WGU C211: Additional Study - 3rd Attempt OA Quizzes
Government purchases include spending on goods and services by
federal, state, and local governments
Representative Vazquez cites the "jobs argument" when he argues before Congress in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Representative Vazquez's reasoning is that he ignores the fact that
the gains from trade are based on comparative advantage
Suppose the market demand curve for a good passes through the point (quantity demanded = 100, price = $25). If there are five buyers in the market, then
the marginal buyer's willingness to pay for the 100th unit of the good is $25
Demand is said to be inelastic if
the quantity demanded changes only slightly when the price of the good changes.
The price elasticity of supply measures how much
the quantity supplied responds to changes in the price of the good
Whenever a cartel in a duopoly breaks down,
total output in the market will rise.
For which of the following goods is the income elasticity of demand likely lowest?
water
When an industry is a natural monopoly,
a larger number of firms will lead to a higher average total cost
If the price elasticity of supply is 1.5, and a price increase led to a 1.8 percent increase in quantity supplied, then the price increase is about
1.20%
Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. Together Kate and William can arrange 35 bouquets per day. What is William's marginal product?
15 bouquets
Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Murphy can paint five houses per week. What is the maximum total output possible if Eldin hires Murphy?
8 houses
A group of buyers and sellers of a particular good or service is called
A market
Which of the following is not an example of price discrimination by a firm?
A natural gas company charging all customers a higher rate in the winter than in the summer
Which of the following is not an example of price discrimination?
An ice cream parlor charges a higher price for ice cream than for sherbet.
Which of the following can defeat the profit-maximizing strategy of price discrimination?
Arbitrage
Which of the following groups or entities has the authority to initiate legal suits to enforce antitrust laws?
Both the U.S. Justice Department and private citizens
Which of the following is included in GDP?
Both the market value of rental housing services and the market value of owner-occupied housing services
Suppose there is a flood in St. Louis, Missouri, that destroys several beer bottling facilities. Which of the following would not be a direct result of this event?
Buyers would not be willing to buy as much as before at each relevant price.
Which of the following costs of publishing a book is a fixed cost?
Composition, typesetting, and jacket design for the book
The distinction between efficiency and equality can be described as follows:
Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society.
Import quotas and tariffs produce some common results. Which of the following is not one of those common results?
Equal revenue is always raised for the domestic government
Suppose the government passes a law eliminating holidays and, as a result, the production of goods and services increases because people work more days per year (and thus enjoy less leisure per year). Based on this scenario, which of the following statements is correct?
GDP would definitely increase because GDP excludes leisure.
Which of the following statistics is usually regarded as the best single measure of a society's economic well-being?
Gross domestic product
Which of the following statements is correct regarding duopolists?
If duopolists successfully collude, then their combined output will be equal to the output that would be observed if the market were a monopoly.
Your younger sister needs $50 to buy a new bike. She has opened a lemonade stand to make the money she needs. Your mother is paying for all of the ingredients. She currently is charging 25 cents per cup, but she wants to adjust her price to earn the $50 faster. If you know that the demand for lemonade is elastic, what is your advice to her?
Lower the price to increase total revenue
Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in
Mexican GDP, but it is not included in U.S. GDP
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
Which of the following statements is correct regarding monopolistic competition?
Monopolistic competition is similar to monopoly because both market structures are characterized by firms being price makers rather than price takers.
Which of the following statements is correct regarding competitive firms?
Only for competitive firms does average revenue equal marginal revenue
Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium?
P = AR
For which pairs of goods is the cross-price elasticity most likely to be positive?
Pens and pencils
Raiman's Shoe Repair produces custom-made shoes. When Mr. Raiman produces 12 pairs per week, the marginal cost of the 12th pair is $84, and the marginal revenue of the 12th pair is $70. What would you advise Mr. Raiman to do?
Produce fewer custom-made shoes
Which of the following expressions is correct for a competitive firm?
Profit = (quantity of output) × (price − average total cost)
Pete owns a shoe-shine business. His accountant most likely includes which of the following costs on his financial statements?
Shoe polish and rent on the shoe stand
Which of the following represents the firm's short-run condition for shutting down?
Shut down if TR < VC
Which of the following is true when the price of a good or service rises?
Some buyers exit the market
When a country allows trade and becomes an importer of bottled water, which of the following is not a consequence?
The losses of domestic producers of bottled water exceed the gains of domestic consumers of bottled water
Which of the following events would cause a movement upward and to the right along the supply curve for mangos?
The price of mangos rises
Which of the following is not a characteristic of a perfectly competitive market?
There is no free entry or exit
Which of the following is likely to have the most price elastic demand?
Tommy Hilfiger jeans
Which of the following statements is true?
When a monopoly firm sells an additional unit of output, its revenue increases by an amount less than the price.
Which of the following demonstrates the law of supply?
When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup.
Net exports equal
Y − (C + I + G)
You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be
a normal good
When we move along a given demand curve,
all nonprice determinants of demand are held constant
The average fixed cost curve
always declines with increased levels of output
The collection of statutes aimed at curbing monopoly power is called
antitrust law
For a monopolistically competitive firm,
at the profit-maximizing quantity of output, marginal revenue equals marginal cost
Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to
both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices.
A decrease in supply will cause the largest increase in price when
both supply and demand are inelastic
Roberto consumes Coke exclusively. He claims that there is a clear taste difference and that competing brands of cola leave an unsavory taste in his mouth. In a blind taste test, Roberto is found to prefer Coke to store-brand cola nine out of ten times. The results of Roberto's taste test would refute claims by critics of brand names that
brand names cause consumers to perceive differences that do not really exist
A good will have a more inelastic demand, the
broader the definition of the market
For the purpose of calculating GDP, investment is spending on
capital equipment, inventories, and structures, including household purchases of new housing.
If a monopolist is able to perfectly price discriminate,
consumer surplus and deadweight losses are transformed into monopoly profits.
When a country that imports a particular good imposes a tariff on that good,
consumer surplus decreases and total surplus decreases in the market for that good.
The world price of a ton of steel is $1,000. Before Russia allowed trade in steel, the price of a ton of steel there was $650. Once Russia allowed trade in steel with other countries, Russia began
exporting steel and the price per ton in Russia increased to $1,000
Scenario 14-1 Assume a certain firm in a competitive market is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit. Refer to Scenario 14-1. To maximize its profit, the firm should
decrease its output but continue to produce
Assume that a consumer's indifference curve is bowed inward and negatively sloped. As the consumer moves from left to right along the horizontal axis, the consumer's marginal rate of substitution
decreases
Equilibrium price must decrease when demand
decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously.
Two goods are substitutes when a decrease in the price of one good
decreases the demand for the other good
The Surgeon General announces that eating chocolate increases tooth decay. As a result, the equilibrium price of chocolate
decreases, and producer surplus decreases.
A drought in California destroys many red grapes causing the prices of both red grapes and red wine to rise . As a result, the consumer surplus in the market for red grapes
decreases, and the consumer surplus in the market for red wine decreases.
Whenever a perfectly competitive firm chooses to change its level of output, its marginal revenue
does not change
When small changes in price lead to infinite changes in quantity demanded, demand is perfectly
elastic, and the demand curve will be horizontal
A firm's opportunity costs of production are equal to its
explicit costs + implicit costs
If the Korean steel industry subsidizes the steel that it sells to the United States, the
harm done to U.S. steel producers is less than the benefit that accrues to U.S. consumers of steel.
The equilibrium quantity in markets characterized by oligopoly is
higher than in monopoly markets and lower than in perfectly competitive markets
A good is an inferior good if the consumer buys less of it when
his income rises
In the actual economy, goods and services are purchased by
households, firms, and the government
The problem with the protection-as-a-bargaining-chip argument for trade restrictions is
if it fails, the country faces a choice between two bad options
In a prisoners' dilemma game,
if the players play the game repeatedly, the players can achieve a higher payoff, on average, than when they play the game only once.
Suppose the world price of a television is $300. Before Paraguay allowed trade in televisions, the price of a television there was $350. Once Paraguay began allowing trade in televisions with other countries, Paraguay began
importing televisions and the price of a television in Paraguay decreased to $300
If an economy's GDP falls, then it must be the case that the economy's
income and expenditure both fall
Tomato sauce and spaghetti noodles are complementary goods. A decrease in the price of tomatoes will
increase consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles.
Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has
increased measured GDP by the value added by the restaurant's preparation and serving of the meals
Two goods are complements when a decrease in the price of one good
increases the demand for the other good
The term economists use to describe a situation in which the economy's overall price level is rising is
inflation
For a firm to price discriminate,
it must have some market power
Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has
less market power than it would otherwise have
In the long run, a monopolistically competitive firm produces a quantity that is
less than the efficient scale
International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with
longer life expectancy and a higher percentage of the population that is literate.
In order to sell more of its product, a monopolist must
lower its price
Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market
may increase, decrease, or remain unchanged.
Assume, for Vietnam, that the domestic price of textiles without international trade is higher than the world price of textiles. This suggests that, in the production of textiles,
other countries have a comparative advantage over Vietnam and Vietnam will import textiles
When economists talk about growth in the economy, they measure that growth as the
percentage change in real GDP from one period to another
The income that households and noncorporate businesses receive is called
personal income
Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is
positive, and the good is a normal good.
Consider a market served by a monopolist, Firm A. A new firm, Firm B, enters the market and, as a result, Firm A lowers its price to try to drive Firm B out of the market. This practice is known as
predatory pricing
For a monopoly, the socially efficient level of output occurs where
price equals marginal cost
If duopoly firms that are not colluding were able to successfully collude, then
price would rise and quantity would fall
Scenario 16-2 Delish, a moderately priced restaurant, has recently announced intentions to open a restaurant in Boston, MA. Assume that the restaurant market in Boston is characterized by monopolistic competition. Refer to Scenario 16-2. As a result of the new restaurant, consumers in Boston are likely to experience a
product-variety externality, which is a positive externality
A demand curve reflects each of the following except the
quantity that each buyer will ultimately purchase.
A country reported nominal GDP of $100 billion in 2010 and $75 billion in 2009. It also reported a GDP deflator of 125 in 2010 and 120 in 2009. Between 2009 and 2010,
real output and the price level both rose
A law that restricts the ability of hotels/motels to advertise on billboards outside of a resort community would likely lead to
reduced efficiency of local lodging markets
Suppose a firm in a competitive market reduces its output by 20 percent. As a result, the price of its output is likely to
remain unchanged
If Miguel expects to earn a higher income next month, he may choose to
save less now and spend more of his current income on goods and services.
Cost is a measure of the
seller's willingness to sell.
Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction
shifts the demand curve for drugs to the left
Ashley bakes bread that she sells at the local farmer's market. If she purchases a new convection oven that reduces the costs of baking bread, the
supply curve for Ashley's bread will shift right. OR supply of Ashley's bread will increase