micro economics final exam

Réussis tes devoirs et examens dès maintenant avec Quizwiz!

the figure shows arnold's demand curve for burritos. arnold's marginal benefit from consuming the third burrito is

$1.50

the figure shows the market for apartments in springfield. recently, the government imposed a rent ceiling of $1,000 per month. what is the value of the deadweight loss after the imposition of the ceiling?

$100,000

if the output price is $3 what is the marginal revenue product of the fifth unit of labor?

$150

the figure shows arnold's demand curve for burritos. if the market price is $1.50, what is arnold's consumer surplus?

$2.25

vispana's gyros house sells gyros. calculate vispana's variable cost per day when she produces 50 gyros using two workers

$220

the figure shows the market for beer. the government plants to impose a unit tax in this market. how much of the tax is paid by buyers?

$5

if the market price is​ $20, what is the amount of the​ firm's profit?

$6,750

the figure shows the market for beer. the government plants to impose a unit tax in this market. what is the size of the unit tax?

$7

paul goes to dick's sporting goods to buy a new tennis racquet. he is willing to pay $200 for a new racquet, but buys one on sale for $125. paul's consumer surplus from the purchase is

$75

if the firm represented in the diagram is currently producing and selling Qa ​units, what is the price​ charged?

$P2

what is the equilibrium hourly wage (W*) and the equilibrium quantity of labor (Q*)?

W*=$10.50; Q*=590,000

compared to a monopolistic​ competitor, a monopolist faces

a more inelastic demand curve

if an increase in income leads to an increase in the demand for peanut butter, then peanut butter is

a normal good

studies show that the income elasticity of demand for wine is approximately five. what does this mean?

a one percent increase in income leads to a five percent increase in wine consumption

rent control is an example of

a price ceiling

when roxanne, a u.s. citizen, purchases a designer dress from saks fifth avenue that was made in milan, the purchase is

a u.s. import and an italian export

according to public choice theory, policymakers

are likely to pursue their own self-interest, even if their self-interest conflicts with the public interest

comparative advantage means the ability to produce a good or service

at a lower opportunity cost than any other producer

which of the following is the correct way to describe equilibrium in a market?

at equilibrium, quantity demanded equals quantity supplied

arlene quits her $125,000-a-year job to take care of her ailing parents. what is the opportunity cost of her decision?

at least $125,000

many economists support free international trade, maintaining that improves economic efficiency by causing goods to be produced

at the lowest opportunity cost

a situation in which a country does not trade with other countries is called

autarky

the vertical difference between curves F and G measures

average fixed costs

if the absolute value of the price elasticity of demand for aspirin equals 0.8 then

the demand for aspirin is inelastic

which country has a comparative advantage in the production of cotton?

indonesia

refer to the diagram to the right. point A is

inefficient in that not all resources are being used

the demand for gasoline in the short run is

inelastic because there are no good substitutes for gasoline

if a good has a negative income elasticity of demand, this indicates that the good is

inferior

the firm's gain in profit from hiring another worker is

the difference between marginal revenue product and the wage of the worker

suppose the current market equilibrium output of Q1 is not the economically efficient output because of an externality. the economically efficient output is Q2. in that case, the diagram shows

the effect of a negative externality in the production of a good

suppose the equilibrium price in a perfectly competitive industry is​ $15 and a firm in the industry charges​ $21. which of the following will​ happen?

the firm will not sell any output

a major factor contributing to the slow growth rate of less-developed economies is

the lack of well-defined and enforceable property rights

in economics, the optimal level of pollution is

the level for which the net benefit reducing the pollution is the greatest

in a competitive market equilibrium

the marginal benefit equals the marginal cost of the last unit sold

the figure to the right represents the market for pecans. assume that this is a competitive market. at a quantity of 4,000 pounds,

the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low

what is the relationship among the following variables for a perfectly competitive​ firm: the market​ price, average revenue and marginal​ revenue?

