Micro Final

Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market a. is unchanged. b. may increase, decrease, or remain unchanged. c. increases. d. decreases.

b. may increase, decrease or remain unchanged

Refer to Figure 8-2. The per-unit burden of the tax on sellers is a. $3. b. $5. c. $2. d. $4.

c. $2

Korie wants to start her own business making custom furniture. She can purchase a factory that costs $400,000. Korie currently has $500,000 in the bank earning 3 percent interest per year. Refer to Scenario 13-1. Suppose Korie purchases the factory using $200,000 of her own money and $200,000 borrowed from a bank at an interest rate of 6 percent. What is Korie's annual opportunity cost of purchasing the factory? a. $18,000 b. $6,000 c. $3,000 d. $15,000

a. $18,000

In a competitive market the price is $8. A typical firm in the market has ATC = $6, AVC = $5, and MC = $8. How much economic profit is the firm earning in the short run? a. $2 per unit b. $0 per unit c. $3 per unit d. $1 per unit

a. $2 per unit

When the price of good A is $50, the quantity demanded of good A is 500 units. When the price of good A rises to $70, the quantity demanded of good A falls to 400 units. Using the midpoint method, the price elasticity of demand for good A is a. 0.67, and an increase in price will result in an increase in total revenue for good A. b. 1.50, and an increase in price will result in a decrease in total revenue for good A. c. 1.50, and an increase in price will result in an increase in total revenue for good A. d. 0.67, and an increase in price will result in a decrease in total revenue for good A.

a. 0.67, and an increase in price will result in an increase in total revenue for good A

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.75. Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded? a. A 13.33 percent increase in the price of the good b. An increase in the price of the good from $10 to $17.50 c. An increase in the price of the good from $7.50 to $10 d. A 7.5 increase in the price of the good

a. 13.33 percent increase in the price of the good

At Q2 price is 2. Refer to Figure 14-4. If there are 100 identical firms in this market, what is the value of Q2? a. 20,000 b. 40,000 c. 10,000 d. 80,000

a. 20,000

At $8 demand = 20 + supply =45 Refer to Table 4-6 . If the price were $8, a a. surplus of 25 units would exist, and price would tend to fall. b. shortage of 20 units would exist, and price would tend to rise. c. shortage of 25 units would exist, and price would tend to rise. d. surplus of 45 units would exist, and price would tend to fal

a. a surplus of 25 units would exist, and price would tend to fall

Refer to Figure 14-3. When market price is P2, a profit-maximizing firm's losses can be represented by the area a. At a market price of P2 the firm has losses, but the reference points in the figure don't identify the losses. b. At a market price of P2, the firm earns profits, not losses. c. (P 4 − P 2 ) × Q 2 . d. (P 2 − P 1 ) × (Q 2 − Q 1 ).

a. at a markets price of P2 the firm has losses, but the reference points in the figure don't identify the losses

A firm produces 400 units of output at a total cost of $1,200. If total variable costs are $1,000, a. average fixed cost is 50 cents. b. average total cost is 50 cents. c. average variable cost is $2. d. average total cost is $2.50.

a. average fixed cost is 50 cents

You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. You still enjoy Ramen noodles very much and buy even more, but your roommate plans to buy fewer Ramen noodles in favor of foods she prefers more. When looking at income elasticity of demand for Ramen noodles, yours would a. be negative, and your roommate's would be positive. b. be zero, and your roommate's would approach infinity. c. be positive, and your roommate's would be negative. d. approach infinity, and your roommate's would be zero.

a. be negative, and your roommates would be positive

Henry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas. When the price of bananas falls from 50 cents a pound to 40 cents a pound, a. both Janine and Henry experience an increase in consumer surplus. b. neither Janine nor Henry experiences an increase in consumer surplus. c. Henry experiences an increase in consumer surplus, but Janine does not. d. Janine experiences an increase in consumer surplus, but Henry does not.

a. both Janine and Henry experience an increase in consumer surplus

If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would happen to the equilibrium price and quantity of lattés if the price of muffins rises? a. Both the equilibrium price and quantity would decrease. b. The equilibrium price would decrease, and the equilibrium quantity would increase. c. Both the equilibrium price and quantity would increase. d. The equilibrium price would increase, and the equilibrium quantity would decrease.

