Econ 202

The government's benefit from a tax can be measured by

tax revenue

In a competitive market the price is $8. A typical firm in the market has ATC = $6, AVC = $5, and MC = $8. How much economic profit is the firm earning in the short run?

2$ per unit

A patent gives a single person or firm the exclusive right to sell some good or service for a specific period of time.

True

If a tariff is placed on watches, the price of both domestic and imported watches will rise by the amount of the tariff.

True

Profit equals total revenue minus total cost.

True

The larger the deadweight loss from taxation, the larger the cost of government programs.

True

If the firm doubles its output from 3 to 6 units, total revenue will

increase by exactly $15

Suppose the government increases the size of a tax by 20 percent. The deadweight loss from that tax

increases by more than 20 percent.

A monopolist produces where P > MC = MR.

True

When a tax is imposed on a good, consumer surplus decreases and producer surplus remains unchanged.

False

Suppose the government imposes a tax of P' - P'. The area measured by I + Y represents the

Deadweight loss due to tax

Anna borrows $5.000 from a bank and withdraws $1,000 from her personal savings to start a coffee shop. The interest rate is 5 percent for both the bank loan and her personal savings. Her opportunity cost of capital is $250.

False

Economists include both explicit and implicit costs while accountants include only implicit costs.

False

For firms operating in a perfectly competitive market, price must always be greater than marginal revenue.

False

If a firm notices that its average revenue equals the current market price, that furm must be participating in a competitive market.

False

Ms. Joplin sells colored pencils. The colored-pencil industry is competitive. Ms. Joplin hires a business consultant to analyze her company's financial records. The consultant recommends X that Ms. Joplin increase her production. The consultant must have concluded that, at her current level of production, Ms. Joplin's

Marginal revenue exceeds her marginal cost

Which of the following is a disadvantage of government provision of a public good?

The government lacks information about the value people place on the good.

A firm produces 400 units of output at a total cost of $1,200. If total variable costs are $1,000.

average fixed cost is 50 cents

The imposition of the tax causes the price received by sellers to

decrease by $2

The competitive firm's long-run supply curve is that portion of the marginal cost curve that lies above average

total cost