Econ 102
The figure on the right shows the typical firm in a perfectly competitive industry. Equilibrium in the market is currently yielding a price of ____. At this price, the typical firm earns a ____ economic profit. As a consequence of the current short-run conditions in this industry, it may be expected that firms will _______ this market. As this movement of firms occurs, economic profits for the typical firm will ______.
30 negative leave approach zero
The figure on the right displays the market for video game consoles, where nine buyers are interacting with nine sellers. According to this figure, the equilibrium price is $______, and at that price, the equilibrium quantity is ______. When the market is in equilibrium, social surplus is $______. If the number of consoles is restricted to two less than the equilibrium quantity, social surplus is $______. Alternatively, if the government mandated that one more video game console than equilibrium be transacted, social surplus is now $_____. From this analysis, it can be concluded that a market in competitive equilibrium ______ social surplus.
500; 5 2000 1800 1800 maximizes
In a competitive market equilibrium, the allocation of the social surplus is such that ____________. A. no individual can be made better off without making someone else worse off. B. all participants are equally satisfied with the outcome. C. equity among the participants is attained. D. no individual can be made better off or worse off.
A. no individual can be made better off without making someone else worse off.
For every choice a person makes it can be assumed that A. some opportunity cost was involved. Your answer is correct. B. the chooser has full knowledge of the situation. C. there is a fifty-fifty chance the choice was the wrong one. D. a good is involved and satisfaction is gained.
A. some opportunity cost was involved.
Suppose that your grade point average and academic record are the most important thing to you. What is the opportunity cost of spending 2 hours studying for a biology exam? A.) Time spent studying for one of your other classes. Your answer is correct. B.) Your lost income from not working. C.) Basic leisure time. D.) Time spent bowling with friends.
A. Time spent studying for one of your other classes.
Assume there are two industries in our economy: the production of pizza and the production of calzones. Each of these products is produced in a similar way with similar ingredients and requires similar skills. If the market price of pizza in this competitive market is below the ATC curve and the price of calzones is above the ATC curve, ____________. A. firms will continue making their current product since demand curves will adjust to equilibrate prices in both markets. B. firms currently making pizza will switch to making calzones. C. firms will increase their productivity to lower their marginal costs. D. firms currently making calzones will switch to making pizza. When firms switch from making pizza to making calzones, the price of pizza will ______ and the price of calzones will _______.
B. firms currently making pizza will switch to making calzones. increase; decrease
A student has a job that pays a wage rate of $20 per hour. The night before an economics exam, the student has set aside four hours to study for the exam, estimating that for each hour spent studying, her grade will rise by 5 points. That night, she gets a call from her employer to come to work for a wage rate of $15 per hour for that night. She decides to work for three hours and earn an extra $45. The next day she takes the test and gets a grade of 75. The opportunity cost for her work is A. the $45 she earned. B. the 15 extra points she estimates that she could have earned on the exam if she had studied the extra three hours. Your answer is correct. C. the three hours she did not study. D. the entire four hours she set aside for studying.
B. the 15 extra points she estimates that she could have earned on the exam if she had studied the extra three hours.
Kyla is buying clothes. She can choose between a red dress, a blue sweater, and black jeans. She doesn't like black jeans, and after some thought, she chooses a red dress. What is the opportunity cost of this choice? A. the black jeans B. the a blue sweater C. the a blue sweater and the black jeans D. the a red dress, the a blue sweater, and the
B. the a blue sweater
Does price gouging have the same effect as setting prices above equilibrium level? A. Yes, both result in unjustifiably high prices given underlying supply and demand conditions. B. No, price gouging is actually an equilibrium outcome, while the setting of prices above equilibrium is not. C. Yes, both produce an excess of quantity supplied over quantity demanded. D. No, price gouging harms buyers, while prices set above equilibrium damages sellers.
B. No, price gouging is actually an equilibrium outcome, while the setting of prices above equilibrium is not.
A difficult problem for central planners is bringing together those economic agents whose interests coincide in order to trade. This is known as the ____________ problem. A. coordination B. communication C. collaboration D. incentive Once planners have successfully brought economic agents together, a second problem of aligning the interests of the economic agents must be solved. This is known as the ___________ problem. A. coordination B. integration C. incentive D. alignment In a market economy, the alignment of interests is accomplished through the use of _______.
B. coordination C. incentive
The diagrams shown below depict the cost curves of two plants owned by a firm producing video games. From the positions the curves hold in each graph, it can be deduced that the older, less efficient facility is ______. If video games are produced in a competitive market and the current price is $70, production in Alpha is ____, thousand units and production in Beta is ____ thousand units. If management sought to transfer 10 thousand units of Beta's production to Alpha, the firm's overall profits would _____ since for those 10 thousand additional units _______.
