ECON 101 - Final

Suppose a perfectly competitive market is in long-run equilibrium. If there is a permanent increase in demand,

All of these answers are correct.

In the long-run equilibrium for a perfectly competitive market

All of these are correct.

Assuming a good is a normal good, a decrease in price will lead to a substitution effect that does what?

Along with the income effect, increases quantity

If population increases in a city with effective rent controls (and nothing else changes), which of the following describes what will happen in the market for rental housing?

An increase in demand, but no change in quantity supplied.

When the federal government subsidizes higher education in the form of Pell grants to students, it results in

An increase in the demand for higher education

When the federal government subsidizes higher education in the form of direct subsidies to universities, it results in:

An increase in the supply of higher education

Which of the following is NOT an assumption of marginal utility theory?

As more of a good is consumed, the decrease in the marginal utility from the good means that the total utility from the good decreases also.

Rising average product as inputs increase means that which of the following is happening to costs?

Average costs alone are falling.

The donut market is perfectly competitive. The figure shows the costs of a typical donut producer. In the short run, the donut producer's supply curve is the curve running from point ________ to point E

B

In the above figure, the marginal cost curve is curve

A.

If the firm were to choose a permanent output level of Q = 6,000, the lowest average cost would be achieved with the ______.

medium factory

When will a minimum wage be an effective price control? When it is a _________.

minimum "price" that is above equilibrium price

The above figure shows the demand and cost curves for a firm. The figure shows a

monopolistically competitive firm in the short run.

Economists are critical of monopoly because

monopolists can create a deadweight loss.

Robinson spends all his income on mangos and bananas. Mangos cost $3 per pound and bananas cost $1 per pound. The marginal utility is 30 for the last pound of mangos purchased and 8 for the last pound of bananas. To maximize his utility, Robinson should buy

more mangos and fewer bananas.

The Atlantic City Expressway is a highway that runs from outside Philadelphia to Atlantic City, New Jersey. It is notoriously congested during the summer weekends when many people are driving to the beach about the same time. Because drivers who decide to take this road ignore the impact of their driving on overall traffic congestion the result is ________ cars on the road than the efficient number of cars and a deadweight loss is ________.

more; created

Situation A: When a $10 per unit tax is imposed on the producer of Bippies (a candy), the equilibrium price increases by $4.Situation B: When a $10 per unit tax is imposed on the producer of Bippies, the equilibrium price increases by $2.Based on the two situations above, Bippies in Situation A has a _________ elastic supply OR faces a _________ elastic demand than exists in Situation B.

more; less

Bob's Lawn Care Services is a perfectly competitive firm that currently mows 22 lawns a week. Bob's marginal cost exceeds the price he charges. Bob can increase his profit if he

mows fewer than 22 lawns a week.

Because Product X has a very small, positive income elasticity of demand, it is likely that product X is a

necessity.

Marginal utility theory is used in the derivation of the

negative slope of demand curves.

Suppose that the equilibrium wage in the low-skilled labor market is $9.25. Further, suppose the federal government raises the minimum wage to $9.00 an hour from its present level of $8.15. The government's action of increasing the minimum wage will result in

neither a shortage nor a surplus of labor in the low-skilled labor market.

The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, there is

neither a shortage nor a surplus of rental housing.

Will a change in fixed costs change marginal cost?

no

In the short run

no firm experiences economies of scale.

In a perfectly competitive market that is in long-run equilibrium, a rightward shift in the market demand curve results in

none of the events listed above

In the above figure, a rent ceiling of $500 per month would

not affect the equilibrium quantity.

The local banking industry currently has a Herfindahl-Hirschman index (HHI) value of 1575 and two of the competing banks have considered merging. Because the merger would raise the HHI by 55 points, the Federal Trade Commission would likely

not challenge the merger.

Bobby consumes only chocolate ice cream and vanilla ice cream. He is spending all of his income. His marginal utility of chocolate is 100 and his marginal utility of vanilla is 200, and the price of chocolate is $1.00 per scoop and the price of vanilla is $2.00 per scoop. To maximize his utility, Bobby should

not change his purchases between chocolate ice cream and vanilla ice cream.

Interlace, Inc. produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. The quantity of soda Interlace Inc. will choose to produce is ________ because when this quantity is produced, ________.

not efficient; marginal social benefit exceeds marginal social cost

The market demand for wheat is ________ and the demand for wheat produced by an individual farm is ________.

not perfectly elastic; perfectly elastic

In the market for batteries, the three largest firms earn 90% of the total revenue and there are 35 firms in the industry. This industry is best described as

oligopoly.

If demand is perfectly elastic, a sales tax is paid by

only the sellers.

The above figure shows the cost curves for a perfectly competitive firm. If all firms in the market have the same cost curves and the price equals $16 per unit

over time, the price will fall as new firms enter the market.

The tragedy of commons is the

overuse of a common resource.

In the long run, perfectly competitive firms earn just enough revenue to

pay all opportunity costs.

If the supply curve is vertical, then supply is

perfectly inelastic

The best example of a good sold in a monopolistically competitive market is

pizza.

Consumer surplus ________.

plus producer surplus is maximized when resources are used efficiently

A $10 per-unit tax on cell phones raises the equilibrium price paid by consumers by $5. Before the tax, 5,000 cell phones were sold per year. The revenue from the tax is zero.

positive but less than $50,000 per year.

The tragedy of the commons is the absence of incentives to

prevent overuse and depletion of a common resource.

Which of the following is always a violation of the antitrust law?

price fixing among competitors

The producer surplus from a good is equal to the

price of the good minus its opportunity cost of production summed over the quantity sold.

As long as it does not shut down, a profit-maximizing perfectly competitive firm will.

produce so that marginal revenue equals marginal cost.

The above figure shows the demand and cost curves for a monopolistically competitive firm in the long run. The firm maximizes its profit by

producing 8 units and charging a price of $15.

When the monopolistically competitive firm shown in the above figure is at its long-run equilibrium, it will be

producing at less than the efficient scale of output and is at a point such as F on the ATC curve.

Brand name drugs are chemically identical to their generic counterparts. Yet, consumers often prefer the brand name product to the generic product. Making consumers think that a brand name drug differs from its generic counterpart is an example of

product differentiation.

In a perfectly competitive market, a permanent increase in demand initially brings a higher price, economic

profit, and entry into the market.

The main purpose of antitrust law is to

prohibit monopoly practices such as restricting output.

The income of a person who owns a small unincorporated business is ________.

proprietor's income

Michigan Radio is the state's most listened-to public radio service, attracting approximately 400,000 listeners each week and is funded through listener donations. Listeners can access Sirius satellite radio through a subscription to the service. Michigan Radio is a ________ and Sirius satellite radio is a ________.

public good; natural monopoly

The above table shows the market shares for all the landscaping services in a suburban area. A merger between firms E and F would

raise the four-firm concentration ratio.

A sales tax is normally viewed as a __________.

regressive tax

An attempt by a firm to create a monopoly and gain the economic profit from the monopoly is called

rent seeking.

When a person lobbies Congress to grant the person the exclusive right to sell a particular good, such lobbying activity is called

rent seeking.

In the above figure, a rent ceiling of $300 per month would You Answered

result in a shortage of 7000 units.

A price floor

results in a surplus if the floor price is higher than the equilibrium price.

Currently, Frank has 10 employees. The marginal product of the 10 worker is 25 units per week. The average product of the 10 workers is 20 units per week. If Frank hires one more worker, the marginal product of the 11 worker will be 24 units per week. The average product of labor will ______________.

rise

Using the market shares in the table above, if Widgotech buys Widgette the HHI will

rise by 18 points.

The demand for corn increases. As a result, the price of corn will ________, and the less elastic the supply of corn, the ________ will be the effect on the price.

rise; greater

Variable cost ______________ while fixed cost ______________ as output ______________ in the short run.

rises; stays the same; increases

A tax on producers would result in the supply ...(supply/demand) curve moving to the left ...(right/left). A tax on consumers would result in the demand ...(supply/demand) curve moving to the right

see question

Suppose that as a firm grows, it first experiences economies of scale, then constant returns to scale, then diseconomies of scale. The LRAC for this firm will be ______.

shaped like a wide U.

If the firm were to choose a permanent output level of Q = 4,000, the lowest average cost would be achieved with the _______.

small factory.

In monopolistic competition, each firm supplies a ________ part of the total market output and its actions ________ the actions of the other firms.

small; do not directly affect

Water has a ________ marginal utility and brings a ________ consumer surplus; diamonds have a ________ marginal utility and bring a ________ consumer surplus.

small; large; large; small

An externality can be a cost or benefit arising from the production of a good that falls upon

someone other than the consumer or producer.

Sonya's budget for magazines and chocolate bars is $50. Her marginal utility from these goods is shown in the table above. The price of a magazine is $5 and the price of a chocolate bar is $2.50. Sonya currently buys 3 magazines and 14 chocolate bars. To maximize her utility, she should

stay with the current combination of goods.

The total utility you get from eating slices of pizza on a given night is the

sum of the marginal utilities of all slices eaten.

On December 10 the price of a Christmas tree is $50 and 100 trees are purchased. On December 20 the demand for Christmas trees decreases so that the price falls to $30 and 20 trees are purchased. From this set of facts, the

supply of Christmas trees is elastic.

According to Figure 15.6, the largest single source of federal government tax revenue in the U.S. is _____________.

taxes on income, profits, and capital gains

When a firm is experiencing economies of scale

the LRAC curve slopes downward.

The problem for the prisoners in the prisoners' dilemma game in the above table is that

the Nash equilibrium is not the best outcome

In the long-run equilibrium, perfectly competitive firms make zero economic profit because of

the ability of firms to enter and exit.

Marginal revenue is defined as

the change in total revenue that results from a one-unit increase in the quantity sold.

Danny has $12 to spend on two goods: pies and soda. The price of a pie is $4, and the price of a can of soda is $2. To maximize his utility, Danny buys ________.

the combination that gives him the same marginal utility per dollar spent on pies as on soda

If goods A and B are complements, then

the cross elasticity of demand between A and B is negative.

