Microeconomics Final

I'MaPizzaCo. produces and sells specialty pizzas. Last year, it produced 8,000 mushroom, sausage and spinach pizzas and sold each one for $8. To produce these 8,000 specialty pizzas, the company incurred variable costs of $24,000 and a total cost of $40,000. I'MaPizzaCo's average fixed cost to produce 8,000 specialty pizzas was

$2

I'MABigCorp. produces and sells kitchen wares. Last year, it produced 7,000 can openers and sold each one for $6. To produce the 7,000 can openers, the company incurred variable costs of $28,000 and a total cost of $45,000. I'MABIGCorp.'s average fixed cost to produce the 7,000 can openers was

$2.43

In order to produce 100 oatmeal cookies, GoodieCookieCo incurs an average total cost of $0.25 per cookie. The company's marginal cost is constant at $0.10 for all oatmeal cookies produced. The total cost to produce 50 oatmeal cookies is

$20

"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is:

$44

When the economy moves from Point A to Point B in the diagram above:

*the economy begins using its resources efficiently to produce both food and clothing. *the economy operates at its productive capacity once it reaches Point B. *the economy increases production of both clothing and food. *All of the above

Alex has $18 per week in his entertainment budget. He splits his time between going to the movies and renting video games. Each movie costs $6 while each video game rental costs $3. The measured total utility of each of his activities is shown in the table below. What is Alex's utility maximizing point?

1 movie, 4 game rentals

Kim has $24 per week in her entertainment budget. She splits her time between going to the movies and yoga classes. Each movie costs $8 while each yoga class costs $3. The total utility from each of these activities is set out in the table below. What is Kim's total utility maximizing point?

1 movie, 5 classes

Billy Bob's Barber Shop knows that a 5 percent increase in the price of their haircuts results in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand facing Billy Bob's Barber Shop?

3

Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3 pizzas per month when the price is $15. What is the price elasticity of Bobo's demand curve?

4.25

If D1 and S1 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are and , respectively.

6; 13

Assume that one day's labor in Argentina can produce either 20 units of cloth or 2 units of wine, while in Chile one day's labor can produce either 24 units of cloth or 12 units of wine. If Argentina transfers 2 units of labor from wine to cloth and Chile transfers 1 unit of labor from cloth to wine, the increase in combined output by those two workers will be:

8 wine; 16 cloths

If D2 and S1 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are and , respectively.

8, 15

Which of the following is true?

A nation cannot have a comparative advantage in the production of every good.

In the competitive market for figure skate blades, manufacturers offer an array of products that are

A. distinctly different in a particular way.

Ideally, a patent should cover a long enough period of time for the inventor to ______, but that period should not be so long that it allows the inventor to ______.

A. earn a hearty return; charge a high monopoly price permanently

In order for a good to be classified as ______ , when one person uses the good, others are also able to use it.

A. nonrivalrous

When exit occurs in a monopolistically competitive industry the

A. perceived demand and marginal revenue curves will shift to the right.

Government has a variety of policies that allow inventors to ______, such as the granting patents and ______.

A. receive an increased rate of return; subsidization of research and development

Along the production possibilities frontier, the most efficient point of production depicted is:

All points on the PPF are equally efficient

Which of the following statements most likely lies within the realm of microeconomics?

An increase in labor costs will increase the additional cost of producing another bus.

Andy views soda and pizza as complements to one another. If the price of pizza decreases, economists would expect:

Andy's demand for soda to increase.

In presidential elections over the last few decades, about _____ of voting-age citizens actually turned out to cast their votes.

A. 55-65%

Why is there scarcity?

Because our unlimited wants exceed our limited resources

Which of the following best characterizes the circular flow of income?

Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.

An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from:

C to F

If IMSmartCO(?) research and development project succeeds, then

B. competitors may find a way to adapt and copy the underlying idea without incurring R&D costs.

When technology is advancing so quickly, even a patent from, say, two years ago may be ______, because ______.

B. completely outdated; no firm is relying on that technology any longer

If a monopoly or a monopolistic competitor raises their prices, then

B. decline in quantity demanded will be larger for the monopolistic competitor.

Through the process of exit, monopolistically competitive firms remaining in the market

C. are no longer earning losses.

If a firm's efforts to be technologically innovative will create a positive externality, then that firm will likely

C. have less incentive to innovate to the extent that the whole of society desires.

The perceived demand curve for a group of competing oligopoly firms will appear kinked as a result of their commitment to

C. match price cuts, but not price increases.

Which of the following would be classified as a differentiated product produced by a monopolistic competitor?

