micro exam 1

1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus. Complete the table by calculating the required opportunity costs for both the B-1 and Stealth bombers. The highest opportunity cost in Table 1.2 for B-1 bombers in terms of Stealth bombers is

10 stealth bomber per B-1

1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X, ceteris paribus. On the basis of Table 1.3, what is the opportunity cost of producing at point M rather than point N?

2 brushes

19.3 Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. In Table 19.3 the marginal utility per dollar of the second cola is

4

1.1 At which point might society be able to produce if new resources were discovered but cannot produce with current resources? (See Figure 1.1.)

A

If the government required the actual market price to be fixed at $6 per unit in,

A binding or effective price ceiling would result.

1.5 Using Figure 1.5, if an economy is currently producing on PP2, which of the following would shift the production possibilities curve toward PP1?

A decrease in the amount of capital available.

1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus. On the basis of Table 1.1, you may infer that the law of increasing opportunity costs applies to increasing production of

Both B-1 bombers and Stealth bombers

Most goods can yield

Both positive and negative marginal utility.

Price discrimination works best when

Buyers do not have perfect information about the price.

1.7 Refer to Figure 1.7. If this economy is currently producing at point F, then by employing more resources this economy

Can move to points D, G, and J.

When economists refer to the determinants of demand, they are referring to factors that when changed,

Cause the demand curve to shift left or right.

Ceteris paribus, an increase in the number of sellers of running shoes causes equilibrium price to

Decrease and equilibrium quantity to increase.

Government failure will likely arise if

Government officials attempt to maximize their own utility.

As more satisfaction is achieved from consuming a good with diminishing marginal utility, then total utility

Increases at a decreasing rate.

The federal government's role in providing aid to the poor and the aged is justified because of concerns about

Inequity

19.3 Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question. Assume the price of Y is $1 per unit. In Figure 19.3, point E

Is a high level of utility but not affordable.

Assume Amanda always maximizes her total utility given her budget constraint. Every morning for breakfast she has two eggs and three sausages. If the marginal utility of the last egg is 10 utils and the price of eggs is $1 each, what can we say about the marginal utility of the last sausage if the price of each sausage is $2?

It must be equal to 20 utils.

Antitrust activity addresses

Market Power

When the invisible hand does not produce optimal outcomes for the economy, there is evidence of

Market failure

International participants

Participate in both American factor markets and American product markets.

The fastest-growing areas for state expenditures are

Prisons and Welfare

Cities and other local governments receive most of their tax revenues from

Property Taxes

The federal government's role as the provider of national defense is justified by considerations of

Public Goods

Which of the following is not a basic decision that all nations must confront?

Should we have economic growth?

Tickets to a sporting event go on sale and sell out almost instantly. This suggests that

The price for the tickets is below the equilibrium price.

When sellers price discriminate,

They are attempting to charge a price that is the maximum price each individual is willing to pay.

In terms of the production possibilities curve, inefficiency is represented by

All points inside the curve

A World View article titled "Secondhand Smoke Kills 600,000 People a Year: Study" implies the harm caused to nonsmokers is

An example of externality costs.

An increase in the equilibrium price of electricity can be caused by

An increase in the demand for electricity.

Ceteris paribus, which of the following is most likely to cause an increase in the quantity supplied of perfume?

An increase in the price of perfume.

Ceteris paribus, a consumer that purchases a sports car must consider the price of gasoline because these goods are

Complements in consumption.

The market tends to underproduce public goods because

Joint consumption allows those who do not pay for the good to still benefit from the good.

If there is a surplus at a given price, then

That price is greater than the equilibrium price

A buyer is said to have a demand for a good only when

The buyer is both willing and able to purchase the good.

Microeconomics is concerned with issues such as

The demand for bottled water by individuals.

Which of the following is an example of a progressive tax?

The federal income tax.

Which of the following can change without shifting demand, ceteris paribus?

The price of the good itself.

The central question in determining whether a good is public or private is whether

We have the technical capability to exclude nonpayers from consumption.

The law of diminishing marginal utility gives us a deeper understanding of the downward-sloping demand curve because

When marginal utility is high, we are willing to pay a higher price.

The ___________ surplus will rise if the price of the good ________.

consumer; falls