Micro Final
If Will's Print Shop competes in a perfectly competitive market and he charges $10 per printing job, what is the marginal revenue of his 3rd print job? A) $3.33 B) $10.00 C) $30.00 D) Between $10.00 and $30.00
B) $10.00
Because Dennis always eats cereal while he drives, he is generating a _____ to others, resulting in a shift of the supply curve to the _____. A) external cost; right B) external cost; left C) external benefit; right D) external benefit; left
B) external cost; left
Strategies for players to overcome a prisoner's dilemma include: A)competing more rigorously to achieve a better outcome. B)playing the game repeatedly over time to promote cooperation. C)avoiding collusion, which hurts all players involved. D)playing the strategies that lead to a Nash equilibrium.
B)playing the game repeatedly over time to promote cooperation.
5. Which of the following is most likely to shift the supply of milk to the right? A) a tax on each gallon of milk produced B) an increase in household income, milk being a normal good C) a decrease in the price of feed given to dairy cows D) the bankruptcy of many small dairy farms
C) a decrease in the price of feed given to dairy cows
18. In movement along a production possibility frontier, the opportunity cost to society of getting more of one good: A) is always constant. B) is measured in dollar terms. C) is measured by the amount of the other good that must be given up. D) usually decreases.
C) is measured by the amount of the other good that must be given up.
30. The financial meltdown of 2008-2009: A) was accurately predicted by an economic model. B) was due to excessive investment in Internet companies. C) was the result of the breakup of the European Union. D) resulted partially from a faulty economic model.
D) resulted partially from a faulty economic model.
Suppose that Rich and Sheri each own the two largest helicopter tour companies at the Grand Canyon. If each uses a pricing strategy that leads to a prisoner's dilemma, what would be the result? A)Both Rich and Sheri would earn a lot of profits. B)Rich and Sheri would be better off by not cooperating with each other. C)Tourists would end up paying a lot more for helicopter tours. D)Tourists would end up getting great deals for helicopter tours.
D)Tourists would end up getting great deals for helicopter tours.
Going to the wholesale club, one can buy toothpaste at a lower cost per unit as long as one buys 6 tubes at once. This is an example of _____ and this _____ total producer surplus. A)perfect price discrimination; decreases B)perfect price discrimination; increases C)imperfect price discrimination; decreases D)imperfect price discrimination; increases
D)imperfect price discrimination; increases
17. The market for beef is in long-run equilibrium at $3.25 per pound. The announcement that mad cow disease has been discovered in the United States reduces the demand for beef sharply, and the price falls to $2.00 per pound. If the long-run supply curve is horizontal, when the long-run equilibrium is reestablished, the price will be: A) $3.25 per pound. B) $2.00 per pound. C) greater than $2.00 per pound but less than $3.25 per pound. D) More information is needed to answer this question.
A) $3.25 per pound.
23. If the average variable cost of producing 5 costumes in Kira's Costume Shop is $50, and the fixed cost of the shop is $100, what is the total cost for 5 costumes? A) $350 B) $250 C) $150 D) $50
A) $350
10. Zoe's Bakery operates in a perfectly competitive industry. When the market price of iced cupcakes is $5, the profit-maximizing output level is 150 cupcakes. Her average total cost is $4, and her average variable cost is $3. Zoe's marginal cost is _____, and her short-run profits are _____. A) $5; $150 B) $5; $300 C) $1; $150 D) $1; $300
A) $5; $150
13. Suppose a local hardware store has explicit costs of $2 million per year and implicit costs of $44,000 per year. If the store earned an economic profit of $50,000 last year, this means that the store's accounting profit equaled: A) $94,000. B) $6,000. C) $2.05 million. D) $2.044 million.
A) $94,000.
