EREC 411 Final Exam

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Oligopoly

few sellers offer similar or identical products

the MC curve is

the firm's supply

As the number of sellers in an oligopoly increases

the price effect becomes smaller the oligopoly looks more and more like a competitive market p approaches MC the market quantity approaches the socially efficient quantity

Profit=

total revenue-total cost

Payoffs

value players attach to each outcome

Sunk cost

a cost that has already been committed and cannot be recovered (FC are sunk costs in the short run)

Predatory Pricing

a firm cuts prices to prevent entry or drive a competitor out of the market so that it can charge monopoly prices later•Illegal under antitrust laws difficult: when a price cut is predatory and when it is competitive & beneficial to consumers? many economists doubt that predatory pricing is a rational strategy: it involves selling at a loss (costly for the firm) it can backfire

Monopoly

a firm that is the sole seller of a product without close substitutes has market power (price maker) arise due to barriers to entry results in a deadweight loss

Exit

a long-run decision to leave the market (if exit in LR, zero costs)

Tying

a manufacturer bundles two products together and sells them for one price critics -Tying gives firms more market power by connecting weak products to strong ones others: tying cannot change market power buyers are not willing to pay more for two goods together than for the goods separately firms may use tying for price discrimination sometimes increases economic efficiency

Sherman Antitrust Act, 1890 Clayton Antitrust Act, 1914

Elevated agreements among oligopolists from an unenforceable contract to a criminal conspiracy prevent mergers, break up companies, prevent companies from coordinating their activities to make markets less competitive

Zero economic profit when

P=ATC

Resale Price Maintenance ("Fair Trade")

a manufacturer imposes lower limits on the prices retailers can charge often opposed because it appears to reduce competition at the retail level yet, any market power the manufacturer has is at the wholesale level no gains from restricting competition at the retail level legitimate objective: preventing discount retailers from free-riding on the services provided by full-service retailers

Shutdown

a short-run decision not to produce anything because of market conditions (if shut down in SR, must still pay FC)

Natural monopoly

a single firm can produce the entire market Q at lower cost than several firms

A positive externality occurs when: a. Jack receives a benefit from John's consumption of a certain good b. Jack receives personal benefits from his own consumption of a certain good c. Jack's benefit exceeds John's benefit when they each consume the same good d. Jack's receives a loss from John's consumption of a certain good

a. Jack receives a benefit from John's consumption of a certain good

If the demand for donuts is elastic, then a decrease in the price of donuts will: a. increase total revenue of donut sellers b. decrease total revenue of donut sellers c. not change total revenue of donut sellers d. there is not enough information to answer this question

a. increase total revenue of donut sellers

Collusion

agreement among firms in a market about quantities to produce or prices to charge

Long run supply curve is horizontal if

all firms have identical costs and costs do not change as other firms enter or exit the market

Duopoly

an oligopoly with two firms

A firm can increase profit

by charging a higher price to buyers with higher willingness to pay

When a firm is operating at an efficient scale,: a. average variable cost is minimized b. average fixed cost is minimized c. average total cost is minimized

c. average total cost is minimized

Perfect price discrimination

charge each customer a different price (exactly equal to his or her willingness to pay) no deadweight loss not possible in the real world

Implicit costs

costs that do not require a cash outlay

Fixed costs

costs that do not vary with the quantity of output produced

Explicit costs

costs that require an outlay of money

Variable costs

costs that vary with the quantity of output produced

In the long run a company that produces and sells candy bars incurs total costs of $1,200 when output is 2,400 candy bars and $1,400 when 2,900 candy bars. The candy bar company exhibits: a. diseconomies of scale because total cost is rising as output rises b. diseconomies of scale because average total cost is rising as output rises c. economies of scale because total cost is rising as output rises d. economies of scale because average total cost is falling as output rises

d. economies of scale because average total cost is falling as output rises

if MR<MC

decrease Q to raise profit

In the long run, the typical firm

earns zero profit

Nash equilibrium

economic actors interacting with one another, each choose their best strategy given the strategies that all the other actors have chosen

Costs rise as firms ____________ the market

enter

Cartel

group of firms acting in unison

Progressive tax

high income taxpayers pay a larger fraction of their income than do low income taxpayers