the market price is equal to both average revenue and marginal revenue

a situation where a member of congress votes to approve a bill in exchange for favorable votes from other members on other bills is called

logrolling

suppose the monopolist represented in the diagram to the right produces positive output. what is the​ profit/loss per​ unit?

loss of​ $7 per unit

refer to the diagram to the right. the firm represented in the diagram makes

makes zero economic profit

in a perfectly competitive market, there are _____ buyers and _____ sellers

many; many

in economics, the term _______ means "additional" or "extra"

marginal

economists reason that the optimal decision is to continue any activity up to the point where the

marginal benefit equals the marginal cost

which of the following is true at the output level where average total cost is at its minimum?

marginal cost equals average total cost

in the short run, if the marginal product is at its maximum, then the

marginal cost it at its minimum

a perfectly competitive firm will maximize its profit at the level of output where the vertical distance between its total revenue curve and total cost curve is the largest. this is the same level of output where

marginal revenue equals marginal cost

for a perfectly competitive​ firm, at profit maximization

marginal revenue equals marginal cost

the efficient output level of a public good occurs where the

marginal social cost of producing the last unit is equal to the marginal social benefit realized by consumers

the demand by all the consumer of a given good or service is the ______ for the good or service

market demand

the price of a​ seller's product in perfect competition is determined by

market demand and market supply

because a​ monopoly's demand curve is the same as the market demand curve for its​ product,

the monopoly must lower its price to sell more of its product

implicit costs can be defined as

the non-monetary opportunity cost of using the firm's own resources

what is the voting paradox?

the observation that majority voting may not always result in consistent choices

which of the following is the best example of an oligopolistic​ industry?

the pharmaceutical industry

the supply curve of a perfectly competitive firm in the short run is

the portion of the​ firm's marginal cost curve above the minimum point of the average variable cost curve

suppliers will be willing to supply a product only if

the price received is at least equal to the additional cost of producing the product

adam smith's invisible hand refers to

the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole

at a product's equilibrium price

the product's demand curve crosses the product's supply curve

economists james buchanan and gordon tullock are well-known for developing

the public choice model

the law of demand implies, holding everything else constant, that as the price of bagels increases,

the quantity of bagels demanded will decrease

what are property rights?

the rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it

the minimum efficient scale is

the smallest level of operation where long run average costs are lowest

refer to the diagram to the right which shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. what is the opportunity cost of one pound of meat?

1 1/3 pounds of vegetables

the marginal product of the 3rd worker is

15

if the rate is $40, how many workers should dale hire?

3

refer to the diagram to the right which shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, mean and vegetables. what is the opportunity cost of one pound of vegetables?

3/4 pounds of meat

what is honduras's opportunity cost of producing one sailboat

5 canoes

if 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units, then the average product of 12 workers is

5 units

the marginal product of the fourth unit of labor is

60

what is the economically efficient output​ level?

940

refer to the diagram to the right. identify the curves in the diagram

E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve

the​ firm's profit maximizing price is

P3

the diagram shows two supply surves, Sa and Sb. as price rises from P0 to P1, which supply curve is more elastic?

Sb

suppose the value of the price elasticity of demand it -3. what does this mean?

a 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent

economists refer to a market where buying and selling take place at prices that violate government price regulations as

a black market

offering to pay the passenger in front of you to keep her from reclining her airplane seat is an example of

a coasian solution to an externality situation

countries that engage in trade will tend to specialize in the production of goods and services in which they have ______ and will _____ these goods and services

a comparative advantage; export

which of the following is the best example of a perfectly competitive​ firm?

a corn farmer in illinois

which of the following would cause an increase in the equilibrium price and decrease in the equilibrium quantity of watermelon?

a decrease in supply

ranchers can raise either cattle or sheep on their land. which of the following would cause the supply of sheep to increase?

a decrease in the price of cattle

which of the following would cause the equilibrium price to decrease and the equilibrium quantity of white bread to increase?