If the government decreases the tax on cell phones, ________.

the deadweight loss decreases

At a local ice cream parlor, when the price of half-gallons of chocolate ice cream was lowered by fifty cents per half-gallon, total revenue from the sale of chocolate ice cream decreased. This result indicates that

the demand for chocolate ice cream is inelastic.

If regulators of the local gas and water utility companies require those firms to price their service at marginal cost

the firms might require a tax-financed subsidy to survive.

If a 5 percent increase in the price of good A leads to a 4 percent decrease in the demand for good B, then ________.

the goods are complements

This type of firm would likely operate as a monopoly

the local water company

If the price of milk increased by 5 percent because of an increase in the demand for milk, and the quantity of milk supplied increased by 7 percent

the price elasticity of supply of milk is greater than one.

In the market for CDs, the producer surplus will decrease if ________.

the price of a CD decreases

According to Figure 15.7, the largest single source of state and local government tax revenue in the U.S. is _______.

the property tax

The long run is distinguished from the short run because only in the long run

the quantities of all factors of production can be varied.

In the short run

the size of the plant is fixed.

Last year in the United States, the price of snowboards rose by 5 percent and the price rise resulted in a 15 percent increase in the quantity supplied. This outcome is an indication that

the supply of snowboards is price elastic.

A market is perfectly competitive if

there are many firms in it, each selling an identical product.

If a monopolist can perfectly price discriminate, then

there will be no consumer surplus.

The average product of labor is equal to the

total product divided by the total number of workers hired.

If a monopolist lowers its price and its demand is inelastic, then its

total revenue decreases.

A decrease in consumption will result in

total utility decreasing, but marginal utility increasing.

A measure of all the satisfaction you receive from all the coffee that you consume is your

total utility from coffee.

The principle of diminishing marginal utility says that

total utility increases by smaller and smaller amounts as the quantity of the good consumed increases.

In the above figure, if the price is $2, then the total consumer surplus is

triangle abc.

The national concentration ratio

underestimates concentration for the newspaper industry and overestimates it for the automobile industry.

When a minimum wage is set above the equilibrium wage rate, ________.

unemployment increases

A perfectly competitive firm has a total revenue curve that is

upward sloping with a constant slope.

For a common resource, the marginal private cost curve slopes ________ and the marginal social cost curve slopes ________.

upward; upward

In the typical short run model of the firm, we generally assume that labor is_______ and capital is________ .

variable; fixed

The paradox of value refers to the fact that

water costs little, while diamonds cost a lot.

A monopolist produces a level of output that can be described as follows. The output is:

where marginal revenue is equal to marginal cost; and too little for allocative efficiency.

The increase in the demand for widgets, shown in the figure above, is the result of an increase in the price of McBoover devices. Therefore

widgets and McBoover devices are substitutes

In the long run, the economic profit of a firm in a perfectly competitive market

will equal zero

In the long run, the economic profit of a firm in a perfectly competitive market

will equal zero.

Will a change in fixed costs change average cost?

yes

Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earns $12,000 in revenue from the sale of those donuts. Homer's has two costs. First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Should Homer's exit the market in the long run?

yes, because he is incurring an economic loss

In the long-run equilibrium in a perfectly competitive market, the economic profit of the firms is

zero

The figure shows the demand curve for Gap jackets (D), and Gap's marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC).In the figure above, what is Gap's economic profit?

zero

The following graph represents a natural monopoly. The demand, marginal revenue, average cost, and marginal cost functions are shown. Points A, B, C, D, and E are also labeled. Examine the following graph. Point [ Select ] represents the price-quantity combination chosen by an **unregulated** monopoly while point [ Select ] represents the price and quantity that result from the average cost regulation of this natural monopoly. Point [ Select ] represents the price and quantity that result from marginal cost regulation of this natural monopoly and If a natural monopoly were to be regulated such that it was required to charge the price and quantity at this point, the firm would [ Select ]

B, C , D , experience economic losses

In the above table, based on the four-firm concentration ratio, which industry is the most concentrated?

Blodgets

The above table shows the short-run total product schedule for the campus book store. At what levels of books sold per hour will the marginal product of labor be greater than the average product of labor?

Both 40 books sold per hour and 73 books sold per hour are correct.

The small town of Narberth has two pizza stores. Which of the following statements are CORRECT?

Both I and II

Disney and Fox must decide when to release their next films. The revenues received by each studio depend in part on when the other studio releases its film. Each studio can release its film at Thanksgiving or at Christmas. The revenues received by each studio, in millions of dollars, are depicted in the payoff matrix above. Which of the following statements CORRECTLY describes Disney's strategy given what Fox's release choice may be?

Both answers If Fox chooses a Thanksgiving release, Disney should choose a Christmas release and If Fox chooses a Christmas release, Disney should choose a Thanksgiving release are correct.

In the long-run equilibrium, perfectly competitive firms produce the level of output such that

Both answers average total cost is minimized and marginal cost equals the price are correct.

The price ceiling depicted in the above figure results in

Both answers consumer surplus increasing from $30 thousand to $34.5 thousand and producer surplus decreasing from $24 thousand to $6 thousand are correct.

Price discrimination by a monopoly

Both answers decreases consumer surplus and increases the firm's profit are correct.

The income elasticity of demand for restaurant meals is 1.61. So

Both answers if income increases by 10 percent, the quantity demanded of restaurant meals will increase by 16.1 percent and restaurant meals are an income elastic normal good are correct.

A small shirt factory in Taiwan doubles its labor inputs and experiences a tripling in output. A large catering kitchen in Tokyo increases its inputs by 30% and experiences a 50% increase in production. Which of the following is true?

Both firms enjoy economies of scale.

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. Jean maximizes utility and buys only sodas and slices of pizza. If the price of a soda increases to $3 each, Jean's marginal utility per dollar for soda

Both will decrease and she'll buy fewer sodas. and will decrease and she'll buy more pizza are correct.

If the government is trying to raise as much revenue as possible, which of the following goods would be the most likely to be subject to a government-imposed tax?

Bottles of alcohol, such as whiskey and gin

Suppose that the price of a pizza is $10 and the price of a video game is $30. Currently, Aaron is consuming such that the ratio of his marginal utility of pizza to marginal utility of video games is ¼. If he wants to maximize his utility, what should he do?

Buy fewer pizzas and more video games

Using the edited figure from the text, on whom is the incidence (the burden) of the tax greater—buyers or sellers?​[Image description: The vertical axis is price, and the horizontal axis is quantity. The original supply curve slopes upward, and the demand curve slopes downward but is steeper, representing an inelastic demand. The two curves intersect at the market equilibrium, setting an original quantity (before tax) and an original price (before tax). When tax is added, the demand curve is unchanged, but the supply curve shifts upward, as the price charged by producers is higher by the exact tax amount at every quantity supplied. The new supply curve crosses the demand curve at a higher point, moving the market equilibrium upward along the demand curve. The new price (with tax) is higher, and the new quantity (with tax) is smaller. The change in quantity is relatively small.]

Buyers

The government of Healthyland imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the price of salt is $0.40 per pound. The demand for salt is perfectly inelastic and the elasticity of supply is 1.5. How is the salt tax burden shared between buyers and sellers in Healthyland?

Buyers pay the whole tax.

In the above figure, the total fixed cost curve is curve

C.

Based on the attached graph, calculate the consumer surplus if the price is 1.50 euros (this demand is distinct from the above graphing question).

CS = 1/2 $1.50 6 = $4.50

Use the numbers to build the firm's LRAC function. In other words, assuming that at any level of output, the firm uses the proper factory size to get the lowest average cost of production. As this firm grows from 8,000 to 10,000 units, it will be experiencing:

Constant returns to scale.

Assume that Jill is NOT consuming at the utility-maximizing level. The marginal utility of soda is 40 and its price is $2, but the marginal utility of popcorn is now 30, and its price is $1. What should Jill do to maximize her utility?

Consume less soda and more popcorn

A government may impose a price ceiling if which of the following is true?

Consumers can persuade legislators that lower prices are needed

Given the following data, what should the firm do?Current production = 1,000Current price = $10Marginal cost = $10Total costs = $15,000Fixed cost = $6,000

Continue to produce in the short run, but close down in the long run.

Given the following facts, what should the firm do in the short run? In the long run?Fixed costs are $50,000. Total costs are $90,000. Total revenues are $45,000.

Continue to produce in the short run; leave the industry in the long run.

Assume Anna is consuming two goods, movies and books, and at her current level of consumption, the marginal utility of the last movie is 60 and the marginal utility of the last book is 30. The price of a movie is $12 and the price of a book is $4. In order to maximise her utility, what should Anna do?

Decrease her consumption of movies and increase her consumption of books

A car manufacturing plant in Michigan employs the optimal combination of both unionized and non-unionized labor. The plant agrees to a new union contract that stipulates higher wages. As the plant re-adjusts its inputs, marginal product of non-unionized workers will:

Decrease.

If the country enters a period of prosperity, resulting in consumer incomes increasing by 4% and the income elasticity of a good is 0.8, what will happen to the demand for that good as a result?

Demand will increase by 3.2%

Why are cartels inherently unstable?

Each producer will have an incentive to cheat and break the agreement.

Use the numbers to build the firm's LRAC function. In other words, assuming that at any level of output, the firm uses the proper factory size to get the lowest average cost of production. As this firm grows from 2,000 to 8,000 units, it will be experiencing:

Economies of scale.

Due to_____________ , a natural monopoly's average cost is___________ as its output rises.

Economies of scale; decreasing

A property tax is likely to do which of the following?

Encourage homeowners to consume less than the allocatively efficient amount of housing

In a perfectly competitive market that is in long-run equilibrium, which of the following will NOT occur?

Entrepreneurs want to enter this industry.

Using Table 15.3 from the text demonstrating the impact of a $4 excise tax, what is the original equilibrium price and equilibrium quantity in this market before the tax is imposed?​[Table description: The first column contains price levels (P). The second column contains quantity demanded (Qd). The third and fourth columns show values of quantity supplied (Qs) and quantity supplied after excise tax respectively (Qs w/tax).]

