Micro Final
Price controls A. always produce a fair outcome. B. always produce an efficient outcome. C. can generate inequities of their own. D. All of the above are correct.
C
Some costs do not vary with the quantity of output produced. Those costs are called A. marginal costs. B. average costs. C. fixed costs. D. explicit costs.
C
A leftward shift of a supply curve is called a(n) A. increase in supply. B. decrease in supply. C. decrease in quantity supplied. D. increase in quantity supplied.
B
A production function describes A. how a firm maximizes profits. B. how a firm turns inputs into output. C. the minimal cost of producing a given level of output. D. the relationship between cost and output.
B
A television broadcast is an example of a good that is A. not rival in consumption. B. social. C. normal. D. private.
A
ALL externalities: A. cause markets to fail to allocate resources efficiently B. cause equilibrium prices to be too high C. benefit producers at the expense of the consumer D. cause equilibrium prices to be too low
A
Consumer surplus is equal to the A. Value to buyers - Amount paid by buyers. B. Amount paid by buyers - Costs of sellers. C. Value to buyers - Costs of sellers. D. Value to buyers - Willingness to pay of buyers.
A
Deadweight loss A. measures monopoly inefficiency. B. exceeds monopoly profits. C. equals monopoly profits. D. equals monopoly revenues minus profits.
A
Elasticity is A. a measure of how much buyers and sellers respond to changes in market conditions. B. the study of how the allocation of resources affects economic well-being. C. the maximum amount that a buyer will pay for a good. D. the value of everything a seller must give up to produce a good.
A
Equilibrium quantity must increase when demand A. increases and supply does not change, when demand does not change and supply increases, and when both demand and supply increase. B. increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease. C. decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply increase. D. decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease. Reset Selection
A
Externalities tend to cause markets to be A. inefficient. B. unequal. C. unnecessary. D. overwhelmed.
A
For a monopolist, when does marginal revenue exceed average revenue? A. never B. when output is less than the profit-maximizing level of output C. when output is greater than the profit-maximizing level of output D. for all levels of output greater than zero
A
For a monopoly, A. average revenue exceeds marginal revenue. B. average revenue equals marginal revenue. C. average revenue is less than marginal revenue. D. price equals marginal revenue.
A
For private goods allocated in market: A. prices guide the decisions of buyers and sellers and these decisions can lead to an efficient allocation of resources. B. prices guide the decisions of buyers and sellers and these decisions can lead to an inefficient allocation of resources C. the government guides the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources D. the government guides the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources
A
Governments can grant private property rights over resources that were previously viewed as public, such as fish or elephants. Why would governments want to do so? A. to prevent overuse B. to decrease taxes C. to fight poverty D. to increase consumption
A
If a country allows trade and, for a certain good, the domestic price without trade is lower than the world price, A. the country will be an exporter of the good. B. the country will be an importer of the good. C. the country will be neither an exporter nor an importer of the good. D. Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.
A
If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would A. decrease by less than $500. B. decrease by exactly $500. C. decrease by more than $500. D. increase by an indeterminate amount.
A
If the government removes a binding price ceiling from a market, then the price paid by buyers will A. increase, and the quantity sold in the market will increase. B. increase, and the quantity sold in the market will decrease. C. decrease, and the quantity sold in the market will increase. D. decrease, and the quantity sold in the market will decrease.
A
Knowledge is an example of a A. public good. B. club good. C. common resource. D. private good.
A
National defense is a classic example of a public good because A. it is difficult to exclude people from receiving the benefits from national defense once it is provided. B. everyone agrees that some level of national defense is important, but only the government knows the optimal amount. C. there is no market for private security services. D. there are no private firms willing to supply defense goods such as tanks and weapons.
A
One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where A. marginal cost equals price, while a monopolist produces where price exceeds marginal cost. B. marginal cost equals price, while a monopolist produces where marginal cost exceeds price. C. price exceeds marginal cost, while a monopolist produces where marginal cost equals price. D. marginal cost exceeds price, while a monopolist produces where marginal cost equals price.
A
One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where: A. marginal cost equals price, while a monopolist produces where price exceeds marginal cost B. marginal cost equals price, while a monopolist produces where marginal cost exceeds price C. price exceeds marginal cost, while a monopolist produces where marginal cost equals price D. marginal cost exceeds price, while a monopolist produces where marginal cost equals price
A
Property rights are well established for A. private goods. B. public goods. C. common resources. D. both (b) and (c).
