Econ final

At equilibrium, producer surplus is represented by the area

D+H+F.

A tax on the buyers of cameras encourages

buyers to demand a smaller quantity at every price.

Suppose a firm in a competitive market earned $1,000 in total revenue and had a marginal revenue of $10 for the last unit produced and sold. What is the average revenue per unit, and how many units were sold?

$10 and 100 units

Refer to Figure 16-5.The firm's maximum profit is

0

The firm's maximum profit is

0

Let QMARKET represent the equilibrium quantity of gasoline, and let QOPTIMUM represent the socially optimal quantity of gasoline. Which of the following inequalities is correct?

1,000 < QOPTIMUM< QMARKET

If the government imposed a corrective tax that successfully moved the market from the market equilibrium to the social optimum, then tax revenue for the government would amount to

2000

.If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus to existing producers?

2500

The socially optimal quantity of output is

420 units, since the value to society of the 420th unit is equal to the cost incurred by the seller of the 420th unit.

If the market price is $10, what is the firm's total revenue?

50

Refer to Figure 16-5. When the firm is maximizing its profit, the markup over marginal cost amounts to

50

The maximum value of total revenue corresponds to a price of

50

Refer to Figure 5-3. The maximum value of total revenue corresponds to a price of

70

What price will the monopolistically competitive firm charge in this market?

80

The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit. If the monopolist were able to perfectly price discriminate, how many units would it sell?

900

What happens to consumer surplus in the cell phone market if cell phones are normal goods and buyers of cell phones experience an increase in income?

Consumer surplus may increase, decrease, or remain unchanged.

Which of the following costs of publishing a book is a fixed cost?

Composition, typesetting, and jacket design for the book

If the firm is currently producing 14 units, what would you advise the owners?

Continue to operate at 14 units

For which pairs of goods is the cross-price elasticity most likely to be positive?

Pens and pencils

Miguel, Maria, and Marcos all would like a place to sit while waiting at their children's bus stop. The neighborhood association is considering installing several park benches at the bus stop. Miguel values the benches at $20, Maria at $30, and Marcos at $40. The park benches and labor for installation cost $100. If Miguel, Maria, and Marcos are the only residents who value the benches, what should the neighborhood association do?

Do not install the park benches because the costs outweigh the benefits.

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

Refer to Figure 13-3. Which of the following can be inferred from the figure above?

Marginal product is increasing at low level of output and decreasing at high level of output.

Which of the following can be inferred from the figure above?

Marginal product is increasing at low level of output and decreasing at high level of output.

n which of the following market structures can firms earn economic profits in the long run?

Monopoly only

Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers.

Refer to Figure 14-3. Firms would be encouraged to enter this market for all prices that exceed

P3.

Assume that the market starts in equilibrium at point W in graph (b) and that graph (a) illustrates the cost curves facing individual firms. Suppose that demand increases from D0 to D1. Which of the following statements is correct?

Points W and Z represent long-run equilibria.

To maximize total surplus, a benevolent social planner would choose which of the following outcomes?

Q = 45 and P = 45

Refer to Figure 16-5. As the figure is drawn, the firm is in

a short-run equilibrium as well as a long-run equilibrium

.A government-imposed price of $24 in this market is an example of a

binding price floor that creates a surplus.

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

buyers will bear a greater burden of the tax than the sellers.

Assume a certain firm in a competitive market is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit. Refer to Scenario 14-1. To maximize its profit, the firm should

decrease its output but continue to produce.

If government regulation sets the maximum price for a natural monopoly equal to its marginal cost, then the natural monopolist will

earn economic losses.

Refer to Figure 4-1.It is apparent from the figure that the

good is inferior.

The deadweight loss from a tax per unit of good will be smallest in a market with

inelastic supply and inelastic demand.

What price will the monopolist charge in order to maximize profit?

k

Motor oil and gasoline are complements. If the price of motor oil increases, consumer surplus in the gasoline market

may increase, decrease, or remain unchanged.

For a monopoly, the socially efficient level of output occurs where

price equals marginal cost.

If a price floor is not binding, then

the equilibrium price is above the price floor

ou are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that

the mayor thinks demand is inelastic, and the city manager thinks demand is elastic.

Producers have little incentive to produce a public good because

there is a free-rider problem.

Refer to Figure 10-2.This market

would be more efficient with a tax on the product.

All else equal, an increase in the use of laptop computers for note-taking would cause a move from

y to x