Equilibrium price of $12 at an equilibrium quantity of 60 units.

Using Table 15.3 from the text demonstrating the impact of a $4 excise tax, what is the equilibrium price and equilibrium quantity in this market after the tax is imposed?

Equilibrium price of $14 at an equilibrium quantity of 50 units.

Mimi wants to see if she should buy another oven for her restaurant. How might she use marginal analysis to make a decision?

Examine the price of the oven and the marginal product of the oven.

Which of the following is NOT an assumption of perfect competition?

Firms compete by making their product different from products produced by other firms.

Which of the following is NOT true of monopolistic competition?

Firms produce a good that is a perfect substitute for their competitors' goods.

Economists have estimated the elasticity of demand for the following (fairly) common goods: If the same excise tax were imposed on the sale of each item, which market would experience the largest dead weight loss?

Fresh green peas

As the elasticity of demand increases, all other things being equal, the impact of a tax on equilibrium quantity does which of the following?

Gets smaller

As the elasticity of supply decreases, all other things being equal, the impact of a tax on equilibrium quantity does what?

Gets smaller

Antitrust measures that would break up a monopoly into multiple, smaller, competing firms may NOT be a good idea if the monopolist:

Has large economies of scale.

A consumer is maximizing her satisfaction and currently consuming three goods. If her tastes change so that the marginal utility she gains from movies increases, what will happen to her consumption of the other two goods - hamburgers and football games?

Her consumption will decrease because the ratio of their marginal utilities to their prices is now less than the ratio of the marginal utility of movies to the price of a movie.

Fred just ate a hamburger and received total utility of 15 from consuming it. If he eats another one, which of the following will be true?

His total utility will likely increase

Methods of rent seeking include which of the following?I. Buying a monopolyII. Creating a monopolyIII. Price discrimination

I and II

You are running a small business and are thinking about ways to increase your profits. Assume you are facing an elastic demand. Would you raise or lower your prices?

I do not know because I cannot tell how much costs would change in relationship to revenues.

Which of the following does NOT contain an externality?

I sell you an ice cream and it gives you a headache.

An efficient Nebraska corn farm decides to hire more workers and use fewer harvesting machines after learning of:I. An increase in corn commodity prices.II. A decrease in fuel prices.III. An increase in worker productivity.IV. An increase in harvesting machine maintenance costs.

III and IV

Which of the following is a result of a rent ceiling set below the equilibrium rent? I. equity in the housing market II. efficient allocation of resources III. a shortage of housing units.

III only

Consider a tax on individuals. Under which of the following circumstances would the tax cause the least effect on economic efficiency?

If the demand for the product is inelastic.

Consider a tax on producers. Under which of the following circumstances would the tax cause the least effect on economic efficiency?

If the supply of the product is inelastic.

Which of the following is a cause of diminishing marginal productivity?

In the short run, labor runs out of available capital as more labor gets added to the production process.

A major city was thinking about increasing its bus fares and commissioned a study to estimate the price elasticity of demand. The study estimated that elasticity was 0.4. What action should the city have taken to increase revenue from bus fares?

Increase fares

A firm is producing where the Marginal Product of Labor is 18 and the Marginal Product of Capital is 10. The price of labor is $3 and the cost of capital is $2. The firm is planning their future inputs and can now adjust both labor and capital. How should they adjust inputs?

Increase labor and decrease capital

Is the demand for a container of salt likely to be inelastic or elastic? Why? Select all that apply.

Inelastic because salt is a necessary dietary component Inelastic because for most people salt is a very small part of their budget

If the income elasticity of a good is 0.8, what do we know about the good?

It is a normal good.

Which of the following statements regarding an average-cost pricing rule for a natural monopoly is WRONG?

It is efficient.

A monopoly firm currently finds that its marginal cost exceeds marginal revenue. What will the monopoly do to raise its profit?

It will lower the output and increase the price.

If the Herfindahl-Hirschman index (HHI) among the firms in the long distance telecommunications market were equal to 1755, when would the Federal Trade Commission probably challenge a proposed merger between any two of the firms?

It would challenge if the HHI would increase by more than 100 points.

Consider a firm, using capital (K) and labor (L) in the production process, that wants to expand production. Suppose MPK = 200 and MPL = 50. The cost of capital is r = 80, and the wage rate is w = 10. Should this firm employ more labor or more capital?

Labor

Compared with the allocative efficiency of perfectly competitive firms, a monopoly tends to be:

Less efficient, as monopoly price will be higher than the marginal cost.

You see that an industry has only a few major firms. How could you determine if it is an oligopoly or a monopolistically competitive industry?

Look to see if there are barriers to entry.

Accountants tell a franchise owner that she earned $30,000 in profits last year. The owner knows that most of her business acquaintances earned at least $70,000 in profits in comparable franchises. Which of the following is true? Her firm earned an economic __________.

Loss of $40,000

If a production process faces diminishing marginal returns, which of the following is most likely?

Marginal costs are increasing.

________ is the additional satisfaction a person receives from consuming an extra unit of a good.

Marginal utility

The table above shows Mary's utility from chips and soda. The table shows that

Mary's marginal utility decreases as she consumes more chips.

Suppose a new vaccine for Lyme disease is developed by Merck, a large drug company. Which of the following is most likely to occur?

Merck will apply for a patent on the vaccine that grants it the monopoly rights to the vaccine for many years.

Michelle spends all of her income on mangos and rice. Mangos cost $2 per pound and rice costs $1.50 per pound. If Michelle is spending all of her income and the marginal utility per dollar spent is 20 for the last pound of mangos purchased and 10 for the last pound of rice purchased, then

Michelle should buy more mangos and less rice to maximize utility.

Which of the following would most likely be a public good?

Michigan Radio is the state's most listened-to public radio service.

In order to maximize profits at any level of output, the firm must:

Minimize production costs

If a man spends approximately 45% of his income on air travel and his sister only spends about 2% of her income on air travel (and that is the only difference), would the man's demand for air travel be less or more elastic than his sister's?

More

Which of the following would be likely in a market with firms experiencing economies of scale?

Most of the firms will tend to be large

Which of the following is a distinguishing characteristic of oligopoly?

Natural or legal barriers prevent the entry of new firms.

Suppose that in a given industry, there are diseconomies of scale, so that larger firms generally have higher average costs than smaller firms. Should a regulator typically approve a merger between two large firms in this industry?

No, because costs will increase and market power will increase, leading to less technical and allocative efficiency.

Suppose a firm wants to do marginal analysis to see if it should employ more capital or more labor in order to increase output. The firm knows the prices of the inputs. Is this enough information to answer the question at hand?

No, the firm also needs to know the marginal productivities of each of the inputs.

Diminishing returns is most relevant when: Correct!

None of the these.

The figure above shows the marginal revenue and long-run cost curves for a perfectly competitive firm. All other firms in the industry have identical curves. Which of the following statements is TRUE?

None of these are true.

A pool-cleaning firm employs cleaning machines and cleaning workers. If local wages fall and robots become more effective, the firm should employ:

One cannot tell.

To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Using the above figure, how much producer surplus is lost from this tax on sports equipment?

P0P1da

A monopoly is currently producing a certain quantity of output. All else being equal, what will happen to the price charged by this monopoly if there is an upward shift in demand?

Price will increase.

A firm has a choice of raising or lowering its price. If the firm wishes to increase its revenues (the price times the quantity sold), what should it do?

Raise price when demand is inelastic, because the revenues gained from the price increase will be larger than the revenues lost from the smaller quantity sold.

Assume that the municipality decides to place a tax on individual incomes. Suppose that the tax is a fixed sum for everyone regardless of income. Explain how you might describe the fairness of the tax. Select all that apply.

Regressive. Would tax a larger percentage of smaller incomes.

Using the edited figure from the text, on whom is the incidence (the burden) of the tax greater—buyers or sellers?​[Image description: The vertical axis is price, and the horizontal axis is quantity. Before tax, the demand curve slopes downward, and the supply curve slopes upward but is steeper, representing an inelastic supply. The two curves intersect at the market equilibrium, setting an original quantity (before tax) and an original price (before tax). When tax is added, the demand curve is unchanged, but the supply curve shifts upward, as the price charged by producers is higher by the exact tax amount at every quantity supplied. The new supply curve (with tax) crosses the demand curve at a higher point, moving the market equilibrium upward along the demand curve. The new price (with tax) is higher, and the new quantity (with tax) is smaller. The change in price is smaller than the change in quantity. At the new market quantity (with tax), the corresponding price level on the old supply curve denotes the actual price to the producer.]

Sellers

The first antitrust law passed was the ________.

Sherman Act

A firm is producing where the Marginal Product of Labor is 18 and the Marginal Product of Capital is 10. The price of labor is $3 and the cost of capital is $2. They cannot adjust their capital, so are they in the short run or the long run?

Short Run

The supply of oil is more elastic than the demand for oil. If oil is taxed $10 per barrel, how will the tax be divided between the buyers and sellers?

The buyers will pay more of the tax than the sellers.

Who is likely to be in favor of a price ceiling on a good?

The consumers of the good who can still purchase it after the ceiling is imposed

Suppose in the long run a firm's labor costs decrease. What will happen regarding the LRAC?

The entire LRAC function will shift downward.

The figure above shows the marginal revenue and long-run cost curves for a perfectly competitive firm. Which of the following statements is TRUE?

The firm is producing at minimum long-run average cost.

What is a possible problem that may arise if a firm is subject to average cost regulation?

The firm loses the incentive to keep its costs low and may engage in wasteful spending

Which of the following is NOT necessary for a firm to engage in price discrimination

The firm must produce output for different buyers at different costs.

What is a problem with using marginal cost pricing regulation on a natural monopoly?

The firm will be making an economic loss and eventually exit the industry.

Suppose in the long run a firm decides to grow in size and increase output. What will happen regarding the LRAC?

The firm will move from one point to another point, from left to right, on the same LRAC.

Libertyville has two optometrists, Dr. Smith and Dr. Jones. Each optometrist can choose to advertise his service or not. The incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. Which of the following statements CORRECTLY categorizes the Nash equilibrium for the game?

