Wiseman HW questions for final

Susan quits her administrative job, which pays $40,000 a year, to finish her four-year college degree. Her annual college expenses are $8,000 for tuition and $700 for books. She spends $500 a year for food - that number is the same whether she is working or attending college. What is the opportunity cost of attending college for the year? $9,200 $8,700 $49,200 $48,700

48,700

Demand for Elsa costumes is given by the expression P = 2,000,100 - 1000QD. The costumes are produced by a profit-maximizing monopolist. The (constant) marginal cost of producing an Elsa costume is $100. There are no fixed costs. What is the deadweight loss associated with the monopolist's profit-maximizing output level? $500,050,000 $1 billion $500 million $2 billion $0

Correct Answer $500 million

Demand for Elsa costumes is given by the expression P = 2,000,100 - 1000QD. The costumes are produced by a profit-maximizing monopolist. The (constant) marginal cost of producing an Elsa costume is $100. There are no fixed costs. What quantity QM and price PM will the monopolist choose in order to maximize profit? PM = $1,000,100, QM = 1000 PM = $1,000,100, QM = 2000 PM = $100, QM = 2000 PM = $100, QM = 1000

Correct Answer PM = $1,000,100, QM = 1000

Which of the following functions might describe the relationship between the quantity demanded Q and market price P of a product? Q=100/P None of these answers are correct. Q=P2 Q=2P-6 Q=P1/3

Correct Answer Q=100/P

When does a backward-bending labor supply curve arise? When the income effect dominates the substitution effect. When workers value additional income more than additional leisure. When workers work more hours at higher wages. When the substitution effect dominates the income effect.

Correct Answer When the income effect dominates the substitution effect.

Consider the figure below of the price discriminating monopolist. If the markets were to charge a uniform price of PU between the two markets, that price would fall in what range? https://utexas.instructure.com/courses/1173838/files/39718714/preview hw5 fig4.jpg $6 < PU < $10 $10 < PU < $14 $10 < PU < $16 $6 < PU < $14

Correct! $10 < PU < $16

According to the diagram below, what is the dollar value of the deadweight loss created by prohibiting foreign trade in this market? https://utexas.instructure.com/courses/1173838/files/39718706/preview hw7 fig1.jpg $6,000 $10,000 $20,000 $28,000

Correct! $10,000

In the figure, a $1 tariff generates government revenue of (Note: Q is in million units) https://utexas.instructure.com/courses/1173838/files/39718718/preview hw7 fig3.JPG $300 million $200 million $100 million $250 million

Correct! $100 million

At the competitive equilibrium, what is the value of producer surplus? https://utexas.instructure.com/courses/1173838/files/39718709/preview $4500 $450. $1000. $720. $2000.

Correct! $1000.

The table below shows David and John's maximum willingness to pay for a one-night stay in a Myrtle Beach golf resort and one round of golf. Assume the resort has zero costs. If the resort sets prices for lodging and golf individually, it will charge ____ for one night's stay and _______ for one round of golf. https://utexas.instructure.com/courses/1173838/files/39718713/preview hw5 fig5.jpg $80 ; $57.50 $110 ; $80 $50 ; $110 $50 ; $35

Correct! $110 ; $80

At the competitive equilibrium, what is the value of consumer surplus? https://utexas.instructure.com/courses/1173838/files/39718709/preview $1250. $360. $2500. $2250. $750.

Correct! $1250.

In the country of Glorida, the demand curve for orange juice (measured in tons) is given by the expression P = 9000 - 80QD. The supply curve is P = 10QS. The world price of orange juice is $5000 per ton. (Glorida is a small country and cannot affect the world price.) If the government of Glorida imposes an export tariff of $1600 per ton on orange juice, how much is the deadweight loss from the tariff? $144,000 $16,000 $128,000 $576,000 $96,000

Correct! $144,000

The table below shows the number of units of output that a firm can produce per day, as function of the number of workers hired. The firm is price-taker in both the labor market and the output market. The market price of a unit of output is $20, and the market daily wage rate is $150. The firm has no costs besides labor. # of workers hired # of units of output produced 1 8 2 20 3 30 4 36 5 40 What is the value of the firm's maximized profit? $600. $100. $150. $120. $720.

Correct! $150.

In the accompanying world imports diagram, the total deadweight loss from prohibiting trade is: https://utexas.instructure.com/courses/1173838/files/39718708/preview hw7 fig4.jpg $320 $160 $140 $90

Correct! $160

Participating in the market for a product are 12 consumers, each of whom will buy at most one unit of the good, and 11 suppliers, each of whom will sell at most one unit of the good. The distribution of buyer values is as follows: Buyer Value Number of Buyers $1 2 $3 4 $5 3 $9 3 The distribution of seller costs is as follows: Seller Cost Number of Sellers $2 2 $4 5 $6 4 What is the value of consumer surplus at the competitive equilibrium? $24 $22 $18 $4 $26

Correct! $18

Damine is a milk producer in a very competitive industry. The market price for a gallon of milk is $2. Damine's farm produces 400 gallons of milk a day. Damine's marginal revenue per gallon of milk is: $800 $2 Not enough information to answer this question. $200 $4

Correct! $2

In the accompanying world imports diagram, the competitive outcome for a country without trade restrictions is where the equilibrium price and quantity demanded are __________, respectively. https://utexas.instructure.com/courses/1173838/files/39718708/preview hw7 fig4.jpg $20 and 20 $40 and 11 $20 and 4 $20 and 11

Correct! $20 and 20

Suppose there are three countries that are engaged in oil production. The total market output and market price are displayed in the table above. For simplicity, let us assume zero costs so that revenue equals profit. Assume that Country A cheats on the cartel agreement by producing 200 more barrels than the other two countries. What is the resultant profit earned by each of the other two countries? https://utexas.instructure.com/courses/1173838/files/39718712/preview hw6 fig1.png $70,000 $40,000 $20,000 $400

Correct! $20,000

If Maria is willing to pay $50 for a sweatshirt, how much consumer surplus does she obtain if the market price for sweatshirts is $27.50 each, and she purchases one sweatshirt? $27.50 $77.50 $22.50 $50 None of these answers are correct.

Correct! $22.50

Suppose there are three countries that are engaged in oil production. The total market output and market price are displayed in the table above. For simplicity, let us assume zero costs so that revenue equals profit. Suppose that the countries create a cartel and agree to mimic monopoly-like behavior. If the countries honor the cartel agreement, how much profit does each country make? https://utexas.instructure.com/courses/1173838/files/39718712/preview hw6 fig1.png $18,000 $23,333 $24,000 $70,000

Correct! $24,000

In the country of Cantada, the demand curve for syrup (measured in tons) is given by the expression P = 5000 - 20QD. The supply curve is P = 30QS. At the competitive equilibrium, what is the value of total surplus ( = consumer surplus + producer surplus)? $500,000. $200,000. $100,000. $250,000. $150,000.

Correct! $250,000.

