Econ Exam 2
Rose growing is perfectly competitive and all growers have the same costs. The market price is $13 a bunch and each grower maximizes profit by producing 400 bunches a week. Average total cost is $12 a bunch and average variable cost is $7 a bunch. Minimum average variable cost is $3 a bunch. What is the price at the grower's shutdown point?
The price at the grower's shutdown point is $3 a bunch.
Tulip growing is a perfectly competitive industry and all tulip growers have the same cost curves. The market price of tulips is $8 a bunch and each grower maximizes profit by producing 2,200 bunches a week. The average total cost of producing tulips is $14 a bunch. Minimum average variable cost is $4 a bunch, and the minimum average total cost is $10 a bunch. In the long run, what is the price and the tulip grower's economic profit? In the long run, the market price of tulips is _______ a bunch.
$10 In the long run, a tulip grower's economic profit is $0.
The supply of luxury boats is perfectly elastic, the demand for luxury boats is unit elastic, and with no tax on luxury boats the price is $2 million and 470 luxury boats a week are bought. Now luxury boats are taxed at 40 percent tax. What price do buyers pay? How is the tax split between buyers and sellers? What is the government's tax revenue? Is this tax efficient? With the tax imposed, the price of a luxury boat is _______. With the 40 percent tax on luxury boats, _______. The tax is ____ because at the quantity produced _____.
$2.80 million the buyer pays all of the tax The government raises tax revenue of $268.80 million. SHAPE: (350,2.00) (350,2.80) (470,2.00) inefficient; marginal benefit exceeds marginal cost
Bob's Books is the only bookstore in town. The graph shows the demand curve for books and Bob's Books' marginal revenue curve and marginal cost curve. What is Bob's Books profit-maximizing output and price? Bob's Books maximizes its profit by charging _______ a book and selling _______ books a year.
$23; 15,000
The graph shows the market for tomato pickers in southern California. If California introduces a minimum wage for tomato pickers of $12.00 an hour, how many pickers are employed and how many are unemployed? What is the lowest wage that some workers might be able to earn if a black market develops?
3,000 2,000 $6
What are natural or legal forces that work to protect a firm from potential competitors? When natural or legal forces work to protect a firm from potential competitors, the market is said to have _______.
A BARRIER TO ENTRY
Classify each of the following items as a final good or an intermediate good, and classify the expenditure on each final good as consumption expenditure or investment: Item 1. A DVD bought by a household Item 2. Trucks bought by Fedex Item 3. New concrete mixers bought by Chicago Concrete Inc Item 4. Cardboard boxes bought by Amazon.com Item 1 is _______ and item 2 is _______. Item 3 is ______ and item 4 is ______.
A FINAL GOOD THAT IS CONSUMPTION EXPENDITURE; A FINAL GOOD THAT IS INVESTMENT A FINAL GOOD THAT IS INVESTMENT; AN INTERMEDIATE GOOD
Before 1991, the eight Ivy League colleges (Brown, Columbia, Cornell, Dartmouth, Harvard, Princeton, the University of Pennsylvania, and Yale), along with MIT, shared information and agreed on rules for setting their prices of education (price equals tuition minus scholarship). Since 1991, these schools have set their prices in competition with each other. How did the market for an Ivy League education change before and after 1991? Before 1991, the Ivy League schools _______. After 1991, tuition at the Ivy League schools _______ and the number of students _______.
ACTED AS A MONOPOLY AND CHARGED THE MONOPOLY TUITION BECAME COMPETITIVE AND TUITION ROSE; INCREASED, DECREASED, OR REMAINED THE SAME
Suppose the government introduces a ceiling on the fees that accountants are permitted to charge. Would this fee ceiling result in an efficient and fair use of resources? Why or why not? A fee ceiling set below the market equilibrium fee results in ______. If the fee ceiling is set below the market equilibrium, then, by the _______ view of fairness, the outcome is _________ .
AN INEFFICIENT USE OF RESOURCES BECAUSE THE MARGINAL BENEFIT OF ACCOUNTING SERVICES EXCEEDS THE MARGINAL COST OF ACCOUNTING SERVICES FAIR-RULES; UNFAIR BECAUSE THE FEE CEILING BLOCKS VOLUNTARY EXCHANGE
What is U.S. gross domestic product? U.S. gross domestic product is the market value of all the _______ produced _______ in a given time period.
