Econ Final!
If Danielle sells 300 wrist bands for $0.50 each, her total revenues are
$150
Suppose that you have received $300 as a birthday gift. You can spend it today or you can put the money in a bank account for a year and earn 5% interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is
$315
Refer to Figure 14-1. The firm's short-run supply curve is its marginal cost curve above
$4.50
We can measure the profits earned by a firm in a competitive industry as
(P - ATC) x Q
Katya owns a math-tutoring business. Her accountant most likely includes which of the following costs on her financial statements?
(i) and (ii) only (workbooks containing practice problems and rent for the storefront)
A binding price floor
(i) and (iii) only (causes a surplus & is set at a price above the equilibrium price)
Economists normally assume that the goal of a firm is to
(iii) only (maximize profit)
A nonbinding price floor
(iv) only (is set at a price below the equilibrium price)
Suppose a gardener produces both tomatoes and squash in his garden. If he must give up 8 bushels of squash to get 5 bushels of tomatoes, then his opportunity cost of 1 bushel of tomatoes is
1.6 bushels of squash
Refer to Figure 15-4. The marginal revenue curve for a monopoly firm is depicted by curve
A.
Abby bakes brownies and Liam grows flowers. In which of the following cases is it impossible for both Abby and Liam to benefit from trade?
Abby does not like flowers and Liam does not like brownies
Which of the following is an example of something economists study?
All of the above
Which of the following products would be considered scarce?
All of the above
Suppose Susan can wash three windows per hour or she can iron six shirts per hour. Paul can wash two windows per hour or he can iron five shirts per hour.
All of the above are correct
Which of the following statements best expresses a firm's profit-maximizing decision rule?
All of the above are correct
Which of the following steps does an economist take when studying the economy?
All of the above are correct
Patents, copyrights, and trademarks
All of the above are correct.
Which of the following is an example of an externality?
All of the above are correct.
Which of the following is an example of a market?
All of the above are examples of markets
An entrepreneur's motivation to start a business arises from
All of the above could be correct
Which of the following is not an example of a barrier to entry?
An entrepreneur opens a popular new restaurant.
Since restored historic buildings convey a positive externality, local govs may choose to
Both a and b are correct
Which of the following represents a way that a gov can help the private market to internalize an externality?
Both a and b are correct
Explicit costs
Both b and c are correct
Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"?
Dani must decide btwn going to Florida or Brazil for spring break
Which of the following is not a characteristic of a competitive market?
Entry is limited
If Korea is capable of producing either shoes or soccer balls or some combination of the two, then
Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls
According to Feb 12, 2016 news article, the average investors can expect the FOMC to consider:
Negarive rates
In a competitive market, the price of a product
None of the above is correct
Based on question number 27 above, Carolina Panthers should win the Super Bowl 50, From an economic perspective, this is a:
Normative Statement
Refer to Figure 15-3. Which of the following statements is correct?
Panel B represents the typical demand curve for a perfectly competitive firm, and Panel A represents the typical demand curve for a monopoly.
Based on the 2015 NFL Regular Season, Carolina Panthers (15-1) team has better win record than Denver Broncos (12-4) team. From an economic perspective, this is a:
Positive statement
Suppose the gov has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?
The number of firms selling laptop computers decreases
A positive externality arises when a person engages in an activity that has
a beneficial effect on a bystander who does not pay the person who causes the effect
If mac & cheese is an inferior good, then an increase in
a consumer's income will cause the demand curve for mac & cheese to shift to the left
Which of the following would most likely serve as an example of a monopoly?
a local cable television company
Which of the following would be most likely to have monopoly power?
a local electrical cooperative
The term market failure refers to
a market that fails to allocate resources efficiently
One of the defining characteristics of a perfectly competitive market is
a similar product
Refer to Figure 14-1. The firm will earn a positive economic profit in the short run if the market price is
above $6.30
In competitive markets, buyers
and sellers are price takers
The fundamental source of monopoly power is
barrieres to entry
Tom produces baseball gloves and baseball bats. Steve also produces baseball gloves and baseball bats, but Tom is better at producing both goods. In this case, trade could
benefit both Steve and Tom
A shortage results when a
binding price ceiling is imposed on a market
A circular-flow diagram is a model that
both (a) and (b) are correct
Based on the recent launch of trust barometer in Davos at the annual Economic Forum, the report showed:
both (a) and (c) are correct
Policymakers use taxes
both to raise revenue for public purposes and to influence market outcomes
If demand is price inelastic, then
buyers do not respond much to a change in price
Demand is said to be price elastic if
buyers respond substantially to changes in the price of the good
A legal maximum on the price at which a good can be sold is called a price
ceiling
Which of the following industries is most likely to exhibit the characteristic of free entry?