Channel No. 5

Which of the following would be classified as a situation where a third party benefits from a market transaction by others?

City buying 10,000 trees for green space renewal projects.

__________ is something valuable that a lender would have a right to________________ if the loan is not repaid.

Collateral; seize and sell

In _____, when there is no president race, the voter turnout is typically _____.

Congressional elections; less than half of the eligible voters

A complementary approach to supporting R&D that does not involve the government's close scrutiny of particular R&D projects is to give firms

C. a reduction in corporate taxes based on amount of R&D performed.

Perfect competition displays ______ because the social benefits of additional production, as measured by the price that people are willing to pay, are in balance with the ______ to society of that production.

C. allocative efficiency; marginal costs

In which of the following countries will the national government have the greatest influence with respect to the nation's economy?

Cuba

In countries like _____________ the command economy predominates.

Cuba and North Korea

Which of the following would be classified as a positive externality?

D. converting a derelict empty lot to a public vegetable garden

Many economists would view market competition as supporting the invention of new technology because it

D. provides short-term above-normal profits, and b and c as well.

Which of the following statements most likely lies within the realm of macroeconomics?

Due to an economic recession, manufacturing firms began implementing layoffs of their workforces.

_____________ - a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines.

Economies of scale

If a nation has a comparative disadvantage in the production of some commodity:

If a nation has a comparative disadvantage in the production of some commodity:

In India one person can produce 330 pounds of rice or 110 shirts in one year. In China one person can produce 400 pounds of rice or 200 shirts in one year. Which of the following statements is true?

India has a comparative advantage in the production of rice.

______ include both the private costs incurred by firms and also costs incurred by third parties outside the production process.

Social costs

_____ are numerically small, but well organized groups that are able to exert a disproportionate effect on political outcomes.

Special interest groups

_____ are more likely to arise from a group that is easily identifiable, rather than from a group where some of those who suffered may not even recognize that ________.

Special interests; they are bearing the costs

Are markets always in equilibrium?

No, but if there is no outside interference, they tend to move toward equilibrium.

______________ include all of the costs of production that increase with the quantity produced.

Variable costs

At point U, __________.

P1/P2 = MU1/MU2

Which of the following best denotes the reason for the existence of substantial black markets?

a command economy

Which of the following would most likely shift the production possibilities curve inward?

a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time

Why are the underlying economic meanings of the perceived demand curves for a monopolist and monopolistic competitor different?

a monopolist faces the market demand curve and a monopolist competitor does not

A firm that holds a monopoly position in the market place is

a price maker

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is:

a shift of the demand curve for beef to the left.

The imposition of a price ceiling on a market often results in

a shortage

When entry occurs in a monopolistically competitive industry,

a smaller quantity will be demanded at any given price.

In the labor market, a stipulation that the first three months of employment is a trial period is

a standard precaution against hiring a lemon.

Which of the following lies primarily within the realm of macroeconomics?

a study of how tax cuts stimulate aggregate production

Economic theory offers ____________________ about the full range of possible events and responses, which can prevent __________________ about how households will respond to changes in prices or incomes

a systematic way of thinking; misguided conclusions

When _____ occurs, the result will be determined by the order in which choices are presented and voted on, not by _____, because every choice is both preferred to some alternative and also not preferred to another alternative.

a voting cycle; majority rule

Specialization:

can lead to an increase in overall production.

Those firms in the oil refining industry that can reduce pollution _____ will do so _____.

cheaply and easily; to minimize their pollution taxes

Economic models like the _____________________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories.

circular flow diagram

When nations increase production in their area of _____ and trade with each other, both sides can benefit.

comparative advantage

What matters most in determining the efficient distribution of production over the world is:

comparative advantage.

Pork-barrel spending can be thought of as another case where democracy is challenged by _____ and _____.

concentrated benefits; widely dispersed costs

Research on voting behavior in the U.S. has shown that, on average, people who are more _____ tend to _____.

connected to society; vote more frequently

In the U.S. political arena, _____ may tend to emphasize the virtues of markets and the limitations of government, while _____ may tend to emphasize the shortcomings of markets and the need for government programs.

conservatives; liberals

When demand is inelastic

consumers are not very responsive to changes in price.

An insurance policyholder must pay a _______________ for each ______________ service, before insurance covers the rest.

copayment; insured

The form of legal protection intended to prevent reproduction of original works is referred to as _____ law.

copyright

The ______________ of all firms can be broken down into some common underlying patterns.

cost structure

If a glass manufacturer has only a few ______ of reducing pollutants, it will _______.

costly ways; end up paying the pollution tax.

Market-oriented environmental tools _____ for firms to take the social costs of pollution into account and _____ in reacting to these incentives.

create incentives; allow firms some flexibility

A 10 percent decrease in the price of potato chips leads to a 30 percent increase in the quantity of soda demanded. It appears that:

cross-price elasticity of demand for soda is -3

In the U.S., the command-and-control environmental laws of the early 1970s, together with the ensuing amendments and updates that have been made to them over time,

are given considerable credit for cleaner air and water in recent decades.

If an externality of pollution exists for all manufacturers in a given industry, then all related social costs

are no longer represented in their supply curves.

Refer to the diagram above. What is the significance of the point at the top of the backward bending of the supply curve marked L3?

as wages increase over this range, the quantity of hours worked actually decreases.

If the average product for six workers is fifteen and the marginal product of the seventh worker is eighteen, then

average product is rising.

The _____________________ curve will always lie below the curve for average cost because average cost includes _____________ in the numerator of the calculation.

average variable cost; fixed costs

Refer to the diagram above. Which of the following is a true statement?

backward-bending supply curves for labor are not typical in the short run

Marginal utility can:

be positive, negative, or zero

Which of the following is used to describe the full spectrum of animal and plant genetic material?

biodiversity

Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine:

both the price and quantity will rise

Macroeconomics primarily examines:

broad issues such as national output, employment and inflation.

The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good.

budget constraint

Martha has decided to purchase a new home constructed by Crown Builders. In addition to Crown Builder's good reputation in the industry, which of the following likely influenced Martha's decision to purchase a new home?

builder's no-charge service contract covering first year

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of:

buyers and sellers

The nature of demand indicates that as the price of a good increases:

buyers to purchase less of it.

If monopolists are able to produce fewer goods and sell them at a higher price than they could under perfect competition, the result will be

abnormally high sustained profits.

When one nation can produce a product at lower cost relative to another nation, it is said to have a(n) in producing that product.

absolute advantage

Which of the following is most likely to cause variation in American household spending patterns?

all of the above

The term "ceteris paribus" means that:

all variables except those specified are constant.

Which of the following results in a rightward shift of the market demand curve for labor?

an increase in demand for the firm's product

Which of the following will not result in a leftward shift of the market demand curve for labor?

an increase in the wage rate

The US laws dealing with original works of authorship allow the US Copyright Office to enforce protection for all but one of the following. Which one is it?

ancient Bible texts

Temperatures have persisted below freezing levels in Florida throughout the months of December and January. As a result, demand for electricity sharply increased and the price of electricity rose sharply. The price of coal also rose. In these circumstances, any resulting shifts in the supply curves for coal miners and electricity producers

can also be interpreted as shifts of their respective marginal cost curves.

A situation where the level of output, scale and average costs are all rising is called

decreasing returns to scale AND diseconomies to scale

The law of ____________________________ explains why people and societies rarely make all-or-nothing choices.

diminishing marginal utility

The most common pattern for marginal utility is ____________________.

diminishing marginal utility

The term ___________________ is used to describe the common pattern whereby each marginal unit of a consumed good provides less of an addition to utility than the previous unit.

diminishing marginal utility

In microeconomics, the term ___________________ is synonymous with decreasing returns of scale.

diseconomies of scale

The term basic research applies specifically to research pertaining to fundamental scientific breakthroughs that may offer commercial applications in the .

distant future

In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers.

division of labor

When the U.S. Congress begins to draft laws and regulations that attempt to reduce the harmful effects of environmental pollution, industry lobbyists will

do all of the above in order to influence legislation in their favour.

According to the definition of profit, if a profit-maximizing firm will always attempt to produce its desired level of output at the lowest possible cost, then it will

do so regardless of what type of competition exists in a market.

