Quiz 3, Quiz 4, Quiz 1, Quiz 2, Quiz 5, Quiz 6, Quiz 7, Quiz 8

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Suppose Cyd knows the average cost of producing 7 scones is $10, while the average cost of producing 8 scones is $12. What is the marginal cost of the 8th unit?

$26

Oscar has negotiated a lease for his sporting goods store in which he is required to pay $3,000 per month in rent. Oscar pays his staff $20 per hour to sell sporting goods and his monthly electricity bill averages $600, depending on his total hours of operation. Oscar's fixed costs per month equal:

$3,000

The market for beef is in long-run equilibrium at a price of $3.25 per pound. The announcement that mad cow disease has been discovered in the United States reduces the demand for beef sharply, and the price falls to $2.00 per pound. If the long-run supply curve is horizontal, then when the long-run equilibrium is reestablished, the price will be:

$3.25 per pound.

Darren runs a barbershop with fixed costs equal to $50 per day and a total output of 20 haircuts per day. What is his weekly total fixed cost if he is open 6 days per week?

$300

Suppose Cyd knows the average cost of producing 12 scones is $5, while the average cost of producing 13 scones is $7. What is the marginal cost of the 13th unit?

$31

The table shows the cost information for Bonita's pet-sitting service, where the quantity of output is the number of clients served per day. Think about the number you would put in the total cost column, and then answer the question. What is the average total cost of serving 5 clients?

$33

Refer to Figure e. If Brandon watches the Mets, what is Allie's best response? rs, rs, 1,2 rs, m 2,1 m, rs 2,1 m, m 1,2

Watch the Mets

A decrease in the price of a good will result in:

a decrease in the quantity supplied.

A decrease in demand and a decrease in supply will lead to ________ in equilibrium quantity and ________ in equilibrium price.

a decrease; an indeterminate change

A government that imposes a price ceiling below the equilibrium price of a good will cause:

a shortage of supply.

The cross-price elasticity of electricity with respect to the price of natural gas has been estimated as being equal to 0.2. This implies that:

a. electricity and natural gas are substitutes.

Suppose the price elasticity of demand for coffee at the CoffeeBarn equals 1.71 for women and 0.55 for men. A successful price discrimination strategy would lead to:

a. higher prices for men and lower prices for women as long as the CoffeeBarn could prevent women from reselling drinks to men.

A monopolist or an imperfectly competitive firm practices price discrimination primarily to:

a. increase profits. Correct!

The municipal swimming pool charges lower entrance fees to local residents than to nonresidents. Assuming that this pricing strategy increases the profits of the pool, we can conclude that nonresidents must have a ________ for swimming at the pool than residents.

a. less elastic demand

Compared to a perfectly competitive market, a monopolist will produce ________ and charge a ________ price.

a. less; higher

If 2 goods have a negative cross-price elasticity of demand between them, we would say that these 2 goods are:

complements

We observe that both the price of and quantity sold of golf balls are falling over time. This is due to:

increases in membership fees for country clubs with golf facilities.

Lilly is the price-taking owner of an apple orchard. The price of apples is high enough that Lilly is earning positive economic profits. In the long run, Lilly should expect:

lower apple prices due to the entry of new firms.

If 2 goods are substitutes, then the cross-price elasticity of demand between them is:

positive

When there is equilibrium in the market for bread, then:

quantity demanded equals quantity supplied Correct

If the actual price were at the equilibrium price in the market for potatoes:

quantity demanded would be equal to quantity supplied. Correct

If the actual price were below the equilibrium price in the market for bread:

quantity demanded would be greater than quantity supplied. Correct

The deadweight loss associated with a monopoly will decrease if:

the monopolist is force to charge a price equal to marginal cost

If the government imposes a price floor for rice that is set above the equilibrium price:

the price paid by consumers increases.

The absolute value of the price elasticity of demand for gasoline in the long run has been estimated to be 1.5. If an extended war in the Middle East caused the price of oil (from which gasoline is made) to increase and remain high for a decade, how would that affect total expenditures on gasoline in the long run, all other things equal? (Hint: Consider the change in gasoline prices.)

total expenditures would fall

Suppose that the market for candy canes operates under conditions of perfect competition, that it is initially in long-run equilibrium, and that the price of each candy cane is $0.10. Now suppose that the price of sugar rises, increasing the marginal and average total cost of producing candy canes by $0.05; there are no other changes in production costs. Based on the information given, we can conclude that once all of the adjustments to long-run equilibrium have been made, the price of candy canes will equal:

$0.15

For your last birthday, your parents gave you a used car for which they paid the fair market value of $10,000. While you are happy with the car, you were hoping for a sportier model that sells for $18,000. The opportunity cost to you of keeping the car that your parents gave you is:

$10,000 worth of other goods that you could get if you sold the car.

You are deciding whether to stay home to do your laundry rather than work at your job and make $80. If you are willing to pay $120 to have someone else do your laundry, what would be the opportunity cost of a third option: going out drinking with your friends?

$120

Say your parents gave you a used car value at $15,000 as a gift for your birthday. Unfortunately, you were hoping for a sportier model that sells for $20,000. The opportunity cost to you of keeping the car that your parents gave you is:

$15,000

Oscar has negotiated a lease for his sporting goods store in which he is required to pay $2,000 per month in rent. Oscar pays his staff $10 per hour to sell sporting goods and his monthly electricity bill averages $500, depending on his total hours of operation. Oscar's fixed costs per month equal:

$2,000

Oscar has negotiated a lease for his sporting goods store in which he is required to pay $2,500 per month in rent. Oscar pays his staff $9 per hour to sell sporting goods and his monthly electricity bill averages $700, depending on his total hours of operation. Oscar's fixed costs per month equal:

$2,500

You won a free ticket to see an Eric Clapton concert (which has no resale value). Bob Dylan is performing on the same night and is your most attractive alternative. Tickets to see Dylan cost $100, but you are willing to pay up to $120 to see him. Assume there are no other costs to see either performer. Based on this information, what is the opportunity cost of seeing Eric Clapton?

$20

You won a free ticket to see an Madonna concert (which has no resale value). Eric Clapton is performing on the same night and is your most attractive alternative. Tickets to see Clapton cost $300, but you are willing to pay up to $500 to see him. Assume there are no other costs to see either performer. Based on this information, what is the opportunity cost of seeing Madonna?

$200

A friend comes up to you and offers to give you a free ticket to the local professional team's baseball game that night. You decide to attend the game. The game takes 3 hours and costs you $10 for transportation. If you had not attended the game, you would have worked at your part-time job for $10 an hour. What is the cost to you of attending the game?

$40

Darren runs a barbershop with fixed costs equal to $80 per day and a total output of 70 haircuts per day. What is his weekly total fixed cost if he is open 6 days per week?

$480

The table shows the cost information for Bonita's pet-sitting service, where quantity of output is the number of clients served per day. Think about the number you would put in the total cost column, and then answer this question. What is the average total cost of serving 2 clients?

$56

Lisa was choosing between three alternatives: working on her job that pays her $60; writing a term paper which she values at $40; or going out with a friend, which she values at $80. The opportunity cost of going out with her friend is

$60

Suppose Cyd knows the average cost of producing 9 scones is $5, while the average cost of producing 10 scones is $5.20. What is the marginal cost of the 10th unit?

If Jakob knows the marginal cost of the first sports jersey is $21, the marginal cost of the second sports jersey is $40, and the marginal cost of the third jersey is $17, what is the total variable cost of producing three jerseys?

$78

Olivia and Sophia are at the bookstore buying a new text book for Econ102. Olivia is willing to pay $50 and Sophia is willing to pay $35. The price for a text book at the bookstore is $42. How much is total consumer surplus?

