Econ 101 Final Exam Tophat

A perfectly competitive firm is producing 50 units of output, which it sells at the market price of $23 per unit. The firm's average total cost is $20. What is the firms total revenue?

$1150

A perfectly competitive firm is producing 50 units of output, which it sells at the market price of $23 per unit. The firm's average total cost is $20. What is the firms economic profit?

$150

If the price of a movie rises 3 percent and, as a result, the quantity demanded of streamed videos increases 6 percent, then the cross elasticity of demand is

-2

If 9 workers can produce 1,550 units of output and 10 workers can produce 1,700 units of output, then the marginal product of the 10th worker is

150 unites

If the marginal private benefit of attending college for Shelly is $40,000 and the marginal external benefit is $15,000, she will attend college if the cost of attendance is no more than

40,000

Which of the following is always true when a single-priced monopolist maximizes its profit?

MR = MC

How do the following headlines concern​ self-interest and the social​ interest?1. Macy's, the New York based department store, is opening in Paris while Pizza Hut is expanding throughout Europe. 2. All bottles must be recycled

Macy's and Pizza Hut make decisions in their​ self-interest. Recycling is in the social​ interest, but people decide whether to make the effort to recycle in their​ self-interest.

What is the impact of a government subsidy to producers?

More is produced relative to the efficient level, creating a deadweight loss.

Pollution is an example of a ____ externality.

Negative Production

As a consumer moves away from the origin onto higher indifference curves, what happens?

The consumer reaches more preferred combinations of goods

The Federal Minimum wage is $7.25. Walmart, Target, Fareway, HyVee and most other retailers offer starting wages around $11-$12 per hour.

The current min wage has no impact on the market.

A market is classified as an oligopoly when

a few firms compete

A price ceiling is

a maximum legal price.

Mac can bake more cookies than Monica per hour. It must be TRUE that a) Mac has an absolute advantage in baking cookies. b) Mac cannot benefit by trade between the two of them. c) Monica has an absolute advantage in cookie baking. d) Monica has a comparative advantage in baking cookies. e) Mac has a comparative advantage in baking cookies.

a) Mac has an absolute advantage in baking cookies.

The United States can use all its resources to produce 250 DVDs or 500 shoes. China can use all of its resources to produce 30 DVDs or 300 shoes. The opportunity cost of producing a DVD in the United States is a) 1 DVD. b) 2 shoes. c) 500 shoes. d) 20 shoes. e) 1/2 of a shoe.

b) 2 shoes.

Which of the following statements is correct? a) Consumers have the ability to buy everything they desire. b) A consumer's budget line shows the limits to what a consumer can buy. c) Rich consumers are unaffected by prices. d) A budget line changes only if the person's budget changes. e) A consumer's budget line shows the goods with the highest marginal utilities.

b) A consumer's budget line shows the limits to what a consumer can buy.

Claire & Don are farmers who produce beef and corn. In a year, Claire can produce 30 tons of beef or 300 bushels of corn. In a year, Don can produce 30 tons of beef or 240 bushels of corn. How do Claire and Don maximize their total output of beef and corn in a year? a) Claire produces beef and Don produces Corn b) Don produces beef and Claire produces Corn c) Claire produces beef and corn while Don produces nothing. d) Claire and Don each spend half of their time producing beef and the other half producing corn.

b) Don produces beef and Claire produces Corn

Erin and Fred own bakeries. If they devote all their resources to a single good, Erin can produce either 40 muffins or 40 cookies. Fred can produce either 100 muffins or 20 cookies producing only one good. What is the opportunity cost of producing cookies? a) Erin = 1 cookie per muffin, Fred = 5 cookies per muffin. b) Erin = 1 muffin per cookie, Fred = 5 muffins per cookie. c) Erin = 1 muffin per cookie, Fred =1/5 of a muffin per cookie.

b) Erin = 1 muffin per cookie, Fred = 5 muffins per cookie.

The law of supply states that other things remaining the same, a decrease in the price of a kayak leads to

b) a decrease in the quantity of kayaks supplied.

Lauren runs a chili restaurant in San Francisco. Her total revenue last year equaled $111,000. The rent on her restaurant totaled $48,000. Her labor costs totaled $43,000. Her materials, food and other variable costs totaled $19,000. To Lauren's accountant, Lauren a) had a total cost equal to $91,000. b) earned a profit of $1,000 c) Incurred a loss of $1,000 d) incurred a loss of $111,000 e)earned profit of $111,000

b) earned a profit of $1,000.

Which of the following statements is TRUE about a competitive market? A competitive market a) includes markets for goods and services but not for inputs. b) has so many buyers and sellers that no one can influence the price. c) has a handful of sellers but always has many buyers. d) has one seller competing to sell his or her product. e) must have a physical location.

b) has so many buyers and sellers that no one can influence the price.

Many years ago, CyRide (operated by Iowa State & the City of Ames) changed the fee structure so they collected a small fee as part of the student fees. As a result, students can ride CyRide for free. Would the decision to change bus fares be a macroeconomic or microeconomic decision?

b) microeconomic

When Abdul buys an electric vehicle, he makes a rational choice because he thinks a) the choice helps the environment. b) of the benefit of the car along with the cost of the car. c) the choice is in the social interest.

b) of the benefit of the car along with the cost of the car.

As technology advances a) all opportunity costs decrease. b) the PPF shifts outward. c) all opportunity costs increase. d) the PPF shifts inward because unemployment occurs.

b) the PPF shifts outward.

When the economy moves from one point on its PPF to another point on its PPF, what is being illustrated? a) free lunch b) tradeoff c) movement from an attainable point to an unattainable point. d) movement from an unattainable point to an attainable point.

b) tradeoff

A price floor makes prices

below the price floor illegal.

