econ 2106 final

(Figure: The Market for Butter) Look at the figure The Market for Butter. The figure represents a competitive market for butter. If a government price floor at $1.40 is imposed on this market, an inefficiency will result in the form of a: A) surplus of 4.5 million pounds of butter. B) surplus of 6.0 million pounds of butter. C) shortage of 6.0 million pounds of butter. D) shortage of 4.5.million pounds of butter.

B)- surplus of 6 million pounds of butter

The price elasticity of demand is computed as the percentage change in the: quantity demanded divided by the percentage change in the quantity supplied. price divided by the percentage change in the quantity demanded. quantity demanded divided by the percentage change in income. quantity demanded divided by the percentage change in the price.

D)- quantity demanded divided by the percentage change in the price

A monopolistically competitive industry, such as corn snack chips, and a perfectly competitive industry, like wheat farming, are alike in that: firms in both types of industries produce identical products. firms in both types of industries produce similar but not identical products. barriers to entry in both industries are large. there are many firms in each industry.

D)- there are many firms in each industry

the effect of a tremendous natural disaster can be shown by- A) a point inside of the production possibility frontier. B) an outward shift of the production possibility frontier. C) a movement from one point to another along the production possibility frontier. D) an inward shift of the production possibility frontier.

D- inward shift of the production possibility frontier

If demand is elastic, then: A) the quantity effect dominates the price effect, and a decrease in the price causes total revenue to rise. B) the price effect dominates the quantity effect, and a fall in the price will cause total revenue to rise. C) the price effect dominates the quantity effect, and an increase in the price will cause total revenue to rise. D) the quantity effect dominates the price effect, and an increase in the price causes total revenue to rise

A)- quantity effect dominates price effect, and a decrease in price causes total revenue to rise

The demand curve for a monopoly is: A) the industry demand curve. B) horizontal because no one can enter. C) perfectly elastic. D) the sum of the supply curves of all of the firms in the monopoly's industry

A)- the industry demand curve

Which of the following is true? A) If price falls below average variable cost, the firm will shut down in the short run. B) Total revenue and marginal revenue are the same in perfect competition. C) Economic profit per unit is found by subtracting MC from price. D) Economic profit is always positive in the long run.

A)- if price falls below AVC, the firm will shut down in the short run

A firm that faces a downward-sloping demand curve is a: price-setter. quantity-minimizer. quantity-taker. price-taker.

A)- price setter

To maximize profit, a monopolistically competitive firm should produce the level of output at which: A) marginal revenue equals marginal cost. B) price equals marginal cost. C) price equals total cost. D) marginal revenue equals price.

A)- MR= MC

In perfect competition, the profit-maximizing level of output occurs where the: MR = MC above minimum AVC. price < marginal cost above minimum AVC. MR > MC below minimum AVC. P = MR above MC.

A)- MR= MC, above minimum AVC

Suppose a monopoly is producing at the profit-maximizing level of output. At that level of output: A) marginal revenue equals marginal cost. B) marginal revenue is greater than marginal cost. C) marginal revenue is less than marginal cost. D) price is less than marginal cost.

A)- MR=MC

(Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly. The profit-maximizing price is price: N. O. P. Q.

A)- N

The demand for meals at a local Applebee's will shift to the left if: the Olive Garden offers a 10% discount coupon in the local newspaper. the price of a meal at Applebee's rises. local incomes increase and Applebee's is a normal good. the price of gasoline falls in the local area.

A)- Olive Garden offers a 10% discount coupon

An inward shift in the U.S. economy's production possibility frontier could represent which of the following? U.S. workers moving to Canada U.S. workers moving from New Jersey to Massachusetts U.S. economic growth U.S. economic growth as workers move to different states

A)- US workers moving to Canada

A rancher in Oklahoma decides to raise the price of her beef by 19% over the prevailing market price. If the demand for beef is perfectly elastic, this rancher's quantity demanded will: fall to 0. not change. fall slightly. increase slightly.

A)- fall to 0

(Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm. This firm's profit per unit is: A) $5. B) $13. C) $14. D) $20.

B)- $13

(Figure: The Market for Hamburgers) Look at the figure The Market for Hamburgers. If the market is originally in equilibrium and the government imposes an excise tax of $0.80 per unit of the good sold, the government's revenue from the tax will be: A) $175. B) $240. C) $105. D) $90.