a decrease in the price of flour

a cartel is

a group of firms that enter into a formal agreement to fix prices to maximize joint profits

who was the economist who first analyzed the advantages of specialization and the division of labor?

adam smith

the market demand for a public good can be determined by

adding up how much each consumer is willing to pay for each unit of the public good

a characteristic of the long run is

all inputs can be varied

of the following examples, which would likely be performed by an economist working for apple?

all of the above

perfectly competitive firms produce up to the point where the price of the good equals the marginal cost of producing the last unit. this condition is referred to as

allocative efficiency

voluntary exchange between buyers and sellers generates _______ in a market economy

allocative efficiency

what is the difference between an "increase in demand" and an "increase in quantity demanded"?

an "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve

collusion is

an agreement among firms to charge the same price or otherwise not to compete

suppose a negative externality exists in a market. if transactions costs are low and parties are willing to bargain then, according to the coase theorem

an efficient solution can be reached regardless of the initial assignment of property rights

as more output is produced, the marginal product of labor declines

because of the law of diminishing returns

consumers benefit from monopolistic competition by

being able to choose from products more closely suited to their tastes

eliminating a tariff on running shoes would _____ businesses that sell running shoes and ______ consumers who purchase them

benefit; benefit

if the firms​ cooperate, what prices will they​ select?

both firms will select a high price

whenever a buyer and a seller agree to trade,

both must believe they will be made better off

both monopolistically competitive firms and perfectly competitive firms maximize profits

by producing where marginal revenue equals marginal cost

perfect price discrimination is also known as

first-degree price discrimination

marginal cost is equal to the

change in total cost divided by the change in output

if a firm could practice perfect price​ discrimination, it would

charge every buyer a different price

a cooperative equilibrium results when firms

choose the strategy that maximizes the total game payoff

which of the following generates productive efficiency?

competition among sellers

a firm that can effectively price discriminate will charge a higher price to

customers who have the more inelastic demand for the product

which of the following statements about the price of elasticity of demand is correct?

demand is more elastic in the long run than it is in the short run

the selling of a product for a price below its cost of production is called

dumping

a market comprising of only two firms is called a

duopoly

which of the following is a characteristic shared by a perfectly competitive firm and a​ monopoly?

each maximizes profits by producing a quantity for which marginal revenue equals marginal cost

which of the following is a reason why cartels often break​ down?

each member of a cartel has an incentive to​ "cheat" on the collusive agreement by producing more than its share when everyone else sticks with the collusive agreement

if, when a firm doubles all its inputs, its average cost of production decreases, then production displays

economies of scale

twenty-eight countries in europe have eliminated all tariffs with each other. this group of countries is known as

european union

a monopolistically competitive industry that earns economic profits in the short run will

experience the entry of new rival firms into the industry in the long run

the rules of accounting generally require that _____ costs be used for purposes of keeping a company's financial records and for paying taxes. these costs are sometimes called _____ costs

explicit; accounting

the study of how people make decisions in situations where attaining their goals depends on their interactions with others is called

game theory

the process of countries becoming more open to foreign trade and investment is known as

globalization

a patent or copyright is a barrier to entry based on

government action to protect a producer

the table above shows the output per week of two jewelers, serena and haley. which of the following statements is true?

haley has an absolute & comparative advantage in making bracelets and serena in making necklaces

congress passed the clean air act in 1970. since this act was passed, emissions of the six main air pollutants

have fallen by more than one-half

if the two countries specialize and trade, who should export sailboats?

honduras

how are the fundamental economic questions answered in a market economy?

households and firms interact in markets to decide the answers to these questions

which of the following could explain why the demand for table salt is inelastic?

households devote a very small portion of their income to salt purchases

price elasticity of demand measures

how responsive quantity demanded is to a change in price

which of the following is a positive economic statement?

if the price of iphones falls, a larger quantity of iphones will be purchased

a tariff is a tax imposed by government on

imports

where do economic agents such as individuals, firms, and nations, interact with each other?

