ECON Multiple Choice

A+ Confections produces 10 cupcakes per day. The marginal cost of the 10th cupcake is $24, and average total cost of 10 cupcakes is $6. The average total cost of 9 cupcakes is:

$4

Which value of the Herfindahl-Hirschman index is MOST likely to indicate a perfectly competitive market?

100

The table below shows the marginal benefit form additional traffic lights for Donatello and Anthony. Suppose that the marginal cost of installing a traffic light is $25. What is the socially optimal number of traffic lights in the neighborhood?

2

Edward is one of 10 vendors who sell playoff T-shirts at football games in a perfectly competitive market. His costs are identical to the costs of the other 9 vendors. If the price of a shirt is $9, the short-run industry supply will be _____ shirts.

200

Consider an economy with just two citizens. If Sandeep's marginal benefit from an hour of black fly control efforts is $10, and Angela's marginal benefit is $25, then the optimal number of hours spent in black fly control efforts occurs when the marginal cost of an additional hour of black fly control is:

35.00

A key feature of a public good is:

access for anyone who wishes to consume it

If the marginal social benefit received from pollution is greater than its marginal social cost in a market:

an increase in the quantity of pollution will improve society's well-being.

Pollution may be the best example of a negative externality. A negative externality is:

an uncompensated cost imposed by an individual or firm on others

Both emissions and tradeable emissions permits:

are efficient methods of pollution reduction

The _____ cost curve continuously declines as more output is produced in the short run.

average fixed

The cost curves for Charlie's Cookie Confections are presented in the figure below. The curve labeled Y represents the firm's _____ cost curve.

average fixed

The figure below shows curves facing a typical restaurant. Assume that there are many firms in the market and many types of food offered. Assume also that firms can easily enter and exit the market. For the restaurant shown here, the profit per unit is represented by the vertical distance between points:

b and f

Suppose that apples and pomegranates are substitutes in consumption. The --- pomegranates will increase when apple prices rise

demand for

Ariel is a land surveyor, who surveys 100 properties in the short run. Her average total cost per acre surveyed is $1.75, her total revenue is $450, and her total fixed cost is $100. Ariel's:

economic profit per acre surveyed is $2.75

If the government of Japan adopts a new law establishing a minimum level of fuel efficiency on new cars in an attempt to slow, if not reverse, the effects of climate change, then it is using a(n):

environmental standard

Label D depicts a good that is either a private good or an artificially scarce good. Such a good is:

excludable

Margaret spends her entire budget on smoothies and muffins. The last smoothie provided Margaret with 10 additional utils, and the last muffin provided her with 25additional utils. The price of a muffin is twice that of a smoothie. Assuming that diminishing marginal utility applies to both goods, Margaret should consume _____ smoothies and_____ muffins.

fewer: more

Suppose there are 100 farms in an industry and cost curves are identical across firms. Total cost values are shown in the table below. If the price is $3.60 per pound:

firms will exist the industry

The optimal level of pollution is the quantity at which:

he total benefit of pollution exceeds its total cost by the greatest possible amount

The production possibility frontier illustrates that:

in a two good economy at maximum capacity, more of one good can be produced only if less of the other good is produced

an externality is said to exist when

individuals impose costs or benefits on others but have no incentive to take these costs and benefits into account

If left to the private market, the provision of a public good would be _____ than it is now, and free riders would pay _____ to consume it.

less; nothing

Unless a good is private and rival in consumption, the market does not efficiently allocate scarce resources in this case. Inefficient resource allocation is referred to as:

market failure

When Jeremiah watches a movie on Apple TV, his viewing is _____ in consumption because other people _____ able to watch the movie at the same time as Jeremiah does.

nonrival; are

External benefits are associated with the production of garden supplies, used to beautify gardens and yards in neighborhoods. Without government regulation, the market will:

price garden supplies at less than the marginal social benefit

Many travelers that must fly for business have a service that purchases their tickets. Regardless of the time of year, when they must travel for a meeting, they do. As such, business travelers' demand for airline flights is relatively _____, and large increases in price will result in relatively _____decreases in additional business travelers

price-inelastic; small

If a good is produced at an inefficiently low level and is subject to the free-rider problem, the good must be a(n):

public good

Which of the following is a microeconomic topic?

reasons why a consumer buys more cheese

Label A depicts a good that is either a private good or common resource. Such a good is:

rival in consumption

Which of the following is NOT a determinant of supply?

tastes and preferences

Suppose a representative consumer's income suddenly decreases. Which of the following will NOT occur?

the consumer's budget line will shift away from the origin.

The efficient quantity of pollution emissions occurs where:

the marginal social benefit of pollution is equal to the marginal social cost of pollution.

Opportunity cost is:

the value of the best alternative in making a choice between alternatives

If a Pigouvian tax is set too low

there will be too much pollution

Suppose that government officials have set an emissions tax to reduce pollution. Further supposethat, with the emissions tax, the marginal social cost of pollution is less than the marginal socialbenefit of pollution. The emissions tax is:

too high

Suppose that the figure represents the demand for and marginal private cost per pound of lobster caught in the local bay. The additional cost of lobster due to the depletion of the common resource is equal to the vertical distance A-C. At an output of F, _____ lobster is being produced.

too much

Suppose the government sets the total level of pollutants that can be discharged by city industries and that cities buy and sell the rights to pollute at levels below the cap. This illustrates:

tradable emissions permits

Nikos' lawn-mowing service is a profit-maximizing, competitive firm. If Nikos mows ten lawns perday at a price of $27 per lawn and has a total cost of $280, of which $30 is a fixed cost, what shouldNikos do in the short run?

Continue operating, since he is covering part of his fixed costs and all his variable costs

The FIRST law designed to curb monopoly power in the United States was the -- act.

Sherman Act

Which activity generates a positive externality?

Your neighbor installs a bat house, and the bats eat mosquitoes

The BEST example of a public good is:

a fireworks display organized by a municipality

The BEST example of a private good is:

a new Jeep