Comprehensive quiz

What is the value of producer surplus in the graph above?

$75

(Table) Referring to the table, ____ is the average variable cost when output is 12 units.

$75.00

In the graph, total surplus is shown by area:

ACE

Suppose that the government could stimulate spending in one of the following expenditure categories. In which of these categories would the spending increase contribute most to an expansion of production possibilities?

Capital goods

For all firms, regardless of the market structure, the profit-maximizing rule is to produce where marginal revenue:

Equals marginal cost

Before deciding on a pricing strategy, Worldwide Widgets consults with its market intelligence team to understand what discounts the Gargantuan Gizmo Company is offering. The model that best fits this industry is:

Oligopoly

If society produces a pie at the lowest possible cost and then distributes the pie evenly among its population, then:

Only productive efficiency is achieved

Veronica is piling up debt while going she is going to college so that she can have the same lifestyle as her friends. She knows that she will have to pay off her debt in the future, but she isn't worried because the time of repayment is so far off. Veronica's situation is an example of:

Overvaluing the present relative to the future

In the table, a combination of 4,500 iPads and 2,000 HDTVs:

is unattainable

A perfectly competitive firm is producing 100 units (profit maximizing). If the price is $12 and average total cost is $11, this firm's profits are:

$100

A customer's willingness to pay for a good is $79, and the sellers willingness to sell is $64. If the negotiated price is $68, what is the value of the consumer surplus?

$11

Using this graph, what is the value of the profit earned by this monopolist?

$120

Graph. The firm will produce at a price of ____ and a quantity of ___

$15; $45

What is the value of consumer surplus In the graph above?

$180

(Graph) Using the graph, what Is the equilibrium price for this monopolist?

$30

Suppose a monopolist faces the demand relationship shown in the table. Marginal revenue for the 2nd unit of output is:

$6

What is Hungary's opportunity cost of producing 1 unit of bacon?

0.4

The price of toothpaste falls from $4.00 to $2.00. The quantity demanded increases from 500 units to 700 units. What is the price elasticity of demand?

0.40

In the table, if society wants to increase production of HDTVs from 2,000 to 3,000 the opportunity cost of doing so will be:

1,500 iPads

Suppose that in Japan, one worker can produce either 4 cars or 5 tons of grain. What is the opportunity cost of producing 1 car in Japan?

1.25 tons of grain

In the table, assume that a consumer has a budget of $12, water costs $2 per bottle, and chips cost $3 per bag. When utility is maximized, the MU/P for both goods is

10

Suppose the price elasticity of demand for yellow peppers is 2.75. A grocery store manager plans to increase the price of yellow peppers by 5%. How much will the quantity demanded fall?

13.75%

My satisfaction from consuming the first cookie is 25 utils. The second cookie increased my satisfaction by 20 utils. My satisfaction after 3 cookies is 60 utils. Therefore the marginal utility of the third cookie is:

15

If quantity demanded rises by 60% when price falls by 20%, the price elasticity of demand is:

3

Izzy brought $20 to the movie theater to spend on popcorn and candy. Popcorn costs $5 per bucket and candy costs $3. If she buys 2 buckets of popcorn, what is the most amount of candy she can purchase?

3

Referring to the table, the marginal utility from consuming the fourth root beer is ____ utils.

30

Heather has one employee in her sweater shop who can sew 6 sweaters a day. When she hires a second person, the two employees can make 10 sweaters together. As it relates to thinking at the margin; the additional benefit from hiring a second worker is:

4 sweaters

(Figure: Unicycle production costs) At a price of $20, how many unicycles will John produce?

44

At which worker does diminishing returns begin?

5

Walmart is offering a 25% discount on shoes. If the price elasticity of demand = 2, then the discount will increase quantity demanded by:

50%

In the table, what is the profit-maximizing output for John's tricycle company?

8

The marginal product of the third worker is (Graph)

9

Which of the following will NOT cause the supply curve for kayaks to shift to the left?

A decrease in the price of kayaks

In the past few years, the demand for donuts has greatly decreased. This decrease in demand might be explained by:

A decrease in the price of scones, a substitute for donuts

Which of the following will not cause a shift in the demand curve?

