MiStudy

B

Refer to Table 13-7. What is the value of D? A. $25 B. $50 C. $100 D. $200

B

Taxes on labor encourage which of the following? A. Labor demand to be more inelastic B. Mothers to stay at home rather than work in the labor force C. Workers to work overtime D. Fathers to take on second jobs

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 a firm operates under conditions of monopoly, its price is A. not constrained. B. constrained by marginal cost. C. constrained by demand. D. constrained only by its social agenda

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.

C

A difference between explicit and implicit costs is that A. explicit costs must be greater than implicit costs. B. explicit costs do not require a direct monetary outlay by the firm, whereas implicit costs do. C. implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do. D. implicit costs must be greater than explicit costs.

B

A tax on an imported good is called a A. quota. B. tariff. C. supply tax. D. trade tax.

D

Cartels are difficult to maintain because A. ​the monopoly output is very difficult to determine. ​B. the number of firms is always large. ​C. costs to the firms in a cartel are continually rising. ​D. each firm has an incentive to deviate from its agreed output level.

C

Consider the U.S. market for chocolate, a market in which the government has imposed a nonbinding price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling? A. A government study that shows that consuming chocolate increases the incidence of cancer. B. A large increase in the size of the cocoa bean crop; cocoa beans are used to produce chocolate. C. South American cocoa bean producers refuse to ship to chocolate producers in the United States. D. A sharp drop in consumer income; chocolate is a normal good.

A

If a tax shifts the demand curve downward, A. we can infer that the tax was levied on buyers of the good. B. we can infer that the tax was levied on sellers of the good. C. we can infer that the tax was levied on both buyers and sellers of the good. D. we cannot infer anything because the shift described is not consistent with a tax.

B

Refer to Figure 14-7. Assume that the market starts in equilibrium at point W in graph (b). An increase in demand from D0 to D1 will result in A. a new market equilibrium at point X. B. an eventual increase in the number of firms in the market and a new long-run equilibrium at point Z. C. rising prices and falling profits for existing firms in the market. D. falling prices and falling profits for existing firms in the market.

A

The imposition of a binding price ceiling on a market causes A. quantity demanded to be greater than quantity supplied. B. quantity demanded to be less than quantity supplied. C. quantity demanded to be equal to quantity supplied. D. the price of the good to be greater than its equilibrium price.

C

The presence of a price control in a market for a good or service usually is an indication that A. an insufficient quantity of the good or service was being produced in that market to meet the public's need. B. the usual forces of supply and demand were not able to establish an equilibrium price in that market. C. policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers. D. policymakers correctly believed that price controls would generate no inequities of their own once imposed.

A

Walter used to work as a high school teacher for $40,000 per year but quit in order to start his own painting business. To invest in his painting business, he withdrew $20,000 from his savings, which paid 3 percent interest, and borrowed $30,000 from his uncle, whom he pays 3 percent interest per year. Last year Walter paid $25,000 for supplies and had revenue of $60,000. Walter asked Tyler the accountant and Greg the economist to calculate his painting business's costs. A. Tyler says his costs are $25,900, and Greg says his costs are $66,500. B. Tyler says his costs are $25,000, and Greg says his costs are $65,000. C. Tyler says his costs are $66,500, and Greg says his costs are $66,500. D. Tyler says his costs are $75,000, and Greg says his costs are $41,500.

D

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy, A. consumer surplus increases and total surplus increases in the market for that good. B. consumer surplus increases and total surplus decreases in the market for that good. C. consumer surplus decreases and total surplus increases in the market for that good. D. consumer surplus decreases and total surplus decreases in the market for that good.

B

In order to sell more of its product, a monopolist must A. lobby the government for a subsidy. B. lower its price. C. advertise. D. enact barriers to entry in related markets.

C

If the government levies a $1900 tax per truck on sellers of trucks, then the price paid by buyers of trucks would A. increase by more than $1900. B. increase by exactly $1900. C. increase by less than $1900. D. decrease by an indeterminate amount.

C

In a natural monopoly, A. society would be better off if antitrust laws were used to create many different firms in the market. B. the marginal cost curve is positively sloped. C. if the government requires marginal cost pricing, it will likely have to subsidize the firm. D. the marginal revenue curve is horizontal.

D

Most economists prefer corrective taxes to regulation as a way to correct the problem of pollution because the market-based solution A. is less efficient. B. can result in a greater increase in pollution. C. lowers revenue for the government. D. is less costly to society.

C

Ms. Joplin sells colored pencils. The colored-pencil industry is competitive. Ms. Joplin hires a business consultant to analyze her company's financial records. The consultant recommends that Ms. Joplin increase her production. The consultant must have concluded that, at her current level of production, Ms. Joplin's A. total revenues equal her total economic costs. B. marginal revenue exceeds her total cost. C. marginal revenue exceeds her marginal cost. D. marginal cost exceeds her marginal revenue.

B

Refer to Table 17-1. Suppose the town enacts new antitrust laws that prohibit Celia and Venya from operating as a monopoly. What will be the price of water once Celia and Venya reach a Nash equilibrium? A. $9 B. $12 C. $15 D. $18

A

Refer to Table 7-12. Both the demand curve and the supply curve are straight lines. At equilibrium, producer surplus is A. $24. B. $32. C. $48. D. $64.

