econ exam 2

A firm is producing goods in a market where the market price is less than the​ firm's average total cost but greater than its average variable cost. At this point the firm​ should: A. continue to operate at a loss. B. decrease production. C. shutdown production. D. increase price.

A

Which of the following pairs of goods is likely to have a negative cross−price ​elasticity? A. Pens and paper notebooks B. Compact discs​ (CDs) and electronic music files C. Nokia and Samsung cell phones D. Motorcycles and typewriters

A. THEYRE COMPLIEMENTS

​$100 is to be divided among two individuals−Mary and Jenna. Which of the following allocations is Pareto​ efficient? A. Mary receives​ $1, and Jenna receives​ $99. B. Mary receives​ $20, and Jenna receives​ $75. C. Mary receives​ $45, and Jenna receives​ $45. D. Mary receives​ $90, and Jenna receives​ $9.

A. only one that adds to 100

Which of the following statements is true in the short​ run? All firms earn zero economic profits. B. Only some of a​ firm's input can be varied. Your answer is correct. C. All factors of production are fixed. D. All factors of production can be changed.

B

Assume that the market for chocolates is perfectly competitive. Which of the following statements would be true in this​ case? A. ​Jessica, a chocolate​ seller, sometimes sets her price lower or higher than the price at which other sellers sell their chocolates. B. Pam wants to produce chocolates but she is unable to as Roy controls all the cocoa farms in the region. C. Terry uses soy milk for producing his​ chocolates, while Donna uses almond milk for producing hers. D. Jill starts to produce chocolates​ today, but the addition of her supply into the market does not decrease the market price.

D

In a perfectly competitive​ market, all firms in the long run earn​ ________. A. positive economic profit B. positive accounting profit C. zero accounting profit D. zero economic profit

D

At a certain level of​ production, the average total cost faced by a monopolist is​ $6 and the marginal cost faced by the monopolist is​ $4. If the government decides to regulate the market by setting the price at the efficient​ price, the good will be sold at a price of​ ________. A. ​$10 per unit B. ​$6 per unit C. ​$4 per unit D. ​$2 per unit

C

Efficiency is achieved in competitive markets because​ ________. A. consumer surplus is maximized B. producer surplus is maximized C. social surplus is maximized​ (the economic pie is made as large as​ possible) D. deadweight loss is maximized

C

If the price elasticity of supply of a good is​ 2, a 200 percent increase in the price of the good will change the quantity supplied by​ ________. A. 100 percent B. 200 percent C. 400 percent D. 50 percent

C

The difference between accounting profits and economic profits​ is: A. goodwill. B. income taxes. C. implicit costs. D. explicit costs.

C

The figure illustrates the demand and supply curves for a good in a competitive market. Suppose a price control of​ $3.50 is imposed on this market. Which areas on the graph represent the deadweight loss in this market due to this price​ policy? A. F​ + G B. A​ + B​ + C​ + D​ + E​ + H C. C​ + D D. A​ + B​ + C​ + D​ + E​ + H​ + F​ + G

C

What is the marketminus−wide consumer surplus when the market price of calculators is​ $3 per​ unit? A. ​$600 B. ​$725 C. ​$1,000 D. ​$1,120

C.

A market structure in which there is no competition is referred to as​ a(n) ________. A. monopoly B. monopolistically competitive market C. monopsony D. oligopoly

A

A perfectly elastic demand curve​ ________. A. is parallel to the quantity axis B. slopes downward C. is parallel to the price axis D. slopes upward

A

A profitminus−maximizing monopolist produces the quantity at which​ ________. A. Marginal revenue​ = Marginal cost B. Price​ = Average total cost C. Price​ = Marginal revenue D. Price​ = Marginal cost

A

Which of the following statements is​ true? Which of the following statements is​ true? A. The number of firms in the industry is fixed in the short​ run, but the number can change in the long run. B. Free entry and exit of firms is possible in the short​ run, but the entry and exit of firms is restricted in the long run. C. A firm can vary all its factors of production in both the short run and the long run. D. The shortminus−run average cost curves lies below the longminus−run average cost curves in both the short run and the long run.

A

Anne has chosen how many bagels and how many units of cream cheese she would buy this month. She has​ $20 to spend on these two goods. Suppose that her chosen​ combination, the marginal benefit per dollar for bagels is​ $6, and her marginal benefit per dollar for cream cheese is​ $10. By reallocating one dollar from​ ________ to​ ________ she can add​ ________ to her benefit. A. cream​ cheese; bagels;​ $6 B. ​bagels; cream​ cheese; $4 C. ​bagels; cream​ cheese; $10 D. cream​ cheese; bagels;​ $10

B

The long−run supply curve of a firm is​ ________. A. the portion of its marginal cost curve that lies below its average total cost curve B. the portion of its marginal cost curve that lies above its average total cost curve C. its marginal cost curve D. its average total cost curve

B

The aggregate difference between the average total cost ​(ATC​) and average variable cost ​(AVC​) for all units of production is​ the: A. total cost. B. total fixed cost. C. marginal cost. D. total variable cost.

B

​Graphically, producer surplus is the​ ________. A. area above the market price of a good B. area between the demand curve and the equilibrium price line C. area between the supply curve and the equilibrium price line D. area below the supply curve

C

​Scenario: The following excerpt is from​ "Throwing the Book at​ Apple" ​(Wall Street​ Journal, Review and​ Outlook, June​ 12, 2013): At the​ time, prior to the existence of the tablet device market that Jobs created with the​ iPad, Apple did not sell eminus−books. Amazon sold nine of every 10. Justice claims Jobs then forced Amazon and every other eminus−book distributor to adopt a new eminus−book pricing model that harmed consumers. Yet the average retail price for​ "trade" eminus−books has since dropped to​ $7.34 from​ $7.97, and​ Amazon's Kindle is still the industry leader with Apple trailing in third. Over the same period readers bought​ 447% more eminus−​books, and they can choose from dozens of tablets for titles and other media content. Is Apple Inc. a monopolist in the eminus−book ​market? A. ​Yes, because it has the power to affect the prices of eminus−books. B. ​No, because it does not have the power to affect the prices of eminus−books. C. ​No, because it is not the only seller of eminus−books without actual or potential competitors. D. ​Yes, because it is the only seller of eminus−books without actual or potential competitors.

C

Which is NOT a feature of the market​ economy? A. It allocates resources to where they are best used. B. It uses price signals to maximize social surplus. C. It provides incentive to market participants to pursue self−interest. D. It provides equity of income and consumption for market participants..

D

Which of the following graphs correctly represents a natural monopoly​ market? A. Market 1 B. Market 2 C. Market 3 D. Both market 1 and market 3

C. MC lower than ATC

In assessing the performance of a perfectly competitive​ market, we can say that​ ____________. A. price efficiently allocates goods and services to buyers and sellers. B. no individual can be made better off without making someone else worse off. C. any departure from the equilibrium necessarily reduces social surplus. D. all of the above.

D

When existing firms leave a perfectly competitive​ market, it causes​ ________. A. a decrease in the profitability of existing firms B. a leftward shift in the demand curve of the good being produced by the firms C. a rightward shift in the demand curve of the good being produced by the firms D. an increase in the profitability of existing firms

D

Which of the following statements is​ true? A. Social planners are only concerned with efficiency and not equity. B. Social planners are only concerned with equity and not efficiency. C. For​ some, efficiency means an even distribution of goods across society. D. For​ some, equity means an even distribution of goods across society.

D