Microeconomics Midterm 2
A firm produces 400 units of output at a total cost of $1,200. If total variable costs are $1,000, a. average fixed cost is 50 cents. b. average variable cost is $2. c. average total cost is $2.50. d. average total cost is 50 cents.
a
A firm that produces and sells furniture gets to choose a. how many workers to hire in both the short run and the long run. b. the size of its factories in the short run but not in the long run. c. which short-run average-total-cost curve to use in both the short run and the long run. d. the number of machines it uses in the short run but not in the long run.
a
A popular celebrity that is paid highly for her time should probably not mow her own lawn because a. her opportunity cost of mowing her lawn is higher than the cost of paying someone to mow it for her. b. she has a comparative advantage in mowing her lawn relative to a landscaping service. c. she has an absolute advantage in mowing her lawn relative to a landscaping service. d. she might sprain her ankle.
a
Because of the free-rider problem, a. private markets tend to undersupply public goods. b. the federal government spends too many resources on national defense and not enough resources on medical research. c. firework displays provided by private markets have become increasingly popular. d. poverty can easily be eliminated through private charity.
a
Billy's Bean Bag Emporium produced 300 bean bag chairs but sold only 245 of the units it produced. The average cost of production for each unit of output produced was $100. The price for each of the 245 units sold was $90. Total profit for Billy's Bean Bag Emporium would be a. -$2,450. b. $22,050. c. $27,000. d. $30,000.
a
If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn, then a. Iowa has a comparative advantage in the production of corn. b. Iowa has an absolute advantage in the production of corn. c. Iowa should import corn from Oklahoma. d. Oklahoma should produce just enough corn to satisfy its own residents' demands.
a
If a highway is congested, then use of that highway by an additional person would lead to a a. negative externality. b. positive externality. c. Pigovian externality. d. free-rider problem with rush-hour drivers stuck in traffic.
a
Jane was a partner at a law firm earning $223,000 per year. She left the firm to open her own law practice. In the first year of business she generated revenues of $347,000 and incurred explicit costs of $163,000. Jane's economic profit from her first year in her own practice is a. −$39,000. b. $124,000. c. $163,000. d. $184,000.
a
Katherine gives piano lessons for $45 per hour. She also grows flowers, which she arranges and sells at the local farmer's market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $450 at the farmer's market. Katherine's accounting profits are a. $400, and her economic profits are $175. b. $400, and her economic profits are $150. c. $175, and her economic profits are $400. d. $150, and her economic profits are $575.
a
On a 250-acre farm, a farmer is able to produce 4,500 bushels of wheat when he hires 2 workers. He is able to produce 6,300 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product? a. The farmer is able to produce 7,560 bushels of wheat when he hires 4 workers. b. The farmer is able to produce 8,100 bushels of wheat when he hires 4 workers. c. The farmer is able to produce 8,300 bushels of wheat when he hires 4 workers. d. The farmer is able to produce 8,500 bushels of wheat when he hires 4 workers.
a
Refer to Figure 10-3. What is the equilibrium price in this market? a. $4 b. Between $4 and $12 c. $12 d. More than $12
a
Refer to Figure 10-6. If 250 units of plastics are produced and consumed, then the a. social optimum has been reached. b. market equilibrium has been reached. c. negative externality associated with plastics has been eliminated. d. positive externality associated with plastics has been eliminated.
a
Refer to Figure 2. From the figure it is apparent that a. Uganda will export coffee if trade is allowed. b. Uganda will import coffee if trade is allowed. c. Uganda has nothing to gain either by importing or exporting coffee. d. the world price will fall if Uganda begins to allow its citizens to trade with other countries.
a
Refer to Figure 3-4. If point A represents Alvina's production and point B represents Jane's production, a. Alvina produces 200 pitchers of lemonade and 100 pizzas while Jane produces 180 pitchers of lemonade and 180 pizzas. b. Alvina produces 180 pitchers of lemonade and 180 pizzas while Jane produces 200 pitchers of lemonade and 100 pizzas. c. Alvina produces 100 pitchers of lemonade and 200 pizzas while Jane produces 180 pitchers of lemonade and 180 pizzas. d. Only Alvina can benefit from specialization and trade
a
Refer to Figure 9-2. If this country allows free trade in tricycles, a. consumers will gain and producers will lose. b. consumers will lose and producers will gain. c. both consumers and producers will gain. d. both consumers and producers will lose.
