econ unit two exam

Scenario 13-10Jessica makes photo frames. She spends $5 on the materials for each photo frame. She can create one photo frame in an hour. She earns $10 per hour at a part-time job at the local coffee shop. She can sell a photo frame for $30 each. Refer to Scenario 13-10. An economist would calculate the total profit for one photo frame to be $25. $10. $15. $20.

fifteen dollars

For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $7 and a marginal cost of $10. It follows that the production of the101st unit of output must increase the firm's profit by more than $3. production of the 100th unit of output increases the firm's average total cost by $7. firm's profit-maximizing level of output is less than 100 units. production of the 100th unit of output increases the firm's profit by $3.

firm's profit maximizing level of output is less than 100 units

At what level of output will average variable cost equal average total cost? when marginal cost equals average total cost when marginal cost equals average variable cost for all levels of output in which average variable cost is falling There is no level of output where this occurs, as long as fixed costs are positive.

there is no level of output where this occurs, as long as fixed costs are positive

Tom walks Bethany's dog once a day for $50 per week. Bethany values this service at $60 per week, while the opportunity cost of Tom's time is $30 per week. The government places a tax of $35 per week on dog walkers. After the tax, what is the loss in total surplus? $0 $30 $25 $50

30 dollars

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that the average total cost when 5 units of output are produced is $30, and the marginal cost of the sixth unit of output is $60. What is the average total cost when six units are produced? $30 $35 $10 $25

thirty five dollars

The nature of a firm's cost (fixed or variable) depends on the price the firm charges for output. firm's revenues. explicit but not implicit costs. time horizon under consideration.

time horizon under consideration

The amount of money that a firm receives from the sale of its output is called total net profit. total gross profit. total revenue. net revenue.

total revenue

When a competitive firm doubles the quantity of output it sells, its profits must increase. total revenue doubles. marginal revenue doubles. average revenue doubles.

total revenue doubles

In the long run, a profit-maximizing firm will choose to exit a market when total revenue is less than total cost. marginal cost exceeds marginal revenue at the current level of production. average fixed cost is falling. variable costs exceed sunk costs.

total revenue is less than total cost

We can say that the allocation of resources is efficient if You Answered consumer surplus is maximized. producer surplus is maximized. total surplus is maximized. sellers' costs are m

total surplus is maximized.

Which of the following expressions is correct for a competitive firm? average total cost = total variable cost/quantity of output marginal revenue = (change in total revenue)/(quantity of output) average revenue = (marginal revenue) x (quantity of output) profit = (quantity of output) x (price - average total cost)

profit = (quantity of output) x (price - average total cost)

A seller is willing to sell a product only if the seller receives a price that is at least as great as the average willingness to pay of buyers of the product. seller's producer surplus. seller's cost of production. seller's profit.

sellers cost of production

Taxes are costly to market participants because they All of the above are correct. distort market outcomes. transfer resources from market participants to the government. alter incentives.

all of the above are correct

Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction. Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist. This maximum is called consumer surplus. producer surplus. deadweight loss. willingness to pay.

willingness to pay

When fixed costs are ignored because they are irrelevant to a business's production decision, they are called opportunity costs. sunk costs. implicit costs. explicit costs.

sunk costs

Which of these types of costs can be ignored when an individual or a firm is making decisions? opportunity costs variable costs marginal costs sunk costs

sunk costs

Scenario 8-1 Erin would be willing to pay as much as $100 per week to have her house cleaned. Ernesto's opportunity cost of cleaning Erin's house is $70 per week. Refer to Scenario 8-1. If Erin pays Ernesto $90 to clean her house, Erin's consumer surplus is $30. $10. $20. $80.

ten dollars

Welfare economics is the study of how a consumer's optimal choice affects her demand curve. the government helps poor people. the allocation of resources affects economic well-being. a price ceiling compares to a price floor.

the allocation of resources effects the economic well-being

When a restaurant stays open for lunch service even though few customers visit the restaurant for lunch, which of the following principles is (are) best demonstrated? (i) Fixed costs are sunk in the short run. (ii) In the short run, only fixed costs are important to the decision to stay open for lunch. (iii) If revenue exceeds variable cost, the restaurant owner is making a smart decision to remain open for lunch. (i) and (ii) only (i) and (iii) only (ii) and (iii) only (i), (ii), and (iii)

i and iii only

If the price elasticity of demand for a good is 0.2, then a 3 percent decrease in price results in a 0.6 percent increase in the quantity demanded. 6 percent increase in the quantity demanded. 2 percent increase in the quantity demanded. 1.5 percent increase in the quantity demanded.