27. Christine recently earned a promotion at work, raising her income by 40%. As a result, she now attends 2 concerts whereas before she only attended 1 concert. What is Christine's income elasticity of demand for concerts? A) 5/3 B) 3/5 C) -5/3 D) -3/5
A) 5/3
16. (Table: Optimal Choice of Milk and Honey) Look at the table Optimal Choice of Milk and Honey. The price of milk is $2 per gallon, and the price of honey is $4 per jar. Hal's income is $16. Assuming that Hal spends all of his income on honey and milk, if he buys 1 jar of honey, he can buy _____ gallons of milk, and his total utility will be _____. A) 6; 176 B) 4; 132 C) 3; 44 D) 2; 60
A) 6; 176
3. Which of the following is most likely to shift the supply curve for pet grooming services leftward? A) An increase in the cost of pet grooming supplies B) A decrease in the number of pet owners taking their pets to be groomed C) A rise in the price of pet grooming services D) An increase in the number of pet groomers seeking employment
A) An increase in the cost of pet grooming supplies
26. You manage a nightclub, and lately revenues have been disappointing. Your bouncer suggests that raising drink price will increase revenues, but your bartender suggests that decreasing drink prices will increase revenues. You aren't sure who is right, but you do know that your bouncer thinks the demand for drinks is _____ and your bartender thinks the demand for drinks is _____. A) Inelastic; elastic B) Elastic; inelastic C) Elastic; elastic D) Inelastic; inelastic
A) Inelastic; elastic
7. Which of the following choices represents a possible trade that makes both countries better off? (Use Test) A) The US would trade 2 tons of wheat for 3 tons of aluminum B) The US would trade 1 ton of wheat to Germany for 1 ton of aluminum C) Germany would trade 2 tons of aluminum to the US for 1 ton of wheat D) Germany would trade 2 tons of wheat to the US for 1 ton of aluminum
A) The US would trade 2 tons of wheat for 3 tons of aluminum
29. An increase in the price of hamburger would probably result in _____ in the demand for hamburger buns. A) a decrease B) an increase C) no change D) random fluctuations
A) a decrease
26. The production possibility frontier will shift outward for all of the following reasons EXCEPT: A) an increase in the unemployment rate. B) an increase in the labor force. C) an improvement in technology. D) an increase in worker productivity.
A) an increase in the unemployment rate.
9. Joe's budget line reflects the _____ available to Joe if he spends _____ of his income. A) consumption bundles; all B) consumption bundles; part C) utility; all D) utility; part
A) consumption bundles; all
As an industry expands, more manufacturing companies are able to increase their productivity due to specialization. This industry is likely to be a(n): A) decreasing cost industry. B) constant cost industry. C) increasing cost industry. D) incremental cost industry.
A) decreasing cost industry.
22. Suppose the government sets the maximum price for a normal doctor's visit at $20, but the current market price is $40. As a result of this government action doctors will see: A) fewer patients B) the same number of patients C) more patients
A) fewer patients
2. Grapes are an input in the production of wine, and wine and red meat are complements in consumption. A decrease in the price of grapes will __________ the total surplus in the market for red meat A) increase B) decrease C) not change
A) increase
8. For most firms, economic profit is: A) less than accounting profit. B) equal to accounting profit. C) greater than accounting profit. D) negative.
A) less than accounting profit.
18. For the Colorado beef industry to be classified as perfectly competitive, ranchers in Colorado must have _____ on prices and beef must be a _____ product. A) no noticeable effect; standardized B) a huge effect; standardized C) a huge effect; differentiated D) no noticeable effect; differentiated
A) no noticeable effect; standardized
15. (Figure: The Total Product) Look at the figure The Total Product. Labor added from L1 and up to L2 is: A) subject to diminishing marginal returns. B) adding increasing amounts to total product. C) adding negative amounts to total product. D) adding negative amounts to total product and subject to diminishing marginal returns.
A) subject to diminishing marginal returns.
11. You own a deli. Which of the following is most likely a fixed input at your deli? A) the dining room B) the bread used to make sandwiches C) the tomato sauce used to make soups D) the employees
A) the dining room
14. It is certain that the equilibrium quantity will rise when: A) the supply curve and the demand curve both shift to the right. B) the supply curve shifts to the right and the demand curve shifts to the left. C) supply and demand both shift to the left. D) supply shifts to the left and demand stays the same.
A) the supply curve and the demand curve both shift to the right.
19. Scarcity in economics means that: A) we do not have sufficient resources to produce all of the goods and services we want. B) the wants of people are limited. C) there must be poor people in rich countries. D) economists are clearly not doing their job.
A) we do not have sufficient resources to produce all of the goods and services we want.