a
Refer to Figure 9-4. Consumer surplus in this market after trade is a. A. b. A + B. c. A + B + D. d. C.
a
Refer to Table 10-1. How large would a corrective tax need to be to move this market from the equilibrium outcome to the socially optimal outcome? a. $4 b. $5 c. $24 d. $22
a
Refer to Table 3-1. Assume that Celia and John each work 24 hours. What happens to total production if instead of each person spending 12 hours producing each good, Celia spends 18 hours producing wine and 6 hours producing bread and John spends 6 hours producing wine and 18 hours producing bread? a. The total production of bread and wine each rise. b. The total production of bread rises and the total production of wine falls. c. The total production of bread falls and the total production of wine rises. d. The total production of bread and wine each fall.
a
Refer to Table 3-11. Cuba's opportunity cost of one cooler is a. 0.5 radios, and Denmark's opportunity cost of one cooler is 0.125 radios. b. 0.5 radios, and Denmark's opportunity cost of one cooler is 8 radios. c. 2 radios, and Denmark's opportunity cost of one cooler is 0.125 radios. d. 2 radios, and Denmark's opportunity cost of one cooler is 8 radios.
a
Refer to Table 3-12. India's opportunity cost of producing bananas is a. 0.5 units of rice. This is lower than Indonesia's opportunity cost of producing bananas. b. 2.5 units of rice. This is higher than Indonesia's opportunity cost of producing bananas. c. 2/5 units of rice. This is lower than Indonesia's opportunity cost of producing bananas. d. 0.5 units of rice. This is higher than Indonesia's opportunity cost of producing bananas.
a
Scenario 9-1 For a small country called Boxland, the equation of the domestic demand curve for cardboard is Q D = 380 − 2P, where QD represents the domestic quantity of cardboard demanded, in tons, and P represents the price of a ton of cardboard. For Boxland, the equation of the domestic supply curve for cardboard is Q S = -60 + 3P, where QS represents the domestic quantity of cardboard supplied, in tons, and P again represents the price of a ton of cardboard. Refer to Scenario 9-1. Suppose the world price of cardboard is $139. Then, relative to the no-trade situation, international trade in cardboard produces which of the following results for Boxland? a. It decreases consumer surplus, increases producer surplus, and increases total surplus. b. It decreases consumer surplus, increases producer surplus, and decreases total surplus. c. It increases consumer surplus, decreases producer surplus, and decreases total surplus. d. It increases consumer surplus, decreases producer surplus, and increases total surplus.
a
Spain is an importer of computer chips, taking the world price of $11 per chip as given. Suppose Spain imposes a $3 tariff on chips. Which of the following outcomes is possible? a. The price of chips in Spain increases to $14; the quantity of Spanish produced chips increases; and the quantity of chips imported by Spain decreases. b. More foreign-produced chips are sold in Spain. c. Spanish consumers and producers of chips gain. d. Total surplus in the Spanish chip market increases.
a
Suppose Canada has an absolute advantage over other countries in producing grapes, but other countries have a comparative advantage over Canada in producing grapes. If trade in grapes is allowed, Canada a. will import grapes. b. will export grapes. c. will either import grapes or export grapes, but it is not clear from the given information. d. would have nothing to gain either from exporting or importing grapes.
a
The Tragedy of the Commons results when a good is a. rival in consumption and not excludable. b. excludable and not rival in consumption. c. both rival in consumption and excludable. d. neither rival in consumption nor excludable.
a
Which of the following expressions is correct? a. accounting profit = economic profit + implicit costs b. accounting profit = total revenue − implicit costs c. economic profit = accounting profit + explicit costs d. economic profit = total revenue − implicit costs
a
A textbook is a a. private good and the knowledge that one gains from reading the book is a common resource. b. private good and the knowledge that one gains from reading the book is a public good. c. common resource and the knowledge that one gains from reading the book is a public good. d. common resource and the knowledge that one gains from reading the book is a private good.
