Econ 2302 (micro)

Harry owns a barber shop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per 8-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. The MRP of the second barber is

$108

The following is a total-product schedule for a resource. Assume that the quantities of other resources the firm employs remain constant. If the product the firm produces sells for a constant $2 per unit, the marginal revenue product of the third unit of the resource is

$24

Assume labor is the only variable input and that an additional input of labor increases total output from 72 to 78 units. If the product sells for $6 per unit in a purely competitive market, the MRP of this additional worker is

$36

Wayne's Jacket Shop sells Wayne's jackets for $20 each. Wayne finds that his total revenues change according to the number of workers he hires, as shown in the table below. What is the marginal revenue product of the third worker?

$600

Use the following graph, where Sd and Dd are the domestic supply and demand curves for a product, to answer the next question. The world price of the product is $6. If the market is open to international trade but there is a tariff of $2 per unit imposed, the total government revenue generated by the tariff would be

$80

Which of the following scenarios would result in a decrease in the wage rate of solar panel installers and a decrease in the quantity of solar panel installers employed in Billy's town?

A decrease in people's income decreases the demand for solar panels.

Which of the following goods is nonrival?

A soccer match in a stadium

Which of the following scenarios would result in a decrease in the wage rate of solar panel installers and an increase in the quantity of solar panel installers employed in Billy's town?

A solar panel company shuts down in another town and solar panel installers try to find jobs in Billy's town.

Which of the following goods is nonexcludable?

A tuna in the ocean

What other economic process needs to accompany international trade, for nations to benefit from such trade?

Specialization in production

Which of the following goods is both nonrival and nonexcludable?

The light from a lighthouse at a harbor entrance

Which of the following events would shift the marginal revenue product of Hannah's root beer factory workers to the left?

The price of root beer falls from $1.00 per bottle to $0.75 per bottle.

Stephanie produces earrings. She sells each pair of earrings for $5.00. The table below shows how many pairs of earrings can be produced, depending on the number of workers Stephanie hires. Fill in the "Total Revenue" and "Marginal Revenue Product" columns using the information given. Assume this is a perfectly competitive market.

Total Revenue: 40, 100, 140, 170, 190, 200, 205 Marginal Revenue Product: 40, 60, 40, 30, 20, 10, 5

Daphne has received job offers in six different cities across the United States. The table below shows the nominal wage she is being offered in each city and the average monthly rent for an apartment in each city. a. Calculate Daphne's real wage in terms of how many months of rent her wage could purchase in each city and complete the "Real Wage" column in the table below. b. In which city is the nominal wage highest? c. In which city is the real wage highest?

a. 42, 37, 34, 54, 41, 30 b. New York c. Lincoln

If the consumption of a product or service involves external benefits, then the government can improve efficiency in the market by

providing a subsidy to correct for an underallocation of resources.

What are the two characteristics that differentiate private goods from public goods?

rivalry and excludability

The graphs below show the production possibilities frontiers for grapes and lemons in Spain and Argentina, with their current levels of production marked as points A and B. Spain and Argentina are trading partners, where the terms of trade are 1 million tons of grapes = 0.2 million tons of lemons or 1 million tons of lemons = 5 million tons of grapes. Each year, 4 million tons of grapes are exported. (Spain pt at 0.6, 6; Arg pt at 1, 3)

see google doc for table

The labor demand curve of a purely competitive seller

slopes downward because of diminishing marginal productivity.

The central idea behind comparative advantage is that a nation should

specialize in the product that it can produce with the lowest opportunity cost.

If some activity creates external benefits as well as private benefits, then economic theory suggests that the activity ought to be

subsidized

An excise tax on imported items is known as a(n)

tariff

Use the following diagram in which S is the market supply curve and S1 is a supply curve comprising all costs of production, including external costs, to answer the question below. Assume that the number of people affected by these external costs is large. If the government wishes to establish an optimal allocation of resources in this market, it should (S1 is above S line)

tax producers so that the market supply curve shifts leftward (upward).

Marginal product is

the amount an additional worker adds to the firm's total output.

A positive externality or spillover benefit (additional social benefit) occurs when

the benefits associated with a product exceed those that accrue for consumers.

Marginal resource cost is

the increase in total resource cost associated with the hire of one more unit of the resource.

Which of the following scenarios would lead to an increase in the demand for mixers at Henry's bread bakery?

the market price of bread increases

When the production of a good generates external costs, a firm's private supply curve will be

to the right of the social supply curve.