A Nash equilibrium occurs when each player in a game takes the ____ given the action of the other player.

best possible action for himself or herself

Many years ago, CyRide (operated by Iowa State & the City of Ames) changed the fee structure so they collected a small fee as part of the student fees. As a result, students can ride CyRide for free. With this decision, do bus rides remain scarce for students? Does the incentive to ride the bus change? a) Bus rides are no longer scarce. Incentives to ride the bus remain the same. b) Bus rides remain longer scarce. Incentives to ride the bus remain the same. c) Bus rides remain longer scarce. Incentives to ride the bus change. d) Bus rides are no longer scarce. Incentives to ride the bus change.

c) Bus rides remain longer scarce. Incentives to ride the bus change.

Which of the following statements is correct? a) The slope of the budget line shows there is no tradeoff between the two goods because the consumer can buy each of them. b) Along the budget line, consuming more of one good implies consuming more of the other. c) The slope of the budget line shows the opportunity cost of the good measured along the x-axis. d ) If the consumer's budget increases, the budget line shifts leftward and its slope does not change.

c) The slope of the budget line shows the opportunity cost of the good measured along the x-axis.

Allocating resources by the order of someone in authority is a ____ allocation method.

command

If Fatma has $30 to spend on apples and bananas, where on the apple axis would Fatma's budget line intersect if the price of apples is $3 a pound? a) 3 pounds b)30 dollars c)10 dollars d) 10 pounds

d) 10 pounds

Mulch is shredded wood and is a by-product in the production of lumber. Because these two goods are produced together, they are

d) complements in production.

The production possibilities frontier illustrates the Select an answer and submit. a) amount of each good that people want to buy. b) resources the economy possess, but not its level of technology. c) limits to people's wants. d) maximum combinations of goods and services that can be produced.

d) maximum combinations of goods and services that can be produced.

An Amusement park produces 10 balloon rides and 9 boat rides per hour. The amusement park cannot produce more balloon rides without producing fewer boat rides. The amusement park is ____ its production possibility frontier. a) producing inside b) moving along c) producing outside d) producing on

d) producing on

The "quantity demanded" of any good or service is ____ during a specified time period and at a specified price.

d) the amount people are willing and able to buy

The marginal benefit of each additional unit of a good consumed

decreases as more is consumed.

If a lower price for a Coke decreases the demand for a Pepsi, the cross elasticity value for Pepsi and Coke is

definitely positive.

An indifference curve shows

different combinations of two goods among which the consumer is indifferent.

Normally shaped indifference curves are bowed towards the origin of the graph. The reason for this shape is

diminishing marginal rate of substitution

Tax incidence is the

division of a tax burden between the buyer and seller.

Which of the following is the best example of a good or service with an external benefit?

education

Suppose the Chicago Bears football team raises ticket prices by 13 percent and as a result the quantity of tickets demanded decreases by 21 percent. This response means that the demand for Bears tickets is

elastic

In an indifference curve/budget line diagram, at the consumer equilibrium the slope of the budget line

equals the slope of the indifference curve.

In the labor market

firms are shown in the demand curve and individuals (consumers) are shown in the supply curve.

A university has a speakers series each semester. Students line up early in order to get a limited number of free tickets to hear the speaker's program. The seats are allocated using the ____ method.

first-come, first-served

The good produced by a monopoly

has no close substitutes

When the indifference curve is steep, the consumer has a

high marginal rate of substitution for the good on the horizontal axis.

Which of the following is TRUE regarding tax incidence? i. The elasticities of supply and demand determine tax incidence. ii. When the government taxes the seller, the firm always pays most of the tax. iii. When the government taxes the buyer, the consumer always pays most of the tax.

i only

The deadweight loss from a tax

is called the excess burden of the tax.

if a perfectly competitive firm finds that the price exceeds its ATC, the the firm

is making an economic

The characteristics that describe a perfectly competitive industry include

many firms selling an identical product

The primary goal of a business firm is to

maximize profit

The elasticity of demand is used to

measure how responsive consumers are to a change in price.

A market with a large number of sellers

might be a monopolistically competitive or a perfectly competitive market.

Which of the following market types has the fewest number of firms

monopoly

An increase in the quantity demanded is shown as

movement along the demand curve

Evidence of external costs in the production of a product is present if

non-buyers and/or non-producers of the product experience a loss for which they are not compensated.

A natural monopoly exist when

one firm can supply an entire market at a lower ATC than can two or more firms

Suppose the current equilibrium wage rate for landscapers is $7.65 in Little Rock; $8.50 in St. Louis and $9.95 in Raleigh. An increase in the minimum wage to $8.50 per hour results in unemployment of landscapers in

only Little Rock.

To encourage invention and innovation, the government provides

patents

The income elasticity of demand for electricity is 1.90. Suppose the economy improves and incomes are expected to increase by 10 percent. This means that

power companies can expect to sell 19 percent more electricity.

A regulation that sets the highest price at which it is legal to trade a good is a

price ceiling.

In order to have an impact, a ____ must be set below the equilibrium price, and when this occurs, ____.

price ceiling; producer surplus decreases

Value and price can be compared by noting that

price is what we must pay and value is what we are willing to pay.

Producer surplus is the ____ summed over the quantity produced.

price of the good minus the marginal cost of producing it

Economists use game theory to analyze strategic behavior, which takes into account

the expected behavior of others and the recognition of mutual interdependence.

The demand for insulin is quite inelastic. The demand for Pepsi is quite elastic. Suppose the elasticity of supply for insulin is the same as the elasticity of supply for Pepsi. If a $0.20 tax was imposed on each of these goods (holding everything else constant), which consumers would pay more of the tax?

the insulin consumers

If a price ceiling is set above the equilibrium price, then

there will be neither a shortage nor a surplus of the good.