B)- $240

(Figure: A Perfectly Competitive Firm in the Short Run) Look at the figure A Perfectly Competitive Firm in the Short Run. The lowest price that will yield zero economic profit is indicated by the letter: A) F. B) E. C) N. D) G

B)- E

(Figure: Prices, Cost Curves, and Profits) Look at the figure Prices, Cost Curves, and Profits. If the price is P1 and the firm decides to produce at output Q1, then the firm earns: A) a loss equal to (ba) × Q1. B) a loss equal to (ca) × Q1. C) a loss equal to (bc) × Q1. D) zero.

B)- a loss equal to (ca) X Q1

The effect of an increase in productive inputs such as labor and capital can be shown by: a point inside of the production possibility frontier. an outward shift of the production possibility frontier. a movement from one point to another along the production possibility frontier. an inward shift of the production possibility frontier.

B)- an outward shift of the production possibility frontier

(Figure: The Market for Blue Jeans) Look at the figure The Market for Blue Jeans. The government recently levied a $10 tax on the producers of blue jeans. What area or areas in the graph identify tax revenue? a + b + c b + d c + e d + e + f

B)- b + d

(Figure: Monopolistic Competition VI) In the figure Monopolistic Competition VI, in the long run firms will: enter this market until all firms earn a zero economic profit. exit this market until all remaining firms earn a zero economic profit. enter this market, leading to excess profit for all the firms. exit this market, leading to excess profit for all the remaining firms.

B)- exit this market until all remaining firms earn a 0 economic profit

(Figure: Perfect Competition) Look at the figure Perfect Competition. In the figure, a perfect competitor will produce at: A) the intersection of marginal revenue and marginal cost. B) the intersection of demand and marginal cost. C) the intersection of demand and average total cost. D) the intersection of marginal revenue and average total cost.

B)- intersection of demand and MC

Given any downward-sloping demand curve for a good, the more price-elastic the supply curve, the ________ equilibrium output will fall and the ________ will be the deadweight loss when the government imposes an excise tax. more; smaller more; larger less; smaller less; larger

B)- more; larger

Which of the following is true? A) If the price falls below the average total cost, the firm will shut down in the short run. B) Price and marginal revenue are the same in perfect competition. C) Economic profit per unit is found by subtracting AVC from the price. D) Economic profit is always positive in the short run.

B)- price and marginal revenue are the same in perfect competition

Suppose the price elasticity of demand for cheeseburgers equals 0.37. This means the overall demand for cheeseburgers is: price elastic. price inelastic. price unit-elastic. perfectly price inelastic.

B)- price inelastic

A shift of the demand curve for thin-crust pizza would not be caused by a change in: buyers' incomes. the price of thin-crust pizza. the price of thick-crust pizza. the popularity of thin-crust pizza.

B)- price of thin-crust pizza

On a linear demand curve, the price elasticity of demand at higher prices will be: A) price-inelastic. B) price-elastic. C) price unit-elastic. D) negative.

B)- price- elastic

The price of microchips used to produce computers falls. As a result, the equilibrium price of computers ________ and the equilibrium quantity ________. rises; increases rises; decreases falls; decreases falls; increases

B)- rises; decreases

A firm's marginal cost is: the ratio of the change in fixed cost to the change in the quantity of output. the slope of the total cost curve. the slope of the average variable cost curve. the ratio of the change in total output to the change in the quantity of labor.

B)- slope of the total cost curve

(Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm. This firm's price per unit is: $20. $26. $29. $35.

C)- $29

(Table: Total Cost for a Perfectly Competitive Firm) Look at the table Total Cost for a Perfectly Competitive Firm. In the short run, the firm will produce, but at a loss, if the price is: A) $2.00. B) $2.50. C) $3.50. D) $4.50.

C)- $3.50

The Atlanta Symphony wants to make sure that its concerts are affordable for all residents of Atlanta and therefore prices all its tickets at $25 each. However, outside Symphony Hall, people can sell the same tickets for $75 or more. The true cost to the concertgoer of a ticket to the symphony is at least: $25. $50. $75. $100.

C)- $75

(Figure: Computing Monopoly Profit) Look at the figure Computing Monopoly Profit. The profit-maximizing price is ________ and will generate total economic profit of ________. P2; EF P3; the rectangle P1P2FG P3; the rectangle P2P3EF P3; EF

C)- P3; the rectangle P2P3EF

Which of the following would shift the demand curve for new textbooks to the right? a decrease in the price of paper a fall in the price of used textbooks an increase in college enrollment a fall in the price of new textbooks

C)- an increase in college enrollment

The main characteristic that distinguishes monopolistic competition from perfect competition is: A) easy entry and exit. B) many firms. C) differentiated products. D) that in perfect competition, to maximize profits, a firm will produce where MR = MC.

