MicroEcon Final

Which of the following is an example of a quantity quota?

A city enforces zoning laws that restrict the number of housing units

Which of the following would be both nonrival and non-excludable?

A siren tornado warning system

What is collusion?

Agreements between sellers to increase their market power.

A binding price floor is:

Always above the equilibrium price

Which of the following goods would be nonrival?

An online course

A subsidy for buyers of a product shifts the:

Demand curve to the right

Buyers bear a smaller incidence of the tax when:

Demand is more elastic than supply

Perfect price discrimination is characterized by charging:

Each customer a price equal to his or her maximum willingness to pay.

The two main types of implicit opportunity costs are:

Forgone wages and forgone interest

A perfectly competitive industry is characterized by:

Many firms with no control over the market price producing identical products.

A quantity regulation is a:

Minimum or maximum price that can be charged

Which of the following is an example of a company practicing price discrimination?

Most passengers traveling on an airplane pay different prices for their tickets.

What type of good is rival and excludable?

Private goods

A price ceiling is:

The maximum price that a seller can charge in a market

Price discrimination can be successful only if:

The product cannot be sold.

One of the market failures caused by market power is:

Underproduction

If market price exceeds ____________ cost, profit will be ____________.

average; positive

In a market system, public goods would

be underproduced

The economic burden of a tax is the:

burden created by the change in after-tax prices faced by buyers and sellers

The long run is best defined as a time period:

during which all inputs can be varied

As output rises, average fixed costs:

fall

The statutory burden of a tax is the:

government-designated burden of a tax payment

When the price elasticity of demand is ____________ relative to the price elasticity of supply, then buyers bear ________ of the economic burden of a tax.

large; a smaller share

When a seller offers lower prices to those buyers who are willing to overcome some obstacle to get it, the seller is using _________ to get buyers to reveal their __________.

the hurdle method; reservation price

A tax on sellers shifts the:

Supply curve to the left

Which of the following statements is true?

A firm with economic profits will also have accounting profits.

A subsidy is:

A government payment designed to encourage particular purchases or productive activities

A tax on buyers causes:

A leftward shift of the demand curve, a decrease in quantity sold, and an increase in the price buyers pay

A tax on sellers causes:

A leftward shift of the supply curve, a decrease in quantity sold and an increase in the price buyers pay

A market with a large number of sellers and a high level of product differentiation is known as:

A monopolistically competitive market

What is a natural monopoly?

A monopoly that results when one firm is able to produce at a lower cost than multiple firms, giving large firms with higher levels of output an advantage over smaller competitors.

Price discrimination leads to __________ than a one-price system.

A more efficient output.

Which is not an example of rent-seeking behavior?

Excessive spending on a corporate jet for executives.

The difference between a club good and a public good is that a club good is ___________and a public good is ____________.

Excludable and nonrival; nonexcludable and nonrival

The marginal private benefit is the:

Extra benefit enjoyed by the buyer of one extra unit of a good or service

One thing that distinguishes the short run and the long run is:

The existence of at least one fixed input.

The marginal cost curve often decreases at first and then starts to increase. This is explained by:

The law of diminishing returns.

In order to maximize economic efficiency society should produce another unit of a good if:

The marginal social benefit exceeds the marginal social cost

What would happen if a binding price floor in a market is removed?

The market price will fall

In a natural monopoly, what deters new sellers from entering the market?

The new seller would have much higher costs than the existing large seller in the market

Externalities tend to occur because decision makers consider ___________ and do NOT consider ___________.

Their own costs and benefits; the effects of their actions on others

A tax on buyers reduces the _________ for buyers

marginal benefits

A price-discriminating company can attract more customers by _________ price, as long as ____________.

Reducing; the price is above its marginal cost

Selling alternatives versions of a product at different prices is a way to identify the ____________ of customers and charge them different prices.

Reservation Price

When firms in a market with free entry and exit experience economic losses, then:

Some sellers will exit the market, reducing average seller losses.

A good has a free-rider problem when:

Someone can enjoy the benefits of the good without bearing the costs

Sellers bear a smaller incidence of a tax when:

Supply is more elastic relative to demand

A tragedy of the commons is the:

Tendency to over-consume common resources

Marginal cost is defined as:

The change in total costs from producing one more unit of output.

Which firm is most likely to be a natural monopoly?

Municipal Power Light, the local supplier of electicity

When the typical seller in a market has economic profits, then:

New sellers will enter the market.

By contrast to a market that produces the socially optimal output, a market with negative externalities will:

Overproduce