15. If there is an increase in supply, assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus: A) will increase. B) will decrease. C) will remain the same. D) may change, but we can't tell how.
A) will increase.
Shani's Frozen Treats is one of 15 ice cream shops on the boardwalk. If Shani sells ice cream for $5 and sells 100 per day, how much economic profit will she earn in the long run? A)$0 B)$5 C)$500 D)There is not enough information to know
A)$0
Sean owns the only pool cleaning service in his town. If he charges $50 per cleaning, he has 10 weekly customers. If he wants to add an 11th customer, he needs to drop his price to $45. What is Sean's marginal revenue for the 11th customer? A)-$5 B)$5 C)$45 D)$495
A)-$5
Digiano's Pizza Buffet charges $15 for adults and $10 for children. The goal of this price discrimination is to transfer more _____ into _____. A)consumer surplus; producer surplus B)producer surplus; consumer surplus C)deadweight loss; producer surplus D)deadweight loss; consumer surplus
A)consumer surplus; producer surplus
Carlise and Mary are the only two editors of mystery novels in the city of Readville. If Carlise and Mary collude to earn more profits, they would: A)each reduce the number of books published and raise prices. B)each reduce the number of books published and lower prices. C)each increase the number of books published and raise prices. D)each increase the number of books published and lower prices.
A)each reduce the number of books published and raise prices.
1. Austin's total fixed cost at the bakery is $3,600 a month. Austin employs 20 workers and pays each worker $8 an hour. The marginal product of the twentieth worker is 12 iced cupcakes an hour. What is the marginal cost of the last cupcake produced by the last worker Austin hired? A) $0.26 B) $0.66 C) $3.81 D) $8.00
B) $0.66
14. Andreas is a political consultant with his own firm. He travels the country and provides campaign advice for political candidates. Last year he earned $250,000 in revenue for his services. He pays one employee $50,000 to manage the small office back home and pays $30,000 on rent and utilities for that office. His accountant tells him that if he sold all of the equipment, he could put that money in the bank and earn $3,000 in interest next year. Andreas also has received an offer to teach political science at a college at a salary of $100,000. Andreas's accounting profit is equal to _____ and his economic profit is equal to _____. A) $175,000; $67,000 B) $170,000; $67,000 C) $200,000; $72,000 D) $170,000; $70,000
B) $170,000; $67,000
10. Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is A) $33,800 B) $42,600 C) $49,800 D) $57,000
B) $42,600
21. (Table: Variable Costs for Lots) Look at the table Variable Costs for Lots. During the winter, Alexa runs a snow-clearing service in a perfectly competitive industry. Assume that costs are constant in each interval; that is, the variable cost of clearing anywhere from 1 through 10 lots is $200. Her only fixed cost is $1,000 for a snowplow. Her variable costs include fuel, her time, and hot coffee. If the price to clear a lot is $25, of the following possible quantities, how many lots should Alexa clear? A) 50 B) 40 C) 30 D) 20
B) 40
13. (Figure: Production Possibility Frontier for Tealand) Look at the figure Production Possibility Frontier for Tealand. Tealand is producing at point C on its production possibility frontier. What is the opportunity cost of increasing the production of tea from 20 million cups to 30 million cups?(Use Test) A) 10 million cups of tea B) 5 million scones C) 10 million scones D) The answer is impossible to determine from the information given.
B) 5 million scones
4. As the price of copper continues to rise, which of the following is a consequence that may result? A) Profits of copper producers decrease B) A potential rise in copper wire thefts C) The quantity suppled of copper falls D) The government increases the copper content in pennies
B) A potential rise in copper wire thefts
9. In the market for wheat, if the price of ethanol (which is made from corn, a substitute in production) increased dramatically, the ___ wheat would____. A) Supply of; increase B) Supply of; decrease C) Demand for; increase D) Demand for; decrease
B) Supply of; decrease
24. Apples and pears have a small (in absolute value) but negative cross-price elasticity of demand, which makes apples and pears: A) Strong complements B) Weak complements C) Close substitutes D) Weak substitutes
B) Weak complements
25. Suppose that at a baseball game, you consumed 3 hot dogs (each priced at $5) and 4 sodas (each priced at $3). The 3rd hot dog provided a marginal utility of 20, while the 4th soda provided a marginal utility of 15. In order to maximize utility, should you have changed your consumption? A) No, you had maximized your utility. B) Yes, you should have consumed more sodas and fewer hot dogs. C) Yes, you should have consumed more hot dogs and fewer sodas. D) Yes, you should have consumed fewer of both hot dogs and sodas.