Copyright protection legislation provides protection for original works

during the author's life plus 70 years

The concept of _____ means that as the measure of output goes up, average costs of production decline at least up to a point.

economies of scale

In order to calculate marginal cost, the change in ______________ is divided by the amount of change in quantity.

either total cost or variable cost

A price cut will increase the total revenue a firm receives if the demand for it's product is

elastic

Supply is said to be when the quantity supplied is very responsive to changes in price.

elastic

When economists are sketching examples of a demand or supply curve that is close to horizontal, they refer to that demand or supply curve as .

elastic

Youth smoking seems to be more than adult smoking—that is, the quantity of youth smoking will fall by a greater percentage than the quantity of adult smoking in response to a given percentage increase in price

elastic

In a monopolistic competitive industry, firms can try to differentiate their products by

enhancing product's physical aspects and all of the above.

Once PharmaCo. has received confirmation of the registration for its latest drug patent application, it will have created a monopoly for that product by restricting

entry into the market.

When J.K. Rowling exerts copyright ownership of her literary works, she creates a monopoly by restricting

entry into the market.

A manufacturer would likely make an ______ in a market following the long-run process of beginning and expanding production in response to ______.

entry; a sustained pattern of profits

Which of the following is generally accepted as a valid criticism of the production of useful goods and services?

environmental pollution

In a perfectly competitive market, each firm produces at a quantity where price is set

equal to marginal cost, both in the short run and in the long run.

The is the quantity where quantity demanded and quantity supplied are equal at a certain price

equilibrium quantity

Which of the following will need to strike some balance between economic output and environmental quality as a prominent climate change priority?

every country

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as:

excess demand

The term "constant returns to scale" describes a situation where

expanding all inputs does not change the average cost of production.

Why do U.S. economists commonly refer to externalities as an example of market failure?

externalities present a case where markets only consider some social costs

Market failure describes a situation in which the market itself ______ in a way that balances social costs and benefits.

fails to allocate resources efficiently

If the supply curve for housing is perfectly inelastic, then a reduction in demand will cause the equilibrium price to:

fall and the quantity to stay the same

Which of the following is the most appropriate response of public policy to a negative externality like pollution?

find ways to account for the social costs of the negative externality in economic decisions

A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production.

fixed costs; do not change,

The demand curve as perceived by a perfectly competitive firm is ______.

flat

The circular flow diagram of economic activity is a model of the:

flow of goods, services, and payments between households and firms.

Automobile manufacturers use warranties as incentives for buyers to purchase their products. Why are warranties on vehicles important to buyers?

for a specific time period, the manufacturer bears the cost of fixing or replacing the vehicle

An inferior good is a product:

for which demand decreases as income increases.

Guarantees, warranties, and service contracts are all examples of

forms of explicit reassurance provided by sellers.

An individual who wants others to pay for public goods, but plans to use those goods for their own purposes, is often referred to as a .

free rider

The branch of mathematics that analyzes situations in which players must make decisions and then receive payoffs most often used by economists is

game theory.

In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made.

government

The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending.

government

Economists readily admit that in settings that involve a monopoly or negative externalities, a potential role exists for

government intervention

Which of the following best describes a fiscal policy tool?

government spending

The political systems in most Latin American nations differ from the political system in the United States because most Latin American nations

have laws that require voting.

Since the 1980s, national elections in Germany, Spain and France have all recorded _____ than was recorded for presidential elections in the United States.

higher voter participation

Which of the following would reduce the supply of microcomputers?

higher wage rates for the workers that assemble the computers

A perfectly elastic supply curve is:

horizontal

Economic profit can be derived from calculating total revenues minus all of the firm's costs,

including its opportunity costs.

The term _____________ describes a situation where a ________________ causes a reduction in the buying power of income, even though actual income has not changed.

income effect; higher price

If the demand curve is perfectly elastic, then an increase in supply will

increase the quantity changed but result in no change in the price.

If a website facilitates the sale of goods by individuals and businesses over the internet, but requires actual photos of every item for sale to be posted instead of a manufacturer's stock picture of the product, demand for that product will likely ___________ due to the improved information, causing quantity to ___________ .

increase, increase

If the demand for software engineers slower than does supply, then wages of software engineers will .

increases; fall

The demand schedule for a good:

indicates the quantities that will be purchased at various market prices.

