ECON Final

Refer to Table 14-4. What is the marginal revenue from selling the 3rd unit?

$120

Refer to Table 17-4. If ABC and XYZ operate to jointly maximize profits and agree to share the profit equally, then how much profit will each of them earn?

$125

A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. Refer to Scenario 15-1. At Q = 500, the firm's profit is

$13,000.

Refer to Table 7-11. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, producer surplus will be

$18.

Refer to Figure 7-7. If the government imposes a price ceiling of $55 in this market, then total surplus will be

$250.00.

Refer to Table 14-2. For this firm, the marginal revenue from selling the 3rd unit is

$3

Refer to Figure 9-2 . Without trade, producer surplus amounts to

$3,240.

Refer to Table 7-7 . If the market price is $1,000, the producer surplus in the market is

$300.

Refer to Figure 5-1. Between point A and point B, price elasticity of demand is equal to

1.5

Refer to Figure 16-2. Which of the following will occur in the long run in this industry?

Firms will enter this industry.

Which of the following is usually true about government-provided goods?

People do not have to pay an explicit fee to enjoy these goods.

Refer to Figure 10-2. Without government intervention, the equilibrium quantity would be

Q3

Refer to Figure 2-7. Taking cause and effect into account, which of the following interpretations would be most reasonable regarding the relationship between coffee and hours without sleep?

The more coffee a person drinks per day, the more time he can go without sleep.

Refer to Figure 9-4. A result of this country allowing international trade in crude oil is as follows:

The well-being of domestic crude-oil producers is now higher in that they now sell more crude oil at a higher price per barrel.

Refer to Table 17-5. Suppose we observe that the price of a gallon of gasoline in Driveaway is $5; we observe as well that a particular seller's profit is $150. Given this observation, which of the following scenarios is most likely?

There are three identical sellers of gasoline in Driveaway, and the sellers collude.

Which of the following is not a typical solution to the "Tragedy of the Commons?"

Turning the common resource into a club good

Refer to Figure 4-6 . The shift from S' to S in the market for chocolate cake could be caused by

a decrease in the number of commercial bakers.

Central planning refers to

a. government guiding economic activity. Today many countries that had this system have abandoned it.

Monopolies are socially inefficient because the price they charge is

above marginal cost.

Refer to Figure 10-6. If 325 units of plastics are produced and consumed, then the

c. market equilibrium has been reached.

Suppose you like to make, from scratch, pies filled with bananas and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would

decrease

The property of society getting the most it can from its scarce resources is called

efficiency

The basic principles of economics suggest that

government should become involved in markets when those markets fail to produce efficient or fair outcomes.

Negative externalities lead markets to produce

greater than efficient output levels and positive externalities lead markets to produce smaller than efficient output levels.

According to the circular-flow diagram, if Jalyssa is a worker who delivers flowers for Happy Day Flower Company, she participates

in the markets for factors of production exchanging labor for income.

Refer to Table 13-9. For the firm whose production function and costs are specified in the table, its average-variable-cost curve is

increasing

The market supply curve

represents the sum of the quantities supplied by all the sellers at each price of the good.

Producer surplus directly measures

the well-being of sellers.

When a country has a comparative advantage in producing a certain good,

then specializing in the production of that good and trading for other goods could allow that country to consume at a point beyond its production possibilities frontier .

It is commonly argued that national defense is a public good. Nevertheless, the weapons used by the U.S. military are produced by private firms. We can conclude that

weapons are rival in consumption and excludable, but national defense is not rival in consumption and not excludable.

Refer to Figure 4-8. All else equal, the premature deaths of thousands of turkeys would cause a move from

x to y.

Refer to Figure 9-1. Relative to the no-trade situation, trade with the rest of the world results in

Guatemalan consumers paying a higher price for coffee.

Under rent control, landlords can cease to be responsive to tenants' concerns about the quality of the housing because

with shortages and waiting lists, they have no incentive to maintain and improve their property.

