Micro Econ

Price elasticity of demand measures how:

consumers respond to a change in price.

Which of these is a characteristic that may be subjected to economic discrimination? I. Age II. Disability III. Human Capital

I and II

Computer game cartridges produced in EconomyLand sell for $50 each. The same cartridges made in MarketLand have a price of $100. If free trade were allowed, we would expect the prices in both countries to:

converge to somewhere between $50 and $100.

The industrial structure of cartels is an example of a(n):

cooperative game.

A right that gives individuals or firms certain types of intellectual property for a period of time is called a:

copyright.

Jim Delaney sold his pizza firm to an investor who then sold stock to the public. Jim now earns a salary of $5,000 a month and all the profits are distributed to the stockholders. This firm is an example of a:

corporation.

A network good is one where the:

cost to the user falls if there is a large number of other users of the good.

Those who favor government intervention to reduce income inequality often see personal wealth as:

created by a joint effort between the individual and community.

If the price of Citgo gasoline increases by 10% and the quantity demanded decreases by 20%, then the demand curve for gasoline is:

elastic.

If the price of a product falls by 15% and the quantity supplied falls by 25%, we can say that the elasticity of supply is:

elastic.

Which item is NOT an example of a market close to perfect competition?

electricity

Which statement is TRUE about public and private-employee unions?

Only private-employee unions can call strikes, while public-employee unions tend to contribute less for their health insurance premiums.

A monopolist will shut down when _________in the long run and _________in the short run.

P < ATC; P < AVC

Which statement is true for a monopolistically competitive firm operating in the long run?

Price is greater than marginal cost.

Perfectly elastic demand is BEST represented by drawing a(n):

horizontal demand curve.

Kama gets 180 total utils from taking three yoga classes per month. The additional utility derived from taking a fourth yoga class per month is 40 utils. Based on this information, which statement is TRUE?

The marginal utility of the third yoga class will be greater than 40 utils.

Which of these is NOT a cause of income inequality?

an increase in the number of manufacturing jobs

Which factor would increase elasticity the most?

an increase in the number of tablet brands being offered

Gary Becker's theory of economic discrimination argues that:

employers who discriminate against women will lose profit opportunities.

Marginal revenue is:

equal to the change in total revenue derived from the sale of one additional unit.

Which of these does not describe the trend of labor markets over the past 50 years?

an increase in trade protectionism policies to restrict outsourcing of jobs

A common format used by software and other products is known as:

an industry standard.

Before deciding on a pricing strategy, Worldwide Widgets consults with its market intelligence team to understand what discounts the Gargantuan Gizmo Company is offering. The model that BEST fits this industry is:

an oligopoly.

Regarding the short-run cost model, the vertical distance between the average total cost (ATC) curve and the average variable cost (AVC) curve is:

average fixed cost (AFC).

All of these are characteristic of monopolistic competition, EXCEPT:

barriers to entry.

Amtrak exhibits _____, and a can of Budweiser is a _____ product.

excludability; rival

If firms in a monopolistically competitive industry are experiencing economic losses in the short run, some firms will _____ the industry, _____ demand until each firm earns a normal profit.

exit; increasing

In the United States, since the 1970s, which of these is NOT a reason why the Gini coefficient has increased?

expansion of the earned income tax credit

The amount that must be repaid to the bondholder upon the bond's maturity is called the:

face value.

Interconnection:

facilitates competition and improves efficiency.

In general, as Americans approach 60 years old, household income _____ and savings ____.

falls; rise

In a cartel:

firms collude to maximize their joint profits.

Alvaro pays $40 in tax on a $120 item. Nurul pays $80 in tax on a $240 item. We can conclude that this tax is a:

flat tax.

If demand is inelastic, the tax burden falls primarily on the _____ and deadweight loss is _____.

buyer; small

Customers who purchase a network good after it matures are called:

casual users.

Profits are BEST described as the rewards that are earned for:

combining resources and assuming the risk to produce products.

The income effect means that:

if wages increase, hours of work decrease.

The substitution effect means that:

if wages increase, hours of work increase.

Money that is a real cost to the company but that is not actually paid at the time a machine wears down is called a(n):

implicit cost.

The cost incurred by a firm through the foregone earnings on capital invested is a(n):

implicit cost.

