ECO 201 FINAL

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When setting prices for different groups of customers, a manager should charge higher prices to groups that have _____ and lower prices to groups that have _____. a. higher marginal benefit; lower reservation prices b. more elastic demand; more inelastic demand c. higher reservation prices; more inelastic demand d. lower reservation prices; lower marginal benefit

a. higher marginal benefit; lower reservation prices

Most neighborhood streets have traffic lights to help control the flow of traffic. Traffic lights are _____ and _____. Therefore, they will be _____ by the competitive market. a. nonrival; nonexcludable; underprovided b. nonrival; nonexcludable; overprovided c. rival; excludable; efficiently provided d. nonrival; excludable; underprovided

a. nonrival; nonexcludable; underprovided

Firms will choose a Grim trigger strategy if they: a. Believe high profits are sustainable b. Believe that the firms in the industry will compete with each other for a long time to come c. Have little control over the market price d. Are sure that cheating behavior will go unnoticed

b. Believe that the firms in the industry will compete with each other for a long time to come

(Figure: Payoff Matrix for Antojito and Carolina Reaper) Use Figure: Payoff Matrix for Antojito and Carolina Reaper. A Nash equilibrium occurs when Carolina Reaper produces _____, and Antojito produces _____. a. Low quantity; low quantity b. High quantity: high quantity c. Low quantity: high quantity d. High quantity; low quantity

b. High quantity: high quantity

Which statement is TRUE? a. If W < MRPL , the firm should hire less labor. b. If W > MRPL , the firm should hire less labor. c. If W = MRPL , the firm should hire less labor. d. If W > 0, the firm should shut down.

b. If W > MRPL , the firm should hire less labor.

How can the tragedy of the commons be averted? a. The government can assess corrective taxes. b. Ownership rights can be assigned. c. The parties involved can engage in public bargaining. d. The government can implement a cap and trade policy.

b. Ownership rights can be assigned.

How is the result of the Rational Rule for Sellers different for companies with market power versus companies with no market power? a. The price is lower for companies with market power. b. The price is higher for companies with market power. c. The demand is lower for companies with market power. d. The demand is higher for companies with market power.

b. The price is higher for companies with market power.

(Figure: MSC and MPC Curves) Use the graph to answer the question. The graph shows marginal social cost and marginal private cost curves. What is the marginal external cost? $2 $4 $6 $12

Figure: Demand, Revenue, and Cost Curves for Thneeds) Use Figure: Demand, Revenue, and Cost Curves for Thneeds. Thneeds and Things is a monopolist in the thneed ("things we need") market. If the government wants to regulate Thneeds so that an efficient outcome is reached, it would impose a price ceiling of: $40. $46. $50. $65.

$40

(Figure: Market 3) Use the graph to answer the question. The graph shows the marginal social cost, supply, and demand curves in the hand sanitizer market. At what quantity could the government set a quota to control this externality? 2 4 8 12

(Figure: The Profit-Maximizing Output and Price in the Diamond Market) Use Figure: The Profit-Maximizing Output and Price in the Diamond Market. Assume that there are no fixed costs and that AC = MC = $200. Under perfect competition, the price of the good would be _____, and _____ units would be produced. $600; 8 $200; 8 $200; 16 $600; 16

$200; 16

(Figure: MSB and Demand Curves 2) Use the graph to answer the question. The graph shows the marginal social benefit and demand curves in the dog food market. What is the marginal private benefit when four bags of dog food are bought? $4 $8 $12 $20

Pamela sells 10 bottles of olive oil per week at $5 per bottle. She can sell 11 bottles per week if she lowers the price to $4.50 per bottle. The quantity effect would be: $4.50. $4.95. $50. $45.

$4.50.

(Figure: The Profit-Maximizing Output and Price in the Diamond Market) Use Figure: The Profit-Maximizing Output and Price in the Diamond Market. Assume that there are no fixed costs and that AC = MC = $200. The profit-maximizing output for a monopolist is: 0. 8. 16. 20.

Which statement is FALSE? a. If W < MRPL , the firm should hire less labor. b. If W > MRPL , the firm should hire less labor. c. If W = MRPL , the firm has the optimal amount of labor. d. If the marginal product of labor is rising, then the value of the marginal product of labor is also rising.

a. If W < MRPL , the firm should hire less labor.

When a company practices price discrimination, it will keep adding customers until the point where the a. Last customer's marginal benefit equals the marginal quantity b. Last customer's marginal benefit exceeds the company's marginal cost c. Company's marginal cost exceeds the last customer's marginal benefit d. Company's marginal cost equals the last customer's marginal benefit

d. Company's marginal cost equals the last customer's marginal benefit

For a good to be efficiently provided by the private market, it must be: a. rival in consumption and nonexcludable. b. nonrival in consumption and excludable. c. a common resource. d. rival in consumption and excludable.

d. rival in consumption and excludable.

In the labor market for computer programmers, the labor demand represents a. the workers looking for a job as a programmer. b. the employers looking to hire programmers. c. all the workers looking for a job. d. all the employers looking to hire.

b. the employers looking to hire programmers.

Jordan's Photography Studio pays its workers $60 per day and sells poster-size prints for $10 each. Suppose that, during the holiday season, the price of poster-size prints increases to $12 due to a shift in the demand for the product. What happens? a. The demand for labor increases. b. The demand for labor decreases. c. The quantity demanded of labor increases, but the labor demand curve does not shift. d. The quantity demanded of labor decreases, but the labor demand curve does not shift.

a. The demand for labor increases.

(Figure: Market 3) Use the graph to answer the question. The graph shows the marginal social cost, demand, and supply curves in the cinnamon roll market. A corrective tax of _____ per unit will move the cinnamon roll market to the socially optimal output of _____ units. $3; 12 $2; 12 $4; 8 $2; 8

$2; 8

(Figure: Market 4) Use the graph to answer the question. The graph shows the marginal social benefit, demand, and supply curves in the milkshake market are in the graph. What are the socially optimal quantity and price? 12; $3 eight; $2 12; $1 eight; $4

12; $3

One of the main problems with the Coase theorem is that: a. bargaining costs are generally not low (or zero). b. individuals only act in their own self-interest. c. the consumer evaluation theorem implies that bargaining costs are not sufficiently high. d. a corrective tax or subsidy is needed to ensure that a social optimum is reached.

a. bargaining costs are generally not low (or zero).

Emissions from large pulp and paper factories create health risks for pedestrians and discomfort for residents of the city of Ashdown, Arkansas. In this case: a. too few of society's resources are used to produce paper. b. the externality can be solved by imposing a specific tax on the pulp and paper factories. c. there is an external benefit to society from the production of paper. d. the externality can be internalized by granting a specific subsidy to pulp and paper factories.

b. the externality can be solved by imposing a specific tax on the pulp and paper factories.

Since the advent of the digital age, the demand for in-person telephone operators has fallen dramatically. Which factor would account for this development? a. an increase in the number of automated answering services b. a decrease in the quality of the technology associated with phone equipment c. an increase in the supply of phone operators d. higher prices for long-distance service

a. an increase in the number of automated answering services

(Figure: Nike and Reebok Sales) Use Figure: Nike and Reebok Sales. Reebok and Nike must decide whether to have a sale or not, based on the potential economic profits shown in the table. The Nash equilibrium in this game is: a. Neither Reebok nor Nike has a sale b. Both Reebok and Nike have sales c. Reebok has no sale, while Nike has a sale d. There is no Nash equilibrium

b. Both Reebok and Nike have sales

(Figure: Nike and Reebok Sales) Use Figure: Nike and Reebok Sales. Reebok and Nike must decide whether to have a sale or not, based on the potential economic profits shown in the table. If Nike and Reebok were to collude to maximize profits, and both decided to cheat on the collusive agreement, what strategy should each follow? a. Nike: no sale; Reebok: no sale b. Nike: sale; Reebok: no sale c. Nike: no sale; Reebok: sale d. Nike: sale; Reebok: sale

d. Nike: sale; Reebok: sale

Why would it be a bad idea for a retailer to use "wearing nail polish" as the basis for segmenting customers into groups for price discrimination? a. A retailer can easily verify whether a customer is wearing nail polish. b. Preference for nail polish seems to be closely tied to a preference for the retailer's product. c. There are big differences in customers who wear nail polish compared to those who do not. d. People can easily switch from wearing nail polish to not wearing it.

d. People can easily switch from wearing nail polish to not wearing it.