D

When a monopolist decreases the amount of output that it produces and sells, average revenue A. decreases, and marginal revenue decreases. B. decreases, and marginal revenue increases. C. increases, and marginal revenue decreases. D. increases, and marginal revenue increases.

C

Which of the following is not an advantage of corrective taxes? A. They raise revenues for the government. B. They enhance economic efficiency. C. They subsidize the production of goods with positive externalities. D. They move the allocation of resources closer to the social optimum.

C

Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to A. only existing customers who now get lower prices on the gowns they were already planning to purchase. B. only new customers who enter the market because of the lower prices. C. both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices. D. Consumer surplus does not increase; it decreases.

C

Refer to Figure 10-6. In order to reach the social optimum, the government could A. impose a tax of $2 per unit on plastics. B. impose a tax of $6 per unit on plastics. C. impose a tax of $8 per unit on plastics. D. offer a subsidy of $6 per unit on plastics.

C

Refer to Figure 15-7. To maximize total surplus, a benevolent social planner would choose which of the following outcomes? A. Q = 30 and P = 30 B. Q = 30 and P = 60 C. Q = 45 and P = 45 D. Q = 60 and P = 30

A

Refer to Figure 7-5. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus due to new producers entering the market? A. $625 B. $2,500 C. $3,125 D. $5,625

A

Refer to Figure 8-8. Which graph correctly illustrates the relationship between the size of a tax and the size of the deadweight loss associated with the tax? A. Graph (a) B. Graph (b) C. Graph (c) D. Graph (d)

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.

C

Refer to Table 14-1. The price and quantity relationship in the table is most likely a demand curve faced by a firm in a A. monopoly. B. strategic market. C. competitive market. D. concentrated market.

C

Refer to Table 15-1. At what price will the monopolist maximize his profit? A. $6 B. $12 C. $18 D. $24

C

Refer to Table 15-3. If the monopolist can engage in perfect price discrimination, what is the total revenue when 3 ties are sold? A. $140 B. $420 C. $450 D. $620

B

Refer to Table 17-1. If Celia and Venya operate as a profit-maximizing monopoly in the market for water, what price will they charge? A. $21 B. $18 C. $15 D. $12

A

Refer to Table 17-1. If this market for water were perfectly competitive instead of monopolistic, what price would be charged? A. $0 B. $18 C. $27 D. $36

D

Refer to Table 7-4. The market quantity of apples demanded per day is exactly seven if the price of an orange, P, satisfies A. $0.60 < P < $0.75. B. $0.60 < P < $2.00. C. $0.25 < P < $0.75. D. $0.25 < P < $0.60.

C

Scenario 10-1The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 600th gallon of gasoline entails the following: a private cost of $2.93; a social cost of $3.20; a value to consumers of $3.31. Refer to Scenario 10-1. Suppose the dollar amount of the externality, per gallon of gasoline, is constant, regardless of how much gasoline is produced. Then the externality could be internalized if producers of gasoline were A. provided a subsidy of $0.11 per gallon of gasoline sold. B. provided a subsidy of $0.27 per gallon of gasoline sold. C. required to pay a tax of $0.27 per gallon of gasoline sold. D. required to pay a tax of $0.11 per gallon of gasoline sold.

B

Suppose a firm in a competitive market reduces its output by 20 percent. As a result, the price of its output is likely to A. increase by 20 percent. B. remain unchanged. C. increase by less than 20 percent. D. decline by more than 20 percent.

C

Suppose that cookie producers create a positive externality equal to $2 per dozen. What is the relationship between the equilibrium quantity and the socially optimal quantity of cookies to be produced? A. They are equal. B. The equilibrium quantity is greater than the socially optimal quantity. C. The equilibrium quantity is less than the socially optimal quantity. D. There is not enough information to answer the question.

A

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the A. buyers will bear a greater burden of the tax than the sellers. B. sellers will bear a greater burden of the tax than the buyers. C. buyers and sellers are likely to share the burden of the tax equally. D. buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.

C

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by A. less than $0.50. B. $0.50. C. between $0.50 and $1. D. $1.

B

The deadweight loss from a tax per unit of good will be smallest in a market with A. inelastic supply and elastic demand. B. inelastic supply and inelastic demand. C. elastic supply and elastic demand. D. elastic supply and inelastic demand.

D

Which of the following statements is correct? A. For all firms, marginal revenue equals the price of the good. B. Only for competitive firms does average revenue equal the price of the good. C. Marginal revenue can be calculated as total revenue divided by the quantity sold. D. Only for competitive firms does average revenue equal marginal revenue.

B

Which tools allow economists to determine if the allocation of resources determined by free markets is desirable? A. Profits and costs to firms B. Consumer and producer surplus C. The equilibrium price and quantity D. Incomes of and prices paid by buyers

D

You receive a paycheck from your employer, and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct? A. You will owe $300 per paycheck to pay the FICA tax for the remainder of the fiscal year regardless of your wages. B. Your employer is required by law to pay $150 to match half the $300 deducted from your check. C. This type of tax is an example of a sales tax. D. The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee.