the good itself. -International trade has the potential to make all countries better off. -International trade helps rich nations while hurting poor nations. -Trade makes some better off and others worse off.

Successful collusion requires direct communication.

Which of the following statements is NOT correct? -Successful collusion requires direct communication. -The combined output of duopolists who successfully collude equals the output that would be produced by a monopolist -The incentives faced by duopolists result in them undercutting each other's price, but not to the point where their prices equal the competitive price. -The incentives faced by duopolists result in their joint production being more than the monopoly level, but not as high as the competitive level.

the effects of borrowing by the federal government

Which of the following would likely be studied by a macroeconomist rather than a microeconomist? -the effect of rent control on housing in New York City -the effects of borrowing by the federal government -the effect of an increase in the gas tax on fuel consumption -how tariffs affect the cotton industry

The firms fail to make a sustainable agreement to collude.

Which of these is the socially desirable outcome of interactions among firms in an oligopoly? -The firms set the price and output in a way that maximizes total profit in the market. -The firms are able to create a successful cartel. -The firms get the government to nationalize the industry. -The firms fail to make a sustainable agreement to collude.

Each duopolist wants a larger share of the market to capture more profit.

Which statement best explains why agreements between duopolists are hard to maintain? -It is difficult to determine what price a monopolist would charge. -It is difficult to determine what output a monopolist would produce. -Each duopolist wants a larger share of the market to capture more profit. -Each duopolist wants to charge a higher price than the monopoly price.