B) Yes, you should have consumed more sodas and fewer hot dogs.
28. Because Casey can type reports faster and more accurately than Ahmet, Casey has a(n) _____ in typing reports. A) comparative advantage B) absolute advantage C) opportunity cost D) specialization
B) absolute advantage
In the long run, positive economic profits ____, while economic losses _____. A) attract market entry; also attract market entry B) attract market entry; attract market exit C) attract market exit; attract market entry D) attract market exit; also attract market exit
B) attract market entry; attract market exit
Generally, the amount of public goods available in a society is _____ what is actually desired. A) greater than B) less than C) exactly D) either exactly or greater than
B) less than
The introduction of the iPad for about $500 marked the beginning of a new era for the highly competitive industry of tablets. As other sellers, such as Amazon and Samsung, realized the success of this product, they began to enter the market with their own tablets. What do you think will happen to the price of tablets (such as the iPad) the next five years? A) prices will increase B) prices will decrease C) prices will not change very much
B) prices will decrease
28. Subira earns $125,000 a year and pays $20,000 in a certain tax. Qamar earns $75,000 a year and pays $15,000 in the same tax. We can conclude that this tax is a: A) progressive tax B) regressive tax C) lump-sum tax D) flat tax
B) regressive tax
27. (Figure: The Demand and Supply of Wheat) Look at the figure The Demand and Supply of Wheat. A temporary price of $2 in this market would result in a _____ of _____ bushels.(Use Test) A) surplus; 4,000 B) shortage; 8,000 C) shortage; 10,000 D) surplus; 10,000
B) shortage; 8,000
Which of the following best represents a tragedy of the commons? A)A shopping mall with virtually no shoppers inside. B)A severe traffic jam on the freeway. C)A fire that burns an entire apartment complex. D)A ski resort closing due to lack of snow.
B)A severe traffic jam on the freeway.
Which of the following is not a characteristic of a monopolistically competitive market? A)There are many firms competing in the market. B)Each firm takes the price as given in the market. C)Firms differentiate their products from other firms. D)Firms can earn economic profits in the short run.
B)Each firm takes the price as given in the market.
In the town of Linsberg, Chuck is the only craft brewer. In the neighboring town of Krugerville, Justin and Tom each run a craft brewery and compete for customers. Which town is likely to have higher prices and greater deadweight loss? A)Linsberg will have higher prices and Krugerville will have greater deadweight loss. B)Linsberg will have higher prices and greater deadweight loss. C)Krugerville will have higher prices and Linsberg will have greater deadweight loss. D)Krugervile will have higher prices and greater deadweight loss.
B)Linsberg will have higher prices and greater deadweight loss.
As new ride-sharing companies compete against taxi companies which had previously enjoyed monopoly power, what will happen to the price and quantity of transportation services? A)Prices will rise and quantity will rise. B)Prices will fall and quantity will rise. C)Prices will rise and quantity will fall. D)Prices will fall and quantity will fall.
B)Prices will fall and quantity will rise.