a. both the equilibrium price and quantity would decrease

Refer to Figure 6-8 . In 1973, OPEC restricted supply and U.S. government regulations limited the price oil companies could charge for gasoline. Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s? a. Buyers of gasoline paid a price of P1 before 1973; they paid a price of P2 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. b. Buyers of gasoline paid a price of P2 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, with no shortage of gasoline at that price. c. Buyers of gasoline paid a price of P1 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. d. The price ceiling was binding before 1973; the price ceiling was no longer binding after OPEC increased the price of crude oil in 1973.

a. buyers of gasoline paid a price of P1 before 1973; they paid a price of P2 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price

Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the a. demand is more inelastic than the supply. b. supply is more inelastic than the demand. c. government has required that buyers remit the tax payments. d. government has required that sellers remit the tax payments.

a. demand is more inelastic than the supply

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 a. diminishing marginal product. b. diseconomies of scale. c. increasing marginal product. d. economies of scale.

a. diminishing marginal product

Point A eg= p = 7, q =12, point B, p= 5 q= 20 Refer to Figure 5-1. Between point A and point B on the graph, demand is a. elastic, but not perfectly elastic. b. inelastic. c. unit elastic. d. perfectly elastic.

a. elastic, but no perfectly elastic

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good? a. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.

a. equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous

A competitive market is in long-run equilibrium. If demand decreases, we can be certain that price will a. fall in the short run. All, some, or no firms will shut down, and some of them will exit the industry. Price will then rise to reach the new long-run equilibrium. b. fall in the short run. No firms will shut down, but some of them will exit the industry. Price will then rise to reach the new long-run equilibrium. c. not fall in the short run because firms will exit to maintain the price. d. fall in the short run. All firms will shut down, and some of them will exit the industry. Price will then rise to reach the new long-run equilibrium.

a. fall in the short run. All, some, or no firms will shut down and some of them will exit the industry. Price will then rise to reach the new long run equilibrium

Refer to Table 13-11. Which firm is experiencing diseconomies of scale? a. Firm C only b. Firm A only c. Firm A and Firm B only d. Firm B only

a. firm C only

Refer to Figure 6-14 . Suppose D 1 represents the demand curve for gasoline in both the short run and long run, S 1 represents the supply curve for gasoline in the short run, and S 2 represents the supply curve for gasoline in the long run. After the imposition of the $2 tax, the price paid by buyers will be a. higher in the long run than in the short run. b. unable to be determined without additional information. c. higher in the short run than in the long run. d. equivalent in the short run and the long run.

a. higher in the long run than in the short run

For a good that is taxed, the area on the relevant supply-and-demand graph that represents government's tax revenue is a. smaller than the area that represents the loss of consumer surplus and producer surplus caused by the tax. b. a right triangle. c. bounded by the supply curve, the demand curve, the effective price paid by buyers, and the effective price received by sellers. d. a triangle, but not necessarily a right triangle.

a. smaller than the area that represents the loss of consumer surplus and producer surplus by the tax

On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product? a. The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers. b. The farmer is able to produce 6,200 bushels of wheat when he hires 4 workers. c. The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers. d. The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers.

a. the farmer is able to produce 5,600 bushels of wheat when he hires 4 workers

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that a. the mayor thinks demand is inelastic, and the city manager thinks demand is elastic. b. both the mayor and the city manager think that demand is elastic. c. the mayor thinks demand is elastic, and the city manager thinks demand is inelastic. d. both the mayor and the city manager think that demand is inelastic.

a. the mayor thinks demand is inelastic, and the city manager thinks demand is elastic

Refer to Figure 6-13. How is the burden of the tax shared between buyers and sellers? Buyers bear a. three-fourths of the burden, and sellers bear one-fourth of the burden. b. one-fourth of the burden, and sellers bear three-fourths of the burden. c. two-thirds of the burden, and sellers bear one-third of the burden. d. one-half of the burden, and sellers bear one-half of the burden.

a. three-fourths of the burden, and sellers bear one-fourth of the burden

Refer to Figure 8-2. The amount of deadweight loss as a result of the tax is a. $10. b. $2.50. c. $5. d. $7.50.

