Microeconomics final

Which of the following statements is correct?

c. Sales taxes and property taxes are the two most important revenue sources for state and local governments.

The idea that "externalities arise because of something of value has no price attached to it" is associated with

c. both public goods and common resources.

For a profit-maximizing monopolistically competitive firm, price exceeds marginal cost in

c. both the short run and the long run.

If the total cost curve gets steeper as output increases, the firm is experiencing

c. diminishing marginal product.

In the short run, a firm that produces and sells house paint can adjust

c. how many workers to hire.

The competitive firm's short-run supply curve is that portion of the

c. marginal cost curve that lies above average variable cost.

Goals of efficiency and equity in tax policy are

c. often in conflict with each other.

Firms in industries that have competitors but do not face so much competitors that they are price takers are operating in either a(n)

c. oligopoly or monopolistically competitive market.

The accountants hired by the Brookside Racquet Club have determined total fixed cost to be $75,000, total variable cost to be $130,000, and total revenue to be $145,000. Because of this information, in the short run, the Brookside Racquet Club should

c. stay open because shutting down would be more expensive.

A person's average tax rate equals her

c. tax obligation divided by her income.

In order to explain the changing gap in earnings between skilled and unskilled workers in recent years, economists have proposed two hypotheses. One hypothesis emphasizes

c. technological process.

Susan won $2,000 at the blackjack tables on her birthday. Her winnings are an example of

c. transitory income.

Comparing the United States household income distribution to other counties is

d. problematic, because countries collect data in different ways.

A streetlight is a

d. public good.

A monopolist can sell 300 units of output for $45 per unit. Alternatively, it can sell 301 units of output for $44.60 per unit. The marginal revenue of the 301st unit of output is

b. -$75.40.

Which of the following factors affects the marginal productivity of a worker?

a. human capital

The output effect describes the situation when a monopolist sells more output and, all else equal, total revenue

a. increases.

The lack of progress in reducing the poverty rate since the early 1970s is most closely related with which of the following factors?

a. increasing income inequality

Table 20-2. According to the table, from 1950-2000, the Hapland income distribution became

a. less equal.

Table 12-10. If Miss Kay has $80,000 in taxable income, her average tax rate is

b. 20.2%

The state government requires all persons to pay 5% of their incomes in income tax. This is an example of:

b. a proportional tax

The Tragedy of the Commons can be correctly by

b. assuming property rights to individuals.

A firm produces 300 units of output at a total cost of $1,000. If fixed costs are $100,

b. average variable cost is $3.

Scenario 19-6. If some families strongly prefer their children to be tutored by male tutors, then

b. biased tutoring centers can charge more for tutoring to offset the higher cost of hiring only male tutors

Suppose that a rare virus infects and kills a significant percentage of the population. Assuming that land and labor are complements in a farming production function, what would happen to the wages earned by workers and the rents earned by landowners?

c. Wages would increase, and rents would decrease.

Table 18-21. Suppose the firm each box of envelopes that it produces for $7.50. How many workers should the firm hire?

c. 4

Table 17-11. What is the socially efficient quantity of the product?

c. 50

Figure 16-9. As the figure is drawn, the firm is an

c. a short-run equilibrium as well as a long-run equilibrium.

To be successful, a cartel must

c. agree on the total level of production and on the amount produced by each member.

Individual Retirement Accounts and 401(k) plans make the current U.S. tax system

a. more like a consumption tax and so more like the tax system of many European counties.

Table 17-27. If both countries follow a dominant strategy, the value of trade flows benefits for the United States will be

b. $65 b.

Table 17-1. If Rochelle and Alec operate as a profit-maximizing monopoly in the market for water, how many gallons of water will be produced and sold?

c. 600

Scenario 19-3. Which of the following statements would weaken the discrimination complaint against Eddy's Hardware?

c. Farm boys are generally less educated than cowboys in the field or hardware.

Figure 15-19. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to

a. $0

Table 17-7. Assume that there are two profit-maximizing internet radio providers operating in this market. Further assume that they are not able to collude on the price and quantity of subscriptions to sell. How much profit will each firm earn when this market reaches a Nash equilibrium?

a. $12,000

Scenario 15-6. How much additional profit can the concert promoters earn by charging each customer their willingness to pay relative to charging a flat price of $150 per ticket?

a. $25,000

Table 13-3. The marginal product of the fourth worker is

a. 10 units.

Table 17-2. If this market for water were perfectly competitive instead of monopolistic, how many gallons of water would be produced and sold?

a. 12 gallons

The poverty rate in Abbyville is

a. 12 percent.

Figure 13-4. Which of the above marginal cost curves reflects diminishing marginal product?

a. A

Which of the following sets of circumstances is likely to provide the best evidence in support of the theory of efficiency wages?

a. Workers in the market are unskilled and not represented by a union, and their wage exceeds both the equilibrium wage and the minimum wage.

Suppose that in 2020 the average citizen's federal tax bill is $12,466, and total federal spending is $10,824 per person. In 2020, the federal government will have

a. a budget surplus.

Tom and Eric went to trade school at the same time. Each graduated with an associate's degree. They have received similar performance evaluations. Eric's employer is not a good business manager, and the sales manager lost a major deal. Because of the decrease in profits, the employees did not receive raises last year. Tom's employer is a savvy business manager and the sales manager is experienced and works hard. If Tom has higher earnings than Eric, the difference is most likely a function of

a. chance.

Table 13-12. Eileen has received an order for 3,000 boxes of earrings for next week. If she expects that the trend in the marginal product of labor will continue in the same direction, it is most likely that her best decision will be to

a. not commit to meeting the order util she can move to a larger room and hire more workers to produce the earrings.

A market structure with only a few sellers, each offering similar or identical products, is known as

a. oligopoly.

The relationship between advertising and product differentiation is

a. positive; the more differentiated the product, the more a firm is likely to spend on advertising.

For a worker, the opportunity cost of an hour of leisure

a. rise by $8 when his wage rises by $8 per hour.

According to proponents of the signaling theory of education,

a. schooling has no real productivity benefit.

Scenario 19-6. If customers do not discriminate between make and female tutors, then

a. the equilibrium wage for male and female tutors will eventually by identical.

Suppose that monopolistically competitive firms in a certain market are experiencing losses. In the transition from this initial situation to a long-run equilibrium,

a. the number of firms in the market decreases.

Table 20-13. If the poverty rate is 19%, where is the poverty line in Widgetapolis?

a. under $39,000

Which of the following is an example of human capital for a college economics professor?

a. years of experience

Scenario 13-19. The firm's fixed cost was

b. $12,000.

Suppose Ron is willing to pay $200 to see a professional basketball game and Felix is willing to pay $150. Assume the normal price of a ticket is $125. The local government decides to impose a $35/ticket surcharge to raise revenue, causing the ticket price to rise to $160. The resulting deadweight loss is:

b. $25

Scenario 16-3. What price should Peter charge per double scoop ice cream cone to maximize his profit?

b. $4.40

Table 13-7. What is the value of A?

b. $50

Consider the market for university economics professors. Suppose the opportunity cost of going to graduate school to get Ph.D. in economics decreases for many individuals. Suppose it generally takes about five years to get a Ph.D. in economics. Holding all else constant, in five years the equilibrium wage for the university economics professors will

b. decrease.

The "beauty premium" can be explained by the fact that

b. in some occupations, physical attractiveness of workers may enhance the value of their marginal product.

The factors of production are best defined as the

b. inputs used to produce goods and services.

A monopolistically competitive market

b. is imperfectly competitive, but not all imperfectly competitive markets are monopolistically competitive.

Table 11-4. Suppose the cost to plant each tree is $220 and the 4 homeowners have agreed to split all tree-planting costs equally. Which homeowner(s) would be in favor of planting at least 3 trees?

b. only Benitez and Chen

If your wage increases from $10 per hour to $15 per hour, then your

b. opportunity cost of an hour of leisure increases by $5 per hour.

A free rider is a person who

b. receives the benefit of a good avoids paying for it.

Which group (or groups) would be the most upset by wide variation in the income distribution?

b. utilitarians and liberals

In the long run, each firm in a competitive industry earns

b. zero economic profits.

