ECO111 ( 141-211 )

QN=273 (17383) This figure reflects the market for outdoor concerts in a public park surrounded by residential neighborhoods. Refer to Figure 10-3. The social cost curve is above the supply curve because a. it takes into account the external costs imposed on society by the concert. b. it takes into account the effect of local noise restrictions on concerts in parks surrounded by residential neighborhoods. c. concert tickets are likely to cost more than the concert actually costs the organizers. d. residents in the surrounding neighborhoods get to listen to the concert for free.

a

QN=274 (17353) Externalities tend to cause markets to be a. inefficient. b. unequal. c. unnecessary. d. overwhelmed.

a

QN=275 (17371) All externalities a. cause markets to fail to allocate resources efficiently. b. cause equilibrium prices to be too high. c. benefit producers at the expense of consumers. d. cause equilibrium prices to be too low.

a

QN=279 (17399) Goods that are nonexcludable and nonrival are a. public goods. b. private goods. c. natural monopolies. d. common resources.

a

QN=285 (17424) The Tragedy of the Commons occurs because a. a common resource is rival in consumption. b. a common resource is underutilized. c. crimes are committed in public places. d. common resources are subject to exclusionary rules.

a

QN=286 (17426) Because elephants roam freely in many countries in Africa, each individual African elephant poacher has a. (i) a strong incentive to kill as many elephants as he can find. b. (ii) a strong incentive to protect the elephants. c. (iii) the ability to save the elephants. d. None of (i), (ii), and (iii) is correct.

a

QN=289 (17400) Common resources are both a. rival and nonexcludable. b. rival and excludable. c. nonrival and excludable. d. nonrival and nonexcludable.

a

QN=295 (17397) If one person's use of a good diminishes another person's enjoyment of it, the good is a. rival. b. excludable. c. normal. d. exhaustible.

a

QN=299 (17416) Advocates of antipoverty programs believe that fighting poverty a. can make everyone better off. b. is most successfully accomplished by charities. c. is most efficiently accomplished by the market. d. reduces the well-being of tax payers.

a

QN=306 (17401) Suppose a human life is worth $10 million. Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 2.6 to 1.9 percent over the life of the system. The city should install the new lighting system if its cost does not exceed a. $70,000. b. $260,000. c. $190,000. d. $10,000,000.

a

QN=309 (17421) The value and cost of goods are easiest to determine when the goods are a. private goods. b. public goods. c. common resources. d. natural monopolies.

a

QN=318 (17461) Which of the following expressions is correct? a. accounting profit = economic profit + implicit costs b. accounting profit = total revenue - implicit costs c. economic profit = accounting profit + explicit costs d. economic profit = total revenue - implicit costs

a

QN=320 (17448) Refer to Figure 13-9. The firm experiences economies of scale at which output levels? a. (i) output levels less than M b. (ii) output levels between M and N c. (iii) output levels greater than N d. All of (i), (ii), and (iii) are correct as long as the firm is operating in the long run.

a

QN=326 (17453) The long-run average total cost curve is always a. flatter than the short-run average total cost curve, but not necessarily horizontal. b. horizontal. c. falling as output increases. d. rising as output increases.

a

QN=334 (17450) Kirsten sells 300 glasses of lemonade at $0.50 each. Her total costs are $125. Her profits are a. $25. b. $124.50. c. $125. d. $150.

a

QN=336 (17443) When, for a firm, long-run average total cost decreases as the quantity of output increases, we have a situation of a. economies of scale. b. diseconomies of scale. c. coordination problems arising from the large size of the firm. d. fixed costs greatly exceeding variable costs.

a

QN=339 (17427) Larry's Lunchcart is a small street vendor business. If Larry makes 15 pretzels in his first hour of business and incurs a total cost of $16.50, his average total cost per pretzel is a. $1.10. b. $6.50. c. $15.00. d. $16.50.

a

QN=343 (17441) Scenario 13-4 For the following questions, assume that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. Refer to Scenario 13-4. Average variable cost will be a. always rising. b. always falling. c. U-shaped. d. constant.

a

QN=345 (17430) The firm's efficient scale is the quantity of output that minimizes a. average total cost. b. average fixed cost. c. average variable cost. d. marginal cost.