.6 percent increase in the quantity demanded

Scenario 13-4Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000. He withdraws $50,000 from his personal savings account. The interest rate on the loan is 8%, and the interest rate on his savings account is 2%. Refer to Scenario 13-4. Abdul's annual implicit cost of capital is $1,000. $4,000. $2,000. $8,000.

1,000 dollars

Scenario 14-1Assume a certain firm in a competitive market is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit. Refer to Scenario 14-1. At Q = 999, the firm's profits equal $1,003. $993. $1,007. $997.

1,003 dollars.

Katherine gives piano lessons for $20 per hour. She also grows flowers, which she arranges and sells at the local farmer's market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer's market. Katherine's accounting profits are $0, and her economic profits are $-100. r $100, and her economic profits are $0. $100, and her economic profits are $100. $0, and her economic profits are $100.

100 dollars, and her economic profits are zero

Consider a firm operating in a competitive market. The firm is producing 40 units of output, has an average total cost of production equal to $6, and is earning $240 economic profit in the short run. What is the current market price? $0 $10 $12 $6

12 dollars

Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer surplus is $250. $150. $400. $650.

150 dollars

For widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. A tax of $15 per unit is imposed on widgets. The tax reduces the equilibrium quantity in the market by 300 units. The deadweight loss from the tax is $1,750. $3,000. $4,500. $2,250.

2,250 dollars

Suppose a tax of $5 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 200 units to 100 units. The tax decreases consumer surplus by $450 and decreases producer surplus by $300. The deadweight loss from the tax is $250. $500. $1,000. $750.

250 dollars

At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for $5.00 each. $3.50 each. $2.00 each. $0.50 each.

3.50 each

Jacqui decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she withdrew $20,000 from her savings, which earned 5 percent interest. She also turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jacqui's economic profit from running her own business? $19,000 $-56,000 $-6,000 $4,000

4,000 dollars

Scenario 14-3Suppose a certain competitive firm is producing Q=500 units of output. The marginal cost of the 500th unit is $17, and the average total cost of producing 500 units is $12. The firm sells its output for $20. Refer to Scenario 14-3. At Q=500, the firm's profits equal $10,000. $1,000. $4,000. $7,000.

4,000 dollars

Carol Anne makes candles. If she charges $20 for each candle, her total revenue will be $200 if she sells 5 candles. $1,000 if she sells 100 candles. $20 regardless of how many candles she sells. $500 if she sells 25 candles.

500 dollars if she sells 25 candles

Scenario 13-9Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500. Refer to Scenario 13-9. Ellie's annual accounting costs will equal $165,700. $55,200. $75,200. $80,500.

55,200 dollars

Bubba is a shrimp fisherman who can catch 4,000 pounds of shrimp per year. Bubba is considering hiring his cousin Bobby to work for him. Bobby can catch 3,000 pounds of shrimp per year. If Bubba hires Bobby, what will be the total output of his shrimp business? 7,000 pounds 3,500 pounds 1,000 pounds 3,000 pounds

7,000 pounds

At Nick's Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling five cakes, Nick experiences a producer surplus in the amount of $17.50. Nick must be selling his cakes for $6.50 each. $7.50 each. $10.50 each. $9.50 each.

7.50 each

Tom tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $155 per tuning. One particular week, Tom is willing to tune the first piano for $120, the second piano for $125, the third piano for $140, and the fourth piano for $160. Assume Tom is rational in deciding how many pianos to tune. His producer surplus is $80. $95. $60. $75.