Which change in the labor market has led to more women entering the workforce?

improved telecommuting technologies

According to an OECD study of thirty-four advanced nations, where did the United States rank in math proficiency?

in the bottom half

Which action can help increase the stability of a cartel?

increase government protection

If a cartel member is considering cheating in order to earn profits, it should:

increase the quantity it sells at the quota price.

The discovery of natural gas in the American Midwest should lead to a(n) ____ in the price of land because of a(n) _____ land.

increase; increase in demand for

Which of these is NOT a potential benefit provided by monopolies?

increased consumer surplus as a result of a smaller scale of operations

Which of these has NOT contributed to global integration?

increased nationalism

Which of the following products is likely to be the MOST differentiated?

garments sold to a retail customer

If Nintendo lowers the price of its product by $10, Sony responds by lowering the price of its own product by $10 and chooses not to cooperate again. This is an example of what type of game strategy?

grim trigger

When perfectly competitive firm X sells three units of product Z, its marginal revenue is $4.67. When it sells one hundred units, marginal revenue is $4.67. We can conclude that the price is:

$4.67.

AJ plans to attend a retreat on mindfulness. He paid a $500 nonrefundable registration fee, made a reservation at a hotel that costs $200, and budgeted $150 for gas and food. Two days before the retreat, he becomes ill. Assuming he is able to cancel the hotel without penalty, AJ's sunk cost equals:

$500

A perfectly competitive firm has total revenues equal to $360 when it produces forty units. What is the marginal revenue for the forty-first unit?

$9

Market power means the ability to:

have some control over price.

Dan's Car Wash produces $150,000 in revenues and incurs $120,000 in labor wages, materials, rent, and other explicit costs. Moreover, Dan gave up a $40,000-a-year job as a hotel valet to start his car wash business. Dan's economic profit is _____, and he _____ earning a normal profit.

-$10,000; is not

Which of the following is a possible measurement of inelastic demand?

0.7

In the town of Skateville, average incomes fall by 20% due to a recession; as a result the sales of skateboards fall by 15%. The income elasticity of demand is _____, and skateboards are a(n) _____ good.

0.75; normal

If the price of electricity falls by 10% per kilowatt hour, and the quantity demanded for electricity subsequently increases by 8%, the price elasticity of demand for electricity is _____ and would be classified as an _____ good.

0.8; inelastic

Which discount rate would result in society devoting the most resources to long-run environmental management?

1%

If a product's price rises by 6% and its quantity demanded falls by 8%, then its elasticity is equal to:

1.33

Staci's Sign Shoppe makes signs for businesses. Staci is currently producing 210 signs per week with three employees. She hires an additional worker and total output per week rises to 328 signs. The marginal product of the last worker is _____ signs.

118

Jeremy's level of satisfaction from consuming the first cookie was 25 utils. The second cookie increased the level of satisfaction by 20 utils. Jeremy's total level of satisfaction after three cookies was 60. Thus, the marginal utility for the third cookie is:

15.

Union membership in the United States rose significantly during the _____.

1940s

During what period did poverty fall the MOST in the United States?

1960-1975

If wages increase at a 5% rate and the quantity demanded of labor decreases by 10%, then the elasticity of demand for labor is:

2.

(Table) Referring to the table, which shows the total utility and marginal utility for ice cream consumption, the value for C will be: Q TU MU 0 0 - 1 25 A 2 B 5 3 53 C 4 D 10 5 71 E

23.

A grocery store announced a 50% decrease in the price of local honey. Sales increased by 200%. Based on the information, the price elasticity of honey is:

4.

Which statement concerning possible changes in productivity is TRUE?

As MPPL rises, the demand for the marginal worker rises because the firm is willing to pay higher wages.

Which of these is a characteristic of a natural monopoly?

high economies of scale

The effects of a quota are similar to that of a tariff in that consumers pay _____ prices and imports _____ as a result of the quota.

higher; fall

According to the segmented labor market view, unions restrict the labor supply in order to increase wages. As labor migrates to non-union markets, non-union wage rates fall. Which of these actions would reduce the incentive for firms to substitute non-union workers for union members?

increasing the minimum wage in the non-union markets

Suppose a tariff is imposed on avocados. This has the effect of _____ the domestic price of avocados, as well as having the effect of _____ the imported price of avocados.

increasing; increasing

The two theories of consumer choice used by economists are:

indifference curve analysis and utility theory.