b
Average total cost is very high when a small amount of output is produced because a. average variable cost is high. b. average fixed cost is high. c. marginal cost is high. d. marginal product is high.
b
For a large firm that produces and sells automobiles, which of the following costs would be a variable cost? a. The $20 million payment that the firm pays each year for accounting services b. The cost of the steel that is used in producing automobiles c. The rent that the firm pays for office space in a suburb of St. Louis d. The cost of internet advertising incurred each year
b
Nathan makes candles. If he charges $20 for each candle, his total revenue will be a. $1,000 if he sells 100 candles. b. $500 if he sells 25 candles. c. $20 regardless of how many candles he sells. d. $2,000 if he sells 5 candles.
b
Private companies are most likely to invest in medical research if a. they will produce general knowledge. b. they will produce a specific product for which they may receive a patent. c. there is no government intervention in the market for medical products. d. others will benefit from their discoveries.
b
Refer to Figure 10-2. If all external costs were internalized, then the market's output would be a. Q1 . b. Q2 . c. Q3 . d. Q4 .
b
Refer to Figure 10-5. A benevolent social planner would prefer a. a $48 price to any other price. b. 140 units to any other quantity of output. c. a subsidy of $52 per unit to a subsidy of $54 per unit. d. a tax of $54 per unit to a subsidy of $54 per unit.
b
Refer to Figure 13-2. Curve C is always declining because a. of diminishing marginal product. b. we are dividing fixed costs by higher and higher levels of output. c. marginal product first increases, then decreases. d. marginal product first decreases, then increases.
b
Refer to Figure 13-5. Which of the following statements is correct? a. Marginal cost is rising for quantities higher than D because marginal cost is higher than average total cost. b. Average variable cost is declining for quantities less than B because marginal cost is lower than average variable cost. c. Marginal cost is minimized at B because at that quantity, marginal cost equals average variable cost. d. Average total cost is declining for quantities less than C because average variable cost is less than average total cost.
b
Refer to Figure 2. When trade in coffee is allowed, producer surplus in Uganda a. increases by the area B + F. b. increases by the area B + F + H. c. decreases by the area A + D. d. decreases by the area H.
b
Refer to Figure 3-3. If the production possibilities frontier shown for Tanek is for 120 hours of production, then how long does it take Tanek to make one burrito? a. 0.1 hour b. 0.4 hour c. 3 hours d. 2.5 hours
b
Refer to Figure 9-4. When the country for which the figure is drawn allows international trade in crude oil, a. consumer surplus changes from the area A + B + D to the area A. b. producer surplus changes from the area C to the area B + C + D. c. total surplus decreases by the area D. d. consumer surplus changes from the area A to the area A + B.
b
Refer to Figure 9-5. Producer surplus in this market before trade is a. C. b. B + C. c. A + B + D. d. B + C + D.
b
Refer to Table 13-9. The average variable cost of producing 240 units is a. $0.13. b. $0.19. c. $0.32. d. $0.80.
b
Scenario 13-3 Kai is an organic brocolli farmer, but he also spends part of his day as a professional organizing consultant. As a consultant, Kai helps people organize their houses. Due to the popularity of her home-organization services, Farmer Kai has more clients requesting his services than he has time to help if he maintains his farming business. Farmer Kai charges $35 an hour for his home-organization services. One spring day, Kai spends 8 hours in his fields planting $130 worth of seeds on his farm. He expects that the seeds he planted will yield $300 worth of brocolli. Refer to Scenario 13-3. Chloe's accountant would calculate the total cost for the day of farming to equal a. $25. b. $130. c. $300. d. $380.
b
The Bow Wow company produced and sold 350 dog beds. The average cost of production per dog bed was $35. Each dog bed can be sold for a price of $45. Bow Wow's total costs are a. $5,000. b. $12,250. c. $15,750. d. $28,000.