Refer to Figure 14-3. In the short run, if the market price is P4, individual firms in a competitive industry will earn

zero profits.

Refer to Figure 10-6. If the government imposed a corrective tax that successfully moved the market from the market equilibrium to the social optimum, then tax revenue for the government would amount to

$2,000.

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 due to new producers entering the market?

$625

Refer to Table 17-4. If this market were perfectly competitive instead of oligopolistic, what would the price be?

$8

Refer to Figure 16-3. What price will the monopolistically competitive firm charge in this market?

$800

Refer to Table 3-7. Which of the following points would not be on Barb's production possibilities frontier, based on a 40-hour week?

(8 computers set up, 32 computers tested)

The principle of comparative advantage does not provide answers to certain questions. One of those questions is

How are the gains from trade shared among the parties to a trade?

Refer to Figure 7-5. 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

Marginal cost is equal to average total cost when

average total cost is at its minimum.

Goods produced abroad and sold domestically are called

imports

A textbook is a

private good and the knowledge that one gains from reading the book is a public good.

Refer to Table 10-2. How large would a subsidy need to be in this market to move the market from the equilibrium level of output to the socially optimal level of output?

$7

Refer to Table 2-3. Which of the following combinations of corn and wheat is not currently attainable but would be attainable if there was an improvement in overall production technology?

1,000 bushels of corn and 2,200 bushels of wheat

Refer to Figure 9-1. In the absence of trade, total surplus in the Guatemalan coffee market amounts to

1,650

If a 25 percent change in price results in a 40 percent change in quantity supplied, then the price elasticity of supply is about

1.60, and supply is elastic.

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 Table 2-2 . What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600?

300 socks

Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. William can arrange 18 bouquets per day. What would be the total daily output of Kate's firm if she hired her husband?

38 bouquets

Refer to Table 3-8. If the production possibilities frontier is bowed outward, then which of the following could represent the number of coats produced when 12 blankets are produced?

500

Suppose the price elasticity of supply for cheese is 0.6 in the short run and 1.4 in the long run. If an increase in the demand for cheese causes the price of cheese to increase by 15 percent, then the quantity supplied of cheese will increase by

9 percent in the short run and 21 percent in the long run.

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

A change in the price of the good or service.

The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desirable market outcomes comes from whose 1776 book?

Adam Smith

Which of the following would shift the demand curve for gasoline to the right?

An increase in consumer income, assuming gasoline is a normal good

Which of the following is not a characteristic of a public good?

Because it is a free good, there is no opportunity cost.

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.

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then

Dallas's consumer surplus would increase.

Refer to Table 17-5. If there are exactly five sellers of gasoline in Driveaway and if they collude, then which of the following outcomes is most likely?

Each seller will sell 30 gallons, charge a price of $5, and earn a profit of $90.

Which of the following claims is consistent with the views of mainstream economists?

If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will temporarily fall.

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 of the tax will fall on sellers.

Where can an economy not produce?

Outside its production possibilities frontier

Refer to Figure 4-10. Which of the following movements would illustrate the effect in the market for swimming lessons of an increase in the incomes of parents with school-aged children?

Point A to Point D

Refer to Table 17-7. Which of the following statements is correct?

Regardless of the strategy pursued by Acme, Pinnacle's best strategy is to produce a good quality product, and for that reason producing a good quality product is a dominant strategy for Pinnacle.

Senator Jackson argues that replacing the federal income tax with a national sales tax would increase the level of output. Senator Feldman objects that this policy would benefit the rich at the expense of the poor.

Senator Jackson's argument is primarily about efficiency, while Senator Feldman's argument is primarily about equality.

Refer to Table 7-3. If you have a ticket that you sell to the group in an auction, what will be the selling price?

Slightly more than $50

Which of the following is NOT a way of internalizing technology spillovers?

Taxes

Which of the following would shift the supply of Green Bay Packers football jerseys to the left?

The cost of the fabric used to make the jerseys increases.

