MIRCO TEST TWO

Cody builds mailboxes. If he charges $20 for each mailbox, his total revenue will be

$500 if he sells 25 mailboxes

When a profit-maximizing firm is earning profits, those profits can be identified by Group of answer choices

(P-ATC)*Q

A binding minimum wage tends to

A) cause a labor surplus. B) cause unemployment. C) have the greatest impact in the market for teenage labor.

Which of the following statements is correct regarding a firm's decision-making? Group of answer choices

The decision to shut down is a short-run decision, whereas the decision to exit is a long0run decision

Which of the following goods is rival and excludable?

a congested toll road

when the government imposes a binding price ceiling on a competitive market

a shortage of the good occurs

Profit-maximizing firms enter a competitive market when existing firms in that market have

average total costs less than market price

Which of the following would not be considered a private good?

cable tv service

A tax of $0.25 is imposed on each bag of potato chips that is sold. The tax decreases producer surplus by $600 per day, generates tax revenue of $1,220 per day, and decreases the equilibrium quantity of potato chips by 120 bags per day. The tax Group of answer choices

creates a deadweight loss of $15 per day

Both private goods and club goods are

excludable

Which of the following is an example of an implicit cost?

foregone rent on office space owned and used by the firm

A certain competitive firm sells its output for $20 per unit. The 50th unit of output that the firm produces has a marginal cost of $22. Production of the 50th unit of output does not necessarily

increase the firm's average variable cost by $0.44

Corrective taxes that are imposed upon the producer of a nasty smell can be successful in reducing that smell because the tax makes the producer Group of answer choices

internalize the negative externality

A negative externality

is an adverse impact on a bystander

When a profit-maximizing firm in a competitive market has zero economic profit, accounting profit

is at least zero

Economists normally assume that the goal of a firm is to

maximize profits

An example of a price floor is

minimum wage

The things that must be forgone to acquire a good are called

opportunity costs

A good is excludable if

people can be prevented from using it

If one person's use of a good diminishes another person's enjoyment of it, the good is

rival in consumption

Some environmentalists argue that we should protect the environment as much as possible, regardless of cost. Which of the following is not a likely outcome of pursuing such a course of action?

the elimination of all pollution

If a price floor is not binding, then

the equilibrium price is above the price floor

The difference between accounting profit and economic profit relates to

the manner in which costs are defined

The business activities of Firm A confer positive externalities on Firm B, and the business activities of Firm B confer positive externalities on Firm A. If the two firms merged, then

their respective markets would move closer to the social optimum

The competitive firm's long-run supply curve is that portion of the marginal cost curve that lies above average

total cost

Profit is defined as

total revenue minus total cost

A certain firm manufactures and sells computer chips. Last year it sold 2 million chips at a price of $10 per chip. For last year, the firm's

total revenue was $20 million

A $3.50 tax per gallon of paint placed on the sellers of paint will shift the supply curve

upward by exactly $3.50

If a firm operating in a competitive industry shuts down in the short run, it can avoid paying

variable costs

Under which of the following scenarios would a park be considered a common resource?

visitors can enter the park free of charge, but frequently all of the picnic tables are in use

Under which of the following scenarios would a park be considered a club good?

visitors to the park must pay an admittance fee, but there are always plenty of empty picnic tables

Some goods can be either common resources or public goods depending on

whether the good is rival in consumption

If the profit-maximizing quantity of production for a competitive firm occurs at a point where the firm's average total cost of production is falling as production increases, then the firm

will have economic profit less than zero at the profit-maximizing quantity

In the long run, each firm in a competitive industry earns

zero economic profit