The key assumption that accompanies the use of numbers for measuring utility is that:

individuals choose based on their preferences

Demand is said to be when the quantity demanded is not very responsive to changes in price.

inelastic

The evidence on the supply curve of financial capital is controversial, but at least in the short run, the elasticity of savings with respect to the interest rate appears to be .

inelastic

Taxes on goods with demand curves will tend to raise more tax revenue for the government than taxes on goods with demand curves.

inelastic; elastic

If the supply curve for a product is horizontal, then the elasticity of supply is:

infinity

Which of the following best describes a monetary policy tool?

interest rates

Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization?

international trade

Saving money is a(n) ____________________, because it involves less consumption in the present, but the ability to consume more in the future.

intertemporal choice

The demand curve perceived by a perfectly competitive firm

is horizontal

I'mAComputerCo. would likely be more willing to undertake an innovative research project to reduce the amount of electricity required to run its computers if there were some form of guarantee that if it succeeded,

it could sell the new computers as a monopoly for at least a few years.

Scarcity implies that:

it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.

Why would a typical U.S. business fail to take the social costs of pollution into consideration during the development of their operating strategies?

it isn't required to pay any of the cost of cleaning up its pollution

When a monopolist increases sales by one unit,

it loses some marginal revenue and all of the above.

In the ____________, households work and receive payment from firms.

labor market

Other things being equal, a supply of workers tends to real wages.

larger; decrease

___________________________________, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines.

law of diminishing marginal utility

Intra-industry trade between similar trading partners allows the gains from ______ that arise when firms and workers specialize in the production of a certain product.

learning and innovation

A natural monopoly occurs when the quantity demanded is ______ the minimum quantity it takes to be at the bottom of the long-run average cost curve.

less than

Which of the following is most likely to be a monopoly?

local electricity distributor

Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. The opportunity cost of producing 1 orange for Alpha and Beta, respectively, are:

lol idk

The perceived demand for a monopolistic competitor

lol idk

In the ______, the perfectly competitive firm will react to losses by ______.

long run; reducing production or shutting down

If the firm produces 5 units that it sells at a price of $30.00 each, what will its profits or losses equal?

loss of $5

When nations desire a healthy macroeconomy, they typically focus on three goals, one of these being:

low inflation

If a firm faces , while the prices for the output the firm produces remain unchanged, a firm's profits will increase.

lower costs of production

Trade allows each country to take advantage of _____ in the other country.

lower opportunity costs

When a natural monopoly exists in a given industry, the per-unit costs of production will be

lowest when a single firm generates the entire output of the industry.

In some instances where voters have more than two choices in a democratic election, the principle that the _____ will decide the outcome may no longer make logical sense.

majority of voters

Which of the following is an oversimplified term that is sometimes used to describe the meaning of democracy?

majority rule

Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good.

marginal analysis

The term _____________ is used to describe the additional cost of producing one more unit.

marginal cost

In economics, the term shutdown point refers to the point where the

marginal cost curve crosses the average variable cost curve.

If marginal cost is rising in a competitive firm's short-run production process and its average variable cost is falling as output is increased, then

marginal cost is below average variable cost.

Under perfect competition, any profit-maximizing producer faces a market price equal to its

marginal costs

The term _________________ refers to the additional utility provided by one additional unit of consumption.

marginal utility

The step-by-step process of finding the choice with highest total utility involves a comparison of the:

marginal utility gained and lost from different choices along the budget constraint.

In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.

market-oriented economy

The main categories of market-oriented approaches to pollution control are

marketable permits; better-defined property rights; pollution charges.

The marginal benefit of a slice of pizza is the:

maximum amount that a consumer is willing to pay for the slice.

The idea behind comparative advantage reflects the possibility that one party:

may be able to produce something at a lower opportunity cost than another party.

The basic difference between macroeconomics and microeconomics is:

microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.