b. $2.50

Size of tax is $4, quantity is 105 Refer to Figure 6-13. What is the amount of the tax per unit? a. $3 b. $4 c. $2 d. $1

b. $4

Refer to Figure 14-1. The firm's short-run supply curve is its marginal cost curve above a. $10. b. $6. c. $4. d. $13.

b. $6

Refer to Figure 4-2. If these are the only two consumers in the market, then the market quantity demanded at a price of $15 is a. 10 units. b. 0 units. c. 15 units. d. 25 units.

b. 0 units

In the market for widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. The equilibrium quantity in the market for widgets is 200 per month when there is no tax. Then a tax of $5 per widget is imposed. As a result, the government is able to raise $800 per month in tax revenue. We can conclude that the equilibrium quantity of widgets has fallen by a. 100 per month. b. 40 per month. c. 50 per month. d. 75 per month.

b. 40 per month

Refer to Figure 8-1. Suppose the government imposes a tax of P'-P'''. Total surplus before the tax is measured by the area a. J + K + L + M. b. I + J + K + L + M + Y. c. L + M + Y. d. I + Y

b. I+J+K+L+M+Y

Which of the following demonstrates the law of demand? a. After Rashad got a raise at work, he bought more pretzels at $1.50 per pretzel than he did before his raise. b. Jayden buys more donuts at $0.25 per donut than at $0.50 per donut, other things equal. c. Kendra buys fewer Snickers at $0.60 per Snickers after the price of Milky Ways falls to $0.50 per Milky Way. d. Iyana buys fewer muffins at $0.75 per muffin than at $1 per muffin, other things equal

b. Jayden buys more donuts at $.025 per donut than at $.50 per donut, other things equal

Refer to Figure 14-7. Assume that the market starts in equilibrium at point W in graph (b) and that graph (a) illustrates the cost curves facing individual firms. Suppose that demand increases from D0 to D1. Which of the following statements is not correct? a. Point W is a long-run equilibrium point. b. Point Y is a long-run equilibrium point. c. Point Z is a long-run equilibrium point. d. Points W, Y, and Z are short-run equilibria points.

b. Point Y is a long run equilibrium point

Consider the U.S. market for chocolate, a market in which the government has imposed a nonbinding price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling? a. A sharp drop in consumer income; chocolate is a normal good. b. South American cocoa bean producers refuse to ship to chocolate producers in the United States. c. A large increase in the size of the cocoa bean crop; cocoa beans are used to produce chocolate. d. A government study that shows that consuming chocolate increases the incidence of cancer.

b. South American cocoa bean producers refuse to ship to chocolate producer in the United States

Refer to Figure 14-1. The firm will earn a positive economic profit in the short run if the market price is a. less than $6. b. above $13. c. exactly $13. d. less than $13 but more than $6.

b. above $13, because that is where the ATC intersects the MC

When we move along a given supply curve, a. all determinants of quantity supplied are held constant. b. all nonprice determinants of supply are held constant. c. only price is held constant. d. technology and price are held constant.

b. all nonprime determinants of supply are held constant

If a firm experiences constant returns to scale at all output levels, then its long-run average total cost curve would a. slope upward. b. be horizontal. c. slope downward for low output levels and upward for high output levels. d. slope downward

b. be horizontal

Refer to Figure 7-1 . Area C represents the a. increase in producer surplus when quantity sold increases from Q 2 to Q 1. b. consumer surplus to new consumers who enter the market when the price falls from P 2 to P 1. c. decrease in consumer surplus which results from a downward-sloping demand curve. d. decrease in consumer surplus to each consumer in the market when the price increases from P 1 to P 2.

b. consumer surplus to new consumers who enter the market when the price falls from P2 to P1

The price paid by buyers in a market will decrease if the government a. increases a binding price floor in that market. b. decreases a tax on the good sold in that market. c. increases a binding price ceiling in that market. d. increases a tax on the good sold in that market.

b. decrease a tax on the good sold in that market

Winona's Fudge Shoppe is maximizing profits by producing 1,000 pounds of fudge per day. If Winona's fixed costs unexpectedly increase and the market price remains constant, then the short run profit-maximizing level of output a. is less than 1,000 pounds. b. is still 1,000 pounds. c. is more than 1,000 pounds. d. becomes zero.