Regressive tax

high income taxpayers pay a smaller fraction of their income than do low income taxpayers

Public ownership

how the ownership of the firm affects the costs of production (private owners; incentive to minimize costs)

if MR>MC

increase Q to raise profit

Perfectly competitive market

many buyers and sellers trading identical products each buyer and seller is a price taker free enter and exit

Monopolistic competition

many sellers product differentiation free entry and exit zero economic profit in long run (ex. apartments, books, bottled water, night clubs, etc)

Some economists argue that it is often best for government ______ try to remedy the inefficiencies of monopoly pricing

not to

The prisoners' dilemma

particular "game" between two captured prisoners illustrates why cooperation is difficult to maintain even when it is mutually beneficial

Concentration ratio

percentage of total output in the market supplied by the four largest firms the higher the concentration ratio, the less competition

Profit maximization in the short-run for the monopolistically competitive firm

produce the quantity where MR=MC if P>ATC ; profit if P<ATC ; loss similar to monopoly

Pure monopoly

rare in the real world many firms have market power due to selling a unique variety of product having a large market share and few significant competitors

Shutdown if:

revenue loss<cost savings shutdown if TR<VC or P<AVC

Price discrimination

sell the same good at different prices to different buyers firms divide customers into groups based on some observable trait that is likely related to willingness to pay, such as age (ex. discount movie tickets for seniors, students, etc. airline price discounts for saturday-night stayovers, etc.)

Dominant strategy

strategy that is best for a player in a game regardless of the strategies chosen by the other players

Game Theory

study of how people behave in strategic situations a person, when choosing alternative courses of action, considers how others might respond to the action she takes used by economists to understand firm behavior in oligopoly

Forms of product differentiation

style or type (ex. restaurants) location (ex. gas stations) quality

What you give up to obtain an item is called your: a. opportunity cost b. explicit cost c. monetary cost d. direct cost

a. opportunity cost

An increase in the price of blueberries would lead to a(n): a. increased supply of blueberries b. a movement up and to the right along the supply curve for blueberries c. a movement down and to the left along the supply curve for blueberries d. both a and b are correct

b. a movement up and to the right along the supply curve for blueberries

A higher price for batteries would result in a(n): a. increase in the demand for flashlights b. decrease in the demand for flashlights c. increase in the demand for batteries d. decrease in the demand for batteries

b. decrease in the demand for flashlights

Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to produce 181 units of output per day when 16 workers are hired, holding other inputs fixed. The marginal product of the 16th worker is: a. 10 inputs of output b. 11 units of output c. 16 units of output d. 181 units of output

c. 16 units of output

The requirement that a minimum volume of ethanol is blended into the U.S. fuel supply is an example of: a. a corrective tax b. a corrective subsidy c. a command-and-control policy d. the Coase Theorem

c. a command-and-control policy

If a tax is levied on the sellers of flour, 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

Which of the following concepts cannot be illustrated by the production possibilities frontier? a. efficiency b. opportunity cost c. equality d. trade-offs

c. equality

The largest source of federal revenue in the United States is: a. social insurance tax b. the corporate income tax c. the individual income tax d. foreign aid to the U.S.

c. the individual income tax

Suppose that a decrease in the price of good X results in a fewer units of a good Y being demanded. This implies that X and Y are: a. complementary goods b. normal goods c. inferior goods d. substitute goods

d. substitute goods

Assume, for Mexico, that the domestic price of oranges without international trade is lower than the world price of oranges. This suggests that, in the production of oranges: a. Mexico has a comparative advantage over other countries and Mexico will export oranges b. Mexico has a comparative advantage over other countries and Mexico will import oranges c. other countries have a comparative advantage over Mexico and Mexico will export oranges d. other countries have a comparative advantage over Mexico and Mexico will import oranges

a. Mexico has a comparative advantage over other countries and Mexico will export oranges

The term market failure refers to: a. a situation in which the market on its own fails to allocate resources efficiently b. an unsuccessful advertising campaign which reduces demand for a product c. a situation in which competition among firms becomes ruthless d. a firm which is forced out of business because of losses

a. a situation in which the market on its own fails to allocate resources efficiently