A decrease in the price of the good

Sharkey's Surfboards are all priced one cent lower than the next round dollar; for example, $89.99, $129.99, $114.99. Sharkey believes that his customers are affected by:

A framing bias

The perfectly competitive market structure assumes all of the following, EXCEPT:

A small number of buyers and sellers

Ramiro has been an accounting major for three years, but isn't doing very well in his courses. He has done very well in his law courses, but doesn't want to change his major to law because he has already spent three years as an accounting major, and doesn't want to lose those three years. Ramiro is subject to:

A sunk cost fallacy

Which of the following will shift the entire production curve to the right

A technological advance that allows firms to produce more output from given imputs

Which of the following Is most likely to cause a rightward shift in the supply curve of skateboards?

An improvement of skateboard-making material technology

Which of the following would shift the entire supply curve for corn to the left?

An increase in land taxes

In the short run, if output is zero, then total costs:

Are equal to fixed costs

Before a house is sold, the buyer usually inspects the property for problems to overcome which market failure?

Asymmetric information

The "Dilemma" in the Prisoner's dilemma is that:

Both players would be better off by cooperating, but not cooperating is a dominant strategy

Which region in the graph indicate diseconomies of scale?

C

Which of the following is a distinguishing feature of a command (communist) system?

Central planning by the government

John is a farmer and expects to make a profit next year, assuming the weather stays the same, and the prices of his crop, fertilizer, and seed do not change. This is an example of what economic concept?

Ceteris paribus

Which of the following is a benefit that results from a Prisoner's Dilemma outcome?

Charging low prices leads to more customers

The demand for gasoline has decreased. Which of the following statements describes a possible cause?

Commuters are switching from driving to public transportation

An increase in the price of ice cream causes the demand for sprinkles to decrease. In this case, ice cream and sprinkles are:

Complementary goods

What is the appropriate course of action for the firm's owner?

Continue operations in the short run and leave the industry in the long run

Refer to the PPC shown above. Which point represents the lowest potential for future economic growth

D (the point farthest on the Consumption goods side)

Market for Cashews: The price of pecans, a consumer substitute, increases

Demand increases, P increase D increase

Suppose that in the short run, a perfectly competitive firm is producing 20 units and P=$10, ATC=$15, and the AVC = $12. The firm is:

Earning losses, and should shut down

The reason monopolistic competitive firms have difficulty maintaining a profit in the long run is that:

Ease of entry into the market encourages new firms to enter and forces down price.

_____ describe(s) a type of barrier to entry for a monopoly where one firm can operate at a lower average cost than two or more firms.

Economies of scale

A bicycle factory finds it can lower costs if it produces tricycles and unicycles. This is an example of

Economies of scope

A lumber company that specialized in making pine boards finds it can lower costs by also making particleboard and paper pulp. This is an example of:

Economies of scope

A firm increases price and total revenue decreases. From this we can conclude that demand is:

Elastic

If both the supply and demand curves shift to the right:

Equilibrium quantity increases and the effect on equilibrium price is indeterminate

A natural monopoly occurs when a firm:

Experiences extreme economies of scale

(Table) Assume that oligopolists, firm A and firm B both charge $20 for the product and face roughly the same costs. Firm A is considering a price decrease to $15. Profits for each firm are given in the payoff matrix (A's profits, B's profits) shown in the table. How will Frim B react?

Firm B will lower its price to $15 and earn $80,000

Productive efficiency refers to:

Goods being produced at the lowest possible cost

When the supply curve increases (shifts to the right) and the demand curve increases (shifts to the right), the equilibrium quantity will:

Increase

Market for automobile: the cost of steel decreases

Increase in supply. Price decreases, Quantity increases

When a new worker hired adds more to total output than the previous worker hired, you have:

Increasing marginal returns

One of the key ingredients in making rational choices is access to:

Information

A firm increases price and total revenue increases. From this we can conclude that the price elasticity of demand:

Is inelastic

A firm increases price and total revenue increases. From this we can conclude that its demand:

Is price inelastic

What would be a possible opportunity cost of you going to the doctor for a check-up?

