Econ 101 final exam

the tool that economists use to analyze the mutual independence of oligopolies is: a.) the efficient scale b.) the HHI c.) economies of scale d.) game theory

game theory

a competitive market is in equilibrium. then there is a decrease in demand and a decrease in supply. the equilibrium price ______, and the equilibrium quantity ______ : a.) perhaps changes but we can't sag if it rises, falls, or stays the same; decreases b.) perhaps changes but we can't say if it rises, falls, or stays the same; incresaes c.) rises; decreases d.) rises; increases e.) falls; increases

rises; increases

a natural barrier to entry is defined as a barrier that arises because of: a.) many firms producing the good and thereby allowing choice for all consumers b.) patents or licenses that exclude others from producing a good or service c.) technology that allows one firm to meet the entire market demand at a lower average total cost than could two or more firms d.) anticompetitive practices by a firm that keep other firms from producing

technology that allows one firm to meet the entire market demand at a lower average total cost than could two or more firms

in the short run, a perfectly competitive firm ______ make an economic profit and ______ incur and economic loss: a.) might; will never b.) might; might c.) will definitely; will never d.) will never; might

might; might

in a production possibilities frontier diagram, the attainable production points are shown as: a.) the points inside and the points on the ppf b.) only the points on the ppf c.) only the points beyond the ppl d.) only the points inside the ppf

the points inside and the points on the ppf

when the percentage change in the quantity demanded exceeds the percentage change in price, then demand is: a.) unit elastic b.) elastic c.) irrelevant d.) inelastic

elastic

which of the following is a legal barrier to entry? i. public franchise ii. government license iii. patent a.) ii and iii b.) i and ii c.) i, ii, and iii d.) iii only

i, ii, and iii

suppose a perfectly competitive market is in long-run equilibrium and then there is a permanent increase in the demand for that product. the new long-run equilibrium will have: a.) more firms in the market b.) the same number of firms in the market c.) fewer firms in the market d.) a permanent decrease in supply

more firms in the market

if a firm in a perfectly competitive market faces an equilibrium price of $5, its marginal revenue: a.) maybe either greater or less than $5 b.) will also be $5 c.) will be less than $5 d.) will be greater than $5

will also be $5

the figure above shows the market demand curve and the ATC curve for a firm. if all firms in the market have the same ATC curve, the lowest price at which a firm could stay in business in the long run is _____ per unit and the quantity demanded in the market at that price is _____ units per hour: a.) $20; 8,000 b.) $10; 8,000 c.) $10; 4,000 d.) $20; 4,000

$10; 8,000

in the figure above, if the market price is $12, then the total consumer surplus is: a.) minimized b.) $12 c.) $480 d.) $240

$240

the above figure shows there market for buckets of golf balls at the driving range. a new leisure time tax is placed on suppliers in this market, shifting the supply curve from S0 to S1. the amount of this tax is ______ per bucket of golf balls: a.) $3 b.) $2 c.) $1 d.) $4

$3

the figure above shows the demand, marginal revenue, and marginal cost curves for Paul's Parrot pillows, a single-price monopoly producer of pillows stuffed with parrot feathers. when Paul maximizes his profit, the price is ______ per pillow and the marginal cost is ______ per pillow: a.) $60; $60 b.) $70; $60 c.) $60; $40 d.) $100; $40

$70; $40

Chase has a budget of $14 which he must allocate between steak and cranberry juice. the table gives his marginal utility and the marginal utility per dollar for both of those goods. the price of steak is $10 per serving and the price of cranberry juice is $2 per serving. to maximize his utility, Chase should buy: a.) 2 servings of steak and 2 servings of cranberry juice b.) 4 servings of steak and 4 servings of cranberry juice c.) 2 servings of steak and 4 servings of cranberry juice d.) 1 serving of steak and 2 servings of cranberry juice

1 serving of steak and 2 servings of cranberry juice

the figure above shows the costs and benefits associated with the production of wood pulp. with a regulation that achieves an efficient outcome, the market produces ______ tons of wood pulp at a price of ______ per ton: a.) 3; $800 b.) 3; $700 c.) 5; $700 d.) 4; $800

3; $800

the figure above shows the costs and benefits associated with wood pulp production. without regulation the market will produce ______ tons of wood pulp at a price of ______ per ton: a.) 3; $900 b.) 5; $1,100 c.) 5; $700 d.) 3; $600

5; $700

suppose the local university charges $85 per credit hour. if tuition increases from $85 to $93 per credit hour, using the midpoint method, what is the percentage change in price a.) 9.41 percent b.) 8.00 percent c.) 8.99 percent d.) 9.12 percent

8.99 percent

a group of firms that has entered into an agreement to restrict output and increase prices and profits is called: a.) a cartel b.) a compliance c.) a multi-firm monopoly d.) a duopoly

a cartel

if we compare a perfectly competitive market to a single-price monopoly with the same costs, the monopoly sells: a.) the same quantity at a higher price b.) a larger quantity at a higher price c.) a smaller quantity at a higher price d.) a smaller quantity at the same price

a smaller quantity at a higher price

the number of corn producers increases, so the supply of corn ______ and the supply curve of corn ______: a.) increases; shifts leftward b.) increases; shifts rightward c.) decreases; shifts leftward d.) decrease; shifts rightward e.) increases, does not shift

increases; shifts rightward

the above figure shows the market demand curve for telephone calls. suppose the marginal cost of a telephone is 2¢ a minute for a call no matter how many minutes of the call are made, and there are 3 firms in the industry. if the firms in the industry operate as perfect competitors, there are ______ minutes of calls made per hour: a.) between 0 and 3 million b.) more than 5 million and less than or equal to 7 moillion c.) more than 7n million and less than or equal to 9 million d.) more than 9 million

more than 7 million and less than or equal to 9 million

the fact that firms in oligopoly are interdependent means that: a.) they definitely compete with each other so that the price is driven down to the monopoly level b.) there are barriers to entry c.) they can produce either identical or differentiated goods d.) one firm's profits are affected by other firms' actions

one firms' profits are affected by other firms' actions

which of the following is TRUE? in the above figure, if the market is: a.) perfect competition, output will be Q2 and price will be P2 b.) perfect competition, output will be Q3 and price will be P3 c.) a monopoly, output will be Q3 and price will be P3 d.) a monopoly, output will be Q1 and price will be P3

perfect competition, output will be Q2 and price will be P2

to increase profits a perfectly competitive firm will produce more output when: a.) price is greater than average variable cost b.) price is greater than average fixed cost c.) price is greater than marginal cost d.) average variable cost is greater than average fixed cost

price is greater than marginal cost

suppose scientific research generates external benefits. without government intervention, the market for scientific research would: a.) produce more than the efficient amount b.) produce some research but less than the efficient amount c.) produce the efficient amount d.) produce zero research

produce some research, but less than the efficient amount

the figure shows a perfectly competitive market that was in a long-run equilibrium on demand curve D0. due to a permanent change in demand to D1, existing firms will begin to make an economic ______ which will result in _____ the market: a.) profit; new firms entering b.) loss; some existing firms exiting c.) loss; all remaining firms exiting d.) profit; existing firms exiting

profit; new firms entering

the downward slope of a demand curve: a.) represents the law of demand b.) indicates how the quantity of demand changes when incomes rise and the good is a normal good c.) indicates how demand changes when incomes rise and the good is a normal good d.) shows that as the price of a good rises, consumers increase the quantity they demand e.) indicates how demand changes when the price changes and the good is a normal good

represents the law of demand

the production possibilities frontier is the boundary between: a.) attainable and unattainable combinations of goods and services b.) goods and services that the economy can produce c.) wanted and unwanted combinations of goods and services d.) rational and irrational choices facing a society

attainable and unattainable combinations of goods and services

for a perfectly competitive rancher in Wyoming, if the price does not change, an economic profit could turn into an economic loss if the: a.) average total cost curve shifts upward b.) average total cost curve shifts downward c.) average fixed cost decreases d.) average total cost curve does not change

average total cost shifts upward

to be able to price discriminate, a firm must: a.) have a patent b.) be a natural monopoly c.) be able to prevent resales of its good d.) have a public franchise

be able to prevent resales of its good

Mary is currently buying apples and oranges such that the last unit of apples has 30 units of utility and the last unit of oranges has 40 units of utility. she has allocated her entire budget. if the price of an apple is 10 cents and the price of an orange is 20 cents, to maximize her utility, what should Mary do? a.) continue to buy the same amounts of both goods b.) buy more apples and fewer oranges c.) buy more oranges and fewer apples d.) buy fewer apples and fewer oranges

buy more apples and fewer oranges

marginal utility is the: a.) change in total utility that results from a one-unit increase in the quantity of a good consumed b.) average utility per unit consumed c.) quantity of a good a consumer prefers d.) total benefit from the consumption of a good or service

change in total utility that results from a one-unit increase in the quantity of a good consumed

a single-price monopoly transfers: a.) producer surplus to consumers b.) consumer surplus to producers c.) economic profit to consumers d.) economic profit to the government

consumer surplus to producers

a cartel is a collusive agreement among a number of firms that is designed to: a.) expand output and lower prices but not to a predatory level b.) expand output and lower prices to a predatory level c.) decrease output and raise prices d.) decrease output and lower prices to a predatory level

decrease output and raise prices

producer surplus: a.) always must equal consumer surplus b.) increases if market price rises and the supply curve does not shift c.) decreases if market price rises and the supply curve does not shift d.) is the same as the marginal cost

increases if the market price rises and the supply curve does not shift

tax incidence is the: a.) division of the burden of a tax between the buyer and the seller b.) deadweight loss created by a tax c.) burden sellers have to absorb from a tax on goods and services d.) burden buyers have to absorb from a tax on goods and services

division of the burden of a tax between the buyer and the seller

the main source of economies of scale is: a.) the ability to hire less labor b.) increasing average costs c.) greater specialization of both labor and capital d.) decreasing marginal product

greater specialization of both labor and capital

for a perfectly competitive sugar producer in Haiti, a short-run economic profit will occur if the price of each ton of sugar sold is: a.) equal to the average total cost of producing sugar b.) greater than the marginal revenue if each ton of sugar c.) greater than the average total cost of producing sugar d.) less than the average total cost of producing sugar

greater than the average total cost of producing sugar

which of the following statements is TRUE about a competitive market? a competitive market: a.) has so many buyers and sellers that no one can influence the price b.) includes markets for goods and services but not for inputs c.) must have a physical location d.) has a handful of sellers but always has many buyers e.) has one seller competing to sell his or her product

has so many buyers and sellers that no one can influence the price

Boeing and Airbus have entered into a cartel agreement tat will enable them to boost their profits. what occurs if Boeing decided to cheat on the agreement? i. Boeing lowers the price of its airplanes ii. the total industry output increases iii. the total profits in the airplane industry will decrease: a.) i only b.) ii only c.) iii only d.) i, ii, and iii

i, ii, and iii

moving from one point to another on a production possibilities frontier implies: a.) increasing the production of one good and decreasing the production of another b.) increasing the production of both goods c.) decreasing the production of both goods d.) holding the production levels of both goods constant

increasing the production of one good and decreasing the production of another

computer memory chips are produced on wafers, each wafer having many separate chips that are separated and sold. the above table shows costs for a perfectly competitive producer of computer memory chips. if the market price of a wafer is $2,400 dollars, the firm is: a.) making zero economic profit b.) making an economic profit of $2,400 an hour c.) incurring an economic loss of $2,800 an hour d.) incurring an economic loss of $2,000 an hour

incurring an economic loss of $2,000 an hour

it is very difficult for a gourmet chocolatier to find inexpensive and available inputs for the business. because of this, we predicts that gourmet chocolatier's supply to be: a.) inelastic b.) perfectly elastic c.) elastic d.) unit elastic

inelastic

the above figure shows a perfect competitive firm. if the price is $10, the firm: a.) is making an economic profit b.) is making zero economic profit c.) is incurring an economic loss d.) will immediately shut down

is making zero economic profit

Peter's Pencils is a perfectly competitive company producing pencils. suppose Peter is producing 1,000 pencils an hour. if the total cost of 1,000 pencils is $500, the market price per pencil is $2, and the marginal cost is $2, then Peter: a.) makes an economic profit because marginal revenuer is equal to marginal cost at this output level b.) should decrease his output to increase his profit c.) is maximizing his profit and is making an economic profit d.) is not maximizing his profit but is making zero economic profit anyway

is maximizing his profit and is making an economic profit

what is NOT true about rational choice: a.) it is the same for all individuals b.) it can result in different decisions for different individuals c.) it involves comparing costs and benefits d.) it might turn out to not have been the best choice after the event

it is the same for all individuals

the table above shows a nation's production possibilities frontier. if the nation wants to produce 4 robots and 34 pizzas: a.) it will be unable to do so because the production point is unattainable b.) it will shift the ppf c.) the opportunity cost is 9 pizzas d.) the nation will be producing efficiently

it wink be unable to do so because the production point is unattainable

the figure above shows the labor market in a region. for minimum wage to change the wage rate and amount of employment: a.) set below $6 an hour b.) left to the forces of supply and demand c.) set equal to $6 an hour d.) set above $6 an hour

left tot he forces of supply and demand

in the long run, perfectly competitive firms will exit the market if the price is: a.) less than average total cost b.) higher than average variable cost c.) equal to average total cost d.) equal to marginal revenue

less than the average total cost

as output increases, economies of scale occur when the: a.) long-run average cost increases b.) long-run fixed cost decreases c.) long-run average cost decreases d.) long-run average cost stays constant

long-run average cost decreases

because human wants are insatiable and unlimited while available resources are limited, people are said to face the problem of: a.) scarcity b.) social interest versus self-interest c.) macroeconomics d.) radio button for answer microeconomics. answer value microeconomics. microeconomics

scarcity

the above figure shows the market for winter jackets. in an effort to keep the nation warm, the president places a price ceiling of $100 in the market for winter jackets. as a result there is a: a.) shortage equal to 150,000 jackets b.) shortage equal to 250,000 jackets c.) surplus equal to 300,0000 jackets d.) surplus equal to 150,000 jackets

shortage equal to 150,000 jackets

an opportunity cost is: a.) the benefits of the highest-valued alternative forgone b.) the dollar amount that is paid c.) anything the decision maker believes costs to be d.) whatever is paid out and cannot be reduced or reversed

the benefits of the highest-valued alternative forgone

marginal revenue is: a.) another name for total revenue b.) the change in total cost from producing an additional unit of output c.) less than price for a perfectly competitive firm d.) the change in total revenue from a one-unit increase in the quantity sold

the change in total revenue from a one-unit increase in the quantity sold

which of the following is a characteristic of monopoly? a.) there are barriers to enter the market b.) the firm's demand is perfectly elastic c.) the firm producers a product that has many close substitutes d.) the firm faces competition from many other firms

there are barriers to enter the market

for a perfectly competitive palm tree nursery in South Carolina, the total revenue curve is: a.) upward sloping b.) a horizontal line c.) downward sloping d.) u-shaped

upward sloping

one way to identity oligopoly is to: a.) use the Herfindahl-Hirschman Index (HHI) b.) determine the market's minimum price c.) determine the market's maximum price d.) use the efficiency test

use the Herfindahl-Hirschman Index (HHI)

the figure above illustrates the bagel market. which of the following statements is correct? a.) with a price ceiling of $3.00 per bagel, the quantity demanded is greater than the quantity supplied b.) with a price ceiling of $1.00 per bagel, there is a shortage of bagels c.) with a price ceiling of $1.00 per bagel, the quantity demanded is equal to the quantity supplied d.) answers a and b are correct e.) answers b and c are correct

with a price ceiling of $1.00 per bagel, there is a shortage of bagels