When a good is taxed: a. both buyers and sellers of the good are made worse off b. only buyers are made worse off, because they ultimately bear the burden of the tax c. only sellers are made worse off, because they ultimately bear the burden of the tax d. neither buyers nor sellers are made worse off, since tax revenue is used to provide goods and services that would otherwise not be provided in a market economy

a. both buyers and sellers of the good are made worse off

A tax on the buyers of cereal will increase the price of cereal paid by buyers: a. decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal b. decrease the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal c. increase the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal d. increase the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal

a. decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal

The idea that people in equal conditions should pay equal taxes is referred to as: a. horizontal equity b. vertical equity c. the ability-to-pay principle d. the marriage tax

a. horizontal equity

In the markets for factors of production in the circular-flow diagram,: a. households provide firms with labor, land, and capital b. households provide firms with savings for investment c. firms provide households with good and services d. firms provide households with revenue

a. households provide firms with labor, land, and capital

If the price of milk rises, when is the price elasticity of demand likely to be the lowest? a. immediately after the price increase b. one month after the price increase c. three months after the price increase d. one year after the price increase

a. immediately after the price increase

Vertical equity in taxation refers to the idea that people: a. in unequal condition should be treated differently b. in equal conditions should pay equal taxes c. should pay taxes based on the benefits they receive from the government d. should pay a proportional tax rather than a progressive tax

a. in unequal condition should be treated differently

If a good is normal, then an increase in income will result in a(n): a. increase in the demand for the good b. decrease in the demand for the good c. movement down and to the right along the demand curve for the good d. movement up and to the left along the demand curve for the good

a. increase in the demand for the good

If the price elasticity of supply for wheat is less than 1, then the supply of wheat is: a. inelastic b. elastic c. unit elastic d. quite sensitive to changes in income

a. inelastic

Which of the following is the best example of a variable cost?: a. monthly wage payments for hired labor b. annual property tax payments for a building c. monthly rent payments for a warehouse d. annual insurance payments for a warehouse

a. monthly wage payments for hired labor

Assume that a 4 percent decrease in income results in a 6 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is: a. negative, and the good is an inferior good b. negative, and the good is a normal good c. positive, and the good is an inferior good d. positive, and the good is a normal good

a. negative, and the good is an inferior good

Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a: a. shortage to exist and the market price of roses to increase b. shortage to exist and the market price of roses to decrease c. surplus to exist and the market price of roses to increase d. surplus to exist and the market price of roses to decrease

a. shortage to exist and the market price of roses to increase

Trade raises the economic well-being of a nation in the sense that: a. the gains of the winners exceed the losses of the losers b. everyone in an economy gains from trade c. since countries can choose what products to trade, they will pick those products that are most beneficial to society d. the nation joins the international community when it begins to engage in trade

a. the gains of the winners exceed the losses of the losers

If a firm uses labor to produce output, the firm's production function depicts the relationship between: a. the number of workers and the quantity of output b. marginal product and marginal cost c. the maximum quantity that the firm can produce as it adds more capital to a fixed quantity of labor d. fixed inputs and variable inputs in the short run

a. the number of workers and the quantity of output

In an economy in which decisions are guided by prices and individual self interest, there is: a. the potential to achieve efficiency in production b. a strong need for government intervention in the market c. less efficiency than would be observed in a centrally-planned economy d. more need for a strong legal system to control individual greed than would be needed in a centrally-planned economy

a. the potential to achieve efficiency in production

Tom tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $155 per tuning. One particular week, Tom is willing to tune the first piano for $120, the second piano for $125, the third piano for $140, and the fourth piano for $160. Assume Tom is rational in deciding how many pianos to tune. His producer surplus is: a. $95 b. $80 c. $75 d. $60

b. $80

The circular-flow diagram is an example of: a. a laboratory experiment b. an economic model c. a mathematical model d. all of the above are correct

b. an economic model

A tax on the buyer of personal computer external hard drives encourages: a. sellers to supply a smaller quantity at every price b. buyers to demand a larger quantity at every price c. buyers to demand a larger quantity at every price d. both a and b are correct

b. buyers to demand a larger quantity at every price

The most obvious benefit of specialization and trade is that they allow us to: a. work more hours per week than we otherwise would be able to work b. consume more goods than we otherwise would be able to consume c. spend more money on good thats are beneficial to society, and less money on goods that are harmful to society d. consume more goods by forcing people in other countries to consume fewer goods

b. consume more goods than we otherwise would be able to consume

The benefits principle is used to justify: a. sales taxes b. gasoline taxes c. "sin" taxes on cigarettes and alcoholic beverages d. personal income taxes

b. gasoline taxes

Economics is the study of: a. production methods b. how society manages its scarce resources c. how households decide who performs which tasks d. the interaction of business and government

b. how society manages its scarce resources

In the circular-flow diagram,: a. taxes flow from households to firms, and transfer payments flow from firms to households b. income payments flow from firms to households, and sales revenue flows from households to firms c. resources flow firms to to households, and good and services flow from households to firms d. inputs and outputs flow in the same direction as the flow of dollars, from firms to households

b. income payments flow from firms to households, and sales revenue flows from households to firms

Suppose the government increases the size of a tax by 20 percent. The deadweight loss from that tax: a. increases by 20 percent b. increases by more than 20 percent c. increases but by less than 20 percent d. decreases by 20 percent

b. increases by more than 20 percent

The deadweight loss from a tax of $2 per unit will be smallest in a market with: a. inelastic supply and elastic demand b. inelastic supply and inelastic demand c. elastic supply and elastic demand d. elastic supply and inelastic demand

b. inelastic supply and inelastic demand

The most efficient tax possible is a: a. marginal income tax b. lump-sum tax c. consumption tax d. corporate profit tax

b. lump-sum tax

Frequently, in the short run, the quantity supplied of a good is: a. impossible, or nearly impossible, to measure b. not very responsive to price changes c. determined by the quantity demanded of the good d. determined by psychological forces and other non-economic forces

b. not very responsive to price changes

Almost all variation in living standards is attributable to differences in countries': a. population growth rates b. productivity c. systems of public education d. taxes

b. productivity

When a country takes a multilateral approach to free trade, it: a. removes trade restrictions on its own b. reduces its trade restrictions while other countries do the same c. does not remove trade restrictions no matter what other countries do d. is willing to trade with multiple countries at once

b. reduces its trade restrictions while other countries do the same

Which of the following statements is an example of a positive, as opposed to a normative statement? a. americans deserve a cleaner environment b. reducing emissions reduces days missed from school due to asthma c. all americans are entitles to quality health care d. economic policies should focus on improving equality

b. reducing emissions reduces days missed from school

A seller is willing to sell a product only if the seller receives a price that is at least as great as the: a. seller's producer surplus b. seller's cost of production c. seller's profit d. average willingness to pay of buyers of the product

b. seller's cost of production

Total surplus is: a. the total cost to sellers of providing the good minus the total value of the good to buyers b. the total value of the good to buyers minus the cost to sellers of providing the good c. the difference between consumer surplus and sellers' cost d. always smaller than producer surplus

b. the total value of the good to buyers minus the cost to sellers of providing the good

If the cross-price elasticity of demand for two goods is -4.5, then: a. the two goods are substitutes b. the two goods are complements c. one of the goods is normal while the other good is inferior d. one of the goods is luxury while the other good is a necessity

b. the two goods are complements

When an economy is operating at a point on its production possibilities frontier, then: a. consumers are content with the mix of goods and services that is being produced b. there is no way to produce more of one good without producing less of the other c. equal amount of the two goods are being produced d. all of the above are correct

b. there is no way to produce more of one good without producing less of the other

The Coase theorem suggests that private solutions to an externality problem: a. are effective under all conditions b. will usually allocate resources efficiently if private parties can bargain without cost c. are only efficient when there are negative externalities d. may not be possible because of the distribution of property rights

b. will usually allocate resources efficiently if private parties can bargain without cost