What will happen in the labor market if employers increase the amount of paid vacation days each year? a. There will be a move to a different point on the labor supply curve with a smaller quantity. b. There will be a move to a different point on the labor supply curve with a larger quantity. c. There will be a leftward shift of the labor supply curve. d. There will be a rightward shift of the labor supply curve.

d. There will be a rightward shift of the labor supply curve.

Why is market power necessary for price discrimination? a. Market power increases competitive pressures, which facilitates discriminatory pricing. b. When a seller has market power, his product cannot be resold. c. Market power allows a seller to control the market demand, and that allows him to set price. d. Without market power, a seller would lose customers if he tried to charge a higher price.

d. Without market power, a seller would lose customers if he tried to charge a higher price.

The socially optimal quantity of pollution emissions occurs where: a. the damage to the environment can be reduced through corrective taxes. b. the government legislates a no-tolerance zero pollution policy. c. the marginal social benefits of pollution exceed the marginal social costs of pollution. d. the marginal social benefit of pollution is equal to the marginal social cost of pollution.

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

(Figure: Market 2) Use the graph to answer the question. The graph shows the marginal social cost, demand, and supply curves in the shower gel market. In this market, the socially optimal output is _____, and the market-determined output is _____. six; four four; six six; eight ten; six

four; six

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

Figure B

A cost imposed on bystanders is _____ cost. a private a marginal private a marginal public an external

an external

(Figure: The Incidence of Tax and Elasticities) Use Figure: The Incidence of Tax and Elasticities. Each panel below shows the application of a tax that raises the price from P 1 to P 2 . When a good or service is characterized by a relatively inelastic supply, as shown in panel _____, a greater share of the burden of a tax is borne by _____. A; buyers B; sellers A; sellers B; buyers

B; sellers

(Figure: The Incidence of Tax and Elasticities) Use Figure: The Incidence of Tax and Elasticities. Each panel below shows the application of a tax that raises the price from P 1 to P 2 . When a good or service is characterized by a relatively elastic demand, as shown in panel _____, the greater share of the burden of a tax on it is borne by _____. D; buyers D; sellers C; sellers C; buyers

C; sellers

A tariff _____ the price received by domestic producers and _____ the price paid by domestic consumers. Decreases; increases Increases; decreases Decreseas; decreases Increases; increases

Increases; increases

If a poverty line is set at a third of the median household income in a country, the poverty line is based on a _____ poverty standard. Fixed Absolute Relative Extreme

Relative

Most Americans receive their health insurance through: Medicare Medicaid Their employer Direct purchase

Their employer

Because Cornell can type reports faster and more accurately than Alice, Cornell has a(n) _____ in typing reports. comparative advantage absolute advantage opportunity cost Specialization

absolute advantage

Ang can mow the lawn in two hours. Bill takes three hours to mow the same lawn. What can you conclude from this information? a. Ang has a comparative advantage over Bill in mowing the lawn. b. Bill has a comparative advantage over Ang in mowing the lawn. c. Ang has an absolute advantage over Bill in mowing the lawn. d. Bill has an absolute advantage over Ang in mowing the lawn.

c. Ang has an absolute advantage over Bill in mowing the lawn.

A perfectly elastic supply curve is: horizontal. downward sloping. upward sloping. vertical.

horizontal.

(Figure: Marginal Revenue) What is the marginal revenue of the fourth unit in the following example? $20 $5 $2 $1

(Figure: Market) In the market shown, the original equilibrium price is 60 cents. A tax is then implemented on the buyer. The economic burden of this tax on the buyer is _____ cents. 6 8 4 2

(Figure: Market for TVs 2) According to the figure, if there is no international trade, the equilibrium quantity (in thousands) in this market is: 50 60 500 600

Supermarkets need to hire fewer cashiers, due to self-checkout counters. Which graph shows what happens to the labor market for cashiers? Graph A Graph B Graph C Graph D

Graph B

New startups allow professionals to work from home and this makes working with startups more attractive. Which graph shows what happens to the labor market for professionals who want to work with startups? Graph A Graph B Graph C Graph D

Graph D

A Japanese-made automobile purchased by a U.S. citizen is an example of a U.S. _____, and a U.S.-made automobile purchased by a Japanese citizen purchasing is an example of a U.S. _____. Import; import Export; export Import; export Export; import

Import; export

The efficient rate of emissions occurs when: MSB > MSC . MSB < MSC . MSB = MSC . There is no efficient or acceptable rate of emissions.

MSB = MSC .

When a welfare program is provided to those whose incomes fall below some minimum level, it is said to be: Means-tested An in-kind benefit A monetary transfer A negative income tax

Means-tested

(Figure: Nike and Reebok Sales) Use Figure: Nike and Reebok Sales. Reebok and Nike must decide whether to have a sale or not, based on the potential economic profits shown in the table. If Nike and Reebok were to collude to maximize profits, what strategy should each follow? a. Nike: no sale; Reebok: no sale b. Nike: sale; Reebok: no sale c. Nike: no sale; Reebok: sale d. Nike: sale; Reebok: sale

Nike: no sale; Reebok: no sale

(Figure: The Market for Amazon Echo) Use Figure: The Market for Amazon Echo. The figure shows the pre-tax and post-tax positions— S 1 and S 2 , respectively—of the supply curve for the Amazon Echo. The tax imposed on the Amazon Echo is equal to: P 1 − P 2 . P 1 − P 3. P 2 − P 3 . P 1 − P 5 .

P 1 − P 3.

If a firm faces a downward-sloping demand curve: P = ATC. P > MR. P < MC. P = MC.

P > MR.

When eligibility for a government program is based on income and sometimes on wealth, the program is classified as _____ program. an income-limited a means-tested a poverty-tested a social insurance

a means-tested

A maximum price legislated by the government is called: a price support. a price floor. a price ceiling. the parity price.

a price ceiling.

A binding price floor leads to: a shortage. a surplus. an equilibrium. a low price.

a surplus.

For nuclear reactors, which have a highly inelastic supply and a downward-sloping demand curve: a. producers will bear most of the burden of a tax. b. producers will not bear much of the burden of a tax. c. consumers and producers will split the burden of a tax in half. d. consumers will not bear any of the burden of a tax.

a. producers will bear most of the burden of a tax.

(Figure: Market 3) Use the graph to answer the question. The graph shows the marginal social cost, demand, and supply curves in the toothpaste market. What is the socially optimal quantity and price in this market? eight; $4 12; $3 four; $6 three; $12

eight; $4

(Figure: Market 8) Use the graph to answer the question. The graph shows the marginal social cost, marginal private cost, and demand curves in the aux cable market. If the government uses a quota to control an externality in this market, what quantity would be chosen as a limit on sales? two four six 12

four

(Figure: Market 5) Use the graph to answer the question. The graph shows the marginal social benefit, demand, and supply curves in the toothbrush market are in the graph. Market forces would yield a quantity of _____ and a price of _____. four; $8 six; $2 six; $6 four; $4

four; $4

A _____ program is one for which the recipient qualifies on the basis of _____. social insurance; income means-tested; age means-tested; income social insurance; need

means-tested; income

Social Security is a(n) _____ that is _____. monetary transfer; means-tested monetary transfer; not means-tested in-kind benefit; means-tested in-kind benefit; not means-tested

monetary transfer; not means-tested

(Figure: Markets) In the set of figures shown, Figures A, C and D are all: equilibrium prices. binding price ceilings. non-binding price ceilings. prices that lead to shortages.

non-binding price ceilings.

A good is _____ when it is difficult to prevent someone from using or having access to it. free nonrival shareable nonexcludable

nonexcludable

A good is characterized as _____ when one person's use of the good does not reduce another person's ability to use the same unit of the good. nonexcludable free nonrival shareable

nonrival

(Figure: Demand Curve for Insulin) Use Figure: Demand Curve for Insulin. The figure shows a demand curve that is: unit-elastic elastic perfectly inelastic perfectly elastic

perfectly inelastic

An import is a good or service: purchased from a foreign seller. purchased from a domestic seller. sold to a foreign buyer. sold to a domestic buyer.

purchased from a foreign seller.

According to the Rational Rule for Sellers, the manager of this company should choose to produce _____ of output and charge a price of _____. one unit; $400 two units; $450 three units; $400 four units; $350

two units; $450

One of the market failures caused by market power is reduced demand. high costs. high price. underproduction.

underproduction.