dairy farming
A movement upward and to the left along a demand curve is called a(n)
decrease in quantity demanded
An increase in the price of a good will
decrease quantity demanded
When the gov implements programs such as progressive income tax rates, which of the following is likely to occur?
equality is increased & efficiency is decreased
Demand is elastic if the price elasticity of demand is
greater than 1
In the markets for g/s in the circular-flow diagram,
households are buyers and firms are sellers
Microeconomics is the study of
how individual households and firms make decisions
In general, elasticity is a measure of
how much buyers & sellers respond to changes in market conditions
Bubba is a shrimp fisherman who could earn $5,000 as a fishing tour guide. Instead, he is a full-time shrimp fisherman. In calculating the economic profit of his shrimp business, the $5,000 that Bubba gave up is counted as part of the shrimp business's
implicit costs
The difference btwn accounting profit and economic profit is
implicit costs
If a decrease in income increases the demand for a good, then the good is a(n)
inferior good
A firm has market power if it can
influence the market price of the good it sells
A competitive firm
is a price taker, whereas a monopolist is a price maker
If a price ceiling is not binding, then the equilibrium price
is below the price ceiling
Demand is inelastic if the price elasticity of demand is
less than 1
In the short run, a firm operating in a competitive industry will shut down if price is
less than average variable cost
On Jan 27, 2016, the FOMC recently decided to:
maintain federal funds rate
Dog owners do not bear the full cost of the noise their barking dogs create and often take too few precautions to prevent their dogs from barking. Local govs address this problem by
making it illegal to "disturb the peace"
A perfectly competitive firm produces where
marginal cost equals price, while a monopolist produces where price exceeds marginal cost.
The profit-maximizing level of output,
marginal revenue equals marginal cost
Goods with many close substitutes tend to have
more elastic demands
Which of the following is likely to have the most price elastic demand?
music downloads
Refer to Figure 10-1. This graph represents the tobacco industry. The industry creates
negative externalities
A cost imposed on someone who is neither the consumer nor the producer is called a
negative externality
Production is efficient if the economy is producing at a point
on the production possibilities frontier
Which of the following is not a characteristic of a monopoly?
one buyer
An externality is the impact of
one person's actions on the well-being of a bystander
The simplest way for a monopoly to arise is for a single firm to
own a key resource
The production possibilities frontier provides an illustration of the principle that
people face trade-offs
The highest form of competition is called
perfect competition
Unemployment would cause an economy to
produce inside its production possibilities frontier
The terms equality & efficiency are similar in that they both refer to benefits to society. However they are different in that
quality refers to uniform distribution of those benefits & efficiency refers to maximizing benefits from scarce resources
When consumers face rising gasoline prices, they typically
reduce their quantity demanded more in the long run than in the short run
The overriding reason why households & societies face many decisions is that
resources are scarce
Dioxin emission that results from the production of paper is a good example of a negative externality because
self-interested paper producers will not consider the full cost of the dioxin pollution they create.
A monopoly is a market with one
seller, and that seller sets the price
In constructing models, economists
sometimes make assumptions that are contrary to features of the real world
A rational decisionmaker
takes an action only if the marginal benefit of that action exceeds the marginal cost of that action
For a good that is a necessity, demand
tends to be inelastic
A production possibilities frontier is bowed outward when
the rate of tradeoff btwn the two goods being produced depends on how much of each good is being produced
A production possibilities frontier is a straight line when
the rate of tradeoff btwn the two goods being produced is constant
A production possibilities frontier can shift outward if
there is a technological improvement
If a price ceiling is not binding, then
there will be no effect on the market price or quantity sold
Which of the following is likely to have the most price inelastic demand?
toothpaste
Which of the following can be added to profit to obtain total revenue?
total cost
The amount of money that a firm receives from the sale of its output is called
total revenue
The opportunity cost of an item is
what you give up to get that item
Price controls are usually enacted
when policymakers believe that the market price of a g/s is unfair to buyers or sellers
Economic profit
will never exceed accounting profit
England can benefit from trade
with any nation