Econ 101 Final
A single-price monopoly can sell 2 units for $8.50 per unit. In order to sell 3 units, the price must be $8.00 per unit. The marginal revenue from selling the third unit is
$7.00.
If we compare a perfectly competitive market to a single-price monopoly with the same costs, the monopoly sells
a smaller quantity at a higher price.
In the short run, a perfectly competitive firm can experience which of the following? i.an economic profit ii.an economic loss but it continues to stay open iii.an economic loss equal to its total fixed cost when it shuts down
i, ii, and iii
Which of the following is a legal barrier to entry? i.public franchise ii.government license iii.patent
i, ii, and iii
The figure above shows the demand, marginal revenue, and marginal cost curves for Paul's Parrot pillows, a single-price monopoly producer of pillows stuffed with parrot feathers. When Paul maximizes his profit, the price is ________ per pillow and the marginal cost is ________ per pillow.
$70; $40
Which of the following is a microeconomic issue? - The quantity of wheat grown in the United States increases this year. - Growth in the U.S. economy slowed. - Increased federal government expenditures have lowered the unemployment rate. - The effect the COVID-19 pandemic has on the unemployment rate.
The quantity of wheat grown in the United States increases this year.
If Wendy can produce more of all goods than Tommy in an hour, then
Wendy has an absolute advantage in all goods.
A group of firms that has entered into an agreement to restrict output and increase prices and profits is called
a cartel.
In the long run, perfectly competitive firms will exit the market if the price is
less than average total cost.
The existence of marginal external benefits for a product like higher education creates a deadweight loss for society because, without government intervention, ________ would be consumed and ________ would be produced.
less than the efficient amount; less than the efficient amount
A supply curve is the same as a
marginal cost curve.
For a perfectly competitive syrup producer whose average total cost curve does not change, an economic profit could turn into an economic loss if the market demand for syrup does not change. price of syrup rises. market demand for syrup decreases. market demand for syrup increases.
market demand for syrup decreases.
When firms in an oligopoly successfully collude and do not cheat on a cartel agreement, they can make a long-run economic profit similar to monopoly. monopolistic competition. non-colluding oligopolies. perfect competition.
monopoly
If the marginal benefit of a hot dog is greater than its marginal cost, then to increase efficiency
more hot dogs should be produced.
The above figure shows the market demand curve for telephone calls. Suppose the marginal cost of a telephone call is 2¢ a minute for a call no matter how many minutes of calls are made and there are 3 firms in the industry. If the firms in the industry operate as perfect competitors, there are ________ minutes of calls made per hour.
more than 7 million and less than or equal to 9 million
The above figure shows the market demand curve for telephone calls. Suppose the marginal cost of a telephone call is 2¢ a minute for a call no matter how many minutes of calls are made and there are 3 firms in the industry. If the firms in the industry operate as perfect competitors, there are ________ minutes of calls made per hour. between 0 and 3 million more than 5 million and less than or equal to 7 million more than 7 million and less than or equal to 9 million more than 9 million
more than 7 million and less than or equal to 9 million
Because human wants are insatiable and unlimited while available resources are limited, people are said to face the problem of
scarcity.
The long run average cost curve
shows the lowest average cost facing a firm as it increases output changing both its plant and labor force.
One way to identify oligopoly is to use the Herfindahl-Hirschman Index (HHI). determine the market's minimum price. determine the market's maximum price. use the Efficiency test.
use the Herfindahl-Hirschman Index (HHI).
The above figure shows the market for biologists. The government decides to set a minimum wage for biologists of $18 per hour. After this minimum wage is in effect, the deadweight loss equals
$200.
The figure shows the costs and benefits associated with wood pulp production. A tax of ________ can be imposed to achieve the efficient level of production of ________ tons.
$200; 3
The figure above shows the market demand curve and the ATC curve for a firm. If all firms in the market have the same ATC curve, the lowest price at which a firm could stay in business in the long run is ________ per unit and the quantity demanded in the market at that price is ________ units per hour.
$10; 8,000
The figure above shows the market demand curve and the ATC curve for a firm. If all firms in the market have the same ATC curve, the lowest price at which a firm could stay in business in the long run is ________ per unit and the quantity demanded in the market at that price is ________ units per hour. $20; 8,000 $10; 8,000 $10; 4,000 $20; 4,000
$10; 8,000
Which of the following is a microeconomic topic? K-Mart's decision to close stores that are not making a profit Home Depot's choice to hire more full-time employees because its sales increased Delta Airlines changes its fares.
1, 2, and 3
In the above figure, the profit-maximizing output for this single-price monopoly is ________ units and the price is ________. 300; $30 200; $10 300; $20 200; $30
200; $30
The figure above shows the demand, marginal revenue, and marginal cost curves for Paul's Parrot pillows, a monopoly producer of pillows stuffed with parrot feathers. When Paul maximizes his profit, Paul produces ________ pillows per hour, and if the market was perfectly competitive, ________ pillows per hour would be produced. 0; 4,000 3,000; 4,000 4,000; 4,000 3,000; 3,000
3,000; 4,000
Use the figure above to answer this question. Pam gives the only piano lessons in town. In order to maximize profit, Pam should give ________ per day and charge ________ per lesson. 4; $40 4; $20 6; $30 4; $30
4; $40
The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve. The marginal external cost when 100 billion kilowatt hours are produced is
5¢ per kilowatt.
A single-price monopoly can sell 2 units for $8.50 per unit. In order to sell 3 units, the price must be $8.00 per unit. The marginal revenue from selling the third unit is $17.00. $8.50. $6.50. $7.00.
7.00
In the figure above, if the wage rate is $6 per hour, then the
All answers are correct.
Consider the market for frozen yogurt. Assume the market starts at point A. An increase in income causes a movement to point
D if frozen yogurt is a normal good.
Imposing a sales tax on sellers of a product has an effect that is similar to which of the following?
an increase in the costs of production
The production possibilities frontier is the boundary between the attainable and unattainable combinations of goods and services. goods and services that the economy can produce. wanted and unwanted combinations of goods and services. rational and irrational choices facing a society.
attainable and unattainable combinations of goods and services.
For a perfectly competitive rancher in Wyoming, if the price does not change, an economic profit could turn into an economic loss if the average total cost curve shifts upward. average total cost curve shifts downward. average fixed cost decreases. average total cost curve does not change.
average total cost curve shifts upward.
In an oligopoly, there are
barriers to entry and only a few firms.
In an oligopoly, there are barriers to entry and only a few firms. many firms and barriers to entry. barriers to entry and only one firm. few firms and no barriers to entry.
barriers to entry and only a few firms.
To be able to price discriminate, a firm must have a patent. be a natural monopoly. be able to prevent resales of its good. have a public franchise.
be able to prevent resales of its good.
Mary is currently buying apples and oranges such that the last unit of apples has 30 units of utility and the last unit of oranges has 40 units of utility. She has allocated her entire budget. If the price of an apple is 10 cents and the price of an orange is 20 cents, to maximize her utility, what should Mary do?
buy more apples and fewer oranges
In the short run, a perfectly competitive firm
can possibly make an economic profit or possibly incur an economic loss.
Elsie is a perfectly competitive dairy farmer. The market price of milk was $2.40 but just fell to $2.20 a gallon. Elsie
can sell as much milk as she wants at $2.20 a gallon.
Elsie is a perfectly competitive dairy farmer. The market price of milk was $2.40 but just fell to $2.20 a gallon. Elsie -can sell as much milk as she wants at $2.20 a gallon. -will produce the same amount of milk at both prices. -will be able to charge her initial customers $2.40 a gallon. -will have to charge some customers $2.40 a gallon to stay in business.
can sell as much milk as she wants at $2.20 a gallon.
Microeconomics includes the study of the
choices made by individuals and businesses.
A cartel is a collusive agreement among a number of firms that is designed to
decrease output and raise prices.
One way to identify oligopoly is to
use the Herfindahl-Hirschman Index (HHI).
The tool that economists use to analyze the mutual interdependence of oligopolies is
game theory.
For a perfectly competitive sugar producer in Haiti, a short-run economic profit will occur if the price of each ton of sugar sold is -equal to the average total cost of producing sugar. -greater than the marginal revenue of each ton of sugar. -greater than the average total cost of producing sugar. -less than the average total cost of producing sugar.
greater than the average total cost of producing sugar.
The marginal revenue curve for a perfectly competitive firm is a straight line coming out of the origin with a 45 degree slope. vertical. upward sloping. horizontal.
horizontal
Consider a perfectly competitive market that was in a long-run equilibrium when a permanent increase in demand occurs. Which of the following will occur as a result? i.The existing firms will start to earn an economic profit. ii.New firms will be motivated to enter the market. iii.Some firms that cannot meet the new demand will exit the market.
i and ii only
Boeing and Airbus have entered into a cartel agreement that will enable them to boost their profits. What occurs if Boeing decides to cheat on the agreement? i.Boeing lowers the price of its airplanes. ii.The total industry output increases. iii.The total profits in the airplane industry will decrease.
i, ii, and iii
In perfect competition, marginal revenue
is equal to the market price.
The above figure shows a perfectly competitive firm. If the market price is $10, the firm
is making zero economic profit.
Suppose the price of a pair of jeans is $25 and the price of a T-shirt is $15. The consumer's budget is entirely allocated. If the marginal utility from a pair of jeans is 100 units and the marginal utility from a T-shirt is 75 units, the consumer is
not in equilibrium and should purchase fewer jeans and more T-shirts.
The fact that firms in oligopoly are interdependent means that
one firm's profits are affected by other firms' actions.
Alice, Bud, and Celia can produce rubber bands in a perfectly competitive market. If they enter the market, the minimum average total cost for a bundle of rubber bands, for the three of them is $2, $3, and $4, respectively. If the market price is $2.10 per bundle, then Alice and Celia will enter the market. all three of them will enter the market. Alice and Bud will enter the market. only Alice will enter the market.
only Alice will enter the market.
The figure shows a perfectly competitive market that was in a long-run equilibrium on demand curve D0. Due to a permanent change in demand to D1, existing firms will begin to make an economic ________ which will result in ________ the market.
profit; new firms entering
What does the long-run average cost curve show?
the lowest average cost to produce each output level in the long run
If the price elasticity of supply for a good is 0.75, then
the percentage change in the quantity supplied is less than the percentage change in price.
In a production possibilities frontier diagram, the attainable production points are shown as
the points inside and the points on the production possibilities frontier.
As we move along the production possibilities frontier the production of one good increases as the production of the other good decreases. the possibilities of tradeoffs diminish. a tradeoff is not possible because nations need all goods. more of both goods can be produced.
the production of one good increases as the production of the other good decreases.
The law of demand refers to how
the quantity demanded changes when the price of the good changes.
The above figure shows the market for game day t-shirts. If the price of t-shirts is $8, then there is a shortage and the price of t-shirts will fall. there is a surplus and the price of t-shirts will rise. there is a surplus and the price of t-shirts will fall. the market is in equilibrium. there is a shortage and the price of t-shirts will rise.
there is a shortage and the price of t-shirts will rise.
If a perfectly competitive wheat farmer is maximizing its profit and then increases its output, the farmer's
total revenue increases, but total cost rises by more so that the farmer's total profit decreases.
If a 10 percent price increase generates a 10 percent decrease in quantity demanded, then demand is
unit elastic.
For a perfectly competitive palm tree nursery in South Carolina, the total revenue curve is upward sloping. a horizontal line. downward sloping. U-shaped.
upward sloping.
