microeconomics final exam study guide

If the price elasticity of demand for canned soup is estimated at -1.62. What happens to sales revenue if the price of canned soup rises? It falls by 162 percent. It falls. It rises by 1.62 percent. It rises.

It falls.

Which of the following would be a good example of an implicit cost incurred by Superior Airways? The salaries paid to the pilots. The jet fuel bills. The purchases of parts needed for maintenance of the aircraft. The rent that could be earned on an aircraft that is owned and used by Superior.

The rent that could be earned on an aircraft that is owned and used by Superior.

In the United States, government-imposed price supports are most often associated with consumer electronics. industrial products. commercial building products. agricultural products.

agricultural products.

If the price of hot dogs increases, the demand for hot dog buns will decrease. increase remain constant. shift to the right.

decrease.

The short-run supply curve for a perfectly competitive firm is the portion of its ATC curve above the MC curve. ATC curve below the MC curve. MC curve above its AVC curve. MC curve above the ATC curve.

MC curve above its AVC curve.

If the price of Pepsi increases, then there will be ________ of Pepsi. a decrease in the quantity supplied a decrease in the supply an increase in the supply an increase in the quantity supplied

an increase in the quantity supplied

Suppose the manager of a restaurant notices that when she has too many waiters on the floor for a shift that the waiters get in each other's way and fewer dinners are served. This is an example of diminishing marginal product. diminishing marginal inputs. diminishing marginal workforce diminishing marginal utility.

diminishing marginal product.

An example of economic capital is equipment that can be used to produce a car. workers digging a trench with shovels and pickaxes. ocean waves used to generate electricity the knowledge to program in C++.

equipment that can be used to produce a car.

A merger between the Ford Motor Company and General Motors would be an example of a ________ merger. horizontal conglomerate vertical

horizontal

In a monopoly, the firm and the industry are the same thing the market is small in an absolute sense. the firm is large in an absolute sense. the monopolist determines how much each firm will produce

the firm and the industry are the same thing

If marginal product is negative, then marginal cost is falling. total product is rising average profit is rising. total product is falling.

total product is falling.

During a period of time with high unemployment, a country can increase the production of one good or service only by increasing its production possibilities frontier. and must increase the production of something else. by using resources in the production process twice without decreasing the production of something else.

without decreasing the production of something else.

All of the following can be considered a student's costs of going to college, EXCEPT: -textbooks. -tuition and fees. -the student's time, which can no longer be devoted to earning a salary. -room and board (that costs her about the same as she was paying before entering college).

-room and board (that costs her about the same as she was paying before entering college).

Which of the following is NOT a factor of production? an apartment building a university professor mineral resources 100 shares of Microsoft stock

100 shares of Microsoft stock

monopolist will not earn any economic profits when AVC is a minimum. ATC lies below the demand curve. ATC lies above the demand curve. AFC is very high.

ATC lies above the demand curve.

Which of the following are barriers to entry? Economies of scale Sole ownership of resources Patents and copyrights All of the above

All of the above

Which of the following is a good example of a common resource? Batteries for toys Congested freeways A gallon of chocolate ice cream Electrical utility service

Congested freeways

Which of the following statements is about quotas is true? Import quotas are preferred to tariffs because they raise more revenue for the imposing government Voluntary quotas established by the exporting country generate no deadweight loss for the importing country. For every tariff, there is an import quota that could have generated a similar result. An import quota reduces the price to the domestic consumers.

For every tariff, there is an import quota that could have generated a similar result.

MSB (Marginal Social Benefit) equals MCprivate + the external benefit. MBprivate + the external cost MCprivate + the external cost MBprivate + the external benefit.

MBprivate + the external benefit.

Which of the following regarding a monopolist is INCORRECT? The monopolist is a single supplier of a good or service. The monopolist constitutes the entire industry. There are barriers to entry that allow monopoly Only expensive products are produced by monopolies.