b
The overuse of a common resource relative to its economically efficient use is called a. the free-rider problem. b. the Tragedy of the Commons. c. a public good. d. cost-benefit analysis.
b
The provision of a public good generates a a. positive externality, as does the use of a common resource. b. positive externality and the use of a common resource generates a negative externality. c. negative externality, as does the use of a common resource. d. negative externality and the use of a common resource generates a positive externality.
b
The town of Smallhaven is on a small island connected to Large City by a single bridge. Most of the residents of Smallhaven work in Large City. As a result, the bridge becomes very congested for two hours each day at the typical morning and evening commute times. Which of the following policies considered by the mayor of Smallhaven would likely be most efficient in alleviating the congestion? a. A fixed toll for the bridge payable by every vehicle crossing the bridge at all days and times. b. A variable toll for the bridge payable only by vehicles crossing the bridge during the congested commute times. c. Any vehicle crossing the bridge at any time must have a sticker paid for with a one-time fee of $25. d. A press conference in which the mayor requests that people try to cross the bridge earlier or later than the typical commute times.
b
Zaria and Hannah are roommates. Zaria assigns a $30 value to smoking cigarettes. Hannah values smoke-free air at $15. Which of the following scenarios is a successful example of the Coase theorem? a. Hannah offers Zaria $20 not to smoke. Zaria accepts and does not smoke. b. Zaria pays Hannah $16 so that Zaria can smoke. c. Zaria pays Hannah $14 so that Zaria can smoke. d. Hannah offers Zaria $15 not to smoke. Zaria accepts and does not smoke.
b
Scenario 13-3 Kai is an organic brocolli farmer, but he also spends part of his day as a professional organizing consultant. As a consultant, Kai helps people organize their houses. Due to the popularity of her home-organization services, Farmer Kai has more clients requesting his services than he has time to help if he maintains his farming business. Farmer Kai charges $35 an hour for his home-organization services. One spring day, Kai spends 8 hours in his fields planting $130 worth of seeds on his farm. He expects that the seeds he planted will yield $300 worth of brocolli. Refer to Scenario 13-3. Joseph's economic profit from farming equals a. −$130. b. −$180. c. $130. d. $170.
b IGNORE THIS IS WRONG
A state-owned bridge is a. always a public good, whether or not it is congested. b. a public good when it is congested, but it is a common resource when it is not congested. c. a common resource when it is congested, but it is a public good when it is not congested. d. always a common resource, whether or not it is congested.
c
Education yields positive externalities. For example, a. colleges and universities have benefited, in recent years, from increases in tuition paid by students. b. as a result of earning a college degree, a person becomes a more productive worker and benefits by earning higher wages. c. a more educated population tends to result in lower crime rates. d. when students go to school, they reinforce the demand for teachers.
c
Goods that are rival in consumption include both a. club goods and public goods. b. public goods and common resources. c. common resources and private goods. d. private goods and club goods
c
If a sawmill creates too much noise for local residents, a. noise restrictions will force residents to move out of the area. b. a sense of social responsibility will cause owners of the mill to reduce noise levels. c. the government can raise economic well-being through noise-control regulations. d. the government should avoid intervening because the market will always allocate resources efficiently.
c
If marginal cost is rising, a. average variable cost must be falling. b. average fixed cost must be rising. c. marginal product must be falling. d. marginal product must be rising.
c
Luis, Mina, and Daniel all would like a play area while waiting at their children's bus stop. The neighborhood association is considering installing playground equipment at the bus stop. Luis values the equipment at $150, Mina at $100, and Daniel at $100. The equipment and labor for installation cost $300. If Luis, Mina, and Daniel are the only residents who value the equipment, what should the neighborhood association do? a. Install the playground equipment because people would like a play area. b. Do not install the playground equipment because the costs outweigh the benefits. c. Install the playground equipment because the benefits outweigh the costs. d. Do not install the playground equipment to prevent the Tragedy of the Commons problem of overuse.
c
Producers have little incentive to produce a public good because a. the social benefit is less than the private benefit. b. the social benefit is less than the social cost. c. there is a free-rider problem. d. there is a Tragedy of the Commons.