The game has a Nash equilibrium in which both optometrists advertise.

In 2010, the Center for Disease Control has recommended that every child between the ages of 6 months and 18 years be vaccinated, except those with a serious egg allergy. Dr. Berreman states,"By protecting ourselves from flu, we also protect our families and neighbors." Which is a solution that could be used to achieve a more efficient allocation of resources in the presence of this externality?

The government could offer a free flu vaccine clinic.

The reason the demand curve slopes downward is that for most goods which of the following is true?

The income effect of a price change is less than the substitution effect, and the substitution effect of a price increase always causes reductions in consumption.

When you chose to buy the second cup of coffee instead of the third bagel, which of the following is necessarily CORRECT?

The marginal utility per dollar from the third bagel is less than the marginal utility per dollar from the second coffee.

An economy is on its production possibilities frontier. If the economy faces diminishing marginal returns, what will happen to the opportunity cost as the production of one of the categories of goods increases?

The opportunity cost will increase as it takes more to produce the good.

If the price of a good changes, why does an income effect exist?

The price change causes a change in real income

The price elasticity of demand for purses is measured in what units?

The price elasticity of demand is a unitless measure.

Which of the following would cause an increase in consumer surplus in the market for cars?

The price of steel decreases.

If a perfectly competitive market becomes a monopoly and the costs do not change, which of the following allocations of costs and benefits applies?

The producer benefits, but consumers and society are harmed.

A production function can best be described as which of the following?

The relationship between the quantity of inputs and quantity of outputs produced in a given amount of time

Consider the concepts of economies of scale and diseconomies of scale. What is meant by the word "scale" in these concepts?

The size of the firm.

Grace likes eating pizza and going to the movies. If she has $120 to spend in a month, and pizza and movies each cost $10, she decides to eat 5 pizzas and see 7 movies. If the price of movies increases to $12 what is likely to happen?

The substitution effect would predict that she consumes more pizzas and fewer movies; the income effect would predict that she would consume fewer of both

If the government taxes car producers, that will happen in the market for cars?

The supply curve will shift to the left.

In general, why do governments raise tax revenue? Select all that apply.

To provide public goods To fund government operations To transfer wealth from some individuals to other individuals

Economists have estimated the elasticity of demand for the following (fairly) common goods: If the same excise tax were imposed on the sale of each item, which market would experience the smallest deadweight loss?

Toothpicks

The table shows the average costs of production for various quantities, given three different amounts of capital. Each factory illustrates a(n) _____ average cost curve.

U-shaped

Compare the four countries represented in Figure 15.4. Which of the four countries allocated the largest percentage of its budget toward health and education expenditures?

United States of America

In the long run, the total cost function will be:

Upward sloping.

At Wisconsin's snowy Lambeau Field, a football stadium, snow removal is currently done by a mix of workers (equipped with shovels and paid minimum wage) and automated self-operating snowblower machines, which require no labor. The stadium is currently using the optimal combination of both snowblowers and workers. If Wisconsin's minimum wage rises, and nothing else changes, what should the stadium do?

Utilize more machines and fewer workers

Working from the table, if Patricia is currently producing 450 web pages per month. If her landlord increases her rent such that her fixed costs rise from $5,000 per month to $6,000 per month, calculate her new _______. ​[Table description: The first column shows number of workers. The second column shows total product. The next four columns contain total fixed cost, total variable cost (labor), total cost, and marginal cost, respectively.]

Variable cost $12¸000 Press space or enter to grab $18¸000 Total cost $18¸000 Press space or enter to grab $40 Average cost $40 Press space or enter to grab $30 Marginal cost

Working from the table, if the wage of web page designers increases from $3,000 per month to $3,250 per month. If Patricia produces 450 web pages per month calculate her new _____. ​​[Table description: The first column shows number of workers. The second column shows total product. The next four columns contain total fixed cost, total variable cost (labor), total cost, and marginal cost, respectively.]

Variable cost $13¸000 Press space or enter to grab $18¸000 Total cost $18¸000 Press space or enter to grab $40 Average cost $40 Press space or enter to grab $32.5 Marginal cost

According to Figures 15.8 and 15.9, what is the largest source of personal income for residents of the U.S.?

Wages and salaries

The key difference between the short-run and long-run model of the firm is that:

We assume at least one fixed input in the short run and all variable inputs in the long run.

Which of the following statements is TRUE?

When marginal product is less than average product, average product is decreasing.

When will the tax incidence (the burden) of the tax be greater for buyers? Select all that apply.

When supply is more elastic than demand When demand is more inelastic than supply

We cannot tell if prices for a natural monopoly will be higher or lower is because:

While marginal costs will be much lower for the natural monopolist, they will also charge a price above marginal cost.

Which of the following episodes would most likely contain an externality?

You decide to grow flowers in your front yard where everyone else can see them.

Supply is elastic if

a 1 percent change in price leads to a larger percentage change in quantity supplied.

Which of the following would most likely be a private good?

a Mariah Carey CD

When producers agree to restrict output, raise the price, and increase profits, the agreement is called ________.

a collusive agreement

The government sets a price floor for corn which is above the equilibrium price of corn. As a result, ________.

a deadweight loss will be created

If firms in a monopolistically competitive industry are making an economic profit, then definitely there is

a leftward shift in each firm's demand curve as new firms enter the market.

If the government grants a firm a public franchise to supply coal, a monopoly is created by

a legal barrier to entry.

In what type of market is a cartel possible?

a market in which there are only a few firms and barriers to entry exist

Under current guidelines, the Federal Trade Commission will likely challenge

a merger if the HHI is between 1500 and 2500 and the merger increases the HHI by 100 points or more.

If economies of scale allow one cable TV firm to supply the entire market at the lowest possible cost, then this company is

a natural monopoly.

A barrier to entry is

a natural or legal impediment that makes it difficult for new firms to enter a market

The above figure shows the apartment market in Big City. If a government policy results in a shortage of 1,500 apartments in the Big City rental market, it is most likely that the Housing Authority has imposed

a rent ceiling of $1000.00 monthly.

When comparing perfect competition and monopolistic competition, we find that

advertising plays a large role in monopolistic competition, unlike in perfect competition.

A cartel is a group of firms that

agree to restrict output to boost their profit.

The long run is a period of time in which

all factors of production are variable.

When a production quota is used to remedy the problem of the commons, then

all users of the resource have an incentive to cheat on the quota quantity.

Patents encourage invention by

allowing patent owners to make an economic profit.

For a perfectly competitive firm, the shutdown point is the

amount of output at which price equals minimum average variable cost

When people decorate the exteriors of their homes with colored lights, they create ________ for the motorists who pass by.

an external benefit

A cost that arises from the production of a good that is paid by someone who did not participate in the production is called

an externality.

If the price of a good falls and, because of the income effect, consumption of the good also decreases, we know that the good is __________.

an inferior good

Game theory is used to explain firms' decisions in

an oligopoly.

In the long run, perfectly competitive firms make zero economic profit (their owners earn a normal profit) because

any economic profit would attract newcomers to the industry.

The key feature of an oligopoly is that there

are only a few sellers.

With increasing marginal cost, if marginal cost is equal to average cost, average cost at this point must be ______________.

at its minimum point Your

The figure above shows the housing market in the city of Appleville. A rent ceiling of $650 per month is imposed. With the rent ceiling, the deadweight loss in the Appleville housing market is

at least $15,000 per month.

Economists define the short run as a period of time so short that

at least one factor of production cannot be varied.

The short run is a time frame in which

at least one factor of production is fixed.

The short run is a time period during which

at least one factor of production is fixed.

In the long-run equilibrium, perfectly competitive firms produce where

average total cost is minimized.

If as output increases, average product increases, then ___________.

average variable cost decreases

When natural or legal forces work to protect a firm from potential competitors, the market is said to have ________.

barriers to entry

The distinguishing features of oligopoly are ________ and a ________ in the industry.

barriers to entry; few firms

Beautification of the national highways through the planting of shrubs and wildflowers will

benefit even people who do not help pay.

Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 4 cents per page, what is Fast Copy's economic profit?

between $0.51 and $1.00 per hour

The figure above shows the situation facing Smart Digit, Inc., a firm in monopolistic competition that produces calculators. What is the firm's economic profit per day?

between $1 and $700

In the above figure, the long-run average cost curve exhibits diseconomies of scale

between 20 and 25 units per hour.

Firms A and B can conduct research and development (R&D) or not conduct it. R&D is costly but can increase the quality of the product and increase sales. The payoff matrix is the economic profits of the two firms and is given above, where the numbers are millions of dollars. The Nash equilibrium occurs when

both A and B conduct R&D.

Dell and Gateway must decide whether to lower their prices, based on the potential economic profits shown in the payoff matrix above. (The profits are in millions of dollars.) In the Nash equilibrium

both Dell and Gateway lower prices.

Consider the prisoner's dilemma model where two criminals have two options (confess or deny), and each criminal must make their decision without speaking to the other criminal first. If they both confess they each get 3 years, if only one confesses then he gets 1 and his partner gets 10, and if neither confesses then they each get 0. They are in fact both guilty. In this game, the Nash equilibrium is where

both confess.

A monopolistically competitive firm is like a monopoly firm insofar as

both have MR curves that lie below their demand curves

In the long run, a firm can vary

both its labor and its capital.

In the above figure, at which point on the demand curve is the price elasticity of demand equal to 1?

c

An example of a short-run fixed factor of production is

capital equipment.

The local banking industry currently has a Herfindahl-Hirschman index (HHI) value of 1945 and two of the competing banks have considered merging. Because the merger would raise the HHI by 155 points, the Federal Trade Commission would likely

challenge the merger

Marginal utility is the

change in satisfaction that results from a one-unit increase in the quantity of a good consumed.

The marginal utility from the consumption of a good is equal to the

change in total utility divided by the change in the quantity consumed.

Every year as the clock nears midnight on December 31st, the eyes of the world turn to Times Square in New York City to watch the famous ball drop at midnight. The event is open to everyone, but it is advised you arrive early to be able to participate because the square quickly becomes crowded with no space left for latecomers. This celebration is most like a

common resource.