Lost income due to not being at work for those hours

If an increase in income of 10% causes an increase in quantity demanded of 20% for a good, the good is a (n):

Luxury good

Macroeconomics deals will all of the following, EXCEPT:

Markets for semiconductor chips

A market situation in which large numbers of firms produce similar but not identical products is:

Monopolistic competition

____ is a market where there are no long-run economic profits, no barriers to entry or exit, some control over price, and differentiated products.

Monopolistic competition

A change from an inefficient mix to an efficient mix of output would best be represented as a:

Movement from inside the PPC onto the PPC

Refer to the above diagram. A decrease in price of the good will cause a:

Movement from point X to point Y

If hot dogs and mustard are complements, then the cross elasticity of demand is:

Negative

If hot dogs and relish are complements, their cross elasticity of demand is:

Negative

The ___ is a period of time long enough for firms to alter all of their inputs in the production process.

Negative

The government often strictly regulates noise and chemical pollution by industry to overcome which market failure?

Negative externality (External cost)

The governemtn often strictly regulates noice and chemical pollution bu industry to overcome which market failure?

Negative externality (External costs)

Which statement about specialization and trade is false?

No industries within a country are hurt as a result of specialization and trade

If the demand for iPhones rises as income rises, then the iPhone is a(n):

Normal good

For a perfectly competitive firm, economic profit is zero when:

Price = minimum ATC

Market for cauliflower: Consumers prefer the lower calories of riced cauliflower. At the same time, the government offers a subsidy to producers of cauliflower

Price would be indeterminate, Quantity would increase

Market for chocolate: researchers find healthy antioxidants in chocolate. Also, a major drought destroys a significant portion of the cocoa bean crop

Price would increase, Quantity would be indeterminate

Which of the following costs is a fixed cost for the first year of production?

Property taxes on a storage facility

If a competitive firm can sell a bushel of soybeans for $25 and the marginal cost is $26 per bushel, the firm should:

Reduce output

When Ford offers a car rental agency lower prices if it buys a fleet of new vehicles, it is practicing:

Second-degree price discrimination

Implementing a price ceiling in a market is likely to cause a?

Shortage

Suppose that quantity supplied of a product equals 5 and quantity demanded equals 8. In this market, there is a

Shortage of this product and the price should rise

The theory of comparative advantage says that countries:

Should export those goods they can produce at a lower opportunity than another country.

Which sequence describes the long-run adjustment process in a competitive market when firms are earning shirt-run economic losses?

Some firms exit, industry supply decreases, market price rises

Which sequence describes the long-run adjustment process in a perfectly competitive market when firms are earning short-term economic losses?

Some firms exit, industry supply decreases, market price rises

Which of the following is an example of third degree price discrimination?

Students receive a 10% discount at a restaurant

If there is a surplus at a given price, then

That price is greater than the equilibrium price.

Which of the following is correct?

The face that two variables are correlated does not mean that one causes the other

A firm operates in a perfectly competitive industry. At the current level of output, the marginal cost is $26. If the firm sells its products for $25

The firm should decrease its output

At equilibrium price:

The sum of consumer surplus and producer surplus is maximized

In economic terms, the short run is:

the time over which at least one factor of production is fixed.

Using the data above for the market for lattes in the table, at a price of $2

there is a shortage and the price will rise

When oligopolists act jointly as a monopoly, they are acting as a:

Cartel

Who runs this shit

I do

Capital includes all of the following except

dollar bills in a bank vault

If the equilibrium price for carrot is $1, and the government sets a price floor of $1.50, then:

There will be a surplus of carrots

Markets are efficient when:

Total surplus is maximized

Refer to the above diagram. The combination of computers and bicycles shown by point G (Outside the line) is:

Unattainable, given currently available resources and technology

Refer to the above diagram. If society is currently producing 9 units of bicycles and 4 units of computers and it now decides to increase computer output to 6, the opportunity cost:

Will be 4 units of bicycles

Norah consumes only milk and honey. She gets 30 utils from the last cup of milk, priced at $3, and 7.5 utils our of the last jar of honey, priced at 75 cents. Is Norah maximizing her utility?

Yes

An example of x-inefficiency is:

an executive, at corporate expense, hiring a limousine to travel one block. whenever it is raining.