in any arena that brings together buyers and sellers

what is the nash equilibrium in this​ game?

in the nash equilibrium saudi arabia produces a low output and earns a profit of​ $80 million and ecuador produces a high output and earns a profit of​ $22 million

which of the following is a source of market failure?

incomplete property rights or inability to enforce property rights

a production possibilities frontier with a bowed-outward shape indicates

increasing opportunity costs as more and more of one good is produced

a characteristic found only in oligopolies is

interdependence of firms

for a monopolistically competitive​ firm, marginal revenue

is less than the price

the median voter theorem states that the outcome of a majority vote

is likely to represent the preferences of the voter who is in the political middle

a dominant strategy

is one that is the best for a​ firm, no matter what strategies other firms use

protectionism

is the use of trade barriers to protect domestic firms from foreign competition

if society decides it wants more of one good and all resources are fully utilized, then

it has to give up some of another good and incur some opportunity costs

excess capacity is a characteristic of monopolistically competitive firms. what does excess capacity​ mean?

it means that firms do not produce the output level that corresponds to the minimum point on their average total cost curves

what is it meant by the term "rational ignorance"?

it means the lack an economic incentive for voters to become informed about a pending legislation

if a firm shuts down in the short​ run,

its loss equals its fixed cost

in the short​ run, a profit maximizing​ firm's decision to produce should be guided by whether

its total revenue covers its variable cost

who won a nobel prize in economics for his work in the development of game​ theory?

john nash

which of the following activities create a negative externality?

keeping a junked car parked on your front lawn

the inelastic segment of the demand curve

lies below the midpoint of the curve

an economic ______ is a simplified version of some aspect of economic life used to analyze an economic issue

model

movie theaters often charge higher ticket prices for evening showings than for afternoon showings. why is this the​ case?

movie theaters know that many people are willing to pay more to see a movie in the evening than during the afternoon

a situation in which each firm chooses the best strategy given the strategies chosen by other firms is called a

nash equilibrium

if a typical firm in a perfectly competitive industry is earning​ profits, then

new firms will enter in the long run causing market supply to​ increase, market price to​ fall, and profits to decrease

with perfect price discrimination there is

no deadweight loss

the arrow impossibility theorem states that

no system of voting can be devised that will always consistently represent the underlying preferences of voters

if, hiring another worker would increase output by three units per hour, then to maximize profits the firm should

not hire an additional worker

an example of a barrier to entry is

occupational licensing

private producers have no incentive to provide public goods because

once produced, it will not be possible to exclude to those who do not pay for the good

in economics, the term "free-rider" refers to

one who waits for others to produce a good and then enjoys its benefits without paying for it

refer to the diagrams above. a perfectly elastic demand curve is shown in

panel B

refer to the diagrams above. a unit elastic supply curve is shown in

panel C

the entry and exit of firms in a monopolistically competitive market guarantee that

price equals average total cost in the long run

total revenue equals

price per unit times quantity sold

the reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because

products are differentiated

free trade _____ living standards by _____ economic efficiency

raises; increasing

if a firm raised its price and discovered that its total revenue fell, then the demand for its product is

relatively elastic

economists also examine the actions of individuals and firms as they attempt to use government to make themselves better off at the expenses of others, a process that is referred to as

rent seeking

in walnut​ creek, california, there are three very popular​ supermarkets: safeway, whole​ foods, and​ lunardi's. while safeway remains open twenty−four hours a​ day; whole foods and​ lunardi's close at 9 pm. which of the following statements is​ true?

safeway has a monopoly at midnight but not during the day

sarita and gabriel own s&g bakery. select the statement that accurately interprets the data in the table

sarita has a comparative advantage in baking cakes

in economics, choices must be made because we live in a world of

scarcity

what is sefronia likely to do, given that she is as rational as any other person?