In a free-market economy, a product that entails a positive externality (additional social benefit) will be

underproduced

In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor equals the

wage rate, or the price of labor

The change in a firm's total revenue that results from hiring an additional worker is measured by the

marginal revenue product

Assuming a firm is selling its output in a purely competitive market, its resource demand curve can be determined by

multiplying marginal product by product price.

Assume there is no way to prevent someone from using an interstate highway, regardless of whether or not he or she helps pay for it. This characteristic is called

nonexcludability

Use the following diagram in which S is the market supply curve and S1 is a supply curve comprising all costs of production, including external costs, to answer the question below. Assume that the number of people affected by these external costs is large. Without government interference, this market will reach a(n) (S1 is above S line)

overallocation of resources to this product.

When producers do not have to pay the full cost of producing a product, they tend to

overproduce the product because of a negative externality

In a free-market economy, a product that entails a negative externality (additional social cost) will be

overproduced

A competitive employer will hire inputs up to the point where the

price of the input equals the marginal revenue product of the input.

The market system does not produce public goods because

private firms cannot stop consumers who are unwilling to pay for such goods from benefiting from them.

Use the following information to answer the question below. It is the custom for paper mills located alongside the Layzee River to discharge waste products into the river. As a result, operators of hydroelectric power-generating plants downstream along the river find that they must clean up the river's water before it flows through their equipment. If the government intervenes and corrects the externality in the situation described above, we would expect

production in the paper mills to decrease.

If Countries A and B produce only either rubber bands or paper clips, their maximum outputs are shown in the production possibilities schedules below. Country Rubber Bands Paper Clips A 40 80 B 10 40 In country A the opportunity cost of 1 paper clip is

1/2 rubber band

Harry owns a barber shop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per 8-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. The MP of the second barber is

18 haircuts

Alfonso wants to know what the cost of living would be in four different cities. He looks at circular ads from each of the cities and finds the prices of goods that he would normally buy during a typical trip to the grocery store each week. He adds up what he would pay for each grocery trip in the different cities and calls the sum "Price of Grocery Basket." He compares these costs to what he would earn in each city. Compute Alfonso's real wage in terms of how many baskets of groceries his wage could purchase and complete the "Real Wage" column with this information.

299, 286, 324, 290

At a wage rate of $23 per worker, the firm will choose to employ

3 workers

If the firm is hiring workers under purely competitive conditions at a wage rate of $22, it will employ

3 workers

After trade, at a world price of Pw , consumer surplus equals area(s)

A

Prior-to-trade (autarky) consumer surplus equals area(s) (see google doc)

A + B + C.

Which of the following scenarios would result in an increase in the wage rate of solar panel installers and an increase in the quantity of solar panel installers employed in Billy's town?

An increase in the demand for solar panels raises the price of each installation.

After trade, at a world price of Pw , producer surplus equals areas

B + C + D + E + F.

After trade, at a world price of Pw , the net gain of total economic surplus equals area(s)

D

Prior-to-trade (autarky) producer surplus equals area(s) (same graph as above)

E + F

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is 1 ton of steel. In France, the domestic opportunity cost of producing 100 barrels of chemicals is 2 tons of steel. In this case

Germany has a comparative advantage in the production of chemicals.

Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at the different levels of economic efficiency shown in the graphs. It can be deduced that (two graphs, italy-midpt at 25, 25; Greece-midpt at 20,20)

Greece has a comparative advantage in chemicals.

The productivity table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input. Country Wheat Rice India 10 10 Canada 40 20 To achieve gains from specialization and trade

India should export rice to Canada and import Canadian wheat.

Use the following information to answer the question below. It is the custom for paper mills located alongside the Layzee River to discharge waste products into the river. As a result, operators of hydroelectric power-generating plants downstream along the river find that they must clean up the river's water before it flows through their equipment. Based on the preceding information, which of the following policies would be most appropriate for dealing with this problem?

Levy a tax on the producers of paper products and use the tax revenues to clean up the river.

A profit-maximizing firm employs resources to the point where

MRP = MRC

Henry bakes loaves of bread, which he sells for $4 each. He is considering purchasing additional mixers (capital) for his bakery. Each additional mixer has the productivity described below. Fill in the "Marginal Product," "Total Revenue," and "Marginal Revenue Product" columns. Assume this is a perfectly competitive market.

Marginal Product: 8, 12, 8, 6, 4, 2, 1 Total Revenue: 32, 80, 112, 136, 152, 160, 164 Marginal Revenue Product: 32, 48, 32, 24, 16, 8, 4

Assume that Nation X can produce either 40 notepads or 80 pens, and that Nation Y can produce either 10 notepads or 40 pens. This implies that

Nation X has a comparative advantage in producing notepads.

Use the following table showing maximum-output alternatives for Brazil and Poland to answer the next question. Country Wine Machines Brazil 30 10 Poland 10 10 If the two nations open up trade with each other, then

Poland will specialize in producing machines and import wine.

Which of the following scenarios would result in an increase in the wage rate of solar panel installers and a decrease in the quantity of solar panel installers employed in Billy's town?

Wages of solar panel installers increase in another town and attract workers away from Billy's town.

Which of the following is an example of a public good?

a weather warning system

Great Britain: Wheat-160; Cloth-480 U.S.: Wheat-800; Cloth-640 a. Use the information above to draw the respective production possibilities frontiers (PPFs) for Great Britain and the United States and indicate the production combination for each nation if it decides to completely specialize. b. The combined production after specialization is _____ units of wheat produced by _______ and _____ units of cloth produced by ________

a. (see google doc) b. 800 wheat by US, 480 cloth by Great Britain

The graph below shows the market for tires in the United States, a nation that is open to international trade but is assumed to be a price taker unable to affect the world price of tires. a. Using the graph, at the world price of $80 per tire, how many tires will the United States import? Now suppose that domestic tire producers in the United States convince the government to impose a tariff (tax) on imported tires with the goal of reducing the number of tires imported by 50% (half of the value in part a). b. How large would the tariff need to be to achieve this goal? c. Using the graph above, indicate the new price with the tariff imposed, the domestic quantity supplied (Qs), and the domestic quantity demanded (Qd) that would result with the new tariff in place. Now suppose instead that domestic tire producers in the United States convince the government to impose a tariff (tax) on imported tires with the goal of do

a. 160 million b. $40 per tire c. see google doc d. $60 per tire; 40 million e. see google doc

The graph below shows the market for tires in the United States, a nation that is open to international trade but is assumed to be a price taker unable to affect the world price of tires. a. Using the graph above, at the world price of $80 per tire, how many tires will the United States import? Now suppose the U.S. government imposes a quota as shown in the graph above. b. Using this same graph, indicate the new market equilibrium with the quota imposed and the domestic quantity supplied (Qs). c. As a consequence of this quota, how many tires will the United States import now? How many tires will be supplied domestically? Now suppose instead that the U.S. government imposes a quota with the goal of reducing the number of tires imported by 50% (half of the value in part a). d. Using the graph below, indicate the new supply with the quota imposed as well as the new market equilibrium and the domestic quantity supplied

a. 160 million tires b. see google doc c. 120 million tires; 80 million tires d. see google doc e. domestic tire producers only

Amanda keeps bees to produce honey. Each hive produces $300 worth of honey each month. The table below shows Amanda's marginal cost of tending each bee hive and her private marginal benefit, which is equal to the market value of the honey each hive produces. a. What is the optimal number of hives for Amanda to tend? Now suppose that each of Amanda's bee hives also provides pollination services to surrounding farms and that these services are worth $100 per hive per month. b. Fill in the external marginal benefit (MBexternal) and the social marginal benefit (MBsocial) columns in the table above. c. What is the socially efficient number of hives for Amanda to tend if all costs and benefits are considered?

a. 3 hives b. MB External: 100 for all; MB Social: 400 for all c. 4 hives

Texarkana Electric Company burns coal to heat the water that drives its electricity-producing turbines. The table below shows the marginal benefit of annual electricity consumption and the private marginal cost of annual electricity production. a. What is the (apparent) optimal amount of electricity for Texarkana Electric Company to produce each year? Now assume the production of each million megawatts of electricity also produces sulfur dioxide (a precursor to acid rain). The external cost of the sulfur dioxide is $20 per million megawatts of electricity production. b. Fill in the external marginal cost (MCexternal) and the social marginal cost (MCsocial) columns in the table above. c. What is the socially optimal amount of electricity for Texarkana to produce if all costs and benefits are considered?

a. 4 million megawatts per year b. MC External: 20 for all; MC Social: 105, 110, 115, 120, 125, 130 c. 3 million megawatts per year

When the world price for this product is $0.50, Marketopia will (graph midpt at 300, 1.50)

import 400 units.