Suppose that at the profit maximizing level of output for a monopolistically competitive firm, the price of a good is $10 and the average total cost is $8. Based on this information, the firm is operating in the _____ and we can expect _____. A)Short-run; firms to exit the market B)Short-run; firms to enter the market C)Long-run; firms to exit the market D)Long-run; firms to enter the market
B)Short-run; firms to enter the market
Which of the following is most likely a monopolistically competitive market? A)lobsters B)blue jeans C)Segway scooters D)commercial aircraft
B)blue jeans
When Lin receives a flu vaccination, it reduces the chance of him receiving the flu as well as the chance that his sister will get sick. His flu vaccination creates a(n): A)external cost B)external benefit C)marginal social cost D)deadweight loss
B)external benefit
Tom is a junk remover who occasionally finds rare antiques to sell. He uses an online auction site to sell each antique for the highest possible price customers are willing to pay. Tom is engaging in _____, and this leads to _____ consumer surplus. A)perfect price discrimination; very high B)perfect price discrimination; zero C)imperfect price discrimination; very high D)imperfect price discrimination; zero
B)perfect price discrimination; zero
Dimitri has several apple trees in his yard, and apples are a perfectly competitive market with a price of $2 per pound. If Dimitri sells apples at the farmer's market, what is his total revenue and marginal revenue when he sells the 100th pound of apples? A)total revenue is $2; marginal revenue is $2 B)total revenue is $200; marginal revenue is $2 C)total revenue is $2; marginal revenue is $200 D)total revenue is $200; marginal revenue is $200
B)total revenue is $200; marginal revenue is $2
3. (Table: The Market for Fried Twinkies) Look at the table The Market for Fried Twinkies. The government decides to tax fried Twinkies at a rate of $0.30 per Twinkie and collect that tax from the producers. According to the table, consumers will pay _____ per Twinkie and buy _____ Twinkies after the tax. A) $1.20; 8,000 B) $1.30; 7,000 C) $1.40; 6,000 D) $1.50; 5,000
C) $1.40; 6,000
12. Suppose that currently the United States produces 500 tons of shrimp and 1,000 tractors while Thailand produces 100 tons of shrimp and 1,500 tractors. Each country only consumes what it produces. Now assume that trade opens up between the two countries. If Thailand focuses on producing only shrimp, how many more tractors can be produced in total while keeping total shrimp production the same? (Use Test) A) 500 B) 1,000 C) 1,500 D) 2,000
C) 1,500
29. If you receive 10 units of utility from consuming one cup of coffee and 16 units of utility from consuming two cups of coffee, which of the following is the likely amount of utility you will receive from consuming three cups of coffee? A) 26 units of utility B) 22 units of utility C) 18 units of utility D) 6 units of utility
C) 18 units of utility
12. (Table: Marginal Utility per Dollar) Look at the table Marginal Utility per Dollar. If Damian has $9 to spend on potatoes and clams, then the utility-maximizing combination is _____ pounds of clams and _____ pounds of potatoes. A) no; 9 B) 2; 2 C) 1; 6 D) 2; 3
C) 1; 6
5. (Figure: Game-Day Shirts) Rick is one of 10 vendors who sell game-day T-shirts at football games in a perfectly competitive market. His costs are identical to the costs of the other 9 vendors. If the price of a shirt is $11, the short-run industry supply will be _____ shirts. A) 140 B) 200 C) 220 D) 240
C) 220
Which of the following is true in the long run for competitive industries? A) Variable costs = $0 B) Fixed costs > variable costs C) Average total cost = price D) marginal cost > average cost
C) Average total cost = price
If Mara's Puzzle Factory is operating at a quantity in which the marginal revenue from the last puzzle produced is $20, marginal cost is $15, and average total cost is $10. What should Mara do to maximize profits? A)Leave her production exactly where it is because she is clearly earning a profit. B) Decrease her production of puzzles. C) Increase her production of puzzles. D) Shut down her business because it is losing money.
C) Increase her production of puzzles.
Use the following to answer question 22. 22. What is likely to happen in the long run if this firm operates in perfectly competitive market A) Industry output will stay the same B) Individual firm output will increase C) Industry output will increase D) Industry output will decrease
C) Industry output will increase
Which of the following is an example of a positive externality? A) Buying a gift for your sister B) Getting a deal at the local store C) Making improvements to your house D) None of these are examples of a positive externality
C) Making improvements to your house
30. Jared runs a personal training studio and earned $5,000 last month. His fixed costs are $4,000 and variable costs are $3,500. Should Jared shut down his business immediately? A) Yes, because he is losing money B) Yes, because $5,000 does not cover his fixed costs C) No, because $5,000 covers his variable costs D) No, because $5,000 covers his fixed costs
C) No, because $5,000 covers his variable costs
Consumer surplus is represented by the area _____ the demand curve and _____ the market price. A) above; below B) above; above C) below; above D) below; below
C) below; above
21. (Figure: The Market for Hybrid Cars) Look at the figure The Market for Hybrid Cars. What area represents deadweight loss if there is a binding price floor at P1?(Use Test) A) a + b + c B) b + c + d + e C) c + e D) c
C) c + e
24. Suppose the government sets a price floor below the current price of a good. This price floor will: A) result in an excess supply of the good. B) result in an excess demand for the good. C) have no effect on the price of the good. D) increase the quantity supplied of the good.