Only expensive products are produced by monopolies

Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase? a decrease in the price of flour an increase in the price of rye bread, a substitute for white bread an increase in the price of butter, a complement for white bread an increase in the price of flour

a decrease in the price of flour

The Great Depression of the 1930s with a large number of workers and factories unemployed would be represented in a production possibilities frontier graph by a point inside the frontier. an intercept on either the vertical or the horizontal axis. a point on the frontier. a point outside the frontier.

a point inside the frontier.

The most important goal of the firm is to maximize its sales volume. maximize its revenues. maximize its profits

maximize its profits

Common resources are: both excludable and rival neither excludable nor rival. excludable, but not rival. rival, but not excludable

rival, but not excludable

Countries should import products for which they have a comparative advantage True False

False country should export goods for which they have a comparative advantage in production

Which of the following is a positive economic statement? Unemployment is a more serious problem than inflation. Economic considerations are less relevant than ethical issues in deciding national policy. The rate of unemployment of young African-Americans exceeds that of white Americans No individual should live in poverty.

The rate of unemployment of young African-Americans exceeds that of white Americans

A perfectly competitive firm is selling 100 units at a price of $10 each. On the last unit, marginal cost was $8. Which of the following statements is true? This firm should increase output to maximize profit. This firm is making a profit of less than zero This firm should reduce output to maximize profit. This firm is producing the profit-maximizing quantity.

This firm should increase output to maximize profit.

Which of the following is an example of a price floor? the prices offered by a local department store in a "fire sale" a legal minimum wage a "buy one get one free" sale all of the above

a legal minimum wage

The benefit that Joan gets from eating cherries is an example of an external cost. the marginal social cost of eating cherries. a private benefit. an external benefit.

a private benefit.

Accounting profit is ________ compared to economic profit, because accountants ________ implicit costs in their calculations. bigger, consider bigger, do not consider smaller, consider smaller, do not consider

bigger, do not consider

Private goods are: both excludable and rival. neither excludable nor rival. excludable, but not rival. rival, but not excludable

both excludable and rival.

The government is least likely to block a __________ merger. horizontal conglomerate vertical

conglomerate

An improvement in technology in the production of computers would increase the supply of computers. decrease the supply of computers. decrease the demand for computers increase the demand for computers.

increase the supply of computers.

A per-unit government subsidy to producers of a good tends to not have any effect on the good's supply. shift the supply curve to the left. increase the supply of the good reduce the supply of the good

increase the supply of the good

Marginal revenue is defined as the additional revenue from selling one more unit of the product. the additional cost of producing one more unit of the product. the difference between the price of the product and the cost of producing the product. the average cost of producing the product.

the additional revenue from selling one more unit of the product.

The law of supply predicts the supply curve will be flat. vertical. upward sloping. downward sloping.

upward sloping

Government policies designed to promote efficiency: always fail. tend to cause the economy to grow more slowly. usually do so at the expense of equity. require very high taxes.

usually do so at the expense of equity.

The cost of raw materials will fall under the category of: fixed costs. variable costs long-run costs. average fixed costs.

variable costs

Suppose the value of the price elasticity of demand is -3. What does this mean? A $1 increase in price causes quantity demanded to fall by 3 units. A 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent. A 1 percent increase in the price of the good causes quantity demanded to increase by 3 percent. A 3 percent increase in the price of the good causes quantity demanded to decrease by 1 percent.

A 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent.

Prices of California Merlot wine (assume that this is a normal good) have risen steadily in recent years. Over this same period, prices for French oak barrels used for wine storage have dropped and consumer incomes have risen. Which of the following best explains the rising prices of California Merlots? The demand curve for Merlot has shifted to the right faster than the supply curve has shifted to the right. The demand curve and the supply curve for Merlot have both shifted to the left. The supply curve for Merlot has shifted to the right while the demand curve for Merlot has shifted to the left. The supply curve for Merlot has shifted to the right faster than the demand curve has shifted to the right

The demand curve for Merlot has shifted to the right faster than the supply curve has shifted to the right.

The Internet has made it easy for consumers to buy books online. As a result, many traditional booksellers like Barnes & Noble and Borders (starting in 2008) along with Amazon sell books on their websites. What effect will the Internet have on the demand curve that any bookstore faces? The demand facing a bookstore becomes horizontal. The price elasticity of demand remains unchanged; only the cross-price elasticity changes. The demand facing a bookstore will become more inelastic. The demand facing a bookstore will become more elastic.

