Micro econ old tests, quizzes, and homeworks

in the long run in monopolistic competition, firms

make zero economic profit

entry and exit continue in monopolistic competition until the remaining firms are

making zero economic profit- long run/ normal profit

the value of the marginal product of labor is calculated by multiplying the __________ by the ___________

marginal product of labor; price of a unit of output

which of the following occurs when a market is efficient?

the sum of consumers surplus and producer surplus is maximized

consider the market for wheat. if there is an improvement in harvesting technology

the supply curve for wheat shifts rightward

which of the following is the best definition of economic growth

the sustained expansion of production possibilities

if demand is price inelastic and the price is lowered which of the following occurs

the total expenditure increases and the total revenue decreases

if demand is price inelastic and the price is lowered which of the following occurs

the total revenue of the firms selling the product decreases

the market fro a good is efficient if

the total surplus is maximized

a production possibilities frontier shows

the various combinations of output a nation can produce a certain time, given its available resources and technology

one requirement for an industry to be perfectly competitive

there are no restrictions on entry into or exit from the market

as the middle east conflict widens, people expect that the price of a gallon of gasoline will rise next week. as a result,

today's demand for gasoline increase

when hiring labor, to maximize profit a firm hires labor

until the value of marginal product equals the wage rate

the supply of labor curve for an individual is

upward sloping for lower wage rates and begins to slope downward at higher wage rates

allocation efficiency is a situation in which the quantities of goods and services produced are those that people __________- it is not possible to produce more of a good or service _______________ some of another good that people _______________

value most highly; without giving up; value more highly

in the market for land, the supply curve is

vertical

we determine the economy's marginal benefit curve for a public good or service by

vertically summing the individual marginal benefit curves of each member of society

value

what the buyer gets

price

what the buyer pay

to calculate the opportunity cost per unit,

you divide the decrease in the quantity of other items obtained

where does allocation efficiency occur

at the intersection of the marginal benefit curve and the marginal cost curve

the factor of production _________, and the factor of production__________

land earns rent; labors earns wages

which of the following increases the supply of a product

lower prices for the resources used to produce the product

when the price of a good rises fro $5 to $7 a unit, the quantity supplied increases from 110 to 130 units a day. the price elasticity of supply is ___________. The supply of the good is _____________

.5; inelastic

a 2% increase in income increases the quantity demanded of a good by 1%. the income elasticity of demand for this good is _________. This good is a ___________ good

1/2; normal

if a consumer obtains 20 units of utility for the first unit consumed, 10 for the second, and 5 for the third. what is the total utility of consuming three units

35

which of the following is an example of comparative advantage

Dave makes 4 pizzas giving up 6 jars of milk shake while rob makes 2 pizzas giving up 4 jars of milkshake

which of the following is correct about comparative advantage

a country has a comparative advantage in the production of a good if it can produce the good at lower opportunity costs then any other country

which of the following shifts the demand curve for movies leftward?

a decrease in the price of Netflix, a substitute for the movies

a decrease in the price of a complement in production leads to

a decrease in the supply of the good in question

demand curve is

a marginal benefit curve

a budgets line shows

a quantities of goods a buyer can purchase with given income and prices

concerned about the political fallout from rising gas prices, the government decides to impose a price ceiling on gaslone of $3.00 a gallon. if a global shortage of oil sends the equilibrium price of gasoline to $3.50 a gallon, _____________ of gasoline will emerge. the market for gasoline will be ________

a shortage, inefficient because marginal benefit exceeds marginal cost

if we compare a perfectly competitive market to a single-price monopoly with the same costs, the monopoly sells

a smaller quantity at a higher price

used car buyers believe a car is good quality when the seller signals the car is quality by offering a warranty because

a warranty on a lemon is costly to the selller

Jennifer owns a pig farm near salina, Kansas. last year she earned $39,000 in total revenue while incurring $38,000 in explicit costs. she could have earned $27,000 as a teacher in Salina. These are all her revenue costs. therefore Jennifer earned an

accounting profit of $1,000 but incurred an economic loss of $26,000

the tendency for people of enter into agreements in which they can use their private information to their own advantage and to the disadvantage of the less informed party is known as

adverse selection

which of increases the quantity supplied of yoga pants but does NOT increase the supply of yoga pants?