If price elasticity of demand is less than 1, a product is said to be:

inelastic.

Home heating gas tends to have _____ demand because _____.

inelastic; people do not have time to adjust their consumption patterns

Alexander Hamilton argued in the late 1700's for strong controls on imports to protect American industries from competition from more established English industries. This is an example of the _____ argument for trade restriction.

infant industry

A firm is an economic institution that transforms _____ of production into _____ for consumers.

inputs; outputs

Suppose you have $100 to spend on two goods: $20 for DVDs or $10 for books. The combination of two DVDs and five books would fall:

inside the budget line.

In recent years, the United States has produced a growing share of:

intangible services.

The assumption that people are rational:

is fairly accurate for most cases.

Farmer Ted sells winter wheat in a perfectly competitive market. The market price for a bushel of winter wheat is $9. Ted has two hundred and seventy bushels of wheat to sell. If his total variable cost is $2,000 and his total fixed cost is $500, then Ted:

is minimizing his losses.

Marginal utility:

is the change in total satisfaction derived from consuming one more unit of a good.

Marginal utility:

is the level of satisfaction received from consuming an additional unit.

A deadweight loss:

is the same as welfare loss.

Total utility:

is the total satisfaction derived from the consumption of given quantity of a good.

The Coase theorem claims that, in the case of tobacco:

it does not matter who is given the property rights to the air, as long as the parties involved are allowed to bargain.

Derived demand suggests that:

labor demand is derived from demand for the product it produces.

One of the reasons that competition may fail to eliminate gender wage discrimination is:

lack of mobility.

Academic studies have found that the economic returns to education are:

large and positive.

Compared with a competitive market, a cartel as a whole will produce:

less output in order to increase prices.

If a monopoly firm sells more than one unit, marginal revenue will then be:

less than the price.

The income distribution in the United States is generally _____ equally distributed than in European countries and is _____ equally distributed than in many South American countries.

less; more

Economists categorize industries using all the characteristics, EXCEPT the:

location of the industry.

In which period can firms decide to leave an industry?

long run

The elasticity of demand for labor will be more elastic in the _____ if labor's share of total production costs is _____.

long run; large

Textile workers in the United States would offer which argument to restrain international trade in textiles?

low foreign wages

Network goods often have _____ costs, and _____ costs.

low variable; low marginal

The price of a mango is $2 and a farmer sells 2,000 mangos. However, the costs to the farmer are $400 for labor, $1,600 for rent, and $2,000 for advertising. Based on the above information, the farmer:

makes $4,000 in total revenue.

Marginal revenue product of labor is equal to:

marginal physical product times marginal revenue.

At an all-you-can eat buffet, a person will stop eating when:

marginal utility is equal to zero.

Which of these is a downside of monopolistic competition and oligopolies?

market power

Economists assume that firms try to _____. Other theories suggest that firms might, among other things, try to _____.

maximize profits; maximize sales

A utility-maximizing consumer will always choose to:

maximize total utility.

Spraying for mosquito control in a local community is an example of a public good because it is:

nonrival and exhibits nonexcludability.

Households with a ratio of household income to poverty of 2.0 are considered:

not poor.

Forgoing paid employment to obtain a university degree is a(n):

opportunity cost.

Because they are so sure of their ability to pick winners, some people hang on to a stock even in the face of overwhelming evidence that its price is going to drop. These people are subject to:

overconfidence.

Which of the answer choices lists market structures in order from the highest number of sellers to the lowest?

perfect competition, monopolistic competition, oligopoly, monopoly

Firms in all market structures experience some type of control over price, EXCEPT firms whose market structure is a(n):

perfect competition.

The market structure associated with many firms that sell a standardized product is:

perfect competition.

Graph of perfectly horizontal supply curve, x axis quantity per period, y axis price per unit

perfectly elastic

If the poverty threshold is approximately $16,000 for a household of three, what would the Census Bureau consider the poverty status of a household of three that earns $12,000?

poor

Households with a ratio of income to poverty of 0.8 are considered:

poor.

Mike constructed a beautiful backyard landscape. He also built a tall wooden fence around his yard. With the fence in place, the good that the landscape brings to the neighborhood becomes a:

private good because Mike can exclude people from enjoying the landscape.