The demand facing a bookstore will become more elastic.

Suppose the world price is below the before-trade domestic price for a good. If a country allows free trade in this goods, consumers will gain and producers will lose producers will gain and consumers will lose both producers and consumers will gain both producers and consumers will lose

consumers will gain and producers will lose

As long as price exceeds AVC, the firm is better off continuing production. cutting price. raising its price closing.

continuing production

The short run is the time frame during which the quantities of some resources are fixed. during which all costs are implicit costs. during which the quantities of all resources are variable. during which the quantities of all resources are fixed.

during which the quantities of some resources are fixed.

Which of the following in NOT employed as an argument in support of trade restrictions? Free trade destroys domestic jobs Free trade harms the national security if vital products are imported. Free trade is harmful to importing countries if foreign countries subsidize their exporting industries. Free trade harms infant industries in an importing country.

Free trade harms infant industries in an importing country.

Which of the following is a possible solution to the free-rider problem of public goods? Regulating the good, to limit its over use Having the government provide the good Educating consumers so they buy the optimal quantity of the good.

Having the government provide the good

A monopoly will maximize profits at the level of output at which MR = MC. MC = P. MC = ATC MR = AFC

MR = MC.

Which of the following is the most efficient solution to congested freeways? Build more freeways. Add more lanes to existing freeways. Urge people to drive less. Make freeways into toll ways, with the toll great enough to discourage some drivers from using them.

Make freeways into toll ways, with the toll great enough to discourage some drivers from using them.

Pam graduates from law school and gets a position in a law firm. At the same time the price of hamburger falls while other food prices have stayed the same. She notices that she buys less hamburger than she did before. Is she violating the law of demand? Yes, since she is buying less hamburger in a relatively short period of time and we wouldn't expect her tastes to have changed. No, since other things are not held constant, such as her income. No, since the law of demand refers to relative price changes and the price of hamburger falling is an absolute price change. Yes, since she is buying less hamburger at a lower price.

No, since other things are not held constant, such as her income.

The property of diminishing marginal product of labor states that: every additional worker hired contributes to diminish the quantity produced by the firm. every additional worker hired contributes to diminish the total costs of the firm. every additional worker hired contributes a smaller increase in production than previously hired workers. every additional worker hired contributes a smaller increase in total costs than previously hired workers.

every additional worker hired contributes a smaller increase in production than previously hired workers.

Because producers are better able to organize than consumers are, we would expect there to be political pressure to create free trade import restrictions export restrictions none of the above

import restrictions

A government that implements a policy designed to reduce inflation can expect unemployment to: increase in the long-run. decrease in the long-run decrease in the short-run. increase in the short-run.

increase in the short-run.

The key characteristics of a monopolistically competitive market structure include all sellers sell a homogeneous product. sellers have no incentive to advertise their products. many small (relative to the total market) sellers acting independently. barriers to entry are strong.

many small (relative to the total market) sellers acting independently.

For a monopolistically competitive firm, marginal revenue equals the price. and price are unrelated. is less than the price. is greater than the price.

is less than the price.

The government is likely to block a merger if: the firms that are merging are producing different products. the firms remaining would be able to charge a price above marginal cost. it can be established that the merger would substantially reduce competition. the firms remaining would all earn economic profit.

it can be established that the merger would substantially reduce competition.

Factors of production include all of the following EXCEPT _______ entrepreneurship money machines made in past years an wheat field that is not irrigated

money

The demand for broccoli is likely to be ________ the demand for green vegetables in general. perfectly inelastic compared to more elastic than perfectly elastic compared to You Answered less elastic than

more elastic than

A fundamental principle in demand analysis is that a change in price leads to movement along the demand curve. a leftward shift of the demand curve. a rightward shift of the demand curve. a complementary movement on the supply curve.

movement along the demand curve.

When an economist uses the term "land" , this means rural. acreage. natural resources. crops

natural resources.

Public goods are: both excludable and rival neither excludable nor rival excludable, but not rival rival, but not excludable

neither excludable nor rival

In perfectly competitive markets ________ the price. every seller is large enough to influence both buyers and sellers are large enough to influence no buyer or seller is large enough to influence every buyer is large enough to influence

no buyer or seller is large enough to influence

The rental price of a two-bedroom apartment in Kansas City is about $600. If the city government placed a price ceiling of $800 on these apartments, a shortage of these apartments would occur. landlords would be better off. renters would be worse off. none of the above

none of the above

If a monopolist wishes to increase its output and quantity sold, it must raise its price, therefore its marginal revenue is less than its price. it must reduce its price, therefore its marginal revenue is less than its price. it must reduce its price, therefore its marginal revenue is greater than its price. it must raise its price, therefore its marginal revenue is greater than its price.

it must reduce its price, therefore its marginal revenue is less than its price.

Copper falls into which factor of production category? entrepreneurship capital labor land

land

What are the four categories into which factors of production are grouped? land, labor, capital, and entrepreneurship profit, wages, rent, and interest capital, human capital, land, and labor entrepreneurship, profit, labor, and wages

land, labor, capital, and entrepreneurship

A tax on a polluting industry leads to less output in this industry. causes more resources to be used in the polluting industry. is not desirable because it reduces efficiency. You Answered shifts the marginal (private) benefit curve rightward.

leads to less output in this industry.

A monopolistically competitive firm will produce _______ the output associated with the lowest possible production cost per unit. more than exactly less than cannot be determined

less than

Economies of scale occur when the ________ as the quantity of output increases short-run Average Total Cost falls short-run Average Total Cost rises long-run Average Total Cost falls long-run Average Total Cost rises

long-run Average Total Cost falls

The elasticity of demand is always a negative value because of the law of demand. it is based on whether or not demand shifts when price changes. of the law of supply. it is based on percentages.

of the law of demand.

A firm will continue to produce in the short run even though economic profits are negative as long as it has fixed obligations to pay. the amount of the loss is no greater than the amount of fixed cost. it earned positive economic profits last year. MC = MR.

the amount of the loss is no greater than the amount of fixed cost.

Price controls may be thought of as the bottling-up of free market forces. the freeing-up of free market forces necessary in market economies useful tools that promote production.

the bottling-up of free market forces.

In the short run, the price at which a firm's total revenues equal its total costs is the break-even point. the shutdown point. a no return price a point of positive profits.

the break-even point.

Which of the following is NOT a factor of production? the wages paid to workers. the management skill of a small business owner. the water used to cool a nuclear power plant. the effort of farmers raising cattle

the wages paid to workers.

A firm can be the sole supplier of a good and is still not a monopolist if the firm is not making excessive profits. the good produced is not important to the economy. there are no barriers to entry. the firm is not large.

there are no barriers to entry.

Monopolies are discouraged in the United States because they restrict output and boost prices. they are more efficient than other industries. they can produce at lower cost in the short run. they hire too many workers.

they restrict output and boost prices.

What is the profit-maximizing rule for a monopolistically competitive firm? to produce a quantity that maximizes market share to produce a quantity such that marginal revenue equals marginal cost to produce a quantity such that price equals marginal cost to produce a quantity that maximizes total revenue

to produce a quantity such that marginal revenue equals marginal cost

If a worker in Brazil can produce 6 oranges or 2 apples in an hour while worker in Mexico can produce 2 oranges and 4 apple in an hour, then Brazil should export oranges and Mexico should export apples True False

true

Firms that collude ________ act in their own self interests. trust each other.

trust each other.

Production points beyond the production possibilities frontier are unattainable attainable but are production inefficient. attainable but have unemployed resources. attainable and desirable.

unattainable

A merger between U.S. Steel and General Motors would be an example of a __________ merger. horizontal conglomerate vertical

vertical

If a firm is a price taker, it can maximize profit by setting a price below equilibrium. has market power. has a differentiated product. will sell nothing if it sets a price above the price that other sellers choose.

will sell nothing if it sets a price above the price that other sellers choose.