A ____________________ is a promise that the buyer's money will be refunded under certain conditions.

money-back guarantee

A ________________________ is a form of incentive to purchase a product on a 30 day trial basis.

money-back guarantee

Shopping malls typically lease retail space to a large number of clothing stores. When this group of retailers competes to sell similar but not identical products, they engage in what economists call .

monopolistic competition

The largest cattle rancher in a given region will be unable to have a ______ if sufficient numbers of smaller cattle ranchers provide sources of competition.

monopoly

As the name monopolistic competition implies, a firm’s decisions in this setting will in certain ways resemble _____ and in other ways resemble ______.

monopoly; perfect competition

When people have insurance against a certain event, the notion that those people are less likely to guard against that event occurring is called a _____________________ .

moral hazard

I'maGoldMiner has benefited from a record rise in gold prices in the global commodities market. While the price of its output is highly influenced by market speculation, if it wants to increase production to take advantage of the current profit-maximizing opportunity, the company

must accept market price for its physical capital inputs.

A ______ exists when the quantity demanded in the market is less than the quantity at the bottom of the long-run average cost curve.

natural monopoly

What do an optician and a lawyer share in common?

need for a valid occupational license from government regulators

The demand curve for a typical good has a(n):

negative slope because some consumers switch to other goods as the price rises.

What happens in a perfectly competitive industry when economic profit is greater than zero?

new firms may enter the industry and all of the above

Many economists believe that the trend toward greater wage inequality across the U.S. economy was primarily caused by .

new technologies

Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be.

normative statement

The price elasticity of demand measures the:

the responsiveness of the quantity demanded to changes in price

A practical approach to microeconomic policy will need to take a realistic view of the specific strengths and weaknesses of markets and _____.

the specific strengths and weaknesses of government

A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of:

the supply curve.

Refer to the diagram above. Based on the information illustrated in the graph, which of the following is correct?

the transition point between where MC is pulling down and pulling up AC always occurs at the minimum point of the AC curve

If cola and iced tea are good substitutes for consumers, then it is likely that:

their cross-price elasticities are greater than zero.

Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. If the terms of trade are established as 1 apple for 2 oranges, then:

there are no incentives for Alpha to specialize and trade with Beta.

Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. If the terms of trade are established as 1 apple for 4 oranges, then:

there are no incentives for Beta to engage in international specialization and trade with Alpha.

When quantity demanded decreases in response to a change in price:

there is a movement up along the demand curve

For a pure monopoly to exist,

there is a single seller in a particular industry

Political institutions play a role in allocating the _____, and economists have played an active role along with other social scientists in analyzing _____.

scarce resources of society; how such political institutions work

The first step to be undertaken by a profit-maximizing monopolistic competitor wanting to decide what price to charge is to

select the profit maximizing quantity to produce

Which of the following characteristics differentiates the private economy from government?

self-correcting mechanism

If each of two competing monopolists undertakes equal advertising efforts to attract consumers away from the other, the total result is

they will simply neutralize one another's efforts.

In the _________, if profits are not possible, the perfectly competitive firm will seek out the quantity of output where ________.

short run; losses are smallest

A monopolistically competitive firm may earn abnormally high profits in the

short term, but the process of entry will drive those profits to zero in the long run.

Some nations that seek to produce all of their own needs face the problem that:

some industries are too small to be efficient if restricted to their domestic markets alone.

A highly innovative firm operating in a competitive market will usually have

some time before competitors catch up to its innovations.

Which of the following would most likely be identified as being the ultimate goal of public policies that pertain to technology?

to encourage a stream of invention that benefits the whole of society.

Which of the following denotes the typical shape of the monopolist's total cost curve?

total costs rise and grow steeper as output rises

Whatever the firm's quantity of production, _____________ must exceed total costs if it is to earn a profit.

total revenue

Legislators who focus on local spending projects for their own district typically show a lack of sufficient concern for

spending in the interest of the nation as a whole.

A 25 percent decrease in the price of breakfast cereal leads to a 20 percent increase in the quantity of cereal demanded. As a result:

total revenue will decrease

The term ______ refers to a market exchange that affects a third party who is outside or external to the exchange.

spillover

The total revenue curve for a monopolist will

start low, rise, and then decline

If the supply curve for aspirin is perfectly elastic, then a reduction in demand will cause the equilibrium price to:

stay the same and the quantity to fall

Since 1969, when the Cuyahoga River in Ohio was so polluted that it spontaneously burst into flame, the overall quality of water in the U.S. has

steadily improved.