All of these are examples of rent-seeking behavior, EXCEPT:

product differentiation.

The key characteristic of monopolistic competition is:

product differentiation.

The goal of investment in human capital is to increase labor's:

productivity.

One of the main purposes of a tariff is to:

raise the price of an import above the world price.

Most economists assume that firms behave _____ and that their objective is _____.

rationally; profit maximization

By including food stamps and housing subsidies and adjusting for household composition, the Census Bureau has:

reduced the estimate of the poverty rate by 25%.

Product differentiation:

reduces price elasticity of demand.

A tax in which the percentage of income tax rises as income falls is known as a:

regressive tax.

Suppose the demand for toxic waste disposal is very elastic. The government imposes an excise tax on waste disposal. The deadweight loss associated with the production of toxic waste disposal will be:

relatively large.

Indifference curves:

represent a set of product bundles to which a consumer is indifferent.

Janice has just graduated from college and is seeking her first job. If she cannot find a job that pays at least $40,000 per year, she will instead travel to Africa to volunteer for a wildlife conservation organization. For Janice, $40,000 is her:

reservation wage.

The tragedy of the commons applies to goods that are:

rival and nonexcludable.

Why does the marginal utility associated with the consumption of a product decline as we increase our consumption?

satiation

In a partnership, legal responsibility for all debts of the partnership are:

shared by all the partners.

If the United States experiences an inflationary episode in which prices of goods and services go up faster than incomes, budget lines for U.S. consumers will:

shift inward.

If the price of diesel fuel increases, the MRP curve for truck drivers will:

shift to the left.

Which sequence describes the long-run adjustment process in a competitive market when firms are experiencing short-run economic losses?

some firms exit, industry supply decreases, market price rises

A right-to-work law is a:

state law making a union shop illegal.

If the cross elasticity of demand for good A with respect to good B is 2.3, then good A is a(n):

substitute for good B.

When the individual labor supply curve is positively sloped, the _____ effect dominates and higher wages lead to _____ hours worked.

substitution; more

In an oligopoly, all the firms:

take their competitors into account when they make pricing decisions.

Which of these is a policy designed to ease the impact of expanded trade and globalization?

the Trade Adjustment Assistance program

If the United States can produce more of both bread and milk than Germany can, then:

the United States can still benefit from trade with Germany because of comparative advantage.

A consumer is in equilibrium when:

the addition to total utility per dollar is the same for every commodity.

Which curve is NOT bowl-shaped?

the average fixed cost curve

In the short run:

the number of firms is fixed.

A critic of John Rawls would say that:

the protection of property rights is equitable and just.

In a competitive labor market, if a new manufacturing plant seeks to build its labor force, it is assumed that:

the quantity of workers available is greater than the quantity of workers that are required.

Indifference curves cannot be concave to the origin because:

the satisfaction consumers get from consuming additional units of a good declines.

After Rachene bought a magazine subscription, she does not enjoy the articles in the magazine. However, she dutifully reads the entire magazine every month because she had already paid for the subscription, and she feels the money will be wasted if she does not read it. What psychological factor associated with behavioral economics explains Rachene's behavior?

the sunk cost fallacy

The primary determinant of the elasticity of supply is:

time.

If a firm sells a product that has a perfectly inelastic demand curve, then, if price doubles, it can be expected that:

total revenue will double.

A gas station owner in a large city learned in his microeconomics class that buyers are relatively unresponsive to changes in the price of gasoline. If, based on that assumption, he increases the price of gas at his station:

total revenue will increase.

Profits are equal to the difference between _____ and _____.

total revenue; total costs

If a person plans to consume a fifth chicken wing, then:

total utility is increasing.

Normal profits are equal to:

zero economic profits.

The official U.S. poverty threshold is roughly:

$30 per day.

What is the present value of $5,000 received in two years if the interest rate is 7%?

$4,367.19

If Canada is using all its resources to their fullest extent, it can produce either 10 million iPads or 5 million HDTVs. If Mexico is using all its resources to their fullest extent, it can produce either 6 million iPads or 6 million HDTVs. Thus:

Canada has a comparative advantage in producing iPads.

The act that makes it unlawful to refuse to hire a person based on their race, color, religion, sex, or national origin is the:

Civil Rights Act of 1964.

Which of the following examples represents the short run?