Suppose there are three countries that are engaged in oil production. The total market output and market price are displayed in the table above. For simplicity, let us assume zero costs so that revenue equals profit. Assume that Country A cheats on the cartel agreement by producing 200 more barrels than the other two countries. What is the resultant profit earned by Country A? https://utexas.instructure.com/courses/1173838/files/39718712/preview hw6 fig1.png $30,000 $36,000 $600 $24,000

Correct! $30,000

Refer to the table below and suppose the monopolist produces 5 units. What is its profit? https://utexas.instructure.com/courses/1173838/files/39718716/preview hw5 fig1.jpg $85 $35 $10 $75 None of these answers are correct.

Correct! $35

Participating in the market for a product are 12 consumers, each of whom will buy at most one unit of the good, and 11 suppliers, each of whom will sell at most one unit of the good. The distribution of buyer values is as follows: Buyer Value Number of Buyers $1 2 $3 4 $5 3 $9 3 The distribution of seller costs is as follows: Seller Cost Number of Sellers $2 2 $4 5 $6 4 What is the competitive equilibrium price of the good? $5 $3 $2 $9 $4

Correct! $4

In the country of Glorida, the demand curve for orange juice (measured in tons) is given by the expression P = 9000 - 80QD. The supply curve is P = 10QS. The world price of orange juice is $5000 per ton. (Glorida is a small country and cannot affect the world price.) Now suppose that the government of Glorida imposes an export tariff of $1600 per ton on orange juice. How much revenue will the government collect from this tariff? $640,000 $432,000 $0 $80,000 $720,000

Correct! $432,000

he table shows the total revenue and total cost schedules for a competitive firm. The fixed cost for the firm is: https://utexas.instructure.com/courses/1173838/files/39718704/preview $100 A dollar amount, but cannot be determined from the information in the table. $50 $80 $90

Correct! $50

Consider the market for a good that generates harmful pollution. In particular, every unit of the good that is produced imposes $3 of pollution damage on society. Participating in this market are 12 consumers, each of whom will buy at most one unit of the good, and 11 suppliers, each of whom will sell at most one unit of the good. The distribution of buyer values is as follows: Buyer Value Number of Buyers $6 2 $8 4 $10 3 $14 3 The distribution of seller costs is as follows: Seller Cost Number of Sellers $7 2 $9 5 $11 4 What is the deadweight loss associated with the competitive equilibrium? $8 $22 $17 $11 $6

Correct! $6

The table shows the total revenue and total cost schedules for a competitive firm. The marginal cost for the fifth unit of output is: https://utexas.instructure.com/courses/1173838/files/39718704/preview hw4_3.JPG $100 $90 A dollar amount, but cannot be determined from the information in the table. $70 $450

Correct! $70

The figure shows the market for Softella Medicated Tissues. Assume that the only use for these tissues is to wipe one's hands to keep them clean. When people use these tissues they prevent germs from spreading to other people. Thus they are creating an external benefit to society. The market price of a box of these tissue is $8. What is the dollar amount of the external benefit per box that is created by the use of this product? https://utexas.instructure.com/courses/1173838/files/39718707/preview hw8 fig1.JPG $12 $16 $8 $24

Correct! $8

The table below shows the number of units of output that a firm can produce per day, as function of the number of workers hired. The firm is price-taker in both the labor market and the output market. The market price of a unit of output is $20, and the market daily wage rate is $150. The firm has no costs besides labor. # of workers hired # of units of output produced 1 8 2 20 3 30 4 36 5 40 What is the value of the marginal product of labor for the fifth worker hired? $160. $240. $200. $800. $80.

Correct! $80.

The figure shows the market for Softella Medicated Tissues. Assume that the only use for these tissues is to wipe one's hands to keep them clean. When people use these tissues they prevent germs from spreading to other people. Thus they are creating an external benefit to society. The market price of a box of these tissue is $8. Relative to the socially optimal quantity, what is the dollar amount of deadweight loss at the competitive outcome? https://utexas.instructure.com/courses/1173838/files/39718707/preview hw8 fig1.JPG $1,600 $2,800 $800 $5,600

Correct! $800

If the world's greatest singer is willing to perform for as little as $50,000 per year, but s/he is paid $10 million per year. How much is his/her economic rent? $50,000. $10 million. Zero - s/he owns a mansion. $9,950,000. Zero - the economic maxim "there's no cash on the table" means that economic rent cannot exist.

Correct! $9,950,000.

The table shows the total revenue and total cost schedules for a competitive firm. The marginal revenue for the fifth unit of output is: https://utexas.instructure.com/courses/1173838/files/39718704/preview $70 $450 $100 $90 A dollar amount, but cannot be determined from the information in the table.

Correct! $90

Two friends, Juan and Omar, must decide whether to join Facebook or Myspace (imagine each can only join one site). By himself, Juan prefers Myspace because he has a band and wants to promote its music. However, both of their choices matter to how much they benefit: Omar Facebook MySpace Facebook 9 , 9 1 , 1 Juan MySpace 5 , 2 14 , 7 Identify the Nash equilibrium (or equilibria) of the above game. (MySpace, Facebook) and (MySpace, MySpace) (Facebook, Facebook) only (MySpace, MySpace) only (MySpace, MySpace) and (Facebook, Facebook) (MySpace, Facebook) and (Facebook, MySpace)

Correct! (MySpace, MySpace) and (Facebook, Facebook)

Suppose that a monopolist can sell 5 units of output at a price of $5 or 6 units of output at a price of $4. What is the marginal revenue of the sixth unit? -$1 $11 $2 $24

Correct! -$1

If the government raises the minimum wage by 6%, the number of people employed falls by 2%. What is the elasticity of employment with respect to the minimum wage? -1.2 -0.33 -0.12 -3.0

Correct! -0.33

If the government raises the minimum wage by 60%, the number of people employed falls by 30%. What is the elasticity of employment with respect to the minimum wage? -1.2 None of these are correct. -0.5 0.33 -0.33

Correct! -0.5

The price of Good B increases by 4%, causing the quantity demanded of Good A to decrease by 6%. The cross-price elasticity of demand is _____, and the goods are _____. 1.5; substitutes -1.5; complements -2.4; substitutes 0.67; complements

Correct! -1.5; complements

Good X and Good Y are related goods. When the price of good X rises by 20%, the quantity demanded for good Y falls by 40%. What is the cross-price elasticity? -2 2 -0.5 4

Correct! -2

Good X and good Y are related goods. When the price of good X rises by 26%, the quantity demanded for good Y falls by 52%. What is the cross-price elasticity? -2 -3 None of these are correct. 4 2

Correct! -2

Suppose that if the wage rate increases from $9 to $11, the quantity of labor demanded falls from 56,000 to 40,000. What is the elasticity of demand for labor with respect to the wage? 1.60 1.00 0.60 0.16 1.67

Correct! 1.67

In the city of Crullaire, the demand curve for doughnuts is given by the equation P=39-Q/20, where Q is the number of doughnuts per day and P is the price of a doughnut. Each doughnut shop that is open has a fixed cost of $200 per day which must be paid so long as the shop is in business and regardless of the number of doughnuts it sells. There is also a variable cost of $4 for each doughnut sold. Each doughnut shop has a capacity of 40 doughnuts per day. In the long run, the doughnut market in Crullaire is characterized by free entry and exit of doughnut shops. In long-run competitive equilibrium, how many active doughnut firms are there in Crullaire? 16 13 12 17 15

