Micro final exam
I'MABigCorp. produces and sells kitchen wares. Last year, it produced 7,000 can openers and sold each one for $6. To produce the 7,000 can openers, the company incurred variable costs of $28,000 and a total cost of $45,000. I'MABIGCorp.'s average fixed cost to produce the 7,000 can openers was $1.50 $1.23 $2.25 $2.43
$2.43
Refer to the table below. This information reflects the demand curve and the average cost curve for a firm that is a natural monopoly. What will this firm's profits equal? $2.50 $1.50 $1.25 $0.50
$2.50
Refer to Figure 5-1. With reference to Graph A, at a price of $5, total revenue equals: $200. $400. $500. $1,000.
$500.
Rick eats only french fries and burgers at his office cafeteria. His weekly lunch budget is $48. Each burger costs $6 and each order of fries costs $3. When deciding how much of each good to buy, Rick knows that 2 burgers and 4 orders of french fries will give him a utility of 8. At his utility-maximizing point, Rick's utility is: 32 48 40 24
32
Refer to Figure 2-2. When the economy moves from Point A to Point B in the diagram above: the economy begins using its resources efficiently to produce both food and clothing. the economy operates at its productive capacity once it reaches Point B. the economy increases production of both clothing and food. All of the above occur.
All of the above occur.
Refer to Figure 2-1. Along the production possibilities frontier, the most efficient point of production depicted is: Point B Point C Point D All points on the production possibilities frontier are equally efficient.
All points on the production possibilities frontier are equally efficient.
Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect: Andy's demand for pizza to increase. Andy's demand for pizza to decrease. Andy's quantity of pizza demanded to decrease. Andy's demand for beer to increase.
Andy's demand for beer to increase.
Refer to Figure 2-1. An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from: A to B B to E C to F G to F
C to F
Which is an example of a price floor? Rent controls Automated Teller Machine (ATM) fees Government-mandated minimum wage Prescription drugs pricing
Government-mandated minimum wage
______________________ refers to the additional revenue gained from selling one more unit. Marginal revenue Total revenue Economic profit Accounting profit
Marginal revenue
Refer to Table 4-1. Suppose that D1 and S2 are the demand and supply schedules for Product A. If the government imposes a price ceiling of $4, then: a 5 unit shortage will result. a 5 unit surplus will result. a 10 unit surplus will result. a 10 unit shortage will result.
a 10 unit shortage will result.
Poverty is measured by the number of people who fall below a certain level of income. the income needed for a basic standard of living. the nation's economic poverty line. all the above are correct.
all the above are correct.
The term "ceteris paribus" means that: everything is variable. all variables except those specified are constant. no one knows which variables will change and which will remain constant. what is true for the individual is not necessarily true for the whole.
all variables except those specified are constant.
The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display _____________________. allocative efficiency the production possibilities frontier trade-offs scarcity
allocative efficiency
_______________________ are numerically small, but well organized groups that are able to exert a disproportionate effect on political outcomes. Bipartisan reform organizations Special interest groups Social scientists organizations Bipartisan campaign reformers
Special interest groups
Small companies typically prefer____________ to borrowing from a bank because it is a source of funding where the company is not obligated to _____________________ . issuing bonds; to proceed with an IPO an IPO; issue bonds an IPO; make interest payments issuing bonds; make interest payments
an IPO; make interest payments
The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good. Opportunity cost productive efficiency budget constraint production possibilities frontier
budget constraint
The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good. personal preference utility level budget constraint opportunity set
budget constraint
Refer to the diagram above. What is the significance of the point at the top of the backward bending of the supply curve marked L3? as wages increase over this range, the quantity of hours worked also increases. as wages increase over this range, the quantity of hours worked changes very little. as wages increase of this range, the quantity of hours worked is more inelastic. as wages increase over this range, the quantity of hours worked actually decreases.
as wages increase over this range, the quantity of hours worked actually decreases.
If the price that a firm charges is lower than its ____________ of production, the firm will suffer losses. average cost marginal cost fixed cost variable cost
average cost
In order to determine ____________, the firm's total costs must be divided by the quantity of its output. diminishing marginal returns fixed costs variable cost average cost
average cost
It is said that in a perfectly competitive market, raising the price of a firm's product from the prevailing market price of $179.00 to $199.00, ____________________. will likely cause the firm to reach its shutdown point immediately will cause the firm to recover some of its opportunity costs could likely result in a notable loss of sales to competitors is a sure sign the firm is raising the given price in the market
could likely result in a notable loss of sales to competitors
In a monopolistic competitive industry, firms can try to differentiate their products by creating optimal perceptions of the product. choosing optimal locations from which the product is sold. enhancing the intangible aspects of the product. enhancing product's physical aspects and all of the above.
enhancing product's physical aspects and all of the above.
Once I'MaPharmaCo. has received confirmation of the registration for its latest drug patent application, it will have created a monopoly for that product by restricting demand for the product. entry into the market. amount of product advertising. the number of product compliments.
entry into the market.
Which of the following is most unlikely to present a barrier to entry into a market? market forces patent laws technological advantages deregulation
deregulation
Monopolistic competitors in the food industry will often include a recyclable symbol on packaging used for their product as a means to be socially responsible. be environmentally responsible. differentiate their product. be perceived more favorably.
differentiate their product.
The most common pattern for marginal utility is ____________________. diminishing marginal utility a budget constraint model a long-term perspective theoretical model substitute consumption
diminishing marginal utility
A ________ is a direct payment from a firm to its shareholders. dividend bond capital gain share
dividend
In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers. division of labor interconnected economy task economy modern economy
division of labor
Marginal thinking is best demonstrated by: choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time. deciding to never purchase a coat made with animal skins or furs acquiring the information relevant to a choice before making that choice measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake
choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.
When nations increase production in their area of _________________ and trade with each other, both sides can benefit. relative advantage absolute advantage comparative advantage opportunity cost
comparative advantage
The absence of which of the following best explains why government agencies are slower to correct mistakes than private firms. imperfect information discrimination in wealth distribution monopoly over the economy competition or a threat of new entry
competition or a threat of new entry
Pork-barrel spending can be thought of as another case where democracy is challenged by _______________ and __________________. specials interest groups; disconnected voters concentrated benefits; widely dispersed costs conventional wisdom; lawyers and judges higher income earners; low-educated individuals
concentrated benefits; widely dispersed costs
In the ______________, households receive goods and services and pay firms for them. labor market financial capital market goods and services market savings market
goods and services market
In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made. government market firm business sector
government
Which of the following would reduce the supply of microcomputers? a technological improvement that lowers the cost of producing the computers higher wage rates for the workers that assemble the computers a reduction in the price of computer chips used to produce the computers a reduction in the price of computers.
higher wage rates for the workers that assemble the computers
A perfectly elastic supply curve is: upward sloping to the right. downward sloping to the left. horizontal. vertical.
horizontal.
Tariffs are taxes imposed on _________________. imported products exported products hazardous goods surplus goods
imported products
Economic profit can be derived from calculating total revenues minus all of the firm's costs, excluding its opportunity costs. including its opportunity costs. including its marginal revenue. excluding its marginal revenue.
including its opportunity costs.
If the demand for software engineers __________ slower than does supply, then wages of software engineers will __________. increases; remain constant increases, rise increases; fall decreases; fall
increases; fall
If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ___________________ excess supply excess demand ceteris paribus a price ceiling
excess demand
An agreement between a manufacturer and a distributor stipulating that a dealer will only distribute that manufacturer's products would be classified as a form of predatory pricing. tie-in-sales arrangement. exclusive dealing. price maintenance.
exclusive dealing.
How can parties who find themselves in a prisoner's dilemma situation avoid the undesired outcome and cooperate with each other? one oligopoly can physically beat up another oligopoly by seeking alternatives to create pressure for members to keep output up and prices up find effective ways to penalize firms who do not cooperate sign legally enforceable contracts setting out their mutual agreement to act like a monopoly
find effective ways to penalize firms who do not cooperate
A ___________________ arrangement exists when medical care providers are paid according to the services they provide. fee-for-service service contract coinsurance insurance
fee-for-service
The circular flow diagram of economic activity is a model of the: flow of goods, services, and payments between households and firms. influence of government on business behaviour. role of unions and government in the economy. interaction among taxes, prices, and profits.
flow of goods, services, and payments between households and firms.
The branch of mathematics that analyzes situations in which players must make decisions and then receive payoffs most often used by economists is oligopoly collusion. prisoner's dilemma. game theory. collusion theory
game theory.
The term _________________ refers to the additional utility provided by one additional unit of consumption. utility marginal utility added utility Giffen utility
marginal utility
The _________ of an investment is determined by how easy it is to sell an asset at any given time. profitability expected profitability liquidity sustainable outcome
liquidity
A checking account typically pays __________________, but gives easy access to your money, either by writing a check or by using ______________. no interest; a credit card between 3% and 5% interest; a credit card little or no interest; a debit card between 2% and 4% interest; a debit card
little or no interest; a debit card
Which of the following is most likely to be a monopoly? local fast-food restaurant local electricity distributor local bathroom fixtures shop local television broadcaster
local electricity distributor
Which of the following have historically been more willing to sacrifice their environmental quality for some additional economic output? high-income, market-oriented economies low incomes and command economies the United States European Union
low incomes and command economies
Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization? division of labor international trade economies of scale command economy
international trade
Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization? division of labour international trade economies of scale command economy
international trade
Under perfect competition, any profit-maximizing producer faces a market price equal to its average costs marginal costs total costs variable costs
marginal costs
The City of Washington needs to upgrade its levies and its water drainage systems. The cost will exceed the amount of tax revenue the City expects to receive over the next 10 years. How will the City be able to raise the funds needed to finance this upgrade? issue Treasury Bonds issue municipal bonds borrow from Banks borrow from large corporations
issue municipal bonds
As a person receives more of a good, the _______________ from each additional unit of the good declines. utility sunk costs marginal utility budget constraint
marginal utility
Intra-industry trade between similar trading partners allows the gains from ______________________ that arise when firms and workers specialize in the production of a certain product. comparative advantage learning and innovation creating the value chain relative advantage
learning and innovation
The perceived demand curve for a group of competing oligopoly firms will appear kinked as a result of their commitment to match price increases, but not price cuts. stand at opposite ends of the competition spectrum. match price cuts, but not price increases. stand at the high point of the competition spectrum.
match price cuts, but not price increases.
The marginal benefit of a slice of pizza is the: total amount that a consumer is willing to pay for a whole pizza, divided by the number of slices difference between the value of the slice to the consumer and the price of the slice. maximum amount that a consumer is willing to pay for the slice. price of the slice of pizza
maximum amount that a consumer is willing to pay for the slice.
Why would a large publically traded corporation likely prefer issuing bonds as a way to raise new money as opposed to issuing more shares? the rate of return the corporation promised will be more difficult to deliver more shares will dilute the existing value of the stock, causing its market price to fall the market will view the new share issue as a sign the company is in financial difficulty issuing bonds is a more secure method for corporations to raise needed money
more shares will dilute the existing value of the stock, causing its market price to fall
When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _________________. demand schedule market price quantity supplied demand curve
quantity supplied
A method often used by economists to look at distribution of income in a society's economy involves programs for wealth redistribution. quintiles, or dividing a whole group into fifths. imposing taxes to redistribute wealth. quads, or dividing a whole group into fourths.
quintiles, or dividing a whole group into fifths.
In circumstances dealing with poverty, the term ______________ means taking income from those with higher incomes and providing income to those with lower incomes. safety net estate tax minimum wage redistribution
redistribution
What do service contracts, occupational licenses and cosigners all share in common? reduced risk of adverse selection reduced the risk of imperfect information eliminate the risk of adverse selection eliminate the risk of imperfect information
reduced the risk of imperfect information
The reasons that nations trade includes the fact that: no one country produces all of what citizens within the country want. the wants of their citizens exceeds their productive capacity. different countries have different levels of greed. labor costs are too high in some countries to efficiently produce goods.
no one country produces all of what citizens within the country want.
Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be. normative statement budget constraint trade-off opportunity cost
normative statement
Property rights are the legal rights of ownership on which others are allowed to infringe by paying the property owner's pollution tax. able to enforce use of pollution-control technologies. able to specify allowable quantities of pollution. not allowed to infringe without paying compensation.
not allowed to infringe without paying compensation.
The underlying reason why trade benefits both sides of a trading arrangement is rooted in the concept of __________________. opportunity cost specialization absolute advantage maximum production
opportunity cost
Which of the following is a feature that typically distinguishes a savings account from a checking account? pays interest less liquidity automatic teller machine access is available for checking accounts withdrawals require a trip to the bank by the account holder
pays interest
The use of sharp, temporary price cuts as a form of _________________ would enable traditional US automakers to discourage new competition from smaller electric car manufacturers. natural monopoly monopolistic competition predatory pricing oligopolistic competition
predatory pricing
Payments made to an insurance company in return for a policy of insurance are called _________________ . risk expenses premiums risk expenditures deductibles
premiums
An individual whose income level is just above the poverty line would most likely be classified as being a member of the _____________ . working poor poverty trapped near-poor illiterate poor
near-poor
The first step to be undertaken by a profit-maximizing monopolistic competitor wanting to decide what price to charge is to determine total revenue, total cost, and profit select the profit maximizing quantity to produce determine what price to charge for the product determine average costs, total revenue, and profit
select the profit maximizing quantity to produce
The opportunity cost of attending university is likely to include all except which of the following? the cost of haircuts received during the school term the income you forgo in order to attend classes tuition fees the cost of required textbooks
the cost of haircuts received during the school term
A ________________ exists when the buyer pays an extra amount and the seller agrees to fix anything that goes wrong for a set time period. warranty money-backed guarantee service contract money-back warranty
service contract
A monopolistically competitive firm may earn abnormally high profits in the short term, but the process of entry will drive those profits to zero in the long run. long term, but the process of entry will drive those profits to zero in the short run. short run, but after entry occurs, the long term perceived demand curve shifts to the right. long run, but after entry occurs, the short term perceived demand curve shifts to the right.
short term, but the process of entry will drive those profits to zero in the long run.
If a firm's revenues do not cover its average variable costs, then that firm has reached its _________________ . price taking point shutdown point marginal point opportunity margin
shutdown point
A narrowly defined market will tend to make concentration appear _________, while a broadly defined market will tend to make it appear _________. concerning; less concerning higher; smaller less concerning; concerning smaller; higher
smaller; higher
The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options. sunk costs opportunity costs marginal analysis budget constraints
sunk costs
Which of the following should typically be ignored because spending has already been made and cannot be changed? variable costs sunk costs marginal costs average marginal costs
sunk costs
For a perfectly competitive firm, the marginal cost curve is identical to the firm's ________________ . demand curve supply curve average total cost curve average variable cost curve
supply curve
A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the __________________ . demand curve to the right supply curve to the left supply curve to the right demand curve to the left
supply curve to the right
Which of the following would most likely be recognized as a defining characteristic of a public good? the good is nonrivalrous item the good is nonexcludable item the good is both a and b above the good is a separate and identifiable item
the good is both a and b above
Medicaid is a federal-state joint program enacted in 1965 that provides medical insurance for the near-poor and the low-income elderly. all those below the poverty line. low-income mothers, but not their spouses. the disabled and all of the above.
the near-poor and the low-income elderly.
If a government wants to establish a marketable permit program, it must begin by determining how many permits will be issued in the overall market. the overall price to be charged for each permit. the overall quantity of a certain pollutant that will be allowed. whether or not permits will be issued free of charge.
the overall quantity of a certain pollutant that will be allowed.
A beekeeper decides to locate her business on a plot of land that is between an apple orchard and an elementary school. A negative externality that can result is the cost of the bee hives to the beekeeper. the possibility of the bees stinging the students at the school. the bees helping to pollinate the orchard, leading to more fruit. the honey the bees produce.
the possibility of the bees stinging the students at the school.
If an industry is perfectly competitive or monopolistically competitive, then the government has relatively little reason for concern about regulatory recapture. taking advantage of economies of scale. new ways of pleasing customers. the extent of competition.
the extent of competition.
If cola and iced tea are good substitutes for consumers, then it is likely that: their cross price elasticities are greater than zero. their price elasticities of demand are less than one. their income elasticities are less than zero. their price elasticities of supply are less than one .
their cross price elasticities are greater than zero.
If a rise in incomes for both low-income and high-income workers is higher for the high-income workers, then poverty will fall and inequality will rise. then poverty will rise and inequality will rise. then poverty will fall and inequality will fall.
then poverty will fall and inequality will rise.
When quantity demanded decreases in response to a change in price: the demand curve shifts to the right. the demand curve shifts to the left. there is a movement down along the demand curve. there is a movement up along the demand curve.
there is a movement up along the demand curve.
For a pure monopoly to exist, there is a single seller in a particular industry there is only one seller, therefore no industry there are a few sellers in a given industry there are limited sellers in a particular industry
there is a single seller in a particular industry
Refer to the diagram above. In this instance, at the range of output represented at point b, total costs exceed total revenues. total revenues exceed total costs. the firm is earning profits. the firm should shut-down.
total costs exceed total revenues.
Whatever the firm's quantity of production, _____________ must exceed total costs if it is to earn a profit. marginal costs average costs total revenue variable costs
total revenue
A 25 percent decrease in the price of breakfast cereal leads to a 20 percent increase in the quantity of cereal demanded. As a result: total revenue will decrease. total revenue will increase. total revenue will remain constant. the elasticity of demand will increase.
total revenue will decrease.
Many states do have ____________, which impose an upper limit on the interest rate that lenders can charge. price ceiling laws usury laws price floor laws minimum interest rate
usury laws
Ireland and England both fish in the Irish Sea. If this sea is over-fished, the fish stocks will fall and fish will eventually become extinct. Both countries have to decide whether to fish a lot or a little. The payoffs are given in the table below.The outcome of this game is ________ , which illustrates the _________ . both countries choosing to fish a little, prisoners dilemma both countries choosing to fish a lot, externalities both countries choosing to fish a lot, prisoner's dilemma both countries choosing to fish a little, externalities
both countries choosing to fish a lot, prisoner's dilemma
Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine: the equilibrium price will fall and the equilibrium quantity will fall. both the equilibrium price and quantity will rise. the equilibrium price will rise and the equilibrium quantity will decrease. the equilibrium price will rise, while the change to equilibrium quantity is indeterminate.
both the equilibrium price and quantity will rise.
When Marietta chooses to only purchase a combination of goods that lie within her budget line, she: is decreasing utility. is maximizing utility. likely has negative savings. must reduce the quantity.
is maximizing utility.
Refer to Figure 2-2. At Point A in the production possibilities graph shown above, the economy: is not using its resources efficiently. is using its resources efficiently while producing clothing but no food. is using its resources efficiently while producing food but no clothing. is using its resources efficiently to produce both food and clothing.
is not using its resources efficiently.
The term _____________ is used to describe the additional cost of producing one more unit. average cost fixed cost variable cost marginal cost
marginal cost
The imposition of a price ceiling on a market often results in: an increase in investment in the industry. a surplus a shortage a decrease in discrimination on the part of sellers.
a shortage
In the labor market, a stipulation that the first three months of employment is a trial period is a standard precaution against hiring a lemon. a precondition to certification in labor. waived when school transcripts are submitted with a resume. a way of classifying potential employees.
a standard precaution against hiring a lemon.
