econ midterm
37) The table above shows the amount of labor inputs necessary to produce given levels of output. If the cost of a unit of labor in $20 and total fixed cost is $100, the average total cost of producing 20 units of output is
$7
6) Following a decrease in the supply of oranges, the price of orange juice increased by 20 percent, which resulted in a 10 percent increase in the quantity of apple juice consumed. This implies that the cross elasticity of demand between orange juice and apple juice is
0.5
21) If the student purhcases 2 units of pizza dn 2 units of pens, the student's total utility will be
53 units
48) Assume that the demand for a certain good is perfectly inelastic and the supply curve of the good is upward sloping. Which o the following occurs in the market for the good if the price of an input used to produce the good increases?
A decrease in the supply and an increase in the equilibrium price.
19) In microeconomics, the short run is defined as which of the following?
A period during which some inputs in a firm's production process cannot be changed
8) At 100 units of a firm's output, average total cost is $10, average variable cost is $8, average fixed cost is $2, and marginal cost is $12. How will each of the following change as the firm's output further increases?
ATC- Increase AVC- Increase AFC- Decrease
50) Assume that a monopolist is producing in the elastic portion of its demand curve. Which of the following will occur if the monopolist decreases its price?
Both total revenue and profits will decrease
45) Based on the information in the Lorenz curve above, which of the following is true?
Income is more equally distributed in Country X than in Country Z.
9) Which of the following is true for a perfectly competitive firm in long-run equilibrium
It is allocatively efficient
11) Which of the following is the best example of the free-ride problem?
It is difficult to exclude those who do not pay for a good from enjoying the benefits of the good.
56) A collusive agreement to fix prices among firms in an oligopolistic industry is most likely to be broken under which of the following conditions?
It is easy for new firms to enter into the indstry
41) A well-known fast-food franchise substantially increases the price of its hamburgers, and loses only some of its customers. Which of the following best explains why the franchise has not lost all of its customers?
Its hamburgers are differentiated.
51) In the short run, a profit-maximizing firm should shut down if which of the following is true?
Its product price is less than its average variable cost.
10) At the current output level, a firm finds that it has the potential to increase its profit by expanding output. If P=price, MR= marginal revenue, and MC= marginal cost, which of the following must hold at the current output for this firm?
MR>MC
14) The graph above shows a monoprony labor market. In the absence of any regulations, which of the following represent the number of workers the firm will hire and the wage ...it. will offer to these workers?
Number of workers- 20 Wage Price- $20
20) The student has $10 and spends it all on pizza and pens. If the price of a unit of pizza is $2 and the price of pens is $1, the student will maximize utility by purchasing which of the following combinations of pizzas and pens?
Pizzas) 4 Pens) 2
18) A monopolist produces two unrelated goods, X and Y. The demand for X is currently price elastic and the demand for Y is currently price inelastic. To increase its total revenue, the firms should change the price of X and Y in which of the following ways
Price of X) Decrease Price of Y) Increase
17) A decrease in raw material prices wil change the equilibrium price and quantity in a market in which of the following ways?
Price) Decrease Quantity) Increase
55) If this were a perfectly competitive industry with the same costs as shown on the graph, the equilibrium price and output would be which of the following?
Price) OT Output) Q3
2) The fundamental difference between a market economy and a command economy lies in which of the following
Property of rights and protecting of private property
54) The economic profit of the profit-maximizing monopolist is given by the area...
RULI
23) If the firm produces Q1 units of output with two inputs , the firm will be experiencing which of the following in the short run and in the long run?
Short Run) Diminishing marginal returns Long Run) Economies of Scale
46) The table below shows the total labor hours required to produce a unit of gold and the total labor hours required to produce a unit of sugar in Portugal and Spain, respectively. Which country has an absolute advantage in sugar production?
Spain, because it requires fewer total labor hours than Portugal to produce a unit of sugar.
59) Which of the following is a government policy that is intended to address a market failure?
Taxing the use of toxic pesticides by farmers
5) A change in which of the following will cause a change in the supply of personal computers (PC's) in the short run?
Technology
27) Motivated by lower input prices. United States manufacturers increase their imports of steel from other steel-producing countries. Which of the following best describes the impact o the increased steel imports on the labor market for steelworkers in the United States?
The demand for United States steelworkers will decline, putting downward pressure on steelworker wages.
25) A perfectly competitive firm is currently in long-run equilibrium. Its total revenue is $100,000, and the average total cost of production is $100. Which of the following can be concluded from this information.
The firm's output is 1,000 units, and its profit is zero
44) Under and efficient policy to address the problem of pollution created from manufacturing good X, which of the following is true?
The marginal social benefit of pollution reduction equals the marginal social cost of pollution reduction
49) An increase in which of the following will cause a firm's marginal cost curve to shift upward?
The price of a variable input.
