Prin Agri Micro Exam 1 Practice
If the market price for an ICU2 monitor, whose demand curve is shown above, is set at $150, then consumer surplus is $_____ billion. (Enter your response rounded to three decimal places.)
3.375
What is meant by holding all else equal and how is this concept used when discussing movements along the demand curve? We make the assumption of holding all else equal when considering demand curves since we want to focus on the changes in the quantity demanded that result from changes in _____.
All variables that can affect the demand for the good are held constant. Only the price of a good.
Which of the following is not one of the three conditions that characterizes a perfectly competitive market?
Firms have pricing power and can set their prices freely.
Are all markets perfectly competitive?
No, there are other market types where firms have considerable power to control the price.
Which change causes a movement along the demand curve?
Price of the good itself
Suppose there is an increase in demand for public transportation because of an increase in the price of automobiles. Which of the following is a possible reason for this elastic demand for automobiles? (Check all that apply.) An increase in a fuel tax would cause _____ in demand for automobiles, and the cross-price elasticity would be _____.
There is a close availability of substitutes for automobiles, A large share of a consumer's budget is spent on automobiles a decrease, negative
Which of the following is common between the supply schedule and the supply curve? Mary is a producer of water bottles. When the price is $10 per bottle, she supplies 100 bottles. If the price falls to $7, she will _____ the quantity supplied to _____ bottles. If the price rises to $15, she will _____ the quantity supplied to _____ bottles. The supply curve has a _____ slope. Which of the following statements is true if the supply curve is curve shaped (non-linear)?
They give information about the quantity supplied at different prices. decrease, 70 increase, 150 positive It is difficult to expand production the higher the quantity supplied.
Consider a good that you do not like at all, perhaps turnips. Given the market price for turnips, what would be your consumer surplus?
Zero, since not liking turnips at all implies an unwillingness to pay anything.
While at a Subway® in your neighborhood, you notice that a single employee completes an order, right from helping you choose your bread, veggies, and meat to making your sub the way you want it. However, over at Pizza Hut®, each task in a pizza order is completed by a different worker. Why do you think Subway and Pizza Hut have chosen these different ways to produce meals? Pizza production is mostly standardized, so Pizza Hut _____ take advantage of specialization and the division of labor, while sandwich production is more customized so Subway _____ take advantage of specialization and the division of labor.
can, cannot
A firm is producing goods in a market where the market price is less than the firm's average total cost but greater than its average variable cost. At this point the firm should:
continue to operate at a loss.
An individual's willingness to pay measured over different quantities of the same good define the ____ .If the retail price of the good increases, the _____ will decrease, all other things constant.
demand curve, quantity demanded
Which of the following criteria would most likely influence an optimizing buyer's purchasing decisions?
highest marginal benefit per dollar spent
For economists, the "buyer's problem" refers to __________.
how consumers arrive at a choice as to what to purchase.
The difference between accounting profits and economic profits is:
implicit costs
Helium is lighter than air and thus can be used to make party balloons float. Helium is also an inert gas that is vital for many industrial applications (such as medical imaging technology) that require achieving super low temperatures. This relatively new industrial application has caused the demand for helium to ________. This has resulted in ________ in the price of party balloons because helium is ________ for these balloons.
increase, increase, input
A group of economic agents who are trading a good or service would define a ______. Price takers exist throughout ______ markets.
market, competitive
A competitive market will
move towards equilibrium quantity because both producers and consumers act in their own best interest.
The demand curve graphs a consumers responsiveness to a change in _____ . The points on the curve can be verified through _____ .
price, marginal analysis
The market supply curve is the _____ of all the supply curves of potential producers and would be graphed to the _____ of the individual curves.
sum, right
The aggregate difference between the average total cost (ATC) and average variable cost (AVC) for all units of production is the:
total fixed cost
Suppose ventilator manufacturers are profit-maximizing firms with costs outlined in this chapter (large fixed cost and increasing marginal costs). These firms typically operate in a competitive market, though the government is considering the following policies to boost production. For each policy, explain whether production will in fact increase. The government gives each firm a large sum of money with no strings attached. Will ventilator production increase? The government promises to buy ventilators at an above-market price. Will ventilator production increase? Via tax subsidies, the government reduces the cost of labor and parts. Will ventilator production increase?
No, a no-strings attached sum of money will not impact marginal revenue or marginal cost, so production will remain unchanged. No, the government promising to buy ventilators at an above-market price will have no impact on production. Yes, the subsidy will lower cost and encourage entry into the market, causing production to increase.