In the case of insurance, _______________ arises because the buyers of insurance have more information about _____________________than the insurance company does. moral hazard; their risk rating actuarial prices; their high-risk or low-risk status adverse selection; the risk group they belong to fundamental laws; actuarial fairness
adverse selection; the risk group they belong to
Another person or firm who legally pledges to repay some or all of the money loaned if the original borrower fails to do so is called a __________________________ . warrantor cosigner guaranty codebtor
cosigner
City Gas is a natural monopoly that supplies natural gas to a particular city. Its cost and demand information are given below. The marginal cost of going from a production of 4 million therms to a production of 5 million therms is $133 million $113 million $23 million $20 million
$20 million
Given the data provided in the table below, what will the marginal revenue equal for production at quantity (Q) level 4? $20.00 $15.00 $5.00 $1.00
$5.00
The table below shows a monopolist's demand curve and cost information for the production of its good. What quantity will it produce? 1,400 1,300 1,100 1,000
1,000
I'MaPizzaCo. produces and sells specialty pizzas. Last year, it produced 8,000 mushroom, sausage and spinach pizzas and sold each one for $8. To produce these 8,000 specialty pizzas, the company incurred variable costs of $24,000 and a total cost of $40,000. I'MaPizzaCo's average fixed cost to produce 8,000 specialty pizzas was $3.00 $2.00 $1.80 $1.60
2.00
I'MABigCorp. produces and sells kitchen wares. Last year, it produced 7,000 can openers and sold each one for $6. To produce the 7,000 can openers, the company incurred variable costs of $28,000 and a total cost of $45,000. I'MABIGCorp.'s average fixed cost to produce the 7,000 can openers was $1.50 $1.23 $2.25 $2.43
2.43
Refer to the table below. This information reflects the demand curve and the average cost curve for a firm that is a natural monopoly. What will this firm's profits equal? $2.50 $1.50 $1.25 $0.50
2.50
Alternate Outputs from One Day's Labor Input: USA: 12 bushels of wheat or 3 yards of textiles. India: 3 bushels of wheat or 12 yards of textiles. The opportunity cost of one bushel of wheat in India is: 1 yard of textiles. 3 yards of textiles. 4 yards of textiles. 12 yards of textiles.
4 yards of textiles.
The table below sets out cost information for the production of volley balls. Some values are missing. Which of the following statements is correct? A = 42; E = 40 A = 70; E = 40 A = 42, E = 12 A = 70; E = 12
A = 42, E = 12
Which of the following best denotes the reason for the existence of substantial black markets? a market-oriented economy a command economy government laws and rules the microeconomy
A command economy
__________________ involves active efforts to improve the job opportunities or outcomes of minority groups or women. Meritorious action Affirmative action Anti-discriminative action Aligned action
Affirmative action
Which of the following statements most likely lies within the realm of microeconomics? Unemployment rises during a recession and falls during an expansion. An increase in government spending will increase the aggregate demand for goods and services in the economy. A rapid acceleration of the supply of money may create inflation. An increase in labor costs will increase the additional cost of producing another bus.
An increase in government spending will increase the aggregate demand for goods and services in the economy.
On April 1, 2009, in the middle of a recession, the government of the province of Ontario, Canada increased the provincial minimum wage from $8.75 to $9.50. What will the likely effect of this policy be? Both the leftward shift in the labor demand curve and the higher minimum wage will lead to an increase in the unemployment rate. Low income workers will be better able to survive the recession at the new, higher wage rate. More people will be hired at the higher wage rate offsetting the effects of the recession. The higher wage will increase the supply of labor offsetting the effects of the recession.
Both the leftward shift in the labor demand curve and the higher minimum wage will lead to an increase in the unemployment rate.
____________ means selling goods below their cost of production. Protectionism Dumping Import quotas Non-tariff barriers
Dumping
___________ requires an insurance policyholder to pay a percentage of a loss, and the insurance company pays the remaining cost. Insurance Coinsurance An insurance policy Government regulation
Coinsurance
Which statement best describes Becker's economic analysis of discrimination? Competitive markets encourage the practice of discrimination. Competitive markets discourage the practice of discrimination. Competitive markets neither encourage or discourage discrimination. Competitive markets can allow some employers to practice discrimination, but can also provide profit-seeking firms with incentives not to discriminate.
Competitive markets can allow some employers to practice discrimination, but can also provide profit-seeking firms with incentives not to discriminate.
Which statement describes the concept of absolute advantage? When one country has an absolute advantage in all goods and another country has an absolute disadvantage in all goods, only one of the countries can benefit from trade. Only when one country has an absolute advantage in all goods and another country has an absolute disadvantage in all goods, can both countries benefit from trade. When one country has an absolute advantage in all goods and another country has an absolute disadvantage in all goods, neither countries can benefit from trade. Even when one country has an absolute advantage in all goods and another country has an absolute disadvantage in all goods, both countries can still benefit from trade.
Even when one country has an absolute advantage in all goods and another country has an absolute disadvantage in all goods, both countries can still benefit from trade.
Which two primary markets interact in the circular flow diagram? Goods and services and labor Households and businesses Income and payments Imports and exports
Goods and services and labor
Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. Which of the following statements is true? Alpha should export to Beta, but Beta should not export to Alpha. Since Alpha has an absolute advantage in both goods, no mutual gains from trade are possible. If Alpha specializes in growing oranges and Beta specializes in growing apples, they could both gain by specialization and trade. If Alpha specializes in growing apples and Beta specializes in growing oranges, they could both gain by specialization and trade.
If Alpha specializes in growing apples and Beta specializes in growing oranges, they could both gain by specialization and trade.