a

QN=348 (17437) XYZ corporation produced 300 units of output but sold only 275 of the units it produced and discarded the remaining 25 defected units. The average cost of production for each unit of output produced was $100. Each of the 275 units sold was sold for a price of $95. Total profit for the XYZ corporation would be a. -$3,875. b. $26,125. c. $28,500. d. $30,000.

a

QN=349 (17462) Refer to Figure 13-2. As the number of workers increases, a. (i) marginal product decreases. b. (ii) total output decreases. c. (iii) marginal product increases but at a decreasing rate. d. Both (i) and (ii) are correct.

a

QN=319 (17444) Which of the following costs would be regarded as an implicit cost? a. the cost of accounting services b. the opportunity cost of financial capital that has been invested in the business c. the cost of compliance with government regulation d. all costs that involve outlays of money by the firm

b

QN=308 (17420) An FM radio signal is an example of a good that is a. private. b. nonrival in consumption. c. social. d. nonexcludable in production.

b

QN=268 (17361) When the social cost curve is above a product's supply curve we know that a. government has intervened in the market. b. a negative externality exists in the market. c. a positive externality exists in the market. d. the market reached equilibrium on its own.

b

QN=269 (17347) An externality is a. the costs that parties incur in the process of agreeing and following through on a bargain. b. the uncompensated impact of one person's actions on the well-being of a bystander. c. the proposition that private parties can bargain without cost over the allocation of resources. d. a market equilibrium tax.

b

QN=277 (17385) Refer to Figure 10-7. To internalize the externality in this market, the government should a. impose a tax on this product. b. provide a subsidy for this product. c. forbid production. d. produce the product itself.

b

QN=287 (17419) When property rights are not well established, a. private goods become public goods. b. markets fail to allocate resources efficiently. c. the distribution of private goods is unfair. d. government resources are used inefficiently.

b

QN=296 (17392) When property rights are not well established, a. private goods become public goods. b. markets fail to allocate resources efficiently. c. the distribution of private goods is unfair. d. government resources are used inefficiently.

b

QN=300 (17409) An overcrowded beach is an example of a. a positive externality. b. a Tragedy of the Commons. c. an environmentally inefficient allocation of resources. d. an economically unfair allocation of resources.

b

QN=327 (17449) At Bert's Bootery, the total cost of producing twenty pairs of boots is $400. The marginal cost of producing the twenty-first pair of boots is $83. We can conclude that the a. average variable cost of 21 pairs of boots is $23. b. average total cost of 21 pairs of boots is $23. c. average total cost of 21 pairs of boots is $15.09. d. marginal cost of the 20th pair of boots is $20.

b

QN=332 (17460) Economic profit is equal to a. total revenue minus the explicit cost of producing goods and services. b. total revenue minus the opportunity cost of producing goods and services. c. total revenue minus the accounting cost of producing goods and services. d. average revenue minus the average cost of producing the last unit of a good or service.

b

QN=340 (17465) Charles's Car Wash has average variable costs of $2 and average total costs of $3 when it produces 100 units of output (car washes). The firm's total variable cost is a. $100. b. $200. c. $300. d. $500.

b

QN=347 (17468) Refer to Table 13-6. What is the shape of the marginal cost curve for this firm? a. constant b. upward-sloping c. downward-sloping d. U-shaped

b

QN=353 (17429) The minimum points of the average variable cost and average total cost curves occur where a. the marginal cost curve lies below the average variable cost and average total cost curves. b. the marginal cost curve intersects those curves. c. the average variable cost and average total cost curves intersect. d. the slope of total cost is the smallest.

b

QN=266 (17377) Suppose that a steel factory emits a certain amount of air pollution, which constitutes a negative externality. If the market does not internalize the externality, a. the supply curve would adequately reflect the marginal social cost of production. b. consumers will be required to pay a higher price for steel than they would have if the externality were internalized. c. the market equilibrium quantity will not be the socially optimal quantity. d. producers will produce less steel than they otherwise would if the externality were internalized.

c

QN=272 (17363) A positive externality a. is a benefit to the producer of the good. b. is a benefit to the consumer of the good. c. is a benefit to someone other than the producer and consumer of the good. d. results in an optimal level of output.