Correct! 15

Consider the market for cans of yacht polish. Suppose that if the price increases from $20 to $60, then the quantity supplied increases from 0 to 80. What is the elasticity of supply with respect to the price? 3 1/2 2 1/4 4

Correct! 2

Production Possibilities for Kenya and Sri Lanka Suppose that Kenya can either produce 100 tons of beans or 200 tons of tea per acre of farmland. Likewise, suppose that on each acre of its farmland, Sri Lanka can produce 150 tons of beans or 450 tons of tea. Beans (millions of tons) Tea (millions of tons) Kenya 100 200 Sri Lanka 150 450 According to the table above, which of the ranges includes a trade price (per ton) that both countries would find acceptable? 0.5 bean for 1 tea < trade price < 3 beans for 1 tea 2 teas for 1 bean < trade price < 3 teas for 1 bean 0.3 bean for 1 tea < trade price < 2 beans for 1 tea 0.5 bean for 1 tea < trade price < 2 teas for 1 bean

Correct! 2 teas for 1 bean < trade price < 3 teas for 1 bean

According to the table below, the opportunity cost of producing 1 sofa in the United States is ______, and the opportunity cost of producing 1 sofa in Germany is _____. https://utexas.instructure.com/courses/1173838/files/39718717/preview hw7 fig2.JPG 0.4 clocks; 0.33 clocks 2.5 clocks; 3 clocks 2 clocks; 3 clocks 10 clocks; 27 clocks

Correct! 2.5 clocks; 3 clocks

Consider the market for a good that generates harmful pollution. In particular, every unit of the good that is produced imposes $3 of pollution damage on society. Participating in this market are 12 consumers, each of whom will buy at most one unit of the good, and 11 suppliers, each of whom will sell at most one unit of the good. The distribution of buyer values is as follows: Buyer Value Number of Buyers $6 2 $8 4 $10 3 $14 3 The distribution of seller costs is as follows: Seller Cost Number of Sellers $7 2 $9 5 $11 4 How many units of the good should be produced to obtain the socially efficient outcome? 6 4 9 2 3

Correct! 3

The marginal revenue (MR) for a firm is a constant $45, and the firm's marginal cost (MC) is given by MC=1.5Q (where Q is the quantity of output). What is the firm's profit-maximizing level of output? 45 30 3.33 67.5 33.33

Correct! 30

You are the owner of a firm that sells vases. You must pay each worker you hire $19 per hour, and each worker can produce 1 vase every 2 hours. You have no other costs. Derive your average total cost function: if output is Q, then average total cost is 38 9.5 19 38Q 19Q

Correct! 38

You are the owner of a firm that sells vases. You must pay each worker you hire $19 per hour, and each worker can produce 1 vase every 2 hours. You have no other costs. Derive your total cost function: if output is Q, then total cost is 9.5Q 38 9.5 38Q 19Q

Correct! 38Q

Refer to the table below. What is the monopolist's profit-maximizing level of output? https://utexas.instructure.com/courses/1173838/files/39718716/preview hw5 fig1.jpg None of these answers are correct. 7 4 1 6

Correct! 4

Suppose there are three countries that are engaged in oil production. The total market output and market price are displayed in the table above. For simplicity, let us assume zero costs so that revenue equals profit. If the countries create a cartel and agree to mimic monopoly-like behavior, what level of output would each firm agree to produce? https://utexas.instructure.com/courses/1173838/files/39718712/preview hw6 fig1.png 400 200 600 700

Correct! 400

The price elasticity of demand is equal to (-0.3). The income elasticity of demand is equal to 0.9. What would be approximately the change in quantity demanded ceteris paribus [the other factors equal] after an increase in consumer income of 4% and a decrease in price of 5%? 5.1% 6.8% 2.8% 0% 2%

Correct! 5.1%

Suppose there are three countries that are engaged in oil production. The total market output and market price are displayed in the table above. For simplicity, let us assume zero costs so that revenue equals profit. Suppose that the countries create a cartel and agree to mimic monopoly-like behavior. Assume that Country A cheats on the cartel agreement by producing 200 more barrels than the other two countries. What is the new market price when Country A cheats on the agreement? https://utexas.instructure.com/courses/1173838/files/39718712/preview hw6 fig1.png 40 30 60 20 50

Correct! 50

The demand curve for widgets is given by D = 85 - 5P and the supply curve is given by S = 25 + 5P, where P is the price of widgets. When the widget market is in equilibrium, the quantity of widgets bought and sold is 11 6 55 30 80

Correct! 55

Consider the market for a good that generates harmful pollution. In particular, every unit of the good that is produced imposes $3 of pollution damage on society. Participating in this market are 12 consumers, each of whom will buy at most one unit of the good, and 11 suppliers, each of whom will sell at most one unit of the good. The distribution of buyer values is as follows: Buyer Value Number of Buyers $6 2 $8 4 $10 3 $14 3 The distribution of seller costs is as follows: Seller Cost Number of Sellers $7 2 $9 5 $11 4 Without any intervention in this market, how many units of the good would be produced in a competitive equilibrium? 4 3 6 9 2

Correct! 6

Participating in the market for a product are 12 consumers, each of whom will buy at most one unit of the good, and 11 suppliers, each of whom will sell at most one unit of the good. The distribution of buyer values is as follows: Buyer Value Number of Buyers $1 2 $3 4 $5 3 $9 3 The distribution of seller costs is as follows: Seller Cost Number of Sellers $2 2 $4 5 $6 4 How many units of the good will be produced in a competitive equilibrium? 6 2 4 3 9

Correct! 6

The figure shows the market for Softella Medicated Tissues. Assume that the only use for these tissues is to wipe one's hands to keep them clean. When people use these tissues they prevent germs from spreading to other people. Thus they are creating an external benefit to society. The market price of a box of these tissue is $8. What is the socially optimal quantity in this market? https://utexas.instructure.com/courses/1173838/files/39718707/preview hw8 fig1.JPG 200 1200 700 500

Correct! 700

In the figure, a $1 tariff results in (Note: Q is in million units) https://utexas.instructure.com/courses/1173838/files/39718718/preview hw7 fig3.JPG An increase in imports of 100 million units. A decrease in imports of 80 million units. An increase in imports of 80 million units. A decrease in imports of 100 million units.

Correct! A decrease in imports of 80 million units.

Which of the following would not produce a shift in the demand curve for apple juice? A decrease in the price of biscuits which are a complement for apple juice. A decrease in the price of apples which are used in juice production An increase in the price of orange juice which is a substitute for apple juice. An increase in the income of apple juice consumers. All of these would produce a shift in the demand curve for apple juice.

Correct! A decrease in the price of apples which are used in juice production

Which of the following statements correctly defines a demand curve? A demand curve is a function that shows the relationship between quantity demanded and quantity supplied None of these answers are correct. A demand curve is a function that shows the relationship between prices and their associated quantities supplied A demand curve is a function that shows the relationship between prices and quantity available for sale A demand curve is a function that shows the relationship between prices and their associated quantities demanded

Correct! A demand curve is a function that shows the relationship between prices and their associated quantities demanded

What is the definition of a good with positive network economies? A good whose value to a user decreases with the number of other users. A good provided by a few large firms. A good whose demand decreases as consumers' income rises (like Ramen noodles). A good with important complements (like a printer with ink cartridges). A good whose value to a user increases with the number of other users.

Correct! A good whose value to a user increases with the number of other users.

Which of the following would not increase the demand (shift the curve to the right) for beer? The price of a substitute, hard liquor, rises. Bars begin giving away spicy snacks to their customers. A price war results in beer selling for $0.50 per bottle. There is an increase in the drinking-age population. A new hospital study concludes that beer cures colds and skin disorders.

Correct! A price war results in beer selling for $0.50 per bottle.

Which of the following correctly describes a monopoly that has economies of scale? A single firm which produces the level of output that minimizes total cost. A single firm which controls the production of a natural resource. A single firm operating in a market. A single firm which produces the efficient and socially optimal quantity in a market. A single firm which can supply the market at a lower cost than two or more firms.

Correct! A single firm which can supply the market at a lower cost than two or more firms.

If a one-of-a-kind Etruscan vase is offered for sale at an auction, which, if any, of the following correctly describes the supply curve for the vase? A vertical line. A downward-sloping curve. A horizontal line. An upward-sloping curve. It is impossible to determine the shape of the supply curve from the given information.

Correct! A vertical line.

Which of the following statements about price discrimination is correct? If the demand curves are different, it is more profitable to set different prices in different markets than a single price that covers all markets. Resale between buyers makes it difficult for a firm to set different prices in different markets thereby reducing the profit from price discrimination. All of the answers are correct. To maximize profit the firm should set a higher price in markets with more inelastic demand.

Correct! All of the answers are correct.

The prisoners' dilemma helps explain why cartels fail. All of these answers are correct. describes how producers can lock themselves into a sub-optimal outcome by pursuing their own self-interest. has a dominant strategy for both players.

Correct! All of these answers are correct.

Government solutions to externality problems include: All of these answers. Command and control regulation (for example, requiring firms to install pollution abatement equipment). Taxes and subsidies Tradeable permits.

Correct! All of these answers.

Which of the following is NOT an example of price discrimination? All of these are examples of price discrimination. peak and non-peak rates for cell phone usage senior citizen discounts student discounts for performing arts events educational discount for Microsoft Office software

Correct! All of these are examples of price discrimination.

Apple Inc's iPod is the dominant product in the market for mp3 players. Suppose that a technology company Orange recently introduced an innovative mp3 player, which many consumers feel is a good substitute of the iPod. You would expect Apple Inc would tend to increase their mark-up for the iPods. demand for the iPods would become inelastic. Apple Inc would tend to decrease their mark-up for the iPods. the marginal cost of producing iPods would increase. demand for the iPods would increase.

Correct! Apple Inc would tend to decrease their mark-up for the iPods.

Why is a monopolist's marginal revenue less than the market price? Because the monopolist wants to discourage competitors from entering the market. Because in order to sell an additional unit, the monopolist must charge a lower price on all units. Because the monopolist can sell as many units as it wants at the market price. Because demand is lower than in competitive markets.

Correct! Because in order to sell an additional unit, the monopolist must charge a lower price on all units.

Most cartels do not result in the monopoly price and quantity because: Price-fixing is legal in the U.S. Not enough technological advancement occurs within a cartel. Cartel members have incentive to "cheat" by selling more than the agreed amount. The cartel causes costs to rise.

Correct! Cartel members have incentive to "cheat" by selling more than the agreed amount.

Vampires must drink blood to survive. Werewolves, on the other hand, can drink either blood or pina coladas, although they prefer blood. If you are a monopoly seller of blood, and you can price discriminate by charging different prices to vampires and werewolves, which of the following describes how you would set the price for blood? Charge both vampires and werewolves the same price. Charge werewolves more. Charge vampires more . There is not enough information to answer this question.

Correct! Charge vampires more .

Refer to the table below. What is Player 1's dominant strategy in this game? https://utexas.instructure.com/courses/1173838/files/39718711/preview hw6 fig2.png Cooperate Both strategies are dominant. Neither strategy is dominant. Cheat

Correct! Cheat

Which of the following is NOT an example of a prisoners' dilemma? Oligopolists trying to form a cartel. Convenience stores operating on adjacent street corners. Party-goers choosing how loud to talk. Cigarette producers deciding whether or not to advertise (before 1971).

Correct! Convenience stores operating on adjacent street corners.

A decrease in income causes the demand to ___________ for a normal good, and an increase in income causes the demand to _______ for an inferior good. None of these answers are correct. Decrease, increase Increase, increase Decrease, decrease Increase, decrease

Correct! Decrease, decrease

There are two countries, East Dakota and West Dakota. Each country produces two products, tablet computers and yo-yos. In East Dakota, it takes 10 hours to make a computer, and 2 hours to make a yo-yo. In West Dakota, it takes 15 hours to make a computer, and 5 hours to make a yo-yo. Which of the following statements is true? West Dakota has an absolute advantage in computers. No one has an absolute advantage in computers. No one has a comparative advantage in yo-yos. East Dakota has a comparative in advantage in yo-yos.

Correct! East Dakota has a comparative in advantage in yo-yos.

There are two countries, East Dakota and West Dakota. Each country produces two products, tablet computers and yo-yos. In East Dakota, it takes 10 hours to make a computer, and 2 hours to make a yo-yo. In West Dakota, it takes 15 hours to make a computer, and 5 hours to make a yo-yo. Which of the following patterns of trade can make both countries better off? East Dakota trades computers to West Dakota for yo-yos at a rate of 0.25 computers per yo-yo East Dakota trades yo-yos to West Dakota for computers at a rate of 0.25 yo-yos per computer East Dakota trades yo-yos to West Dakota for computers at a rate of 6 yo-yos per computer East Dakota trades yo-yos to West Dakota for computers at a rate of 4 yo-yos per computer

Correct! East Dakota trades yo-yos to West Dakota for computers at a rate of 4 yo-yos per computer

In the country of Glorida, the demand curve for orange juice (measured in tons) is given by the expression P = 9000 - 80QD. The supply curve is P = 10QS. The world price of orange juice is $5000 per ton. (Glorida is a small country and cannot affect the world price.) If Grance is free to trade at the world price, Glorida will _______: Export 450 tons. Import 450 tons. Export 50 tons. Export 400 tons. Import 400 tons.

Correct! Export 450 tons.

Farida is thinking of entering the pie industry by leasing a factory. The cost of leasing the factory is $1,000 per day. The profit maximizing quantity of pies is 1,000 pies a day. Each pie sells for $3 and cost only $2.10 to make (in addition to the cost of leasing the factory). Which of the following is a correct conclusion based on this information? At the profit maximizing quantity, her producer surplus is -$200. Farida should not enter the industry. If she enters the industry, Farida would make profits of $900 per day. None of these answers are correct. If she enters the industry, Farida would make profits of $3,000 per day.