Which is not an example of a reason why governments place tariffs on imported goods? Protecting sensitive industries Humanitarian reasons Protection against dumping Increase economies of scale
Increase economies of scale
In the circular flow diagram, what do households sell to business firms? Goods Labor Benefits Salaries
Labor
The profit-maximizing quantity will occur where Marginal Revenue equals Marginal Cost (MR = MC) in which type of firms? Monopolies and perfectly competitive firms Only in natural monopolies Only in perfectly competitive firms Only in legal monopolies
Only in perfectly competitive firms
Refer to Figure 2-1. The most inefficient point depicted is: Point A Point C Point D Point G
Point G
____________________ is a particular type of spending that mainly benefits a single political district. Logrolling Special interest spending Pork-barrel spending An appropriate spending program
Pork-barrel spending
The supply and demand conditions facing a firm that makes widgets and generates a negative externality by dumping a highly toxic sludge in a nearby river is given in the table below.The equilibrium price and quantity when only private costs are taken into account are Price = $55, Quantity = 30 Price = $40, Quantity = 55 Price = $30, Quantity = 20 Price = $30, Quantity = 80
Price = $30, Quantity = 80
What type of price control is enacted in an attempt to keep prices low for those who demand the product? Market equilibrium level Price support Price ceiling Price floor
Price ceiling
The race to the bottom scenario of global environmental degradation is explained roughly like this: Companies seek to reduce their costs of operations on plant and equipment design and this results in higher levels of pollution. Companies seek the lowest market prices on products in order to gain market share, resulting in inferior goods and increased waste and pollution. Profit-seeking multinational companies shift their production from countries with strong environmental standards to countries with weak standards, thus reducing their costs and increasing their profits. Companies seek to influence environmental legislation standards are set to the lowest possible standards in the USA in order to maximize profits.
Profit-seeking multinational companies shift their production from countries with strong environmental standards to countries with weak standards, thus reducing their costs and increasing their profits.
Which factor drives the study of economics? Profit Scarcity Trade Politics
Scarcity
If the USA could produce 1 ton of potatoes or 0.5 tons of wheat per worker per year, while Ireland could produce 3 tons of potatoes or 2 tons of wheat per worker per year, there can be mutual gains from trade if: The USA specializes in potatoes because of its comparative advantage in producing potatoes. The USA specializes in wheat because of its absolute advantage in producing wheat. The USA specializes in wheat because of its comparative advantage in producing wheat. There can be no mutual gains from trade.
The USA specializes in potatoes because of its comparative advantage in producing potatoes.
Why would foreign firms export a product at less than its cost of production—which presumably means making a loss? Many nations participate in poor planning and as a result produce a surplus of product which they sell at a loss. This may be part of a long-term strategy in which foreign firms would sell at below the cost of production in the short-term for a time, and when they have driven out the domestic U.S. competition, they would then raise prices. Many nations simply wish to keep their workers employed, no matter what the cost. Many nations simply produce and sell inferior goods at prices that reflect this fact.
This may be part of a long-term strategy in which foreign firms would sell at below the cost of production in the short-term for a time, and when they have driven out the domestic U.S. competition, they would then raise prices.
In deciding how many hours to work, Beulah will make a choice that maximizes her _______; that is, she will choose according to her preferences for leisure time and income. budget constraint opportunity set utility production possibilities frontier
Utility
Colombia produces coffee with less labor and land than any other country; it therefore necessarily has: a comparative advantage in coffee production. both a comparative and absolute advantage in coffee production. an absolute advantage and comparative disadvantage in coffee production. an absolute advantage in coffee production
a comparative advantage in coffee production.
Which of the following would most likely shift the production possibilities curve inward? an increase in the number of hours factories are in use a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time an increase in the production of capital goods technological progress
a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time
Which of the following is the best example of a quota? a tax placed on all small cars sold in the domestic market a limit imposed on the number of men's suits that can be imported from a foreign country a subsidy from the American government to domestic manufacturers of men's suits so they can compete more effectively with foreign producers of men's suits a $100-per-car fee imposed on all small cars imported
a limit imposed on the number of men's suits that can be imported from a foreign country
When P > MC in a monopolistically competitive market, that industry will most likely produce ______________________ than would be found in a perfectly competitive industry. a higher quantity of a good and charge a lower price the price that people are willing to pay is lower a lower quantity of a good and charge a higher price the price people are willing to pay is not more
a lower quantity of a good and charge a higher price
Antipoverty programs that are set up so that the amount of government benefits will decline substantially as poor people earn more income typically create ______________. a poverty trap an income inequity a poverty line a safety net
a poverty trap
If monopolists are able to produce fewer goods and sell them at a higher price than they could under perfect competition, the result will be elimination of barriers to entry irregularly high unsustainable profits. government deregulation. abnormally high sustained profits.
abnormally high sustained profits.
A mutual fund that seeks to imitate the overall behaviour of the stock market is called ____________________ . a long-run collectibles fund an index fund a mortgage-backed securities fund an indexed retirement age fund
an index fund
Individuals who have a small amount deducted from their paychecks to contribute into a pooled fund used to pay benefits for a period of time if they are laid-off have contributed to a pension insurance fund. a deposit insurance fund. an unemployment insurance fund. a healthcare insurance fund.
an unemployment insurance fund.
Members of labor unions are able to use their ________________ to achieve better economic outcomes. cooperative nature bargaining power secret ballot votes excess supply of labor
bargaining power
Firms operating under cost-plus regulation have an incentive to generate high costs by building huge factories or employing lots of staff, because doing so creates efficiencies and innovation. because the market changes dramatically and they have incentive to meet new demand. because this will reduce the firm's costs more quickly and it can make a high level of profit. because what they can charge is linked to the costs they incur.
because what they can charge is linked to the costs they incur.
Antitrust laws were created to give government the power to block certain mergers and break up large firms into smaller ones. block cartels, and break up regulatory capture. force the firm to sell off the profitable parts of its operation. block certain mergers that are determined to be uncompetitive.
block certain mergers and break up large firms into smaller ones.
The term __________ refers to the __________ that a bond is expected to pay at the time of purchase. rate of interest; yield rate bond yield; rate of return rate of interest; rate of return yield rate; bond rate
bond yield; rate of return
In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of: all consumers. buyers and sellers. producers and input suppliers. producers and government planning committees.
buyers and sellers
Specialization: leads to greater self-sufficiency. can lead to an increase in overall production. allows workers to develop skills by working on a large number of tasks is always the result of an inefficient use of resources
can lead to an increase in overall production.
Since 1960, the earnings gap between men and women in the U.S. labor market has steadily risen. been completely eliminated. continued to narrow. increased throughout the 1970s.
continued to narrow.
Which of the following would be classified as a positive externality? a surcharge for ambulance service is shifted to property taxes reselling outdated textbooks to under-funded public schools removing government education subsidies for public schools converting a derelict empty lot to a public vegetable garden
converting a derelict empty lot to a public vegetable garden
How has the widespread adoption of debit cards as the preferred method of payment for consumer purchases likely affected bank administration costs? the cost of bank administration is unaffected by widespread use of debit cards costs increased due to high cost of developing and maintaining debit card technology administration costs increased because the cost of electricity means high-cost for electronic transactions costs are reduced because the cost of purchase is immediately debited from purchaser's checking account
costs are reduced because the cost of purchase is immediately debited from purchaser's checking account
A 10 percent decrease in the price of potato chips leads to a 30 percent increase in the quantity of soda demanded. It appears that: elasticity of demand for potato chips is 3. cross-price elasticity of demand for soda is -3. elasticity of demand for potato chips is 3. elasticity of demand for soda 3.
cross-price elasticity of demand for soda is -3.