80 dollars

Economies of scale arise when fixed costs are large relative to variable costs. individuals in a society are self-sufficient. workers are able to specialize in a particular task. an economy is self-sufficient in production.

workers are able to specialize in a particular task

A firm's marginal cost has a minimum value of $80, its average variable cost has a minimum value of $90, and its average total cost has a minimum value of $100. Then the firm will shut down in the short run once the price of its product falls below $90. $100. $80. $40.

90 dollars

In a perfectly competitive market, the process of entry and exit will end when (i) accounting profits are zero. (ii) economic profits are zero. (iii) price equals minimum marginal cost. (iv) price equals minimum average total cost. (ii) and (iv) only (ii) and (iii) only (i) and (ii) only (i), (ii), (iii), and (iv)

ii and iv only

Bubba is a shrimp fisherman who could earn $5,000 as a fishing tour guide. Instead, he is a full-time shrimp fisherman. In calculating the economic profit of his shrimp business, the $5,000 that Bubba gave up is counted as part of the shrimp business's marginal costs. explicit costs. implicit costs. total revenue.

implicit costs

Suppose Brent, Callie, and Danielle each purchase a particular type of electric pencil sharpener at a price of $20. Brent's willingness to pay was $22, Callie's willingness to pay was $25, and Danielle's willingness to pay was $30. Which of the following statements is correct? The fact that all three individuals paid $20 for the same type of pencil sharpener indicates that each one placed the same value on that pencil sharpener. Brent's consumer surplus is the smallest of the three individual consumer surpluses. Had the price of the pencil sharpener been $24 rather than $20, only Danielle would have been a buyer. For the three individuals together, consumer surplus amounts to $60.

Brent's consumer surplus is the smallest of the three individual consumer surpluses

In a competitive market the current price is $5. The typical firm in the market has ATC = $5.50 and AVC = $5.15. The firm will earn zero profits in both the short run and long run. New firms will likely enter this market to capture any remaining economic profits. In the short run firms will shut down, and in the long run firms will leave the market. In the short run firms will continue to operate, but in the long run firms will leave the market.

in the short run several firms will shut down, and in the long run firms will leave the market

Scenario 5-4 Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine (cattle) infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. Refer to Scenario 5-4. The equilibrium price will increase in both the milk and beef markets. decrease in the milk market and increase in the beef market. decrease in both the milk and beef markets. increase in the milk market and decrease in the beef market.

increase in both milk and beef markets

Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA). Johnny's cumulative GPA will be better next semester if he (i) performs better than he did last semester. (ii) performs better than his cumulative GPA. (iii) gives an average performance. (iii) only (ii) only (ii) and (iii) (i) and (ii)

II only

Sonia opened a yoga studio where she teaches classes and sells yoga clothing. Fixed costs for Sonia's yoga studio include the cost of the (i) tank tops. (ii) wages paid to the other yoga instructors. (iii) lease on the studio space. (iv) insurance that the landlord requires Sonia to carry for the studio. (iii) and (iv) only (i), (ii), (iii), and (iv) (i) and (ii) only (i) only

III and IV only

Which of the following statements is not correct? If marginal cost is rising, then average variable cost must be rising. The marginal cost of the fifth unit of output equals the total variable cost of five units minus the total variable cost of four units. The total variable cost of seven units equals the average variable cost of seven units times seven. The marginal cost of the fifth unit of output equals the total cost of five units minus the total cost of four units.

If marginal cost is rising, then average variable cost must be rising

Scenario 14-3Suppose a certain competitive firm is producing Q=500 units of output. The marginal cost of the 500th unit is $17, and the average total cost of producing 500 units is $12. The firm sells its output for $20. Refer to Scenario 14-3. If the marginal cost of producing the 501st unit would be $19, producing and selling the 501st unit would decrease the firm's profit by $19. decrease the firm's profit by $2. increase the firm's profit by $3. increase the firm's profit by $1.

increase the firms profit by 1 dollar

Jennifer is a junior in college. Her current cumulative grade point average (GPA) is 3.5 out of a 4.0 scale. Jennifer is hoping that by the time she graduates, she can raise her cumulative GPA to a 3.7. Which of the following statements is correct? Jennifer must earn above a 3.7 GPA in her senior year in order to raise her cumulative GPA to a 3.7. If Jennifer earns between a 3.5 and a 3.7 GPA in her senior year, she will be able to raise her cumulative GPA to a 3.7. If Jennifer earns a 3.7 GPA in her senior year, she will be able to raise her cumulative GPA to a 3.7. Either b or c could be correct.