an increase in the price of yoga pants

which of the following statements about the supply of labor is correct

an individual 's supply curve of labor curve can bend backwards

when a market price allocates a scarce resource, the people who _____ get the resource

are willing and able to pay that price

because of leisure time has value to many workers, as wages increase, the labor supply curve

bends backwards and has a negative slope

an efficient production quota __________ producers and ___________ a dead weight loss

benefits , creates

utlity

benefits or satisfaction that a person gets from the consumption of a good or service

banks in cut throat competition cut mortgages is an example of

businesses using economics to make a decision

supermarkets hire seniors to cut labor costs is an example of

businesses; using economics to make a decision

a government subsidy

can help achieve an efficient amount of output when the good has an external benefit

the factor of production __________, and the factor of production ___________

capital earns interest; entrepreneurship receives a profit or incurs a loss

items bought by business to help produce other goods and services are called

capital goods

consider the factors of production and the type of income that each factors of production earns. which of the following pairs does not match>

capital; rent

which of the following is a postive statement

competition among cell phone providers across the borders of canada, mexico, and the unitied states has driven roaming rates down

an increase in the rental rate of capital _______________ the quantity of capital demanded and _________ the quantity of capital supplied

decreases, increases

congress raises taxes to shrink the national debt. american incomes are reduced. which figure and answer shows the effect of this change in demand has on pizza, other things constant?

demand curve shifts left decrease demand , a lower equilibrium price, and a smaller equilibrium quantity

in the market for land, an increase in demand ___________ the equilibrium rent of land and the equilibrium equality

does not change; does not change

the key characteristics of an oligopoly marker is "interdependence among firms". this means that:

each firm must consider how its decisions will affect its competitors

if a good has many close substitutes, then its demand is most likely

elastic

the cost of producing an additional unit of a good or service that falls on people other than the producer is the marginal

external cost

"as more people buy computers, the deamnd for internet service increase and the price of internet service decreases, which decreases the supply of internet service" this statement is __________ because ______________

false; an increase in demand for internet service does not decrease the price of internet service and a decrease in the price of internet service does not decrease the supply of internet service

the market for land

has a perfectly inelastic supply

which of the following statements is true about a competitive market? a competitive market

has so many buyers and sellers that no one can influence the price

___________the owners of the factories of production which ___________ the amounts of those factors to hire

households are; firms determine

the income elasticity of a demand is a measure of

how demand for a product changes when the price of a substitute or complement changes

with more job training the more scholarships to poor american students, which special factor of production is likely to grow faster than in the past?

human capital

the law of supply states, other things remaining the same

if the price of a good increases, the quantity supplied increases

if the price of a movie ticket falls from $9 to $7, total revenue

increases because demand is elastic

a production quota set below the market equilibrium quantity

increases the price, increases producer surplus, and is inefficient

the price of wheat has fallen from $9 a bushel to $7 a bushel in the past seven months as rain and snow fell on the southern states. explain the effect of the fall in the wheat price _________, which_____________ the market price

increases the supply for cereal; lowers

when the price of a good increased by 10%, the quantity demanded of it decreased 2%. Demand for this good is

inelastic

marginal benefit

is the benefit that a person receives from consuming one more unit of a good or service peoples preferences determine marginal benefit is what people are willing to foro go to get one more unit of the good

consumer surplus

is the marginal benefit from a good or service minus the price paid for it, summed over the quanity consumed

marginal cost

is the opportunity cost of producing one more unit of a good or service and is measured by the slope of the ppf increases as more of the good is produced curve shows the amount of other goods and services that we must give up to produce one more

consider the incomes paid to the factors of production. wages are paid to ___________ and interest is paid to_______

labor; capital

marry makes 10 pies and 20 cakes a day and her opportunity cost of producing a cake is 2 pies. time makes 20 pies and 10 cakes a day and his opportunity cost of producing a cake is 4 pies. if mary and tim specialize in the good in which they have a comparative advantage_________

mary produces only cakes while tim produces only pies

firms in monopolistic competition determine the profit

maximizing level of output by producing where marginal revenue equals marginal cost

when firms in a monopolistic competitive market are earning an economic profit, in the short run

new firms will enter the market

in the market for smartphones, which of the following events increases the supply of smartphones?

