Econ Module 7 HW

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.

incentive

This price adjustment would eliminate the mismatch by _______ market participants to change their behavior.

incentivizing

A market where sellers orally state asks and buyers orally state offers is known as​ a:

double oral auction

If the imposed price Upper PC were​ removed, market forces would rectify the mismatch between quantity demanded and quantity supplied by pushing the price

downward

In a perfectly competitive​ market, a firm with multiple production plants will minimize total costs of production when

each plant produces where marginal revenue equals marginal cost.

As a consequence of the current​ short-run conditions in this​ industry, it may be expected that firms will _____ this market

enter

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, ____________.

firms currently making pizza will switch to making calzones.

A​ non-market price imposition is a

price control

All of the following are issues faced by central planners in a command​ economy, except:

setting quantity targets of production.

Social surplus is the​ ____________.

sum of consumer surplus and producer surplus.

In the figure on the​ right, the imposition of price Upper PC results in a _______ in the market.

surplus

The price at which a buyer is indifferent between making a purchase and not doing so is known as her ​____________.

​willingness-to-pay value. reservation price.

When the market is in​ equilibrium, social surplus is

$1000

Since this market is prevented from attaining​ equilibrium, the result is a deadweight​ loss, which is measured by area

C+E

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.

a higher

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.

1. higher than 2. less than 3. a lower

When firms switch from making pizza to making​ calzones, the price of pizza will _________ and the price of calzones will _________

1. increase 2. decrease

If the number of consoles is restricted to two less than the equilibrium​ quantity, social surplus is

$900

​Alternatively, if the government mandated that one more video game console than equilibrium be​ transacted, social surplus is now

$900

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 _____.

1. 250 2. 5

If video games are produced in a competitive market and the current price is $ 90​, production in Beta is ____ thousand units and production in Alpha is ____ thousand units.

1. 80 2. 70

When economists speak of a deadweight​ loss, they are referring to ________ in _________ caused by a market distortion.

1. a decrease 2. social surplus

In a __________ economy, a central authority determines the goods and services produced while a _________ economy is based on price signals and strong economic incentives.

1. command 2. market

If management sought to transfer 10 thousand units of Alpha​'s production to Beta​, the​ firm's overall profits would _________, since for those 10 thousand additional units __________

1. decrease 2. alpha less than beta

A deadweight loss is the __________ in social surplus that results from a market ___________.

1. decrease 2. distortion

The government of a certain country decides that all its citizens should be equally well off. It decides to redistribute money so that each person has a roughly equal share of the total income. How would this policy affect economic activity in the​ country?

It would be adversely affected since incentives to work or seek profits would be greatly diminished.

Does price gouging have the same effect as setting prices above equilibrium​ level?

No, price gouging is actually an equilibrium​ outcome, while the setting of prices above equilibrium is not.

Consider the figure on the right that shows a market with a​ government-imposed price control at Upper PC. At this​ price, the transacted level of the product is ____ units

Q2

Which of the following would maximize social​ surplus?

Trade at the competitive market equilibrium.

From the positions the curves hold in each​ graph, it can be deduced that the​ older, less efficient facility is

alpha

Bilateral negotiations often lead to prices​ that:

approach the theoretical equilibrium price.

As this movement of firms​ occurs, economic profits for the typical firm will

approach zero

Social surplus is maximized when the​ ___________.

buyers and sellers as distinct groups are doing as well as they possibly can. ​highest-value buyers are making a purchase and the​ lowest-cost sellers are selling. competitive market is in equilibrium.

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.

coordination

In a perfectly competitive​ market, when firms enter and exit competitive​ markets:

it is a good sign the market is working.

From this​ analysis, it can be concluded that a market in competitive equilibrium

maximizes social surplus

During peak​ demand, service-based companies using a​ surge-pricing model often charge more than during less busy times in order to

move the market to equilibrium

An outcome is Pareto efficient if

no individual can be made better off without making someone else worse off

In a competitive market​ equilibrium, the allocation of the social surplus is such that​ ____________.

no individual can be made better off without making someone else worse off.

In assessing the performance of a perfectly competitive​ market, we can say that​ ____________.

no individual can be made better off without making someone else worse off. price efficiently allocates goods and services to buyers and sellers.. any departure from the equilibrium necessarily reduces social surplus.

The figure on the right shows the typical firm in a perfectly competitive industry. Equilibrium in the market is currently yielding a price of $ 70. At this​ price, the typical firm earns a ________ economic profit

positive

In a market​ economy, the alignment of interests is accomplished through the use of

prices