38) Assume that a profit-maximizing monopoly is charging a single price. If the monopoly can price discriminate and charge each consumer what he or she is willing to pay, which of the following will occur?
The quantity of output produce will increase.
13) If the three largest widget producers control 15 percent of the total widget market, then these producers are operating in
an oligopoly
52) Beyond a certain level of output, the short-run marginal cost will rise because...
at least one input is fixed and eventually diminishing returns will occur.
If government regulations set price such that a natural monopolist earns only normal profits, price will be set to equal...
average total cost
28) When labor supply is a competitive labor market increases, the equilibrium wage rises and employment will change in which of the following ways?
Wage Rate) Decrease Employment) Increase
16) Carlos has a van with 20 seats and charges $10 per person per ride to the airport from downtown. Carlos' cost of the trip is $140 for any number of passengers. On one trip, Carlos has 19 seats filled when a person offers him $5 for the last seat. Should Carlos accept the offer?
Yes, since marginal benefit exceeds the marginal cost.
35) The long-run average cost curve will be sloping downward if a firm experiences...
economies of scale
31) A farmer in Country A can harvest 20 bushels of wheat or 10 bushels of corn in a day, while a farmer in Country B can harvest 8 bushels of wheat or 8 bushels of corn in a day. If Country A and Country B specialize and trade, Country A will...
export wheat and import corn
3) when the market is in equilibrium, the total economic surplus is equal to area
f+g+h+i+j+k
47) A production possibilities curve is bowed out, indicating increasing opportunity cost because of...
imperfect adaptability of resources to alternative uses
36) A decrease in the supply of oranges raised the price of oranges in the market. The substitution effect of the price increase will motivate consumers to...
increase the quantity of other fruits demanded and decrease the quantity of oranges demanded
57) Assume that the last worker a firm hired produces 60 additional units of output per hour and the last machine used produces 6,000 units or output per hour. A worker's hourly wage rate is $12, and the rental cost of a machine is $1000 per hour. In order to minimize the cost of its current output, the firm should...
increase the use of capital and decrease the use of labor
7) F&D Manufacturing Company increases all its inputs by 50 percent each. If F&D's output increases by 100 percent, then F&D is experiencing
increasing returns to scale
26) Game theory is a useful model to explain the behavior of firms in a market when the firms are...
interdependent
33) The additional satisfaction received from consuming an additional unit of a good is called the...
marginal utility
53) An industry consists of 100 small firms, and the largest firm accounts for only 2 percent of sales. Brand names are considered a signal of quality. The industry described is best classified as ...
monopolistically competitive
15) To correct for positive externalities, the government should
pay a subsidy equal to the marginal external benefit.
60) Public goods are typically provided by the government, because private markets tend to...
produce less than the socially optimum quantity
1) Oppurtuniy Cost
the value of the next best alternative that is forgone when an activity is pursued
58) A perfectly competitive profit-maximizing firm will continue to hire additional units of an input as long as the ...
value of the marginal product of the in put exceeds the price of the input
34) Assume that apple juice and grape juice are substitutes. Which of the following will cause an increase in the quantity of apple juice supplied?
An increase in the price of apple juice
22) After the government imposed a $0.20 per gallon tax on gasoline, the price of a gallon of gasoline increased from $1.00 to $1.15. Which of the following statements is true?
Consumers bear most, but not all, of the tax burden
24) Which of the following will be true if the firm is in a perfectly competitive market and the price is P1?
In the Long Run, existing firms in the industry will produce an output level greater than Q1
42) if a single firm can produce and supply an entire market at a lower unit cost than many small firms can, the long-run average total cost must be
Decreasing as the firm's output increases
43) An increase in the demand for automobiles will cause the demand for skilled automobile workers and the wage rate of skilled automobile workers to change in which of the following ways?
Demand for Workers) Increase Wage Rate) Increase
32) Which of the following changes in the demand for and the supply of a good will necessarily result in an increase in both the equilibrium price and quantity of the good in a market?
Demand) Increase Supply) No change
12) Which of the following statements best describes the graph?
Economic losses are incurred, and exit of firms from the market will cause prices to increase in the long run.
40) Which of the following statements is true for both moralistically competitive firm and a perfectly competitive firm in long-run profit-maximizing equilibrium?
Economic profits equal zero, and marginal revenue equals marginal cost.
29) Which of the following would create a positive externality?
Flu vaccination
39) Pam and Tara run two competing lemonade stands in a town. In the payoff matrix above, the first entry in each cell shows the profits to Pam, and the second entry in each cell shows the profits to Tara. According to the information, which of the following is true?
If Pan sets the high price, Tara will do best by charging the low price
4) if a price ceiling is set at F1 which of the following areas represent the remaining consumer surplus, producer surplus, and dead weight loss?
consumer surplus=f+g+i producer surplus =k dead weight loss = h+j