A politician's statement that "to encourage economic growth, taxes should be cut," would be a statement of mercantilist economic philosophy. would be an example of a positive statement would be an example of a microeconomic statement. would be an example of a normative statement.

would be an example of a normative statement.

In monopolistic competition there is/are a few sellers who each face a downward-sloping demand curve. many sellers who each face a downward-sloping demand curve. many sellers who each face a perfectly elastic demand curve. only one sell

many sellers who each face a downward-sloping demand curve.

Which of the following is a TRUE statement about a monopoly? A monopoly does not necessarily earn positive economic profits. A monopoly must earn an above-normal profit to stay in business. As long as the demand curve slopes down, a monopoly can always find some price-output combination that generates positive economic profits. As long as there are barriers to entry, a monopoly can always find some price-output combination that generates positive economic profits.

A monopoly does not necessarily earn positive economic profits.

Which of the following statements about a tariff is true? A tariff increases produces surplus, decreases consumer surplus, increases revenue to the government, and reduces total surplus A tariff increases consumer surplus, decreases producer surplus, increases revenue to the government, and reduces total surplus. A tariff increases producer surplus, decreases consumer surplus, increases revenue to the government, and increases total surplus. A tariff increases consumer surplus, decreases producer surplus, increases revenue to the government, and increases total surplus.

A tariff increases produces surplus, decreases consumer surplus, increases revenue to the government, and reduces total surplus

In the simplest case, a key characteristic of the free market is that it reaches equilibrium by itself. All of the above are correct. does not require government intervention to work properly. surpluses and shortages provide the incentives for buyers and sellers to work toward equilibrium

All of the above are correct.

Which of the following are scarce resources? Top soil Lumber Time All of the above are scarce resources.

All of the above are scarce resources.

Jonah lives in a small town where there is only one Mexican restaurant. Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant? Demand is likely to be perfectly inelastic. Demand is likely to be relatively inelastic. Demand is likely to be relatively elastic. Demand is likely to be perfectly elastic.

Demand is likely to be relatively inelastic.

A perfectly competitive firm will maximize profit by selling output until P = MC TR = TC TR = MC P = MR

P = MC

When two firms in an industry become one firm, they are engaged in: a trust agreement. predatory pricing. a merger.

a merger

All of the following are examples of public goods, EXCEPT: national defense. basic research. a slice of pizza. a fireworks display.

a slice of pizza

During hurricanes, price ceilings are often placed on goods such as water, ice, candles, etc. What effect do the price ceilings have? They create shortages of these goods. They lower the incentive to ship more of these goods into the affected geographical area. They decrease the quantity of these goods that are sold, relative to the higher price that would occur in the absence of price controls. all of the above

all of the above

Everything that needs to be given up whenever a choice is made is called: an implicit cost. an explicit cost. an opportunity cost. variable cost.

an opportunity cost.

One reason why the coffeehouse market is competitive is that consumption takes place in public. demand for specialty coffee is very high. it is trendy and therefore is likely to have a customer following. barriers to entry are low.

barriers to entry are low.

The assumption of perfect information in a competitive market means that buyers and sellers have complete information about all markets. buyers and sellers are fully informed about prices and quality of good in the market. buyers and sellers have access to the Internet. All of the above are implied by the assumption of perfect information.

buyers and sellers are fully informed about prices and quality of good in the market.

Even though markets do a great job in organizing economic activity, governments are needed to do all of the following EXCEPT: establish and enforce property rights intervene when markets fail due to externalities decide what and how much should be produced.

decide what and how much should be produced

A country produces health care and education and is producing at a point on its production possibilities frontier. To produce more health care, the country must increase its production of both health care and education. decrease its production of education use unemployed resources to produce health care. increase its production of education.

decrease its production of education

If the price of apples goes down, then the demand for pears will increase, assuming apples and pears are substitutes remain constant, assuming apples and pears are related goods. decrease, assuming apples and pears are complements. decrease, assuming apples and pears are substitutes.

decrease, assuming apples and pears are substitutes.