b. is still 1,000 pounds

Suppose demand is perfectly elastic, and the supply of the good in question decreases. As a result, a. the equilibrium quantity and the equilibrium price both are unchanged. b. the equilibrium quantity decreases, and the equilibrium price is unchanged. c. buyers' total expenditure on the good is unchanged. d. the equilibrium price increases, and the equilibrium quantity is unchanged.

b. the equilibrium quantity decreases, and the equilibrium price is unchanged

Timothy decides to spend four hours playing video games rather than attending his classes. His opportunity cost of playing games is a. the value of his time playing video games minus the value of attending classes. b. the value of the knowledge he would have received had he attended his classes. c. the $50 he could have earned if he had worked at his job for those four hours. d. nothing, since he valued playing video games more than attending classes.

b. the value of the knowledge he would have received had he attended his classes

Refer to Table 13-7. What is the value of E?, asking for average variable cost -with fixed costs being $50 and total being $100, total units are 1 a. $25 b. $50 c. $100 d. $150

c. $100

For 9 models variable cost is $7,300. Refer to Table 13-10. What is the average fixed cost for the month if 9 instructional modules are produced? a. $150.00 b. $811.11 c. $120.00 d. $108.00

c. $120

At $4, both supplied and demand are 12 units. Refer to Table 7-11. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, producer surplus will be a. $16. b. $24. c. $18. d. $26

c. $18

Refer to Figure 4-7. At what price would there be an excess supply of 200 units of the good? a. $20, supply 300, demand 500 b. $15, supply 200, demand 600 c. $30, supply 300, demand 500 d. $35, supply 200, demand 600

c. $30

Consider Luis's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Luis's cost of going to college is a. $57,000. b. $49,800. c. $42,600. d. $33,800.

c. $42,600

Refer to Table 13-3. The marginal product of the second worker is a. 85 units. b. 90 units. c. 80 units. d. 20 units.

c. 80 units

Suppose that in a competitive market the equilibrium price is $2.50. What is marginal revenue for the last unit sold by the typical firm in this market? a. Less than $2.50 b. The marginal revenue cannot be determined without knowing the actual quantity sold by the typical firm. c. Exactly $2.50 d. More than $2.50

c. Exactly $2.50

Refer to Figure 4-6 . The shift from S' to S in the market for chocolate cake could be caused by, shifts from S1 to the left to S a. a decrease in the price of chocolate cake. b. a decrease in the price of butter. c. a decrease in the number of commercial bakers. d. an improvement in oven technology

c. decrease in the number of commercial bakers

Suppose the cross-price elasticity of demand between peanut butter and jelly is −2.50. This implies that a 20 percent increase in the price of peanut butter will cause the quantity of jelly purchased to a. fall by 8 percent. b. rise by 8 percent. c. fall by 50 percent. d. rise by 50 percent.

c. fall by 50 percent

The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10 percent. Refer to Scenario 5-2. The change in equilibrium price will be a. unknown without more information. b. the same in the aged cheddar cheese and bread markets. c. greater in the aged cheddar cheese market than in the bread market. d. greater in the bread market than in the aged cheddar cheese market.

c. greater in the aged cheddar cheese market than in the bread market

Refer to Figure 5-5 . If the price decreased from $36 to $12, total revenue would a. decrease by $7,200, and demand is inelastic between points X and Z. b. decrease by $4,800, and demand is inelastic between points X and Z. c. increase by $4,800, and demand is elastic between points X and Z. d. increase by $7,200, and demand is elastic between points X and Z.

c. increase by $4,800 and demand is elastic between points X and Z

Refer to Table 4-4. If these are the only four sellers in the market, then when the price increases from $6 to $8, the market quantity supplied a. increases by 2 units. b. decreases by 4 units. c. increases by 12 units. d. increases by 0.5 units.

c. increase by 12 units

Equilibrium Price 4, quantity 120. Price ceiling makes it price 3, for sellers quantity is 90 and buyers quantity 180 Refer to Figure 6-2. The price ceiling a. causes a shortage of 30 units of the good. b. is not binding because it is set below the equilibrium price. c. makes it necessary for sellers to ration the good using a mechanism other than price. d. causes a shortage of 60 units of the good.