Jennifer must earn above a 3.7 in her senior year in order to raise her cumulative GPA to a 3.7

Scenario 14-4The information below applies to a competitive firm that sells its output for $40 per unit.• When the firm produces and sells 150 units of output, its average total cost is $24.50.• When the firm produces and sells 151 units of output, its average total cost is $24.55. Refer to Scenario 14-4. When the firm increases its output from 150 units to 151 units, its profit increases by $4.15. increases by $7.95. decreases by $5.75. decreases by $7.20.

increases by 7.95

Sebastian decides to open a tree farm. When deciding to open his own business, he turned down two separate job offers of $25,000 and $30,000 and withdrew $20,000 from his savings. Sebastian's savings account paid 3 percent interest. He also borrowed $20,000 from his brother, whom he pays 2 percent interest per year. He spent $15,000 to purchase supplies and earned $50,000 in revenue during his first year. Which of the following statements is correct? ​ ​Sebastian's economic profit is $4,600. ​Sebastian's accounting profit is $35,000. ​Sebastian's total implicit costs are $55,600. ​Sebastian's total explicit costs are $15,400.

Sebastian's total explicit cost are 15.400 dollars

Walter used to work as a high school teacher for $40,000 per year but quit in order to start his own painting business. To invest in his painting business, he withdrew $20,000 from his savings, which paid 3 percent interest, and borrowed $30,000 from his uncle, whom he pays 3 percent interest per year. Last year Walter paid $25,000 for supplies and had revenue of $60,000. Walter asked Tyler the accountant and Greg the economist to calculate his painting business's costs. Tyler says his costs are $66,500, and Greg says his costs are $66,500. Tyler says his costs are $75,000, and Greg says his costs are $41,500. Tyler says his costs are $25,000, and Greg says his costs are $65,000. Tyler says his costs are $25,900, and Greg says his costs are $66,500.

Tyler said his costs are 25,900, and greg says his costs are 66,500

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will decrease the effective price received by sellers of picture frames by $1. $0.50. less than $0.50. between $0.50 and $1.

less than .50

Constant returns to scale occur when a firm's long-run average total costs do not vary as output increases. long-run average total costs are increasing as output increases. marginal costs are constant as output increases. long-run average total costs are decreasing as output increases.

long run average total cost's do not vary as output increases

Consider a good to which a per-unit tax applies. The size of the deadweight that results from the tax is smaller, the less elastic is the supply of the good. All of the above are correct. smaller is the amount of the tax. less elastic is the demand for the good.

all of the above are correct

For a large firm that produces and sells automobiles, which of the following costs would be a variable cost? the unemployment insurance premium that the firm pays to the state of Missouri that is calculated based on the number of worker-hours that the firm uses the cost of the steel that is used in producing automobiles All of the above are correct. the cost of the electricity of running the machines on the factory floor

all of the above are correct

Suppose a firm operates in the short run at a price above its average total cost of production. In the long run the firm should expect the market price to fall. All of the above are correct. new firms to enter the market. its profits to fall.

all of the above are correct

Suppose a tax of $1 per unit is imposed on a good. The more elastic the demand for the good, other things equal, the larger is the deadweight loss of the tax. the larger is the decrease in quantity demanded as a result of the tax. All of the above are correct. the smaller is the tax burden on buyers relative to the tax burden on sellers.

all of the above are correct

When a tax is levied on a good, All of the above are correct. a wedge is placed between the price buyers pay and the price sellers effectively receive. there is a decrease in the quantity of the good bought and sold in the market. government collects revenues which might justify the loss in total welfare.

all of the above are correct

Scenario 14-4The information below applies to a competitive firm that sells its output for $40 per unit.• When the firm produces and sells 150 units of output, its average total cost is $24.50.• When the firm produces and sells 151 units of output, its average total cost is $24.55. Refer to Scenario 14-4. Let Q represent the quantity of output. Which of the following magnitudes has the same value at Q = 150 and at Q = 151? average fixed cost total cost total revenue average revenue

average revenue

Marginal cost is equal to average total cost when average fixed cost is rising. marginal cost is at its minimum. average total cost is at its minimum. average variable cost is falling.

average total cost is at it's minimum

When a firm is operating at an efficient scale, average total cost is minimized. marginal cost is minimized. average fixed cost is minimized. average variable cost is minimized.

average total cost is minmized

Laura is a gourmet chef who runs a small catering business in a competitive industry. Laura specializes in making wedding cakes. Laura sells 20 wedding cakes per month. Her monthly total revenue is $5,000. The marginal cost of making a wedding cake is $200. In order to maximize profits, Laura should We do not have enough information to answer the question. continue to make 20 wedding cakes per month. make fewer than 20 wedding cakes per month. make more than 20 wedding cakes per month.

make more than 20 wedding cakes per month

Which of the following measures of cost is best described as "the increase in total cost that arises from an extra unit of production?" marginal cost average total cost variable cost average variable cost

marginal cost

When a firm's only variable input is labor, then the slope of the production function measures the quantity of output. quantity of labor. marginal product of labor. total cost.

marginal cost of labor

The firm will make the most profits if it produces the quantity of output at which marginal revenue equals total revenue. marginal cost equals average cost. profit per unit is greatest. marginal revenue equals marginal cost.

marginal revenue equals marginal cost

Total cost is the market value of the inputs a firm uses in production. fixed cost less variable cost. amount a firm receives for the sale of its output. quantity of output minus the quantity of inputs used to make a good.

market value of the inputs a firm uses in production

Which of the Ten Principles of Economics does welfare economics explain more fully? Rational people think at the margin. People respond to incentives. The cost of something is what you give up to get it. Markets are usually a good way to organize economic activity.

markets are usually a good way to organize economic activity

The demand for salt is inelastic, and the supply of salt is elastic. The demand for caviar is elastic, and the supply of caviar is inelastic. Suppose that a tax of $1 per pound is levied on the sellers of salt, and a tax of $1 per pound is levied on the buyers of caviar. We would expect that most of the burden of these taxes will fall on sellers of salt and the sellers of caviar. buyers of salt and the buyers of caviar. buyers of salt and the sellers of caviar. sellers of salt and the buyers of caviar.

buyers of salt and the sellers of caviar

The midpoint method for calculating elasticities is convenient in that it allows us to assume that sellers' total revenue stays constant when the price changes. calculate the same value for the elasticity, regardless of whether the price increases or decreases. ignore the percentage change in quantity demanded and instead focus entirely on the percentage change in price. restrict all elasticity values to between 0 and 1.

calculate the same value for elasticity, regardless of whether the price increases or decreases

When existing firms in a competitive market are profitable, an incentive exists for new firms to seek government subsidies that would allow them to enter the market. existing firms to increase production. new firms to enter the market, even without government subsidies. existing firms to raise prices.

new firms to enter the market, even without government subsidies

Suppose that the organic-produce industry is composed of a large number of small firms. In recent years, these firms have suffered economic losses, and many sellers have left the industry. Economic theory suggests that these conditions will shift the demand curve outward so that price will rise to the level of production cost. cause the remaining firms to collude so that they can produce more efficiently. cause the market supply to decline and the price of organic produce to rise. cause firms in the organic-produce industry to suffer long-run economic losses.

cause the market supply to decline and the price of organic produce to rise

For a firm, marginal revenue minus marginal cost is equal to average total cost. change in profit. profit. change in average revenue.

change in profit

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets. The Big Blue Sky jet company is experiencing diseconomies of scale. economies of scale. constant returns to scale. negative profits.

constant returns to scale

In the long run a company that produces and sells dog beds incurs total costs of $1,200 when output is 30 beds and $1,600 when output is 40 beds. Firm A exhibits diseconomies of scale because average total cost is rising as output rises. economies of scale because average total cost is falling as output rises. diseconomies of scale because total cost is rising as output rises. constant returns to scale because average total cost is constant as output rises.