Table 15-12. At what price will the firm maximize its profit?

c. $3

Tony is the owner of Tony's Taqueria. Tony is a profit-maximizing owner whose firm operates in a competitive marker. An additional worker cost Tony $200 and has a marginal productivity of 40 tacos. Assuming no other variable costs, what is the marginal cost of a taco?

c. $5

Table 15-7. What is the total revenue from selling 8 pairs of shoes?

c. $720

Table 14-12. What is the marginal revenue from selling the 5th unit?

c. $80

Before considering any public project, the government should

c. (i) and (ii) only

Table 13-2. What is the marginal product of the third world?

c. 100 units

Suppose the government imposes a tax of 20 percent on the first $50,000 of income and 30 percent on all income above $50,000. What is the marginal tax rate when income is $60,000?

c. 30 percent

The poverty rate for female households with no spouse present is approximately

c. 30 percent.

Table 20-11. What is the poverty line for a family of three with one child?

d. $22,891

Table 14-6. What is the total revenue from selling 4 units?

d. $480

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What are the tax liability and the marginal tax rate for a person whose income is $50,000?

d. $6,000 and 20 percent, respectively

Competitive firms differ from monopolies in which of the following ways?

d. (i), (ii), and (iii)

Table 17-6. The socially efficient level of water supplied to the market would be

d. 300 gallons.

As the number of sellers in an oligopoly becomes very large,

d. All of the above are correct.

Figure 13-9. In the long run, the firm can operate on which of the following average total cost curves?

d. All of the above are correct.

Figure 16-10. If the firm were to produce 154.92 units of output,

d. All of the above are correct.

Firms operating in competitive markets produce output levels where marginal revenue equals

d. All of the above are correct.

The market wage could be higher than the equilibrium wage if a worker

d. All of the above are correct.

Why does a firm in a competitive industry charge the market price?

d. All of the above are correct.

Table 17-17. Which of the following outcomes represent the Nash equilibrium in this game?

d. Both a and b are correct.

Which of the following statements is correct?

d. Game theory is not necessary for understanding competitive or monopoly markets.

Figure 14-2. Which of the four pieces corresponds to a firm earning negative economic profits in the short run and shutting down?

d. Pd

Which of the following statements is not correct?

d. The government should always intervene to improve monopoly inefficiency.

Which of the following represents the best government policy to reduce the deadweight loss associated with a monopolistically competitive market?

d. There is no government policy that can reduce deadweight loss without creating other problems.

Table 17-27. If the trade negotiators are able to communicate effectively about the consequences of various trade polices, (i.e., enter into an agreement about the policy they should adopt), then we would expect the countries to agree to which outcome?

d. United States $130 b and Farland $275 b

An example of a private good would be

d. a sleeping bag.

Which of the following would be considered a private good?

d. a swimming suit

Why do economists study sports teams when looking for evidence of labor-market discrimination?

d. because the wide availability of performance statistics allows economics to control for individual player productivity in ways that are difficult to do for other types of firms

Figure 16-9. Efficient scale is reached

d. beyond 133.33 units.

Land of Many Lakes (LML) sells butter to a broker in Albert Lea, Minnesota. Because the market for butter is generally considered to be competitive, LML does not

d. choose the price at which it sells its butter.

Suppose that a firm's long-run average total costs of producing hand-crafted chairs is $300 when it produces 10,000 chairs and $325 when it produces 11,000 chairs. For this range of output, the firm is likely experiencing

d. coordination problems.

If the value of in-kind transfers are taken into account, the number of families living in poverty in the United States would

d. decrease by about 10 percent.

Figure 19-6. This figure depicts labor demand and supply for the widgets industry. The equilibrium market wage is $15. If a labor union forms within the widget industry and subsequently negotiates an hourly wage of $20.00, then there will be an

d. excesses supply of 50 labor hours.

Suppose the long-run supply curve for a good is upward-sloping. The upward slope could be explained by

d. the fact that a resource used in the product of the good is available only in limited quantities.

If your income is $40,000 and your income tax liability is $5,000, your marginal tax rate is

d. unknown. We do not have enough information to answer this question.