c. makes it necessary for seller to ration the good using a method other than price

Suppose there are six bait and tackle shops that sell worms in a lakeside resort town in Minnesota. If we add the respective quantities that each shop would produce and sell at each of the six bait and tackle shops when the price of worms is $2 per bucket, $2.50 per bucket, and $3 per bucket, and so forth, we have found the a. surplus or shortage depending on market conditions. b. equilibrium curve. c. market supply curve. d. market demand curve.

c. market supply curve

Refer to Figure 7-5. If the demand curve is D and the supply curve shifts from S' to S, what is the change in producer surplus? a. Producer surplus increases by $625. b. Producer surplus decreases by $625. c. Producer surplus increases by $1,875. d. Producer surplus decreases by $1,875.

c. producer surplus increases by $1,875

If the price of walnuts rises, many people would switch from consuming walnuts to consuming pecans. But if the price of salt rises, people would have difficulty purchasing something to use in its place. These examples illustrate the importance of a. a necessity versus a luxury in determining the price elasticity of demand. b. the definition of a market in determining the price elasticity of demand. c. the availability of close substitutes in determining the price elasticity of demand. d. the time horizon in determining the price elasticity of demand.

c. the availability of close substitutes in determining the price elasticity of demand

Refer to Figure 6-15 . In which market will the majority of the tax burden fall on buyers? a. The tax burden on buyers is the same for all three graphs. b. The market shown in graph (a) . c. The market shown in graph (b) d. The market shown in graph (c)

c. the market shown in graph B, because demand curve is the most inelastic

Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct? a. Forty percent of the burden of the tax falls on buyers. b. This tax causes the supply curve for fountain drinks to shift downward by $0.50 at each quantity. c. This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity. d. The price paid by buyers is $0.20 per drink more than it was before the tax.

c. this tax causes the demand curve for fountain drinks to shift downed by $.50 at each quantity

Jerome says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Jerome's demand for apps is a. perfectly elastic. b. perfectly inelastic. c. unit elastic. d. somewhat inelastic, but not perfectly inelastic.

c. unit elastic

Refer to Table 7-4. The market quantity of oranges demanded per day is exactly seven if the price of an orange, P, satisfies a. $0.60 < P < $2.00. b. $0.60 < P < $0.75. c. $0.25 < P < $0.75. d. $0.25 < P < $0.60.

d. $0.25< P< $0.60

Suppose a tax is imposed on each new hearing aid that is sold. The supply curve is a typical upward-sloping straight line, and the demand curve is a typical downward-sloping straight line. As a result of the tax, the equilibrium quantity of hearing aids decreases from 10,000 to 9,000, and the deadweight loss of the tax is $60,000. We can conclude that the tax on each hearing aid is a. $160. b. $200. c. $60. d. $120.

d. $120

Refer to Figure 8-3 . As a result of the tax, consumer surplus decreases by a. $150, producer surplus decreases by $150, tax revenue is $240, and deadweight loss is $60. b. $130, producer surplus decreases by $170, tax revenue is $240, and deadweight loss is $60. c. $240, producer surplus decreases by $240, tax revenue is $400, and deadweight loss is $80. d. $160, producer surplus decreases by $160, tax revenue is $240, and deadweight loss is $80

d. $160, produced surplus decreases by $160, tax revenue is $240, and deadweight loss is $80

Refer to Figure 14-2. If the market price is $10, what is the firm's total cost? a. $15 b. $50 c. $30 d. $35

d. $35

At 55 chairs there are 2 machine and 5 workers. Refer to Table 13-5 . Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. What is the total daily cost of producing at a rate of 55 chairs per hour if the factory operates 8 hours per day? a. $480 b. $616 c. $576 d. $520

d. $520

Refer to Table 13-12. Firm 4's efficient scale occurs at what quantity? a. 4 b. 2 c. 5 d. 3

d. 3

Refer to Figure 8-6. Suppose the government imposes a $1 tax in each of the four markets represented by demand curves D 1 , D 2 , D 3 , and D 4 . The deadweight will be the smallest in the market represented by a. D3. b. D4. c. D2. d. D1.

