MicroEconomics

48) If a monoposony labor market suddenly were transformed into a perfectly competitive labor market how would the wage and employment change?

A) Both would increase

55) More college students are graduating with BA degrees in economics. Given this trend, we would expect the wage of the economist, the employment of economics, and the demand for economics textbooks to change in which of the following ways?

A) Decrease Increase Increase

40) The curve labeled 1 represents which of the following

A) Marginal Cost

25) If total product of labor is rising at an increasing rate.

A) Marginal Product of Labor is rising

27) Which of the following is true in the long run n a perfect competition?

A) P = MR = MC = ATC

19) Monopoly Deadweight loss is the result of

A) Setting the price above marginal cost.

20) The market for Cincinnati Reds baseball tickets is currently in equilibrium. Which of the following events would most likely increase the consumer surplus received by Reds fans?

A) The Reds offer discounted parking for all home games.

2) Nancy the choice to spend one hour studying for an exam, mowing the lawn for one hour at a wage of $6, or babysitting her niece for one hour at a wage of $8. If we know that Nancy has chosen to study for the exam, which of the following is true?

A) The benefit received from studying is greater than the opportunity cost of $8

31) Which of the following might explain how a price you decrease might cause a decrease in quantity demanded and an upward-sloping demand curve?

A) The good is inferior and the income effect is stronger than the substitution effect.

44) Monopolistic competition is said to be productively inefficient because

A) The long run price is above minimum average total cost

11) When the production or consumption of a good creates a positive externalize, it is deemed a market failure because at the market quantity.

A) The marginal social benefit exceeds the marginal social cost

15) You are told that the income elasticity for DVDs is 1.5. This means that

A) a 10 percent increase in income produces a 15 percent increase in consumption of DVDs. DVDs are a normal luxury good.

7) Assuming, no government involvement in this market, if the current price were at the level of 0A, we would expect (graph)

A) shortage in the market to be eliminated by rising prices.

50) The marginal revenue product of the fourth unit of labor is equal to

B) $16

29) If a market is organized by a cartel, we can expect

B) An incentive for cartel firms to cheat on the cartel agreement.

37) If these firms do not collude, the outcome will be

B) Both firms enter the market.

21) If Matt's total utility from consuming bratwurst increased at a constant rate, no matter how many bratwurst Matt consumed, what would Matt's demand curve for bratwurst look like?

B) Horizontal

26) The demand curve for a perfectly competitive firm's product is

B) Perfectly Elastic

3) Suppose the market for roses is currently in equilibrium. If the supply of roses falls, while at the same time the demand for roses rise, what can you say about the price and quantity of roses in the market.

B) Price rises, but the change in quantity is ambiguous.

58) The sales tax that you pay at the grocery store is commonly labeled a

B) Regressive Tax

10) Everyday Melanie spends her lunch money consuming apples, at $1 each, and oranges $2 each. At her current level of consumption Melanie's marginal unity of apples is 12 and her marginal utility of ranges is 18. If she has already spent all of her lunch money, how should Melanie change her consumption decision to maximize utility?

B) She should increase her apple consumption and decrease her orange consumption and decrease her orange consumption until the marginal utility per dollar is equal for both

4) The United States is trading salmon to Peru in exchange for anchovies. If these nations are trading based upon relative opportunity costs, what must be the case?

B) The United States has comparative advantage in salmon production, and Peru has comparative advantage in anchovy production.

18) Suppose the country government sends each parent a coupon that can be used to subsidize the cost

B) The demand for daycare rises, increasing the market price.

5) Which of the following is the best example of public good?

B) The volunteer fire department in your community

33) Declining populations of tuna in the Atlantic Ocean have likely had which of the following impacts on the wages of tuna fisherman, the employment of tuna fisherman, and real estate prices in new England fishing towns?

B)Decrease | Decrease| Increase|

51) If the wage paid to all units of labor is $20, how many units of labor are employed

C) 3

8) If the market is initially in equilibrium, which of the following would create a new equilibrium at point H.

C) A decrease in the cost of a production input for this good.

47) In a competitive labor market for housepainters which of the following would increase the demand for housepainters?

