Econ
In which of the following market structures would best describe the cola market?
Oligopoly
A situation in which no one can be made better off witout making at least one person worse off is called
Pareto efficiency
In order for a voluntary market exchange to make both people better off, we need to assume..
Rationality and complete information
The price has fallen and the quantity has risen. The dominant factor is a
Rise in supply
The price of televisions is expected to fall next month. What would happen to the demand for televisions now?
Shift left
What is an example of a free good?
Sunlight
The idea that a market system benefits society when individuals act in their own self-interest is caleld
The invisible hand
The lowest price at which the firm shoudl produce is
Where the AVC and the MC intersect
oligopoly
a market structure in which only a few sellers offer similar or identical products
monopsony
a market where there exists a single buyer of a good
cartel model
a model that assumes that oligopolies act as if they were monopolists that have assigned output quotas to individual member firms of the oligopoly so that total output is consistent with joint profit maximization
prisoner's dilemma
a particular "game" between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial
Name an example of moral hazard
a sports agent invests money for a lient, for which the agent would make a higher commission if the company does well and the cmopany he invests in goes bust.
What is an example of a public good?
a weather warning system
Suppose a firm offers its workers a cafeteria plan in which it allows workers to allocate a set amount of fringe benefit money toward specific insurance. Mary, who has five kids needing braces, selects the family dental coverage. This is an example of the:
adverse selection problem
If a firm is uninformed about the qualities of a product,t hen the market will result in
an underallocation of resources to this product
An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction assumes that:
bicycles are normal goods
Along a production-possibilities curve, an increase in the production of one type of good can be accomplished
by decreasing the production of the other type of good
The demand curve in a purely competitive industry is ______, while the demand curve to a single firm in that industry is ______.
downsloping, perfectly elastic
_ exists when all inputs are variable and the proportional change in costs is less than the change in output
economies of scale
The price has fallen, and quantity has fallen. That means that demand has ___ and supply has ___
fallen; risen, fallen, or stayed the same
competitive labor market
firm will continue to hire labor until the revenue from the sale of the good is greater than or equal to cost of hiring labor
A constant-cost industry is one in which
if 100 units can be produced for $100, then 150 can be produced for $150, 200 for $200, and so forth.
You should decide to go to a movie..
if the marginal benefit of the movie exceeds its marginal cost.
The main difference between the short run and the long run is that
in the short run, one or more inputs is fixed.
When the price of oil declines significantly, the price of gasoline also declines. The latter occurs because of a(n):
increase in the supply of gasoline
Qdx = 400 - 4 * Px + 7 *Pw - 10 * Pz - .3 * I Goods X are...
inferior good
When a firm is maximizing profit, it will necessarily be:
maximizing the difference between total revenue and total cost
Upon buying a car having airbags, Joe begins to drive recklessly. This is an example of:
moral hazard problem
An uninformed consumer will buy ___ and pay a price that is ___ than an informed consumer.
more, higher
If a purely competitive firm is producing at the MR=MC output level and earning an economic profit, then:
new firms will enter this market.
The two main characteristics of a public good are:
nonrivalry and nonexcludability
The demand for a good has decreased. The only other thing to change is that the income has decreased. This good is a
normal good
First Degree price discrimination
occurs when the seller charges a different price for each unit of output and the price is always the max price the consumer is willing to pay
the value of the next best alternative
opportunity cost
If a firm is confronted withe cnomic losses in the short run, it will decide whether or not to produce by comparing:
price and minimum average variable cost
Assume a drought in the Great Plains reduces the supply of wheat. Noting that wheat is a basic ingredient in the production of bread and potatoes are a consumer substitute for bread, we would expect the price of wheat to:
rise, the supply of bread to decrease, and the demand for potatoes to increase
The Tragedy of Commons occurs when there is a good that is
rivalrous but nonexcludable
Third degree price discrimination
seller is able to partition market demand into 2 or more groups and charges different prices to different groups
A leftward shift of a production supply curve might be caused by
some firms leaving an industry
In 1994 Ford sold 500,000 Escorts at an average price of $7,200 per car; in 1995, 600,000 were sold at avg. price of $7,500 per car. These statements:
suggest that the demand for Escorts increased between 1994 and 1995
A positive externality or spillover benefit occurs when:
the benefits associated with a product exceed those accruing to people who consume it
Because of the free-rider problem,
the market demand for a public good is nonexistent or understated.
rent-seeking behavior
the pursuit of profitable market opportunities through socially unproductive and wasteful means
If a manufacturing firm temporarily ceases production, its
total cost will equal its total fixed cost
What would likely be an inferior good?
used clothing
What is the firm's short run supply?
where the AVC and MC intersect upward
The demand curve for hot dogs would shift down and to the left with what event?
A decrease in the price of hamburgers
The price of apples has just gone up. What else can we expect to happen?
A movement up the demand curve for apples.
What would cause a shift in production possibilities curve to the right?
A technological advance that allows farmers to produce more output frmo given inputs
In which of the following market structures are there many firms selling differentiated products?
Monopolistic competition
"In the corn market, demand often exceeds supply and supply sometimes exceeds demand." "The price of corn rises and falls in response to changes in supply and demand." In which of these two statements are the terms demand and supply being used correctly?
In the second statement
For a given quantity produced, the relationship between LAC and SAC is which of the following:
LAC is always below or equal SAC
Solutions for information asymmetries are...
Labeling requirements, pigouvian taxes, deductibles
Consider the Borg society, consisting of cyborg humanoids with identical skills and intelligence. Assume all other resources are similarly identical or perfectly malleable such that they are equally productive in producing any good. What does the Borg production possiblities frontier look like?
Linear line throughout.
Two individuals have demand curves represented by the functions, q=12-3p and q=8-3p. If the price is $3, the quantity of the market will be..
$3
Assume that you can go to Africa next summer for free. Instead you can work at McDonald's and earn $4000 for the summer. You value the trip to Africa at $3000 in benefit, but if you had to pay for it, it would cost $5000. What is the opportunity cost of taking the trip?
$4000
"Building to a scale that minimizes long-run costs" is which type of efficiency?
Efficiency in Scale
The price has fallen and the quantity has fallen. The dominant factor is a:
Fall in demand
Price discrimination
charging different groups different prices based on group membership, breaks up consumers based on difference in demand
Second degree price discrimination
different prices for different quantity