Econ 201 Examen2

Donald produces nails at a cost of 350$ per ton. If he sells the nails for $500 per ton, his producer surplus is?

$150

In a competitive market the price is $8. A typical firm in the market has ATC = $6, AVC= $5, and MC = $8 How much economic profit is the firm earning in the short run?

$2 per unit

Studies of the effects in minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about

1 to 3 percent

Barney builds custom wooden birdhouses. He can make 150 birdhouses per month and sell them for $50 His average total cost is $30 per birdhouse. Barney is considering hiring his best friend Fred to work for him. Fred can buil d 125 birdhouses per month. If Barney hires Fred, what will be the monthly output birdhouse busines

150+125= 275 birdhouses

Barnery builds birdhouses. He can make 150 birdhouses per month and sell them for $50 each. His Average total cost is 30$ per bird house. Whatbis Barneys monthly total revenue?

150x$50= 7,500

Suppose the price of the good is $175$. If the firm produces and sells 515 units of output, its total revenue is

175x515= 90,125

Donald produces nails at a cost $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton is:

350-200= 150

Which of the following forms is the clapest to being perfectly competitive firm? A. Apple B a wheat farmer in Kansas C. The NY yankees D. Debeers diamond wholesalers

A wheat farmer in Kansas

Which if the following firms is the closest to being a perfectly competitive firm?

A. A hot dog vendor in New York

Average Total Costs (ATC) is calculated as follows

ATC= (total cost)/(quantity of output)

Anger over British taxes played significant role in bringing about the

American Revolution

Consumer surplus is

Amount a consumer is willing to pay minus the amount the consumer actually pays

If marginal cost is greater than the average total cost, then

Average total cost is increasing

Who is a price taker in a competitive market?

Both buyers and sellers

Suppose that the market price for pizzas increases. The increase in producer surplus comes from the benefit of higher prices to

Both existing sellers who now receive higher prices on the pizzas they were already selling new sellers who enter the market because of the higher prices.

In 1776, the american revolution was sparked by anger over

British taces imposed on American Colonies

When a tax is levied on buyers of tea?

Buyers of tea and sellers of tea both are made worse off

When a tax is imposed on a good for which the supply is relatively elastic and the demand is relatively inelastic,

Buyers of the good will bear most of the burden of the tax

Which of the following is not correct? a. As that's policy advisers economics use the thing is to help change the world for the better B. Economic have two rolls-scientist and policy adviser C. Economic policies really have a fax that the architect did not intend or anticipate. D. As scientists, economists develop and test there is to explain the world around them

C. Economic policies really have a fax that the architect did not intend or anticipate.

Which of the following statements is correct a. Marginal revenue can be calculated as total revenue divided by the quantity sold. b. For all firms, marginal revenue equals the price of the good. c. Only for competitive firms does average revenue equal marginal d. Only average revenue equal the price of the good.

C. Only for competitive firms does average revenue equal marginal

On a graph, the area below a demand curve and above the price meausres

Consumer Surplus

The benefit to buyers of participating in a market is measured by

Consumer surplus

Christine used $5,000 from her personal savings account to buy pottery tools for her business . The savings account paid 1 % annual interest . Christine could earn $ 6,000 per year as a tax preparer . What is the annual economic profit of her cookie jar business?

D. 29,950

The loss in total surplus resulting from a tax is called?

Deadweight loss

Deadweight loss is the

Decline in total surplus that surplus that results from a tax

Taxes wre costly to market participants because they

Distort market outcomes, alter incentives, transfer respurces from market particpants to the government

Equillibrium =

Efficient price-quantity combination

For a firm in a perfectly competitive market, the price of the good is always

Equal to marginal value

Suppose that in a competitive market the equilibrium price is $2.50. What is marginal revenue for the last unit sold by the typical firm in this market?

Exatly 2.50

Competitive markets are characterized by

Free entry and exit by firms

For the purpose of analyzing the gains and losses from a tax on a good, we use tax revenue as a direct measure of the

Governments benefit from the tax

The Social Security tax is a tax on

Labor

Get a portion of minimum-wage owners who are families with income is below the poverty line is what?

Less than one third

Diseconomics of a scale occur when a firm's

Long run average total costs ade increasinc as output increases

When the government imposes taxes on buyers or sellers of a good, society

Loses some of the benefits of market efficiency

Market Power and externalities are examples of?

Market failure

Which of the following is a tax on Labor? A. Medicare tax B. Sales tax C. Quantity of output D. Revenue

Medicare Tax

Which of the following is a tax on labor?

Medicare, Social, Federal Income taxes

Total revenue minus only implicit costs is called?

Nothing we have learned.

The welfare of sellers is measured by

Producer surplus

A seller's oppurtunity cost measures the?

Value of everything she must give up to produce a good.

At the equillibrium price of a good, the good will be purchased by those buyers who?

Value the good more than price

The study of how the allocation of resources affects economic well being is called:

Welfare economics

Suppose sellers of liquor are required to send five dollars to the government for every bottle of liquor they sell. Further, suppose this tax cut is the price paid by buyers of liquor to rise by three dollars per bottle which of the following statements is correct

b, This tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor.

The minimum wage was instituted to ensure workers

b. A minimally adequate standard of living

When policymakers set prices by legal decree, they

c. Obscure the signals that normally guide the allocation of societys resources

This prices. goods Since story Local in the large 1980s, demonstrates retailers, outside quantities like of Wal-Mart that the the and, stores therefore, have neighborhood community at appeared drug business cheaper in store, district. prices. almost often go Many out Wal-Mart every community of customers also business locates in at its because America. Wal-Mart stores where Wal-Mart land buys prices its

ere are economies of scale in retail sales.

If a firm in a perfectly competitive market triples the number of units of output sold, then total revenue will

exactly triple

2. If the government removes a binding price floor from a market, then the price paid by buyers will

increase, and the quantity sold in the market will decrease.

If the size of a tax increases, tax revenue

may increase, decrease, or remain the same

The value of a business owners time is an example of

oppurtunity cost

economic profit

will never exceed accounting profit

Marginal cost is equal to

ΔTC/ΔQ

A production function is a relationship between inputs and

Quantity of output

Assume a certain firm regards the number of workers it employs as variable but regards the size of its factory as fixed. This assumptionis often realistic

In the short run, but not in the long run

A firm has a market power if it can

Influrnce the market price kf the good it sells.

The length of the short run

Is different for different types of firms.

For a firm, the relationship between the wuantity of inputs and quantity of output is called the?

Production function

Economist assume that the goalof the firm is to maximize the total

Profits

Economists normally assume people's preferences should be

Respected

Which of the following would increase producer surplus?

Sellers' costs stay the same and the price of the good increases

Which of these types of costs can be ignored when an individual or a firm is making decisions?

Sunk costs

A payroll tax is a

Tax on the wages that firms pay their workers

An alternative to rent-control laws that would not reduce the quantity of housing supplied is

The payment by government of a fraction of a poor familys rent.

Producer surplus directly measures

The well-being sellers

Which of the following characteristics of competitive markets is necessary for firms to be price takers

There are many sellers, and Goods offered for sale are largely the same

The amount of money that a pharmacy is from the sale of its output is called

Total Revenue

Economists typically measure efficiency using?

Total surplus

Suppose the tax on gasoline is decreased from 0.60$ to 0.40$ per gallon. As a result,

a. The deadweight loss of the tax necessarily decreases.

which of the following instances would the deadweight loss of the tax on airline tickets increase by a factor of 9?

b. The tax on airline tickets increases from $20 per ticket per ticket.

3. Which of the following will cause an increase in producer surplus?

b. the price substitute increases