d. D1 because it is the most inelastic

Refer to Figure 4-3 . The shift from Db to Da in the market for potato chips could be caused by a. an increase in the price of a pretzels. b. a decrease in the price of potato chips. c. an announcement by the FDA that potato chips lower cholesterol. d. a decrease in income, assuming that potato chips are a normal good.

d. a decrease in income, assuming that potato chips are a normal good

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then a. a one-unit increase in output will increase the firm's profit. b. total revenue exceeds total cost. c. total cost exceeds total revenue. d. a one-unit decrease in output will increase the firm's profit.

d. a one unit decrease in output will increase the firm's profit

Profit-maximizing firms enter a competitive market when existing firms in that market have a. average total costs that exceed average revenue. b. total revenues that exceed total variable costs. c. total revenues that exceed fixed costs. d. average total costs that are less than market price.

d. average total costs that are less than market price

Eq, p= 20 quantity is 20 Refer to Figure 6-3. A government-imposed price of $24 in this market is an example of a a. nonbinding price floor that creates a surplus. b. nonbinding price ceiling that creates a shortage. c. binding price ceiling that creates a shortage. d. binding price floor that creates a surplus.

d. binding price floor that creates a surplus

When her income increased from $10,000 to $20,000, Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds. Using the midpoint method, we can conclude that for Heather, macaroni a. and soy-burgers are both normal goods with income elasticities equal to 1. b. is an inferior good and soy-burgers are normal goods; both have income elasticities of 1. c. and soy-burgers are both inferior goods with income elasticities equal to -1. d. is an inferior good with an income elasticity of -1 and soy-burgers are normal goods with an income elasticity of 1

d. is an inferior good with an income elasticity of -1 and soy-burgers are normal goods with an income elasticity of 1

If a competitive firm is selling 900 units of its product at a price of $10 per unit and earning a positive profit, then a. its marginal revenue is less than $10. b. the firm cannot be a competitive firm because competitive firms cannot earn positive profits. c. its total cost is more than $9,000. d. its average total cost is less than $10.

d. its average total cost is less than $10

Refer to Figure 6-7. If the government imposes a price ceiling at $6, it would be a. nonbinding if market demand is Demand A or Demand B. b. binding if market demand is Demand A or Demand B. c. binding if market demand is Demand A and nonbinding if market demand is Demand B. d. nonbinding if market demand is Demand A and binding if market demand is Demand B.

d. nonbonding if market demand is Demand and binding if market demand is Demand B (not binding if price is at the price ceiling)

Refer to Figure 14-3. In the short run, if the market price is higher than P4 but less than P6, individual firms in a competitive industry will earn a. losses but will remain in business. b. zero profits. c. losses and will shut down. d. positive profits.

d. positive profits

At $3.00 Alpine Springs - 100 units, Brook Mountain- 40, Cascade Waters- 60, Dew Good- 100. Refer to Table 4-5. If the four suppliers listed are the only suppliers in this market and the market quantity demanded is 300 cases when the price is $3.00, which of the following statements is correct? a. There is a shortage of 100 cases at a price of $3.00. b. There is a surplus of 100 cases at a price of $3.00. c. There is a shortage of 50 cases at a price of $3.00. d. The market is in equilibrium at a price of $3.00

d. the market is in equilibrium at a price of $3.00

The marginal benefit Sabrina gets from purchasing a third pair of gloves is a. the total benefit she gets from purchasing four pairs of gloves minus the total benefit she gets from purchasing three pairs of gloves. b. more than the marginal cost of purchasing the third pair of gloves. c. the same as the total benefit she gets from purchasing three pairs of gloves. d. the total benefit she gets from purchasing three pairs of gloves minus the total benefit she gets from purchasing two pairs of gloves.

d. the total benefit sh gets from purchasing three Paris go gloves minus the total benefit she gets from purchasing two pairs of gloves

Refer to Figure 8-5. Graph (a) and Graph (b) each illustrate a $4 tax placed on a market. In comparison to Graph (a), Graph (b) illustrates which of the following statements? a. When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic. b. When supply is relatively elastic, the deadweight loss of a tax is larger than when supply is relatively inelastic. c. When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic. d. When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic.

d. when demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic.