Econ Final
When a minimum wage is in place, scarce jobs are allocated by _______.
a method other than market price, such as personal characteristics, first-come first-served, or discrimination
The closer the substitutes for a good or service, the more ______ is demand. The greater the proportion of income spent on a good, the more ______ is demand.
elastic; elastic
The water supplier in your town is an example of _______.
A monopoly
Which of the following is an example of a price ceiling or price cap?
A regulation requires cable service to be provided for no more than $30 a month.
Choose the statement about monopoly that is incorrect. A.Local water supplier is a monopoly. B.A monopoly produces more than the efficient quantity and charges too high a price. C.A monopoly sets its price to achieve its self-interest. D.A monopoly is a firm that is the sole provider of a good or service.
C
Production efficiency is a situation in which the economy is getting all that it can from its resources and _____ produce more of one good or service without producing _____ of something else.
Cannot; less
Lin's makes fortune cookies. Anyone can make and sell fortune cookies, so there are dozens of producers. All fortune cookies are the same and buyers and sellers know this fact. Lin's fortune cookies operates in a ______ market. The price of a fortune cookie is determined by ______. Lin's marginal revenue from a fortune cookie equals ______.
Competitive market demand and market supply; price
______ are features of a firm's technology that lead to rising long-run average cost as output increases.
Diseconomies of scale
On a Ford assembly line, the cost of producing a car falls as output increases. Given this information, we know that for Ford, ______ exist.
Economies of scale
______ are features of a firm's technology that lead to falling long-run average cost as output increases.
Economies of scale
T or F: the marginal cost curve intersects the average fixed cost curve at its minimum?
False
T or F:when marginal cost is greater than average cost, average cost is increased?
False
When a firm price discriminates, it is doing its customers a favor.
False
Which of the following is an example of a price-discrimination?
IMAX charges $6 per movie ticket for children younger than 8, and $8.50 per movie ticket for adults
When Mohesha receives an increase in her pay check from $1,800 a month to $2,200 a month, she increases the quantity of hot chocolate that she buys from 19 cups a month to 21 cups a month. Mohesha's demand for hot chocolate is income ______. For Mohesha, hot chocolate is ______ good.
Inelastic; a normal
Which of the following illustrates economies of scale? Liza's average total cost changes from $4.50 to $2.20 when she increases salad production from 7 to 9 an hour. Sam's average total cost changes from $1.30 to $2.80 when he increases smoothie production from 5 to 8 gallons an hour. Tina's average total cost remains at $3 when she increases pizza production from 12 to 13 an hour.
Liza faces economies of scale
Goods and services that use rare resources in their production have a ______ elasticity of supply. The greater the amount of time available after a price change, the ______ is the elasticity of supply.
Low; greater
_______ arises when there is one firm, which produces a good or service that has no close substitutes and in which the firm is protected by a barrier preventing the entry of new firms.
Monopoly
Ski trips and ski jackets are complements. The cross elasticity of demand for ski trips with respect to the price of a ski jacket is _______.
Negative
Are changes in preferences and obstacle or not?
Not
Are taxes and subsidies an obstacle or not?
Obstacle
Which of the following is an example of regulation?
The Surface Transportation Board influences the prices on interstate railroads.
T or F: The marginal cost curve intersects the average variable cost curve at its minimum?
True
Suppose that in 2014, tomato growers in Florida lobby the U.S. government to impose an import quota on Mexican tomatoes. ______ gain and ______ lose.
U.S. growers of tomatoes; U.S. consumers of tomatoes and society
Which of the following is an example of price elasticity of demand?
When the price of bananas increased by 5 percent and nothing else changed, the quantity of bananas demanded decreased by 2 percent.
Demand is elastic if?
a price cut increases total revenue
Demand is inelastic if?
a price rise increases total revenue
Is high transaction cost an obstacle or not an obstacle?
an obstacle
The long-run average cost curve traces out the lowest attainable _______ of producing each output.
average total cost
A firm experiences constant returns to scale when _______.
average total cost does not change when output changes
What is an incorrect statement: A.A firm practices price discrimination to maximize profit. B.A monopoly faces a market constraint because to sell a larger quantity, it must set a lower price. C.A firm that practices price discrimination is a monopoly. D.A firm practices price discrimination when it sells different units of a good or service for different prices.
c
Producer surplus is ______.
calculated as the price received for a good minus its minimum supply price, summed over the quantity sold
The production possibilities frontier is the boundary between the combinations of goods and services that _____, given the available factors of production and the state of technology.
can be produced and the combinations that cannot be produced
Perfect price discrimination is the price discrimination that extracts the entire _____ surplus by charging the _____ price that _____ are willing to _____ for each unit.
consumer; highest; consumers; pay
A minimum wage set above the equilibrium wage rate ______
creates unemployment
The tools that a country can use to restrict international trade include all of the following except _______.
deadweight loss
With competitive rent seeking, a single-price monopoly's _______.
deadweight loss increases
Marginal cost______?
decreases at low outputs and increases at high inputs
Diminishing returns to capital ___ occur as the quantity of capital increases because for a given quantity of ____ each additional unit of ____ will result in _____ incremental amounts of output.
do; labor; capital; smaller
Workers at Sue's Surfboards negotiate a wage increase of $100 a week for each worker. If other things remain the same, Sue's average fixed cost curve ______ and the average variable cost curve ______. If other things remain the same, Sue's average total cost curve ______, and the marginal cost curve ______.