Refer to Figure 3-3. A change from Point A to Point E represents a(n): increase in supply. decrease in supply. increase in quantity supplied. decrease in quantity supplied.
decrease in supply
If immigration consists of mainly high-skilled workers, then a(n) ________ in immigration will ________ the wages of high-skilled workers. increase, increase increase, not affect decrease, decrease decrease, increase
decrease, increase
Suppose that the government implements a new policy that provides free skills training to all low-skilled workers, which makes them more productive and turns them into high-skilled workers. This will ______ the supply of low-skilled workers and ______ the supply of high-skilled workers. increase, decrease increase, increase decrease, decrease decrease, increase
decrease, increase
According to the definition of profit, if a profit-maximizing firm will always attempt to produce its desired level of output at the lowest possible cost, then it will do so regardless of what type of competition exists in a market. take a long-run perspective on costs, when such costs cannot be adjusted. take a short-run perspective on labor costs which cannot be immediately changed. breakdown its cost structure according to short-run adjustments.
do so regardless of what type of competition exists in a market.
The infant industry argument for protectionism suggests that an industry must be protected in the early stages of its development so that: firms will be protected from subsidized foreign competition. domestic producers can attain the economies of scale to allow them to compete in world markets. there will be adequate supplies of crucial resources in case they are needed for national defence. it will not be subjected to a takeover from a foreign competitor.
domestic producers can attain the economies of scale to allow them to compete in world markets.
Ideally, a patent should cover a long enough period of time for the inventor to _______________, but that period should not be so long that it allows the inventor to _____________________________. earn a hearty return; charge a high monopoly price permanently contribute to the social interest; only receive a slice of the social benefits earn a rate of return; prevent broad public access to classic works contribute to the social interest; prevent broad public access to inventions
earn a hearty return; charge a high monopoly price permanently
The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls. diminishing marginal returns marginal cost output economies of scale diseconomies of scale
economies of scale
Youth smoking seems to be more __________ than adult smoking—that is, the quantity of youth smoking will fall by a greater percentage than the quantity of adult smoking in response to a given percentage increase in price. unitary elastic inelastic elastic cross-price elastic
elastic
If the supply curve for a product is vertical, then the elasticity of supply is: equal to zero. equal to 1. greater than 1 but less than infinity. equal to infinity.
equal to zero.
The ___________ is the only price where quantity demanded is equal to quantity supplied. equilibrium price horizontal axis intercept vertical axis intercept market price
equilibrium price
Refer to Table 4-1. Suppose that D1 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D1 to D2, then: equilibrium price decreases from $6 to $4. equilibrium quantity decreases from 15 to 13. equilibrium quantity increases from 13 to 18. equilibrium price increases from $6 to $8
equilibrium price increases from $6 to $8
The ____________ is the quantity where quantity demanded and quantity supplied are equal at a certain price. quantity demanded equilibrium quantity demand schedule supply schedule
equilibrium quantity
As a result of the American workers' ability to sell their labor though a union, profit-making firms must pay wages exceeding the equilibrium wage those firms would otherwise have selected. at the intersection of the demand and supply labor curves. below the equilibrium wage level those firms would otherwise be able to pay. that match the preferred equilibrium wage these firms have selected.
exceeding the equilibrium wage those firms would otherwise have selected.
The term "constant returns to scale" describes a situation where expanding all inputs does not change the average cost of production. a larger-scale firm can produce at a lower cost than a smaller-scale firm. expanding all inputs changes the average cost of production. the quantity of output rises and the average cost of production falls.
expanding all inputs does not change the average cost of production.
Why do U.S. economists commonly refer to externalities as an example of market failure? firms that are required to pay social costs of externalities produce more externalities present a case where markets consider all social costs externalities present a case where markets only consider some social costs firms avoid having to pay social costs of externalities by lowering prices
externalities present a case where markets only consider some social costs
Automobile manufacturers use warranties as incentives for buyers to purchase their products. Why are warranties on vehicles important to buyers? manufacturers pay insurance policy premiums on the buyer's vehicle for a set period of time for a fixed time period, buyer's can return vehicles for a full refund of the purchase price for a specific time period, the manufacturer bears the cost of fixing or replacing the vehicle manufacturers bear the cost of fixing the vehicles under unlimited-term service contracts
for a specific time period, the manufacturer bears the cost of fixing or replacing the vehicle
An inferior good is a product: for which demand increases as income increases. for which there is no demand. for which demand decreases as income increases. that has an upward sloping demand curve.
for which demand decreases as income increases.
An individual who wants others to pay for public goods, but plans to use those goods for their own purposes, is often referred to as a ______________ . tax evader excludable free rider nonexcludable
free rider
The political systems in most Latin American nations differ from the political system in the United States because most Latin American nations have laws that require voting. have laws requiring voters to cast informed votes. are not recognized as democracies ruled by electoral majorities. are ruled by dictatorships.
have laws that require voting.
In the U.S. manufacturing sector, unionized jobs have _________________ in recent years. increased modestly have trended up have trended down declined dramatically
have trended down
What name is given to an organization that receives a fixed amount per each person enrolled in a health care plan, regardless of how many services are provided? health members organization (HMO) health maintenance organizations (HMO) health care organization (HCO) non-government health organization (NGO)
health maintenance organizations (HMO)
An import quota or tariff on French wine that raises the prices for wine will probably: hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices. hurt both domestic wine drinkers and domestic wineries, but this will be more than offset by a reduction in driving fatalities. hurt both domestic wine drinkers and domestic wine producers because of a reduction in competition. hurt domestic wineries, which will lose business as a result of the higher prices.
hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices.
As environmental protection increases, the biggest marginal benefits are achieved first, smaller marginal benefits follow. inexpensive and easy methods of reducing pollution begin to dwindle. the more costly and innovative methods can be readily avoided. in addition to a and b above, the quality of environmental protection increases.
in addition to a and b above, the quality of environmental protection increases.
