Micro

each customer a price equal to his or her maximum willingness to pay.

Perfect price discrimination is characterized by charging

6$

Portia produces and sells headbands. Her marginal cost for one headband is $6, and her average cost is $4. She gains producer surplus only when she sells headbands at a price above:

government-designated burden of a tax payment.

The statutory burden of a tax is the:

developing countries can benefit from trade as much as developed countries can.

The theory of comparative advantage predicts that:

tendency to overconsume common resources.

The tragedy of the commons is the:

forgone wages and forgone interest.

The two main types of implicit opportunity costs are:

large; a smaller share

When the price elasticity of supply is _____ relative to the price elasticity of demand, then sellers bear _____ of the economic burden of a tax.

no player has an incentive to unilaterally change strategies.

A Nash equilibrium occurs when

The market price will fall.

A binding price floor in a market is removed. Which of the following is likely to occur as a result?

always above the equilibrium price.

A binding price floor is:

Haggling

A furniture store owner allows its salespersons to lower a price by up to ten percent to gain a sale if the buyer appears price sensitive. The owner also instructs salespersons to confer with management about the possibility of higher discounts if needed to make a sale. This example of individually negotiated prices is a form of price discrimination known as

someone can enjoy the benefits of the good without bearing the costs.

A good has a free-rider problem when:

nonrival

A good is characterized as _____ when one person's use of the good does not reduce another person's ability to use the same unit of the good.

a monopolistically competitive market.

A market with a large number of sellers and a high level of product differentiation is known as

many firms with no control over the market price producing identical products.

A perfectly competitive industry is characterized by

the maximum price that a seller can charge in a market.

A price ceiling is:

reducing; the price is above its marginal cost

A price-discriminating company can attract more customers by _____ price, as long as _____.

minimum or maximum quantity that can be sold.

A quantity regulation is a:

demand curve to the right.

A subsidy for buyers of a product shifts the:

their own costs and benefits; the effects of their actions on others

Externalities tend to occur because decision makers consider _____ and do NOT consider _____.

They are price-sensitive.

Hassan is a student who received a coupon to buy pizza from Pizza House at $4 off the regular price. Students at Hassan's school seem to receive the coupons frequently. Which of the following is an assumption that the owners of Pizza House are making about students at Hassan's school?

Mary has a comparative advantage in baking cakes.

If Mary can bake a cake at a lower opportunity cost than Sarah can, then:

Above the price and below the demand curve

In a market graph, consumer surplus is the area:

be underproduced

In a market system, public goods would:

the marginal social benefit exceeds the marginal social cost.

In order to maximize economic efficiency society should produce another unit of a good if:

the change in total costs from producing one more unit of output.

Marginal cost is defined as

an externality.

Marjean walks to work every day along a busy road. As she does so, she breathes in the fumes of many cars, often arriving at work coughing. The economic term for the impact of the cars on Marjean is:

excludable and nonrival; nonexcludable and nonrival

The difference between a club good and a public good is that a club good is _____ and a public good is _____.

burden created by the change in after-tax prices faced by buyers and sellers.

The economic burden of a tax is the:

during which all inputs can be varied.

The long run is best defined as a time period

the economic surplus

The marginal benefit minus the marginal cost equals:

the law of diminishing returns.

The marginal cost curve often decreases at first and then starts to increase. This is explained by

extra benefit enjoyed by the buyer of one extra unit of a good or service.

The marginal private benefit is the:

price minus marginal cost.

The producer surplus on a unit sold equals:

Quanity discount

Bayside Shoe Shop offers a BOGO (buy one, get one) special where customers can buy one pair at full price and get another pair at half-price. This form of price discrimination is referred to as

supply is more elastic than demand.

Buyers bear a smaller incidence of the tax when:

overproduce

By contrast with a market that produces the socially optimal output, a market with negative externalities will:

0$

Chin purchases five protein bars at a price of $3 each. The marginal benefit he receives from each bar is $5 for the first bar, $4.50 for the second bar, $4 for the third bar, $3.50 for the fourth bar, and $3 for the fifth bar. The marginal cost of producing the bars is $2 each. What is Chin's consumer surplus on the fifth bar?

high; low

Countries benefit from trade by importing goods in which their opportunity costs are relatively _____ and exporting goods in which their opportunity costs are relatively _____.

The product cannot be resold

Price discrimination can be successful only if

a more efficient output

Price discrimination leads to _____ than a one-price system.

supply is more elastic relative to demand.

Sellers bear a smaller incidence of a tax when:

Reservation Price

Selling alternative versions of a product at different prices is a way to identify the _____ of customers and charge them different prices.

normative

Statements about what option should be chosen are _____ statements.

tax on imported products.

A tariff is a:

supply curve to the left.

A tax on sellers shifts the:

positive

Analysis that describes what would happen if various actions were taken is _____ analysis.

fall

As output rises, average fixed costs:

Mexico; Canada

One hour of labor in Mexico can produce 10 avocados or 20 bananas. One hour of labor in Canada can produce four avocados or 16 bananas. _____ has a comparative advantage in the production of avocados. _____ has a comparative advantage in the production of bananas.

the existence of at least one fixed input.

One thing that distinguishes the short run and the long run is

at a price below the value of the benefit they receive from the item.

People gain consumer surplus when they purchase an item:

private goods

What type of good is rival and excludable?

the hurdle method; reservation price

When a seller offers lower prices to those buyers who are willing to overcome some obstacle to get it, the seller is using _____ to get buyers to reveal their _____.

some sellers will exit the market, reducing average seller losses.

When firms in a market with free entry and exit experience economic losses, then:

deadweight loss

When the economic surplus in a market is less than it would be if the market were efficient, the market is experiencing:

large; a smaller share

When the price elasticity of demand is _____ relative to the price elasticity of supply, then buyers bear _____ of the economic burden of a tax.

new sellers will enter the market.

When the typical seller in a market has economic profits, then:

an online course

Which of the following goods would be nonrival?

If the government raises taxes, people will have less income available for purchases and saving.

Which of the following is a positive economic statement?

Most passengers traveling on an airplane pay different prices for their tickets.

Which of the following is an example of a company practicing price discrimination?

A city enforces zoning laws that restrict the number of housing units.

Which of the following is an example of a quantity quota?

We should protect the environment.

Which of the following statements is based on normative analysis?

a siren tornado warning systemterm-35

Which of the following would be both nonrival and nonexcludable?

the cost-benefit principle

Which principle helps buyers and sellers make decisions about whether to trade?

normative; positive; normative

A government leader determines that the 5% unemployment rate is too high. She asks her staff to research policy options to reduce the rate and a few weeks later is given four options. Each option would reduce the rate by a different amount and at a different cost. The leader studies the options and chooses the one she feels is best for the country. In order, what types of analysis were used in this three-stage chain of events?

Although enjoying the exhibits might be nonrival, the experience is excludable because admittance could easily be limited to those who pay.

A government uses taxes to build and maintain a museum, and citizens can visit the museum without paying an admission fee. Which of the following considerations implies that visiting a museum is NOT a public good?

the economic surplus at the efficient quantity minus the economic surplus at the actual quantity.

A market's deadweight loss is calculated as:

a government payment designed to encourage particular purchases or productive activities.

A subsidy is a:

5$

Chin purchases five protein bars at a price of $3 each. The marginal benefit he receives from each bar is $5 for the first bar, $4.50 for the second bar, $4 for the third bar, $3.50 for the fourth bar, and $3 for the fifth bar. The marginal cost of producing the bars is $2.50 each. What is Chin's total consumer surplus from the five bars that he purchased?