The graphs below show the production possibilities frontiers for apples and peaches in Italy and Turkey. (Italy pt at 1.6, 2.4; Turkey pt at 0.6, 2.6) a. At the current level of production, combination A in Italy and combination B in Turkey, how many apples and peaches are produced in total? b. If each nation specializes based on its comparative advantage, how many apples and peaches does each country produce? c. If each nation specializes based on its comparative advantage, how many apples and peaches are produced in total? d. Comparing your answers to part a with part c, specialization will lead to:

a. 5.0 mil apples; 2.2 mil peaches b. Italy: 0 apples, 4.8 peaches; Turkey: 5.2 apples, 0 peaches c. 5.2 apples; 4.8 peaches d. more apples and more peaches being produced.

Great Britain: Wheat-20; Cloth-60 U.S.: Wheat-100; Cloth-80 a. Use the information above to compute the opportunity cost of producing 1 unit of wheat in each country. b. Which country has the comparative advantage in producing wheat? c. Use the information above to compute the opportunity cost of producing 1 unit of cloth in each country. d. Which country has the comparative advantage in producing cloth?

a. GB = 3; US = 0.8 b. US c. GB = 0.33; US = 1.25 d. Great Britain

The following graph represents Ronnie's demand for labor to help him make cookies in his cookie shop. Assume this is a perfectly competitive market. a. Using the graph, draw Ronnie's marginal resource cost (MRC) curve for the first 5 workers. b. If the wage is $40 per day, how many workers will Ronnie want to hire?

a. MRC = horizontal line at $40 starting at y axis to 5 b. 2 workers

Ronnie owns a cookie store. He has carefully recorded the number of cookies that his shop can produce with different numbers of workers. The table below shows the different number of workers and the "Total Product" column shows their output. The current market price for Ronnie's cookies is $0.50 per cookie. Assume this is a perfectly competitive market. a. Fill in the "Marginal Product," "Total Revenue," and "Marginal Revenue Product" columns. b. Graph Ronnie's demand for labor based on the information in the table above.

a. Marginal Product: 100, 80, 60, 40, 20 Total Revenue: 50, 90, 120, 140, 150 Marginal Revenue Product: 50, 40, 30, 20, 10 b. graph # of workers (x) and marginal revenue product (y)

Billy is hiring workers to help him install solar panels. The table below presents the marginal product (in terms of solar panels installed per week) of various workers. Assume this is a perfectly competitive market. a. What is the marginal revenue product of each worker if the current market price to install one solar panel is $50? What if the current market price is $100? $150? Using the table below, fill in the "Marginal Revenue Product" columns for each price. b. Graph the three marginal revenue product curves (for prices of $50, $100, and $150) based on your answers to part a.

a. Marginal Revenue P = $50: 700, 600, 500, 400, 300, 200, 100 MR P = $100: 1400, 1200, 1000, 800, 600, 400, 200 MR P = $150: 2100, 1800, 1500, 1200, 900, 600, 300 b. graph the above numbers, 3 downward sloping lines

The graph below shows the herring market for a small Scandinavian country, with no international trade, in a state of autarky. a. What is the initial market price and quantity traded in equilibrium? Now suppose this small country opens its market to international trade. Suppose the world price of herring is $1.60 per pound. b. Use the graph above to indicate the world price, the new domestic quantity supplied (Qs), and the new domestic quantity demanded (Qd). c. At the world price of $1.60 per pound, this small country will __________ ________ million pounds of herring. d. A result of this country opening its herring market to international trade is that:

a. Pe: $ 2.80 per pound; Qe: 6 million pounds b. see google doc c. import; 6 d. domestic consumers benefit while domestic producers lose.

The graph below shows a small country that produces wine, with no international trade, existing in a state of autarky. a. What is the initial market price and quantity of wine traded in equilibrium? Now suppose this small country opens its market to international trade. Suppose the world price of wine is $60 per barrel. b. Use the graph above to indicate the world price, the new domestic quantity supplied (Qs), and the new domestic quantity demanded (Qd). c. At the world price of $60 per barrel, this small country will ________ ___________ million barrels of wine. d. A result of this country opening its wine market to international trade is that:

a. Pe: $ 40 per barrel; Qe: 7 million barrels b. see google doc for graph c. export; 8 d. domestic producers benefit while domestic consumers lose.