(Figure: The Market for Beyond Meat Burgers) Use Figure: The Market for Beyond Meat Burgers. If the market is originally in equilibrium, and the government imposes a tax of $0.80 per unit of the good sold, the amount of the tax paid by producers is: $1.00 $0.50 $0.30 $0.80

$0.30

(Figure: Market for Pants) According to the figure, if there is no international trade in this market, the value of the domestic producer surplus is: $1,600,000 $800,000 $2,500,000 $1,250,000

$800,000

(Figure: Market for Pants) Suppose that the world price of a pair of pants is $40. According to the figure, the total domestic surplus in the free-trade equilibrium _____ the total domestic surplus in the no-international trade equilibrium by _____. Exceeds; $100,000 Falls short of; $200,000 Falls short of; $100,000 Exceeds; $200,000

Exceeds; $100,000

(Figure: Market for Pants) Suppose that the world price of a pair of pants is $30. According to the figure, the total domestic surplus in the free-trade equilibrium _____ the total domestic surplus in the no-international trade equilibrium by _____. Exceeds; $200,000 Exceeds; $400,000 Falls short of; $200,000 Falls short of; $400,000

Exceeds; $400,000

Low; low

Compared to a situation without trade, international trade leads to _____ domestic production in import-competing industries and _____ domestic production in exporting industries. Higher; lower Higher; higher Lower; higher Lower; lower

Lower; higher

(Figure: Market) A quota of 25 units is placed on the market that is shown in the figure. The quota _____ the quantity sold in the market by _____ units. Lowers; 25 Lowers; 50 Raises; 25 Rises; 30

Lowers; 25

When labor is hired in a competitive market, the value of the marginal revenue product is computed by: P × MPL. P × W . W × MPL . MPL/P .

P × MPL.

An income level below which a family is defined to be in poverty is known as the: Poverty line Bottom quintile Relative property measure Needs-based indicator

Poverty line

(Figure: Price Discrimination) A business that price discriminates will produce at what output level? Quantity 1 Quantity 2 Quantity 3 Quantity 4

Quantity 3

(Figure: The Market for Apple Computers in the United States) Use Figure: The Market for Apple Computers in the United States. Assume that P A is the domestic equilibrium price without trade and P W is the world price. Producer surplus with international trade would be area: X + Y + Z. W + X + Y. X + Y. Y.

X + Y + Z.

(Figure: Market for Pants) Suppose that the world price of a pair of pants is $40. According to the figure, international trade will lead to _____ in the domestic producer surplus and _____ in the domestic consumer surplus. an increase; an increase an increase; a decrease a decrease; an increase a decrease; a decrease

a decrease; an increase

In a finitely repeated game, both players have an incentive to ____ during the last round a. Cooperate b. Defect c. Collude d. Maintain past behavior

b. Defect

The official poverty line depends on _____ and is adjusted every year to reflect changes in the cost of living. a. only the major wage earner's annual income b. the size and composition of a family c. only the size of the family d. only the composition of the family

b. the size and composition of a family

If a monopolist produces a quantity that generates MC > MR, then profit: a. is maximized. b. is maximized only if MC = P. c. can be increased by increasing price. d. can be increased by decreasing price.

c. can be increased by increasing price.

The demand curve for a monopoly is: a. the MR curve above the AVC curve. b. the MR curve above the horizontal axis. c. the entire MR curve. d. above the MR curve.

d. above the MR curve.

Jordan's Photography Studio pays its workers $60 per day and sells poster-size prints for $10 each. If the market wage rises to $70, then the: a. demand for labor increases. b. demand for labor decreases. c. quantity demanded of labor increases, but the labor demand curve does not shift. d. quantity demanded of labor decreases, but the labor demand curve does not shift.

d. quantity demanded of labor decreases, but the labor demand curve does not shift.

Buyers bear a smaller incidence of the tax when: the tax is higher. supply is more elastic than demand. demand is more elastic than supply. demand is perfectly inelastic.

demand is more elastic than supply.

(Figure: Market 4) Use the graph to answer the question. The graph show the marginal social benefit, demand, and supply curves in the milkshake market. Market forces would yield a quantity of _____ and a price of _____ in the milkshake market. 12; $1 16; $4 12; $3 eight; $2

eight; $2

(Figure: Market 4) Use the graph to answer the question. The graph shows the marginal social benefit, demand, and supply curves in the toothbrush market. Market forces would yield a quantity of _____, whereas the socially optimal quantity is _____. four; six eight; 12 two; three 12; three

eight; 12

(Figure: Kenyan Labor Market) The labor market begins in equilibrium. Then, the government of Kenya implements a minimum wage of 15,000 Kenyan shillings per month. After the implementation of the minimum wage, the number of workers hired _____ people. falls by 10,000 falls by 6,000 rises by 9,000 rises by 10,000

falls by 6,000

A binding price ceiling is usually designed to: keep prices below the equilibrium level. increase the quality of the good. prevent surplus. keep prices above the equilibrium level.

keep prices below the equilibrium level.

The supply curve of a firm is also its _____ cost curve. average social marginal private marginal external

marginal private

A measure of how responsive buyers are to price changes is the: price elasticity of demand. price elasticity of supply. cross-price elasticity of demand. income elasticity of demand.

price elasticity of demand.

(Figure: Public Goods and Common Resources) Use Figure: Public Goods and Common Resources. The figure lists the type of goods that are available for consumption. Panel D depicts a good that is both nonrival in consumption and nonexcludable. Such a good would be considered a: private good. club good. public good. common resource.

public good.

(Figure: The Market for Grapes in California) Use Figure: The Market for Grapes in California. When the government imposes a tariff on imported grapes, the price of grapes in California rises from P W to P T , and there's a net _____ in total surplus of _____. addition; D + F + E + C addition; D + F + E reduction; D + F reduction; D + F + E + C

reduction; D + F

A binding price ceiling would result in a(n): surplus of the good. shortage of the good. quantity control. equilibrium price.

shortage of the good.

(Figure: Market 5) Use the graph to answer the question. The graph shows the marginal social benefit, demand, and supply curves in the toothbrush market. What are the socially optimal quantity and price? four; $4 eight; $8 six; $6 four; $8

six; $6

All marginal benefits, no matter who gets them, are referred to as the marginal _____ benefit. external public private social

social

All marginal costs, no matter who pays them, are marginal _____ costs. social external private public

social

From a community perspective, the marginal cost that matters is the marginal _____ cost. private external public social

social

An export is a good or service: purchased from a foreign seller. purchased from a domestic seller. sold to a foreign buyer. sold to a domestic buyer.

sold to a foreign buyer.

(Figure: Market 3) Use the graph to answer the question. The graph shows the marginal social cost, demand, and supply curves in the toothpaste market. If market forces prevail, this market will produce and sell _____ tubes of toothpaste at a price of _____. eight; $5 eight; $4 12; $3 12; $4

12; $3

(Figure: Market for Sustainable Furniture) Consider the market for furniture made from sustainable, man-made forests that is shown in the figure. The government wants to encourage buyers to buy such furniture and places a price ceiling of $250 on the market. After the implementation of the price ceiling, the market quantity sold falls by _____ thousand units. 400 300 200 500

200

(Figure: Labor Market) Refer to the labor market shown here. Suppose a minimum wage of $18 per hour is introduced. After the implementation of the minimum wage, _____ workers are hired. 20,000 18,000 30,000 24,000

24,000

(Figure: Market for Sustainable Furniture) Consider the market for furniture made from sustainable, man-made forests that is shown in the figure. The government wants to encourage buyers to buy such furniture and places a price ceiling of $250 on the market. The market quantity actually sold after the implementation of the price ceiling is _____ thousand pieces of furniture. 700 300 500 350

300

(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of engines is $1,000, the quantity demanded is _____, and domestic suppliers will sell _____ units to domestic consumers. 400; 400 400; 600 600; 400 600; 600

400; 400

(Figure: Market) In the market shown, the original equilibrium price is 60 cents. A tax is then implemented on the buyer. After the implementation of the tax, the buyer pays a price of _____ cents per unit of the product. 58 60 64 90

(Figure: Market) Use the graph to answer the question. The graph shows the marginal social cost, demand, and supply curves in the jigsaw puzzle market. If market forces prevail, this market will produce and sell _____ units of output at a price of _____. 6; $6 4; $8 6; $8 8; $4

6; $6

(Figure: Market for TVs 2) According to the figure, if there is international trade in this market, and the world price of a television is $400, the quantity demanded is _____, and domestic suppliers will sell _____ units to domestic consumers. 70,000; 20,000 70,000; 60,000 80,000; 20,000 80,000; 60,000

80,000; 20,000

Which of the following tax systems is progressive? Corinne pays a 10% tax on the first $10,000 she earns plus _____ tax on any additional income. No A 5% A 10% A 25%