Ford asks its workers to work overtime.

Which of these is a limitation of the infant industry argument?

It is difficult to remove the protection after an industry has matured.

Which of these is an example of consumers creating a negative externality?

Litter is found in an area around a fast-food restaurant.

Which characteristic does monopolistic competition NOT have in common with perfect competition?

Products of individual firms are different.

______ are more numerous, but ______ sell more goods and services.

Sole proprietorships; corporations

If Tamara is given a $3-per-hour pay increase, and in response, she decides to work more hours, then:

Tamara's work hours are represented on the upward-sloping portion of her labor supply curve.

If the economic arguments against tariffs and quotas are that they are very costly for the macroeconomy, why are they imposed?

The costs to individual consumers are small, whereas individual producers gain much from such trade barriers.

If the market price is $60, a firm's minimum average total cost is $70, and minimum average variable cost is $50, what should the firm do in this perfectly competitive market?

The firm should continue producing in the short run in order to minimize losses

Which statement is TRUE?

The price elasticity of demand is always a negative number, but economists generally ignore the negative sign.

Which of the following is NOT a reason why standards for reducing pollution are popular?

They lead each firm to have the same abatement costs.

Which of these will cause a shift in the labor demand curve?

a change in the demand for the final product a change in the productivity of labor a change in the price of a complementary input

All of these would explain a change in labor supply, EXCEPT:

a decrease in productivity.

An economic institution that combines factors of production into outputs for consumers is:

a firm.

Which game does NOT describe a Prisoner's Dilemma outcome?

a game of chicken in which one player backs down while the other player does not

Getcha-There-In-One-Piece Airlines offers a loyalty program that rewards its frequent flyers with free flights and upgrades. This is an example of:

a lock-in strategy.

Which firm is MOST likely to operate in a perfectly competitive market?

a maple syrup company

In which case would producers bear 100% of the tax incidence?

a perfectly elastic demand curve with an inelastic supply curve

Which factor would shift the market labor supply curve to the right?

a reduction in nonwage income

The local school district wants to close down a neighborhood high school because its outdated heating and cooling systems make it too expensive to operate compared to the new high school being built nearby. Parents who are against closing the neighborhood school argue that the $2 million dollars spent refurbishing the school over the last few years will be wasted if the school is shut down. This argument is an example of:

a sunk cost fallacy.

Occasionally, gyms waive their membership fees in the hope of attracting new customers. This is BEST described as an example of:

a teaser strategy.

A Nash equilibrium:

assumes that each player chooses his or her best strategy.

When the Keep On Calling Cell Phone Company is at full capacity, it incurs costs of $230,000. During the December shutdown period, when no cell phones are produced, it incurs costs of $76,000. One can conclude that:

at full capacity, variable costs are $154,000.

The "dilemma" in a Prisoner's Dilemma refers to the fact that:

both players would be better off by cooperating, but not cooperating is a dominant strategy.

An oil field lies beneath the border of Oklahoma and Texas. Both states drill wells every 100 yards, and in two weeks, the field loses all its pressure and ability to produce, leaving 80% of the oil in the ground. This consequence is an example of market failure due to:

common property resource.

Factors that affect the elasticity of demand for labor include all of these EXCEPT:

demographics.

Corn is a perfectly competitive commodity. In the marketplace, the demand curve for corn is:

downward sloping.

Industrial agglomeration occurs because of which economic phenomenon?

economies of scale

What types of industries have been outsourced from the United States because of international trade?

industries that require a large amount of labor

If the price elasticity of demand is 0.5, then the demand is:

inelastic.

In competitive labor markets, we assume that:

information in the industry is widely available and accurate.

Which of these is a characteristic of an oligopoly market structure?

mutual interdependence

Which of the following is an implicit cost?

opportunity cost

All of these are considered negative externalities, EXCEPT:

overstock of a flu vaccine.

Ryan stayed out late last night and is very tired. He plans to skip his 8 A.M. economics class, even though he knows his professor will cover material that will be on the final exam. Ryan is subject to:

overvaluing the present relative to the future.

Craig and his friend Jay own Cut Rate Legal Services. They make $16,190 in profits per month, which they split between themselves. Craig and Jay carry a hefty insurance policy because they have unlimited liability. Cut Rate Legal Services is an example of a:

partnership.