The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options.

sunk costs

Demand is said to be when the quantity demanded changes at the same proportion as the price.

unit elastic

The marginal cost curve is generally ______________, because diminishing marginal returns implies that additional units are ________________________.

upward-sloping; more costly to produce

Many states do have __, which impose an upper limit on the interest rate that lenders can charge.

usury laws

If a paper mill shuts down its operations for three months so that it produces nothing, its __________________ will be reduced to zero?

variable costs

In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. Which of the following correctly sets out that choice?

what quantity to produce

One difficulty with direct government support of R&D is that it inevitably involves government decisions about

which of the vast number of proposed projects are worthwhile

Australian law may require people to vote, but mandatory voting laws are unlikely to mean that each vote cast in an election _____.

will be an informed or a thoughtful vote

For a perfectly competitive firm, the marginal cost curve is identical to the firm's ________.

supply curve

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the ________.

supply curve to the right

If a government chooses a system of marketable permits as its environmental managing tool, the reduction in pollution will

take place in the firms where it is least expensive to do so.

As the complement for high-skill labor becomes cheaper, the demand curve for high- skill labor will shift to the right.

technology

As the substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left.

technology

Attending college is a case where the ________________ exceeds the monetary cost.

opportunity cost

The slope of the production possibility frontier is determined by the _____ of expanding production of one good, measured by how much of the other good would be lost.

opportunity cost

The underlying reason why trade benefits both sides of a trading arrangement is rooted in the concept of _____.

opportunity cost

Following the assumption that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency?

output will be too small and its price too high.

To be effective, U.S. command-and-control environmental regulation required

the EPA to oversee all environmental laws and all of the above.

Which of the following has become the least willing to sacrifice their environmental quality for some additional economic output?

the European Union

Government ______ regulations specify that inventors will maintain exclusive legal rights to their respective inventions for .

patent; a limited time

The elasticity of supply is defined as the change in quantity supplied divided by the change in price.

percentage; percentage

Firms operating in a market situation that creates _______, sell their product in a market with other firms who produce identical or extremely similar products.

perfect competition

James decides to spend an hour playing basketball rather than studying. His opportunity cost is:

the benefit to his grades from studying for an hour

The opportunity cost of attending university is likely to include all except which of the following?

the cost of food eaten during the school term

Which of the following best identifies what the concept of differentiated products is closely related to?

the degree of product variety that is available.

If a perfectly competitive firm is a price taker, then

pressure from competing firms will force acceptance of the prevailing market price.

The "law of supply" functions in labor markets; that is, a higher ________ for labor leads to a higher quantity of labor supplied.

price

In contrast to goods and services markets, are rare in labor markets, because rules that prevent people from earning income are not politically popular.

price ceilings

Suppose that D1 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D1 to D2, then:

price increases from 6 to 8

If the quality differences of similar products are mostly imperceptible to the average consumer's eyes, which of the following will most likely play a major role in influencing the decisions of purchasers?

price of competing products

The downward slope of the demand curve again illustrates the pattern that as ______ rises, _______ decreases.

price, quantity demanded

When a firm invests in new technology, the _____ that the firm receives are ______

private benefits; only a portion of the overall social benefits

Why would labor be treated as a variable cost?

producing larger quantities of a good or service generally requires more workers

Jeremy is an 18 year old college student with no prior credit history, who still lives at home. He will have a part-time job while he is attending college and has applied for a car loan. In these circumstances, the bank's loan officer will most likely approve the loan if Jeremy can

provide a cosigner on the loan.

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and _____, shown on the horizontal axis.

quantity

A demand curve shows the relationship between price and on a graph.

quantity demanded

refers to the total number of units that are purchased at that price.

quantity demanded

If a graph is used to compare total revenue and total cost of a perfectly competitive firm, then the horizontal axis of the graph will represent the ______ and the vertical axis will represent ______.

quantity produced; both total revenue and total costs, measured in dollars.

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the .

quantity supplied

Which of the following is an example of economic output that can injure the environment?

radio-active waste leaking into a river, and all of the above

A straightforward example of a _________, often used for simplicity, is the interest rate.

rate of return

What do service contracts, occupational licenses and cosigners all share in common?

reduced the risk of imperfect information

Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business. Which is it?

rent of space for the gallery

The chef at a high-end French cuisine restaurant has accepted a job on a cruise liner. The restaurant owner must advertise for a replacement chef, but is concerned about reducing the amount of imperfect information respondents to the career ad will provide. This concern can best be addressed by

requiring current resumes and recommendations.

In a discussion of economics, which of the following would exert the most influence on an individual firm's decision to hire workers?

the macroeconomy

Which of the following is considered to be a tell-tale signal that the point with the highest total utility has been found?

the marginal utility per dollar is the same for both goods

When buyers use ___________________ to draw inferences about the quality of products, then markets may have trouble reaching _________________ and quantity.

the market price; an equilibrium price

The price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise:

the percentage change in quantity demanded divided by the percentage change in price

As depicted in _______________, it is necessary to give up some of one good to gain more of the other good.

the production possibilities frontier

Whenever there is a surplus at a particular price, the quantity sold at that price will equal:

the quantity demanded at that price

When consumers and businesses have greater confidence that they will be able to repay in the future, .

the quantity demanded of financial capital at any given interest rate will shift to the right

In order to determine the average variable cost, the firm's variable costs are divided by _______________________.

the quantity of output

Whenever there is a shortage at a particular price, the quantity sold at that price will equal

the quantity supplied at that price

Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. Which of the following statements is true?

If Alpha specializes in growing apples and Beta specializes in growing oranges, they could both gain by specialization and trade.

_______ are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling.

Price floors

_____________ is calculated by taking the quantity of everything that is sold and multiplying it by the sale price.

Total revenue

Which of the following occurs simultaneously with an income effect?

substitution effect

While the majority of economists acknowledge that intellectual property rights do provide a method for increasing the rate of return for inventors, some have suggested there are number of reasons to doubt whether patents provide

sufficient incentives for innovation, as well as c.

Economists are able to determine total utility by:

summing up the marginal utilities of each unit consumed.

In the US economy, nearly half of all the workers employed by private firms work at

18,000 large firms that employ more than 500 workers.

Jay and Jen are married with two children. They are preparing a household budget for the coming year. Based on statistical information for American households, approximately what portion of this family's annual consumption will most likely be budgeted for food and vehicle expenses?

1/3

Some studies done by economists have found that the original inventor receives ______ from innovations, while other businesses and new product users receive the rest of the benefit.

C. one-third to one-half of the total economic benefits

If the USA could produce 1 ton of potatoes or 0.5 tons of wheat per worker per year, while Ireland could produce 3 tons of potatoes or 2 tons of wheat per worker per year, there can be mutual gains from trade if:

Georgeland has an absolute but not a comparative advantage in producing clothing.

Say that Alland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 36 units of food per year or 18 units of clothing. Which of the following is true?

Georgeland has an absolute but not a comparative advantage in producing clothing.

A point unobtainable given current resources is:

Point E(any point above the curve)

The most inefficient point depicted is:

Point G

_____ is a particular type of spending that mainly benefits a single political district.

Pork-barrel spending

If new manufacturers enter the computer industry, then (ceteris paribus):

The supply curve shifts to the right.

According to the law of supply:

There is a direct relationship between price and the quantity supplied.

Steel mill wage costs increase by 18 percent over a year. What is the likely economic effect on the market for steel?

There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel

Which of the following is most unlikely to present a barrier to entry into a market?

deregulation

In economics, labor demand is synonymous with

derived demand

A perfectly competitive industry is a

hypothetical extreme.

Another person or firm who legally pledges to repay some or all of the money loaned if the original borrower fails to do so is called a __________________________ .

idk lol

The problem of _________________ arises when an antique dealer knows more about the quality of an item than the potential buyer, and as a result the buyer with less knowledge must worry about ending up at a ________________.

idk lol

Most buyers face a situation of _____________________ when they invest in the stock market.

imperfect information

A buyer confronted with _______________will often believe that the price being charged reveals something about the ____________ of the product.

imperfect information; quality

If a small electric automobile manufacturer is able to gain the social return generated by its electric motor, its demand for financial capital would

shift to the left.

A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will:

shift to the right, decreasing the price

If labor demand is downward sloping and labor supply is upward sloping, then when labor demand rises faster than labor supply, it is expected that real wages .

will increase

The marginal utility of two goods changes ______________.

with the quantities consumed.

In the U.S., individuals often pay a small portion of their earnings into a state _________________ pooled fund that will compensate them if they are injured on the job.

workman's compensation insurance

If you are highly asthmatic, then having high levels of industrial air pollutants waft over your house every day

would be a negative externality.