new technology that lowers the cost of making a smartphone

the organization of petroleum exporting countries OPEC produces about 40% of the world's output of crude oil. With the global demand for oil falling, OPEC has cut production in an attempt to stop the price sliding further from its high of $147 a barrel. OPEC knows that to raise the world price of oil it has to cut the total production of its member countries.OPEC also knows that the demand for crude oil is inelastic. is it possible to conclude from these facts that opec's total revenue would increase if it were to cut its production?

no because non open oil producers can increase production, which lowers the price

for a firm selling its product in a perfectly competitive market, the demand curve for a factor of production is downward sloping because

of the diminishing marginal product of the factor

the income elasticity of demand is a measure

of the extent to which the demand for a good changes when income changes

game theory is used to analyze the interactions among firms in

oligopoly

high wages and low pensions keep seniors at work is an example of

persons using economics to make a decision

the cost of producing an additional unit of good or service that is born by the producer of that good or service is the marginal

private cost

a firm in monopolistic competition makes its decisions on quantity and price by

producing where MR=MC and setting the price for this quantity from the demand curve

when the rental rate for capital falls, the _______ capital __________

quantity demanded of ; increases

if a union restricts the supply of labor, it _____________ the wage rate and __________ the level of employment

raises, decreases

a technological change that raises the value of marginal product of capital __________ the rental rate for capital because the ________

raises; demand curve for capital shifts rightward

a technological change that raises the value of marginal product of capital ___________ the rental rate for capital because the ____________

raises; demand curve for capital shifts rightward

if unrest in the middle east sends the price of gasoline to $5 a gallon, the marginal cost driving your automobile will_______, so the incentive to use public transit will_________

rise; strengthen

if the supply of labor decreases, then the equilibrium wage rate____________ and equilibrium employment __________

rises, decreases

what is the effect on the equilibrium price and equilibrium quantity of orange juice if the price of apple juice increases and the wage rate paid to orange grove workers increases? the equilibrium price of orange juice_________ and the equilibrium quantity______

rises, increases, decreases or remains the same

during valentine's week, more people buy boxes of chocolates than in a normal week and chocolatiers offer their chocolates in special red boxes which cost more the produce than the everyday boxes. during valentine's week, the equilibrium price of a box of chocolates ___________ and the equilibrium quantity _____________

rises; increase because demand increases by more than supply decreases

a rent ceiling creates a __________ of housing if it __________ the equilibrium rent

shortage; is less than

the more people who remain in school for full-time education and training, the __________ is the __________ low-skilled labor

smaller; supply of

suppose that a firm earned $500,000 in total revenue at the same time; it incurred labor costs for $200,000, economic depreciation of $50,000; normal profit is $75,000; interest paid to the bank of $25,000; and used other factors of production that cost $100,000

the economic profit earned by the firm equals $50,000

efficient allocation

the highest valued allocation it is efficient when it is not possible to produce more of any good without producing less of something else that is valued more highly to find we compare marginal benefit and marginal cost

the market supply in the short run for the perfectly competitive industry is

the horizontal sum of the supply schedules of all firms

if an external benefit is present in the consumption of a good or service , then

the marginal social benefit is greater than the marginal private benefit

marginal benefit can be measured as

the maximum price that people are willing to pay for another unit of the good or service

changes in which of the following factors do NOT shift the demand curve

the price of a substitute good

your school has decided to increase the intake of new students next year. in reaching its decision, would the school use the "economic way of thinking" and make its decision at the margin? your school would use the "economic way of thinking" and make its decision at the margin by checking that

the school's net benefit from an additional student was psotive

allocative efficiency

the situation in which the quantities of goods and services produced are those that people value most highly it is not possible to produce more of one good or service without producing less of something else