c
Refer to Figure 10-1. This graph represents the tobacco industry. Without any government intervention, the equilibrium price and quantity are a. $2.80 and 48 units, respectively. b. $3.00 and 60 units, respectively. c. $2.07 and 76 units, respectively. d. $1.50 and 100 units, respectively.
c
Refer to Figure 10-4. The installation of a scrubber in a smokestack reduces the emission of harmful chemicals from the smokestack. Therefore, the market for smokestack scrubbers is shown in a. Graph (a). b. Graph (b) only. c. Graph (c) only. d. Graphs (b) and (c).
c
Refer to Figure 13-5. The efficient scale of production occurs at which quantity? a. A b. B c. C d. D
c
Refer to Figure 2. From the figure it is apparent that a. Uganda will experience a shortage of coffee if trade is not allowed. b. Uganda will experience a surplus of coffee if trade is not allowed. c. Uganda has a comparative advantage in producing coffee, relative to the rest of the world. d. foreign countries have a comparative advantage in producing coffee, relative to Uganda.
c
Refer to Figure 9-2. Without trade, producer surplus amounts to a. $19,440. b. $23,280. c. $9,720. d. $3,000.
c
Refer to Figure 9-3. The imposition of a tariff on roses a. increases the number of roses imported by 100. b. increases the number of roses imported by 200. c. decreases the number of roses imported by 200. d. decreases the number of roses imported by 500.
c
Refer to Figure 9-4. Producer surplus in this market after trade is a. A. b. A + B. c. B + C + D. d. C.
c
Refer to Figure 9-5. Consumer surplus in this market after trade is a. A. b. C + B. c. A + B + D. d. B + C + D.
c
Refer to Table 10-3. The social value of the 4th unit of output that is produced is a. $10. b. $16. c. $26. d. $30.
c
Refer to Table 13-10. What is the marginal cost of creating the tenth instructional module in a given month? a. $900 b. $1,250 c. $2,500 d. $3,060
c
Refer to Table 13-12. Which firm has constant returns to scale over the entire range of output? a. Firm 1 b. Firm 2 c. Firm 3 d. Firm 4
c
Refer to Table 13-3. The marginal product of the second worker is a. 90 units. b. 85 units. c. 80 units d. 20 units.
c
Refer to Table 13-7. What is the value of C? a. $25 b. $50 c. $100 d. $200
c
Scenario 13-4 If Farmer Brown plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 5 bushels of wheat. If he plants 2 bags, he gets 9 bushels. If he plants 3 bags, he gets 12 bushels. A bag of seeds costs $120, and seeds are his only cost. Refer to Scenario 13-4. Farmer Brown's production function exhibits a. increasing marginal product. b. constant marginal product. c. diminishing marginal product d. The production function is unrelated to the marginal product.
c
The parable called the Tragedy of the Commons applies to goods and services such as a. police protection and cable TV. b. tornado sirens and medical research. c. grazing land and fishing. d. antipoverty programs and national defense.
c
The world price of a ton of steel is $650. Before Russia allowed trade in steel, the price of a ton of steel there was $1,000. Once Russia allowed trade in steel with other countries, Russia began a. exporting steel and the price per ton in Russia decreased to $650. b. exporting steel and the price per ton in Russia remained at $1,000. c. importing steel and the price per ton in Russia decreased to $650. d. importing steel and the price per ton in Russia remained at $1,000.
c
When marginal cost is less than average total cost, a. marginal cost must be falling. b. average variable cost must be falling. c. average total cost is falling. d. average total cost is rising.
c
When the nation of Worldova allows trade and becomes an exporter of silk, a. residents of Worldova who produce silk become worse off; residents of Worldova who buy silk become better off; and the economic well-being of Worldova rises. b. residents of Worldova who produce silk become worse off; residents of Worldova who buy silk become better off; and the economic well-being of Worldova falls. c. residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova rises. d. residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova falls.