C) An increase in the construction of new houses

17) Using the diagram above, which of the following might have caused the outward movement of the production possibility frontier.

C) An increase in the productivity of the labor force

9) If the price were to rise from 0B to 0C

C) Dollars spent on this good would increase if demand for the good were price inelastic

32) For the perfectly competitive firm the profit maximizing decision to shut down is made when the price.

C) Falls below minimum average variable cost

54) In order to hire the least-cost combination of labor and capital, the firm must do which of the following?

C) Find the combination of labor and capital where the marginal product of labor divided by the price of labor is = to the marginal product of capital divided by the price of capital.

42) Which is true of a monopolistic Competition

C) Firms spend money to differentiate and advertise their products.

38) When the marginal product of labor is equal to the average product of labor.

C) Marginal cost is equal to minimum average variable cost.

39) The area 0abQ is equal to

C) Total Fixed Cost

59) Which of the following is the best example of the free rider effect

C) You have orded a big college football game on payperview.. they leech blah blah

52) An industry described as an oligopoly would most likely have.

C) significant barriers to entry

34) Which of the following is true of monopoly markets

D) Barriers to entry allow for the power to set prices above marginal cost.

45) One of the reasons that the government discourages and regulates monopolies is that

D) Consumer Surplus is lost with higher prices and lower level output.

23) You are told that the cross-prise elasticity between goods X and Y is +2.0. This means that

D) Goods X and Y are substitute goods.

13) Suppose the price of elasticy for cigarettes is less than one. When an excise tax is imposed on cigarette production, it changes the price, quantity and consumer spending in which of the following ways?

D) Increase Price| Decrease Quantity | Increase Spending |

30) Jason cleans swimming pools in a perfectly competitive local market. A profit maximizer, he can charge $10 per pool to clean 9 pools per day, incurring total variable costs of $80 and total fixed costs of $20. Which of the following is true?

D) Jason should clean 9 pools per day, with economic losses of $10

28) If the market price is above the perfectly competitive firm's average total cost cure, we expect that in the long run.

D) The industry expands as firms enter the market

14) Which of the following is true of a price floor?

D) To be an effective floor, it must be set above the equilibrium price.

22) When a firm is earning a normal profit from the production of a good, it is true that

D) Total Revenues from production are = to the sum of explicit and implicit costs.

57) A perfectly competitive employer hires labor up to the point where

D) Wage = Marginal Revenue of product of labor

41) If this firm was operating in a perfectly competitive market, and the price was equal to 0g, economic profit would be equal to which of the following areas?

D) eghf

1) At The Birthday Part of your best friend you see Skylar help himself to a second piece of a cake. For this individual it must be the case that

D) the marginal benefit of the second piece of cake is greater than the marginal cost

35) If this firm were a profit-maximizing monopoly list, the price and output would be which of the following?

E) 0f and Q1

53)A minimum wage in the market for fast food workers is likely to produce.

E) A surplus of fast food workers

56) Which of the following is the best example of a negative externality and the appropriate plan for eliminating it?

E) Air Pollution from a power plant is blowing downwind and harming the trees in tour community. Tax the production of electricity.

16) Which of the following causes the supply curve of paper to shift to the left?

E) Environmental concerns reduce the yearly amount of timber that can be harvested

12) Which of the following best complete a short definition of economics? "Economics is the study of..."

E) How scarce resources are allocated to satisfy unlimited wants.

6) Which of the following statements are true of capitalist market economy?

E) II and III only

46) What is one reason why the government discourages collusion between large firms in the same industry?

E) Joint profit maximization costs society consumer surplus as the price rises above competitive levels.

49) Which of the following is most likely to be true in the long run for a monopoly firm

E) P>ATC>MR=MC

43) If firms are entering an industry that is monopolistically competitive we would expect

E) The demand for existing irms to shift leftward

24) Which of the following is an example of a long run adjust for the owners of a small cafe

E) The owners buy the office next door, and this double the customer seating.

36) Deadweight loss is equal to which of the following areas?

E) bdgh

60) If the market for this good was in equilibrium at Q2 but the socially optimal output was Q1, the government could best remedy this_____ of resources by legislating a ____ on____ of the good.

E) overallocation, per unit tax, producers.