A 25%

$0.50

(Figure: The Market for Exercise Apps) Use Figure: The Market for Exercise Apps. If the government imposes a tax of $1 in this market, producers will receive _____ less per app and sell _____ fewer apps. $1; 5 $1; 25 $0.50; 5 $0.50; 20

$0.50; 5

(Figure: The Market for Exercise Apps) Use Figure: The Market for Exercise Apps. If the government imposes a tax of $3 in this market, producers will pay _____ of the tax, while consumers will pay _____ of the tax. $3; $0 $0; $3 $1.50; $1.50 $1.50; $2.50

$1.50; $1.50

(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of an engine is $800, the value of the consumer surplus is: $720,000 $360,000 $500,000 $250,000

$250,000

(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of engines is $800, the value of the domestic producer surplus is: $360,000 $180,000 $640,000 $320,000

$320,000

(Figure: Market) A quota of 25 units is placed on the market that is shown in the figure. How much are buyers willing to pay after the implementation of the quota? $25 $35 $30 $20

$35

(Figure: MSB and Demand Curves 2) Use the graph to answer the question. The graph shows the marginal social benefit and demand curves in the hamburger market. What is the marginal external benefit when eight units are bought? $2 $4 $6 $8

(Figure: Market for TVs 2) According to the figure, if there is international trade in this market, and the world price of televisions is $400, buyers and sellers will make exchanges at a price of _____ because buyers will refuse to pay _____ than the world price. $400; less $400; more $600; less $600; more

$400; more

(Figure: The Domestic Supply and Demand for Recreational Vehicles (RVs) in the United States) Use Figure: The Domestic Supply and Demand for Recreational Vehicles (RVs) in the United States. Suppose the world price equals $50,000, and there is free trade. Calculate the loss of consumer surplus. $41,250 million $30,000 million $52,000 million $22,250 million

$41,250 million

Mr. Parker sells 10 bottles of wine per week at $50 per bottle. He can sell 11 bottles per week if he lowers the price to $45 per bottle. The quantity effect of the sale of an additional bottle would be _____, whereas the price effect of the sale of an additional bottle would be _____. $450; -$500 $495; -$550 $45; -$5 $45; -$50

$45; -$50

(Figure: Market 2) Use the graph to answer the question. The graph shows the marginal social cost, demand, and supply curves in the cinnamon roll market. A corrective tax of _____ per unit will move the cinnamon roll market to the socially optimal output of _____ units. $4; 4 $8; 4 $6; 6 $2; 6

$4; 4

(Figure: Market for Reusable Jute Shopping Bags) Refer to the market for reusable jute shopping bags that is shown in the figure. The original equilibrium price is $7 per bag. After the subsidy is implemented, the amount that buyers pay is: $8 $6 $7 $5

(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of an engine is $1,000, the value of the domestic producer surplus is: $360,000 $180,000 $1,000,000 $500,000

$500,000

(Figure: Market for TVs 2) According to the figure, if there is international trade in this market, and the world price of a television is $500, buyers and sellers will make exchanges at a price of _____ because buyers will refuse to pay _____ than the world price. $500; less $500; more $600; less $600; more .

$500; more

(Figure: Pay Per View Movies on Xfinity Cable) Use Figure: Pay Per View Movies on Xfinity Cable. The figure shows the demand and marginal revenue curves for on-demand movie rentals on Xfinity. Assume that marginal cost and average cost are constant at $20. If the cable company has market power, what price will it charge? $20 $40 $60 $100

$60

(Figure: Market for Engines) According to the figure, if there is no international trade, the equilibrium price in this market is: $500 $600 $700 $800

$600

(Figure: Market for TVs 2) According to the figure, if there is no international trade, the equilibrium price in this market is: $50 $60 $500 $600

$600

A tax on buyers causes which of the following? (i) a leftward shift of the demand curve (ii) a decrease in quantity sold (iii) an increase in the price buyers pay (i), (ii), and (iii) (i) and (iii) (ii) and (iii) only (i)

(i), (ii), and (iii)

A tax on sellers causes which of the following? (i) a leftward shift of the supply curve (ii) a decrease in quantity sold (iii) an increase in the price buyers pay (i), (ii), and (iii) (i) and (iii) (ii) and (iii) only (i)

(i), (ii), and (iii)

(Figure: Market for Printed Houses) Consider the market for environmentally friendly three-dimensional printed houses that is shown in the figure. The government wants to encourage buyers to buy such houses and places a price ceiling on the market at $200,000 per house. After the implementation of the price ceiling, the market quantity sold falls by _____ houses. 200,000 400,000 300,000 100,000

100,000

(Figure: Market) In the market shown, the original equilibrium price is 60 cents. A tax is then implemented on the buyer. The economic burden of this tax on the seller is _____ cents. 6 8 4 2

Delilah's income rises by 8%. She decides to increase the number of movie tickets she purchases by 20%. Her income elasticity of demand for movie tickets is: 2.5 0.4 0.8 -2.5

2.5

(Figure: Market for TVs 2) According to the figure, if there is international trade in this market, and the world price of televisions is $400, domestic consumers will purchase _____ units from domestic producers and _____ units from foreign producers. 20,000; 30,000 20,000; 60,000 40,000; 30,000 40,000; 60,000

20,000; 60,000

(Figure: Kenyan Labor Market) The government of Kenya implements a minimum wage of 15,000 Kenyan shillings per month. After the implementation of the wage, _____ workers are hired. 20,000 36,000 30,000 45,000

30,000

(Figure: Market for TVs 2) According to the figure, if there is international trade in this market, and the world price of televisions is $500, domestic consumers will purchase _____ units from domestic producers and _____ units from foreign producers. 20,000; 30,000 20,000; 60,000 40,000; 30,000 40,000; 60,000

40,000; 30,000

(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of engines is $1,000, domestic consumers will purchase _____ units from domestic producers and _____ units from foreign producers. 400; 0 400; 600 600; 0 600; 600

400; 0

(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of engines is $1,000, the quantity demanded is _____, and the quantity supplied is _____ at the world price. 500; 800 800; 500 400; 1,000 1,000; 400

400; 1,000

(Figure: Tax on Seller) In the graph shown, the original equilibrium price is $50. A $6 tax is placed on the seller in this market. The economic burden of this tax on the seller is $ _____. 6 1 2 5

(Figure: Market) A quota of 10,000 logs of forest wood per month is placed in the market that is shown in the figure. The equilibrium quantity sold in the market before the implementation of the quota was _____ logs. 50 60 30 100

(Figure: Market) A quota of 25 units is placed on the market that is shown in the figure. The equilibrium quantity sold in the market before the implementation of the quota was _____ units. 40 50 60 30

50%; 50%

(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of an engine is $800, the quantity demanded is _____, and domestic suppliers will sell _____ units to domestic consumers. 500; 500 500; 800 800; 500 800; 800

500; 500

(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of an engine is $800, the quantity demanded is _____, and the quantity supplied is _____ at the world price. 500; 800 800; 500 400; 1,000 1,000; 400

500; 800

(Figure: Market) In the market shown, the original equilibrium price is 60 cents. A tax is then implemented on the buyer. After the implementation of the tax, the seller receives _____ cents per unit of the product. 58 60 64 90

(Figure: Market) In the market shown, the original equilibrium price is 60 cents. A tax is then implemented on the buyer. The amount of the tax is _____ cents. 6 8 4 2

(Figure: Market for TVs 2) According to the figure, if there is international trade in this market, and the world price of televisions is $500, the quantity demanded is _____, and domestic suppliers will sell _____ units to domestic consumers. 70,000; 30,000 70,000; 40,000 80,000; 30,000 80,000; 40,000

70,000; 40,000

(Figure: Market for TVs 2) According to the figure, if there is international trade in this market, and the world price of televisions is $500, the quantity demanded is _____, and the quantity supplied is _____ at the world price. 20,000; 80,000 80,000; 20,000 40,000; 70,000 70,000; 40,000

70,000; 40,000

(Figure: Market for TVs 2) According to the figure, if there is international trade in this market, and the world price of a television is $400, the quantity demanded is _____, and the quantity supplied is _____ at the world price. 80,000; 20,000 20,000; 80,000 40,000; 70,000 70,000; 40,000

80,000; 20,000

(Figure: The Market for Notebooks) Use Figure: The Market for Notebooks. Assume that S and D are the domestic supply and demand curves and that the world price is P W . Identify the area of consumer surplus when a tariff raises the domestic price from the world price to P T . A + B A + B + C + D + E + F A + C + G D + F

A + B

(Figure: The Domestic Market for Sugar) Use Figure: The Domestic Market for Sugar. Assume that P A is the domestic equilibrium price without trade and that P W is the world price. Before international trade, consumer surplus is equal to the area: A A + B A + B + C A + B + D

A + B + D

Which tax is regressive? Arturo pays an 8% tax on the first $9,000 he earns plus _____ tax on any additional income. A 5% A 8% A 10% A 25%

A 5%

(Figure: The Incidence of Tax and Elasticities) Use Figure: The Incidence of Tax and Elasticities. Each panel below shows the application of a tax that raises the price from P 1 to P 2 . Consumers are likely to bear most of the burden of a tax in the situations illustrated by panels: A and B A and D B and D B and C

A and D

A Korean-made washing machine purchased by a Chinese citizen is an example of a Korean _____, and a Chinese-made washing machine purchased by a Korean citizen is an example of a Korean _____. Import; import Export; export Import; export Export; import

Export; import

(Figure: Labor Market) Refer to the labor market shown here. Suppose a minimum wage of $18 per hour is introduced. After the implementation of the minimum wage, the number of workers hired _____. Falls by 12,000 Falls by 6,000 Rises by 6,000 Rises by 10,000

Falls by 6,000

(Figure: The Market for Grapes in California) Use Figure: The Market for Grapes in California. When the government imposes a tariff on imported grapes, the price of grapes in California rises from P W to P T , and domestic consumer surplus _____ to _____. Falls; A + B Falls; A + B + C + D + E + F Rises; A + B Rises; A + B + C + D + E +F

Falls; A + B

(Figure: A Fly Fishing Salmon Monopoly) Use Figure: A Fly Fishing Salmon Monopoly. Andrew is the only licensed fly-fishing guide in Matane, Quebec. If Andrew maximizes profit, then he will sell _____ guided tours at _____ each. Q 2 ; P 1 Q 2 ; P 5 Q 3 ; P 2 Q 4 ; P 3

Q 2 ; P 1

(Figure: Market for Pants) The world price of a pair of pants is $30. According to the figure, opening up to international trade will lead to _____ in the domestic producer surplus and _____ in the domestic consumer surplus. an increase; an increase an increase; a decrease a decrease; an increase a decrease; a decrease

a decrease; an increase

(Figure: Market for Printed Houses) Consider the market for environmentally friendly three-dimensional printed houses that is shown in the figure. The government wants to encourage buyers to buy such houses and places a price ceiling on the market at $200,000 per house. What occurs in this market after the implementation of the price ceiling? a shortage of 100,000 houses. a shortage of 300,000 houses. a surplus of 200,000 houses. a surplus of 100,000 houses.

a shortage of 300,000 houses.

(Figure: Kenyan Labor Market) The government of Kenya implements a minimum wage of 15,000 Kenyan shillings per month. What occurs in this labor market after the implementation of the minimum wage? a shortage of 9,000 workers. a shortage of 6,000 workers. a surplus of 15,000 workers. a surplus of 10,000 workers.

a surplus of 15,000 workers.

(Figure: Market for TVs 2) According to the figure, if there is international trade in this market, and the world price of televisions is $400: a. Domestic consumers will import 60,000 units b. domestic consumers will export 60,000 units. c. domestic producers will import 20,000 units. d. domestic producers will export 20,000 units.

a. Domestic consumers will import 60,000 units

If they spend all night writing poems, Leticia can write 10 poems, and Isabella can write five. If they spend all night making necklaces, Leticia can make six, and Isabella can make four. We know that: a. Leticia's opportunity cost of writing poems is less than Isabella's. b. Leticia's opportunity costs of writing poems and of making necklaces are less than Isabella's. c. Isabella's opportunity costs of writing poems and of making necklaces are less than Leticia's. d. Isabella's opportunity cost of writing poems is less than Leticia's.

a. Leticia's opportunity cost of writing poems is less than Isabella's.

Given that the definition of poverty has not been adjusted to reflect the long-term rise in average incomes, one would expect _____ in the percentage of the population living below the poverty line. a. a decrease b. an increase c. no change d. It is impossible to determine how the percentage of the population living in poverty might change.

a. a decrease

(Figure: Market for Sustainable Furniture) The graph depicts the market for furniture made from sustainable, man-made forests. The government wants to encourage buyers to buy such furniture and imposes a price ceiling of $250. What occurs as a result of the price ceiling? a. a shortage of 400,000 pieces of furniture. b. a shortage of 200,000 pieces of furniture. c. a surplus of 300,000 pieces of furniture. d. a surplus of 400,000 pieces of furniture.

a. a shortage of 400,000 pieces of furniture.

A regressive tax is a tax where: a. additional income earned is taxed at lower rates as additional income is earned. b. additional income earned is taxed at higher rates as additional income is earned. c. the tax rate remains stable as income rises. d. the total tax bill remains stable as income rises.

a. additional income earned is taxed at lower rates as additional income is earned.

If demand is relatively inelastic, and the supply curve is upward-sloping, then the burden of an excise tax is: a. borne mostly by consumers. b. borne mostly by producers. c. shared by consumers and producers, with the burden falling mainly on consumers. d. shared by consumers and producers, with the burden falling mainly on producers.

a. borne mostly by consumers.

The poverty line is adjusted each year to reflect: a. changes in the cost of living. b. changes in the size of the average family. c. the long-term rise in the average standard of living. d. changes in the cost of living and changes in the size of the average family.

a. changes in the cost of living.

For a medical procedure which has a highly inelastic demand and an upward-sloping supply curve: a. consumers will bear most of the burden of a tax. b. consumers will not bear an insignificant portion of the burden of a tax. c. consumers and producers will split the burden of a tax in half. d. producers will not bear any of the burden of a tax.

a. consumers will bear most of the burden of a tax.

If a tax is imposed on new SUVs and collected from consumers, the: a. demand curve will shift downward by the amount of the tax. b. supply curve will shift downward by the amount of the tax. c. equilibrium quantity supplied will increase relative to the pretax level. d. supply curve will shift upward by the amount of the tax.

a. demand curve will shift downward by the amount of the tax.

(Figure: Market for TVs 2) According to the figure, if there is international trade in this market, and the world price of televisions is $500: a. domestic consumers will import 30,000 units. b. domestic consumers will export 30,000 units. c. domestic producers will import 40,000 units. d. domestic producers will export 40,000 units.

a. domestic consumers will import 30,000 units.

When the definition of poverty focuses on relative poverty, a person is in poverty if the household income is: a. in the bottom 10% of household incomes in the nation. b. insufficient to provide basic food, shelter, medical care, and transportation. c. is less than three times the cost of a basic food plan. d. below $3.10 per day.

a. in the bottom 10% of household incomes in the nation.

When a poverty line is based on relative poverty, a household is poor if its income is less than: a. one-half the median household income in the country. b. three times the cost of a low-cost food plan for the household. c. twice the rent on a low-cost two-bedroom apartment. d. $3 per day per person in the household.

a. one-half the median household income in the country.

In a perfectly competitive market, a company's marginal revenue equals _____. For a company with market power, marginal revenue is _____. a. price; less than price b. price; greater than price c. marginal cost; greater than marginal cost d. marginal cost; less than marginal cost

a. price; less than price

(Table: Comparative Advantage for Mia and Juanita) The table provides data on how long it takes Maia and Juanita to mow the lawn and weed the flower beds. Maia's opportunity cost for mowing the lawn is _____, and Juanita's opportunity cost for mowing the lawn is _____. a. weeding three flower beds; b. weeding two flower beds b. weeding one flower bed; weeding two flower beds c. weeding one-third of a flower bed; weeding one-half of a flower bed d. weeding one-half of a flower bed; weeding three-quarters of a flower bed

a. weeding three flower beds; b. weeding two flower beds

Food stamps (now called the Supplemental Nutrition Assistance Program) is an example of: a negative income tax. an in-kind transfer. a monetary benefit. unemployment insurance.

an in-kind transfer.

(Table: Bruno and Sasha's opportunity cost) The table provides data on the number of minutes it takes for Bruno and Sasha to each change a tire and iron a dress shirt. Use the data to answer the question. When ironing a dress shirt, Bruno's opportunity cost is _____, and Sasha's opportunity cost is _____. a. .6 of a tire changed; .67 of a tire changed b. .67 of a tire changed; .6 of a tire changed c. 1.67 tires changed; 1.5 tires changed d. 1.5 tires changed; 1.67 tires changed

b. .67 of a tire changed; .6 of a tire changed

(Table: Both Joyce and Simeon can cook) Both Joyce and Simeon can cook chicken gumbo and pork chops. Use the data to answer the question. What will be the total output of chicken gumbo and pork chops if Joyce and Simeon each work for 24 hours on the task for which they each have a comparative advantage? a. Eight chicken gumbos and eight pork chops. b. 7.5 chicken gumbos and 24 pork chops. c. 15.5 chicken gumbos and 24 pork chops. d. 15.5 chicken gumbos and 32 pork chops.

b. 7.5 chicken gumbos and 24 pork chops.

What is social insurance? a. It is the cash-assistance, goods, and services provided by the government to better the lives of those at the bottom of the income distribution. b. It is government-provided financial funding to households to compensate for bad outcomes such as unemployment, illness, disability, or outliving their savings. c. It is the government assignment of jobs to individuals based on household need and employee education and skills. d. It is a system where those with more income tend to pay a higher share of their income in taxes than those with lower incomes.

b. It is government-provided financial funding to households to compensate for bad outcomes such as unemployment, illness, disability, or outliving their savings.

If they spend all night writing computer programs, Laurence can write 10 programs, and Carrie Anne can write five. If they spend all night making sunglasses, Laurence can make six pairs, and Carrie Anne can make four. Given this information and supposing Laurence and Carrie Anne have constant opportunity costs, we know that _____ has an absolute advantage in _____. a. Laurence; programs but not in sunglasses b. Laurence; both programs and sunglasses c. Carrie Anne; programs but not in sunglasses d. Carrie Anne; both programs and sunglasses

b. Laurence; both programs and sunglasses

(Figure: Market for Electrical Components) Refer to the figure which shows the market for electrical components. Which of the following statements is correct? a. The incidence of the tax on the buyer is 45% and on the seller is 55%. b. The incidence of this tax is greater on the buyer. c. The incidence of this tax is 50% on the buyer and 50% on the seller. d. The incidence of this tax is greater on the seller.

b. The incidence of this tax is greater on the buyer.

Suppose that the demand for and supply of a good are each neither perfectly inelastic nor perfectly elastic. If a tax on consumers of the good is imposed, the tax is paid by: a. the buyers only. b. both the buyers and the sellers. c. the sellers only. d. the buyers only if demand for the good increases.

b. both the buyers and the sellers.

For a good with a highly elastic demand, such as black beans, and an upward-sloping supply curve: a. consumers will bear most of the burden of a tax. b. consumers will bear an insignificant part of the burden of a tax. c. consumers and producers will split the burden of a tax in half. d. producers will not bear any of the burden of a tax.

b. consumers will bear an insignificant part of the burden of a tax.

Suppose the government imposes a $6 per month tax on cell phone usage. If the demand for cell phone usage is perfectly inelastic, and the supply curve is elastic (but not perfectly elastic), then the price of cell phone usage will: a. increase by more than $6. b. increase by exactly $6. c. increase by less than $6. d. remain constant.

b. increase by exactly $6.

A tax on sellers: a. decreases the price that the seller charges the buyer. b. increases the price that buyers pay and decreases the price that sellers receive. c. does not have any impact on the market price for the product. d. does not represent any economic burden on the buyer.

b. increases the price that buyers pay and decreases the price that sellers receive.

If a government program is means-tested, it: a. provides benefits for everyone. b. is a poverty program that helps people who have low incomes. c. provides benefits only to households that earn less than the mean household income in a given year. d. provides only in-kind benefits.

b. is a poverty program that helps people who have low incomes.

A person that has the _____ opportunity cost of producing a particular good is said to have _____. a. lowest; an absolute advantage in the production of that good b. lowest; a comparative advantage in the production of that good c. highest; a production possibility frontier d. highest; increasing opportunity costs in the production of that good

b. lowest; a comparative advantage in the production of that good

The poverty rate is the: a. portion of the population who cannot afford to pay rent. b. percent of people whose family income is below the poverty line. c. income level below which a household cannot provide itself with necessities. d. income level based on three times the cost of basic food.

b. percent of people whose family income is below the poverty line.

The burden of a tax on a good is said to fall completely on the consumers if the: a. price paid by consumers for the good declines by the amount of the tax. b. price paid by consumers for the good increases by the amount of the tax. c. price received by producers for the good declines by the amount of the tax. d. price received by producers for the good increases by the amount of the tax.

b. price paid by consumers for the good increases by the amount of the tax.

For Uber rides, which have a highly elastic supply and a downward-sloping demand curve: a. producers will bear most of the burden of a tax. b. producers will bear only a small proportion of the burden of a tax. c. consumers and producers will split the burden of a tax in half. d. consumers will not bear any of the burden of a tax.

b. producers will bear only a small proportion of the burden of a tax.

Because the general market mechanism does not take into account the side effects that harm bystanders, a market economy will produce _____ without any government regulation. a. too little pollution b. too much pollution c. the socially optimal amount of pollution d. the amount of pollution that maximizes total surplus

b. too much pollution

Demand for Bartlett pears is relatively elastic compared to the supply of Bartlett pears, so if a tax is imposed on consumers of Bartlett pears, the tax incidence: a. will fall on consumers more than producers. b. will fall on producers more than consumers. c. will fall equally on consumers and producers. d. cannot be determined without more information

b. will fall on producers more than consumers.

Barlow and Rusia own a nail salon. A manicure takes Barlow 60 minutes to complete and takes Rusia 45 minutes to complete. Completing a pedicure takes Barlow 45 minutes and takes Rusia 30 minutes. Who has a comparative advantage in manicures? a. Barlow because he is faster. b. Rusia because she is faster. c. Barlow because he has a lower opportunity cost. d. Rusia because she has a lower opportunity cost.

c. Barlow because he has a lower opportunity cost.

How does marginal revenue compare to price for a seller with market power? a. Marginal revenue is equal to price. b. Marginal revenue is always higher than price. c. Beyond the first unit sold, marginal revenue is below price. d. Beyond the first unit sold, marginal revenue is above price.

c. Beyond the first unit sold, marginal revenue is below price.

Which of the following is a negative result of redistributing income toward equality? a. Average income rises. b. The poor have a higher standard of living. c. Work incentives are reduced. d. Government expenses fall, and tax revenues rise.

c. Work incentives are reduced.

The poverty line is: a. a measure that is used to define relative poverty and is based on housing and food costs. b. an estimate of the minimum income needed to provide a comfortable standard of living. c. an income level determined by the government, below which a family is defined to be in poverty. d. an income level set by the poor to identify the income needed to cover their basic needs.

c. an income level determined by the government, below which a family is defined to be in poverty.

If a monopolist produces a quantity that generates MC < MR, then profit: a. is maximized. b. is maximized only if MC = P. c. can be increased by increasing output. d. can be increased by decreasing output.

c. can be increased by increasing output.

If Penelope, a monopolist, is producing a quantity where MC < MR, then profit: a. is maximized. b. is maximized only if MC = P. c. can be increased by increasing production. d. can be increased by decreasing production.

c. can be increased by increasing production.

A rise in the price of cheese will shift the a. supply curve for yogurt rightward if the cross elasticity of demand between yogurt and cheese is positive. b. demand curve for yogurt rightward if the cross elasticity of demand between yogurt and cheese is negative. c. demand curve for yogurt rightward if the cross elasticity of demand between yogurt and cheese is positive. d. supply curve of yogurt rightward if the cross elasticity of demand between yogurt and cheese is negative.

c. demand curve for yogurt rightward if the cross elasticity of demand between yogurt and cheese is positive.

Arnie recently purchased the Mill Town Square Mall in Philadelphia. Attempting to explain the elasticity of supply to shop owners in the mall, he tells them that the price elasticity of supply measures: a. the responsiveness of supply to changes in technology. b. the responsiveness of supply to changes in input prices. c. the responsiveness of quantity supplied to changes in price. d. the response of supply to changes in technology and changes in price.

c. the responsiveness of quantity supplied to changes in price.

The poverty line in the United States is based on an estimate of: a. the cost of basic food, housing, medical care, and transportation. b. minimum wage income. c. three times the value of low-cost food for the household. d. the income level that separates the bottom and second quintiles of the population.

c. three times the value of low-cost food for the household.