A
Ryan says that he would buy one cup of tea every day regardless of the price. If he is telling the truth, Ryan's A. demand for tea is perfectly inelastic. B. price elasticity of demand for tea is 1. C. income elasticity of demand for tea is 0. D. None of the above answers is correct.
A
The long-run average total cost curve is always A. flatter than the short-run average total cost curve, but not necessarily horizontal. B. horizontal. C. falling as output increases. D. rising as output increases.
A
The price elasticity of demand measures A. buyers' responsiveness to a change in the price of a good. B. the extent to which demand increases as additional buyers enter the market. C. how much more of a good consumers will demand when incomes rise. D. the movement along a supply curve when there is a change in demand.
A
Total revenue equals A. price x quantity. B. price/quantity. C. (price x quantity) - total cost. D. output - input.
A
When a good is taxed, A. both buyers and sellers of the good are made worse off. B. only buyers are made worse off, because they ultimately bear the burden of the tax. C. only sellers are made worse off, because they ultimately bear the burden of the tax. D. neither buyers nor sellers are made worse off, since tax revenue is used to provide goods and services that would otherwise not be provided in a market economy.
A
When quantity demanded decreases at every possible price, the demand curve has A. shifted to the left. B. shifted to the right. C. not shifted; rather, we have moved along the demand curve to a new point on the same curve. D. not shifted; rather, the demand curve has become flatter.
A
When the price of a good is $5, the quantity demanded is 120 units per month; when the price is $7, the quan-tity demanded is 100 units per month. Using the midpoint method, the price elasticity of demand is about A. 0.55. B. 1.83. C. 2. D. 10.
A
Which of the following are necessary characteristics of a monopoly? (i) The firm is the sole seller of its product. (ii)The firm's product does not have close substitutes. (iii) The firm generates a large economic profit. (iv) The firm is located in a small geographic market. A. (i) and (ii) only B. (i) and (iii) only C. (i), (ii), and (iii) only D. (i), (ii), (iii), and (iv)
A
Which of these types of costs can be ignored when an individual or a firm is making decisions? A. sunk costs B. marginal costs C. variable costs D. opportunity costs
A
Willingness to pay A. measures the value that a buyer places on a good. B. is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. C. is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. D. is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
A
f the demand for textbooks is inelastic, then an increase in the price of textbooks will A. increase total revenue of textbook sellers. B. decrease total revenue of textbook sellers. C. not change total revenue of textbook sellers. D. There is not enough information to answer this question.
A
A key characteristic of a competitive market is that A. government antitrust laws regulate competition. B. producers sell nearly identical products. C. firms minimize total costs. D. firms have price setting power.
B
A sunk cost is one that A. changes as the level of output changes in the short run. B. was paid in the past and will not change regardless of the present decision. C. should determine the rational course of action in the future. D. has the most impact on profit-making decisions.
B
A tax imposed on the sellers of a good will A. raise both the price buyers pay and the effective price sellers receive. B. raise the price buyers pay and lower the effective price sellers receive. C. lower the price buyers pay and raise the effective price sellers receive. D. lower both the price buyers pay and the effective price sellers receive.
B
A vacation home in Malibu is a. not rival in consumption and excludable. b. rival in consumption and excludable. c. not rival in consumption and not excludable. d. rival in consumption and not excludable.
B
An example of a perfectly competitive market would be the market for A. electricity. B. soybeans. C. coffee shops. D. restaurants.
B
As a monopolist increases the quantity of output it sells, the price consumers are willing to pay for the good A. is unaffected. B. decreases. C. increases. D. There is not enough information given in answer the question.
B
Economies of scale occur when A. long-run average total costs rise as output increases. B. long-run average total costs fall as output increases. C. average fixed costs are falling. D. average fixed costs are constant.
B
Economists normally assume that the goal of a firm is to A. maximize its total revenue. B. maximize its profit. C. minimize its explicit costs. D. minimize its total cost.
B
If a price ceiling is not binding, then A. the equilibrium price is above the price ceiling. B. the equilibrium price is below the price ceiling. C. it has no legal enforcement mechanism. D. None of the above is correct because all price ceilings must be binding.
B
If a tax is levied on the sellers of a product, then there will be a(n) A. downward shift of the supply curve. B. upward shift of the supply curve. C. movement up and to the right along the supply curve. D. movement down and to the left along the supply curve.
B
If demand is price inelastic, then when price rises, total revenue A. will fall. B. will rise. C. will remain unchanged. D. may rise, fall, or remain unchanged. More information is need to determine the change in total revenue with certainty.
B
If the price elasticity of supply for a good is equal to infinity, then the A. supply curve is vertical. B. supply curve is horizontal. C. supply curve also has a slope equal to infinity. D. quantity supplied is constant regardless of the price.
B
If the price elasticity of supply is 1.2, and price increased by 5%, quantity supplied would A. increase by 4.2%. B. increase by 6%. C. decrease by 4.2%. D. decrease by 6%.
B
Rent-control laws dictate A. the exact rent that landlords must charge tenants. B. a maximum rent that landlords may charge tenants. C. a minimum rent that landlords may charge tenants. D. both a minimum rent and a maximum rent that landlords may charge tenants.
B
Specialization and trade are closely linked to A. absolute advantage. B. comparative advantage. C. gains to some traders that exactly offset losses to other traders. D. shrinkage of the economic pie.
B
Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has A. less incentive to advertise than it would otherwise have. B. less market power than it would otherwise have. C. more control over the price of diamonds than it would otherwise have. D. higher profits than it would otherwise have.
B
Suppose researchers at the University of Wisconsin discover a new vitamin that increases the milk production of dairy cows. If the demand for milk is relatively inelastic, the discovery will A. raise both price and total revenues. B. lower both price and total revenues. C. raise price and lower total revenues. D. lower price and raise total revenues.
B
Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two countries do not trade, Cornland will produce and consume 400 bushels of corn and 100 bushels of oats, while Oatland will produce and consume 60 bushels of corn and 400 bushels of oats. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by A. 280 bushels of corn and 450 bushels of oats. B. 340 bushels of corn and 500 bushels of oats. C. 360 bushels of corn and 520 bushels of oats. D. 360 bushels of corn and 640 bushels of oats.
B
Suppose that two supply curves pass through the same point. One is steep, and the other is flat. Which of the following statements is correct? A. The flatter supply curve represents a supply that is inelastic relative to the supply represented by the steeper supply curve. B. The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve. C. Given two prices with which to calculate the price elasticity of supply, that elasticity would be the same for both curves. D. A decrease in demand will increase total revenue if the steeper supply curve is relevant, while a decrease in demand will decrease total revenue if the flatter supply cure is relevant.
B
Suppose you make jewelry. If the price of gold falls, then we would expect you to A. be willing and able to produce less jewelry than before at each possible price. B. be willing and able to produce more jewelry than before at each possible price. C. face a greater demand for your jewelry. D. face a weaker demand for your jewelry.
B
The benefit to sellers of participating in a market is measured by the A. amount of taxes collected on sales of the good. B. producer surplus. C. amount sellers receive for their product. D. sellers' willingness to sell.
B
The case of perfectly elastic demand is illustrated by a demand curve that is A. vertical. B. horizontal. C. downward-sloping but relatively steep. D. downward-sloping but relatively flat.
B
The commercial value of ivory is a threat to the elephant, but the commercial value of beef is a guardian of the cow. This is because A. the cow is raised in developed countries, while the elephant lives primarily in less-developed countries. B. cows are private goods, while elephants tend to roam freely without owners. C. cows and elephants are public goods, but ivory is nonrival. D. ivory is nonrival and nonexclusive, but beef is rival and exclusive.
B
The maximum price that a buyer will pay for a good is called the A. cost. B. willingness to pay. C. equity. D. efficiency.
B
The price elasticity of supply measures how much A. the quantity supplied responds to changes in input prices. B. the quantity supplied responds to changes in the price of the good. C. the price of the good responds to changes in supply. D. sellers respond to changes in technology.
B
The provision of public goods gives rise to A. no externalities. B. positive externalities. C. negative externalities. D. rivalries in consumption.
B
The provision of public goods gives rise to: A. no externalities B. positive externalities C. negative externalities D. rivalries in consumption
B
To measure the gains and losses from a tax on a good, economists use the tools of A. macroeconomics. B. welfare economics. C. international-trade theory. D. circular-flow analysis.
B
Trade can make everybody better off because it A. increases cooperation among nations. B. allows people to specialize according to comparative advantage. C. requires some workers in an economy to be retrained. D. reduces competition among domestic companies.
B
When a good is excludable, A. one person's use of the good diminishes another person's ability to use it. B. people can be prevented from using the good. C. no more than one person can use the good at the same time. D. everyone will be excluded from using the good.