she might claim that she is not willing to pay for a housecleaner, hoping that bella would pay the entire $80

if the cross-price elasticity of demand for two goods is positive, this implies that the two goods are

substitutes

tomas increased his consumption of potato chips when the price of pistachios increased. for tomas, potato chips and pistachios are

substitutes

the table shows the demand and supply schedules for the labor market in the city of pixley. if a minimum wage of $11.50 is mandated, there will be a

surplus of 40,000 units of labor

the actual division of the burden of a tax between buyers and sellers in a market is called

tax incidence

allocative efficiency is achieved when firms produce goods and services

that consumers value most

the curve labeled "F" is

the average product curve

by definition, economics is the study of

the choices people make to attain their goals, given their scarce resources

the equilibrium wage and quantity of labor in the market for skilled workers is determined by

the demand and supply of labor

during the covid-19 pandemic, most gyms were forced to close due to social distancing requirements. what likely happened in the market for home fitness equipment during this pandemic?

the demand curve shifted to the right

economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which

the sum of consumer surplus and producer surplus is at a maximum

which of the following is an example of a common resource?

the sumatran tiger population in the wild

in 2004, hurricanes destroyed a large portion of florida's orange and grapefruit crops. in the market for citrus fruit,

the supply curve shifted to the left resulting in an increase in the equilibrium price

suppose favorable weather resulted in a bumper crop of oranges in florida. in the market for oranges

the supply curve shifted to the right resulting in a decrease in the equilibrium price

in october, market analysts predict that the price of platinum will fall in november. what happens in the platinum market in october, holding everything else constant?

the supply curve shifts to the right

the ratio at which a country can trade its exports for imports from other countries is called

the terms of trade

in a perfectly competitive​ industry, in the long−run equilibrium

the typical firm earns zero profit

which of the following correctly describes the relationship between economic efficiency and economic equity?

there is often a trade-off between the two

monopolistically competitive firms can differentiate their products

through marketing

without an increase in the supply of the factors of production, how can a nation achieve economic growth?

through technological advancement which enables more output with the same quantity of resources

companies producing toilet paper bleach the paper to make it white. an efficient way to get the firm to produce the socially optimal output level is

to impose a tax to make the industry bear the external costs it creates

the term used by economists to describe a situation in which one country raises tariffs and other countries retaliate by raising tariffs on the first country's exports is

trade war

refer to the diagram to the right. point C is

unattainable with current resources

a firm that successfully differentiates its product or lowers its average cost of production creates

value for its customers

which of the following is a microeconomic question?

what factors determine the price of carrots?

a perfectly competitive firm produces​ 3,000 units of a good at a total cost of​ $36,000. the fixed cost of production is​ $20,000. the price of each good is​ $10. Should the firm continue to produce in the short​ run?

yes, it should continue to produce because the​ firm's revenues cover the total variable cost of​ $16,000

what is the fixed cost of​ production?

​$1,000

refer to the table to the right. what is the marginal revenue of the 3rd​ unit?

​$5.50

if the market price is​ $20, what is the​ firm's profit maximizing​ output?

​1,350

in long−run equilibrium, compared to a perfectly competitive​ market, a monopolistically competitive industry produces a​ ________ level of output and charges a​ ________ price.

​lower; higher

insurance companies typically charge women lower prices than men for automobile insurance. is this an example of price​ discrimination?

​no, because, on​ average, women have better driving records than men and the costs of insuring men are greater than the costs of insuring women

is this candy store maximizing its profit and if it is​ not, what would you recommend to the​ firm?

​no, it is not; it should lower its charging price to Pb and sell Qb units

is there a dominant strategy for airporter and if​ so, what is​ it?

​no, its outcome depends on what limozeenz does

is there a dominant strategy for saudi arabia​ and, if​ so, what is​ it?

​yes, the dominant strategy is to produce a low output


Ensembles d'études connexes

A-Level Politics: Key Terms: The US President and Executive

View Set

Chapter 5: Foundations of Employee Motivation - Quiz

View Set

Ch. 8 - nutrition for childbearing

View Set