Microeconomics Exam 2

(Refer to the table in 6) The market quantity of oranges demanded per day is exactly 7 if the price of an orange, P, satisfies

$0.25 < P < $0.60.

Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

Buyers and sellers share the burden of the tax.

In analyzing the gains and losses from international trade, to say that Moldova is a small country is to say that

Moldova is a price taker.

The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit. http://s1266.photobucket.com/user/bokurawauta/media/mank07t.62.020.1_zpsntrtsfc7.png.html With free trade allowed, this country

exports 800 units of the good.

http://s1266.photobucket.com/user/bokurawauta/media/mank07t.68.174.1_zpssrcjpdku.png.html Which of the following is an appropriate label for Line 1?

private value

Bubba is a shrimp fisherman who catches 4,000 pounds of shrimp per year. He can sell the shrimp for $5 per pound. His average total cost of catching shrimp is $3 per pound. Bubba's annual total profit is

$8,000

The total cost to the firm of producing zero units of output is

its fixed cost in the short run and zero in the long run.

In the case of a subsidy which of the following is true?

All of the above are not true. (Choices were The price supplier receive is smaller than the price paid by consumers, The quantity bought and sold after a subsidy is smaller then the market equilibrium quantity, or There is no Deadweight Loss when you impose a subsidy.)

Which of the following best describes an allocation that is Pareto Efficient?

None of the above describe a Pareto Efficient allocation. (Choices were An allocation where the economic pie is sliced into equal pieces, Pareto Efficient allocation depend on the market price, or Any Market Equilibrium is also Pareto Efficient.)

http://s1266.photobucket.com/user/bokurawauta/media/mank07t.100.162.1_zpsgtdqv16y.png.html Which of the four prices corresponds to a firm earning positive economic profits in the short run?

Pa

http://s1266.photobucket.com/user/bokurawauta/media/CV_zpsut2wffoy.jpg.html Which graph represents a market with a positive externality?

Panel (c)

http://s1266.photobucket.com/user/bokurawauta/media/mank07t.100.162.1_zpsgtdqv16y.png.html Which of the four prices corresponds to a firm earning negative economic profits in the short run but trying to remain open?

Pc

At present, the United States uses a system of quotas to limit the amount of sugar imported into the country. Which of the following statements is most likely true?

The quotas are probably the result of lobbying from U.S. producers of sugar. The quotas increase producer surplus for the United States, reduce consumer surplus for the United States, and harm foreign sugar producers.

http://s1266.photobucket.com/user/bokurawauta/media/C_zpshnjuubgs.jpg.html Buyers pay how much of the tax per unit?

$1.50

http://s1266.photobucket.com/user/bokurawauta/media/G_zpsx7kerlon.jpg.html At the equilibrium price, consumer surplus is

$100.

For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. First Orange / Second Orange / Third Orange Allison / $2.00 / $1.50 / $0.75 Bob / $1.50 / $1.00 / $0.60 Charisse / $0.75 / $0.25 / $0 If the market price of an orange is $0.65, then consumer surplus amounts to

$3.60.

The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit. http://s1266.photobucket.com/user/bokurawauta/media/mank07t.62.020.1_zpsntrtsfc7.png.html Producer surplus with free trade is

$32,000.

http://s1266.photobucket.com/user/bokurawauta/media/mank07t.53.143.1_zpsaqqsgh5w.png.html Total surplus with the tax in place is

$4,500.

http://s1266.photobucket.com/user/bokurawauta/media/FF_zpsqqqtib0t.jpg.html Suppose the cost to run the ferry for each roundtrip is $1,000 per day and the 4 business owners have agreed to split the costs of the ferry trips equally. How many ferry trips would the owner of Store A prefer to have?

0

The following diagram shows the domestic demand and domestic supply for a market. In addition, assume that the world price in this market is $40 per unit. http://s1266.photobucket.com/user/bokurawauta/media/mank07t.62.020.1_zpsntrtsfc7.png.html With free trade, domestic production and domestic consumption, respectively, are

1,600 and 800.

Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L=6,Q=147) and (L=7,Q=184). The marginal product of the seventh worker is

37 units of output.

http://s1266.photobucket.com/user/bokurawauta/media/NN_zpsy0tmufsr.jpg.html Suppose a firm in a competitive market, like the one depicted in panel (a), observes market price rising from P1 to P2. Which of the following could explain this observation?

An increase in market demand from D0 to D1.

Which of the following statements is not correct about a market in equilibrium?

Consumer surplus will be equal to producer surplus.

A firm produces 400 units of output at a total cost of $1,200. If fixed costs are $200,

average variable cost is $2.50.

Governments can improve market outcomes for

both public goods and common resources.

When a tax is placed on the sellers of cell phones, the size of the cell phone market

decreases, but the price paid by buyers increases.

http://s1266.photobucket.com/user/bokurawauta/media/NN_zpsy0tmufsr.jpg.html If the market starts in equilibrium at point Z in panel (b), a decrease in demand will ultimately lead to

fewer firms in the market.

A country has a comparative advantage in a product if the world price is

higher than that country's domestic price without trade.

Economies of scale occur when

long-run average total costs fall as output increases.

It would always be a mistake to view

national defense as a common resource.

A good is excludable if

people can be prevented from using it.

Each of the following would be considered a common resource except a

streetlight.

Suppose that a steel factory emits a certain amount of air pollution, which constitutes a negative externality. If the market does not internalize the externality,

the market equilibrium quantity will not be the socially optimal quantity.