does not change; shifts upward shifts upward; shifts upward
If diseconomies of scale are present and the firm ______ all its inputs, its output _______.
doubles; less than doubles
A firm that can use cost-saving equipment and highly specialized labor as the scale of production increases experiences _______.
economies of scale
The marginal cost curve slopes downward at low outputs because of _______.
greater specialization and division of labor
A firm in perfect competition is a price taker because _______.
it produces a tiny proportion of the total output of a particular good and buyers are well informed about the prices of other firms
The demand for a necessity is income ______ and the demand for a luxury is income ______.
inelastic; elastic
Economic profit _______.
is equal to total revenue minus the opportunity cost of production
Consumer surplus is _______.
measured as the marginal benefit (or value) of a good minus the price paid for it, summed over the quantity bought
Maximum MP occurs at the same output as ______. Maximum AP occurs at the same output as ______.
minimum MC; minimum AVC
The smallest quantity of output at which long-run average cost reaches its lowest level is the firm's _______.
minimum efficient scale
A single-price monopoly is a firm that ______ each unit of its output ______.
must sell; for the same price to all its customers
Monopoly is a market in which one firm sells a good or service that has _____ substitutes and _____ blocks the entry of new firms.
no close; a barrier
is a technological advance an obstacle or not an obstacle?
not an obstacle
A monopoly arises when a firm produces a good or service for which _______ substitutes exist, and the firm _______.
no close; is protected by a barrier that prevents other firms from selling that good or service
is a monopoly an obstacle or not?
obstacle
A minimum wage is unfair because _______.
only those people who have jobs and keep them benefit from the minimum wage, and a minimum wage blocks voluntary exchange
What are true statements about opportunity cost?
opportunity cost is a ratio and opportunity cost of a good is the decrease in the quantity produced of one good divided by the increase in the quantity produced of another good as we move along the PPF .produced of another good as we move along the PPF.
The price elasticity of demand is calculated by dividing the _______ by the _______ .
percentage change in the quantity demanded; percentage change in the price
A minimum wage is a _______ applied to labor markets.
price floor
A firm's production function shows the relationship between the maximum output attainable and the ______.
quantities of both labor and capital
In a perfectly competitive market, the market demand is _______ and the demand faced by the individual firm is _______.
shown by a downward-sloping curve; perfectly elastic
When economies of scale are present, the LRAC curve ______. When diseconomies of scale are present, the LRAC curve ______.
slopes downward; slopes upward
The quantity supplied of a good or service is ______.
the amount producers plan to sell during a given time period at a particular price
A tax is inefficient for all of the following reasons except _______.
the burden of the tax falls entirely on buyers, so buyers purchase a smaller quantity
The marginal product of capital is equal to ______.
the change in total product divided by the change in capital when the quantity of labor is constant
A firm's opportunity cost includes _______.
the cost of using resources bought in the market, owned by the firm and supplied by the firms owner
The marginal cost curve eventually slopes upward because of _______.
the law of diminishing returns
If a consumer's income increases and if all goods are normal goods, ______.
the quantity bought of each good increases
The price elasticity of demand is a units-free measure of the responsiveness of ______.
the quantity demanded of a good to a change in its price when all other influences on buying plans remain the same
the quantity of bottled water that firms plan to sell this month depends on all of the following except ______ because_____?
the quantity of bottled water that consumers plan to buy this month; a change in the quantity of bottled water that consumers plan to buy this month changes the quantity supplied
Along the total product curve, output increases as _______.
the quantity of labor increases and the plant size remains constant
The quantity of rubber ballsrubber balls that firms plan to sell this month depends on all of the following except _______ because ______.
the quantity of rubber ballsrubber balls that consumers plan to buy this month; a change in the quantity of rubber ballsrubber balls that consumers plan to buy this month changes the quantity supplied
Which of the following is the opportunity cost of attending a ball game?
the things you would have bought with what you spent on the ticket and bus fare getting to the game plus the things you would have alternatively done with your time
T or F: When marginal cost is less than average total cost, average total cost is decreased?
true
Because elasticity is a units-free measure of the responsiveness of the quantity demanded of a good or service to a change in its price, _______.
we can compare the responsiveness of the same good when quantity is measured in different units, or we can compare across different goods
To maximize profit, a firm in perfect competition must decide all of the following except _______.
what price to charge
A consumer equilibrium is a situation in which a consumer has allocated _____ of her income in a way that _____.
all; maximizes her total utility
The fewer the substitutes for a good or service, the more ______ is the demand for it. The smaller the proportion of income spent on a good, the more ______ is the demand for it.
inelastic; inelastic
Sarah maximizes her total utility when she spends all her available income such that the ______ utility per dollar is _______ for all goods.
marginal; equal
A ______ monopoly sells different units of a good or service for different prices.
price-discriminating
The production possibilities frontier is the boundary between those combinations of goods and services that can be _____ and those that ______.
produced; cannot be produced
When the marginal product curve is ______, the marginal cost curve is falling. When the average product curve is ______, the average variable cost curve is falling.
rising; rising
The long-run average cost curve is made up of the segments of individual average ______ cost curves with the lowest average ______ cost for a given output.
total; total
The long-run average cost curve is the relationship between the lowest attainable average total cost and output, when plant size is ______ and labor is ______.
varied; varied