c

QN=283 (17394) Because public goods are a. excludable, people have an incentive to be free riders. b. excludable, people do not have an incentive to be free riders. c. not excludable, people have an incentive to be free riders. d. not excludable, people do not have an incentive to be free riders.

c

QN=288 (17410) Which of the following is an example of the free-rider problem? a. Both Fred and Wilma receive low-cost dental care at the local dental school, so neither of them pays the full cost of the care. b. Elmer receives a free lunch from the local "Meals on Wheels" program because of his low monthly income. Yet his next door neighbor, Dorothy, is not eligible for the free lunch. c. Max owns Fido, a large dog who barks whenever anyone walks near his house. Sally lives next to Max, and Fido's barking can be heard whenever anyone walks near her house, too. Thus, Sally receives free protection from burglars because of Fido's barking. d. David purchases a burger at a fast food restaurant and gets a second burger free because the restaurant is having a buy one, get one free sale.

c

QN=292 (17396) A stairwell in a certain office building is always congested at 12:00 p.m. and 2:00 p.m. The congestion is so bad that people have been complaining to the building's owner. Which of the following methods would be the most efficient way of reducing congestion? a. Assign each person in the building a time when they are allowed to use the stairwell. b. Encourage people to voluntarily keep off the stairwell during peak times. c. Charge everyone who uses the stairwell when it is congested the same fee which is high enough to discourage some people from using the stairwell during peak times. People who value the use of the stairs the most will be the ones who use the stairwell at peak times. d. Hold a lottery to determine who wins the right to use the stairwell at peak times.

c

QN=294 (17402) Goods that are not excludable include both a. private goods and public goods. b. natural monopolies and common resources. c. common resources and public goods. d. private goods and natural monopolies.

c

QN=297 (17414) The free-rider problem a. forces the supply of a public good to exceed its demand. b. results in common resources becoming natural monopolies. c. explains why many local governments supply public goods. d. results in public goods becoming private goods.

c

QN=298 (17391) A view of a spectacular sunset along a private beach is an example of a a. private good. b. public good. c. nonrival but excludable good. d. rival but nonexcludable good.

c

QN=307 (17415) Government policy can potentially raise economic well-being a. in all markets for goods and services. b. in economic models, but not in reality. c. when a good does not have a price attached to it. d. never.

c

QN=314 (17411) People have little incentive to produce a public good because a. the social benefit is less than the private benefit. b. the social benefit is less than the social cost. c. there is a free-rider problem. d. there is a Tragedy of the Commons.

c

QN=315 (17431) Table 13-13 Consider the following table of long-run total cost for four different firms: Refer to Table 13-13. Which firm has diseconomies of scale over the entire range of output? a. Firm 1 b. Firm 2 c. Firm 3 d. Firm 4

c

QN=316 (17433) Refer to Table 13-2. The marginal product of the second worker is a. 90 units. b. 85 units. c. 80 units. d. 20 units.

c

QN=317 (17458) A difference between explicit and implicit costs is that a. explicit costs are greater than implicit costs. b. explicit costs do not require a direct monetary outlay by the firm, whereas implicit costs do. c. implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do. d. implicit costs are greater than explicit costs.

c

QN=322 (17439) Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?" a. average fixed cost b. average variable cost c. average total cost d. marginal cost

c

QN=324 (17432) Jane decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jane's economic profit from running her own business? a. $-55,000 b. $-5,000 c. $5,000 d. $20,000

c

QN=333 (17454) Profit is defined as total revenue a. plus total cost. b. times total cost. c. minus total cost. d. divided by total cost.

c

QN=335 (17456) An example of an opportunity cost that is also an implicit cost is a. (i) a lease payment. b. (ii) the cost of raw materials. c. (iii) the value of the business owner's time. d. All of (i), (ii), and (iii) are correct.

c

QN=346 (17435) Economists normally assume that the goal of a firm is to (i) sell as much of their product as possible. (ii) set the price of the product as high as possible. (iii) maximize profit. a. (i) and (ii) are true. b. (ii) and (iii) are true. c. only (iii) is true. d. (i) and (iii) are true.