Under Federal Trade Commission merger guidelines, an industry with a Herfindahl-Hirschman index (HHI) of 800 points is considered

competitive.

Income of a corporation after expenses is ________.

corporate profits

An externality can be a

cost or a benefit.

The average total cost curves for plants A, B, C, and D are shown in the above figure. It is possible that the long-run average cost curve runs through points

d, e, and f.

In the above figure, if a single-price monopolist charges the profit-maximizing price, the triangle dce represents

deadweight loss.

In the figure above, D0 is the demand for labor curve. Imposing a minimum wage of $6 per hour will initially

decrease employment from 30 to 20 million hours per year.

If a firm's marginal product of labor is less than its average product of labor, then an increase in the quantity of labor it employs definitely will

decrease its average product of labor.

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. David maximizes his utility by buying only sodas and pizza. He buys 5 sodas and 10 slices of pizza. If the price of a soda increases to $3 each, David will You Answered

decrease the number of sodas bought and move along the demand curve for soda.

Assuming a fixed budget, when the price good X increases, consumers will adjust their consumption patterns in a way that the marginal utilities of all other goods will _________.

decrease, but the marginal utility of good X will increase.

If the price of a normal good increases, the income effect ______________ the quantity demanded of that good.

decreases

The above figure shows a linear (straight-line) demand curve. Starting at point A and then moving to point B and then point C, the price elasticity of demand

decreases.

As the quantity of a good consumed increases, its marginal utility ________ and its total utility ________.

decreases; increases

Economies of scale occurs when long-run average costs are and diseconomies of scale occurs when long-run average costs are .

decreasing / increasing

The law of diminishing marginal returns is the cause of ______________ marginal product and ______________ marginal cost.

decreasing; increasing

For a monopoly able to practice perfect price discrimination, the market

demand curve is the same as the marginal revenue curve.

The marginal benefit curve for a product can be the same as the good's

demand curve.

A shift of the supply curve of oil raises the price from $60 a barrel to $75 a barrel and reduces the quantity demanded from 40 million to 20 million barrels a day. You can conclude that the

demand for oil is elastic.

They are starving and finish the order of tzatziki dip really quickly. They decide to place another order of tzatziki, but they realize they don't like it as much this time. What is the economic term to describe what happened to their decreased enjoyment of the tzatziki?

diminishing marginal utility

The fact that the fourth plate from the "All You Can Eat Country Buffet" generated more satisfaction than the fifth plate is an example of

diminishing marginal utility.

A restaurant employs 10 workers and has one oven. The firm hires an 11th worker. The week after, it hires a 12th worker. The marginal product of the 12th worker is less than the 11th worker because of _______.

diminishing returns.

Liz loves to eat popcorn. Still, the more she eats, the less she wants each additional bite. Her marginal utility from popcorn is

diminishing.

A private psychiatrist's office is a business that will demonstrate ______________, as it will face increasing average costs in the long run.

diseconomies of scale

Suppose a company with a single large factory expands to multiple locations. This would require the firm to hire more mid-level management positions and establish an HR department. This firm is likely experiencing ________ with this expansion.

diseconomies of scale

The diamond-water paradox of value can be explained by

distinguishing between total utility and marginal utility.

For a perfectly competitive firm, as its output increases its marginal revenue ________ and its marginal cost ________.

does not change; changes

In the long run, if a firm is operating with economies of scale, it is on the ______ portion of its LRAC.

downward-sloping

An example of an activity that generates an external cost is

dumping soapsuds into a trout stream.

If the price exceeds the average variable cost, by producing the level of output such that marginal revenue equals marginal cost, the firm ensures that it will

earn the largest profit possible.

The goal of a perfectly competitive firm is to maximize its

economic profit.

Electric utility companies have built larger and larger electric generating stations and, as a result, the long-run average cost of producing each kilowatt hour decreased. This is an example of

economies of scale.

In the long run, if a firm is on the downward-sloping portion of its LRAC curve, the firm is currently experiencing ______.

economies of scale.

In Figure 15.5, of the items listed below, on average the single largest expenditure item for state and local governments across the U.S. is _________.

education

Two facets of taxes that economists often use to compare taxes are _________.

efficiency and fairness

A monopolist will produce where demand is:

elastic

Price discrimination will mean that a firm will lower price to consumers whose demand is:

elastic and raise price where demand is inelastic. Revenues will rise in both cases.

Goods and services that can be produced by using commonly available resources that could be allocated to a wide variety of alternative tasks have a supply that is

elastic.

If a 5 percent change in the price of a good leads to a 10 percent change in the quantity supplied, then the supply of the good is ________ and the elasticity of supply is ________.

elastic; 2.0

The amount of a tax paid by the sellers will be larger the more ________ the demand and the more ________ the supply.

elastic; inelastic

A copyright creates a monopoly by restricting ________.

entry into the market

The table above shows the total utility from the two goods Freddy likes to consume. Suppose that Freddy has already eaten 5 bags of Fritos. If he consumes one more bag, his marginal utility will

equal 15.

The catch of American lobster off the shores of New England is regulated using quotas. If the quota is set correctly, then at this quantity, the marginal social cost ________ the marginal social benefit.

equals

If the donut industry is perfectly competitive and is in long-run equilibrium, then the price of a donut

equals long-run average cost.

In the long-run, if firms in a perfectly competitive market are incurring persistent economic losses, some firms will

exit and the price will rise.

Joshua consumes only apples and bread and is in consumer equilibrium. Joshua reads that eating bread is healthy, so his total utility from each loaf of bread increases. To maximize his total utility, Joshua would consume

fewer apples and more bread.

Teddy buys only chocolate chip cookies and hot chocolate and spends all of his income on the two items. Suppose the price of a cookie rises. According to marginal utility theory, Teddy will buy

fewer cookies and more hot chocolate, which increases his marginal utility from cookies and decreases his marginal utility from hot chocolate.

One difference between perfect competition and monopolistic competition is that

firms in monopolistic competition face a downward-sloping demand curve.

A minimum wage set above the equilibrium wage rate is a price

floor that results in a surplus of low-skilled labor.

The price elasticity of supply of laptop computers equals 1.5 if

for every 1 percent that laptop prices increase, computer makers produce another 1.5 percent laptops.

Michigan Radio is the state's most listened-to public radio service, attracting approximately 400,000 listeners each week. The on-air fundraiser, which ran during October 2010, generated over 7400 pledges from donors. The money raised helps pay for programming costs at the station, with membership support being the single largest source of income. The 392,600 listeners who did not call and donate can be classified as what?

free riders

With an elastic demand, there will be a ____________ in allocative efficiency then there will be with an inelastic demand.

greater decrease

For a common resource, the marginal social cost of the resource is ________ the marginal private cost.

greater than

Pizza Hut pizza has more close substitutes than does food in general. The price elasticity of demand for Pizza Hut pizza is ________ the price elasticity of demand for food in general.

greater than

The average total cost curves for Plant 1, ATC0, and Plant 2, ATC1, are shown in the figure above. Over what range of output is it efficient to operate Plant 2?

greater than 25

Donna owns the only dog grooming salon on Lonely Island. If Donna can price discriminate between dog owners who are seniors and those who are not, her economic profit will be ________ than if she does not price discriminate and the number of dog groomings will be ________ than if she does not price discriminate.

greater; more

In the figure above, a single-price unregulated monopoly will produce an amount of output equal to

h.

With respect to water and diamonds, water

has a lower marginal utility than diamonds.

A key difference between a monopoly and a perfectly competitive firm is that the monopolist

has a marginal revenue curve that lies below its demand curve

Use the data in the table above and suppose that labor is the only variable factor of production. When 122 dozen donuts are produced at Decent Donuts, the MC curve

has a positive slope.

Imposing a minimum wage that is above the equilibrium wage rate results in

higher job search costs.

A natural oligopoly can form

if there are economies of scale.

In which of the following markets are external benefits most likely to exist?

in the market for flu shots

Last year, Jack's income was $15,000 and he bought 50 bags of potato chips. This year his income is $18,000 and he buys 55 bags of potato chips. Therefore, Jack's

income elasticity of demand for potato chips is 0.52.

The marginal product of labor is equal to the

increase in the total product that results from hiring one more worker with all other inputs remaining the same.

The above table shows the market sales for all the landscaping services in a suburban area. A merger between the three largest firms would

increase the four-firm concentration ratio and increase the Herfindahl-Hirschman Index (HHI).

If the elasticity of supply of TV sets is equal to 3, then a 10 percent increase in the price of a TV will

increase the quantity supplied by 30.0 percent.

Firms that can price discriminate between customers do so to ________.

increase their profit

In the above figure, at point b on the demand curve, a price cut of one dollar will

increase total revenue.

If a consumer is currently maximizing her satisfaction, what will happen to the marginal utility of a good when its price increases and the consumer adjusts consumption accordingly? The marginal utility will __________.

increase, because the consumer will decrease her consumption of the good.

Suppose Target decided to lower the price on all shirts as part of its Back to School promotion. The cross elasticity of demand between pants and shirts is negative. Lowering the price on shirts will ________ the demand for pants because shirts and pants are ________.

increase; complements

An increase in an effective minimum legal price will do what to prices and quantities actually sold in a market? Prices will __________ and the quantities actually sold will ___________.

increase; decrease

An increase in technology will cause the total product function to ______________ and average costs to ______________.

increase; decrease

The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $4.00 to $3.50, then total revenue would ________ because demand is ________.

increase; elastic

In the short run, an increase in wages (the price of the variable input) will cause average cost to ______________ and marginal cost to ______________.

increase; increase

In the short run, an increase in the price of one of the fixed inputs will cause average cost to ______________ and marginal cost to ______________.

increase; not change

Prices should be ___________ (increased/decreased/not changed) in the winter and ___________ (increased/decreased/not changed) in the summer. ​[Image description: The two tables below show the demand (prices and quantities) for movie tickets in the winter and summer.]

increased; decreased

If the price of a normal good decreases, the substitution effect ______________ the quantity demanded of that good.

increases

In the short run, an increase in demand for a good that is sold in a perfectly competitive market

increases the economic profits of existing firms in the market.