Suppose Alcoa, Inc. is a monopsonist employer in the town of Alcoa, TN. Using the concept of marginal factor cost, each time Alcoa increases the number of workers it hires, it will:

pay a higher wage, resulting in an even higher marginal factor cost.

The subway system in Washington, D.C., charges higher fares during rush hour. This is BEST described as an example of:

peak-load pricing.

In economics, the rewards earned by entrepreneurship are called:

profits.

In a perfectly competitive market, individual firms set:

quantities but not prices.

The effects of a tariff are:

reduced quantity supplied overall, increased quantity supplied by domestic producers, and a higher price.

A financial services firm might hire a college graduate who majored in something other than finance, because graduating from college shows the employer that the graduate has the discipline to be a good employee. This is an example of:

signaling.

Network demand curves:

slope upward at small quantities but, once the market matures, become downward sloping.

Facebook is a:

social network.

If the marginal damage caused by a certain type of pollution is $100 billion and the marginal cost of abatement is $180 billion, then:

society would be better off if emissions were increased.

The limited ability to raise capital is a disadvantage of what type of business structure?

sole proprietorship

If the prices of the two goods the consumer buys increase:

the budget line shifts closer to the origin.

When moving down along a straight-line demand curve:

the elasticity of demand changes from elastic to inelastic.

Discrimination can cause a vicious circle because:

the lack of high wages reduces the incentives to invest in human capital.

Consider that the corn industry is a perfectly competitive industry with constant returns to scale. The price per bushel is $2. If the long-run, minimum ATC is $1.50 per bushel, it should follow that (ceteris paribus):

the long-run price will be $1.50 per bushel.

The notion that individuals and firms are compelled to retaliate or punish others for engaging in noncooperative actions, but leaving the door open for future reconciliation, is BEST referred to as a(n):

tit-for-tat strategy.

When nations specialize according to their comparative advantage:

total production and consumption in the world increase.

If an oligopolistic firm attempts to decrease its price:

total revenue will decrease.

If air pollution comes from multiple sources and it causes many people to suffer, then an efficient agreement among the parties is difficult to achieve because:

transaction costs are high.

All of these are classified as functional distributions of income, EXCEPT:

transfer payments.

If Nintendo lowers the price of its product by $10, Sony waits to see whether Nintendo's price cut was a temporary mistake. This is an example of what type of game strategy?

trembling hand trigger

A(n) _____ on imports is a fixed amount per unit of the product assessed by a government at its border.

unit tax

Sole proprietors and partnerships share the characteristic of:

unlimited liability.

Way-to-Go Wireless offers different wireless plans for people with different needs, such as an unlimited monthly plan and a fixed-minute monthly plan. This is an example of:

versioning.

People who use Sony's PlayStation 4 gaming system are members of a:

virtual network.

An increase in the _____ will NOT increase the supply of labor.

wage rate for a job

The idea that monopolies do not have to act efficiently because they are protected from competition is known as:

x-inefficiency.

In general, which is true about the focus of different countries' university educational systems?

European programs focus on a specific field of study, while American programs offer more breadth of topics.

The price of gold increases by 200%. If the price elasticity of demand for gold is 0.4, what will happen in the market?

Gold sales will decrease by 80%.

If price increases by 100% and quantity demanded decreases by 50%, then the price elasticity of demand will equal _____.

0.5

Which of these is a disadvantage of issuing stock relative to bonds?

Partial ownership in the business is given up.

Among perfectly competitive firms, profit maximizing will always operate where:

MC = MR.

For a monopolistically competitive firm, profit is maximized when:

MC = MR.

A firm will invest in additional capital goods as long as the:

MRPK exceeds the interest rate.

If Rosco's Tacos competes with eight other fast-food restaurants in the same neighborhood, and two of those rival firms exit the market, then:

Rosco's demand curve will shift to the right.

When oligopolies act jointly as a monopoly, they are acting as a:

cartel.

Bonds are BEST described as a type of:

debt capital.

A price taker is a firm that:

has no control over the market price.

Rent is the payment to owners of which factor of production?

land

A country has an absolute advantage in the production of a good if it can:

produce more of the good than another country.

A firm "owns" a network when it becomes:

the industry standard.

Which statement about monopolies is NOT correct?

In the short run, monopolies never shut down.