Correct! Farida should not enter the industry.

Consider the following matrix of profits for an oligopoly consisting of two firms where each must choose a price level. (The first number in each pair represents Firm ABC's profit, and the second represents Firm XYZ's profit, in thousands of dollars.) XYZ Inc. High Low ABC Corp. High 11, 10 3,17 Low 16, 3 4, 5 What is Firm ABC's dominant strategy? Firm XYZ's? Firm ABC = Low, Firm XYZ = High Firm ABC = High, Firm XYZ = High Firm ABC = Low, Firm XYZ = Low Firm ABC = High, Firm XYZ = Low

Correct! Firm ABC = Low, Firm XYZ = Low

Which of the following is not a reason that monopolies arise? Copyrights Patents High price Economies of scale Control of natural resources

Correct! High price

Which of the following statements is(are) true? I. Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and its market price. II. Bill is willing to pay $10 for two pounds of clay. If the market price for a pound of clay is $2, Bill receives a total consumer surplus of $8 if he buys two pounds. III. Graphically, consumer surplus is represented by the area bounded by vertical axis, demand curve and market price. I and III are true II, and III are true Only I is true Only III is true Only II is true

Correct! I and III are true

Which of the following statements are true? I. Accounting profits are usually greater than economic profits, because economic profits take into account opportunity costs and accounting profits do not. II. What economists call "excess profits" is the same as what accountants call "accounting profits." III. Sunk costs, once paid, can never be recovered. I only. II only. I and II. I and III. II and III.

Correct! I and III.

Which of the following conditions characterize a perfectly competitive industry? I. The product sold is similar across firms. II. There are many sellers, each small relative to the total market. III. Firms are price takers. IV. The threat of competition exists from potential sellers that haven't yet entered the market. None of the conditions. I and II only. I, II, and III only. I, II, III, and IV. II only.

Correct! I, II, III, and IV.

Which of the following would cause a shift in supply? I. The income level of consumers changes II. The price of production inputs changes III. The production technology changes I and III will cause a shift in supply Only III will cause a shift in supply II and III will cause a shift in supply Only I will cause a shift in supply Only II will cause a shift in supply

Correct! II and III will cause a shift in supply

What does the Coase theorem state? If transactions costs are low and property rights are clearly defined, then private bargains will ensure that the market equilibrium is efficient even when there are externalities. In the absence of market failures, the competitive equilibrium quantity maximizes total surplus. A monopolist who is not stupid should set a price above marginal cost. Private solutions to externality problems are always possible, so there is no role for government in solving complex externality problems. The distribution of income in a society is just if property is justly acquired and voluntarily exchanged.

Correct! If transactions costs are low and property rights are clearly defined, then private bargains will ensure that the market equilibrium is efficient even when there are externalities.

Edgar's internal benefit from a flu shot is $15.00, and it would cost him $20 to get vaccinated. Therefore, which of the following is correct? Even without a government subsidy, Edgar is certain to be vaccinated. The deadweight loss is eliminated if Edgar is vaccinated and the external benefits are $4.00. It is socially optimal for Edgar to get the flu shot if the social benefits of the shot exceed $20. The external benefits of the flu shot equal $5.00.

Correct! It is socially optimal for Edgar to get the flu shot if the social benefits of the shot exceed $20.

If Jo puts a statue of a pig in her front yard, she would get $250 of consumer surplus, but the statue would impose a negative externality of $300 on her neighbor Pat. Transaction costs are low. If Jo needs her neighbor's permission to erect the statue, what outcome does the Coase theorem predict? Jo won't erect the statue; no payments will be made. Jo will erect the statue; no payments will be made. Jo will erect the statue; she will pay Pat at least $300. Jo won't erect the statue; Pat will pay her between $250 and $300. Jo will erect the statue; she will pay Pat between $250 and $300.

Correct! Jo won't erect the statue; no payments will be made.

Suppose that a seller is auctioning off one hug from Robert Frank, Ben Bernanke, or Kate Antonovics (who are the most popular economists among you kids these days) to you and your 499 classmates through a first-price, sealed-bid auction. You get one hug from the economist of your choice if you win, but the hug is non-transferable - you can't resell it. You value a hug from your favorite at $1000; you do not know the valuations of your classmates. What bid should you submit? THINK CAREFULLY. $1 more than your estimate of the highest valuation among your classmates. Less than $1000, even though this is a private-value auction and the winner's curse doesn't apply. $1000, since this is a common-value auction and the winner's curse doesn't apply. Less than $1000, because this is a common-value auction and you're worried about the winner's curse. $1000, since this is a private-value auction and the winner's curse doesn't apply.

Correct! Less than $1000, even though this is a private-value auction and the winner's curse doesn't apply.

Cracker Monster consumes only crackers, so he spends all his income on crackers. Cheese-and-Cracker Monster, on the other hand, consumes only cracker-and-cheese sandwiches (one slice of cheese between two crackers). He has no use for cheese without two crackers or for crackers without cheese. He spends all his income to make as many cracker-and-cheese sandwiches as possible. Is Cheese-and-Cracker Monster's price elasticity of demand for crackers higher or lower than Cracker Monster's? Lower, because crackers have more complements for him than for Cracker Monster. Higher, because cheese-and-cracker sandwiches have more substitutes for him than crackers have for Cracker Monster. Lower, because cheese is more expensive than crackers. Higher, because crackers have more complements for him than for Cracker Monster.

Correct! Lower, because crackers have more complements for him than for Cracker Monster.

The figure below shows the revenue-cost structure for a monopolist. The monopolist earns a profit of https://utexas.instructure.com/courses/1173838/files/39718715/preview hw5 fig2.jpg $240 $480 $420 None of these answers are correct. $600

Correct! None of these answers are correct.

South Africa and Russia control a large portion of the world production of diamonds. Suppose the marginal cost of mining diamonds is constant at $1,000 per carat weight, and that demand is as follows: Price Quantity (in carats) $8,000 4,000 $7,000 5,500 $6,000 6,000 $5,000 7,000 $4,000 8,000 $3,000 9,000 $2,000 10,000 $1,000 11,000 If there were many suppliers of diamonds, the price and quantity would be: P = $6,000, Q =6,000 P = $1,000, Q = 11,000 P = $2000, Q = 10,000 P = $8,000, Q = 4,000

Correct! P = $1,000, Q = 11,000

South Africa and Russia control a large portion of the world production of diamonds. Suppose the marginal cost of mining diamonds is constant at $1,000 per carat weight, and that demand is as follows: Price Quantity (in carats) $8,000 4,000 $7,000 5,500 $6,000 6,000 $5,000 7,000 $4,000 8,000 $3,000 9,000 $2,000 10,000 $1,000 11,000 Say South Africa and Russia form a cartel with regards to quantity supplied, with the goal of maximizing total profit. Assuming both parties follow the cartel agreement, the cartel price and quantity would be: P = $7,000, Q =5,500 P = $5,000, Q = 7,000 P = $1,000, Q = 11,000 P = $8,000, Q = 4,000

