Econ Exam 3

Refer to Table 7-2. If the price is $17, then consumer surplus in the market is

$15, and Keira, Ava, and Chen purchase the good

Refer to figure 10-1. this graph represents the tobacco industry without any government intervention the equilibrium price and quantity are

$4.14 and 76 units respectively

Refer to figure 10 one this graph represents the tobacco industry the socially optimal price and quantity are

$5.60 and 48 units, respectively

Refer Table 10-5 Suppose the government wants to reduce pollution pollution permits to achieve this goal. Which of the following is a likely auction price of the permits

$81

Refer to Figure 15 - 4 . What area measures the monopolist's profit

(U - Z) • O

Refer to Table 3 - 11.1 Bahamas's opportunity cost of one cooler is

0.5 radios, and Norway's opportunity cost is 0.125 radios

Refer to Figure 10-5. The socially optimal quantity of output is

8 units, since the value to the buyer of the 8th is equal to the cost mcurred by the seller of the unit.

Oakley bakes muffins that he sells at the local farmers market. If he purchases a new convection over that reduces the costs of baking muffins, the Supply of oakleys muffins will increase Supply of oakleys muffins will decrease Demand of oakleys muffins will increase Demand of oakleys muffins will decrease

A

Which of the following would be most likely to have monopoly power

A local natural gas company

Which of the following would not be considered a private good

A national park

Which of the following is an example of the tragedy of the commons

A type of fish becomes extinct due to overfishing

Refer to Table 7-2, if theres only one unit of the good and if the buyers bid against each other for the right to purchase it then the good will sell for $15 or slightly less $18 or slightly more $21 or slightly more $27 or slightly less

D

Original crocodile management board recently proposed a five year moratorium on crocodile hunting in the Atlantic water south of Florida based on the study of crocodile population which of the following statements is not correct

If left unregulated, the crocodile population will likely increase

When social costs are greater than private costs

Negative externalities are present

Which of the following conditions is characteristic of monopolistically competitive firm in short-run equilibrium

P > MC

A radio station is an example of a good that is

Private

Refer to Table 10-1 Which of the following statements is correct?

Taking the external cost into account, total surplus declines when the 3rd unit of output is produced and consumed

In some cases, traceable pollution permits may be better than a corrective tax because

The government can set a maximum level of pollution using permits

Refer to Table 10-1. How large would a corrective tax need to be to move this market from the equilibrium outcome to the socially optimal outcome? a. $2 b. $3 c. $13 d. $11

a. $2

Refer to Figure 5-6. Using the midpoint method, what is the price elasticity of supply between points E and F? a. 0.40 b. 0.11 c. 0.26 d. 2.48

a. 0.40

Refer to Figure 3-2. the production possibilities frontier shown is for 40 hours of production, then how long does it take to make one pound of ? a. 1/6 hour b. 1/3 hour c. 3 hours d. 6 hours

a. 1/6 hour

Refer to Table 10 - 1 . What is the equilibrium quantity of output in the market ? a. 4 units b. 3 units c. 5 units d. 2 units

a. 4 units

Refer to Table 10-5. If the government charged a fee of $70 per unit of pollution , how many units of pollution would the firms eliminate altogether ? a. 7 b. 8 c. 9 d. 10

a. 7

Refer to Figure 15-2. The demand curve for a monopoly firm is depicted by curve a. A b. C c. B d. D

a. A

Refer to Figure 7-4. Which area represents producer surplus when the price is P 1 a. BCG b. ACH c. ABGD d. DGH

a. BCG

Refer to Figure 9 - 1 . Relative to the no-trade situation , trade with the rest of the world results in a. Guatemalan consumers paying a higher price for coffee. b. a decrease in producer surplus in Guatemala c. a decrease in total surplus in Guatemala d. . an increase in consumer surplus

a. Guatemalan consumers paying a higher price for coffee.

Who among the following is a free rider? a. Joseph listens to National Public Radio, but does not contribute to any fundraising efforts. b. Chandler takes the commuter rail to work, but he purchases the discounted monthly passes rather than buying tickets each day c. Ross sends his five children to a private school rather than to the public school in his neighborhood d. Michael goes to Rachel's house to watch a baseball game on the local commercial television channel.

a. Joseph listens to National Public Radio, but does not contribute to any fundraising efforts.

Refer to Figure 4-10. Which of the following movements would illustrate the effect of an improved oven that allows bakers to produce scones in less time on the market for scones? a. Point B to Point C b. Point D to Point C c. Point D to Point A d. Point B to Point A

a. Point B to Point C

refer to figure 15-2 Profit can always be increased by increasing the level of output by one unit of the monopolist is currently operating at

a. Q4 only b. Q1 or Q2 only c. Q5 only d. Q3, Q4, or Q5 only b. Q1 or Q2 only

Refer to Figure 6-3. A government-imposed price of $18 in this market is an example of a a. binding price ceiling that creates a shortage . b. nonbinding price ceiling that creates a shortage c. binding price floor that creates a surplus . d. nonbinding price floor that creates a surplus .

a. binding price ceiling that creates a shortage .

Benjamin installed a metal sculpture in his front yard. A positive externality arises if the sculpture a. increases the value of other properties in the neighborhood. b. increases the value of Benjamin's home. c. is visually unappealing to Benjamin's neighbors . d. creates a safety hazard for neighborhood children .

a. increases the value of other properties in the neighborhood.

Refer to Figure 10-6. If 650 units of plastics are produced and consumed, then the a. social optimum has been reached. b. market equilibrium has been reached. c. government must have imposed a corrective tax to guide the market to this outcome. d. government must have offered a corrective subsidy to guide the market to this outcome

a. social optimum has been reached.

a benevolent social planner would prefer that the output of good x be increased from its current level if, at the current level of output of good x,

a. social value = private value = private cost < social cost b. social cost > private value = social value > private cost c. social cost = private cost = private value < social value d. social value = private cost = social cost > private value c. social cost = private cost = private value < social value

In monopolistically competitive markets, economic losses a. suggest that some existing firms will exit the market . b. suggest that new firms will enter the market c. are minimized through government -imposed barriers to entry d. are never possible .

a. suggest that some existing firms will exit the market .

Guilherme's Butcher Shop is the only place within 150 miles that sells bison burgers. Assuming that Guilherme is a monopolist and maximizing his profit, which of the following statements is true?

a. the price or Guilherme's bison burgers will be less than Guilherme's marginal cost b. the price of Guilherme's bison burgers will exceed Guilherme's marginal cost c. the price of Guilherme's bison burgers will equal Guilherme's marginal cost d. costs are irrelevant to Guilherme because he is a monopolist b. the price of Guilherme's bison burgers will exceed Guilherme's marginal cost

If a price ceiling is binding, then a. there will be no effect on the market price or quantity sold. b. there will be a surplus in the market. c. the market will be more efficient than it would be without the price ceiling. d. there will be a shortage in the market

a. there will be no effect on the market price or quantity sold.

suppose france has an absolute advantage over other countries in producing sugar, but other countries have a comparative advantage over france in producing sugar. if trade in sugar is allowed, france

a. will import sugar b. will export sugar c. will either import or export sugar, but it is not clear from the given information d. would have nothing to gain either from exporting or importing sugar b. will export sugar

Refer to Figure 9-3. The amount of deadweight loss caused by the tariff equals a. $50. b. $100 c. $25 d. $150.

b. $100

Suppose that when the price of good X increases from $500 to $690, the quantity demanded of good Y decreases from 50 to 3 - 10 . Using the midpoint method , the cross- price elasticity of demand is about a. 9.39, and X and Y are substitutes. b. - 0.11 , and X and Y are complements c. 0.11, and X and Y are substitutes. d. - 9.39 , and X and Y are complements.

b. - 0.11 , and X and Y are complements

Refer to Table 10-1. What is the socially optimal quantity of output in this market? a. 3 units b. 2 units c. 4 units d. 5 units

b. 2 units

Refer to Table 10 - 2 . What is the equilibrium quantity of output in this market? a. 5 units b. 4 units c. 3 units d. 6 units

b. 4 units

Which of the following will cause an increase in consumer surplus? a. An increase in the number of sellers of the good b. A technological improvement in the production of the good c. A decrease in the production cost of the good d. The imposition of a binding price floor in the market

b. A technological improvement in the production of the good

Refer to Scenario 10-1. Let Q represent the number of gallons of gasoline and let P represent the price of a gallon of gasoline. Which of the following statements is correct? a. One point on the socialcost curve is (Q=1,000,P=\$0.27) . b. One point on the supply curve is (Q=1,000,P=\$2.86) c. One point on the demand curve is (Q=1,000,P=\$3.13) d. The socially optimal quantity of gasoline is less than 1,000 gallons

b. One point on the supply curve is (Q=1,000,P=\$2.86)

Refer to Figure 15-6. What is the area of deadweight loss? a. The rectangle (E - G) * J b. The triangle 1 / (2[(E - G)(K - J)]) c. The triangle 1 / (2[(E - F)(K - J)]) d. The rectangle (E - G) * J plus the triangle 1 / (2[(E - G)(K - I)]) ]

b. The triangle 1 / (2[(E - G)(K - J)])

Cable TV shows are a. private goods. b. club goods. c. common resources. d. public goods .

b. club goods.

On a graphthe area below a demand curve and above the price measures a. deadweight loss. b. consumer surplus. c. producer surplus. d. willingness to pay .

b. consumer surplus.

Refer to Scenario 5-2. The change in equilibrium quantity will be a. greater in the pickles market than in the flour market. b. greater in the flour market than in the pickles market . c. the same in the pickles and flour markets. d. unknown without more information .

b. greater in the flour market than in the pickles market .

To say that a price ceiling is nonbinding is to say that the price ceiling a. results in a surplus b. is set above the equilibrium price c. causes quantity demanded to exceed quantity supplied d. is set below the equilibrium price

b. is set above the equilibrium price

Refer to Figure 10 - 1 . This graph represents the tobacco industryThe industry creates a. positive externalities b. negative externalities. c. no externalities. d. no equilibrium in the market .

b. negative externalities.

The U.S. military defends Jacob from foreign conflict. The fact that Jacob enjoys this protection does not detract from other Americans enjoyment of it. For this reason, we say that national defense is a. excludable b. not excludable c. rival in consumption d. rival in consumption

b. not excludable

If Christian expects to earn a higher income next month, he may choose to a. save more now and spend less of his current income on goods and services. b. save less now and spend more of his current income on goods and services c. decrease his current demand for goods and services. d. move along his current demand curves for goods and services.

b. save less now and spend more of his current income on goods and services

Producer surplus is... a) measured using the demand curve for a good b) always a negative number for sellers in a competitive market c) the amount a seller is paid minus the cost of production d) the opportunity cost of production minus the cost of producing goods that go unsold

c) the amount a seller is paid minus the cost of production

A manufacturer produces 330 units when the market price is $8 per unit and produces 470 units when the market price is $13 per unit. Using the midpoint method, for this range of prices, the price elasticity of supply is about a. 1.36 b. 0.35 c. 0.74 d. 0.48

c. 0.74

Refer to Figure 3 - 2 . If the production possibilities frontier shown is for 16 hours of production, then how long does it take Brazil to make one pound of peanuts? a. 1/16 hour b. 1/2 hour c. 2 hours d. 5 hours

c. 2 hours

Refer to Table 10-2. What is the socially optimal level of output in this market? a. 6 units b. 4 units c. 5 units d. 3 units

c. 5 units

Refer to Table 10-2. What the socially optimal level of output in this market? a. 6 units b. 4 units c. 5 units d. 3 units

c. 5 units

Refer to Scenario 11-1. Due to traffic, Isaiah expects to be 30 minutes late to pick up his children. Which of the following most accurately describes the set of prices that he would be willing to pay for a variable toll road that would get him to the daycare center on time? a. Any price less than $ 25.00 b. Any price less than $20.00 c. Any price less than $15.00 d. Isaiah would not be willing to pay out of pocket to avoid traffic.

c. Any price less than $15.00

A city street is a. always a public good, whether or not it is congested. b. a public good when it is congested, but it is a common resource when it is not congested. c. a common resource when it is congested, but it is a public good when it is not congested. d. always a common resource, whether or not it is congested.

c. a common resource when it is congested, but it is a public good when it is not congested.

If a tax is levied on the sellers of fish, then a. buyers will bear the entire burden of the tax. b. sellers will bear the entire burden of the tax. c. buyers and sellers will share the burden of the tax. d. the government will bear the entire burden of the tax

c. buyers and sellers will share the burden of the tax.

The product-variety externality is associated with the

consumer surplus that is generated from the introduction of a new product

builds fences for a living. Jack's out-of-pocket expenses (for wood, paint, etc.) plus the value that he places on his own time amount to his

cost of building fences

Suppose Jack and Tucker can both produce two goods: baseball bats and hockey sticks. Which of the following is not possible? a. Jim has an absolute advantage in the production of baseball bats and in the production of hockey sticks. b. Jim has an absolute advantage in the production of baseball bats and a comparative advantage in the production of hockey sticks. c. Jim has an absolute advantage in the production of hockey sticks and a comparative advantage in the production of baseball bats. d. Jim has a comparative advantage in the production of baseball bats and in the production of hockey sticks.

d. Jim has a comparative advantage in the production of baseball bats and in the production of hockey sticks.

If the government decides to build a new park, the first step would be to conduct a study to determine the value of the project. The study is called a a. budget analysis. b. project analysis. c. reimbursement analysis. d. cost -benefit analysis.

d. cost -benefit analysis.

When a monopolist increases the amount of output that it produces and sells , average revenue a. increases, and marginal revenue increases. b. increases, and marginal revenue decreases. c. decreases, and marginal revenue increases. d. decreases, and marginal revenue decreases

d. decreases, and marginal revenue decreases

Ten friends decide to meet at a Chinese restaurant for dinner. They decide that each person will order an item off the menu, and they will share all dishes. They will split the cost of the final bill evenly among each of the people at the table. A Tragedy of the Commons problem is likely for each of the following reasons except a. each person has an incentive to eat as much as possible since their individual rate of consumption will not affect their individual cost. b. there is an externality associated with eating the food on the table . c. when one person eats, he may not take into account how his choice affects his friends. d. each dish would be both excludable and rival in consumption.

d. each dish would be both excludable and rival in consumption.

refer to scenario 16.1 Which of the following statements best describes the long-run adjustment in this market

d. one of more new ice cream shops in Fairfield opens and competes with Hassan for customers, reducing the demand for Hassan's ice cream. Hassan's profits decline until he earns zero profit

A demand curve reflects each of the following except the a. willingness to pay of all buyers in the market. b. value each buyer in the market places on the good. c. highest price buyers are willing to pay for each quantity. d. quantity that each buyer will ultimately purchase.

d. quantity that each buyer will ultimately purchase.

Refer to Figure 6-9. In this market, a minimum wage of $7 creates a labor a. shortage of 7,000 worker hours. b. shortage of 4,000 worker hours. c. surplus of 7,000 worker hours. d. surplus of 4,000 worker hours.

d. surplus of 4,000 worker hours.

If the government imposes a binding price ceiling on a market, then the price paid by buyers will

decrease, and the quantity sold in the market will increase

In both perfect competition and monopolistic competition, each firm

has many competitors.

When large changes in price lead to no changes in quantity demanded, demand is perfectly

inelastic, and the demand curve will be vertical

Refer to Figure 10-3. If the government wanted to tax or subsidize this good to achieve the socially optimal level of output , it would

introduce a subsidy of $4 per unit

A likely example of substitute goods for most people would be

pencils and pens

According to the Coase theorem, private parties can solve the problem of externalities if

property rights are clearly defined

The law passed in 1914 that strengthened the government's powers and authorized private lawsuits was

the Clayton Antitrust Act

Suppose France has an absolute advantage over other countries in producing sugar, but other countries have a comparative advantage over France in producing sugar. If trade in sugar is allowed, France

will export sugar

Which of the following is not an example of a barrier to entry

An entrepreneur opens a popular new barbershop