Microeconomics True/false Final Exam
a monopolist produces where P=MC=MR
false: a monopolist produces where P > MC =MR
A decrease in the price of creamer will increase the equilibrium price and decrease the equilibrium quantity in the market for coffee
false: equilibrium quantity would increase, not decrease
When the market price is above the equilibrium price, suppliers are unable to sell all they want to sell
true
a monopoly creates a deadweight loss to society because it produces less output than the socially efficient level
true
during the life of a drug patent, the monopoly pharmaceutical firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost
true
If the price of Coca Cola declines the demand for Coca Cola will increase
False: If the price of Coca Cola decline the quantity demanded for Coca Cola will increase
when a good is taxed, the tax revenue collected by the government equals the decrease in the welfare of buyers and sellers caused by the tax
False: also a deadweight loss
Figure 2-14: Point B represents an inefficient outcome for this economy
True
Suppose you sell a kayak for $600 but you were willing to sell it for $450. The buyer was willing to pay $650. Total surplus is $200.
True
for a firm operating in a perfectly competitive industry, total revenue, marginal revenue, and average revenue are all equal
false: for a firm operating in a perfectly competitive industry, PRICE, marginal revenue, and average revenue are all equal
Figure 6-26: a price ceiling at $70 would create a shortage of 40 units
false: no impact
Figure 2-14: It is possible for this economy to produce 80 doghouses
false: ppf limits production to less than 75 doghouses
the lower the price, the lower the consumer surplus, all else equal
false: the lower the price the higher the consumer surplus
Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers
false: the side that is less elastic bears the majority of the tax burden
in the short run, if a firm produces nothing, total costs are zero
false: there will still be fixed costs
along the elastic portion of a linear demand curve, total revenue rises as price rises
false: total revenue decreases as price rises
A price ceiling set below the equilibrium price causes a shortage in the market
true
suppose hank and tony can both produce corn. If Hank's opportunity cost of producing a bushel of corn is 2 bushels of soybeans and Tony's opportunity cost of producing a bushel of corn is 3 bushels of soybeans, then Hank has the comparative advantage in the production of corn
true
the housing shortages caused by rent control are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run
true