C) have no effect on the price of the good.
8. Say the following two events occur at the same time: The Chicago Cubs win the MLB Championship, The team management increases the salaries of all the Chicago Cubs players Holding everything else constant, we would expect the price of next season Cubs' tickets to _____ and the quantity of tickets to _______ A) increase; increase B) decrease; increase C) increase; increase or decrease D) increase or decrease; increase
C) increase; increase or decrease
Suppose you own the patent for a new type of bicycle lights, hence giving you a monopoly over the industry. If you lower the price of the light from $10 to $9, then we know for sure that at the new price: A) marginal cost is more than $9 B) marginal cost is less than $9 C) marginal revenue is less than $9 D) marginal revenue is more than $9 E) none of the above
C) marginal revenue is less than $9
11. For most goods, purchases tend to rise with increases in buyers' incomes and to fall with decreases in buyers' incomes. Such goods are known as: A) inferior. B) direct. C) normal. D) indirect.
C) normal.
Dolly's Backyard BBQ is the only BBQ restaurant in town. Her profit maximizing price is $10 and serves 50 customers per day. At this quantity, her average total cost is $7 per customer. How much profit does Dolly earn per day? A)$3 B)$10 C)$150 D)$500
C)$150
Which of the following would be the best example of a free-rider? A)A roommate asking you for a ride to school but won't help out with gas. B)A panhandler who sneaks onto the subway without paying. C)A person without health insurance visiting an emergency room because they can't be turned away. D)A neighbor who plants vegetables in her garden and allows others to help themselves to the harvest.
C)A person without health insurance visiting an emergency room because they can't be turned away.
Which of the following is not a common method by which government controls pollution? A)Issuing tradable permits to pollute. B)Implementing a tax on pollution emitted. C)Advertising the harmful effects of pollution to encourage firms to pollute less. D)Setting a strict limit on the amount of pollution each firm can generate.
C)Advertising the harmful effects of pollution to encourage firms to pollute less.
Suppose the production of widgets generates an unpleasant smell to households that are located nearby, but when the widgets are consumed people nearby the consumer also benefit. Is the total surplus generated by the free market outcome smaller than the socially optimal outcome? A)Yes B)No C)Not enough information
C)Not enough information
Which of the following statements must be true in a game theory situation that results in a prisoners' dilemma? i. The outcome of each player is the worst possible outcome in the game. ii. Neither player has an incentive to deviate unilaterally from the prisoners' dilemma outcome. iii. Both players could achieve a better outcome if they successfully collude. A)Only i is true B)Only iii is true C)Only ii and iii are true D)All three statements are true
C)Only ii and iii are true
Which of the following is the best example of a public good with exclusion? A)A fireworks display that can be seen miles away B)Fire protection services offered by the city C)Satellite radio service D)A public lake
C)Satellite radio service
The private consumption of services that generate positive externalities, such as getting a college education, is usually _____ the socially optimal level of consumption. A)greater than B)equal to C)less than D)unrelated to
C)less than
The value of deadweight loss for a perfect price discriminator is _____ an imperfect price discriminator. A)greater than B)the same as C)less than D)unknown compared to
C)less than
The movie theater in your neighborhood charges lower ticket prices to senior citizens than to other patrons. Assuming that this pricing strategy increases the profits of the movie theater, we can conclude that senior citizens must have a ________ for movie tickets than other patrons. A)greater demand B)lower demand C)more elastic demand D)less elastic demand
C)more elastic demand
Which of the following would be the best example of a public good? A)clean water at the public lake B)a community park C)snowplowing the streets D)public school
C)snowplowing the streets
25. (Table: Music Downloads) Two consumers, Eli and Madison, like to download songs to their iPhones, and the table Music Downloads represents their willingness to pay for each downloaded song. If an individual song can be downloaded for $1, what is the total consumer surplus received by these consumers? (Use Test) A) $19.25 B) $18 C) $10 D) $11
D) $11
6. 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 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is A) $0 B) $15 C) $305 D) $315
D) $315
7. A business produces 10 pairs of eyeglasses. It incurs $30 in average variable cost and $5 in average fixed cost. The total cost of producing 10 pairs of eyeglasses is: A) $35. B) $50. C) $300. D) $350.
