MicroEcon

Use the table to answer the question. With no cooperation, the Nash equilibrium yields Bella a profit of ____ and Martin a profit of ______

4000; 3500

(Table: Supply of Matcha Tea) Use Table: Supply of Matcha Tea. If the price of matcha tea is $0.75 per cup, the total quantity of matcha tea supplied will be _____ cups per day.

50

Figure: Profit Maximizing Output and Price in the Diamond Market) Use the figure. The profit-maximizing output for this firm is: Assume that there are no fixed costs and that AC=MC=$200. The profit-maximizing output for a monopolist is:

8

(Figure: Supply Curves) The figure shows four differeny supply curves for four products. Which of the products has a perfectly inelastic supply curve? | / --- , /-

A

Which is NOT an example of a solution to an adverse selection problem caused by sellers having private information?

A company makes sure that all its employees enter positive product reviews on an online website that reports product reviews.

(Figure: Equilibrium in the Market for Mechanical Pencils) Consider the figure, Equilibrium in the Market for Mechanical Pencils. At the equilibrium price, the consumer surplus is equal to area:

ADI

A government uses taxes to build and maintain a museum, and citizens can visit the museum without paying an admission fee. Which consideration implies that visiting a museum is NOT a public good?

Although enjoying the exhibits might be nonrival, the experience is excludable because admittance could easily be limited to those who pay.

Suppose that the government increases the child tax credit, which increases the after-tax income of families with children. How will this decision affect the amount of labor supplied by parents, assuming that leisure is a normal good?

We dont know what will happen to the quanitity of labor supplied, since we don't know whtther the income effect or substitution effect will dominate.

To maximize economic surplus, keep increasing output as long as

marginal benefits exceed marginal costs

An industry with a single producer that sells a unique product with no substitutes is a

monopoly

When you buy a $36.00 ticket to a baseball game at a ticket booth just before entering the stadium, you pay $39.20—a price that includes a tax of $3.20. When you buy a $36.00 ticket to a baseball game online, you pay $44.40—a price that includes a tax of $3.20, an "order processing fee" of $3.30, and a "service charge" of $2.00. The marginal cost of the digital actions involved in selling tickets online is negligible, while the cost of employing ticket sellers at ticket booths is significant. Which is NOT a hurdle a fan must clear to get the lower-priced ticket? Message @Shilpa

payment of gratuitous fees tacked on to the ticket price

Chin is extremely risk averse. This means that his utility function will have a ______ slope that _____ becomes more horizontal as his wealth rises

positive; rapidly

Suppose that more security guards become aware that wearing Kevlar(bulletproof) vests protect them from injury and decide to start wearing Kevlar. At the same time, the price of materials used to produce the vests falls. The equilibrium price of Kevlar vests ____, and the equilibrium quantity produced ______.

probably changes but in an ambiguous direction; increases

(Figure: Demand Curves) The figure shows four different demand curves for four products. Which of the products has perfectly elastic demand curve? | --- \ -\

product B

After vandals break into Vanessa's bookstore one night, police investigate the crime. The police investigation is BEST described as a:

public good

When a good is nonrival and nonexcludable, the good is referred to as:

public good

the Cedar Point amusement park reduces its entry fees. as a result, the:

quantity demanded will rise.

The Coase Theorem states that when negative externalities are present, a market can:

reach an efficient solution if bargaining costs are low.

Which is NOT one of the ways companies create barriers to entry through unique cost advantages?

regulations

Suppose the government of the oil-rich country Saudi Arabia sets the price of gasoline at $0.25 per gallon when the market price is $1.50. The Saudi government actions will likely:

result in gasoline shortages, even in an oil-rich country.