A good that is excludable but nonrival in consumption is known as a _____ good. public club private proprietary

club

(Table: Bruno and Sasha's comparative advantage) The table provides data on the number of minutes it takes for Bruno and Sasha to change a tire and iron a dress shirt. Use the data to answer the question. Which statement explains who has a comparative advantage in changing a tire? a. Sasha because she has a higher opportunity cost b. Bruno because he has a higher opportunity cost c. Sasha because she has a lower opportunity cost d. Bruno because he has a lower opportunity cost

d. Bruno because he has a lower opportunity cost

What is a progressive tax system? a. It is the cash assistance, goods, and services provided by the government to better the lives of those at the bottom of the income distribution. b. It is government-provided financial funding to people to compensate for bad outcomes such as unemployment, illness, disability, or outliving their savings. c. It is the government assignment of jobs to individuals based on household need and employee education and skills. d. It is a system where those with more income pay a higher share of their income in taxes than those with lower incomes.

d. It is a system where those with more income pay a higher share of their income in taxes than those with lower incomes.

Which of the following is an example of an in-kind transfer? a. Junko receives an old-age pension from her former employer. b. Tomasi is eligible for an income supplement because he lost his job. c. Ellen is eligible for income because she had a type of accident that qualifies. d. Martin receives housing from the government due to his low income.

d. Martin receives housing from the government due to his low income.

Barlow and Rusia own a nail salon. A manicure takes Barlow 60 minutes to complete and takes Rusia 45 minutes to complete. Completing a pedicure takes Barlow 45 minutes and takes Rusia 30 minutes. Who has a comparative advantage in pedicures? a. Barlow because he is faster. b. Rusia because she is faster. c. Barlow because he has a lower opportunity cost. d. Rusia because she has a lower opportunity cost.

d. Rusia because she has a lower opportunity cost.

Which of the following gifts is most like an income transfer rather than an in-kind transfer? a. membership in a gym for a year b. an antique book c. a custom-tailored suit with the recipient choosing fabric and style d. a gift card branded through one of the main credit card companies

d. a gift card branded through one of the main credit card companies

When a tax is imposed on sellers, the supply curve shifts upward, so that the vertical distance between the original supply curve and the new supply curve that incorporates the tax equals the: a. tax multiplied by the price elasticity of demand. b. tax multiplied by the price elasticity of supply. c. tax relative to the deadweight loss generated. d. amount of the tax per unit.

d. amount of the tax per unit.

A progressive tax system is designed so that: a. a person pays the same tax rate, regardless of income. b. as a person progresses from one tax rate to another, the after-tax income falls. c. as a person's income rises, a lower tax rate is paid on the extra dollars that are earned. d. as a person's income rises, a higher tax rate is paid on the extra dollars that are earned.

d. as a person's income rises, a higher tax rate is paid on the extra dollars that are earned.

If Penelope, a monopolist, is producing a quantity where MC = P, then profit: a. is maximized. b. is maximized only if MR = P. c. can be increased by increasing production. d. can be increased by decreasing production

d. can be increased by decreasing production

A person is said to have a _____ in the production of a good if it can produce that good _____. a. comparative advantage; with more resources than another person b. absolute advantage; at a higher opportunity cost than another person c. absolute advantage; outside its production possibility frontier d. comparative advantage; at a lower opportunity cost than another person

d. comparative advantage; at a lower opportunity cost than another person

A linear demand curve has: a. a uniform elasticity of demand. b. a elasticity of demand equal to the inverse of the slope at all prices. c. a positive elasticity of demand. d. elastic, inelastic, and unit-elastic segments.

d. elastic, inelastic, and unit-elastic segments.

A person is said to have a comparative advantage if they: a. can produce more of all goods than another person with the same b. amount of resources. can produce fewer of all goods than another person. c. have the highest opportunity cost of producing a particular good compared with another person. d. have the lowest opportunity cost of producing a particular good compared with another person.

d. have the lowest opportunity cost of producing a particular good compared with another person.

The tragedy of the commons is the: a. destruction of rival, excludable goods. b. destruction of nonrival, nonexcludable goods. c. tendency to underconsume common resources. d. tendency to overconsume common resources.

d. tendency to overconsume common resources.

A tax is levied on suppliers. The incidence of the tax: a.falls more on the consumer than on the producer. b.falls more on the producer than the consumer. c.is shared between consumers and producers. d.cannot be determined without more information.

d.cannot be determined without more information.

(Figure: The Market for Cappuccinos) Use Figure: The Market for Cappuccinos. If the government assesses a tax of $0.75 on sellers of cappuccinos, the price producers receive for a cappuccino will: decrease from $2 to $1.75. decrease from $2 to $1.50. decrease from $2 to $1.25. change, but we cannot determine by how much.

decrease from $2 to $1.50.

A tax on buyers shifts the: supply curve to the left. supply curve to the right. demand curve to the left. demand curve to the right.

demand curve to the left.

(Figure: Markets) In the set of figures shown, figure A is a binding price floor. figure B is a binding price floor. figure C is a binding price floor. figure D is a binding price ceiling.

figure C is a binding price floor.

(Figure: Markets) In the set of figures shown, figure A is a binding ceiling. figure B is a binding price floor. figure C is a binding price ceiling. figure D is a binding price floor.

figure D is a binding price floor.

(Figure: Market 5) Use the graph to answer the question. The graph shows the marginal social benefit, demand, and supply curves in the toothbrush market. Market forces would yield a quantity of _____, whereas the socially optimal quantity is _____. four; six eight; four six; four four; eight

four; six

(Figure: The Market for Cappuccinos) Use Figure: The Market for Cappuccinos. If the government assesses a tax of $0.75 on each cappuccino, the price the consumer pays for a cappuccino will: increase from $2 to $2.75. increase from $2 to $2.50. increase from $2 to $2.25. change, but we cannot determine by how much.

increase from $2 to $2.25.

(Figure: Market) Refer to the graph. Suppose that a binding price floor of $35 is removed. The number of consumers who are able to purchase the product will: decrease from 40 to 35. decrease from 50 to 25. increase from 30 to 50. increase from 25 to 50.

increase from 25 to 50.

(Figure: Market) Refer to the graph. Suppose that a binding price ceiling of $25 is removed. The actual number of items sold in this market will: decrease from 25 to 30. decrease from 75 to 50. increase from 40 to 50. increase from 50 to 75.

increase from 40 to 50.

(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 decrease; increase increase; decrease decrease; decrease

increase; increase

When the wage for public school teachers rises by 15% in a state, the number of people seeking jobs as teachers increases. decreases. remains the same. fluctuates up and down quickly.

increases.

If a monopolist is producing a quantity that generates MC = MR, then profit: a. is maximized. b. is maximized only if MC = P. c. can be increased by increasing production. c. can be increased by decreasing production.

is maximized.

Use the data in Table: Pat's Pedicures to answer the question. If Pat uses the Rational Rule for Employers, how many nail technicians will she hire? one two three four

three

(Figure: Marginal Revenue) What is the marginal revenue of the fifth unit in the following example? $20 $5 $4 $0

A 10% decrease in income increases the quantity demanded of online movie rentals by 3%. The income elasticity of demand for online movie rentals is _____, and online movie rentals are a(n) _____ good. -3.3; inferior 3.3; normal -0.3; inferior 0.3; normal

-0.3; inferior

Each month Jamie buys exactly 15 McWraps, regardless of the price. Jamie's price elasticity of demand for McWraps is: 0 1 greater than 1 less than 1 but greater than 0

Because of declining stocks in the Caspian Sea, Beluga caviar prices recently increased by a whopping 25% (to about $700 per ounce). As a result, purchases of Beluga caviar decreased by 5%. The price elasticity of demand for Beluga caviar is: 5 2 0.2 0.5

0.2

(Figure: Tax on Seller) In the graph shown, the original equilibrium price is $50. A $6 tax is placed on the seller in this market. The economic burden of this tax on the buyer is $_____. 6 1 2 5

(Figure: Market for Plastic Bags) In the market for plastic bags shown here, the original equilibrium price is 50 cents per bag. In an effort to reduce plastics usage, a tax is then placed on the buyers of plastic bags. The economic burden of this tax on the seller is _____ cents. 20 10 40 60

Medicare is provided to: a. all Americans age 65 and older and is means-tested. b. individuals who fall below the poverty threshold and is means-tested. c. all Americans age 65 and older and is not means-tested. d. individuals who fall below the poverty threshold and is not means-tested.

c. all Americans age 65 and older and is not means-tested.

A tax on buyers would not cause a decrease in quantity sold if: demand is inelastic. there are few competing products. supply is perfectly elastic. supply is perfectly inelastic.

supply is perfectly inelastic.