Beta 70, 60 decrease; MC beta<MC alpha
Opportunity cost A. only is considered for goods in short supply. B. is the value of all alternatives forgone as a result of choosing some given alternative. C. is the value of the next best alternative as a result of choosing some given alternative. Your answer is correct. D. either B or C.
C. is the value of the next best alternative as a result of choosing some given alternative.
Social surplus is the ____________. A. difference between the amount that buyers actually pay and what they wish to pay. B. gain to society from having a trade surplus with other countries. C. sum of consumer surplus and producer surplus. D. excess of aggregate demand over aggregate supply.
C. sum of consumer surplus and producer surplus.
Jack and Jill both decide to go to a movie with free tickets. We know that A. both bear the same opportunity cost since they are doing the same thing. B. the cost of going to the movie is greater for the one who had more choices to do other things. C. both bear an opportunity cost since they could have done other things instead of watching a movie. Your answer is correct. D. neither bears an opportunity cost because the tickets were free.
C. both bear an opportunity cost since they could have done other things instead of watching a movie.
Which of the following statements is FALSE about opportunity cost? A. Opportunity cost is always foregone opportunity. B. Opportunity cost is the next-best alternative. C. When a person buys two items, the concept of opportunity cost applies even though she can afford to buy both items. D. Opportunity cost exists only for goods with monetary values.
D. Opportunity cost exists only for goods with monetary values.
Social surplus is maximized when the ___________. A. buyers and sellers as distinct groups are doing as well as they possibly can. B. competitive market is in equilibrium. C. highest-value buyers are making a purchase and the lowest-cost sellers are selling. D. all of the above.
D. all of the above
In assessing the performance of a perfectly competitive market, we can say that ____________. A. no individual can be made better off without making someone else worse off. B. any departure from the equilibrium necessarily reduces social surplus. C. price efficiently allocates goods and services to buyers and sellers. D. all of the above.
D. all of the above.
Opportunity cost is A. when unlimited wants exceed the limited resources available to fulfill those wants. B. when consumers and firms use all available information as they act to achieve their goals. C. the idea that because of scarcity, producing more of one good or service means producing less of another good or service. D. the highest valued alternative that must be given up to engage in an activity.
D. the highest valued alternative that must be given up to engage in an activity.
Two manufacturing plants operate at Acme Corporation: Plant A and Plant B. If Plant A uses older technology than Plant B, it is likely to have _____ marginal cost than Plant B. In this case, Plant A requires a market price that is ________ Plant B in order to produce. At the market price, Plant A will produce _____ plant B and will earn _______ economic profit.
a higher higher than; less than; a lower
Microeconomics studies _________, while macroeconomics studies _________.
a small piece of the overall economy; the economy as a whole.
The definition of economics states that it is the study of how _________.
agents choose to allocate scarce resources and the impact of those choices on society.
Policy decisions made by the government are analyzed by _________.
both microeconomics and macroeconomics.
Anthony and Kelly decide to watch a movie on Netflix using a promotion code so they do not need to pay for that movie. We know that A. neither bears an opportunity cost since neither needs to pay for the movie. B. both bear the same opportunity cost because the movie has a promotion code. C. both bear an opportunity cost that depends on what each person is giving up to watch the movie. Your answer is correct. D. both bear the same opportunity cost because they are seeing the same thing.
c. both bear an opportunity cost that depends on what each person is giving up to watch the movie.
When economists speak of a deadweight loss, they are referring to a ______ in ________ caused by a market distortion. Consider the figure on the right that shows a market with a government-imposed price control at ____. At this price, the transacted level of the product is ____ units. S ince this market is prevented from attaining equilibrium, the result is a deadweight loss, which is measured by area ______.
decrease; social surplus PC Q2 C + E
A policy such as reducing government spending to control the national debt would be studied under _______ since it deals with ___________.
macroeconomics; the economy as a whole
Equilibrium describes a situation where
no one would benefit from changing his or behavior.
The statement that the United States should legalize same−sex marriage is a _______ statement since it describes what people _______.
normative; ought to do
The ethical implications of a hotly debated government policy would best be considered a _________.
normative question, since it deals with a subjective issue based on personal preferences.
Optimization describes a situation where
people weigh costs and benefits when making a decision.
The statement that the United States has a lower unemployment rate than Spain is a ________ statement since it describes what people _______.
positive; actually do
A non-market price imposition is a price control. In the figure on the right, the imposition of price PC results in a _______ in the market. If the imposed price PC were removed, market forces would rectify the mismatch between quantity demanded and quantity supplied by pushing the price _______. This price adjustment would eliminate the mismatch by _________ market participants to change their behavior.
shortage upward incenivizing
Empircism describes a situation
where economists use data analyze what is happening in the world.