In the figure above, originally the apartment rental market is in short-run and long-run equilibrium with a rent of $600 per month. Then the government imposes a rent ceiling of $500 per month, which causes a shortage. Suppose that apartments are a normal good and incomes rise. The increase in income

increases the shortage.

In the above figure, if the market price rises from $100 to $125 per ton of wheat, then producer surplus

increases.

As output increases, total cost ________, total fixed cost ________, and total variable cost ________.

increases; does not change; increases

The figure above shows a perfectly competitive firm. The firm is operating; that is, the firm has not shut down. The firm is

incurring a economic loss of $200.

If Steve's Apple Orchard, Inc. is a perfectly competitive firm, the demand for Steve's apples has

infinite elasticity.

Using your intuition and the Original and New Output tables, we can say the following about the relationship between marginal product of labor (MPL) and marginal cost of output (MC): There is an relationship between MPL and MC. As MPL rises, MC will , and as MPL diminishes, MC will . If there is an overall increase in MPL, there will be an overall in MC.

inverse, fall, rise, decrease.

The external benefit of a good

is a benefit from the good falling on people who are not the consumers of the good.

A minimum wage ________.

is a price floor in the labor market

The unregulated, single-price monopoly shown in the figure above will produce where its demand

is elastic.

In the figure above, originally the apartment rental market is in short-run and long-run equilibrium with a rent of $600 per month. Then the government imposes a rent ceiling of $500 per month. The loss of producer surplus

is larger than the gain in consumer surplus.

The economic profit of a perfectly competitive firm

is less than its total revenue

A firm's average total cost is $80, its fixed cost is $1000, and its output is 100 units. Its average variable cost

is more than $60.

Price discrimination, where different units of a good are sold for different prices

is possible if the good cannot be resold.

An example of an externality occurs when a chemical factory

is producing ethanol and dumps waste in a river upstream from a popular fishing spot.

Liane maximizes her total utility when she allocates all of her available income such that the marginal utility per dollar spent on each good ________.

is the same

A straight-line demand curve along which the price elasticity of demand equals 0 is one that

is vertical.

Two duopoly firms form a cartel. They decide to collude and fix the price of their good. Each individual firm will earn the highest profit if

it cheats and the other sticks with the agreement.

It is easier for a monopolist to price discriminate between groups for a service than for a good because

it is easier for consumers to resell goods than resell services.

If the firm were to choose a permanent output level of Q = 8,000, the lowest average cost would be achieved with the _______.

large factory.

Freedom of entry and exit in monopolistic competition

leads to falling prices when new firms enter the market.

Compare the effects of a given tax on goods with elastic demands and inelastic demands in terms of amount of revenues raised from the taxes. With an elastic demand, ______ revenue will be raised than with an inelastic demand.

less

The marginal utility from drinking one more glass of water is likely to be ______________ the marginal utility from going to one more movie.

less than

The output at which average variable cost is a minimum is ________ than the output at which ________ is a minimum.

less than; average total cost

Silvio's Pizza is a small pizzeria. The firm's production function is shown in the table above. Suppose that Silvio's costs include only the cost of renting ovens, which is $100 per oven per week, the labor cost, $280 per worker per week, and the opportunity cost of Silvio's entrepreneurship, $1,000 per week. When Silvio's uses 2 ovens and hires the 3rd worker, the marginal product of labor is ________ the average product of labor, and therefore the average product of labor ________.

less than; increases

Which of the following is an example of natural monopoly?

local water utility companies

A period of time in which the quantity of all factors of production used by a firm can be varied is called the

long run.

Diseconomies of scale definitely means that as the firm increases its output, its

long-run average total cost increases.

According to the paradox of value, expensive goods, such as gemstones, provide consumers with

low total utility and high marginal utility.

If a good is provided for free, it is likely to have a marginal utility that is relatively ______________ and be ______________ the marginal utility that could be gained from consuming some other good which must be paid for.

low; less than

Assume a firm faces a market where there are individuals with elastic demands and inelastic demands. What should it do if it wishes to maximize revenues?

lower prices for those with elastic demand and raise them for those with inelastic demand

What does this outcome mean for the firm? Marginal costs are now blank , meaning their average cost has blank

lower, decreased

Use the information from the table. If the weekly wage is $200, the marginal cost of increasing weekly production from 10 to 22 scarves per week is ______________ than the marginal cost of increasing weekly production from 40 to 46 scarves per week because the marginal product of the second worker is ______________ than the fifth worker. ​[Table description: The first column contains number of workers. The second column shows output. The third and fourth column contain average product and marginal product, respectively.]

lower, higher

In a perfectly competitive market that is in long-run equilibrium, a permanent leftward shift in the market demand curve

lowers the price at first but then raises it as firms leave the market.

Because of a decrease in labor costs, a monopoly finds that its marginal cost and average total cost have decreased. The monopoly ________ its price and ________ its quantity

lowers; increases

In the long-run equilibrium in a perfectly competitive market, the firms produce at the ________ possible average total cost and the price equals the ________ possible average total cost.

lowest; lowest

The industry that produces zangs is in long-run equilibrium. Then the demand for zangs increases permanently. As a result, firms in the industry will ________. Some firms will ________ the industry, and the industry supply curve will shift ________.

make economic an profit; enter; rightward

All the decisions made by people who operate firms have one overriding objective, which is to ________.

make maximum attainable profit

If the government assigns private property rights to a common resource, then the

marginal private cost becomes equal to the marginal social cost.

The market price of an individual transferable quota is equal to the

marginal social benefit minus the marginal cost.

The problem of the commons arises because ________ exceeds ________ when the resource is used.

marginal social cost; marginal private cost

To achieve the efficient amount of use of a common resource, the use should be such that ________ equals ________.

marginal social cost; marginal social benefit

When the waiter comes to take their order, he tells them they are running a special on spanakopita (spinach pies), and they are the same price as the Greek salads (before the price change they were more expensive). Instead of a Greek salad, they decide to order a spinach pie. What must be true about the marginal utility of spinach pie relative to Greek salads?

marginal utility of spinach pie is greater than Greek salads

If David buys more coffee and less ice cream, the ______________ of coffee will ______________ , and the ___ of ice cream will ______________.

marginal utility; fall; marginal utility; rise

Even though the market for bricks has a low concentration ratio nationally, the U.S. Justice Department might still scrutinize any mergers in this industry because the

market is regional not national, and the regional concentration might be high.

When the total product curve is drawn in a figure that measures employment along the horizontal axis, it is a graph that shows the

maximum output attainable for each quantity of labor employed.

Total product is

maximum output that a given quantity of labor can produce.

Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, how much economic profit does the firm make?

$0

There are two can companies, American and National, which have entered into a collusive agreement. The payoff matrix of economic profits is above. If both firms cheat on the collusive agreement, what amount of economic profit is made by American?

$0

The government of Healthyland imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the price of salt is $0.40 per pound. The demand for salt is perfectly inelastic and the elasticity of supply is 1.5. With the tax, the price of salt paid by buyers in Healthyland is

$0.50 per pound.

Assume that Jill is consuming at the utility-maximizing point. If the utility from the last soda she consumes is 40 and its price is $2, and the utility from the last bucket of popcorn is 20, then we know that the price of the bucket of popcorn is ____.

$1

If the price of a hot dog is $2 and your willingness to pay is $3, then your consumer surplus is _____.

$1

The figure shows the market for books before and after a sales tax is introduced. The tax on books is ________ a book, buyers pay ________ of tax per book, and the government's tax revenue is ________ a week.

$1.20; $0.80; $12

The above table shows the total product schedule for the campus book store. If employees are paid $6 per hour and there are no other variable costs, then what is the marginal cost (MC) per book of increasing book sales from 83 to 87 books per hour?

$1.50

Suppose there are four firms that are each willing to sell one unit of a good. Each firm has a different minimum price that they are willing to sell for: Firm A $6, Firm B $7, Firm C $10, and Firm D $12. If the market price is $11, then the total producer surplus is

$10.

The motel whose costs are given in the table above has total fixed costs equal to

$100.

Silvio's Pizza is a small pizzeria. The firm's production function is shown in the table above. Suppose that Silvio's costs include only the cost of renting ovens, which is $100 per oven per week, the labor cost, $280 per worker per week, and the opportunity cost of Silvio's entrepreneurship, $1,000 per week. Suppose Silvio's uses Plant 1 and hires 3 workers. What is the firm's average fixed cost?

$11.00

The equilibrium price consumers pay for the product without the $4 excise tax is ______________. The equilibrium price consumers pay with the $4 excise tax is ______________. The change in equilibrium price due to the $4 excise tax is ______________.

$12, $14, $2

Roxie's Movie Theatre is the only one in town. The table above gives the demand schedule for movies. If Roxie's is a single-price monopoly and the marginal cost of a movie is $6, Roxie's will charge ________ a movie and will sell ________ movie tickets a week.

$12; 200

At 600 units of output, total fixed cost is equal to $1,000 and total variable cost is equal to $12,000. Total cost is equal to _______.

$13,000

The figure above shows the marginal revenue and costs of a perfectly competitive firm. The marginal cost of the last unit produced is

$16 per unit.

At 1,000 units of output, the fixed cost of production is $12,500 per week. Total cost of producing 1,000 units per week is $28,500 per week. The variable cost of producing 1,000 units of output per week is equal to _____.

$16,000

The above table gives some production and cost information for Flaming Fernando's, a restaurant that sells Fiery Frijoles. What is the average total cost of producing 4,500 frijoles?

$2

The table above gives information on the marginal perceived private benefit and marginal social benefit associated with vaccination against varicella (chicken pox). If the marginal cost of a varicella vaccination is $10, to achieve an efficient quantity of vaccinations, the government could provide a subsidy of

$2 per vaccination

If labor is the only variable input a firm owner uses and the wage rate is $200 per week, what is the firm owner's variable cost per week if she hires 12 workers?