B
Which of the following equations is valid? A. Consumer surplus = Total surplus - Cost to sellers B. Producer surplus = Total surplus - Consumer surplus C. Total surplus = Value to buyers - Amount paid by buyers D. Total surplus = Amount received by sellers - Cost to sellers
B
Which of the following goods is nonrival in consumption and excludable? A. a tornado siren B. an uncongested toll road C. a home D. the environment
B
Which of the following is not an example of a market? A. A small town has only one seller of electricity. B. In the United States, a sick person cannot legally purchase a kidney. C. In Florida, there are many buyers and sellers of key lime pie. D. The availability of Internet shopping has expanded the clothing choices for buyers who do not live near large cities.
B
Which of the following statements are correct? A. the establishment of property rights sometimes gives rise to market failure B. the absence of property rights sometimes gives rise to market failure C. in the context of public goods, the Coase theorem implies that total surplus in some markets can be improved by the elimination of property rights D. Government regulation of private behavior, in response to market failure , can never improve social well-being
B
Which of the following statements is correct? A. Buyers determine supply, and sellers determine demand. B. Buyers determine demand, and sellers determine supply. C. Buyers determine both demand and supply. D. Sellers determine both demand and supply.
B
Which of the following statements is correct? A. The establishment of property rights sometimes gives rise to market failure. B. The absence of property rights sometimes gives rise to market failure. C. In the context of public goods, the Coase theorem implies that total surplus in some markets can be improved by the elimination of property rights. D. Government regulation of private behavior, in response to market failure, can never improve social well-being.
B
Which parable describes the problem of wild animals that are hunted to the point of extinction? A. Coase theorem B. Tragedy of the Commons C. Cost-benefit analysis D. Clean Air Act
B
A demand schedule is a table that shows the relationship between A. quantity demanded and quantity supplied. B. income and quantity demanded. C. price and quantity demanded. D. price and income.
C
A monopoly market A. always maximizes total economic well-being. B. always minimizes consumer surplus. C. generally fails to maximize total economic well-being. D. generally fails to maximize producer surplus.
C
A monopoly market: A. always maximizes total economic well-being. B. always minimizes consumer surplus C. generally fails to maximize total economic well-being D. generally fails to maximize producer surplus
C
A price ceiling will be binding only if it is set A. equal to the equilibrium price. B. above the equilibrium price. C. below the equilibrium price. D. either above or below the equilibrium price.
C
A surplus exists in a market if A. there is an excess demand for the good. B. quantity demanded exceeds quantity supplied. C. the current price is above its equilibrium price. D. All of the above are correct.
C
An economy's production possibilities frontier is also its consumption possibilities frontier A. under all circumstances. B. under no circumstances. C. when the economy is self-sufficient. D. when the rate of tradeoff between the two goods being produced is constant.
C
At price of $1.25, a paper manufacturer is willing to supply 150 spiral notebooks per day. At a price of $1.50, the paper manufacturer is willing to supply 175 spiral notebooks per day. Using the midpoint method, the price elasticity of supply is about A. 1.18. B. 1.00. C. 0.85. D. 0.25.
C
Because many good substitutes exist for a competitive firm's product, the demand curve that it faces is A. unit-elastic. B. perfectly inelastic. C. perfectly elastic. D. inelastic only over a certain region.
C
For a monopoly, the level of output at which marginal revenue equals zero is also the level of output at which A. average revenue is zero. B. profit is maximized. C. total revenue is maximized. D. marginal cost is zero.
C
Good news for farming can be bad news for farmers because the A. supply curve for an individual farmer is usually perfectly elastic. B. supply curve for an individual farmer is usually perfectly inelastic. C. demand for basic foodstuffs is usually inelastic, meaning that factors that shift supply to the right decrease total revenues to sellers. D. demand for basic foodstuffs is usually elastic, meaning that factors that shift supply to the right increase total revenues to sellers.
C
Governments can improve market outcomes for A. public goods but not common resources. B. common resources but not public goods. C. both public goods and common resources. D. neither public goods nor common resources.
C
Holding all other forces constant, if increasing the price of a good leads to a decrease in total revenue, then the demand for the good must be A. unit elastic. B. inelastic. C. elastic. D. None of the above is correct because a price increase always leads to an increase in total revenue.
C
Honey producers provide a positive externality to orchards because A. the honey producers get more honey. B. the orchard owner frequently gets stung by the honey producer's bees. C. the orchard owner does not have to purchase bees to pollinate his flowers. D. the honey producers have to rent access to the orchard grounds.