Abraham drinks Mt. Dew. He can buy as many cans of Mt. Dew as he wishes at a price of $0.55 per can. On a particular day, he is willing to pay $0.95 for the first can, $0.80 for the second can, $0.60 for the third can, and $0.40 for the fourth can. Assume Abraham is rational in deciding how many cans to buy. His consumer surplus is: a. $0.50 b. $0.60 c. $0.70 d. $1.00

c. $0.70

In which of the following situations would supply be the most elastic? a. an auto parts manufacturer is operating at capacity b. a real estate developer in Boston is looking to build condos on the waterfront c. a furniture manufacturer is operating its factory 8 hours per day d. a hotel has all of its rooms booked for each night of the next 3 months

c. a furniture manufacturer is operating its factory 8 hours per day

Tax systems that impose record-keeping requirements on taxpayers are said to have a(n): a. auditing burden b. lower incidence of compliance c. administrative burden d. certification requirement

c. administrative burden

An externality arises when a person engages in an activity that influences the well-being of: a. buyers in the market for that activity b. sellers in the market for that activity and yet neither pays nor receives any compensation for that effect c. bystanders in the market for that activity and yet neither pays nor receives any compensation for that effect d. both a and b are correct

c. bystanders in the market for that activity and yet neither pays nor receives any compensation for that effect

You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should: a. compare the total cost of your education to the total benefits of your education b. compare the total cost of your education to the benefits of staying one more semester c. compare the cost of staying one more semester to the benefits of staying one more semester d. compare the total benefits of your education to the cost of staying one more semester

c. compare the cost of staying one more semester to the benefits of staying one more semester

Which of the following events must cause equilibrium price to fall? a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increases d. demand and supply both increase

c. demand decreases and supply increases

When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, the firm is experiencing: a. diminishing labor b. diminishing output c. diminishing marginal product d. negative marginal product

c. diminishing marginal product

In designing a tax system, policymakers have two objectives that are often conflicting. They are: a. maximizing revenue and minimizing costs to taxpayers b. efficiency and minimizing costs to taxpayers c. efficiency and equity d. maximizing revenue and reducing the national debt

c. efficiency and equity

In the markets for goods and services in the circular-flow diagram,: a. households provide firms with savings for investment b. households provide firms with labor, land, and capital c. firms provide households with output d. firms provide households with profit

c. firms provide households with output

Economists generally believe that rent control is: a. an efficient and fair way to help the poor b. inefficient but the best available means of solving a serious social problem c. highly inefficient way to help the poor raise their standard of living d. an efficient way to allocate housing, but not a good way to help the poor

c. highly inefficient way to help the poor raise their standard of living

The ability-to-pay principle claims that a person should pay taxes according to: a. the level of public education that the person has received throughout his lifetime b. how many government services that person will receive c. how well that person can shoulder the tax burden d. the level of debt that the person has

c. how well that person can shoulder the tax burden

For which pairs of goods is the cross-price elasticity most likely to be positive? a. peanut butter and jelly b. bicycle frames and bicycle tires c. ice cream and frozen yogurt d. college textbooks and iPods

c. ice cream and frozen yogurt

A tradeoff exists between a clean environment and a higher level of income in that: a. studies show that individuals with higher levels of income pollute less than low-income individuals b. efforts to reduce pollution typically are not completely successful c. laws that reduce pollution raise costs of production and and reduce incomes d. employing individuals to clean up pollution causes increases in employment and income

c. laws that reduce pollution raise costs of production and reduce incomes

If the government imposes a tax of $3,000 on everyone, the tax would be a(n): a. income tax b. consumption tax c. lump-sum tax d. marginal tax

c. lump-sum tax

Total cost is the: a. amount a firm receives from the sale of its output is called b. fixed cost less variable cost c. market value of the inputs a firm uses in production d. quantity of output minus the quantity of inputs used to make a good

c. market value of the inputs a firm uses in production

When policymakers set prices by legal decree, they: a. are usually following the advice of mainstream economists b. improve organization of economic activity c. obscure the signals that normally guid the allocation of society's resources d. are demonstrating a willingness to sacrifice fairness for the sake of a gain in efficiency

c. obscure the signals that normally guid the allocation of society's resources

Economists compute the price elasticity of demand as the: a. percentage change in price divided by the percentage change in quantity demanded b. change in quantity demanded divided by the change in the price c. percentage change in quantity demanded divided by the percentage change in price d. percentage change in quantity demanded divided by the percentage change in income

c. percentage change in quantity demanded divided by the percentage change in price