constant returns to scale because average total cost is constant as output rises

Which tools allow economists to determine if the allocation of resources determined by free markets is desirable? incomes of and prices paid by buyers consumer and producer surplus the equilibrium price and quantity profits and costs to firms

consumer and producer surplus

All else equal, what happens to consumer surplus if the price of a good decreases? Consumer surplus may increase, decrease, or remain unchanged. Consumer surplus decreases. Consumer surplus is unchanged. Consumer surplus increases.

consumer surplus increases

Which of the following is not equal to total surplus? value to buyers - amount paid by buyers + amount received by sellers - cost to sellers consumer surplus - producer surplus value to buyers - cost to sellers buyers' willingness to pay - sellers' costs

consumer surplus- producer surplus

Justin builds fences for a living. Justin's out-of-pocket expenses (for wood, paint, etc.) plus the value that he places on his own time amount to his profit. producer deficit. producer surplus. cost of building fences.

cost of building fences

Consider a firm that operates in a perfectly competitive market. Currently the firm is producing 300 units of output and the price is $20. If marginal cost at 300 units is $22, the firm ​should decide to increase the price above $20. ​could increase profits by increasing output from 300 units. could increase profits by reducing output from 300 units. ​should shut down, since it must be losing money.

could increase profits by reducing out put from 300 units

In a competitive market the current price is $6. The typical firm in the market has ATC = $5.00 and AVC = $4.50. In the short run firms will shut down, and in the long run firms will leave the market. New firms will likely enter this market to capture some of the economic profits. The firm will earn zero profits in both the short run and long run. In the short run firms will continue to operate, but in the long run firms will leave the market.

new firms will likely enter this market to capture some of the economic profits

For a firm in a competitive market, an increase in the quantity produced by the firm will result in no change in the product's market price. a decrease in the product's market price. either an increase or no change in the product's market price depending on the number of firms in the market. an increase in the product's market price.

no change in the products market price

Variable cost divided by quantity produced is profit. average total cost. marginal cost. None of the above is correct.

none of the above is correct

Inefficiency exists in a market when a good is not being consumed by buyers who value it most highly. distributed fairly among buyers. not produced because buyers do not value it very highly. not distributed fairly among buyers.

not being consumed by buyers who value it most highly

Inefficiency exists in a market when a good is not being produced by the lowest-cost producers. not distributed fairly among buyers. not produced because buyers do not value it very highly. being consumed by buyers who value it most highly.

not being produced by the lowest cost producers

Economic profit is equal to total revenue minus the implicit cost of producing goods and services. opportunity cost of producing goods and services. accounting cost of producing goods and services. explicit cost of producing goods and services.

opportunity cost of producing goods and services

Jamar used to work as an office manager, earning $40,000 per year. He gave up that job to start a life-coaching business. In calculating the economic profit of his life-coaching business, the $40,000 income that he gave up is counted as part of the life-coaching business's total revenue. marginal costs. explicit costs. opportunity costs.

opportunity costs

The decrease in total surplus that results from a market distortion, such as a tax, is called a consumer surplus loss. deadweight loss. wedge loss. revenue loss.

dead weight loss

Relative to a situation in which gasoline is not taxed, the imposition of a tax on gasoline causes the quantity of gasoline demanded to increase and the quantity of gasoline supplied to increase. decrease and the quantity of gasoline supplied to decrease. increase and the quantity of gasoline supplied to decrease. decrease and the quantity of gasoline supplied to increase.

decrease and the quantity of gasoline supplied to decrease

Steak and chicken are substitutes. A sharp reduction in the supply of steak would increase consumer surplus in the market for steak and increase producer surplus in the market for chicken. increase consumer surplus in the market for steak and decrease producer surplus in the market for chicken. decrease consumer surplus in the market for steak and decrease producer surplus in the market for chicken. decrease consumer surplus in the market for steak and increase producer surplus in the market for chicken.

decrease consumer surplus in the market for steak and increase producer surplus in the market for chicken

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then decreasing output would increase the firm's profit. average revenue exceeds marginal cost. the firm is earning a positive profit. All of the above are correct.