For your last birthday, your girlfriend bought you a ticket to see your favorite band, The Economists, for which she paid $100. If you sold the ticket the most anyone would pay you would be $80. The opportunity cost to you of attending the concert is:

$80

You are deciding whether to stay home to do your laundry rather than work at your job and make $60. If you are willing to pay $80 to have someone else do your laundry, what would be the opportunity cost of a third option: going out drinking with your friends?

$80

Suppose this game is played sequentially, with A making the first move. What is the rollback equilibrium of the game? AdvertiseDon't Advertise A's profit $75 millionA's profit $200 million AdvertiseB's profit $75 millionB's profit $50 millionA's Strategy Don'tA's profit $50 millionA's profit $100 million AdvertiseB's profit $200 millionB's profit $100 million

(Advertise, Advertise)

If a 10 percent increase in the price of lodging at a ski resort causes a 12 percent decrease in the quantity of skis rented, then the cross-price elasticity of demand between lodging and ski rentals is:

-1.20

If a 25 percent decrease in the price of sapphires causes a 15 percent decrease in the quantity of diamonds demanded, then the cross-price elasticity of demand between sapphires and diamonds is:

0.60

If a 20 percent decrease in the price of sapphires causes a 15 percent decrease in the quantity of diamonds demanded, then the cross-price elasticity of demand between sapphires and diamonds is:

0.75

John and Linda takes turns removing matchsticks from a pile. They start with 21 matchsticks and John goes first. On each turn, each player may remove either one, two, three, or four matchsticks. The player to remove the last matchstick wins the game. To win the game, how many matchsticks John should remove in his first turn to prevent Linda from winning the game (assuming John continues to make the correct moves in each of his turns)?

If a 15 percent decrease in the price of sapphires causes a 20 percent decrease in the quantity of diamonds demanded, then the cross-price elasticity of demand between sapphires and diamonds is:

1.33

The following table shows the hours needed to produce 1 car, and the hours needed to produce 1 bike for UK and Germany. What is the opportunity cost of producing 2 bikes for UK (without trade) Cars Bikes UK 20hs 5hs Germany 16hs 2hs

1/2 car

The following table shows the hours needed to produce 1 car, and the hours needed to produce 1 bike for UK and Germany. What is the opportunity cost of producing 1 bike for UK (without trade) Cars Bikes UK 20hs 5hs Germany 16hs 2hs

1/4 car

Liam is willing to buy the last ticket to the Radiohead concert for $150, while Alexander is willing to pay $250. Liam is first in line and buys a ticket for $150. Liam sells his ticket to Alexander for $200, since there is no government regulation. What is the total surplus?

100

Jessica is willing to spend $60 for a haircut. If she finds a salon where the price of a haircut is only $40 plus a tip $8, she will receive ______ in consumer surplus from this transaction.

The following table shows the hours needed to produce 1 car, and the hours needed to produce 1 bike for UK and Germany. What is the opportunity cost of producing 2 cars for Germany (without trade) Cars Bikes UK 20hs 5hs Germany 16hs 2hs

16 bikes

The table below show the production possibilities for two countries: Greece and Germany. If these two countries traded based on comparative advantage then the following would be a trade beneficial to both regions: Sweaters Skirts Germany 1 5 Greece 2 8

18 skirts for 4 sweaters

Jenna is willing to spend $70 for a haircut. If she finds a salon where the price of a haircut is $68, she will receive ______ in consumer surplus from this transaction.

21 skirts for 21 sweaters

27 skirts for 6 sweaters

Egg producers know that the elasticity of demand for eggs is 0.1. If they want to increase sales by 3%, they will have to lower price by ________%.

Chris, Caitlin, and Cara are want to buy fishing poles for a fishing trip. Chris is willing to pay $6, Caitlin is willing to pay $11, and Cara is willing to pay $5. If the actual price of a fishing pole turns out to be $7, what is the total consumer surplus for these three shoppers?

The following table shows the hours needed to produce 1 car, and the hours needed to produce 1 bike for UK and Germany. What is the opportunity cost of producing 1 car for UK (without trade) Cars Bikes UK 20hs 5hs Germany 16hs 2hs

4 bikes

Olivia and Sophia are at the bookstore buying new computers for the semester. Olivia is willing to pay $750 and Sophia is willing to pay $1000. The price for a computer at the bookstore is $650. How much is total consumer surplus?

450

Jenna is willing to spend $50 for a haircut. If she finds a salon where the price of a haircut is only $45, she will receive ______ in consumer surplus from this transaction.

Egg producers know that the elasticity of demand for eggs is 0.1. If they want to increase sales by 5%, they will have to lower price by ________%.

Egg producers know that the elasticity of demand for eggs is 0.1. If they want to increase sales by 5%, they will have to lower price by:

Chris, Caitlin, and Cara want to buy fishing poles for a fishing trip. Chris is willing to pay $6, Caitlin is willing to pay $11, and Cara is willing to pay $5. If the actual price of a fishing pole turns out to be $5, what is the total consumer surplus for these three shoppers?

The following table shows the hours needed to produce 1 car, and the hours needed to produce 1 bike for UK and Germany. What is the opportunity cost of producing 1 car for Germany (without trade) Cars Bikes UK 20hs 5hs Germany 16hs 2hs

8 bikes.

From 1970 to 2010, the real price of a college education increased, and total enrollment increased. Which of the following could have caused this increase in price and enrollment?

A shift to the left in the supply curve for college education and a shift to the right in the demand curve for college education. Correct

Consider the rivalry between Airbus and Boeing to develop a new commercial jet aircraft. Suppose Boeing is ahead in the development process and Airbus is considering whether to enter the competition. If Airbus stays out, it earns zero profit, whereas Boeing enjoys a monopoly and earns a profit of $1 billion. If Arbus decides to enter and develop the rival airplane, then Boeing has to decide whether to accommodate Airbus peaceably or to wage a price war. In the event of the peaceful competition, each firm will make a profit of $300 million. If there is a price war, each will lose $100 million because the prices of airplanes will fall so low that neither firm will be able to recoup its development costs.

Airbus enters the market and Boeing peacefully accommodates

Which of the following will result in a decrease in the demand for X?

An decrease in the price of a good that is a substitute for X Correct

Which of the following will result in a shift in the demand curve for X?

An increase in the average income of consumers

Which of the following will result in a change in the demand for X?

An increase in the average income of consumers Correct

Which of the following will result in a change in the demand for X?

An increase in the price of a good that is a complement to good X

Which of the following will result in an increase in the demand for X?

An increase in the price of a good that is a substitute for X A decrease in the price of a good that is a complement to good X An increase in consumers' preferences for X all of the other choices are correct**

Which of the following will result in an increase in the demand for X?

An increase in the price of a good that is a substitute for X NO?

What impact (through its effect on demand) will an increase in income have on the price of a given good?

Its effect on price is ambiguous

Which of the following examples of price discrimination strategies expropriates all consumer surplus?

Car dealerships charging different prices for the same car to different buyers

Which of the following is an example of price discrimination?

College students receive a discount at the ice cream store when they show their college ID cards.

When an industry is transformed from Perfect Competition to Monopoly:

Consumer surplus and total surplus fall

If the demand curve becomes steeper, all else equal, the Monopolist will __________ quantity.

Decrease

An increase in the price of wheat, an important ingredient in the production of bread, combined with an increase in the number of people consuming bread, will result in which of the following changes in the bread market?

Equilibrium price will increase, but equilibrium quantity may decrease, increase, or stay the same.

An increase in the price of sugar (an ingredient for soft drinks) and an increased concern about tooth decay caused by the consumption of soft drinks will result in which of the following in the soft drink market?

Equilibrium quantity will decrease, but equilibrium price may decrease, increase, or stay the same.

