Microeconomics

Which of the following events will cause the demand curve for hamburgers to shift to the right?

(A) An increase in the price of pizza, a substitute for hamburgers

The condition for allocative efficiency is violated when:

(A) Firms are price makers (price searchers)

Private supply of public goods is most likely to result in:

(A) Less than the efficient level of output, due to the free-rider problem

A chemical plant pollutes a river that serves as the water supply for a near by town. From an economists point of view, pollution from the plant should be reduced until the

(A) Marginal benefit from the cleaner water is equal to the marginal cost of making the water cleaner

Which of the following statements is true for a monopolist at the profit-maximizing output level?

(A) Price exceeds marginal revenue

Monopolistically competitive firms are inefficient because they?

(A) Produce a lower level of output at a higher average cost than do perfectly competitive firms.

If a perfectly competitive firm wishes to maximize profits and is producing where price exceedes both marginal cost and average variable cost, then the firm is?

(A) Producing too little output

If the price of a product in a competitive market increases, which of the following is most likely to occur in the labor market for workers who produce that product?

(A) The demand for labor and the number of workers hired both increase.

An increase in which of the following will most likely result in the long run surplus of a product?

(B) A price that is set by law above the equilibrium price.

Which of the following statements about the firm whose costs and revenue curves are sown above is correct?

(B) It's profit maximizing output level is 200 units.

A profit maximizing firm will hire

(B) Labor until its wage re\ate equals its marginal revenue product

If a perfectly competitive industry was monopolized without any changes in cost conditions, the price and quantity produced would change in which of the following ways?

(B) Price: Increase / Quantity: Decrease

The concept of derived demand is described by which of the following?

(A) A decrease in the demand for theater tickets will decrease the demand for actress and actors

The chart below shows the number of resource units the countries of Gamma and Omega must use t produce one unit of food or one unit of clothing Gamma Omega Food 10 5 Clothing 9 3 Which of the following statements is true according to the chart above?

(B) Trade should take place, with Gama specializing in food production and Omega specializing in clothing production.

Assume that the total fixed costs are $46, that the average product of labor is 5 units when 10 units of output are produced, and that the wage rate is $12. If labor is the only variable input, what is the average total cost of producing 10 unts of output?

(C) $7

In a perfectly competitive labor market for nurses, all of the following statements are true except:

(C) An increase in the supply of nurses will create unemployment and leave wages unchanged.

In a perfectly competitive industry, the market price of the product is $12. A firm produces at a level of output where average total cost is $16, marginal cost is $16, and average variable cost is $8. To maximize profit, the firm should?

(C) Decrease output, but keep producing

In the short run in perfect competition, the industry's demand curve and firm's demand curve have which of the following slopes?

(C) Industry's Demand Curve: Downward sloping / Firm's Demand Curve: Horizontal

In the short run, a decrease in the production costs of a product will shift?

(C) Only the supply curve to the right

The demand curve for a normal good slopes down for which of the following reasons?

(D) I and II only: I. An increase in the price of the good induces consumers to purchase substititue products. II. An increase in the price of the good reduces consumers' purchasing power.

Suppose that a consumer purchase two goods X and Y and that the marginal utility of X is MUx , the total utility of X is TUx, the marginal utility of Y is MUy, and the total utility of Y is TUy. If the prices of X and Y are Px and Py, respectively, which of the following expressions defines consumer equilibrium.

(D) Mux / Px = MUy / Py

Which of the following is the best example of a negative externality?

(D) Oil leakage from drilling platforms in the Gulf of Mexico

When a perfectly competitive firm sells additional units of output, its revenue will?

(E) Increase at constant rate

In a perfectly competitive market, which of the following shifts in the supply and the demand curves will definitely cause both the equilibrium price and quantity to decrease?

(E) Supply Curve: No shift / Demand Curve: Shifts to the left