Economic profit can be derived from calculating total revenues minus all of the firm's costs, excluding its opportunity costs. including its opportunity costs. including its marginal revenue. excluding its marginal revenue.
including its opportunity costs
The longer the time period considered, the more the elasticity of supply tends to: decrease remain constant increase converge to zero
increase
Raising an existing tariff on grapes from Argentina will: increase domestic production of grapes. increase total American consumption of grapes. increase American consumption of domestically produced grapes. increase American imports of grapes from Argentina.
increase American consumption of domestically produced grapes.
Introducing a tariff on vitamin Z would: reduce exports of vitamin Z. increase American consumption of domestically produced vitamin Z. increase total American consumption of vitamin Z. decrease domestic production of vitamin Z.
increase American consumption of domestically produced vitamin Z.
Refer to Figure 3-3. A change from Point A to Point B represents a(n): increase in supply. decrease in supply. increase in quantity supplied. decrease in quantity supplied.
increase in quantity supplied.
Improvements in the productivity of labor will tend to: decrease wages. decrease the supply of labor. increase wages. increase the supply of labor.
increase wages
In the United States, the number of unionized government jobs has __________________. increased dramatically increased modestly modestly declined dramatically declined
increased modestly
An import quota does which of the following? decreases the price of the imported goods to consumers increases the price of the domestic goods to consumers redistributes income away from domestic producers of those products toward domestic producers of exports both a) and c)
increases the price of the domestic goods to consumers
The price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise: increasing the price of game tickets because demand is inelastic. not changing the price of game tickets because demand is unit elastic. increasing the price of game tickets because demand is elastic. decreasing the price of game tickets because demand is elastic.
increasing the price of game tickets because demand is inelastic.
The stock of a business firm is divided into _________________ . individual shares voting shares non-voting shares individual stocks
individual shares
Demand is said to be _____________ when the quantity demanded is not very responsive to changes in price. independent inelastic unit elastic elastic
inelastic
Refer to Figure 5-1. Graph B represents a demand curve that is relatively __________. Total revenue __________ as the price decreases from $10 to $5. inelastic; decreases elastic; decreases elastic; increases inelastic; increases
inelastic; decreases
In the U.S., comparisons of high and low incomes raise issues of economic ______________________. inequality and poverty equality and wealth distribution wealth distribution and poverty equality and inequality
inequality and poverty
How do insurance companies reduce the risk of moral hazard? deny claims with high damages only allow claims with low damages investigation and monitoring classifying people based on credit history
investigation and monitoring
The opportunity cost of an action: can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action. can be determined by adding up the bills incurred as a result of the action. can be objectively determined only by economists. is a subjective valuation that can be determined only by the individual who chooses the action.
is a subjective valuation that can be determined only by the individual who chooses the action.
In Canada, voters typically choose between three or more candidates in an election, which can lead to situations where actors in the political system are presumed to follow their own self-interest. there will be a disproportionately large impact on conservative politicians. there will be a disproportionately large impact on liberal politicians. it becomes impossible for the majority to decide who it prefers.
it becomes impossible for the majority to decide who it prefers.
Why would regulators find that a proposed merger is likely to lessen competition? it can lead to lower prices it can increase availability of goods it can enhance innovation it can lead to lower quality products
it can enhance innovation
In the ____________, households work and receive payment from firms. financial investment market financial capital market labor market savings market
labor market
Other things being equal, a __________ supply of workers tends to __________ real wages. smaller; not change larger; increase smaller; decrease larger; decrease
larger; decrease
When a natural monopoly exists in a given industry, the per-unit costs of production will be lowest when there are a large number of producers in the industry. lower for the smaller firms than for larger firms. minimized at the output that maximizes the industry's profitability. lowest when a single firm generates the entire output of the industry.
lowest when a single firm generates the entire output of the industry.
Most real-world choices aren't about getting all of one thing or another, instead, most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. utility opportunity cost benefit analysis marginal analysis
marginal analysis
If a monopolist increases quantity by one unit, but sells the increased output at a slightly lower price, marginal revenue is affected by adding one additional unit sold at the new price. all the previous units, which used to sell at a higher price, now sell for more. the marginal revenue of selling a unit is more than the price of the unit. because of higher output the marginal revenue curve is above the demand curve.
marginal revenue is affected by adding one additional unit sold at the new price.
Refer to the table below. In this instance, confirmation that this firm is operating in a perfectly competitive market can readily be ascertained by the fact that its marginal cost is increasing. total cost is increasing. economic profits are zero. marginal revenue is constant.
marginal revenue is constant.
The step-by-step process of finding the choice with highest total utility involves a comparison of the: budget constraint and low-income housing expenses. marginal utility gained and lost from different choices along the budget constraint. household consumption choice budget and the labor-leisure budget using an utilimometer. various categories of economic proverbial wisdom.
marginal utility gained and lost from different choices along the budget constraint.
The term ____________ refers to the percentage share of a firm's total sales in the market. market share concentration ratio total market ratio market cap
market share
In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers. market-oriented economy macroeconomy microeconomy command economy
market-oriented economy
The idea behind comparative advantage reflects the possibility that one party: may be able to produce everything relatively more efficiently than another party. may be able to produce something at a lower dollar cost than another party. with an absolute advantage in producing two different may export goods both of those goods to the other party. may be able to produce something at a lower opportunity cost than another party.
may be able to produce something at a lower opportunity cost than another party.
The basic difference between macroeconomics and microeconomics is: microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. microeconomics concentrates on the behavior of individual consumers while macroeconomics focuses on the behavior of firms. microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.
microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.
The basic difference between macroeconomics and microeconomics is: microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. microeconomics concentrates on the behaviour of individual consumers while macroeconomics focuses on the behaviour of firms. microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.
microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.
The basic difference between macroeconomics and microeconomics is that: microeconomics looks at the forest (aggregate markets) while macroeconomics looks at the trees (individual markets). macroeconomics is concerned with groups of individuals while microeconomics is concerned with single countries. microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets). macroeconomics is concerned with generalization while microeconomics is concerned with specialization.
microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets).
A ____________________ is a promise that the buyer's money will be refunded under certain conditions. money-back guarantee warranty service contract insurance policy
money-back guarantee
The term _______________ is used to describe circumstances where government takes over ownership of a business. privatization regulatory capture nationalization deregulation
nationalization
What happens in a perfectly competitive industry when economic profit is greater than zero? existing firms may expand their operations firms may move along their LRAC curves to new outputs there may be pressure on the market price to fall new firms may enter the industry and all of the above
new firms may enter the industry and all of the above
If a perfectly competitive firm is a price taker, then pressure from competing firms will force acceptance of the prevailing market price. it must be a relatively small player compared to its competitors in the overall market. it can increase or decrease its output without affecting overall quantity supplied in the market. quality differences will be very perceptible and will play a major role in purchasers' decisions.
pressure from competing firms will force acceptance of the prevailing market price.
The elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in __________. quantity supplied the slope of the demand curve price the slope in the supply curve
price
In contrast to goods and services markets, _____________ are rare in labor markets, because rules that prevent people from earning income are not politically popular. minimum wages price floors price ceilings living wage laws
price ceilings
The downward slope of the demand curve again illustrates the pattern that as _____________ rises, _________________ decreases. quantity demanded, price quantity supplied, quantity demanded price, quantity demanded price, quantity supplied
price, quantity demanded
For a positive externality, _________________________than the social benefits. private benefits of an action are more social benefits of an action are more private benefits of an action are less social costs of an action are less
private benefits of an action are less
Why would labor be treated as a variable cost? they are costs incurred in the act of producing that will decrease with quantity produced they are made before production starts and vary according to the specific line of business labor costs are an input cost that firms are unable to change in the short run producing larger quantities of a good or service generally requires more workers
producing larger quantities of a good or service generally requires more workers
A monopolist is able to maximize its profits by setting the price at the level that will maximize its per-unit profit. producing output where MR = MC and charging a price along the demand curve. setting output at MR = MC and setting price at the demand curve's highest point. producing maximum output where price is equal to its marginal cost.
producing output where MR = MC and charging a price along the demand curve.
Idaho farmers can sell as large a quantity of their potato crop as they wish, if they set their own price in the short run, but in the long run, the market sets the price. provided each is willing to accept the prevailing market price. if they set their own price in the long run, but in the short run, the market sets the price. provided quality is perceptible and determines the market price.
provided each is willing to accept the prevailing market price.
Raven Farms raises a substantial number of bees and uses the honey to produce its own skin healing cream. Raven Farms is situated next to the Oakcreek Apple Orchard. The bees from Raven Farms pollinate Oakcreek's apple trees. In this instance, Raven Farms derives more private benefits and provides less social benefit. provides more social benefits than it derives in private benefits. provides a marginal social benefit and derives a complete private benefit. provides a complete social benefit and derives a marginal private benefit.
provides more social benefits than it derives in private benefits.
The costs that immigrants impose on governments arise mainly in terms of _________, which are primarily the responsibilities of the _________ government(s). administration, state and local administration, federal public schools and healthcare, state and local public schools and healthcare, federal
public schools and healthcare, state and local
The theory of __________________ holds that people won't bother incurring the costs of becoming informed and voting, because they know that their vote ___________________________________________. rational ignorance; won't be decisive in the election imperfect competition; has little impact on election outcomes inequality of incomes; won't be decisive in the election democracy by majority rule; won't impact election outcomes
rational ignorance; won't be decisive in the election
Refer to the diagram above. In this instance, the marginal revenue curve reflects a perfectly competitive firm is equal to the price of the good is a horizontal straight line reflects each of the above
reflects each of the above
The term ______________ refers to a situation where the firms supposedly being regulated end up playing a large role in setting the regulations that they will follow. regulatory tie-in deregulation privatization regulatory capture
regulatory capture
Legislators who focus on local spending projects for their own district typically show a lack of sufficient concern for meeting the demands of special interest groups. spending in the interest of the nation as a whole. law and non-market based economics. the prevalence of voting cycles.
spending in the interest of the nation as a whole.
As depicted in ______________, it is necessary to give up some of one good to gain more of the other good. the production possibilities frontier allocative efficiency scarcity utility
the production possibilities frontier
Whenever there is a surplus at a particular price, the quantity sold at that price will equal: (quantity demanded plus quantity supplied)/2. the quantity supplied at that price. the quantity supplied minus the quantity demanded. the quantity demanded at that price.
the quantity demanded at that price.
A pollution charge is a form of tax imposed on the quantity of pollution that a firm emits. pollution control technologies. every economy in the world. low-income market-orientated industries.
the quantity of pollution that a firm emits.
If new manufacturers enter the computer industry, then (ceteris paribus): the supply curve shifts to the left. the supply curve shifts to the right. the demand curve shifts to the left. some established manufacturers must exit the industry.
the supply curve shifts to the right.
A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of: the supply curve. the demand curve, as consumers try to economize because of the shortage. both the supply and demand curves. the supply curve and a rightward shift of the demand curve, resulting in a higher equilibrium price.
the supply curve.
In the highly competitive setting in which oligopoly firms operate, which of the following are considered to be typical temptations each may face? to cooperate to generate and then divide up monopoly-like profits to cooperate to mutually decide what price to charge to cooperate to make decisions about what quantity to produce to cooperate to act as a single monopoly and all of the above
to cooperate to act as a single monopoly and all of the above
When a firm pursues a predatory pricing strategy, it does so to hire more staff to lower unemployment. to increase supply to benefit consumers. to maximize profits in the long run. to discourage short run competition.
to maximize profits in the long run.
A minimum resale price maintenance agreement requires a dealer who buys from a manufacturer ______________________________ . to sell for at least a certain minimum price to avoid engaging in restrictive practices. to guarantee a certain percentage of market share to sell for at least a certain maximum price
to sell for at least a certain minimum price
Demand is said to be __________ when the quantity demanded changes at the same proportion as the price. elastic unit elastic inelastic independent
unit elastic
The marginal cost curve is generally ______________, because diminishing marginal returns implies that additional units are ________________________. downward-sloping; more costly to produce upward-sloping; more costly to produce downward-sloping; less costly to produce upward-sloping; less costly to produce
upward-sloping; more costly to produce
In economics, the demand for a good refers to the amount of the good that people: would like to have if the good were free. will buy at various prices. need to achieve a minimum standard of living. will buy at alternative income levels.
will buy at various prices.
If a monopoly or a monopolistic competitor raises their prices, the quantity demanded ____________. will expand stays the same will decline will decline in the short run
will decline
If labor demand is downward sloping and labor supply is upward sloping, then when labor demand rises faster than labor supply, it is expected that real wages __________. will stay the same will decrease will increase may increase, decrease or stay the same depending on the relative slopes.
will increase
If the two smallest firms in a competitive market merged, the four-firm concentration ratio _______________ because ____________________________ . would change; the degree of competition is notably diminished would not change; especially high concentration ratios can benefit consumers would change; the largest firms high concentration ratio is diminished would not change; the degree of competition isn't notably diminished
would not change; the degree of competition isn't notably diminished
