Econ Final
This is an exercise in the relationship between marginal values and average values. The grade you receive on this quiz is basically your marginal quiz grade. If you perform better on this quiz than your previous quiz average, your quiz average will ____________. If you score lower than your previous average, which I truly hope is not the case, than your quiz average will ____________ . A) wrong answer, some other wrong answer B) increase, fall C) turn negative, never be spoken of again D) fall, become zero
) increase, fall
PA Governor Tom Wolf recently proposed increasing the PA state minimum wage to A) $9.00 B) $12.00 C) $7.25 D) $10.10
12
At the competitive equilibrium in the market for snow shoes, the producer surplus is $1200 and the consumer surplus is $1000. After the introduction of a tax on snow shoes, producer surplus drops to $800 and consumer surplus drops to $700. The Government collects $500 in tax revenue. What is the value of deadweight loss in the market after the tax is introduced? A) $200 B) $0 C) $400 D) It cannot be determined with the information given
200
What is the tax incidence borne by the consumers? A) 67% B) 75% C) 33% D) 50%
67%
The current federal hourly minimum wage is A) $7.25 B) $12.00 C) $9.00 D) $10.10
7.25
) From 1970 to 1993, the real price of a college education increased, and total enrollment increased. Which of the following could have caused this increase in price and enrollment? A) A shift to the left in the supply curve for college education and a shift to the right in the demand curve for college education. B) A shift to the right in the supply curve for college education and a shift to the left in the demand curve for college education. C) A shift to the left in the supply curve for college education and a shift to the left in the demand curve for college education. D) none of the above.
A) A shift to the left in the supply curve for college education and a shift to the right in the demand curve for college education
The production possibilities frontier A) depicts the boundary between those combinations of goods and services that can be produced and those that cannot given resources and the current state of technology. B) shows how many goods and services are consumed by each person in a country. C) is a model that assumes there is no scarcity and no opportunity cost. D) is a graph with price on the vertical axis and income on the horizontal axis.
A) depicts the boundary between those combinations of goods and services that can be produced and those that cannot given resources and the current state of technology.
Which of the following is an example of a recently imposed specific excise tax? A) 1.5 cents per ounce of soda B) a new tax bracket for those earning >$400K C) 25% tax on imported aluminum D) a 10% tax on tanning services
A) 1.5 cents per ounce of soda
Which of the following would result in a positive externality? A) Medical research results in a cure for malaria. B) A local government establishes a price ceiling on rental apartments. C) Increases in the cigarette tax. D) An electric utility burns coal that causes acid rain
A) Medical research results in a cure for malaria.
If the U.S. Surgeon General announced that increased grapefruit juice consumption could help prevent heart attacks, what would happen to the equilibrium price and quantity of grapefruit juice? A) Price and quantity both increase. B) Price and quantity both decrease. C) Price decreases but quantity increases. D) Price increases but quantity decreases.
A) Price and quantity both increase.
4) Which of the following will NOT cause a shift in the demand curve for compact discs? A) a change in the price of compact discs B) a change in wealth C) a change in the price of downloadable online music D) a change in income
A) a change in the price of compact discs
A tariff is A) a tax on imports. B) a government payment made to domestic firms to encourage exports. C) a limit on the quantity of a good that can be imported into a country. D) a payment made by the government to producers of the product.
A) a tax on imports
The "law of demand" implies that A) as prices fall, quantity demanded increases. B) as prices fall, demand shifts right. C) as prices rise, quantity demanded increases. D) as prices rise, demand shifts right
A) as prices fall, quantity demanded increases.
If the marginal cost curve is below the average variable cost curve, then A) average variable cost is decreasing. B) average variable cost is increasing. C) average variable cost is constant. D) marginal cost is increasing.
A) average variable cost is decreasing.
Deadweight loss can be the result of A) both overproduction and underproduction. B) overproduction, but not underproduction. C) neither overproduction, nor underproduction. D) underproduction, but not overproduction.
A) both overproduction and underproduction
The difference between what a consumer is willing to pay for a unit of a good and what must be paid when actually buying it is called A) consumer surplus. B) cost benefit analysis C) producer surplus. D) net utility
A) consumer surplus.
The price elasticity of demand for beef is estimated to be 0.60 (in absolute value). This means that a 20 percent increase in the price of beef, holding every thing else constant, will cause the quantity of beef demanded to A) decrease by 12 percent. B) decrease by 26 percent. C) decrease by 32 percent. D) decrease by 60 percent.
A) decrease by 12 percent.
Marginal cost is ________ average variable cost when ________. A) equal to; average variable cost is minimized. B) greater than; average fixed cost is minimized C) less than; total cost is maximized D) equal to; average total cost is minimized
A) equal to; average variable cost is minimized.
The tax placed on the sale of gasoline in the U.S. is an example of a A) excise tax. B) ad valorem tax. C) green tax. D) punitive tax.
A) excise tax.
Ideal temperatures in California have produced a bumper crop and caused the supply of strawberries in the U.S. to shift to the right. You predict that the price of strawberries will ________, and the more elastic the demand for strawberries, the ________ will be the effect on the price. A) fall; smaller B) fall; greater C) rise; smaller D) rise; greater
A) fall; smaller
Overuse of a common resource may be avoided by all of the following methods except A) government taking over ownership of all private common resources. B) issuing tradable permits for the use of a common resource. C) setting quotas or legal limits on the quantity consumed of the common resource. D) charging for the use of a common resource.
A) government taking over ownership of all private common resources.
Monopolistic competition differs from perfect competition primarily because A) in monopolistic competition, firms can differentiate their products. B) in monopolistic competition, there are relatively few barriers to entry. C) in perfect competition, firms can differentiate their products. D) in monopolistic competition, entry into the industry is blocked.
A) in monopolistic competition, firms can differentiate their products
Economic surplus A) is equal to the sum of consumer surplus and producer surplus. B) does not exist when a competitive market is in equilibrium. C) is the difference between quantity demanded and quantity supplied when the market price for a product is greater than the equilibrium price. D) is equal to the difference between consumer surplus and producer surplus.
A) is equal to the sum of consumer surplus and producer surplus
) A firm maximizes profit by operating at the level of output where A) marginal revenue equals marginal cost. B) average revenue equals average cost. C) average revenue equals average variable cost. D) total costs are minimized. E) marginal revenue exceeds marginal cost by the greatest amount.
A) marginal revenue equals marginal cost.
The smallest quantity of output at which long-run average cost is at a minimum is a firm's ________. A) minimum efficient scale B) profit-maximizing output point C) maximum efficient scale D) efficient output point
A) minimum efficient scale
) Microeconomics is best described as the study of A) the choices made by individual households, firms, and governments. B) marginal changes in the economy. C) inflation, unemployment, gross national product, and the nation's economy as a whole. D) how markets interact in the aggregate economy.
A) the choices made by individual households, firms, and governments.
) Consumer surplus is A) the difference between the maximum a person is willing to pay and current market price. B) the difference between current market price and full costs of production for the firm. C) the difference between the maximum a person is willing to pay and full costs of productions for the firm. D) current market price.
A) the difference between the maximum a person is willing to pay and current market price.
The average product of labor is equal to the A) total product divided by the total number of workers hired. B) total number of workers hired divided by the total product. C) slope of the marginal product of labor curve. D) Both answers B and C are correct.
A) total product divided by the total number of workers hired.
Of the groups listed below, which is most likely to lobby for trade protection? A) workers in importing industries B) consumers of imported goods C) producers in exporting industries D) workers in exporting industries
A) workers in importing industries
Subsidies will cause A) deadweight loss in the market B) more production than the efficient quantity. C) the price consumers pay for the product to fall. D) all of the above
All the above
The idea of comparative advantage implies that people or countries A) can gain from trading. B) should specialize in the production of goods. C) can consume at a point outside their production possibilities frontier. D) all of the above
All the above
) Sue owns a baking company. The company's total revenue for a month is $4000. The monthly costs of resources bought in the market and of resources owned by the firm (explicit costs) are $2000 and monthly costs of resources supplied by the owner (implicit costs) are $1000. Sue's economic profit for the month is equal to A) $3000. B) $1000. C) $4000. D) $2000
B) $1000
________ refers to the reduction in economic surplus resulting from not being at the efficient, competitive equilibrium. A) Producer atrophy B) Deadweight loss C) Marginal cost D) Economic shortage
B) Deadweight loss
When the price of wood (which is an input in the production of furniture) falls, the consumer surplus associated with the consumption of furniture A) does not change. B) decreases. C) increases. D) must be equal to producer surplus.
B) Increases
Adam Smith argued that each person in a competitive market is led to promote the efficient use of society's resources, even though it is no person's intention to make society better off. His theory uses the phrase: A) Quiet Foot B) Invisible Hand C) The Deaf Ear D) Junk in the Trunk
B) Invisible Hand
Which of the following is a microeconomics question? A) What will the level of economic growth be in the entire economy? B) What factors determine the price of carrots? C) How much will be saved and how much will be produced in the entire economy? D) What determines the average price level and inflation?
B) What factors determine the price of carrots?
Which of the following statements is correct? A) When demand decreases (shifts left), both the equilibrium price and the equilibrium quantity increase. B) When supply increases (shifts right), the equilibrium quantity increases and the equilibrium price falls. C) When demand increases (shifts right), both the equilibrium price and the equilibrium quantity decrease. D) When supply decreases (shifts left), both the equilibrium price and the equilibrium quantity decrease.
B) When supply increases (shifts right), the equilibrium quantity increases and the equilibrium price falls.
) Electric car enthusiasts want to buy more electric cars at a lower price. All of the following events would have this effect except A) an increase in the number of manufacturers of electric cars. B) an increase in the price of gasoline. C) a decrease in the price of lithium, which is used in the electric car batteries. D) technological advancement in the production of electric car batteries.
B) an increase in the price of gasoline.
) During stong economic times, when consumer income increases, the demand for tacos decreases and the demand for sushi increases. This implies that tacos A) are an economic bad and sushi is an economic good. B) are an inferior good and sushi is a normal good. C) are a normal good and sushi is an inferior good. D) and sushi are complements.
B) are an inferior good and sushi is a normal good.
) Economists usually assume that ________ is a fixed input in the ________ run. A) labor; short B) capital; short C) labor; long D) capital; long
B) capital; short
) Suppose sugar is exported from a nation. In the sugar market who does NOT benefit from the exports? A) workers in the industry B) domestic consumers C) foreign consumers D) domestic producers
B) domestic consumers
Governments often intervene in agricultural markets by A) imposing heavy taxes on farm products. B) granting subsidies. C) setting production quotas that will increase production. D) setting price floors that reduce prices for buyers.
B) granting subsidies
The shape of a traditional, curved production possibility frontier shows A) decreasing opportunity costs. B) increasing opportunity costs. C) constant opportunity costs. D) random opportunity costs.
B) increasing opportunity costs.
Education generates external benefits. When these external benefits are not considered, the market will produce A) zero units of education. B) less than the efficient level of education. C) an efficient level of education. D) more than the efficient level of education.
B) less than the efficient level of education.
) If the unemployment rate increases, the economy will A) remain on the origin. B) move away from the ppf toward the origin. C) move closer to a point on the ppf. D) remain on the ppf.
B) move away from the ppf toward the origin
During the last decade, the price of a computer fell every year and the quantity sold increased every year. This experience suggests that the A) "law of demand" was definitely contradicted. B) supply curve shifted rightward. C) "law of supply" was definitely contradicted. D) demand curve shifted rightward.
B) supply curve shifted rightward.
If economic profit is equal to zero then A) the entrepreneur's profit as measured by accountants must be less than zero. B) the entrepreneur is earning only a normal profit. C) the entrepreneur profit cannot be determined based on the information given. D) the entrepreneur's profit as measured by accountants is also equal to zero
B) the entrepreneur is earning only a normal profit
The short run is a period of time in which A) nothing the firm does can be altered. B) the quantity of at least one factor of production is fixed. C) prices and wages are fixed. D) the amount of output is fixed.
B) the quantity of at least one factor of production is fixed.
At the efficient level of production, ________. A) the market price is greater than the monopoly price B) there is no deadweight loss C) producer surplus must be greater than consumer surplus D) consumer surplus must be greater than producer surplus
B) there is no deadweight loss
Suppose that you rent a house next to a factory. The factory legally emits a chemical into the air that smells like feet. You now have to spend $300 more per month on air fresheners because the firm pollutes the air. You could move to another house far enough away from the factory, but the rent for that house is $200 more than you now pay. The efficient solution to this problem is that A) the factory owner should compensate you $300 so that you can pay for the additional expenses you incur. B) the firm should be able to continue to pollute because only one person is being harmed by the factory's pollution. C) you should move to the new house because the additional rent on that new house is less than the additional expenses you incur from living next to the factory. D) the factory owner should reimburse you $100, the difference between your expenses and the higher rent on the new house.
C) you should move to the new house because the additional rent on that new house is less than the additional expenses you incur from living next to the factory.
The federal portion of the tax on every gallon of gasoline sold in the U.S. is A) 70.2 cents per gallon. B) 3.8 cents per gallon. C) 18.4 cents per gallon. D) There is no federal tax on gasoline.
C) 18.4 cents per gallon.
Which of the following displays these two characteristics: rivalry and nonexcludability? A) a quasi-public good B) a public good C) a common resource D) a private good
C) a common resource
Rent control is an example of A) a subsidy for low-skilled workers. B) a price floor. C) a price ceiling. D) a black market.
C) a price ceiling.
Which of the following pairs of goods are most likely substitutes? A) DVDs and DVD players B) lettuce and salad dressing C) cola and lemon lime soda D) peanut butter and gasoline
C) cola and lemon lime soda
An inferior good is a good for which demand A) decreases when population increases. B) increases when population increases. C) decreases when income increases. D) increases when income increases.
C) decreases when income increases.
The demand for a good is more price elastic A) if the share of the good in the average consumer's budget is smaller. B) in the short run than in the long run. C) if closer substitutes are available. D) if the good is a necessity rather than a luxury.
C) if closer substitutes are available.
Marginal cost is the A) average cost of production divided by output. B) equivalent of average total cost. C) increase in total cost resulting from producing one more unit of output. D) increase in AVC resulting from producing one more unit of output.
C) increase in total cost resulting from producing one more unit of output
A minimum wage ________. A) is a price ceiling in the labor market B) is an effective way of increasing employment C) is a price floor in the labor market D) changes the demand for labor.
C) is a price floor in the labor market
The more time that elapses, the A) less price elastic is the demand for the product. B) smaller the income elasticity of demand for the product. C) more price elastic is the demand for the product. D) greater the income elasticity of demand for a product.
C) more price elastic is the demand for the product.
Poor temperatures in California have produced a depressed crop and caused the supply of strawberries in the U.S. to shift to the left. You predict that the price of strawberries will ________, and the more elastic the demand for strawberries, the ________ will be the effect on the price. A) rise; greater B) fall; greater C) rise; smaller D) fall; smaller
C) rise; smaller
The change in the number of low-skilled jobs available caused by a change in the minimum wage largely depend on A) the cost of attending college. B) whether the current president is a Republican or Democrat. C) the elasticity of demand for low-skilled labor. D) income tax reform.
C) the elasticity of demand for low-skilled labor.
If equilibrium is achieved in a competitive market A) the deadweight loss will be the same as the opportunity cost of the last unit of output sold. B) the deadweight loss will equal the sum of consumer surplus and producer surplus. C) there is no deadweight loss. D) the deadweight loss will be maximized.
C) there is no deadweight loss.
In recent years the cost of producing wines in the U.S. has increased largely due to rising rents for vineyards. At the same time, more and more Americans prefer wine over beer. Which of the following best explains the effect of these events in the wine market? A) The supply curve has shifted to the left and the demand curve has shifted to the right. As a result there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price. B) Both the supply and demand curves have shifted to the right. As a result, there has been an increase in both the equilibrium price and the equilibrium quantity. C) Both the supply and demand curves have shifted to the right. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity. D) The supply curve has shifted to the left and the demand curve has shifted to the right. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity.
D) The supply curve has shifted to the left and the demand curve has shifted to the right. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity.
Marginal product is A) total amount of output produced. B) total amount of output produced divided by price of the output. C) total amount of output produced divided by the quantity of labor employed. D) the increase in output that results from a one-unit increase in the quantity of labor employed with all other inputs remaining the same.
D) the increase in output that results from a one-unit increase in the quantity of labor employed with all other inputs remaining the same
Which of the following would shift the demand curve for new textbooks to the right? A) A fall in the price of new text books. B) A fall in the price of equivalent used text books. C) A fall in the price of paper used in publishing texts. D) An increase in the number of students attending college.
D) An increase in the number of students attending college.
Your roommate has the right to play her stereo during the day. But you find the best time to study is during the day, and the stereo playing makes it hard for you to concentrate. You tell your roommate that you will do her laundry every week if she does not play the stereo during the day and she agrees to this. This is an example of theA) free rider problem. B) fallacy of composition. C) drop-in-the-bucket problem. D) Coase theorem.
D) Coase theorem.
Which of the following are types of economic markets? I. perfectly competitive. II. oligopoly III. monopoly. IV. multilateral. A) I and II B) I and IV C) II and III D) I, II and III
D) I, II and III
Economists have shown that the burden of a tax is the same whether the tax is collected from the buyer or the seller. Why, then, are gasoline and cigarette taxes collected from the sellers? A) The Equal Protection Clause of the U.S. Constitution prohibits the government from imposing taxes like these on buyers. B) Sellers are more honest than buyers. C) The demand for both gasoline and cigarettes is very elastic. D) It is more difficult for buyers to keep track of their purchases, and for the government to verify that the right of amount of tax revenue is collected. 33) The tax placed on the sale of gasoline in the U.S. is an
D) It is more difficult for buyers to keep track of their purchases, and for the government to verify that the right of amount of tax revenue is collected.
When a market is in equilibrium, the total amount of consumer surplus must be ________ the total amount of producer surplus. A) less than B) larger than C) equal to D) None of the above answers are correct
D) None of the above answers are correct
Anyone can purchase sulfur dioxide emissions allowances on the Chicago Mercantile Exchange. Several environmental groups have raised money to buy allowances (which they subsequently destroy). As part of their fund-raising, these groups have urged contributors to buy the allowances as gifts. As one newspaper story put it, "For the environmentalist in your life, here's a gift that is sold by the ton, fits in an envelope and will last forever." Source for quote: Randall Edwards, "Dear Santa: Please Bring Me Sulfur Dioxide for Christmas," Columbus Dispatch, December 19, 1999. What would be the impact on the price of the emission allowances in the market? A) The price remains unchanged because the allowances purchased by the environmental groups are destroyed. B) The price falls to zero. C) The price falls but not to zero. D) The price rises.
D) The price rises.
Which of the following statements is ALWAYS true for any marginal and average? A) When the marginal is rising, the average is rising. B) When the marginal is equal to the average, the average falls. C) When the marginal is less than the average, the average rises. D) When the marginal is greater than the average, the average rises.
D) When the marginal is greater than the average, the average rises.
Economic growth may occur when A) a society acquires new resources. B) a society learns to produce more using existing resources. C) the society begins to produce the combination of goods society wants most. D) both A and B
D) both A and B
Suppose that iPhones are normal goods. If the income of iPhone users decreases, you predict that in the market for iPhones A) equilibrium price will fall but quantity will increase. B) equilibrium price will increase and quantity will decrease. C) both equilibrium price and quantity will increase. D) both equilibrium price and quantity will fall.
D) both equilibrium price and quantity will fall.
) Among the sources of economic inefficiency are all of the following EXCEPT A) external costs. B) taxes. C) subsidies. D) competition
D) competition
An increase in the demand for computers and a decrease in the number of sellers of computers will ________, regardless of the magnitude of the shifts. A) increase the number of computers bought B) increase the price of a computer and the number of computers bought C) not change the price of a computer but increase the number of computers bought D) increase the price of a computer
D) increase the price of a computer
The marginal product and average product curves A) intersect at the maximum point of the marginal product curve. B) never intersect. C) do not intersect at any predictable point. D) intersect at the maximum point of the average product curve
D) intersect at the maximum point of the average product curve.
Economics is best defined as the study of how people, businesses, governments, and societies A) use their infinite resources. B) choose abundance over scarcity. C) attain wealth. D) make choices to cope with scarcity.
D) make choices to cope with scarcity
The market structure in which a large number of firms compete by making similar but slightly different products is called A) oligopoly. B) perfect competition. C) monopoly. D) monopolistic competition.
D) monopolistic competition.
When an action is chosen, the highest-valued alternative NOT chosen is called the A) accounting cost. B) explicit cost. C) implicit cost. D) opportunity cost.
D) opportunity cost
Suppose that there were no regulations regarding the amount of crabbing that anyone could participate in the Chesapeake Bay. This would most likely result in the __________ of crabs and an ________ market. A) underproduction; inefficient B) overproduction; efficient C) underproduction; efficient D) overproduction; ineffiecient
D) overproduction; ineffiecient
Holding everything else constant, the demand for a good tends to be more elastic A) the shorter the time period involved. B) the more consumers perceive the good to be a necessity. C) the less important the product is in consumers' budgets. D) the more substitutes there are for the good.
D) the more substitutes there are for the good.
________ refers to the reduction in economic surplus resulting from not being at the efficient, competitive equilibrium. A) Deadweight loss B) Economic shortage C) Marginal cost D) Producer atrophy
DWL
When a foreign firm sells its exports at a lower price than its cost of production, the firm is A) avoiding a tariff. B) competing in an infant industry. C) dumping. D) imposing an economies of scale cost
Dumping
The change in total cost from producing another unit of output equals the A) variable cost. B) average total cost. C) marginal cost. D) average variable cost
Marginal Cost
Any firm's total revenue equals
P × q
The United States placed a limit on the amount of cars that can be imported into the United States. This is an example of A) an export subsidy. B) a quota. C) a tariff. D) dumping.
a quota
Marginal revenue is the A) difference between total revenue and total costs. B) added revenue that a firm takes in when it increases output by one additional unit. C) ratio of total revenue to quantity. D) additional profit the firm earns when it sells an additional unit of output.
added revenue that a firm takes in when it increases output by one additional unit
Economies of scale exist when the A) cost of producing a unit of a good falls (average costs fall) as its output decreases in the long run. B) firm uses specialized resources to produce a range of goods and services. C) total cost of production falls as the output increases. D) cost of producing a unit of a good falls (average costs fall) as its output increases in the long run.
cost of producing a unit of a good falls (average costs fall) as its output increases in the long run