Which of the following areas of study typifies macroeconomics as opposed to microeconomics?

The effect on the economy of changes in the nation's unemployment rate

The "invisible hand" refers to

how the decisions of households and firms lead to desirable market outcomes.

Employing a lawyer to draft and enforce a private contract between parties wishing to solve an externality problem is an example of

a transaction cost.

Suppose that Thierry and Abdul are duopolists. Thierry is producing 700 units of output, and Abdul is producing 500 units of output. When Abdul produces 500 units, Thierry maximizes profit by producing 700 units. When Thierry produces 700 units of output, Abdul maximizes profit by producing 500 units. Thierry and Abdul are

at a Nash equilibrium.

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource. To correct for this problem, the town could

auction off a limited number of sheep-grazing permits.

Brad owns 5 acres of land. Brad sells the land to a real estate developer who builds a subdivision with 10 houses. The land is an example of a good that is

both rival in consumption and excludable.

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.

For a firm, marginal revenue minus marginal cost is equal to

change in profit.

Knowledge that is patented is a

club good, whereas knowledge that is not patented is a public good.

When a country that imports a particular good imposes an import quota on that good,

consumer surplus decreases and total surplus decreases in the market for that good.

Refer to Figure 9-2 . If this country allows free trade in tricycles,

consumers will gain and producers will lose.

The goal of rent control is to

help the poor by making housing more affordable.

The General Agreement on Tariffs and Trade (GATT) was initiated in response to

high tariffs imposed during the Great Depression of the 1930s.

In a prisoners' dilemma game,

if the players play the game repeatedly, the players can achieve a higher payoff, on average, than when they play the game only once.

Imagine a 2,000-acre park with picnic benches, trees, and a pond. Suppose it is publicly owned, and people are invited to enjoy its beauty. When the weather is nice, it is difficult to find parking, and the trash cans overflow with food wrappers on summer afternoons. Otherwise, it is a great place. The park is a common resource because

if too many people use it, one person's use diminishes other peoples' use.

Absolute advantage is found by comparing different producers'

input requirements per unit of output.

Refer to Figure 14-1. The firm will earn a negative economic profit but remain in business in the short run if the market price is

less than $13 but more than $6.

When a tax is placed on the sellers of a product, buyers pay

more, and sellers receive less than they did before the tax.

Refer to Figure 14-1. If the market price is $10, the firm will earn

negative economic profits in the short run but remain in business.

Both public goods and common resources are

nonexcludable

A market structure with only a few sellers, each offering similar or identical products, is known as

oligopoly

The phenomenon of scarcity stems from the fact that

resources are limited.

The law of supply states that, other things equal, when the price of a good

rises, the quantity supplied of the good rises.

Dioxin emission that results from the production of paper is a good example of a negative externality because

self-interested paper producers will not consider the full cost of the dioxin pollution they create.

A monopoly is a market with one

seller, and that seller sets the price.

Suppose roses are currently selling for $40 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a

surplus to exist and the market price of roses to decrease.

Refer to Figure 7-6. Area A represents

the increase in producer surplus to those producers already in the market when the price increases from P1 to P2.

The marginal benefit Sabrina gets from purchasing a third pair of gloves is

the total benefit she gets from purchasing three pairs of gloves minus the total benefit she gets from purchasing two pairs of gloves.

Suppose that in a competitive market the equilibrium price is $2.50. What is marginal revenue for the last unit sold by the typical firm in this market?

Exactly $2.50

Which of the following is an important cause of inflation in an economy?

Growth in the quantity of money in the economy

Consider the market for gasoline. Buyers

would lobby for a price ceiling, whereas sellers would lobby for a price floor.

Billy's Bean Bag Emporium produced 300 bean bag chairs but sold only 275 of the units it produced. The average cost of production for each unit of output produced was $100. The price for each of the 275 units sold was $95. Total profit for Billy's Bean Bag Emporium would be

−$3,875