Henry is shopping for mixers (capital) for his bakery. Each mixer costs $40. Assume this is a perfectly competitive market. a. Fill in the "Total Capital Cost" and "Marginal Resource Cost" columns in the table below.

a. Total Capital Cost: 40, 80, 120, 160, 200, 240, 280 Marginal Resource Cost: 40 for all b. horizontal line at $40

Stephanie is looking to hire workers to help her produce earrings. The current hourly market wage rate is $10 per worker. Assume this is a perfectly competitive market. a. Fill in the "Total Labor Cost" and "Marginal Resource Cost" columns in the table below. b. Graph the marginal resource cost of labor (MRC) for Stephanie's business.

a. Total Labor Cost: 10, 20, 30, 40, 50, 60, 70 Marginal Resource Cost: 10 for all b. horizontal line at $10

Henry can purchase mixers (capital) for his bakery, where he makes loaves of bread. The productivity and revenue generated by additional mixers is presented in the table below. Assume this is a perfectly competitive market. a. Graph Henry's demand for capital based on the information in the table above. Draw the marginal resource cost (MRC) curve if the price for a mixer is $30. b. How much capital does Henry demand given the current price of mixers?

a. graph marginal revenue product and $30 horizontal line b. 4 mixers

The table below provides the demand and supply information for solar panel installers in a small town. a. Graph the supply and demand curves for solar panel installers in the small town. b. What is the equilibrium wage and the equilibrium quantity of solar panel installers for this small town? c. If the local solar panel installers form a union and negotiate a weekly wage of $1,200, how many workers will be supplied and demanded?

a. graph supply and demand lines, intersect at (4, 800) b. $800, 4 workers c. 2 workers, 6 workers

For each of the following scenarios, determine which benefit of international trade applies: lower-priced goods, increased variety of products, or access to scarce resources. a. Today most television sets bought in the United Stated are made in China; however, this was not the case twenty years ago. b. In large grocery stores in the United States, consumers can buy noodles from Asia, soups from France, pickled herring from Scandinavia, and beer from Germany. c. The United States has become a prime location for producers of semiconductors, whose products are then exported to nations around the world. This choice to produce in the United States is largely due to the access to the high-skilled workforce that is required for this type of production. d. While many developed nations have at least one domestic car manufacturer, consumers in these nations also have access to cars produced in other nations. e. The United

a. lower priced goods b. increased variety of products c. access to scarce resources d. increased variety of products e. lower priced goods

The graph below shows the market for tires in the United States, a nation that is open to international trade but is assumed to be a price taker unable to affect the world price of tires. a. In the graph below, identify the areas that represent consumer surplus (CS) and producer surplus (PS) with international trade. Now suppose that domestic tire producers in the United States convince the government to impose a tariff (tax) on imported tires with the goal of reducing the number of tires imported by 50% (half of what is imported with free trade). b. How large will the tariff need to be to achieve this goal? c. Using the graph below, indicate the new price with the tariff imposed, the domestic quantity supplied (Qs), and the domestic quantity demanded (Qd) that would result with the new tariff in place. d. With the tariff in place, how much tariff revenue is generated by the government through the tariff on tires? e.

a. see google doc b. $40 per tire c. see google doc d. $3,200 million e. see google doc f. producer surplus and deadweight loss to increase.

The graph below shows the market for tires in the United States, a nation that is open to international trade but is assumed to be a price taker unable to affect the world price of tires. a. In the graph below, identify the areas that represent consumer surplus (CS) and producer surplus (PS) with international trade. b. Using the graph above, at the world price of $80 per tire, how many tires will the United States import? Now suppose the U.S. government imposes a quota as shown in the graph below. c. Using this same graph, indicate the new market equilibrium with the quota imposed and the domestic quantity supplied. d. As a consequence of this quota, how many tires will the United States import now? How many tires will be supplied domestically? e. Using the graph below, identify the area that represents the surplus lost to this economy, which is also known as deadweight loss or DWL, as a result of this restriction o

a. see google doc b. 160 million c. see google doc d. 80 million; 100 million e. see google doc f. producer surplus and deadweight loss to increase.

The graph below shows a small but oil-rich country, with no international trade, existing in a state of autarky. a. In the graph, identify the areas that represent consumer surplus (CS) and producer surplus (PS) in the absence of international trade. Now suppose this small country opens its markets to international trade. Suppose the world price of oil is $50 per barrel. b. In the graph below, indicate the domestic quantity supplied (Qs) and the domestic quantity demanded (Qd) and identify the areas that represent the new consumer surplus (CS) and new producer surplus (PS). c. At the world price of $50 per barrel, this small nation will _______ _____ million barrels of oil. d. Using the graph below, identify the gain to this economy from international trade. e. The economy as a whole will gain because:

a. see google doc b. see google doc c. export; 4 d. see google doc e. the increase in producer surplus exceeds the decline in consumer surplus.