D) $350.
23. (Figure: Producer Surplus III) Look at the figure Producer Surplus III. If the price of the good is $4, producer surplus will equal: (Use Test) A) $20. B) $40. C) $60. D) $80.
D) $80.
20. The only producer of chocolate bunnies in the world, Choco's Bunny Company, recently expanded its production capacity from 1,000 to 2,000 bunnies per day. If the price elasticity of demand for bunnies is 3.33, by how much will the company have to reduce its price to sell the additional 1,000 bunnies (by the midpoint method)? A) 2.5% B) 25% C) 125% D) 20%
D) 20%
Jared runs a personal training studio and earned $5,000 last month. His fixed costs are $4,000 and variable costs are $3,500. Should Jared shut down his business immediately? A) Yes, because he is clearly losing money. B)Yes, because $5,000 cannot cover his fixed costs. C)No, because $5,000 covers his fixed costs. D)No, because $5,000 covers his variable costs.
D) No, because $5,000 covers his variable costs.
16. A decrease in the price of eggs will result in an increase in the A) Demand for eggs B) Supply of eggs C) Quantity of eggs supplied D) Quantity of eggs demanded
D) Quantity of eggs demanded
Roy makes so much money in his private tutoring business that all of his classmates start their own tutoring businesses. What is the effect of competition on the market for tutoring? A) Demand will shift right and prices will rise. B) Demand will shift right and prices will fall. C) Supply will shift right and prices will rise. D) Supply will shift right and prices will fall.
D) Supply will shift right and prices will fall.
4. (Table: The Market for Fried Twinkies) Look at the table The Market for Fried Twinkies. As a result of the $0.30 tax per fried Twinkie, the government will receive total tax revenue of: A) $500. B) $1,000. C) $1,500. D) The total is impossible to calculate.
D) The total is impossible to calculate.
20. In the market for tacos, you observe that the equilibrium price and quantity have increased. This can be caused only by: A) an increase in the price of beef. B) an increase in the wages of taco shop workers. C) fewer taco shops. D) an increase in the incomes of people who eat tacos.
D) an increase in the incomes of people who eat tacos.
19. Some fast-food restaurants and retail stores seem to be able to clone their operations from market to market without a noticeable rise in costs. Therefore, it can be expected for the long-run supply curve to be: A) downward sloping B) upward sloping C) vertical D) horizontal
D) horizontal
2. Suppose that some firms in a perfectly competitive industry are earning positive economic profits. In the long run, the: A) industry is in equilibrium. B) industry supply curve will shift to the left. C) number of firms in the industry will not change. D) number of firms in the industry will increase.
D) number of firms in the industry will increase.
6. When the government imposes an excise tax, the deadweight loss: A) should equal the tax revenue paid to the government. B) should be greater than the tax revenue paid to the government. C) should be less than the tax revenue paid to the government. D) should be caused by prevention of transactions because of the cost of the tax.
D) should be caused by prevention of transactions because of the cost of the tax.
17. The market for apples is in equilibrium at a price of $0.50 per pound. If the government imposes a price floor in the market at a price of $0.40 per pound: A) quantity demanded will decrease. B) quantity supplied will increase. C) there will be a shortage of apples. D) the price floor will not affect the market price or output.
D) the price floor will not affect the market price or output.
Suppose that Fortune 8 Casino is one of ten casinos in the town of Luckyville, and every casino is earning substantial economic profits. What is likely to happen in the long run? A)Some casinos will take their profits and exit the market. B)Some casinos will downsize because their profits are not high enough. C)New casinos will enter the market and continue to earn economic profits. D)New casinos will enter the market but economics profits will be eliminated.
D)New casinos will enter the market but economics profits will be eliminated.
Which of the following is not an essential component when analyzing situations using game theory? A)players B)payoffs C)strategies D)money
D)money