Correct! P = $7,000, Q =5,500

In the city of Crullaire, the demand curve for doughnuts is given by the equation P=39-Q/20, where Q is the number of doughnuts per day and P is the price of a doughnut. Each doughnut shop that is open has a fixed cost of $200 per day which must be paid so long as the shop is in business and regardless of the number of doughnuts it sells. There is also a variable cost of $4 for each doughnut sold. Each doughnut shop has a capacity of 40 doughnuts per day. Initially, 12 doughnut shops are open in Crullaire. A doughnut shop that is open cannot escape its fixed costs immediately; instead, the doughnut shop must give 6 months advance notice to its landlord that it will close. It also takes about 6 months to organize and open a new doughnut shop. What are the short-run competitive equilibrium price P* and quantity Q* of doughnuts in Crullaire? P* = $4, Q* = 700 P* = $9, Q* = 600 P* = $9, Q* = 480 P* = $4, Q* = 480 P* = $15, Q* = 480

Correct! P* = $15, Q* = 480

In the country of Cantada, the demand curve for syrup (measured in tons) is given by the expression P = 5000 - 20QD. The supply curve is P = 30QS. What are the competitive equilibrium price P* and quantity Q* of syrup in Cantada? P* = $2000, Q* = 100. None of these are correct. P* = $1500, Q* = 500. P* = $3000, Q* = 100. P* = $1000, Q* = 200.

Correct! P* = $3000, Q* = 100.

The supply curve for mopeds is given by the expression P = 1000 + 25QS. The demand curve is given by the equation P = 10,000 - 5QD. What are the competitive equilibrium price and quantity? P* = $12,250, Q* = 450. P* = $10,175, Q* = 367. P* = $8500, Q* = 300. P* = $8165, Q* = 367. P* = $7750, Q* = 450.

Correct! P* = $8500, Q* = 300.

In the country of Glorida, the demand curve for orange juice (measured in tons) is given by the expression P = 9000 - 80QD. The supply curve is P = 10QS. The world price of orange juice is $5000 per ton. (Glorida is a small country and cannot affect the world price.) In the absence of trade, what are the competitive equilibrium price P* and quantity Q* in Glorida? P* = 1286, Q* = 128.6 P* = 1000, Q* = 100 P* = 100, Q* = 1000 P* = 1000, Q* = 80

Correct! P* = 1000, Q* = 100

Consider the market for vests, whose supply and demand curves are shown in the graph below. NOTE: Graph is not to scale. What are the competitive equilibrium price and quantity of vests? https://utexas.instructure.com/courses/1173838/files/39718709/preview P* = 40, Q* = 60. P* = 40, Q* = 140. P* = 100, Q* = 30 P* = 30, Q* =100. More information is needed.

Correct! P* = 30, Q* =100.

The demand curve for the yacht market is given by the equation P = 180 - 20QD and the supply curve is given by the equation P = 40 QS. What are the competitive equilibrium price P* and Q* in this market? P*=120, Q*=3 P*=360, Q*=18 P*=1200, Q*=18 P*=18, Q*=120 P*=60, Q*=12

Correct! P*=120, Q*=3

The figure below shows the revenue-cost structure for a monopolist. What are the monopolist's profit-maximizing price and output level? https://utexas.instructure.com/courses/1173838/files/39718715/preview hw5 fig2.jpg P=$6.00; Q=40 P=$3.00; Q=40 P=$5.00; Q=40 P=$6.00; Q=80 P=$16.50; Q=40

Correct! P=$16.50; Q=40

Airlines usually charge a much higher price for a beer served on board than almost any other beverage retailer on the ground. Which of the following is NOT a reason for the higher price? All of these are reasons that airlines can charge more for beer. Passengers' demand for beer is elastic. Airlines are local monopolies over beverages served in-flight. The cost of serving beverage in-flight is higher. Passengers are not allowed to bring beer onto a plane.

Correct! Passengers' demand for beer is elastic.

In an industry with a horizontal long-run supply curve, if there is a decrease in demand, then Prices remain the same in the short run but decrease in the long run. Prices increase in the short run but decrease in the long run. Prices increase in the short run and long run. Prices decrease in the short run but return to initial level in the long run. Prices decrease in the short run and the long run.

Correct! Prices decrease in the short run but return to initial level in the long run.

Suppose that the market price is $32. In the short run, what should the firm do? https://utexas.instructure.com/courses/1173838/files/39718710/preview Shut down. Produce Q = 10 and make a loss. Produce Q = 13 and make a loss. Produce Q = 20 and break even. Produce Q = 13 and make a profit.

Correct! Produce Q = 13 and make a loss.

In the city of Crullaire, the demand curve for doughnuts is given by the equation P=39-Q/20, where Q is the number of doughnuts per day and P is the price of a doughnut. Each doughnut shop that is open has a fixed cost of $200 per day which must be paid so long as the shop is in business and regardless of the number of doughnuts it sells. There is also a variable cost of $4 for each doughnut sold. Each doughnut shop has a capacity of 40 doughnuts per day. A doughnut shop that is open cannot escape its fixed costs immediately; instead, the doughnut shop must give 6 months advance notice to its landlord that it will close. It also takes about 6 months to organize and open a new doughnut shop. In the long run, the doughnut market in Crullaire is characterized by free entry and exit of doughnut shops. Starting from the long-run equilibrium, the city of Crullaire unexpectedly imposes a tax on doughnuts. In particular, doughnut shops must now pay the city a sales tax of $2 for every doughnut sold. In the short run, how will this tax affect the price of a doughnut? In the long run? Short run: no change; long run: price increases by $2. Short run: price increases by $2; long run: price increases by $2. Short run: no change; long run: no change Short run: price increase by less than $2; long run: price increases by $2. Short run: price increases by less than $2; long run: price increases by less than $2.

Correct! Short run: no change; long run: price increases by $2.

A market is initially in long-run competitive equilibrium. Each active firm is producing 200 units at an average total cost of $90 per unit. Suppose that because of a decrease in demand, the market price falls to $80. In the short run, each firm has fixed costs of $1000. What should a firm do in the short run? Produce and make a profit. Produce and break even. Produce and make a loss. Shut down. Exit the industry.

Correct! Shut down.

Suppose that the price of pumpkins in Austin has fallen by 10%, while total spending on pumpkins in Austin has gone up by 2%. Which of the following could explain those changes? Demand curve shifted out, supply curve stayed the same, and demand is elastic. Demand curved shifted in and supply curve stayed the same. Supply curve shifted out, demand curve remained the same, and demand is inelastic Supply shifted in, demand stayed the same, and demand is elastic. Supply curve shifted out, demand curve remained the same, and demand is elastic

Correct! Supply curve shifted out, demand curve remained the same, and demand is elastic

According to the table below, which of the following statements is true? https://utexas.instructure.com/courses/1173838/files/39718717/preview hw7 fig2.JPG The United States has a comparative advantage in clocks and sofas. The United States has a comparative advantage in sofas. Germany has an absolute advantage in clocks and sofas. The United States has a comparative advantage in clocks.

