econ practice exam2
People cannot be prevented from using a good if the good is a
public good or a common resource.
Which of the following statements is not correct?
Corrective taxes set the maximum quantity of pollution, whereas tradable pollution permits fix the price of pollution.
Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce.
$170
Victor is the recipient of $1 million from a lawsuit. Victor decides to use the money to purchase a small business in Florida. His business operates in a perfectly competitive industry. If Victor would have invested the $1 million in a risk-free bond fund, he could have earned $100,000 each year. After he bought the small business, Victor quit his job as a market analyst with Research, Inc., where he used to earn $75,000 per year.
175,000
If Brunhilda's Butcher Shop sells its product in a competitive market, then
Brunhilda's Butcher Shop's Shop's total revenue must be proportional to its quantity of output.
Miguel, Maria, and Marcos all would like a place to sit while waiting at their children's bus stop. The neighborhood association is considering installing several park benches at the bus stop. Miguel values the benches at $20, Maria at $30, and Marcos at $40. The park benches and labor for installation cost $100. If Miguel, Maria, and Marcos are the only residents who value the benches, what should the neighborhood association do?
Do not install the park benches because the costs outweigh the benefits.
In which of the following cases is the Coase theorem most likely to solve the externality?
In which of the following cases is the Coase theorem most likely to solve the externality?
All else equal, an increase in supply will cause an increase in consumer surplus.
True
When free riders are present in a market, the market generally fails to provide the efficient outcome.
True
Marginal cost is equal to average total cost when
average total cost is at its minimum
Profit-maximizing firms enter a competitive market when existing firms in that market have
average total costs that are less than market price
Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to
both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices.
As Bubba's Bubble Gum Company adds workers while using the same amount of machinery, some workers may be underutilized because they have little work to do while waiting in line to use the machinery. When this occurs, Bubba's Bubble Gum Company encounters
diminishing marginal product.
On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times, electric companies may ask people to voluntarily cut back on their use of electricity. On these days, electricity is
excludable and rival in consumption.
When Monique drives to work every morning, she drives on a congested highway. What Monique does not realize is that when she enters the highway each morning she increases the travel time of all other drivers on the highway. In this case, the external cost of Monique's highway trip
increases the social cost above the private cost
When the demand for a good increases and the supply of the good remains unchanged, consumer surplus You Answered
may increase, decrease, or remain unchanged.
We can say that the allocation of resources is efficient if
total surplus is maximized