$2,400

Juan wants to increase production at his confection shop. If he hires one more worker, he can increase output by 100 candies per week. A confection worker's weekly wage is $200. Juan's marginal cost of increasing output by 100 candies per week is ______.

$2.00

Alicia is currently spending $6,000 per week on total variable costs to produce 500 hats. To produce 505 hats per week, she would have to spend $6,100 per week. The marginal cost per hat is ______.

$20

The above figure illustrates a single-price unregulated monopolist. If the monopolist maximizes its profit, the consumer surplus equals ________.

$20,000

Cindy's Sweaters' production function is shown in the above table. Cindy rents two knitting machines for $30 a day each and hires workers at a wage rate of $40 a day. What is the marginal cost of the 19th sweater?

$20.00

The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The total fixed cost of producing 10 baseball hats per hour is

$200.

In the above figure, to achieve efficiency the government could offer a subsidy to producers of ________ per vaccination so that consumers would pay ________ per vaccination.

$20; $10

If the monopoly illustrated in the figure above could engage in perfect price discrimination, then when it maximizes its profit the total revenue collected by the firm would be

$210.

A used car was recently priced at $20,000.00. Seeing the car, Bobby thought, "It's nice, but if I have to pay more than $19,500 for this car, then I would rather do without it." After negotiations, Bobby purchased the car for $19,250.00. His consumer surplus was equal to

$250.00.

Nick can purchase each milkshake for $2. For the first milkshake purchased Nick is willing to pay $4, for the second milkshake $3, for the third milkshake $2 and for the fourth milkshake $1. What is the value of Nick's consumer surplus for the milkshakes he buys?

$3

The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. What is the amount of the tax?

$3 per gallon

The following graph represents a natural monopoly. The demand, marginal revenue, average cost, and marginal cost functions are shown. If this natural monopoly were subject to average cost regulation, how much total revenue would be earned by the firm? how much profit would be earned by the firm?

$3,000; $0

Peter can produce 50 lunches per hour for $1,250. If he hires one more cook for $15 an hour, he can produce 55 lunches per hour. The marginal cost of expanding hourly lunch production from 50 to 55 is _____.

$3.00

Using the graph, if the price increases from $1 to $1.50, consumer surplus will decrease by _____. ​[Figure description: The graph has price of ice cream cone on the vertical axis and quantity of ice cream on the horizontal axis. The demand curve is a downward sloping straight line. Starting at $3.00 with zero demand, with every $0.25 decrease in price, the quantity demanded of ice cream increases by 1. When price is $0.50, the quantity demanded is 10. ] ​[Table description: the table shows price (column 1) and the corresponding quantity demanded (column 2).]

$3.50

Suppose Gail is willing to pay $89 for a new pair of shoes and Karen is willing to pay $60. What is the gain in total consumer surplus if the price of the shoes falls from $70 to $50?

$30

The table above gives costs at Jan's Bike Shop. Unfortunately, Jan's record keeping has been spotty. Each worker is paid $100 a day. Labor costs are the only variable costs of production. What is the total variable cost of producing 60 bikes?

$300

La Bella Pizza is the only pizza place on Pepper Island. The figure above shows La Bella Pizza's demand curve, marginal revenue curve, and marginal cost curve. At La Bella Pizza's profit-maximizing output, its annual total revenue is

$312,000.

At 2,000 units of output, the variable cost of production is $12,500 per week. Total cost of producing 2,000 units per week is $45,500. The fixed cost of producing 2,000 units of output per week is equal to ______.

$33,000

If an average cost pricing rule is imposed on the natural monopoly shown in the figure above, then the price will be

$4.

The figure above shows the costs and demand curves for the Bigshow Cable Company. Bigshow Cable Company incurs an economic loss if the regulator set its price at

$4.

The above table shows some cost data for Tracey's Tents. What is the average total cost when output is 3?

$40

For the monopoly shown in the figure above, the economic profit is

$40.

The above figure shows the demand and cost curves for a firm in monopolistic competition. In the figure, the firm makes an economic profit of

$40.

The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $400, what is the rent?

$400

Using the information from the table, if the monthly wage of an office chair factory worker is $2,160, what is the marginal cost of increasing output from 190 office chairs per month to 235 office chairs per month?

$48.00

The above figure shows the demand and cost curves for a firm in monopolistic competition. The firm makes the maximum profit when the marginal cost of last item produced equals

$5.

Stefano has just completed an original oil painting. After considering the costs for brushes, paint, canvas, and the value of Stefano's labor time, the marginal cost of the painting is $1,000. Lucky Stefano. One art lover paid him $1,500. How much producer surplus did Stefano obtain?

$500

The figure above shows the costs and demand curves for the Bigshow Cable Company. If the regulator wants to set the price so that Bigshow earns the same normal profit as a perfectly competitive firm, what price should be set?

$6

The figure above shows the situation facing Smart Digit, Inc., a firm in monopolistic competition that produces calculators. The firm's markup is ________ per calculator.

$6

If the natural monopoly shown in the figure above is unregulated, then it will charge a price of

$6.

Jane is willing to pay $80 for a pair of shoes. The actual price of the shoes is $50. Her marginal benefit is

$80

The figure above shows the marginal revenue, marginal cost, and demand curves for an airline offering daily flights between Los Angeles and Toronto. If the airline is regulated using a marginal cost pricing rule total surplus will be ________.

$80,000

Roxie's Movie Theatre has a monopoly and discovers that at $12 a movie, no one is buying movie tickets during weekdays. Roxie's conducts a survey and the table above reveals the results of the survey. Roxie decides to price discriminate between weekend and weekday moviegoers. The marginal cost of a showing a movie is $6. Roxie's charges ________ on weekdays and ________ on weekends.

$9; $12

A fall in the price of X from $12 to $8 causes an increase in the quantity of Y demanded from 900 to 1,100 units. What is the cross elasticity of demand between X and Y?

-0.5

Florida State University has just lowered the price of its season football tickets from $350.00 to $300.00. As a result, there was an increase in the number of season tickets purchased from 43,000 to 47,000. The price elasticity of demand for season tickets equals

-0.58.

In the table above, what is the level of unemployment (in millions of workers) if the minimum wage is set at $8 per hour?

0

The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $3 per hour is imposed. Unemployment will equal

0 hours.

Fred's income has just risen from $940 per week to $1,060 per week. As a result, he decides to purchase 9 percent more steak per week. The income elasticity of Fred's demand for steak is Correct!

0.75.

If an industry were perfectly competitive, the four-firm concentration ratio would be close to ________ and the Herfindahl-Hirschman index would be close to ________.

0; 0

The above table gives the total utility that Homer obtains from consuming various quantities of chocolate chip cookies. The marginal utility from the fifth pound of cookies is

1.

How many pounds of apples should Bill buy if he wants to maximize his utility from consuming the two goods and he has $23 to spend?

1.0

A rise in the price of cabbage from $14 to $18 per bushel increases the quantity supplied from 4,000 to 6,000 bushels. The elasticity of supply is

1.6.

The table above gives Cathy's total utility from Mt. Dew. If the price of a Mt. Dew is $2, Cathy's marginal utility per dollar from the 3rd Mt. Dew is ________ units per dollar

10

The figure above shows a perfectly competitive firm. The firm is operating; that is, it has not shut down. The firm produces

10 units of output and incurs an economic loss.

Betsy's utility depending from her consumption of coffee is shown in the table above. Betsy's marginal utility from the 3rd cup of coffee per day is

10.

At 1,000 units of output, the fixed cost of production is $12,500 per week. Total cost of producing 1,000 units per week is $28,500 per week. If labor is the only variable input and the weekly wage is $1,600, how much labor is being used to produce 1,000 units of output?

10.0

The figure shows the demand curve for Gap jackets (D), and Gap's marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC).In the figure above, Gap maximizes its profit if it sells ________ jackets per day.

100

What is the consumer surplus at a price of $10, assuming the demand relationship is linear? $______

100.0

Suppose that you consume only pizza and Diet Pepsi. The table above gives your utility from consuming these two goods. What is the marginal utility you get from the fourth slice of pizza?

12

What is the average score if the third student has an SAT score equal to 1000?

1200

In the figure above, the marginal utility of the third crate of tomatoes for the person with total utility curve C is

13 units of utility.

In the U.S. in 2017, an individual who earns $25,000 a year (after standard deductions and exemptions) faces an average tax rate of ______________.

13%

Consider two students, each earning 1300 on the quantitative and verbal portions of the SAT. The average SAT score for our group of two is 1300, of course. (1300 + 1300)/2. Suppose we add one more student to the group and calculate the new average. What will the new average be if the third student has an SAT that is equal to 1300?

1300

Consider a firm, using capital (K) and labor (L) in the production process, that wants to expand production. Suppose MPK = 200 and MPL = 60. The cost of capital is r = 50. The firm would use more labor to expand production only if the wage rate is less than _____ dollars.

15

The income elasticity of demand for vacations is 5. If incomes increase by 3 percent next year, the quantity of vacations demanded at today's price will increase by ________ percent.

15

The table above gives Cathy's total utility from Mt. Dew. Cathy's marginal utility from the 4th Mt. Dew is ________ units.

15

In the U.S. in 2017, an individual who earns $25,000 a year (after standard deductions and exemptions) faces a marginal tax rate of ______________.

15%

The above table shows the market shares for all the landscaping services in a suburban area. The Herfindahl-Hirschman Index (HHI) equals

1600

The figure above shows the marginal revenue and costs of a perfectly competitive firm. The firm's profit is maximized when the firm produces

170 units of output.

This table shows the supply and demand for socks. If the government imposes a price floor of $10, how many pairs of socks will be exchanged on this market?

2

Using the graph, if the price of an ice cream cone is $2.00, consumer surplus will equal ______. ​[Figure description: The graph has price of ice cream cone on the vertical axis and quantity of ice cream on the horizontal axis. The demand curve is a downward sloping straight line. Starting at $3.00 with zero demand, with every $0.25 decrease in price, the quantity demanded of ice cream increases by 1. When price is $0.50, the quantity demanded is 10. ] ​[Table description: the table shows price (column 1) and the corresponding quantity demanded (column 2).]