Demand is said to be inelastic if the: a. quantity demanded changes proportionately more than price b. price changes proportionately more than income c. quantity demanded changes proportionately less than price d. quantity demanded changed proportionately the same as price

c. quantity demanded changes proportionately less than price

The local bakery makes such great cinnamon rolls that consumers do not respond much at all to a change in the price. If the owner is only interested in increasing revenue, she should: a. lower the price of the cinnamon rolls b. leave the price of the cinnamon rolls unchanged c. raise the price of the cinnamon rolls d. reduce costs

c. raise the price of the cinnamon rolls

One tax system is less efficient than another if it: a. places a lower tax burden on lower-income families than on higher-income families b. places a higher tax burden on lower-income families than on higher-income families c. raises the same amount of revenue at a higher cost to taxpayers d. raises less revenue at a lower cost to taxpayers

c. raises the same amount of revenue at a higher cost to taxpayers

Efficiency: a. and equality both refer to how much a society can produce with its resources b. and equality both refer to how fairly the benefits from using resources are distributed between members of a society c. refers to how much a society can produce with its resources. equality refers to how evenly the benefits from using resources are distributed among members of society d. refers to how evenly the benefits from using resources are distributed between members of society. equality refers to how much a society can produce with its resources

c. refers to how much a society can produce with its resources. equality refers to how evenly the benefits from using resources are distributed among members of society

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States. Any farmer with land above the aquifer can at present pump water out of it. Which of the following statements about the aquifer is correct? a. the aquifer is a public good which must be publicly owned to be used efficiently b. the aquifer is a private good which must be privately owned to be used efficiently c. the aquifer is a common resource which will be overused because no one owns it d. the aquifer is a club good which should be left as it is

c. the aquifer is a common resource which will be overused because no one owns it

A rational decision maker takes an action if and only if: a. the average benefit of the action exceeds the average cost b. the average cost of the action exceeds the average benefit c. the marginal benefit of the action exceeds the marginal cost d. the marginal cost of the action exceeds the marginal benefit

c. the marginal benefit of the action exceeds the marginal cost

When good X is produced, some people benefit. A free-rider problem arises when: a. the number of people who benefit is small and it is impossible to prevent anyone from benefitting b. the number of beneficiaries is small and it is possible to prevent some people from benefitting c. the number of beneficiaries is large and it is impossible to prevent anyone from benefitting d. the number of beneficiaries is large and it is possible to prevent some people from benefitting

c. the number of beneficiaries is large and it is impossible to prevent anyone from benefitting

Education is heavily subsidized through public school and government scholarships. This subsidization of education reflects the fact that: a. a negative externality requires a subsidy to move the market equilibrium closer to the social optimum b. the social cost of education exceeds the private cost of education c. the social value of education exceeds the private value d. the market-equilibrium quantity of education exceeds the optimal quantity of education

c. the social value of education exceeds the private value

The amount of money that a firm receives from the sale of its output is called: a. total gross profit b. total net profit c. total revenue d. net revenue

c. total revenue

Which of the following is not an example of a group responding to an incentive? a. students attend class because of an attendance policy that reduces their grade for absences b. consumers buy more of a product when it is on sale at a reduced price c. universities offer fewer online classes when they generate more revenue than traditional classes d. employees work harder to earn higher commissions

c. universities offer fewer online classes when they generate more revenue than traditional classes

Under which of the following scenarios would a park be considered a public good?: a. visitors to the park must pay an admittance fee, but there are always plenty of empty picnic tables b. visitors to the park must pay an admittance fee and frequently all of the picnic tables are in use c. visitors can enter the park free of charge and there are always plenty of empty picnic tables d. visitors can enter the park free of charge, but frequently all of the picnic tables are in use

c. visitors can enter the park free of charge and there are always plenty of empty picnic tables

Which of the following would not be considered a negative externality? a. Smelter, Inc. creates steel and pollution b. your friend buys a new puppy that barks every night c. you have an adverse reaction to a medication your doctor prescribed for you d. your neighbor plays loud music that you dislike through stereo speakers set up on his desk

c. you have an adverse reaction to a medication your doctor prescribed for you

Which of the following is likely to have the most price elastic demand? a. ice cream b. frozen yogurt c. vanilla ice cream d. Haagen-Dazs vanilla bean ice cream

d. Haagen-Dazs vanilla bean ice cream

"Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." This relationship between price and quantity demanded: a. applies to most goods in the economy b. is represented by a downward-sloping demand curve c. is referred to as the law of demand d. all of the above are correct