C
If the demand for a product increases, then we would expect equilibrium price A. to increase and equilibrium quantity to decrease. B. to decrease and equilibrium quantity to increase. C. and equilibrium quantity both to increase. D. and equilibrium quantity both to decrease.
C
Suppose the US and Mexico both produce semiconductors and auto parts and the US has a comparative advantage in semiconductors while Mexico has a comparative advantage in auto parts. Also suppose the US has an absolute advantage in the production of both semiconductors and auto parts. The US should A. not trade semiconductors and auto parts with Mexico. B. import semiconductors from Mexico and export auto parts to Mexico. C. export semiconductors to Mexico and import auto parts from Mexico. D. export both semiconductors and auto parts to Mexico.
C
The forces that make market economies work are A. work and leisure. B. politics and religion. C. supply and demand. D. taxes and government spending.
C
The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good, A. has a low opportunity cost of producing that good, relative to the opportunity costs of other producers. B. has a comparative advantage in the production of that good. C. has an absolute advantage in the production of that good. D. should be the only producer of that good.
C
The production of methamphetamine (meth) is a social problem in the Midwest. Iowa is considering two po-tential programs: Operation Methbust would increase the number of sheriffs' deputies to search out and de-stroy methamphetamine labs. Operation Say No to Meth would increase the training required of public school teachers so that they could better educate students about the health risks of using meth. Assuming that each program were successful, which of the following statements is correct? A. Both Operation Methbust and Say No would reduce the equilibrium quantity and increase the equilibrium price of meth. B. Both Operation Methbust and Say No would increase the equilibrium quantity and reduce the equilibrium price of meth. C. Both Operation Methbust and Say No would reduce the equilibrium quantity of meth; Operation Methbust would increase the equilibrium price, whereas Say No would reduce the equilibrium price of meth. D. Both Operation Methbust and Say No would reduce the equilibrium price of meth; Operation Methbust would reduce the equilibrium quantity, whereas Say No would increase the equilibrium quantity of meth.
C
Total surplus is represented by the area below the A. demand curve and above the price. B. price and up to the point of equilibrium. C. demand curve and above the supply curve, up to the equilibrium quantity. D. demand curve and above the horizontal axis, up to the equilibrium quantity.
C
When a supply curve is relatively flat, the A. sellers are not at all responsive to a change in price. B. equilibrium price changes substantially when the demand for the good changes. C. supply is relatively elastic. D. supply is relatively inelastic.
C
When describing the opportunity cost of two producers, economists use the term A. natural advantage. B. trading advantage. C. comparative advantage. D. absolute advantage.
C
When goods do not have a price, which of the following primarily ensures that the good is produced? A. buyers B. sellers C. government D. the market
C
Which of the following statements is not correct? A. Fixed costs are constant. B. Variable costs change as output changes. C. Average fixed costs are constant. D. Average total costs are typically U-shaped.
C
A binding minimum wage tends to A. cause a labor surplus. B. cause unemployment. C. have the greatest impact in the market for teenage labor. D. All of the above are correct.
D
A competitive market is a market in which A. an auctioneer helps set prices and arrange sales. B. there are only a few sellers. C. the forces of supply and demand do not apply. D. no individual buyer or seller has any significant impact on the market price.
D
A competitive market is one in which there A. is only one seller, but there are many buyers. B. are many sellers, and each seller has the ability to set the price of his product. C. are many sellers, and they compete with one another in such a way that some sellers are always being forced out of the market. D. are so many buyers and so many sellers that each has a negligible impact on the price of the product.
D
A downward-sloping demand curve illustrates A. that demand decreases over time. B. that prices fall over time. C. the relationship between income and quantity demanded. D. the law of demand.
D
A free-rider problem exists for any good that is not A. rival in consumption. B. a private good. C. free. D. excludable.
D
A legal maximum on the price at which a good can be sold is called a price A. floor. B. subsidy. C. support. D. ceiling.
D
A tariff is a A. limit on how much of a good can be exported. B. limit on how much of a good can be imported. C. tax on an exported good. D. tax on an imported good.
D
An internet radio broadcast is a. excludable and rival in consumption. b. excludable and not rival in consumption. c. not excludable and rival in consumption. d. not excludable and not rival in consumption.
D
At a price of $1.00, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.20, the coffee shop would be willing to supply 150 cinnamon rolls per day. Using the midpoint method, the price elasticity of supply is about A. 0.45 B. 0.90 C. 1.11 D. 2.20
D
Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly is often A. not in the best interest of society. B. one that fails to maximize total economic well-being. C. inefficient. D. All of the above are correct.