The free-rider problem refers to the under-use of common resources abuse of power by some firms when they increase their prices to unreasonable levels. excessive consumption that occurs when goods are given for free during promotional campaigns. fact that when public goods are provided there is no way of preventing others from using them, even if they do not pay for them.

fact that when public goods are provided there is no way of preventing others from using them, even if they do not pay for them.

A tariff raises the price of a good, reduces the domestic quantity demanded, increases the domestic quantity supplied and increases the quantity imported True False

false

Trade makes everyone better off. True False

false

The quantity supplied of a particular good is the amount of the good that households are willing to consume at each particular price. firms will actually end up buying at a particular price during a given time period. households want firms to sell at each price during a particular time period. firms are willing to sell at each price during a particular time period.

firms are willing to sell at each price during a particular time period.

When a perfectly competitive firm experiences zero economic profits the high barriers to entry prevent further competition. firms have no incentive to exit or enter the industry. additional firms enter the industry existing firms exit the industry.

firms have no incentive to exit or enter the industry.

the lease payments made by a firm fall under the category of: fixed costs. variable costs. short-run costs. average fixed costs.

fixed costs.

all of the following are possible solutions to the overuse of common resources EXCEPT: converting the common resource into a private good through privatization or other means. having the government provide more of the common resource. regulations limiting the use of the common resource a tax imposed on the common resource.

having the government provide more of the common resource.

The government estimated that by allowing the merger between AT&T and T-Mobile to go through, the Herfindahl Hirschman Index for the national market would increase from about 2,400 to about 3,100. According to the merger standards of the Department of Justice and the FTC, these index numbers indicate that the market is ________ concentrated, and the merger ________ be challenged. moderately; may highly; may highly; will moderately; will

highly; will

If there is a decline in the price of milk, an input in the production of ice cream, then there will be a(n) decrease in the supply of ice cream and a leftward shift of the supply curve. increase in the supply of ice cream and a rightward shift of the supply curve. decrease in the quantity of ice cream supplied and a movement up along the supply curve. increase in the quantity of ice cream supplied and a movement down along the supply curve.

increase in the supply of ice cream and a rightward shift of the supply curve.

According to an article in the Wall Street Journal, unlike airlines, even elite hotels don't have sophisticated systems that can react quickly to changes in demand. Even if they could, many hoteliers say people don't respond that much to lower rates. "We've tested this, cutting our rates by $50 [per night], and we didn't see an appreciable response in occupancy," says Jim Schultenover, a vice president for Ritz-Carlton. Source: Jesse Drucker, "In Times of Belt-Tightening, We Seek Reasonable Rates," Wall Street Journal, April 6, 2001. Based on the information above, the demand for hotel rooms is elastic. perfectly elastic unit-elastic. inelastic

inelastic

The free-rider problem exists because people must all consume the same public good and so everyone wants to pay for it. people cannot be excluded from consuming public goods even if they don't pay for them. some goods or services that are rival and leave some people without them. private goods or services cause some people to want to take them for free.

people cannot be excluded from consuming public goods even if they don't pay for them.

For a monopolist that is maximizing profits, price equals average total cost. marginal revenue exceeds price price equals marginal revenue. price exceeds marginal cost.

price exceeds marginal cost.

For a perfectly competitive firm, marginal revenue is always equal to price. profit. average total cost average variable cost.

price.

The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because there are many firms in the market. entry into the market is blocked. products are differentiated. barriers to entry are very low.

products are differentiated.

The purpose of antitrust policy is to: promote competition among firms. achieve scale economies in production. protect domestic firms from foreign trade.

promote competition among firms.

The law of demand states that consumers have unlimited demands for a good. the price can never be too high for some consumers. a higher price will lead to increased sales. quantity demanded will vary inversely with the price of the good.

quantity demanded will vary inversely with the price of the good.

Living standards in the United States have risen tremendously over the years, mainly due to: trade protection from competition from countries with low wages, such as China. relentless increases in the productivity of labor over the years. the forceful efforts of labor unions. successive

relentless increases in the productivity of labor over the years.

A negative slope represents a direct relationship, such as snow fall and car accidents. represents an inverse relationship, such as beers consumed and test score. indicates that there is no relationship between two variables, such as women's wages and likelihood of sunshine. means that the line crosses below the x-axis

represents an inverse relationship, such as beers consumed and test score.