C)- differentiated products

The marginal revenue received by a firm in a perfectly competitive market: is greater than the market price. is less than the market price. is equal to its average revenue. increases with the quantity of output sold.

C)- equal to its average revenue

If Marie Marionettes is operating under conditions of diminishing marginal product, the marginal costs will be: A) equal to average total cost. B) decreasing. C) increasing. D) constant.

C)- increasing

In economics, the short run is defined as: less than 1 year. less than 6 months. period in which some inputs are considered to be fixed in quantity. period in which some inputs are fixed, but it cannot exceed 1 year.

C)- period in which some inputs are considered to be fixed in quantity

Which of the following is true? Profit-maximizing behavior occurs only in perfectly competitive markets. Additional units of a good should be produced as long as MR < MC. The profit-maximizing solution occurs where MR = MC. The profit-maximizing solution occurs where MR > MC.

C)- profit maximizing solution occurs where MR= MC

Consider two competing motorcycle manufacturers, Harley-Davidson and Honda. If Harley-Davidson raises the price of its motorcycles, we can expect: a shift to the right in the supply curve of Hondas and lower prices for Hondas. a shift to the left in the supply curve of Hondas and higher prices for Hondas. a shift to the right in the demand curve for Hondas and higher prices for Hondas. a shift to the left in the demand curve for Hondas and lower prices for Hondas.

C)- shift to the right in the demand curve for Hondas and higher prices for Hondas

Which of the following is true if there is a decrease in the supply of ice cream? A) It's impossible to tell what will happen to consumer surplus. B) There is an increase in consumer surplus. C) There is a decrease in consumer surplus. D) There is no change to consumer surplus

C)- there is a decrease in consumer surplus

Suppose the marginal cost curve in the short run first decreases, then reaches a minimum, and then increases. If we are at an output where marginal cost is decreasing, then: marginal product must be increasing. average variable cost must be decreasing. average total cost must be increasing. marginal product must be increasing and average variable cost must be decreasing.

D)- marginal product must be increasing and AVC must be decreasing

Which of the following statements about the differences between monopoly and perfect competition is incorrect? A) A monopolist has market power, while a perfect competitor does not. B) Unlike a perfectly competitive firm, a monopoly can make positive economic profits in the long run. C) A monopoly will charge a higher price and produce a smaller quantity than a competitive market with the same demand and cost structure. D) Monopoly profits can continue to exist in the long run because the monopoly produces more and charges a higher price than a comparable perfectly competitive industry.

D)

(Figure: Cost Curves for Corn Producers) Look at the figure Cost Curves for Corn Producers. The market for corn is perfectly competitive, and an individual corn farmer faces the cost curves shown in the figure. If the price of a bushel of corn in the market is $14, then the farmer will produce ________ of corn and earn an economic ________ equal to _________. A) 4 bushels; profit; just less than $80 per bushel B) 2 bushels; profit; $0 C) 2 bushels; loss; just more than $80 per bushel D) 4 bushels; profit; $0

D)- 4 bushels; profit; $0

(Figure: The Market for Blue Jeans) Look at the figure The Market for Blue Jeans. The government recently levied a $10 tax on the producers of blue jeans. What area or areas in the graph identify consumer and producer surplus after the tax was levied? a + b + c a + b + c + d + e + f d + e + f a + f

D)- a + f

Price-takers are individuals in a market who: select a price from a wide range of alternatives. select the lowest price available in a competitive market. select the average of prices available in a competitive market. have no ability to affect the price of a good in a market.

D)- have no ability to affect the price of a good in a market

Which of the following is true? A) Instead of applying the marginal decision rule, monopoly firms just set the price as high as possible. B) If demand is downward sloping, P = MR. C) If demand is downward sloping, P = ATC. D) If demand is downward sloping, P > MR.

D)- if demand is downward sloping, P> MR

Expenses associated with factors of production may be: implicit costs. opportunity costs. explicit costs. implicit costs, opportunity costs, or explicit costs.

D)- implicit, opportunity, or explicit costs

Figure: Strawberries and Submarines. As the economy moves from point A to D, it will find that the opportunity cost of each additional submarine-

doubles