D
For a particular good, a 10 percent increase in price causes a 15 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good? A. There are no close substitutes for this good. B. The good is a necessity. C. The market for the good is broadly defined. D. The relevant time horizon is long.
D
If a firm produces nothing, which of the following costs will be zero? A. total cost B. fixed cost C. opportunity cost D. variable cost
D
If a tax shifts the supply curve downward (or to the right), we can infer that the tax was levied on A. buyers of the good. B. sellers of the good. C. both buyers and sellers of the good. D. We cannot infer anything because the shift described is not consistent with a tax.
D
If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price results in a A. 0.4 percent decrease in the quantity demanded. B. 2.5 percent decrease in the quantity demanded. C. 4 percent decrease in the quantity demanded. D. 40 percent decrease in the quantity demanded.
D
In a market economy, supply and demand are important because they A. play a critical role in the allocation of the economy's scarce resources. B. determine how much of each good gets produced. C. can be used to predict the impact on the economy of various events and policies. D. All of the above are correct.
D
In the case of perfectly inelastic demand, A. the change in quantity demanded equals the change in price. B. the percentage change in quantity demanded equals the percentage change in price. C. infinitely-large changes in quantity demanded result from very small changes in the price. D. quantity demanded stays the same whenever price changes.
D
Sam sells soybeans to a broker in Chicago, Illinois. Because the market for soybeans is generally considered to be competitive, Sam maximizes his profit by choosing A. to produce the quantity at which average variable cost is minimized. B. to produce the quantity at which average fixed cost is minimized. C. to sell at a price where marginal cost is equal to average total cost. D. the quantity at which market price is equal to Sam's marginal cost of production.
D
Suppose Jim and Tom can both produce baseball bats. If Jim's opportunity cost of producing baseball bats is lower than Tom's opportunity cost of producing baseball bats, then A. Tom must have an absolute advantage in the production of baseball bats. B. Jim must have an absolute advantage in the production of baseball bats. C. Tom has a comparative advantage in the production of baseball bats. D. Jim has a comparative advantage in the production of baseball bats.
D
Taxes on labor have the effect of encouraging A. workers to work more hours. B. the elderly to postpone retirement. C. second earners within a family to take a job. D. unscrupulous people to take part in the underground economy.
D
The greater the price elasticity of demand, the A. more likely the product is a necessity. B. smaller the responsiveness of quantity demanded to a change in price. C. greater the percentage change in price over the percentage change in quantity demanded. D. greater the responsiveness of quantity demanded to a change in price.
D
The impact of one person's actions on the well-being of a bystander is called: A. an economic dilemma B. deadweight loss C. a multi-party problem D. an externality
D
The market for corn in Wheatland consists solely of domestic buyers of corn and domestic sellers of corn if A. consumer surplus equals producer surplus in the Wheatland corn market. B. total surplus exceeds consumer surplus in the Wheatland corn market. C. Wheatland permits international trade in corn. D. Wheatland forbids international trade in corn.
D
Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 2. Which of the following events is consistent with a 0.1 percent increase in the price of the good? A. The quantity of the good demanded decreases from 250 to 150. B. The quantity of the good demanded decreases from 200 to 100. C. The quantity of the good demanded decreases by 0.05 percent. D. The quantity of the good demanded decreases by 0.2 percent.
D
When a buyer's willingness to pay for a good is equal to the price of the good, the A. buyer's consumer surplus for that good is maximized. B. buyer will buy as much of the good as the buyer's budget allows. C. price of the good exceeds the value that the buyer places on the good. D. buyer is indifferent between buying the good and not buying it.
D
Which of the following is not a common resource? a. clean air b. clean water c. open grazing land d. national defense
D
Which of the following is not an example of a public policy? A. rent-control laws B. minimum-wage laws C. taxes D. equilibrium laws
D
Which of the following would be the most likely result of a binding price ceiling imposed on the market for rental cars? A. frequent rental programs such as "Rent nine times and the tenth rental is free!" B. enhanced maintenance programs to promote the high quality of the cars C. free gasoline given to people as an incentive to a rent a car D. slow replacement of old rental cars with newer ones
D
n general, elasticity is a measure of A. the extent to which advances in technology are adopted by producers. B. the extent to which a market is competitive. C. how firms' profits respond to changes in market prices. D. how much buyers and sellers respond to changes in market conditions.
D
