Econ Practice M2

The use of government regulations and barriers to control trade is referred to as ________. A. liberalization B. actualization C. protectionism D. globalization

C

A ________ is the price at which a trading partner is indifferent between making the trade and not doing so. A. reservation value B. discounted value C. market value D. shadow value

A

A firm produces 200 units of a good when it employs seven workers. The marginal product of an eighth worker is 46 units. If the eighth worker is hired, the firm's total product will increase to ________. A. 246 units B. 322 units C. 228 units D. 208 units

A

Graphically, producer surplus is the ________. A. area between the supply curve and the equilibrium price line B. area below the supply curve C. area between the demand curve and the equilibrium price line D. area above the market price of a good

A

In a perfectly competitive market, sellers ________. A. are price takers B. are told the price to charge by the government C. each have the power to set the price D. coordinate to set the market price

A

Which of the following statements is true? A. The downward-sloping portion of the long-run average cost curve indicates the presence of economies of scale in production. B. In the long run, a firm cannot vary any of its inputs. C. The downward-sloping portion of the long-run average cost curve indicates the presence of diseconomies of scale in production. D. In the short run, a firm can vary all its inputs.

A

Sellers in a perfectly competitive market ________. A. sell differentiated goods and services B. are price takers C. are few in number D. are not allowed to exit the market

B

Efficiency is achieved in competitive markets because ________. A. deadweight loss is maximized B. social surplus is maximized (the economic pie is made as large as possible) C. producer surplus is maximized D. consumer surplus is maximized

B

Equity refers to ________. A. Minimizing deadweight loss B. Distributing resources across society (how the economic pie is divided) C. Ensuring that all producer surplus is transferred to consumers D. Making the economic pie as large as possible

B

If an economy is producing ON the production possibilities curve, then that economy ________. A. is not making full use of its resources B. is making full use of its resources C. must have the government allocating resources D. is maximizing profits

B

If firms in a perfectly competitive market are realizing economic losses in the short run, A. entry will occur, the market supply curve will shift out, and the market price will fall B. exit will occur, the market supply will shift in, and the market price will rise C. exit will occur, the market supply will shift in, and the market price will fall D. entry will occur, the market supply curve will shift out, and the market price will rise

B

Imagine that the economy resembles a pie. In this analogy, ________ concerns with growing the size of the pie, while ________ concerns with how the pie if distributed among the people. A. equity; optimization B. efficiency; equity C. equity; efficiency D. efficiency; optimization

B

Which of the following statements is true of market prices in a perfectly competitive market? A. Market prices are determined by the government. B. Market prices allow for the efficient allocation of scarce resources. C. Market prices do not act as incentives for buyers. D. Market prices are not stable and fluctuate widely

B

he ability of an individual, firm, or country to produce a certain good at a lower opportunity cost than other producers is referred to as ________. A. absolute advantage B. comparative advantage C. marginal advantage D. cardinal advantage

B

A perfectly competitive firm's supply curve in the short run is ________. A. its marginal cost curve above the marginal revenue schedule B. its marginal cost curve above its average total cost curve C. its marginal cost curve above its average variable cost curve D. its marginal cost curve

C

An outcome is Pareto efficient if ________. A. the benefits of the outcome are equally distributed among all participants B. the costs of the outcome are equally shared by all participants C. no individual can be made better off without making someone else worse off D. an individual can be made better off without making someone else worse off

C

A curve that shows the various combinations of goods and services that are possible for an economy to produce with a given amount of resources is referred to as a(n) ________. A. indifference curve B. supply curve C. budget constraint D. production possibilities curve

D

For a buyer, reservation value is the same as ________. A. price B. total benefit C. willingness to accept (marginal cost) D. willingness to pay

D

If prices are held below the equilibrium price, ________. A. social surplus will be maximized B. all firms will earn positive economic profits C. there will be a surplus in the market D. there will be a shortage in the market

D

In a perfectly competitive market, ________. A. there are restrictions on the entry of new firms B. bargaining over prices is a common phenomenon C. each seller charges a different price for its product D. sellers produce identical goods

D

The entry of new firms into an existing market causes ________. A. a downward movement along the market supply curve B. an upward movement along the market supply curve C. a leftward shift of the market supply curve D. a rightward shift of the market supply curve

D

Which of the following is an example of a variable cost? A. The annual rent paid for an office space B. The cost of installing new software on all office computers C. The cost of purchasing land for a new office space D. The cost of the electricity used in an office

D