When you are working in the labor market, you are demanding labor. demanding a job. supplying labor. supplying a job.

supplying labor.

(Figure: Labor Market) Refer to the labor market shown here. A minimum wage of $18 per hour is introduced. The implementation of the minimum wage leads to a _____ of _____ workers. surplus; 12,000 shortage; 6,000 surplus; 10,000 shortage; 24,000

surplus; 12,000

(Figure: Oligopoly Pricing Strategy in Wireless TV Market II) Use Figure: Oligopoly Pricing Strategy in Wireless TV Market II. The Nash equilibrium in the cable TV market occurs when: a. Both firms set a low price, and each earns $90,000 b. Both firms set a high price, and each earns $100,000 c. Spectrum sets a high price and earns $80,000, and Sling sets a low price and earns $130,000 d. Spectrum sets a low price and earns $130,000, and Sling sets a high price and earns $80,000

Both firms set a low price, and each earns $90,000

Nicholas and Carolina are working on a group project for a course. They will receive the same grade for the project. They have done a great job, but they have not kept track of their bibliographical sources very well, although they both have all of the information. Carolina knows that Nicholas will eventually do the bibliography, since Nicholas does not like to turn in incomplete work. As a result: a. Carolina will free-ride on Nicholas's labor. b. Nicholas will free-ride on Carolina's labor. c. neither will free-ride, since they both earn the same grade. d. neither will free-ride, since no money is involved.

a. Carolina will free-ride on Nicholas's labor.

What will happen in the market for nurses in the United States if capital equipment replaces nurse labor to monitor vital statistics on patients in hospitals? a. Labor demand will decrease, resulting in lower wages and fewer hours of employment for nurses. b. Labor demand will increase, resulting in higher wages and more hours of employment for nurses. c. Labor supply will decrease, resulting in higher wages and fewer hours of employment for nurses. d. Labor supply will increase, resulting in lower wages and more hours of employment for nurses.

a. Labor demand will decrease, resulting in lower wages and fewer hours of employment for nurses.

In an indefinitely repeated game, the players face: a. The same strategic interaction an unknown number of times b. Uncertainty about how many other players there are in each round c. Unclear options with each round of the game d. The same options in each round but different players

a. The same strategic interaction an unknown number of times

(Figure: Market) Use the graph to answer the question. The graph shows the marginal social cost, demand, and supply curves in the jigsaw puzzle market. What are the socially optimal quantity and price in this market? 6; $6 8; $4 6; $10 4; $8

4; $8

(Figure: Pay Per View Movies on Xfinity Cable) Use Figure: Pay Per View Movies on Xfinity Cable. The figure shows the demand and marginal revenue curves for on-demand movie rentals on Xfinity Cable. Assume that marginal cost and average cost are constant at $30. If the cable company practices perfect price discrimination, then it will sell _____ movie rentals. 4 8 6 0

(Table: Nike and Reebok Advertising Game) Use Table: Nike and Reebok Advertising Game. The sneaker industry is dominated by Nike and Reebok, and each firm spends a lot of money on advertising. Suppose each firm is considering a costly television commercial during the World Series. The table shows the payoff matrix of profits that each firm would receive from its advertising decision, given the advertising decision of its rival. Profits in each cell of the payoff matrix are given as (Nike, Reebok). If each firm independently decides whether to advertise, the Nash equilibrium is for Nike _____ and Reebok _____ during the World Series. a. To advertise; to advertise b. Not to advertise; not to advertise c. Not to advertise; advertise d. To advertise; not to advertise

a. To advertise; to advertise

(Figure: Payoff Matrix for Blue Bottle and Opal Ocean) Use Figure: Payoff Matrix for Blue Bottle and Opal Ocean. The figure shows the potential profits of two producers of bottled water. Each has two strategies available to it: a high price and a low price. Suppose Blue Bottle charges a high price and Opal Ocean does the same. In the next period, Blue Bottle charges a low price and Opal Ocean incurs a loss. If Opal Ocean responds with a Grim trigger strategy, it will: a. Always charge a low price - the same as its best response b. Make random changes in its price so that the Blue Bottle is left with no systematic strategy c. Charge a low price in the next period and thereafter charge the same price that Blue Bottle charged in the previous period d. Always charge a high price

c. Charge a low price in the next period and thereafter charge the same price that Blue Bottle charged in the previous period

(Table: Nike and Reebok Advertising Game) Use Table: Nike and Reebok Advertising Game. The sneaker industry is dominated by Nike and Reebok, and each firm spends a lot of money on advertising. Suppose each firm is considering a costly television commercial during the World Series. The table shows the payoff matrix of profits that each firm would receive from its advertising decision, given the advertising decision of its rival. Profits in each cell of the payoff matrix are given as (Nike, Reebok). If both firms expect to play this game repeatedly (every year for the foreseeable future), and each follows a Grim trigger strategy, then in equilibrium, Nike _____ and Reebok _____. a. Advertises; does not advertise b. Does not advertise; advertises c. Does not advertise; does not advertise d. Advertises; advertises

c. Does not advertise; does not advertise

Pedro attends a university that provides antivirus software to all students, faculty, and staff for their personal computers as well as all university-owned computers. Why would the university pay for the protection of the personal computers of students, faculty, and staff? a. Having this extra perk from being associated with the university makes it easier to attract high-quality students, faculty, and staff. b. It reduces the cost of operations for the university because it can thereby buy software in bulk. c. It reduces the number of viruses on university-owned computers by reducing the probability that viruses will spread through files transferred from personal computers to university-owned computers and systems. d. Reducing the spread of viruses across campus promotes health among students and decreases absenteeism, which improve educational outcomes on campus.

c. It reduces the number of viruses on university-owned computers by reducing the probability that viruses will spread through files transferred from personal computers to university-owned computers and systems.

What three conditions must be present before a company can price discriminate? a. The company has market power; the product is homogeneous; the demand is elastic. b. The product cannot be resold; consumers have differing willingness to pay; there are many sellers. c. The company can identify how much each customer is willing to pay; the product cannot be resold; the company has market power. d. Product demand is highly elastic; the company can identify how much each customer is willing to pay; the company is seeking market power.

c. The company can identify how much each customer is willing to pay; the product cannot be resold; the company has market power.

An externality is defined as: a. the effect of an activity undertaken outside a building rather than inside a building. b. an effect of market activity that impacts the opposite side of the market from the side whose decision caused the effect. c. a side-effect of an activity that affects bystanders whose interests are not taken into account. d. the impact of an activity on buyers and sellers in the market where the activity takes place.

c. a side-effect of an activity that affects bystanders whose interests are not taken into account.

When the hurdle method is used to price discriminate, buyers a. are put into a price group based on an observable, personal characteristic. b. are unaware that they are paying a different price than some of the other buyers. c. sort themselves into reservation price groups based on their willingness to overcome the hurdle. d. face insurmountable obstacles to accessing the product

c. sort themselves into reservation price groups based on their willingness to overcome the hurdle.

To maximize profit, firms should hire workers up to the point where: a. the marginal product of labor times the price equals the demand. b. the quantity of labor supplied equals the quantity of labor demanded. c. the marginal product of labor times the price equals the worker's wage. d. the marginal product of labor times the worker's wage equals the price.

c. the marginal product of labor times the price equals the worker's wage.

If Penelope, a monopolist, is producing a quantity where MC > MR, then profit: a. is maximized. b. is maximized only if MC = P. c. can be increased by increasing production. d. can be increased by decreasing production.

can be increased by decreasing production.

A good that is rival and nonexcludable is known as a: public good. club good. common resource. private resource.

common resource.

If a player has a Grim Trigger strategy, that player; a. Becomes pessimistic if any other player gains an advantage that the player does not share in b. Becomes hostile if she is the only player left in the game c. Is serious and firm in her quest to do whatever it takes to succeed, particularly if opposition from other players rises. d. Cooperates if other players have cooperated in all pervious rounds but defects if any player ever defects

d. Cooperates if other players have cooperated in all pervious rounds but defects if any player ever defects

Salaries for physical therapists rise more than salaries for athletic trainers. What will happen in the labor market for athletic trainers? a. Labor demand will decrease, resulting in lower wages and fewer hours of employment for the trainers. b. Labor demand will increase, resulting in higher wages and more hours of employment for the trainers. c. Labor supply will decrease, resulting in higher wages and fewer hours of employment for the trainers. d. Labor supply will increase, resulting in lower wages and more hours of employment for the trainers.

d. Labor supply will increase, resulting in lower wages and more hours of employment for the trainers.

ECO 201 FINAL

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