2

Given the following data, calculate profit as an economist would measure it $___.

2,000,000

If apples cost $3 per pound and bananas cost $5 per pound, how many pounds of apples should Bill buy if he wants to maximize his utility and he has $31 to spend?

2.0

The increase in the demand for widgets, shown in the figure above, is the result of an increase in the price of McBoover devices from $9 to $11. Therefore, the cross-price elasticity for these two products is

2.0.

In the above figure, if the price is $8 per unit, how many units will a profit maximizing perfectly competitive firm produce?

20

Julie's total utility from cheeseburgers is given in the table above. What is the marginal utility of the third cheeseburger?

20

Using Table 15.3 from the text demonstrating the impact of a $4 excise tax, what is the deadweight loss in dollars created by the imposition of this tax?

20.0

The production of 12,000 candy bars per day requires 60 workers. The average product of each worker is ______________ candy bars per day.

200

Suppose the Herfindahl-Hirschman Index (HHI) in the market for chocolate is 3,200. Two companies want to merge. The FTC definitely will challenge the merger if it increases the HHI by more than

200 points

Using Table 15.3 from the text demonstrating the impact of a $4 excise tax, what is the revenue collected in dollars by the government given the imposition of this tax?

200.0

The figure above shows the cost, demand, and marginal revenue curves for a monopoly. At an output level of ________, demand is ________.

20; elastic

Using the table above, what is the marginal product of the 5th worker hired at Decent Donuts?

22 dozen donuts per day

What is the consumer surplus at a price of $5? $______

225

Using the data in the above table, if the firm employs 5 workers, total product (measured in units per day) and average product and marginal product of the fifth worker (measured in units per worker) are

25, 5.00, and 2 respectively.

The figure above shows a typical perfectly competitive corn farm, whose marginal cost curve is MC and average total cost curve is ATC. The market is initially in a long-run equilibrium, where the price is $3.00 per bushel. Then, the market demand for corn decreases and, in the short run, the price falls to $2.50 per bushel. In the new short-run equilibrium, the farm produces ________ bushels of corn and sells corn at ________ per bushel.

250,000; $2.50

The above table shows Tammy's total utility from videos and CDs. If Tammy has $110 to spend on videos and CDs and if the price of a video is $10 and the price of a CD is $20, then Tammy maximizes her utility by purchasing

3 CDs and 5 videos.

The table above gives information on the marginal perceived private benefit and marginal social benefit associated with vaccination against varicella (chicken pox). If the marginal cost of a varicella vaccination is $10, then the unregulated competitive equilibrium will have

3 million vaccinations.

Given the following data, calculate profit as an accountant would measure it (give your answer in millions of dollars).

3.0

If apples cost $3 per pound, how much marginal utility per dollar is Bill getting with the 4 pound of apples?

3.0

In the above figure, the competitive unregulated equilibrium is producing and consuming ________ vaccinations per year at a price of ________.

30 thousand; $20

The unregulated, single-price monopoly shown in the figure above will sell

30 tickets

The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource. A quota to prevent the overuse of the cod sets the catch equal to ________.

300 tons per week

The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource. The efficient outcome is ________

300 tons per week

The figure illustrates the short-run costs of Paul's Picture Frames Inc. The picture frame market is perfectly competitive and the market price is $30 a frame. Paul produces ________ frames each week, makes ________ of total revenue, and makes zero ________ profit.

300; $9,000; economic

The figure shows the demand curve for Gap jackets (D), and Gap's marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC).In the figure above, what is Gap's excess capacity?

32 jackets per day

Public art installations are considered a public good because they are easily accessible for viewers and one person's viewing does not diminish the value of the art for anyone else. A small town consists of three people: Pablo, Edward, and Georgia. Their marginal benefits from viewing various quantities of public art installations are shown in the prescribed table. Assume that each public art installation costs $220 to install. If the only providers of public art are town members who are willing to pay the installation cost, the total quantity of public art that will be provided? The allocatively efficient quantity of public art is [ Select ] installations.

35

Gunther rents Nintendo games and videos. The marginal utility from his last Nintendo game is 10 and that from his last video is 5. Nintendo games rent for $2 each. Gunther's demand curve for games is shown in the figure above. How many videos a week does Gunther rent?

4

The table above gives the demand for a monopolist's output. Between which two quantities is marginal revenue equal to 0?

4 and 5

An efficient allocation of resources is reached in the figure above when output equals

4 million.

Bobby spends $100 per month on pizza and CDs. His utility from these goods is shown in the table above. The price of a pizza is $10 and the price of a CD is $20. Which of the following combinations of the two goods maximizes Bobby's utility?

4 pizzas and 3 CDs

In the above table, the marginal product of the third worker is

4.

How many pounds of bananas should Bill buy if he wants to maximize his utility from consuming the two goods and he has $23 to spend?

4.0

They need a cab home but have no idea how much it will cost (Uber is not allowed in Athens). They discuss it and agree that between the two of them, they would be willing to pay 40 euros for a taxi. After a few minutes, they are able to flag down a cab. When they get back to their hotel, the cab driver tells them it will be 12 euro. How much is their consumer surplus?

40 - 12 = 28

The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture. A quota to prevent the overuse of the common pasture sets the number of goats to be raised equal to ________.

40 goats

The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource. The market equilibrium with no government intervention is ________.

400 tons per week

In the table above, the Herfindahl-Hirschman Index in the widget industry is

4182 points.

The figure above shows the demand curve (D) faced by Visual, Inc., a cable TV company, and the firm's marginal revenue (MR), marginal cost (MC), and average cost (LRAC) curves. If Visual is regulated according to the social interest theory, it will serve ________ million households and set a price of ________ per household per month.

4; $12

The above table shows the per day total cost for Kiley's Baseball Glove Company. Each glove is priced at $50 and Kiley's Baseball Glove Company is a perfectly competitive firm. At which of the following amounts of output is the economic profit maximized for Kiley's Baseball Glove Company?

5

Marcus has four employees. The four employees produce 55 floral arrangements in a day. Marcus hires a fifth employee. The five employees produce 60 floral arrangements in a day. The fifth employee's marginal product is __________.

5 floral arrangements in a day

The table above gives information on the marginal perceived private benefit and marginal social benefit associated with vaccination against varicella (chicken pox). If the marginal cost of a varicella vaccination is $10, then the efficient quantity of vaccinations is

5 million vaccinations.

If apples cost $3 per pound and bananas cost $5 per pound, how many pounds of bananas should Bill buy if he wants to maximize his utility and he has $31 to spend?

5.0

When the price of perfume changes from $24 to $26, the quantity supplied increases from 100 jars to 150 jars. What is the elasticity of supply of perfume?

5.0

Consider a firm, using capital (K) and labor (L) in the production process, that wants to expand production. Suppose MPK = 400. The cost of capital is r = 80, and the wage rate is w = 10. The firm would use more labor to expand production only if the marginal product of labor is greater than _____.

50

If the government regulates the market in the above figure in a way to achieve efficiency, then ________ vaccinations will be produced and consumed.

50 thousand

The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $8 per hour, how many hours of students' labor are unemployed?

6,000 hours

The above table shows the total product of producing baseball hats. The average product of 3 workers is equal to

6.00 baseball hats.

The market equilibrium quantity without the $4 excise tax is ______________ units. The market equilibrium quantity with the $4 excise tax is ______________ units. The change in equilibrium quantity due to the $4 excise tax is ______________ units.

60, 50, -10

Fill in the missing value for B in the table below. ​​[Figure description: The first column contains the number of workers. The second column shows output. The third and fourth columns show average and marginal product, respectively.]

64

The above table shows the market shares for all the landscaping services in a suburban area. The four-firm concentration ratio equals

65 percent.

In the above table, the marginal product of the 7th worker is 6. What is the total product when 7 workers are employed?

70

The following graph presents the marginal cost and marginal benefit information for tons of steel produced. If the external costs are ignored the market equilibrium quantity will be [ Select ] tons and the market equilibrium price will be $ [ Select ] . If the external costs are included in the market price the allocatively efficient equilibrium quantity will be [ Select ] tons and the market equilibrium price will be $ [ Select ] . The policy option, [ Select ] , would result in the market producing the allocatively efficient amount of steel

700, 195 , 500, 225 , A tax of $80 for every ton of steel produced.

Based on the above table, which shows the firms and sales in an industry, what is the four-firm concentration ratio?

74

Using the graph, if the price of an ice cream cone is $1, consumer surplus will equal ______. ​[Figure description: The graph has price of ice cream cone on the vertical axis and quantity of ice cream on the horizontal axis. The demand curve is a downward sloping straight line. Starting at $3.00 with zero demand, with every $0.25 decrease in price, the quantity demanded of ice cream increases by 1. When price is $0.50, the quantity demanded is 10. ] ​[Table description: the table shows price (column 1) and the corresponding quantity demanded (column 2).]

8

The above figure shows the demand and cost curves for a monopolistically competitive firm in the long run. The firm has excess capacity of

8 units.

The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $4 per hour, how many hours do students work?

9,000 hours

There are six firms in an industry, with market shares of 50 percent, 25 percent, 10 percent, 10 percent, 3 percent and 2 percent. The four firm concentration ratio is ________, and the HHI is ________.

95; 3338

A firm engaged in predatory pricing is

A firm that lower prices with the purpose of driving competitors out of the market

A change in supply will have a (greater, lesser, the same) effect on quantity for a relatively more elastic demand curve than a relatively less elastic one.

A greater

A cartel is best described as:

A group of firms working together in an attempt to become a monopoly.

Which of the following statements is TRUE?

A monopolist will leave the market if it incurs an economic loss in the long run

Using the table above, if the government imposes a price floor of $10, what will the effect be?

A surplus of 6 units

Which of the following taxes is progressive?

A tax of 20% on the first $100,000 of income and 30% on any additional income

Which of the following taxes is progressive?

A tax of 50% on inheritances of more than $4 million only

All of the following are examples of price discrimination EXCEPT

"buy now, pay later" payment options