decreasing output would increase the firms profit

Which of the following will cause a decrease in producer surplus? the price of a complement decreases an increase in the number of buyers of the good income increases and buyers consider the good to be normal the imposition of a binding price ceiling in the market

the imposition of a binding price ceiling in the market

Which of the following will cause a decrease in consumer surplus? sellers expect the price of the good to be lower next month an increase in the number of sellers of the good a decrease in the production cost of the good the imposition of a binding price floor in the market

the imposition of a binding price floor in the market

Suppose the price of milk is $2.39 per gallon, and the equilibrium quantity of milk is 100 thousand gallons per day with no tax on milk. Starting from this initial situation, which of the following scenarios would result in the smallest deadweight loss? The price elasticity of demand for milk is 0.1, the price elasticity of supply for milk is 0.5, and the milk tax amounts to $0.20 per gallon. The price elasticity of demand for milk is 0.2, the price elasticity of supply for milk is 0.7, and the milk tax amounts to $0.30 per gallon. The price elasticity of demand for milk is 0.3, the price elasticity of supply for milk is 0.7, and the milk tax amounts to $0.40 per gallon. The price elasticity of demand for milk is 0.2, the price elasticity of supply for milk is 0.5, and the milk tax amounts to $0.30 per gallon.

the price elasticity of demand for milk is .1, the price elasticity for the supply of milk is .5, and the milk tax amounts to 20 cents per gallon

When motorcycles are taxed and sellers of motorcycles are required to pay the tax to the government, the demand for motorcycles decreases. the quantity of motorcycles bought and sold in the market is reduced. the price paid by buyers of motorcycles decreases. there is a movement downward and to the right along the demand curve for motorcycles.

the quantity of motorcycles bought and sold in the market is reduced

The assumption of a fixed number of firms is appropriate for analysis of both the short run and the long run. neither the short run nor the long run. the long run but not the short run. the short run but not the long run.

the short run but not the long run

If the current allocation of resources in the market for hammers is inefficient, then it must be the case that producer surplus exceeds consumer surplus in the market for hammers. consumer surplus exceeds producer surplus in the market for hammers. the costs that sellers of hammers are incurring could be reduced by moving to a different allocation of resources. the sum of consumer surplus and producer surplus could be increased by moving to a different allocation of resources.

the sum of consumer surplus and producer surplus could be increased by moving to a different allocation of resources

Which of the following scenarios is consistent with the Laffer curve? The tax rate is moderate (between very high and very low), and tax revenue is very low. The tax rate is 1 percent, and tax revenue is very high. The tax rate is 1 percent, and tax revenue is very low. The tax rate is 99 percent, and tax revenue is very high.

the tax rate is one percent and the tax revenue is very low

A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that the value of MP3 players to consumers has decreased, and the cost of producing MP3 players has increased. both the value of MP3 players to consumers and the cost of producing MP3 players has increased. the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased. both the value of MP3 players to consumers and the cost of producing MP3 players has decreased.

the value of MP3 players to consumers has increased, the cost of producing MP3 players has decreased

A tax placed on buyers of tuxedoes shifts the demand curve for tuxedoes downward, decreasing the price received by sellers of tuxedoes and causing the quantity of tuxedoes to increase. demand curve for tuxedoes downward, decreasing the price received by sellers of tuxedoes and causing the quantity of tuxedoes to decrease. supply curve for tuxedoes upward, increasing the effective price paid by buyers of tuxedoes and causing the quantity of tuxedoes to decrease. supply curve for tuxedoes upward, decreasing the effective price paid by buyers of tuxedoes and causing the quantity of tuxedoes to increase.

demand curve for tuxedoes downward, decreasing the price received by sellers of tuxedoes and causing the quantity of tuxedoes to decrease

As Bubba's Bubble Gum Company adds workers while using the same amount of machinery, some workers may be underutilized because they have little work to do while waiting in line to use the machinery. When this occurs, Bubba's Bubble Gum Company encounters diminishing marginal product. economies of scale. diseconomies of scale. increasing marginal product.

diminishing marginal product

When a tax is imposed on the buyers of a good, the demand curve shifts upward by more than the amount of the tax. downward by the amount of the tax. downward by less than the amount of the tax. upward by the amount of the tax.

downward by the amount of the tax