Which of the following is equivalent to average variable cost (AVC)?

ATC - AFC

Which of these is both finite and nonrenewable?

Helium, gold, and copper are all finite and nonrenewable.

Holding all else constant at a given price point, if the percentage change in quantity demanded is less than the percentage change in price, then:

Ed is inelastic.

Which statement is NOT true about the elasticity of supply?

Elasticity of supply tends to fall as companies have more time to adjust their production methods.

_____ is a market in which there is no close substitute for the product, the potential for long-run economic profit, and nearly impossible barriers to entry.

Monopoly

If the price of copper pipes is $70 in a perfectly competitive market, and a firm is producing a quantity at which the marginal cost is $65, is this firm maximizing profit?

No, this firm should be producing more to maximize profit.

Which characteristic is NOT found in a monopoly?

One firm produces homogeneous products.

Which characteristic is NOT typical of a monopoly?

There is low demand for the product.

If a store sells a good that has a unitary elastic demand, what would be the net result on their total revenue from an increase in price?

There would be no change in total revenue.

Due to a drought in Georgia, the market price for peanuts rises by 20% nationwide. If the price elasticity of demand for peanuts is 0.8, what would happen to total revenue for peanut farmers who were not affected by the drought?

Total revenue would rise as quantity demanded falls by 16%.

For a competitive industry:

VMP = MRP.

Bayram had the opportunity to choose between two investments. The first investment was described as having a 30% chance of succeeding, while the second investment was described as having a 70% chance of failing. Bayram opted for the first investment, because he thought it sounded less risky than the second investment. The chances of succeeding and failing are the same for the two investments, however, which implies that Bayram is subject to:

a framing bias.

A monopoly firm exhibits all of the following characteristics except:

a marginal revenue curve that equals price at all quantities.

The perfectly competitive market structure assumes all of these EXCEPT:

a small number of buyers and sellers.

Which of these is the best example of a framing bias?

airlines that advertise low airfare but then add fees for checked bags and seat assignments.

A perfectly competitive market helps ensure that the products produced are the goods that consumers want. This demonstrates the concept of:

allocative efficiency.

Which strategy makes price discrimination more difficult for a firm?

allowing unwanted concert tickets to be sold on StubHub

Parami volunteers at a homeless shelter. It takes a lot of her time, and thus she sometimes takes off time from her job to do the volunteer work. Parami's behavior can be explained by:

altruism.

Traditional causes of poverty include:

an apathy toward work that leads to frequent termination.

All of these would be included in on-the-job training, EXCEPT:

an economics principles class.

Marginal utility analysis and indifference curve analysis are both used to:

derive demand curves.

In competitive labor markets, the going wage is:

determined by the intersection of the market supply and market demand curves for labor.

Monopolistically competitive markets and perfectly competitive markets do NOT share which characteristic?

differentiated products

If a firm increases its inputs by 80% and its output increases by 60%, then this would be an example of:

diseconomies of scale.

If the domestic price of a good is below the prices in other countries and free trade is opened up, then in terms of pricing:

domestic consumers lose and domestic producers gain.

A bicycle factory finds that it can lower costs if it also produces tricycles and unicycles. This is an example of:

economies of scope.

In a 2008 case before the Supreme Court regarding older power plants and how best to protect fish and aquatic organisms, Justice David Souter remarked, "The difficulty that I have is if you are going to apply . . . a cost-benefit analysis, I'm not sure how it would work. Are a thousand plankton worth a million dollars?" Justice Souter's question points out the difficulty of:

measuring nonmarket or intangible aspects of public projects.

Which of these describes a labor market in which most of a small town's workers are employed by one large company?

monopsony

In the long run, interconnection in network industries creates a _____ environment that leads firms to ____.

more competitive; cut costs

In general, the flatter the supply curve is, the:

more elastic is supply.

Robotic manufacturing has made labor demand for factory workers:

more elastic.

Factory jobs are no longer plentiful in the United States. This is due to all of these EXCEPT:

more foreign direct investment into the United States.

What percentage of families with small children are two-income households?

more than 50%

A constantly declining long-run average cost curve is a characteristic of what type of industrial structure?

natural monopoly

When hiring additional workers reduces total output, the firm faces:

negative marginal returns.

Which condition will NOT contribute to a cartel's stability?

nonprice discounts