c
Which of the following is an example of an implicit cost? a. Interest paid on the firm's debt b. Rent paid by the firm to lease office space c. The owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm d. Wages paid to workers
c
A lighthouse is typically considered to be a public good because a. the owner of the lighthouse is able to exclude beneficiaries from enjoying the lighthouse. b. there is rarely another lighthouse nearby to provide competition. c. a nearby port authority cannot avoid paying fees to the lighthouse owner. d. all passing ships are able to enjoy the benefits of the lighthouse without paying.
d
Bev is opening her own court-reporting business. She financed the business by withdrawing money from her personal savings account. When she closed the account, the bank representative mentioned that she would have earned $300 in interest next year. If Bev hadn't opened her own business, she would have earned a salary of $25,000. In her first year, Bev's revenues were $30,000, and she spent $1,000 on materials and supplies. Which of the following statements is correct? a. Bev's total explicit costs are $26,300. b. Bev's total implicit costs are $300. c. Bev's accounting profits exceed her economic profits by $300. d. Bev's economic profit is $3,700.
d
Flu shots provide a positive externality. Suppose that the market for vaccinations is perfectly competitive. Without government intervention in the vaccination market, which of the following statements is correct? a. At the current output level, the marginal social cost exceeds the marginal private cost. b. The current output level is inefficiently high. c. A per-shot tax could turn an inefficient situation into an efficient one. d. At the current output level, the marginal social benefit exceeds the marginal private benefit.
d
Goods that are excludable include both a. club goods and public goods. b. public goods and common resources. c. common resources and private goods. d. private goods and club goods.
d
If China is capable of producing either shoes or toy trains or some combination of the two, then a. China should specialize in the product in which it has an absolute advantage. b. it would be impossible for China to have an absolute advantage over another country in both products. c. it would be difficult for China to benefit from trade with another country if China is efficient in the production of both goods. d. China's opportunity cost of shoes is the inverse of its opportunity cost of toy trains.
d
If a firm produces nothing, which of the following costs will be zero? a. Total cost b. Fixed cost c. Opportunity cost d. Variable cost
d
Pollution is a a. problem that is entirely unrelated to the parable called the Tragedy of the Commons. b. problem that cannot be remedied with regulations or corrective taxes. c. negative externality that can be viewed as a public-goods problem. d. negative externality that can be viewed as a common-resource problem.
d
Refer to Figure 10-4, Graph (b) and Graph (c). The installation of a scrubber in a smokestack reduces the emission of harmful chemicals from the smokestack. Therefore, the socially optimal quantity of smokestack scrubbers is represented by point a. Q2 . b. Q3 . c. Q4 . d. Q5 .
d
Refer to Figure 10-5. The socially optimal quantity of output is a. 80 units, since the value to the buyer of the 80th unit is equal to the cost incurred by the seller of the 80th unit. b. 80 units, since the value to society of the 80th unit is equal to the cost incurred by the seller of the 80th unit. c. 140 units, since the value to the buyer of the 140th unit is equal to the cost incurred by the seller of the 140th unit. d. 140 units, since the value to society of the 140th unit is equal to the cost incurred by the seller of the 140th unit.
d
Refer to Figure 9-2. Without trade, total surplus amounts to a. $9,720. b. $3,000. c. $23,280. d. $19,440.
d
Refer to Figure 9-4. Producer surplus in this market before trade is a. A. b. A + B. c. B + C + D. d. C.
d
Refer to Figure 9-5. Producer surplus plus consumer surplus in this market after trade is a. A + B. b. A + B + C. c. B + C + D. d. A + B + C + D.
d
Refer to Table 10-4. The market equilibrium quantity of output is a. 3 units. b. 4 units. c. 5 units. d. 6 units.
d
Refer to Table 13-8. What is the marginal cost of producing the fifth unit of output? a. $4 b. $40 c. $50 d. $70
d
Refer to Table 3-8. If the production possibilities frontier is a straight line, then how many coats are produced when 8 blankets are produced? a. 5 b. 10 c. 30 d. 40
d
Suppose Jassie and Tucker can both produce two goods: toy cars and dinosaur figures. Which of the following is not possible? a. Jim has an absolute advantage in the production of toy cars and in the production of dinosaur figures. b. Jim has an absolute advantage in the production of toy cars and a comparative advantage in the production of dinosaur figures. c. Jim has an absolute advantage in the production of dinosaur figures and a comparative advantage in the production of toy cars. d. Jim has a comparative advantage in the production of toy cars and in the production of dinosaur figures.
d
The "unfair-competition" argument might be cited by an American who believes that a. almost every country has a comparative advantage, relative to the United States, in producing almost all goods. b. young industries should be protected against foreign competition until they become profitable. c. the American automobile industry should be protected against Japanese firms that are able to produce automobiles at relatively low cost. d. the French government's subsidies to French farmers justify restrictions on American imports of French agricultural products.
d
The phenomenon of free riding is most closely associated with which type of good? a. Private goods b. Club goods c. Inferior goods d. Public goods
d
When a country that imports a particular good imposes a tariff on that good, a. producer surplus decreases and total surplus increases in the market for that good. b. domestic sellers and domestic buyers become better off. c. the domestic quantity demanded increases. d. producer surplus increases and total surplus decreases in the market for that good.
d
When a country that imports a particular good imposes an import quota on that good a. producer surplus decreases and total surplus decreases in the market for that good. b. domestic sellers and domestic buyers become better off. c. the domestic quantity supplied decreases. d. domestic sellers become better off and domestic buyers become worse off
d
When an externality is present, the market equilibrium is a. efficient, and the equilibrium maximizes the total benefit to society as a whole. b. efficient, but the equilibrium does not maximize the total benefit to society as a whole. c. inefficient, but the equilibrium maximizes the total benefit to society as a whole. d. inefficient, and the equilibrium does not maximize the total benefit to society as a whole.
d
Which of the following costs of publishing a book is a fixed cost? a. Author royalties of 5 percent per book b. The costs of paper and binding c. Shipping and postage expenses d. Composition, typesetting, and jacket design for the book
d
Which of the following explains why long-run average total cost at first decreases as output increases? a. Diseconomies of scale b. Less-efficient use of inputs c. Fixed costs becoming spread out over more units of output d. Gains from specialization of inputs
d
Which of the following is not a characteristic of a public good? a. It is not excludable. b. It is not diminished or depreciated as additional people consume the good. c. Its benefits cannot be withheld from anyone. d. Because it is a free good, there is no opportunity cost.
d
Which of the following is not a reason why government agencies subsidize basic research? a. The private market devotes too few resources to basic research. b. The general knowledge developed through basic research can be used without charge. c. The social benefit of additional knowledge is perceived to be greater than the cost of the subsidies. d. The government wants to attract the brightest researchers away from private research firms.
d
Which of the following is not correct? a. The producer who requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good. b. The producer who gives up less of other goods to produce Good X has the smaller opportunity cost of producing Good X. c. The producer who has the smaller opportunity cost of producing a good is said to have a comparative advantage in producing that good. d. The gains from specialization and trade are based not on comparative advantage but on absolute advantage.
d
Which of the following statements is not true of both pollution permits and corrective taxes? a. Both policies internalize the externality of pollution. b. Both policies require firms to pay for their pollution. c. Both policies lead to the establishment of an equilibrium price of pollution. d. Both policies increase the amount of pollution compared to the market equilibrium.
d
Scenario 13-3 Kai is an organic brocolli farmer, but he also spends part of his day as a professional organizing consultant. As a consultant, Kai helps people organize their houses. Due to the popularity of her home-organization services, Farmer Kai has more clients requesting his services than he has time to help if he maintains his farming business. Farmer Kai charges $35 an hour for his home-organization services. One spring day, Kai spends 8 hours in his fields planting $130 worth of seeds on his farm. He expects that the seeds he planted will yield $300 worth of brocolli. Refer to Scenario 13-3. What is the total opportunity cost of the day that Farmer Joseph spent in the field planting lettuce? a. $130 b. $480 c. $300 d. $350
d IGNORE THIS IS WRONG