An increase in the price of wheat, an important ingredient in the production of bread, combined with an increase in the number of people following a low-carb diet, will result in which of the following changes in the bread market?

Equilibrium quantity will decrease, but equilibrium price may decrease, increase, or stay the same.

Ryan goes to India and shops for souvenirs at the traditional market. His friend told him that the seller will first set an unrealistically high price. He has to bargain down the price. The fair price is usually half of the opening price. This is an example of:

First-degree price discrimination

In one hour, the United States can produce 200 tons of steel or 50 automobiles. In one hour, Japan can produce 40 tons of steel or 80 automobiles. This information implies that:

Japan has a comparative advantage in the production of automobiles.

In one hour, the United States can produce 25 tons of steel or 250 automobiles. In one hour, Japan can produce 30 tons of steel or 350 automobiles. This information implies that:

Japan has a comparative advantage in the production of automobiles.

In one hour, the United States can produce 25 tons of steel or 250 automobiles. In one hour, Japan can produce 30 tons of steel or 275 automobiles. This information implies that:

Japan has a comparative advantage in the production of steel.

John

The going rent in the market for 1-bedroom apartments in your neighborhood is $400. If the government imposes a price ceiling of $300 in this market:

Less people will rent apartments.

A monopolist maximizes profits when it produces an output at the point where:

MC=MR None of the other choices is correct P > MC P < MR P = MC MR > MC

Refer to Figure e. Suppose Brandon promises Allie he will watch the same team she watches. Is Brandon's promise credible?

The market for smartphones in a community is perfectly competitive and that the market. is initially in long-run equilibrium. If the demand for smartphones decreases long run the market price will _ and the long run output of a typical firm will _ (assume this is a constant cost industry)

None of the other choices is correct

What is Firm A's Dominant Strategy? NO AD, NO AD500,500 NO AD, AD400,900 AD, NO AD400,100 AD, AD300,300

Not Advertise

A monopolist can increase profits by decreasing production if its currently producing at a point where:

P = MC

Total producer surplus will fall when the price of the good:

b. falls while supply stays the same

Consider the market for iPods. What happens if a fantastic new alternative MP3 player is developed and at the same time a boat carrying a large shipment of iPods is attacked by pirates and sunk?

The change in price is indeterminate and quantity decreases.

Consider the market for corn. What happens if there is an increased demand for corn tortillas and at the same time a new corn seed becomes available that dramatically increases the per-acre yield?

The change in price is indeterminate; quantity increases.

The current market price for good X is above the equilibrium price, and then the demand for X decreases. What is the likely outcome of the change in demand?

The surplus increases.

Say you have two assignments due tomorrow: a CHEM assignment, and an CS assignment. If took an average of 20 minutes to answer a CHEM problem, and 10 minutes to answer a CS problem. If you had limited time left to study, and wanted to solve the most problems regardless of the class, your best strategy would be to solve:

We need more information to answer

Suppose you manage a delivery company and you must choose between two transportation methods: (a) truck or (b) train. (a)Trucks: Costs U$ 26,000 upfront. For each mile it runs it costs U$ 2.00 in gas. Maintenance costs U$ 4,000 per year and additional U$ 1.00 per mile run. (b)Train: To lease a container that carries the same volume of orders as the truck it costs U$ 10.000 per year. In addition it costs U$ 4.00 per mile to move orders around. For the truck, the average fixed cost and the marginal cost are the same when:

We run 10000 miles.

Suppose that each of two firms has the independent choice of advertising its product or not advertising. If neither advertises, each gets $10 million in profit; if both advertise, their profits will be $5 million each; and if one advertises while the other does not, the advertiser gets profit of $15 million while the other gets profit of $2 million. Is this game an example of a prisoner's dilemma?

YES

Yes

An effective price floor in the market for good X will create ________ in that market.

a supply surplus

A government that imposes a price floor above the equilibrium price of a good will cause:

a surplus of supply.

Austin's total fixed cost is $4,000. Austin employs 15 workers and pays each worker $100. The average product of labor is 5, and the marginal product of the last worker hired is 8. What is the marginal cost of the last unit produced by the last worker Austin hired?

a. $13

The table above gives the total cost information for Hank and Helen's cherry farm. They sell their cherries in a perfectly competitive market, where the price is $6.00 per pound. If Hank and Helen produce and sell 6 pounds of cherries, what is their total revenue?

a. $36

When a cherry orchard in Oregon adds an additional worker, the total cost of production increases by $24,000. Adding the worker increases total cherry output by 600 pounds. Therefore, the marginal cost of the last pound of cherries produced is:

a. $40.

Austin's total fixed cost is $3,600. Austin employs 20 workers and pays each worker $60. The average product of labor is 30, and the marginal product of the twentieth worker is 12. What is the marginal cost of the last unit produced by the last worker Austin hired?

a. $5

Refer to Table 14.3. What is the Nash equilibrium in the game? AdvertiseDon't AdvertiseA's profit $75 millionA's profit $200 millionAdvertiseB's profit $75 millionB's profit $50 millionA's StrategyDon'tA's profit $50 millionA's profit $100 millionAdvertiseB's profit $200 millionB's profit $100 million

a. (Advertise, Advertise)

A local restaurant has estimated that the price elasticity of demand for meals is equal to 2. If the restaurant decreases menu prices by 5%, they can expect the number of customers to increase by ________and total revenue to ________.

a. 10%; increase

The table above gives the total cost information for Hank and Helen's cherry farm. They sell their cherries in a perfectly competitive market, where the price is $6.00 per pound. What is the profit-maximizing quantity of cherries?

a. 5 pounds

The table above gives the total cost information for a perfectly competitive firm. What is the profit-maximizing quantity of output? at $9

a. 6

There are several close substitutes for Bayer aspirin but fewer substitutes for a complete medical examination. Therefore, you would expect the demand for:

a. Bayer aspirin to be more price-elastic.

Suppose GoSports pennant monopoly is broken up and the pennant industry becomes perfectly competitive. We would expect the ________ to increase from the breakup and ________ to decrease from the breakup.

a. consumer surplus and total surplus; producer surplus

The absolute value of the price elasticity of demand for gasoline in the short run has been estimated to be 0.1. If a war in the Middle East causes the price of oil (from which gasoline is made) to increase, how will that affect total expenditures on gasoline in the short run, all other things equal? (Hint: Consider the change in gasoline prices.)

a. Demand will not change much, but total expenditures will rise.

Refer to Game Matrix III. In this game, Firm B - low outputFirm B - high outputFirm A - low output300, 250200, 100Firm A - high output200, 7575, 100

a. Firm A's dominant strategy is to produce low levels of output, but Firm B does not have a dominant strategy.

What are the dominant strategies in this game? Firm B - low outputFirm B - high outputFirm A - low output300, 250200, 100Firm A - high output200, 7575, 100

a. Firm A's dominant strategy is to produce low levels of output, but Firm B does not have a dominant strategy.

Say that the market for tennis balls in a community is perfectly competitive and that the market is initially in long-run equilibrium. If the demand for tennis balls increases long run the market price will _ and the long run output of a typical firm will _ (assume this is a constant cost industry)

a. None of the other choices is correct Incorrect b. fall; fall c. rise; rise d. rise; fall e. fall; rise

The absolute value of the price elasticity of demand for fresh zucchini has been estimated to be 2.25. A new irrigation system yields a 25% increase in the nation's crop of fresh zucchini. Which of the following best describes how this will affect total expenditures on zucchini, all other things equal? (Hint: Consider the change in zucchini prices.)

a. Total expenditures will rise.

Suppose the absolute value of the price elasticity of demand for blueberries is 1.5. If climate change destroys one-fourth of the nation's blueberry crop (and thus reduces supply), how will that affect total revenue, all other things unchanged? (Hint: Consider which direction blueberry prices will go.)

a. Total revenue will fall.

The price elasticity of demand for lettuce has been estimated to be 2.58. If an insect infestation destroys 10% of the nation's lettuce crop, how will that affect total revenue from lettuce, all other things unchanged?

a. Total revenue will fall.

A newspaper typically consumes a smaller fraction of a consumer's budget than a home entertainment system. Therefore, you would expect the demand for:

a. a home entertainment system to be more price-elastic.

Which of the following is not an example of price discrimination?

a. a special Fourth of July sale

If the demand for golf is price-inelastic and your local public golf course increases the greens fees for using the course, you would expect:

a. an increase in total revenue received by the course.

At 20 units of output, a firm finds that its average variable cost is $5 per unit and its average total cost is $8 per unit. Therefore, its:

a. average fixed cost is $3 per unit.

Jessica experienced an increase in her income by 10% this year. In the same year, Jessica's quantity demanded of milk increased by 10% and her quantity demanded for bread increased by 5%. This means that for Jessica:

a. both milk and bread are normal goods.

If a perfectly competitive firm can sell a bushel of soybeans for $25 and it has an average variable cost of $26 per bushel and the marginal cost is $26 per bushel, the firm should:

a. cut output to zero.

The city bus system charges lower fares to senior citizens than to other passengers. Assuming that this pricing strategy increases the profits of the bus system, we can conclude that senior citizens must have a ________ for bus service than other passengers.

a. more elastic demand

Suppose that the market for haircuts in a community is a perfectly competitive constant-cost industry and that the market is initially in long-run equilibrium. Subsequently, an increase in population increases the demand for haircuts. In the long run, we expect that:

a. more firms will enter the market, driving the price of haircuts down and the profits of individual firms back down to zero.

If the University of Michigan increases the price of football tickets, this will result in increasing revenues if the price elasticity of demand is:

a. price-inelastic.

Total consumer surplus will decrease when the price of the good:

a. rises while demand stays the same

Suppose the cross-price elasticity of demand for butter and margarine is equal to 0.96 while the answer for water and lemon is -0.13. This means that butter and margarine are ________ while water and lemon are ________.

a. substitutes; complements

Buford Bus Manufacturing installs a new assembly line. As a result, the output produced per worker increases. The marginal cost of output at Buford:

a. will decrease (the MC curve will shift right).

Bad weather reduces the supply of corn. At the same time, scientists discover the health benefits of corn. This will result in:

an increase in the equilibrium price and an uncertain impact on the equilibrium quantity.

A beneficial technological change enhances the production of cranberries. At the same time, scientists discover the health benefits of cranberries. This will result in:

an increase in the equilibrium quantity and an uncertain impact on the equilibrium price of cranberries.

Good weather increases the supply of corn. At the same time, scientists discover the health benefits of corn. This will result in:

an increase in the equilibrium quantity and an uncertain impact on the equilibrium price.

A government that imposes a price floor above the equilibrium price of a good will cause:

an increase in the price of the good from the equilibrium price

A decrease in the price of a normal good will result in:

an increase in the quantity demanded.

Cindy operates Birds-R-Us, a small store manufacturing and selling 200 bird feeders per month. Cindy's monthly total fixed costs are $700, and her monthly total variable costs are $2,000. If for some reason Cindy's fixed cost increased to $1,000, then her:

average fixed costs would increase.

Maria has a business printing t-shirts selling 200 t-shirts per month. Her monthly total fixed costs are $400, and her monthly total variable costs are $1,000. If for some reason Maria's fixed cost increased to $1,000, then her:

average fixed costs would increase.

b. $30

At 500 units of output, total cost is $50,000 and total variable cost is $5,000. What does total fixed cost equal at 500 units?

b. $45,000

b. $8

Wendy leaves her job as a dancer to start her own dance studio. As a dancer, she made $34,000 per year. During the first year she paid $4,300 per year for insurance, $1846 for music and licensing fees, $150 for a boom box, and $11,300 for rent and utilities. She received $60,480 in tuition payments. Wendy's economic profit was

b. $8,884

If Jakob knows the marginal cost of the first sports jersey is $20, the marginal cost of the second sports jersey is $32, and the marginal cost of the third jersey is $40, what is the total variable cost of producing 3 jerseys?

b. $92

A local restaurant has estimated that the price elasticity of demand for meals is equal to 2. If the restaurant increases menu prices by 5%, they can expect the number of customers to decrease by ________and total revenue to ________.

b. 10%; fall

The table above gives the total cost information for a perfectly competitive firm. What is the profit-maximizing quantity of output? at $6.50

b. 5

What are the dominant strategies in this game? Firm B - low outputFirm B - high outputFirm A - low output300, 250200, 100Firm A - high output200, 7575, 50

b. Both firms produce low levels of output

There is one gas station in a small rural town. The owner of the station claims that he will sell the same quantity of gas, no matter how high or low the price. If he is correct in this assertion, what must be true about the demand curve for gas at his station?

b. It must be vertical with a price elasticity of zero.

Farmer Ted sells winter wheat in a perfectly competitive market. The market price for a bushel of winter wheat is $9. Ted has 270 bushels of wheat to sell. If his total variable cost is $2000 and his total fixed cost is $500, then

b. Ted is minimizing his losses.

Which of the following statements are false? Player B's Strategies LEFT RIGHT UP A gets 10 A gets 30 B gets 10 B gets 8 Player A's Strategies DOWN A gets 8 A gets 20 B gets 30 B gets 20

b. This game has no Nash Equilibrium.

Refer to Game Matrix II. Which outcomes in this game are Nash equilibria? Player B's Strategies Odd Even High A gets 0 A gets 3 B gets 0 B gets 3 Player A's Strategies LowA gets -2A gets 4 B gets 2B gets -4

b. This game has no Nash equilibria.

The absolute value of the price elasticity of demand for milk has been estimated to be somewhere between 0.49 and 0.63. If a new system of feeding and milking cows yields a 15% increase in the production of milk throughout the country, how will that affect total expenditures on milk, all other things equal? (Hint: Consider the change in milk prices.)

b. Total expenditures will fall.

The absolute value of the price elasticity of demand for cabbage has been estimated to be 0.25. If an insect infestation destroys 20% of the nation's cabbage crop (and thus reduces supply), how will that affect total expenditures on cabbage, all other things equal? (Hint:Consider the change in cabbage prices.)

b. Total expenditures will rise.

Juan is willing to buy the last ticket to the Meathead concert for $120, while Mara is willing to pay $250. Juan is first in line and buys a ticket for $120. Juan could sell his ticket to Mara for $200, but he can't because of government regulation preventing the reselling of tickets. The regulation, then, is causing:

b. a deadweight loss of 130.

If you drop a course after the refund date, the tuition that you have paid and cannot recover is:

b. a sunk cost.

The average total cost of producing cell phones in a factory is $20 at the current output level of 100 units per week. If fixed cost is $1,200 per week:

b. average variable cost is $8.

Cindy operates Birds-R-Us, a small store manufacturing and selling 200 bird feeders per month. Cindy's monthly total fixed costs are $800, and her monthly total variable costs are $1,500. If for some reason Cindy's variable cost decreased to $1,000, then her:

b. average variable costs would decrease.

Refer to Game Matrix III. The Nash equilibrium is to be found where Firm B's Strategies No Ads Ads No Ads A gets 500 A gets 100 B gets 500 B gets 900 Firm A's Strategies AdsA gets 400A gets 300 B gets 100B gets 300

b. both firms choose to advertise.

A Japanese steel firm sells steel in the United States and in Japan. Since the United States buys steel from a number of sources, the U.S. demand for Japanese steel is more price-elastic than the Japanese demand for Japanese steel. If the Japanese steel firm wishes to maximize its profits, it should:

b. charge a lower price in the United States and a higher price in Japan.

Suppose the price of cereal rose by 25% and the quantity of milk sold decreased by 50%. Then we know that the:

b. cross-price elasticity between cereal and milk is -2.

As you move down a linear demand curve, the price elasticity of demand will:

b. decrease.

The demand curve facing a monopolist is:

b. downward sloping, like the industry demand curve in perfect competition.

The demand curve facing a monopolist is:

b. downward sloping, unlike the horizontal demand curve facing a perfectly competitive firm.

Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long-run equilibrium. Subsequently, a decrease in population decreases the demand for haircuts. In the short run, we expect that the market price will ________ and the output of a typical firm will ________.

b. fall; fall

Suppose that Jody sells fish in a perfectly competitive market. He can sell each fish for $5, and today he brought 20 fish to the fish market. If his total variable cost is $110 and his total fixed cost is $50, then:

b. he should have stayed home.

We would say that sports cars are a normal good if the ___________ for a sports car is __________ .

b. income elasticity of demand; positive.

In theory, which of the following would be an expected result the government imposing a minimum wage in market for fast food restaurants?

b. increase in unemployment in that market

If the marginal revenue for the next unit being produced is $50, but the marginal cost is $45, the firm should:

b. increase production.

For a monopolist, the market demand curve:

b. is also the demand for the monopolist's product.

Heath's company is currently producing 30 units of output. The price of the good is $8 per unit. Total fixed costs are $50 and the average variable cost is $5 at 30 units. This company:

b. is experiencing an economic profit of $40.

Cindy operates Birds-R-Us, a small store manufacturing and selling 100 bird feeders per month. Cindy's monthly total fixed costs are $500, and her monthly total variable costs are $1,000. If for some reason Cindy's variable cost increased to $4,000, then her:

b. marginal costs would increase.

Suppose a perfectly competitive firm can increase its profits by increasing its output. Then it must be true that the firm's:

b. marginal revenue exceeds its marginal cost.

Amtrak charges lower fares to students than to its other passengers. This pricing strategy increases Amtrak's profits. From this information, we can conclude that students must have a ________ for Amtrak train service than other passengers.

b. more price-elastic demand

Suppose that a monopoly firm invest in very expensive form of capital. In response to the investment, the firm will:

b. not change its price.

Because business travelers' demand for airline flights is relatively ________, small increases in price will result in relatively ________ in additional business travelers.

b. price-inelastic; small decreases

If a competitive firm can sell a bushel of soybeans for $25 and it has an average variable cost of $24 per bushel and the marginal cost is $26 per bushel, the firm should:

b. reduce output.

Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long-run equilibrium. Subsequently, an increase in population increases the demand for haircuts. In the short run, we expect that the market price will ________ and the output of a typical firm will ________.

b. rise; rise

A perfectly competitive small organic farm that produces 1,000 cauliflower heads in the short run has an ATC = $6 and AFC = $2. The market price is $3 per head and is equal to MC. In order to maximize profits (or minimize losses), this farm should:

b. shut down.

Refer to Game Matrix I. The only Nash equilibrium for this game is in Player B's Strategies ¨ © § A gets 7 A gets 2 B gets 3 B gets 2 Player A's Strategies ªA gets 9A gets 6 B gets 1B gets 4

b. the lower right-hand corner.

If the price of a good is held above the equilibrium price:

b. the quantity supplied will exceed the quantity demanded

The student center on campus has burritos, bagels, or burgers for lunch, and they all cost the same. You decide to have a burger today, but if they were out of burgers, you would have bought a bagel. Your opportunity cost is:

b. your enjoyment of the bagel.

Suppose both firms commit to not advertise. Game theory predicts the outcome of this commitment would be the following: Firm B's Strategies No Ads Ads No Ads A gets 500 A gets 100 B gets 500 B gets 900 Firm A's Strategies AdsA gets 400A gets 300 B gets 100B gets 300

both firms choose to advertise.

Two classmates, Richard and Ana, are assigned a group project. Each student can choose to Work on the project, or to Shirk, and watch TV. - -If the project is done they each get 4 points. -If the project is not done, they each get zero. -One student alone CAN work and finish the project, but -Working on the project cost 6 points (subtracted from score), divided equally among those who Work. Suppose both students made a commitment to both Work. Game theory would predict the outcome of this game would be the following:

both shirk

Which of the following is an example of price discrimination?

buyers using discount coupons to pay lower price at grocery store

King's Inc. produces 250 sweaters per week. The average variable cost per sweater is $3.75 and average fixed costs are $1.50 per sweater. Total cost per week is:

c. $1312.50.

c. $15

Darren runs a barbershop with average fixed costs equal to $60 per day and a total output of 50 haircuts per day. What is his weekly total fixed cost if he is open six days per week?

c. $18,000

c. $24

Darren runs a barbershop with fixed costs equal to $40 per day and a total output of 10 haircuts per day. What is his weekly total fixed cost if he is open 6 days per week?

c. $240

c. $25

Austin's total fixed cost is $3,600. Austin employs 20 workers and pays each worker $60. If labor is his only variable cost, what is Austin's total cost?

c. $4,800

Jen-Chi's Tea House produces 500 4-ounce packets of tea per week. His variable cost is $14.10 per packet and his total fixed cost per week is $1,775. Jen-Chi's total cost per week is

c. 8,825

Refer to Game Matrix I. What are the dominant strategies in this game?

c. A's dominant strategy is ª, but B does not have a dominant strategy.

Arlene makes earrings in the shape of the mascot of a local university. Last year Arlene made 250 pairs of earrings, which she sold to the university bookstore for $10 each. Arlene works out of her home, so her only cost is $3 per pair for materials and $85 for tax help. If Arlene didn't produce earrings, she would spend her time babysitting her nephews and make about $500 per year.

c. Arlene's total revenue is $2500.

What is the Nash equilibrium for this game? Firm B - low outputFirm B - high outputFirm A - low output300, 250200, 100Firm A - high output200, 7575, 100

c. Both firms producer low levels of output

Suppose the cross-price elasticity between demand for Burger King burgers and the price of McDonald's burgers is 0.8. If McDonald's increases the price of its burgers by 10%, then:

c. Burger King will sell 8% more burgers.

Refer to Game Matrix III. In this game, Firm B's Strategies No Ads Ads No Ads A gets 500 A gets 100 B gets 500 B gets 900 Firm A's Strategies Ads A gets 400 A gets 300 B gets 100 B gets 300

c. Firm B's dominant strategy is to advertise.

If a good is a necessity with few substitutes, then the price elasticity of demand will tend to be:

c. less price-elastic.

Suppose a perfectly competitive industry is suddenly transformed into a monopoly industry. We can assume that monopoly output will be ________ than the competitive output and that ________.

c. lower; deadweight loss will emerge

Larry owns his own auto repair shop, and employs three mechanics. His total parts and sales volume this year was $322,400. Because he is well known for his repair expertise, he is also paid $5,200 per year by a local radio station to answer auto repair questions on "Ask the Mechanic." His explicit costs for payroll, parts and taxes, mortgage and utilities are 290,160. Larry left a job as an accountant making $40,000 a year to own his own business. Larry's economic profit is

c. Larry is actually making an economic loss of $2,560.

There are several close substitutes for Quaker State oil but fewer substitutes for a complete check-up of your car's engine. We can expect the demand for:

c. Quaker State oil to be more price-elastic.

Assume the absolute value of the price elasticity of demand for corn has been estimated to be 2.33. Flash floods destroy 10% of the nation's crop of corn. Which of the following best describes how this will affect total expenditures on corn, all other things equal? (Hint:Consider the change in corn prices.)

c. Total expenditures will fall.

The absolute value of the price elasticity of demand for ground beef has been estimated to be 1.0. If mad cow disease strikes the United States and a large percentage of the cattle are removed from the market, how will that affect total expenditures on hamburger, all other things equal? (Hint: Consider the change in meat prices.)

c. Total expenditures will remain unchanged.

c. Total expenditures will rise.

The price elasticity of demand for fresh tomatoes has been estimated to be 2.22. If a new insecticide and fertilizer treatment yields a 20% increase in the nation's fresh tomato crop, how will that affect total revenue from fresh tomatoes, all other things unchanged?

c. Total revenue will rise.

The demand curve for a monopoly is:

c. above the MR curve.

An increase in demand and a decrease in supply will lead to ________ in equilibrium quantity and ________ in equilibrium price.

c. an indeterminate change; an increase

c. both will advertise.

Suppose that each of two prisoners has the independent choice of confessing to a crime or not confessing. Note that they cannot communicate with each other. If neither confesses, they spend 4 years in jail; if both confess, they spend 6 years in jail; and if one confesses while the other does not, the confessor gets off with 2 years in jail while the other gets 10 years in jail. According to game theory, the likely strategy by the prisoners is:

c. both will confess

If a monopolist is producing a quantity that generates MC < MR, then profit:

c. can be increased by increasing production.

Compared to a perfectly competitive industry, a monopolist:

c. charges a higher price.

If a monopolist knows its price elasticity of demand is greater than one, then a(n):

c. decrease in price will increase total revenue.

Refer to Table 14.1. Firm Aʹs optimal strategy is Raise PriceDon't Raise PriceRaiseA's profit $3,000A's profit $10,000PriceB's profit $3,000B's profit $15,000A's StrategyDon'tA's profit $15,000A's profit $5,000RaiseB's profit $10,000B's profit $5,000

c. dependent on what Firm B does.

The motivation for a firm with market power to engage in price discrimination is to:

c. enhance its profitability. Correct!

Suppose are studying for your ECON exam, which takes place tomorrow. After four hours of study, you realized you had been studying all the wrong material. What you studied is not going to be in the exam! Given this discovery, which of the following you should include in your decision about whether to study another hour for your ECON exam?

c. how much weight the exam has towards your final grade in the course

We would say that sports cars are an inferior good if the ___________ for a sports car is __________ .

c. income elasticity of demand; negative.

Krista operates a dry-cleaning business in Tampa that incurs $900 per month in fixed costs. Last month her total output equaled 3,000 pounds of clothes. This month her total output fell to 2,700 pounds. This means her average fixed cost ________ by a little more than ________.

c. increased; 3.33 cents

The price elasticity of demand along a demand curve with a constant slope:

c. increases in absolute value as the price rises.

If the price elasticity of demand for digital cameras is 0.88, then the demand is _____ and total revenue will ______ if the price of cameras increases.

c. inelastic; increase

If the price elasticity of demand for oranges is 0.65, then the demand is _____ and total revenue will ______ if the price of oranges increases.

c. inelastic; increase

When Aishe's Bar-B-Que produces 10 pork sandwiches, the total cost is $5.00. When 11 pork sandwiches are produced, the total cost rises to $6.00. From this we know that the marginal cost of the eleventh pork sandwich:

c. is greater than the average cost of 11 pork sandwiches.

For a restaurant:

c. labor and food would be variable resources and a building would be a fixed resource in the short run.

A local community college charges lower tuition fees to local town residents than to nonresidents. This pricing strategy increases the profits of the community college. Using this information, we can conclude that nonresidents must have a ________ for attending the community college than residents.

c. less price-elastic demand

Suppose that a monopoly firm is required to pay a new annual license fee just for the privilege of doing business in its city and that the fee is somewhat less than the economic profit the firm is now earning. In response to the increase in fees, the firm will:

c. not change its price.

Price discrimination will occur when a firm can segment its existing and potential customers into different groups based on:

c. price elasticity of demand. Correct!

Suppose a perfectly competitive market is suddenly transformed into one that operates as a monopoly market. We would expect:

c. price to rise, output to fall, consumer surplus to fall, producer surplus to rise, and deadweight loss to rise.

If a monopoly is producing at the profit-maximizing level of output, then we can assume that at that level of output, demand is:

c. price-elastic.

If a university decreases the price of tickets to football games to collect more revenue, it is assuming that the demand for tickets is:

c. price-elastic.

If a competitive firm can sell a ton of steel for $500 a ton and it has an average variable cost of $400 a ton, and the marginal cost is $600 a ton, the firm should:

c. reduce output.

Total producer surplus will rise when the price of the good:

c. rises while supply stays the same

Ashley, who makes knitted caps, determines that her marginal cost of producing one more knitted cap is equal to $10. A consumer offers her $12 if she sells one more knitted cap to her. Ashley will:

c. sell the additional knitted cap, since the marginal revenue is greater than the marginal cost for the unit.

Raina consumes 100% more mechanical pencils when the price of felt-tip pens increases by 50%. For Raina, pencils and pens are ________ and the cross-price elasticity of demand is ________.

c. substitutes; 2

Money spent by a firm to bribe a corrupt foreign minister of commerce, who then is imprisoned, is a(n):

c. sunk cost.

You own a small deli that produces sandwiches, soups, and other items for customers in your town. Which of the following is a fixed input in the production function at your deli?

c. the dining room where customers eat their meals

You have $2 to spend on a drink from the vending machine. A bottle of water costs $2 and the bottle of orange juice will also cost you $2. If you chose the bottle of water, the opportunity cost of buying the bottle of water is:

c. the enjoyment you would have received from the bottle of orange juice.

The market for kiwis is in equilibrium at a price of $1.50 per pound. If the government imposes a price ceiling in the market at a price of $1.80 per pound, then:

c. the price ceiling will not affect the market price or output.

The demand curve facing a monopolist is always:

c. the same as the industry's demand curve.

Total producer surplus will rise when:

c. there are more consumers who want to buy the good while supply stays the same

Refer to Table 14.2. Firm Aʹs dominant strategy is Refer to Table 14.3. Firm Aʹs dominant strategy is AdvertiseDon't AdvertiseA's profit $100 millionA's profit $200 millionAdvertiseB's profit $100 millionB's profit $50 millionA's StrategyDon'tA's profit $50 millionA's profit $75 millionAdvertiseB's profit $200 millionB's profit $75 million AdvertiseDon't AdvertiseA's profit $75 millionA's profit $200 millionAdvertiseB's profit $75 millionB's profit $50 millionA's StrategyDon'tA's profit $50 millionA's profit $100 millionAdvertiseB's profit $200 millionB's profit $100 million

c. to advertise.

If the price elasticity of demand for beach towels is 1.00, then the demand is _____ and total revenue will ______ if the price of beach towels increases.

c. unit-elastic; remain unchanged.

If a monopolist is producing a quantity that generates MC = P, then profit:

can be increased by decreasing production.

The cross-price elasticity of electricity with respect to the price of natural gas has been estimated as being equal to 0.2. This implies that:The price of coffee increases by 10%, and as a result, Alex purchases less donuts. This suggests that to Alex, coffee and donuts are:

complements

d. $10

Austin's total fixed cost is $4,000. Austin employs 20 workers and pays each worker $140. The average product of labor is 8, and the marginal product of the last worker hired is 10. What is the marginal cost of the last unit produced by the last worker Austin hired?

d. $14

d. $2,500 per month.

Say your parents gave you a used car value at $20,000 as a gift for your birthday. Unfortunately, you were hoping for a sportier model that sells for $25,000. The opportunity cost to you of keeping the car that your parents gave you is:

d. $20,000

Austin's total fixed cost is $4,000. Austin employs 25 workers and pays each worker $110. The average product of labor is 4, and the marginal product of the last worker hired is 5. What is the marginal cost of the last unit produced by the last worker Austin hired?

d. $22

Kaile Cakes is currently producing 10 cakes per day. The marginal cost of the tenth cake is $24, and average total cost of 10 cakes is $6. The average total cost of 9 cakes is:

d. $4.

d. $8

At 500 units of output, total cost is $50,000 and total variable cost is $5,000. What does average fixed costs equal at 500 units?

d. $90

To pursue a goal of being a business owner, Mary left a job that paid $40,000 per year. At the end of her first year in business, her cash revenues summed up to $90,000 and her explicit costs were $50,000. Also, in order to fund her business startup, Mary cashed in a $20,000 certificate of deposit that was providing a yield of 5%. Ceteris paribus, Mary's economic profit is:

d. -$1,000.

Which of the following is not an example of price discrimination?

d. Street vendors increase the price of umbrellas when it is raining.

If Jakob knows the marginal cost of producing the seventh sports jersey is $21, then the total cost of seven sports jerseys is:

d. The answer cannot be determined from the information provided.

If the government imposes a price floor for rice that is set above the equilibrium price:

d. There will be a surplus of rice

d. Total expenditures will fall.

The absolute value of the price elasticity of demand for ground beef has been estimated to be 0.5. If mad cow disease strikes the United States and a large percentage of the cattle are removed from the market, how will that affect total expenditures on hamburger, all other things equal? (Hint: Consider the change in meat prices.)

d. Total expenditures will rise.

The absolute value of the price elasticity of demand for soft drinks has been estimated to be 0.55. If the government enacts a major increase in the tax on imported sugar (a major ingredient in soft drink manufacture), how will that affect total expenditures on soft drinks, all other things equal? (Hint: Consider the change in soft drink prices.)

d. Total expenditures will rise.

Suppose the price elasticity of demand for oranges is 1.8. If a fall frost destroys one-third of the nation's orange crop, how will that affect total revenue from oranges, all other things unchanged?

d. Total revenue will fall.

Suppose the price elasticity of demand for oranges is 0.8. If a fall frost destroys one-third of the nation's orange crop, how will that affect total revenue from oranges, all other things unchanged?

d. Total revenue will rise.

Refer to Game Matrix IV. The Nash Equilibrium for the game is Player B's Strategies LEFT RIGHT UP A gets 10 A gets 30 B gets 10 B gets 8 Player A's Strategies DOWNA gets 8A gets 20 B gets 30B gets 20

d. UP, LEFT

Say you have two assignments due tomorrow: a MATH assignment, and an ECON assignment. If took an average of 13 minutes to answer an ECON problem, and 18 minutes to answer a MATH problem. If you had limited time left to study, and wanted to solve the most problems regardless of the class, your best strategy would be to solve:

d. We need more information to answer

Refer to Figure e. Suppose Allie promise Brandon she will watch the same team he watches; is Allie's promise credible?

d. Yes

If the demand for golf is unit-price elastic and your local public golf course increases the greens fees for using the course, you would expect:

d. a decrease in the amount of golf played on the course.

Which of the following goods is likely to have the largest price elasticity of demand?

d. a green Cannondale mountain bike

A recent news story reported that OPEC is expected to decrease the supply of oil next summer. Summer is traditionally a time of increased demand for oil because of the many families driving and flying to vacation sites. What would be the combined effect of these two events on the summer market for gasoline?

d. an increase in the price and an unpredictable change in the quantity

Cindy operates Birds-R-Us, a small store manufacturing and selling 100 bird feeders per month. Cindy's monthly total fixed costs are $500, and her monthly total variable costs are $2,500. If for some reason Cindy's fixed cost fell to $400, then her:

d. average total costs would decrease.

You run a business producing picture frames. This month your total cost of production is $10,000, your variable cost of production is $6,000, and you produce 3,000 picture frames. It follows that:

d. average variable cost is $2.

Suppose that each of two firms has the independent choice of advertising its product or not advertising. If neither advertises, each gets $20 million in profit; if both advertise, their profits will be $10 million each; and if one advertises while the other does not, the advertiser gets $25 million profit while the other gets $4 million profit. According to game theory, the likely strategy by the firms is:

d. both will advertise

If a monopolist is producing a quantity that generates MC > MR, then profit:

d. can be increased by decreasing production. c. can be increased by increasing price.

Sometimes airlines raise ticket prices as the flight departure date approaches in the hope of increasing revenue. The airlines raise their prices on the assumption that:

d. consumer demand becomes less price-elastic as departure time approaches.

One of the major differences between a monopolist and a purely competitive firm is that the monopolist has a ________ demand curve, while the purely competitive firm has a ________ demand curve.

d. downward-sloping; perfectly elastic

If the price elasticity of demand for coffeemakers is 1.15, then the demand is _____ and total revenue will ______ if the price of coffeemakers increases.

d. elastic; decrease

If the price elasticity of demand for coffeemakers is 1.50, then the demand is _____ and total revenue will ______ if the price of coffeemakers increases.

d. elastic; decrease

If the price elasticity of demand for concert tickets is 2.12, then the demand is _____ and total revenue will ______ if the price of concert tickets increases.

d. elastic; decrease

Because tourist demand for airline flights is relatively ________, small ________ in ticket price will result in relatively ________ in additional tourists.

d. elastic; reductions; large increases

You own a small deli that produces sandwiches, soups, and other items for customers in your town. Which of the following is a variable input in the production function at your deli?

d. employees hired to help make the food

Total consumer surplus will rise when the price of the good:

d. falls while demand stays the same

The demand for strawberry ice cream tends to be relatively price-elastic because:

d. for most people there are many close substitutes for strawberry ice cream.

In order to maximize profits, an airline will offer ________ prices to customers with ________ demand.

d. higher; inelastic

If a monopolist is producing a quantity that generates MC = MR, then profit:

d. is maximized.

Suppose a fast-food restaurant currently serves lunch and dinner, and is trying to determine if it should open for breakfast. Which of the following costs is a sunk cost for this business?

d. monthly rent

Refer to Game Matrix II. In this game, Player B's Strategies Odd Even High A gets 0 A gets 3 B gets 0 B gets 3 Player A's Strategies LowA gets -2A gets 4 B gets 2B gets -4

d. neither player has a dominant strategy..

Juan is willing to buy the last ticket to the Meathead concert for $100, while Mara is willing to pay $200. Juan is first in line and buys a ticket for $100. Juan could sell his ticket to Mara for $150, but he can't because of government regulation preventing the reselling of tickets. The regulation, then, is causing:

d. potential total surplus to decrease.

Liam is willing to buy the last ticket to the Radiohead concert for $150, while Alexander is willing to pay $250. Liam is first in line and buys a ticket for $150. Liam could sell his ticket to Alexander for $200, but he can't because of government regulation preventing the reselling of tickets. The regulation, then, is causing:

d. potential total surplus to decrease.

The practice of charging different prices to different customers for the same good or service, even though the cost of supplying those customers is the same, is:

d. price discrimination. Correct!

When a public transit system (such as a subway or bus line) raises its fares, it may experience an increase in total revenue. This suggests that demand is:

d. price-inelastic.

If 2 goods have a positive cross-price elasticity of demand between them, we would say that these 2 goods are:

d. substitutes.

If a monopoly is forced to charge a price equal to marginal cost:

d. the deadweight loss will decrease.

Suppose a monopoly can separate its customers into two groups. If the monopoly practices price discrimination, it will charge the lower price to the group with:

d. the higher price elasticity of demand.

The demand curve for a monopoly is:

d. the industry demand curve.

Refer to Game Matrix I. The only outcome in this game that is not Pareto optimal is Player B's Strategies ¨ © § A gets 7 A gets 2 B gets 3 B gets 2 Player A's Strategies ªA gets 9A gets 6 B gets 1B gets 4

d. the upper right-hand corner.

For Heidi, the marginal cost of producing one additional photograph equals the change in ________ divided by the change in the ________.

d. total cost; number of photographs

If the price of iPads rises while demand remains unchanged, then total consumer surplus will ____________.

decrease

If a monopolist knows its price elasticity of demand is elastic, then a(n):

decrease in price will increase total revenue.

We observe that both the price of and quantity sold of swimsuits are rising over time. This is due to:

decrease in the cost of swimming goggles and caps.

Assume that corn is an input in the production of beef but not in the production of pork. Further, beef and pork are substitutes. An increase in the price of corn will:

decrease the supply of beef and increase the demand for pork.

We observe that both the price of and quantity sold of golf balls are rising over time. This is due to:

decreases in membership fees for country clubs with golf facilities.

We observe that both the price of and quantity sold of tennis balls are rising over time. This is due to:

decreases in membership fees for country clubs with tennis facilities.

We observe that both the price of and quantity sold of golf balls are rising over time. This is due to:

decreases in the price of golf apparel.

Assume that the current market price is above the market equilibrium price. We would expect:

downward pressure on the current market price. Correct

earning an economic profit.

If a firm produces a quantity at which total revenue exceeds total cost, then:

economic profit is positive.

If a firm produces a quantity at which total revenue equals total cost, then:

economic profit is zero.

In general, we would predict the price elasticity of demand for Gala apples would be:

elastic

If the minimum wage set in a given labor market is a binding price floor, then the number of workers hired will depend upon:

employers

A monopolist knows an increase in price will have no impact on total revenue when its price elasticity of demand is:

equal to 1 (in absolute terms)

firms leaving the industry.

The price of good A goes down. As a result, the demand for good B shifts to the right. From this we can infer that:

goods A and B are complements. Correct

The price of good A goes up. As a result, the demand for good B shifts to the left. From this we can infer that:

goods A and B are complements. Correct

The price of good A goes up. As a result, the demand for good B shifts to the right. From this we can infer that:

goods A and B are substitutes. Incorrect- but says its right? try complements, it says correct but its not

The price of good A goes down. As a result, the demand for good B shifts to the left. From this we can infer that:

goods A and B are substitutes. Incorrect

The reason a monopoly creates a deadweight loss is because a monopolist charges a price that is _________ marginal cost.

greater than

Suppose a monopoly industry is suddenly transformed into a perfectly competitive industry. We can assume that perfectly competitive output will be ________ than the monopoly output and that ________.

higher; deadweight loss will fall

An increase in which of the following determinants of demand will have an ambiguous (uncertain) effect on price?

income

We would say that apples are an inferior good if the ___________ for apples is __________ .

income elasticity of demand; negative

If the price of iPads falls while demand remains unchanged, then total consumer surplus will ____________.

increase

Suppose the quantity of nursing services demanded exceeds the quantity of nursing services supplied. The nursing wage rate will:

increase

Which of the following will have an effect on the price the monopolist must charge in order to maximize profits in the short-run?

increase in labor costs

If a monopolist knows its price elasticity of demand is equal to one, then a(n):

increase in price will have no impact on total revenue.

If a monopolist knows its price elasticity of demand is Inelastic, then a(n):

increase in price will increase total revenue.

If a monopolist knows its price elasticity of demand is less than one, then a(n):

increase in price will increase total revenue.

In theory, which of the following would be an expected result the government imposing a binding minimum wage in market for fast food restaurants?

increase in unemployment in that market

A competitive firm operating in the short run is producing at the output level at which ATC is at a minimum. If ATC = $8 and MR = $9, in order to maximize profits (or minimize losses), this firm should:

increase output.

Assume that barley is an input in the production of beef but not in the production of pork. Further, beef and pork are substitutes. A decrease in the price of barley will:

increase the supply of beef and decrease the demand for pork.

Assume that corn is an input in the production of beef but not in the production of pork. Further, beef and pork are substitutes. A decrease in the price of corn will:

increase the supply of beef and decrease the demand for pork.

Assume that corn is an input in the production of beef but not in the production of potato. Further, beef and potato are complements. A decrease in the price of corn will:

increase the supply of beef and increase the demand for potato.

Assume that wax is an input in the production of candles but not in the production of air fresheners. Further, candles and air fresheners are substitutes. A decrease in the price of wax will:

increase the supply of candles and decrease the demand for air fresheners.

We observe that the price of golf balls increases and at the same time the quantity sold of golf balls decreases over time. This is due to:

more stringent professional requirements on the quality of golf balls requiring producers to use more expensive raw materials.

If 2 goods are complements, then the cross-price elasticity of demand between them is:

negative

Suppose that the market for candy canes operates under conditions of perfect competition, that it is initially in long-run equilibrium, and that the price of each candy cane is $0.10. Now suppose that the price of sugar rises, increasing the marginal and average total costs of producing candy canes by $0.05. Based on the information given, we can conclude that in the short run a typical producer of candy canes will be making:

negative economic profits.

According to game theory, if the firms could collude to maximize profit:

neither will advertise.

Which of the following would cause an unambiguous decrease in the real price of eggs and an unambiguous decrease in the quantity of eggs consumed?

none of the other choices is correct Correct Incorrect: A shift to the left in the supply curve for eggs and a shift to the right in the demand curve for eggs. A shift to the right in the supply curve for eggs and a shift to the right in the demand curve for eggs. A shift to the left in the supply curve for eggs and a shift to the left in the demand curve for eggs.

Suppose both of you made a commitment to go out and vote. Game theory would predict the outcome of the game in this case would be the following:

none vote

What is the Nash equilibrium in this game? vote, vote 5,5 vote, dont vote -3,10 dont vote, vote 10, -3 dont vote, dont vote 0,0

none vote

Say that a monopolist purchases an expensive new machine. In order to maximize profits in the short-run, the monopolist should _________ its price to offset the investment in the new machine

not change

The current price in the market for cab rides in your neighborhood is $5.00/mile. If the government imposes a price ceiling of $7.50/mile in this market total surplus in this market will:

not change

A change in which of the following determinants of demand will always have an unambiguous (certain) effect on price?

price of a complement increase

A monopoly always produces along the __________ portion of the demand curve.

price-elastic.

If the actual price were below the equilibrium price in the market for bread, a:

shortage would develop, which market forces would eliminate over time. Correct

If the actual price were above the equilibrium price in the market for bread, a:

surplus would develop, which market forces would eliminate over time. Correct

In one hour, the United States can produce 25 tons of steel or 250 automobiles. In one hour, Japan can produce 30 tons of steel or 275 automobiles. This information implies that:

the United States has a comparative advantage in the production of automobiles.

In one hour, the United States can produce 25 tons of steel or 250 automobiles. In one hour, Japan can produce 30 tons of steel or 275 automobiles. This information implies that:

the United States has a comparative disadvantage in the production of steel.

Assume that the current market price is below the market equilibrium price. We would expect:

upward pressure on the current market price. Correct

Assume that there has been a sudden increase in the demand for a certain good and that prices haven't had a chance to adjust yet. We would expect:

upward pressure on the current market price. Correct

The current price of breakfast burritos is lower than the equilibrium price. We would expect:

upward pressure on the current market price. Correct

On your way to class you stop by the coffee shop to buy a sandwich. The coffee shop sells sandwiches, bagels, and cup cakes. Your opportunity cost of buying the sandwich is:

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