A reason the production possibilities frontier exists is unemployment. scarcity of resources and unlimited technology scarcity of resources. unlimited resources and technology.

scarcity of resources.

An increase in demand is represented by a shift of the demand curve to the right. shift of the demand curve to the left. movement up the demand curve movement down the demand curve

shift of the demand curve to the right.

Economic models are used to exactly replicate reality. determine the thoughts of individuals predict all possible outcomes of a study simplify reality to predict outcomes

simplify reality to predict outcomes

A microeconomist would study all of the following issues EXCEPT the most efficient means for General Motors to produce an automobile. the effect of a change in income taxes on the nation's rate of unemployment. the impact of a change in consumer income on the sales of corn the impact of a snowstorm on the sales of snow shovels.

the effect of a change in income taxes on the nation's rate of unemployment.

Labor includes labor by those who earn a wage but not a salary. the entire pool of physical and mental talents available to produce goods and services. manual labor and mental effort exerted by those without a college degree. manual labor only.

the entire pool of physical and mental talents available to produce goods and services.

The tragedy of the commons refers to: the grounds surrounding medieval towns, which became barren through overuse. ll conceived government policies that led to excessive bureaucracy. the free rider problem, that led communities to not provide desirable public goods. farmers being taxed too heavily.

the grounds surrounding medieval towns, which became barren through overuse.

When demand is elastic, a fall in price causes total revenue to rise because the demand curve shifts. when price falls, quantity sold increases so total revenue automatically rises. the percentage increase in quantity demanded is less than the percentage fall in price. the increase in quantity sold is large enough to offset the lower price.

the increase in quantity sold is large enough to offset the lower price.

A monopolist's demand curve is of unit elasticity throughout. perfectly inelastic. perfectly elastic. the industry demand curve.

the industry demand curve.

When politicians argue that outsourcing or offshoring of technical support to India by Dell Computer Corporation is harming to the U.S economy, they are employing which of the following arguments for restricting trade? the infant-industry argument the job argument the national security argument the deadweight- loss argument

the job argument

A major difference between a monopolist and a perfectly competitive firm is that the monopolist charges the highest possible price that he can. the monopolist engages in marginal cost pricing. the monopolist is certain to earn economic profits the monopolist's marginal revenue curve lies below its demand curve.

the monopolist's marginal revenue curve lies below its demand curve.

The price elasticity of demand is equal to the value of the slope of the demand curve. You Answered the percentage change in price divided by the percentage change in quantity demanded. the change in quantity demanded divided by the change in price. the percentage change in quantity demanded divided by the percentage change in price.

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

A movement along a supply curve is induced by a change in the product's price. taxes and subsidies. input prices. price expectations

the product's price.

In economics, "demand" refers to the amount of a good people need rather than the amount they want. the satisfaction a good will provide a person. the quantities of a good that people will buy at various prices. the intensity of desire for a good.

the quantities of a good that people will buy at various prices.

A given supply curve illustrates the effect of a change in resource costs on quantity supplied. the relationship between price and quantity supplied the effect of a change in technology on quantity supplied. the relationship between expected future prices and quantity supplied.

the relationship between price and quantity supplied

A market failure is when markets do not bring about production of all goods that consumers desire. production at the lowest possible average cost. profit maximization the socially optimal outcome.

the socially optimal outcome.

Hurricane Katrina damaged a large portion of oil refining and pipeline capacity in the Gulf coast states. In the market for gasoline, the supply curve shifted to the left resulting in an increase in the equilibrium price. the supply curve shifted to the right resulting in an increase in the equilibrium price. the demand curve shifted to the left resulting in a decrease in the equilibrium price. the demand curve shifted to the right resulting in an increase in the equilibrium price.

the supply curve shifted to the left resulting in an increase in the equilibrium price.

If other things are held constant, an increase in wages earned by workers in the steel industry will cause the demand for steel to decrease. the quantity of steel demanded to increase. the supply of steel to decrease. the quantity of steel supplied to decrease.

the supply of steel to decrease.