The manager at Discount Tire knows that the price elasticity of demand for new tires is -1.3. When the manger runs a storewide sale of 15% off a set of tires, how much does she expect the quantity demanded of tires to change? The quantity demanded will:

rise by 19.5%

When a price-discriminating company lowers price for potential new customers who wouldn't buy otherwise, total economic surplus:

rises with the gain shared by sellers and buyers

The price of microchips used to produce iPads rises. As a result, the equilibrium price of iPads _____, and the equilibrium quantity _____.

rises; decreases

The opportunity cost principle implies that, as the wage rises, the number of hours supplied in the labor market _________ and the number of hours demanded in the labor market _________

rises; falls

Harrison is willing to buy the last ticket to the Billy Elliot play for $15, while Stefania is willing to pay $25. Harrison is first in line and buys a ticket for $15. He then resells his ticket to Stefania for $20. By reselling the ticket instead of going to the play himself, Harrison caused: the sum of the consumer and producer surplus to increase. the sum of the consumer and producer surplus to decrease. a deadweight loss of $5. the consumer surplus to decrease and the producer surplus to increase.

the of the consumer and producer surplus increase

To prevent people from pretending to qualify for the market segment with the lowest price, a company manager that engages in group pricing must ensure that:

there is a simple way to verify the segment in which a consumer qualifies.

When government policies lead to outcome that are worse than those that would occur in unregulated markets:

there is government failure.

Use the table to answer the question. At what price does this market experience a shortage of 70 units?

$7

The probability that it will hail in Denver on any given day in February is 2.5%, and the probability that you, living in Los Angelels, will have a car accident on any given day in February is 1% The Probability of both events occuring on the same day is _____ %

.025

You are in a long line at the grocery store when a cashier opens a second checkout counter. You must decide if it is better for you to move to the newly opened counter or stay where you are, with the possible outcomes indicated in the payoff matrix. Is there a Nash equilibrium in this game? Message @Shilpa

No, because anyone who ends up in a long line will want to switch to a short line.

How are people affected when economic efficiency increases?

Overall gains exceed any change in costs, but some people may be worse off.

Although your college bookstore charges everyone the same price for a t-shirt, different students buy very different quantities. Which is NOT a plausible general explanation for this?

Students need sizes that bookstore does not keep in stock

Which of these will NOT happen when the wages of pharmacists fall?

The supply curve or pharmacists will shift to the left.

Suppose the labor market for electricians is in equilibrium. Which event might decrease the wage of electricians?

Unemployed manufacturing workers attend techinical schools to learn the electrician's trade.

(Figure: Utility Functions) Which utility function represents the most risk-averse person?

Utility function C

An action taken to convey private information credibly is known as:

a signal

Candice's stand-up paddleboard company will earn profits producing and selling at any output level where the company's:

demand curve is above its average cost curve

Why does an employer's labor demand curve slope downward?

diminishing marginal product

(Figure: Price Ceilings) A binding price ceiling can be seen in:

figure B

When Ratana notices that the price of frozen yogurt has fallen, she buys less ice cream and more blueberries. This happens because:

for Ratana, frozen yogurt and ice cream are substitutes, and frozen yogurt and blueberries are complements

You're studying for your economics exam, utilizing two methods of study: reading the textbook and working on economics problems. You expect that reading the textbook will increase your exam score by 2 points per hour of reading per day. Your expected marginal benefit of working on economics problems, by contrast, diminishes over time, as shown in the following table:

four

Your company provides portfolio accounting systems to a wide range of investor clients, including unsophisticated ones who simply buy and hold stocks over the long term and sophisticated ones, such as hedge funds, that trade frequently and require realtime stock price quotes to calculate portfolio values at any given time. You might take advantage of this situation through price discrimination by selling two systems: a expensive system that has real-time stock prices and a expensive one with stock price quotes delayed by 20 minutes. Those who want a discounted portfolio management system must clear the hurdle of stock price quotes.

more; less; delayed

A cable TV company gives current customers a year-long discount for each new customer they bring to the cable company. Jose, a current customer, gets five of his friends to sign up for cable TV service with his provider so that he can receive discounts on his cable bill. The Cable TV company is using a ___ strategy to create a barrier to entry.

network effect

The relationship between price expectations and current demand is:

positive; when future prices are expected to rise, current demand rises

(Figure: Oligopoly Pricing Strategy for TV Service Providers) Use Figure: Oligopoly Pricing Strategy for TV Service Providers. If neither Spectrium nor Sling advertise, then without any collusion: Oligopoly Advertising Strategy for TV Service Providers

there will be no incentive for either Philo or Sling to begin advertising.

When market power is a significant force in a product market, the market tends to _____ compared to a market where there is no market power.

underproduce

A recent study found that power usage in the mining of bitcoin is costing businesses an extra $79 million per year for energy, as electricity prices rise. For a typical manufacturing business, the rise in the price of electricity would be reflected in a:

leftward shift of its supply curve.

An intern at Rovio Entertainment is sifting through sales data for the Angry Birds game and discovers that when the monthly premium subscription fee was $20, the quantity of memberships demanded was 10 million. When the price rose to $25 per month, the quantity of monthly memberships demanded was 8 million. Using the midpoint formula, the absolute value of the price elasticity of demand is ________, which is _______

1; neither elastic nor inelastic

(Table: Total Utility of Income for the Perez Family) Use Table: Income and Utility of Income for the Perez Family. The Perez family would like to send their daughter, Inciana, to university in the fall. There is a 25% chance that Luciana will attend the University of Miami, leaving the Perez family with $50,000 in income after tuition; a 50% chance that Luciana will attend the Florida State University and that the Perez family will have $40,000 in income after tuition; and a 25% chance that she will attend the Florida Institute of Technology, a private college, and that the Perez family will consequently have $30,000 in income after tuition. The Perez family's expected total utility is ________.

3210

You earn windfall profits when you start selling gourmet coffee outside the administration building at your campus. After a time, however, as other students set up gourmet coffee stands nearby, your revenues dwindle until they equal your costs. You then notice that no one sells snacks near the library, so you set up a snack stand there, attaining economic profits in this new market, at least for a time. All of this reminds you of a recent experience you had at a rock concert, where every time you found an open view of the performer through the crowd, the space around you would quickly close up, leaving you again with little or no view. Why is the rock concert a metaphor for the coffee and snack markets at your college? Message @Shilpa

An open view of the performer is a short-run "profit" opportunity; but once you enter that "market" other concertgoers also enter it, competing away your "viewing profits" in the long run.

Which is NOT an example of hedging?

Employees buy stock in the company that employs them in case dividends are needed.

If demand fora good is inelastic ----- like for eggs ----- then which statement is likely FALSE?

It has many substitues.

Ari owns a hair salon in a small city. Which is NOT an effect that the opening of new hair salons in her city will have on her salon?

Its cost curves will shift upward.

Lena likes to buy vegetables at a farmer's market. Each week, she walks through the market to see what's available and compares prices offered by different sellers. She makes sure each seller knows that she is comparing prices and then buys from the one who gives her the best deal. Which method of price discrimination are the sellers practicing? Message @Shilpa

haggling

(Figure: Competitive Equilibrium in the Labor Market) Use Figure: Competitive Equilibrium in the Labor Market. In the figure, an increase in demand of the good produced will, all else equal, lead to a(n) _ in the equilibrium quantity of labor and a(n) in the equilibrium price of labor.

increase; increase

If an individual is risk averse, then as their income increases,, their utility from that income:

increases at a decreasing rate.

When the demand for stand-up paddleboard increases, the demand for skilled paddleboard shapers _____, and their marginal revenue product ______.

increases; increases

Your aunt is a skilled woodworker who recently began selling the handcrafted pieces that she makes in her garage during her spare time. She normally works 1 hour per evening, after her day job. Orders have increased but the maximum amount of time she can work per evening is 1.5 hours. There is not another skilled woodworker she could employ to meet increased demand, and her workspace cannot expand beyond her garage. Your aunt's elasticity of supply in the short run is: Message @Shilpa

inelastic

Fast food is a(n):

inferior good

When a seller has no market power, its demand curve:

is horizontal