econ final 1

Refer to figure 6-23. How much tax revenue does this tax produce for the government?

A. $18

Refer to figure 4-3. If these are the only two consumers in the market, then the market quantity demanded at a price of $15 is

A. 0 units

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

A. Buyers will bear a greater burden of the tax than the sellers

Which of the following statements best expresses a firm's profit-maximizing decision rule?

A. If marginal revenue is greater than marginal cost, the firm should increase its output

Roger owns a small health store that sells vitamins in a perfectly competitive market. If vitamins sell for $12 per bottle and the average total cost per bottle is $11.50 at the profit-maximizing output level, then in the long run

A. More firms will enter the market

Which of the followings statements is not correct?

A. Part if the deadweight loss associated with monopoly is measured by the monopolist's economic profit.

Suppose you value a special watch at $100. You purchase it for $75. On your way home from class one day, you lose the watch. The store is still selling the same watch, but the price has risen to $85. Assume that losing the watch has not altered how you value it. What should you do?

A. Pay the $85 to buy the watch

If the price elasticity of supply for a window manufacturer is 1.5,

A. a 10% increase in the price of windows results in a 15% increase in the quantity of windows supplied.

In setting the production level, a firm's cost curves

A. by themselves do not tell us what decisions the firm will make

Economists normally

A. do not try to explain people's tastes, but they do try to explain what happens when tastes change.

In the long run a company that produces and sells laundry detergent incurs total costs of $2,500 when output is 1,250 units and $2,750 when output is 1,500 units. For this range of output, the laundry detergent company exhibits

A. economies of scale

Suppose the number of buyers in a market decreases and a technological advancement occurs also. What would we expect to happen in the market?

A. equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous

A market might have an upward-sloping long-run supply curve if

A. firms have different costs

Refer to scenario 5-4. The equilibrium price will

A. increase in both the milk and beef markets

A tax is imposed on the sellers of a good will raise the

A. price paid by buyers and lower the equilibrium quantity

Refer to table 13-7. What is the value of D?

B. $50

A candle manufacturer produces 4,000 units when the market price is $11 per unit and produces 6,000 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

B. 2.4

Refer to figure 6-14. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

B. Binding and creates a shortage of 40 units of the good

If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos rises?

B. Both the equilibrium price and quantity would decrease

If the number of buyers in a market decreases, then

B. Demand will decrease

Refer to figure 15-3. Which of the following statements is correct?

B. Panel A represents the typical demand curve for a monopoly.

Each of the following is a determinant of demand except

B. Production technology

An increase in quantity supplied

B. Results in a movement upward and to the right along a fixed supply curve

If sellers expect higher basket prices in the near future, the current

B. Supply of baskets will decrease

Refer to table 6-33. Based upon the diagram,

B. The incidence of the tax falls more heavily on sellers

Refer to figure 4-5. Which of the following would cause the demand curve to shift from Demand B to Demand C in the market for mattresses?

B. a decrease in the price of custom wooden sleigh bed frames

Refer to figure 6-4. A government-imposed price floor of $12 in this market results in

B. a surplus of 4 units

When a monopolist decreases the price of its good, consumers

B. buy more

Holding all the other forces constant, if increasing the price of a good leads to an increase in total revenue, then the demand for the good must be

B. inelastic

When a tax is placed on the sellers of a product, buyers pay

B. more, and sellers receive less than they did before the tax

When a firm experiences continually declining average total costs,

B. society is better served by having one firm supply the product

Roger owns a small health store that sells vitamins in a perfectly competitive market. If vitamins sell for $12 per bottle and the average total cost per bottle is $12.50 at the profit-maximizing output level, then in the long run

B. some firms will exit from the market

When a binding price floor is imposed on a market,

B. the quantity demanded at the price floor exceeds the quantity that would have been demanded without the price floor

Refer to table 13-7. What is value of E?

C. $100

Refer to table 14-12. What is the marginal cost of the 8th unit?

C. $120

Refer to table 13-14. What is the total cost of producing 7 units of output?

C. $123

Refer to table 14-12. What is the total revenue from selling 4 units?

C. $320

Refer to table 14-17. Based upon the information, if the firm is producing the profit-maximizing output, how much profit does the firm make?

C. $4

Refer to 15-5. A profit-maximizing monopoly's profit is equal to

C. (P2-P5)xQ3

A market is competitive if (i) firms have the flexibility to price their own product. (ii) each buyer is small compared to the market. (iii) each seller is small compared to the market.

C. (ii) and (iii) only

Monopolies are inefficient because they

C. (iii) only

If the price of supply is 1.5, and a price increase led to a 1.8% increase in quantity supplied, then the price increase is about

C. 1.20%

Refer to figure 5-5. Using the midpoint method, between prices of $50 and $60, price elasticity of demand is about

C. 1.22

Refer to figure 5-17. Using the midpoint method, what is the price elasticity of supply between point A and point B?

C. 1.67

C. Refer to table 13-7. At which number of workers does diminishing marginal product begin?

C. 3

Refer to table 13-1. What is the total output when 2 workers are hired?

C. 75

Refer to figure 15-5. At the profit-maximizing level of output,

C. Average revenue is equal to P2

Refer to figure 15-4. The average total cost curve for a monopoly firm is depicted by curve

C. C

Which of the following events must result in a lower price in the market for Snickers?

C. Demand for Snickers decreases, and supply of Snickers increases

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

C. Marginal revenue is less than the price of the product

The burden of a luxury tax falls

C. More on the middle class than on the rich

An increase in which of the following would shift the supply curve for gasoline to the right?

C. Number of producers of gasoline

Refer to figure 14-6. Firms will be encouraged to enter this market for all prices that exceed

C. P3

Refer to figure 4-5. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for DVDs?

C. a change in consumer preference towards watching movies theaters rather than at home

Which of the following would most likely serve as an example of a monopoly?

C. a local cable television company

If a binding price floor is imposed on the market for eBooks, then

C. a surplus of eBooks will develop

Refer to table 15 -18. The monopolist's marginal revenue is

C. always less than the price of its good, beyond the first unit

If a tax is levied on the buyers of dog food, then

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

A movement upward and to the left along a demand curve is called a(n)

C. decrease in quantity demanded

If the government removes a tax on a good, then the price paid by buyers will

C. decrease, and the price received by sellers will increase

Tax incidence

C. depends on the elasticities of supply and demand

If the government wants to reduce the burning of fossils fuels, it should impose a tax on

C. either buyers or sellers of gasoline

In a competitive market, the actions of any single buyer or seller will

C. have a negligible impact on the market price

A surplus exists in a market if

C. the current price is above its equilibrium price

Additional firms often do not try to compete with a natural monopoly because

C. they know they cannot achieve the low costs that the natural monopolist enjoys

Refer to scenario 14-4. Suppose the firm is producing 150 units of output and its fixed cost is $975. Then its variable cost amounts to

D. $2,700.00

Refer to figure 6-13. Which of the following price floors would be binding in this market?

D. $6

Refer to table 14-17. The marginal cost of the fourth unit it

D. $7

Refer to figure 6-9. A price floor set at

D. $7 will be binding and will result in a surplus of 8 units

Refer to Table 4-4. Suppose the market consists of Adam, Barb, and Carl. If the price falls by $2, the quantity demanded in the market increases by

D. 10 units

Refer to Table 4-3. If these are the only four buyers in the market, then the market quantity demanded at a price of $2 is

D. 14 units

In response to a shortage caused by the imposition of a binding price ceiling on a market,

D. All of the above are correct

When OPEC raised the price of crude oil in the 1970s, it caused the

D. All of the above are correct

A firm will shut down in the short run if, for all positive levels of output

D. All of the above is correct

Refer to table 5-11. WHich scenario describes the market for oil in the short run?

D. D

Refer to figure 4-5. Which of the following would cause the demand curve to shift from Demand A to Demand B in the market for oranges in the United States?

D. an announcement by the FDA that oranges prevent heart disease

Refer to table 14-2. This firm maximizes total revenue by producing

D. as many units as possible

Holding all other factors constant and using the midpoint method, if a candy manufacturer increases production by 20 percent when the market price of candy increases from $0.50 to $0.60, then supply is

D. elastic, since the price elasticity of supply is equal to 1.1

The difference between a supply schedule and a supply curve is that a supply schedule

D. is a table, and a supply curve is drawn on a graph

Total revenue

D. remains unchanged as price increases when demand is unit elastic