Correct! The United States has a comparative advantage in sofas

Which of the following statements concerning the winner's curse in auctions is true? The WC applies only in private-value auctions. A potential bidder worried about the WC should not submit a bid (or should submit a bid of zero). The WC is a bigger problem in auctions with open bids than in auctions with closed bids. The WC applies in common-value auctions. A potential bidder worried about the WC should bid higher than his or her actual valuation.

Correct! The WC applies in common-value auctions.

The market for apples is in equilibrium. If the price of apples and the quantity of apples sold increase, which of the following most likely occurred? The demand curve for apples shifted to the right. Both the supply curve and the demand curve for apples shifted to the left. The supply curve for apples shifted to the left. The demand curve for apples shifted to the left. The supply curve for apples shifted to the right.

Correct! The demand curve for apples shifted to the right.

If producers increase the price of soft drinks by 10 percent and the quantity demanded remains the same, which of the following must be true? Soft drinks are inferior goods The demand for soft drinks is perfectly elastic The demand for soft drinks is perfectly inelastic The demand for soft drinks is unit elastic There are many close substitutes for soft drinks

Correct! The demand for soft drinks is perfectly inelastic

Which of the following is NOT true about network economies? They are an important source of market power. They are essentially similar to economies of scale. An initial sales advantage in an industry with network economies helps a firm establish a long-lasting position of dominance. The dominant firm an industry with network economies is always the one with the best product.

Correct! The dominant firm an industry with network economies is always the one with the best product.

Which of the following statements about competitive markets is NOT correct? A price-taking firm has no control over the price that it receives in the market. Profits act as a positive signal for producing a good that is valued more highly than the cost of producing it. In the long run, entry and exit drive economic profits to zero. A firm should shut down if the price does not cover its average variable costs. The market supply curve is much more elastic in the short run than in the long run.

Correct! The market supply curve is much more elastic in the short run than in the long run.

Why do you think that researchers sometimes find a positive relationship between the unemployment rate and college enrollment rates? Professors tend to teach better during recessions. The opportunity cost of attending college falls during economic booms, leading to higher college enrollment rates. The opportunity cost of attending college rises during recessions, leading to higher college enrollment rates. The opportunity cost of attending college falls during recessions, leading to higher college enrollment rates.

Correct! The opportunity cost of attending college falls during recessions, leading to higher college enrollment rates.

Suppose a famous baseball player, Alex Rodriguez, hires a high school student to paint his house. Which of the following is most likely true? The opportunity cost of painting a house is lower for Alex Rodriguez than for the high school student. The opportunity cost of painting a house is higher for Alex Rodriguez than for the high school student. The opportunity cost of painting a house is zero for Alex Rodriguez and is negative for the high school student. The opportunity cost of painting a house is the same for Alex Rodriguez as for the high school student.

Correct! The opportunity cost of painting a house is higher for Alex Rodriguez than for the high school student.

Your benefit from attending your cousin's wedding in Chicago would be $550. The cost of a round-trip airline ticket is $500, and there are no other costs, so you bought the ticket and plan to attend the wedding. However, your cousin then postponed the wedding by a week. Your ticket is non-refundable, but the airline will let you change the date of your ticket for a fee of $100. You decline, because "the total cost of attending the wedding is now $500 + $100 = $600, which is greater than the benefit." Which decision pitfall have you fallen into? The pitfall of thinking normatively rather than positively. The pitfall of measuring costs or benefits proportionally . The pitfall of ignoring implicit costs. The pitfall of failing to think at the margin.

Correct! The pitfall of failing to think at the margin.

Corky-Cola and Pripsy are substitute soft drinks. Which of the following would cause the demand curve for Pripsy to shift to the left? The price of Corky-Cola decreases. The cost of making Pripsy rises. The price of Pripsy rises. A news report says that drinking Pripsy helps to promote weight loss.

Correct! The price of Corky-Cola decreases.

At a point where two demand curves intersect, which of the following is correct? The steeper curve is more elastic than the flatter curve Only the slopes of the two curves are the same The steeper curve is less elastic than the flatter curve The changing scales on either axis make a comparison impossible The two elasticities are equal

Correct! The steeper curve is less elastic than the flatter curve

What is the "value of marginal product of labor"? The dollar amount that a firm must pay someone in order to hire that person. The opportunity cost of time spent working. The value of the change in output associated with adding one more worker. The value of the inputs that a firm uses to supply a good in another market.

Correct! The value of the change in output associated with adding one more worker.

Which of the following statements is correct? When MR=MC, the average cost curve is at its minimum point. When a marginal cost curve is above the average cost curve, the average cost curve must be rising. When a marginal cost curve is below the average cost curve, the average cost curve must be rising. When MR=P, the average cost curve is at its minimum point. None of these answers are correct.

Correct! When a marginal cost curve is above the average cost curve, the average cost curve must be rising.

Which of the following factors does not result in a shift of the supply curve? a change in the number of sellers in the market. a change in production technology. a change in the costs of production. a change in the demand for the product.

Correct! a change in the demand for the product.

In the prisoners' dilemma, "tit-for-tat" is: a way to avoid the long-run benefits of cooperation. a long-run strategy that mimics the opponent's most recent action. a strategy that alters incentives in the long run and reduces cooperation. the strategy that yields the largest gain in the short run.

Correct! a long-run strategy that mimics the opponent's most recent action.

If a new technological breakthrough in genetic engineering makes it possible to grow twice as much corn per acre as had been possible in the past, the most likely result will be: an increase (shift to the right) in the supply of corn, due to the reduced cost of production an increase in the demand for corn, due to the greatly reduced price a decrease (shift to the left) in the supply of corn, due to the increased costs associated with the new technology a shift from corn production to wheat production, using all of the extra land not needed for corn production an increase in the long-run profit of competitive corn producers

Correct! an increase (shift to the right) in the supply of corn, due to the reduced cost of production

Production Possibilities for Kenya and Sri Lanka Suppose that Kenya can either produce 100 tons of beans or 200 tons of tea per acre of farmland. Likewise, suppose that on each acre of its farmland, Sri Lanka can produce 150 tons of beans or 450 tons of tea. Beans (millions of tons) Tea (millions of tons) Kenya 100 200 Sri Lanka 150 450 According to the table above, Kenya should produce ________ and Sri Lanka should produce ________ . beans; tea both goods; neither good tea; beans only beans; any combination of beans and tea

Correct! beans; tea

Consider the figure below of a price discriminating monopolist. In order to profit maximize, the monopolist should: https://utexas.instructure.com/courses/1173838/files/39718714/preview hw5 fig4.jpg charge a uniform price of $6 in both markets. charge a price of $16 in market A, and $10 in market B. charge a price of $14 in market A, and $9 in market B. charge a price of $16 in market A, and $6 in market B.

Correct! charge a price of $16 in market A, and $10 in market B.

If the price of an input decreases, you would expect a monopolist to: decrease the price of its product and increase output. go out of business. increase the price of its product and decrease output. increase the price of its product and increase output. decrease the price of its product and decrease output.

Correct! decrease the price of its product and increase output.

A straight-line (constant-slope) demand curve has an elasticity that: increases as quantity demanded increases along its length remains constant along its length first increases then decreases as quantity demanded increases None of these are correct. decreases as quantity demanded increases along its length

Correct! decreases as quantity demanded increases along its length

If a theater increases the price of a movie ticket from $10 to $15 and the quantity of movie tickets demanded decreases from 4000 to 1000, then over this price range the demand schedule is inelastic and total revenue will increase elastic and total revenue will increase elastic and total revenue will decrease inelastic and total revenue will decrease unit elastic and total revenue will remain constant

Correct! elastic and total revenue will decrease

If the market demand for a good decreases, and the supply increases, then equilibrium price decreases the effect on equilibrium price is ambiguous. equilibrium quantity decreases equilibrium quantity increases nothing will change

Correct! equilibrium price decreases

If the price of a good with elastic demand increases, the revenue will not change rise no unique answer can be given about the direction of revenue's change fall rise by a greater percentage than the price increase

Correct! fall

In a perfectly competitive industry, there are many buyers but few sellers. marginal costs are zero. there are many buyers and sellers, and each is large relative to the total market. firms sell similar products. demand is high.

Correct! firms sell similar products.

Price elasticity of supply tends to be higher: the more adaptable the firms can be to changing market conditions the easier it is for more new firms to enter the industry the longer the time period for manufactured goods than for antiques for all of these.

Correct! for all of these.

The price elasticity of demand is equal to -3. That means that if the price of a commodity decreases by 0.4%, the quantity demanded will fall by 1.2% if the price of a commodity increases by 0.4%, the quantity demanded will increase by 1.2% if the price of a commodity decreases by 0.4%, the quantity demanded will increase by 2% if the price of a commodity increases by 0.4%, the quantity demanded will fall by 1.2% if the price of a commodity increases by 1%, the quantity demanded will fall by 1.2%

Correct! if the price of a commodity increases by 0.4%, the quantity demanded will fall by 1.2%

Refer to the figure. If price increases from $10 to $20, total revenue will: https://utexas.instructure.com/courses/1173838/files/39718705/preview increase by $800 so the demand curve must be inelastic. decrease by $800 so the demand curve must be elastic. increase by $100 so the demand curve must be inelastic. decrease by $100 so the demand curve must be elastic.

Correct! increase by $800 so the demand curve must be inelastic.

A perfectly horizontal demand curve has a price elasticity of: between 0 and 1 infinity 1 0 100

Correct! infinity

To economists, "thinking on the margin" means ... measuring the value of the opportunities lost. people respond to incentives. making choices by thinking in terms of the benefits and costs of a little bit more or less. it is impossible to make one person better off without making someone else worse off.

Correct! making choices by thinking in terms of the benefits and costs of a little bit more or less.

As income rises during economic upturns, consumption of potatoes declines, yet as income falls during economic downturns, consumption of potatoes rises. The most likely explanation is: high income elasticity of demand negative income elasticity of demand changing tastes for potatoes very low price elasticity of demand very high price elasticity of supply

Correct! negative income elasticity of demand

Which of the following are factors that shift the demand curve? income, population, tastes, and input prices costs of production, price of the product, and subsidies price of substitutes, tastes, price of complements expectations, opportunity costs, price of the product

Correct! price of substitutes, tastes, price of complements

Refer to the table below. What type of game does this payoff matrix represent? https://utexas.instructure.com/courses/1173838/files/39718711/preview hw6 fig2.png coordination game prisoners' dilemma network game cheating game

Correct! prisoners' dilemma

Economic theory suggests that a natural monopoly should be: eliminated whenever it arises. regulated to take advantage of economies of scale. left alone to operate with excess capacity. broken up into smaller firms.

Correct! regulated to take advantage of economies of scale.

In the oil market, an increase in the wages of oil workers will ... shift the demand curve for oil to the left. shift the supply curve of oil to the right. shift the demand curve for oil to the right. shift the supply curve of oil to the left.

Correct! shift the supply curve of oil to the left.

The per-unit cost of producing Tic Tac candy does not change with increases in production, which means that the: demand for Tic Tac candy is inelastic. supply of Tic Tac candy is inelastic supply of Tic Tac candy is elastic demand for Tic Tac candy is elastic.

Correct! supply of Tic Tac candy is elastic

As a result of the supply curve shift the quantity demanded of chocolate has fallen, but the revenue of producers has increased. Which of the following may explain the phenomenon? the supply is elastic with respect to price chocolate is a luxury good the demand is elastic with respect to price the supply is inelastic with respect to price the demand is inelastic with respect to price

Correct! the demand is inelastic with respect to price

Suppose that the supply of a certain good is perfectly inelastic. If the demand for that good increases, then the equilibrium price will fall, equilibrium quantity will rise the equilibrium price will rise, the equilibrium quantity will fall the equilibrium price and quantity will rise the equilibrium price and quantity will fall the equilibrium price will rise, the equilibrium quantity will not change

Correct! the equilibrium price will rise, the equilibrium quantity will not change

The demand for a commodity will be more inelastic the lower the number of substitutes the smaller is the price change the longer the time period involved the greater is the price change the greater the number of substitutes

Correct! the lower the number of substitutes

Which of the following conditions would prevent a firm from setting different prices in different markets? government intervention forcing the firm to reduce the level of output. law enforcement preventing buyers from moving between different markets. the possibility of resale between buyers between different markets. None of these answers are correct.

Correct! the possibility of resale between buyers between different markets.

Competitive equilibrium occurs where: suppliers want to change their behavior customers want to change their behavior the quantity supplied and the quantity demanded are the same for a given price the quantity supplied is greater than the quantity demanded the quantity demanded is greater than the quantity supplied

Correct! the quantity supplied and the quantity demanded are the same for a given price

If the price elasticity of supply is 4, then when the price of Good X rises by 5% the quantity supplied of Good X falls by 1.25% the quantity supplied of Good X rises by 20% the quantity supplied of Good X falls by 20% the quantity supplied of Good X rises by 1.25%

Correct! the quantity supplied of Good X rises by 20%

If the cost per unit of producing a good increases, and all other factors remain the same as before, then the demand curve for the good will shift to the right the supply curve for the good will shift to the right the supply curve for the good will shift to the left the demand curve for the good will shift to the left nothing will happen.

Correct! the supply curve for the good will shift to the left

The opportunity cost of a choice is ... sometimes positive and sometimes negative. the value of the best alternative that must be sacrificed to make the choice. the net value of the opportunities gained. the difference between the benefits and costs of the choice.

Correct! the value of the best alternative that must be sacrificed to make the choice.

Suppose that there are three methods of financing the transportation of prisoners by boat from Point A to Point B: I. The boat's captain is paid $100 for every live prisoner who is loaded on board at Point A. II. The captain is paid $100 for every live prisoner who is unloaded at Point B. III. The captain is paid $800 for every live prisoner who is loaded on board at Point A. Which financing method will result in the greatest number of prisoners surviving the trip? I All methods affect prisoner survival equally. II III

II