The MRP curve for labor

is the firm's labor demand curve.

The graph below shows the market for domestically produced tires in the United States, with no international trade, existing in a state of autarky. a. In the graph, identify the areas that represent consumer surplus (CS) and producer surplus (PS) in the absence of international trade. Now suppose instead that the tire market in the United States is open to international trade. Suppose the world price of tires is $80 per tire. Assume that the United States is a price taker unable to affect the world price of tires in accordance with the small-country model. b. In the graph below, indicate the new domestic quantity supplied (Qs) and domestic quantity demanded (Qd). Identify the areas that represent the new consumer surplus (CS) and new producer surplus (PS). c. At the world price of $80 per tire, the United States will ________ ______ million tires. d. Using the graph below, identify the area that represents the wealth

a. see google doc b. see google doc c. import; 160 d. see google doc e. Domestic tire producers will oppose free trade and consumers will support it.

The graph below shows the herring market for a small Scandinavian country, with no international trade, in a state of autarky. a. In the graph, identify the areas that represent consumer surplus (CS) and producer surplus (PS) in the absence of international trade. Now suppose this small country opens its market to international trade, becoming an open economy. Suppose the world price of herring is $2 per pound. b. In the graph below, indicate the domestic quantity supplied (Qs) and domestic quantity demanded (Qd). Then identify the areas that represent the new consumer surplus (CS) and new producer surplus (PS). c. At the world price of $2 per pound, this small nation will _______ _____ million pounds of herring. d. Using the graph below, identify the gain to this economy from international trade. e. The economy as a whole will gain because:

a. see google doc b. see google doc c. import; 4 d. see google doc e. the increase in consumer surplus exceeds the decline in producer surplus.

Marginal revenue product measures the

amount by which the extra production of one more worker increases a firm's total revenue.

Which of the following is an example of a positive externality (additional social benefit)?

an increase in the value of land you own when a nearby development is completed

In a situation where an externality occurs, the "third party" refers to those who

are not directly involved in the transaction or activity.

Which of the following scenarios would lead to an increase in the demand for labor at Ronnie's cookie shop?

labor productivity increases

The production of paper often creates a waste product that pollutes waterways. Assume the producer of paper does not directly pay to dispose of the waste in the water. In this case, the price of paper will be _______ the socially efficient price and the amount of paper produced will be _____ the socially efficient amount.

below; above

If the world price for good A is above the domestic price for good A without trade, then consumer surplus will ________ and producer surplus will _______ with trade.

decrease; increase

If the world price for this product is $2.00, then Marketopia will (graph midpt at 300, 1.50)

export 200 units.

In economics, goods, services, or resources produced domestically and sold abroad are known as:

exports

In the graph, line S is the current supply of this product, while line S1 is the optimal supply from the society's perspective. This figure suggests that there is (are) (S1 is above and to the left of S line)

external costs from the production of this product.

Which of the following is an example of a negative externality (additional social cost)?

falling property values in a neighborhood where a disreputable nightclub is operating

When a nation starts opening up to international trade, it will see falling prices for

goods that it imports

Education benefits both students and the community. Suppose that those students who purchase education consider only their own benefits when determining how much education to obtain while schools consider only the cost of producing education when determining how much education to supply. In this situation, the social benefit will be _________ the private benefit and the amount of education produced will be __________ the socially efficient amount.

greater than; below

Two nations, Alpha and Beta, can both produce steel. Alpha has a comparative advantage in the production of steel if it

has a lower domestic opportunity cost of producing steel than Beta.

A country is said to have a comparative advantage in producing a good over another country if that first country

has a lower opportunity cost of producing the good.

A profit-maximizing firm's daily total revenue is $155 with 3 workers, $200 with 4 workers, and $230 with 5 workers. The cost of each worker is $40 per day. The firm should

hire four workers.

Harry owns a barber shop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. Harry should

hire the second barber because he will add $28 to profits.

Use the following table to answer the question below for Country Y. Column 1 is the world price of a product, Column 2 is the quantity demanded domestically (Qdd), and Column 3 is the quantity supplied domestically (Qsd). Assume the small-country model is applicable. Price $9.00, 8.00, 7.00, 6.00 Qdd 250, 300, 350, 400 Qsd 450, 400, 350, 300 Assume the small-country model is applicable. If the world price of the product is $6, then Country Y will

import 100 units of the product.