c

QN=350 (17451) Refer to Table 13-1. Alyson's pet sitting service experiences diminishing marginal productivity with the addition of the a. first worker. b. second worker. c. third worker. d. fourth worker.

c

QN=354 (17455) A firm's opportunity costs of production are equal to its a. explicit costs only. b. implicit costs only. c. explicit costs + implicit costs. d. explicit costs + implicit costs + total revenue.

c

QN=355 (17452) Suppose Jan started up a small lemonade stand business last month. Variable costs for Jan's lemonade stand now include the cost of a. (i) building the lemonade stand. b. (ii) hiring an artist to design a logo for her sign. c. (iii) lemons and sugar. d. All of (i), (ii), and (iii) are correct.

c

QN=356 (17466) Refer to Table 13-6. What is the average variable cost of producing 5 units of output? a. $4 b. $5 c. $40 d. $44

c

QN=342 (17446) Which of the following measures of cost is best described as "the increase in total cost that arises from an extra unit of production?" a. variable cost b. average variable cost c. average total cost d. marginal cost

d

QN=338 (17428) Which of the following measures of cost is best described as "the increase in total cost that arises from an extra unit of production?" a. variable cost b. average variable cost c. average total cost d. marginal cost

d

QN=281 (17405) What causes the Tragedy of the Commons? (i) Social and private incentives differ. (ii) Common resources are not rival in consumption and are not excludable. (iii) Common resources are not excludable but are rival in consumption. a. (i) only b. (ii) only c. (i) and (ii) only d. (i) and (iii) only

d

QN=282 (17407) A good is excludable if a. one person's use of the good diminishes another person's enjoyment of it. b. the government can regulate its availability. c. it is not a normal good. d. people can be prevented from using it.

d

QN=284 (17423) A lighthouse is typically considered to be a public good because a. the owner of the lighthouse is able to exclude beneficiaries from enjoying the lighthouse. b. there is rarely another lighthouse nearby to provide competition. c. a nearby port authority cannot avoid paying fees to the lighthouse owner. d. all passing ships are able to enjoy the benefits of the lighthouse without paying.

d

QN=291 (17406) Most goods in the economy are a. natural monopolies. b. common resources. c. public goods. d. private goods.

d

QN=301 (17390) For most goods in an economy, the signal that guides the decisions of buyers and sellers is a. preference. b. government intervention. c. quantity. d. price.

d

QN=302 (17412) Which of the following would not be considered a private good? a. a pair of jeans b. an apple c. a Honda Civic d. cable TV service

d

QN=310 (17404) When the absence of property rights causes a market failure, the government can potentially solve the problem a. (i) by clearly defining property rights. b. (ii) through regulation. c. (iii) by supplying the good itself. d. All of (i), (ii), and (iii) are correct.

d

QN=312 (17417) If the government decides to build a new highway, the first step would be to conduct a study to determine the value of the project. The study is called a a. fiscal analysis. b. monetary analysis. c. welfare analysis. d. cost-benefit analysis.

d

QN=325 (17440) Industrial organization is the study of how a. labor unions organize workers in industries. b. profitable firms are in organized industries. c. industries organize for political advantage. d. firms' decisions regarding prices and quantities depend on the market conditions they face.

d

QN=330 (17464) If a firm produces nothing, which of the following costs will be zero? a. total cost b. fixed cost c. opportunity cost d. variable cost

d

QN=337 (17445) Refer to Table 13-3. What is total output when 5 workers are hired? a. 70 b. 120 c. 160 d. 190

d

QN=344 (17463) Which of the following statements about a production function is correct for a firm that uses labor to produce output? a. (i) The production function depicts the relationship between the quantity of labor and the quantity of output. b. (ii) The slope of the production function measures marginal product. c. (iii) The slopes of the production function and the total cost curve are inversely related; if one is increasing, the other is decreasing. d. All of (i), (ii), and (iii) are correct.

d

QN=352 (17442) The curves below reflect information about the cost structure of a firm. Use the figure to answer the following questions Refer to Figure 13-5. Curve A is U-shaped because of a. diminishing marginal product. b. increasing marginal product. c. the fact that increasing marginal product follows decreasing marginal product. d. the fact that decreasing marginal product follows increasing marginal product.

d