FINAL GOODS AND SERVICES; WITHIN THE UNITED STATES
Before 1991, the eight Ivy League colleges (Brown, Columbia, Cornell, Dartmouth, Harvard, Princeton, the University of Pennsylvania, and Yale), along with MIT, shared information and agreed on rules for setting their prices of education (price equals tuition minus scholarship). Since 1991, these schools have set their prices in competition with each other. What has happened to the efficiency of the market, to the distribution of producer surplus and consumer surplus, and to deadweight loss. Moving from 1991 to today, everything else remaining the same, the Ivy League market for education _______. Producer surplus _______. Consumer surplus _______. Deadweight loss _______.
BECAME MORE EFFICIENT DECREASED; INCREASED; DECREASED
Joe's Shiny Shoes is a firm that operates in a competitive market. The graph shows Joe's marginal cost curve and average variable cost curve. What curve segment is part of Joe's supply curve? The curve segment _______ is part of Joe's supply curve
CD
The graph shows the market for lawnmowers when lawnmowers are taxed. What is the amount of consumer surplus, producer surplus, deadweight loss, and tax revenue after the imposition of the tax?
Consumer surplus is $900 Producer surplus is $900 The deadweight loss is $200 Tax revenue is $1200
Suppose the government introduces a ceiling on the fees that trainers are permitted to charge. How would the amount of work done by trainers, the consumer surplus of people who hire trainers, and the producer surplus of gyms change? If the fee ceiling is set below the market equilibrium fee, the amount of work done by trainers will _______. With the fee ceiling, the consumer surplus of people who hire trainers _______, and the producer surplus of gyms ________.
DECREASE DECREASES; DECREASES
BHP Billiton to axe 6,000 jobs The price of coal has fallen to $125 a ton from $300 a ton. BHP Billiton will cut production, lay off 6,000 workers, and close some mines for six months. Source: FT.com, January 21, 2009 As BHP responded to the fall in price, how did its marginal cost change? What is minimum average variable cost in the mines that closed temporarily? As BHP responded to the fall in price, its marginal cost _______. The minimum average variable cost in the mines that closed temporarily is _______.
FELL FROM $300 A TON TO $125 A TON; BETWEEN $125 A TON AND $300 A TON
Congress passes increase in the minimum wage In 2007, Congress voted to raise the minimum wage to $7.25 an hour from $5.15. For about 5.6 million low-income workers, it was a major victory—the first increase in the federal minimum wage rate in a decade. Source: New York Times, May 24, 2007 If the new federal wage of $7.25 an hour is effective, how does the higher minimum wage change workers' surplus and firms' surplus? Does the labor market become more or less efficient? Did Congress hand a major victory to all workers who earned the minimum wage of $5.15 an hour? If the new federal wage of $7.25 an hour is effective, then the higher minimum wage ______ workers' surplus and ______ firms' surplus. The labor market becomes _______ efficient. Congress ________ hand a major victory to all workers who earned the minimum wage of $5.15 an hour.
DECREASES; DECREASES LESS; DID NOT
The graph shows the market for no-name soda. The government imposes a tax of $2 per case on no-name soda. The sellers of no-name soda pay the entire tax. Draw the demand curve for no-name soda. Label it D. How does the price elasticity of demand determine who pays the tax? The more ______ the demand, ______.
DEMAND CURVE: (1,6) (10,6) ELASTIC; THE LARGER IS THE AMOUNT OF THE TAX PAID BY SELLERS
California's commercial drone industry is taking off Customers are finding ever more creative ways to use drones, and 3D Robotics Inc., America's largest producer of consumer drones, expects sales to soar. commercial drones? How would you expect the price of a drone and the economic profit of a drone producer such as 3D Robotics to change in the short run and in the long run? The _______ drones is _______ in the short run. In the short run, the equilibrium price of a drone _______ and the economic profit of drone producers _______. In the long run, _______ the price of a drone, and drone producers make _______
DEMAND FOR; INCREASING RISES; INCREASES ENTRY OF NEW DRONE PRODUCERS LOWERS; ZERO ECONOMIC PROFIT
The supply of apartments in New York City is inelastic, and the demand for apartments is elastic. The city introduces a tax on apartment rentals. When is the larger share of the tax paid by the landlord? Why does the government collect a large tax revenue? The more _______ the demand and the more _______ the supply of apartments, the larger is the share of the tax paid by the landlord. The government collects a large tax revenue because the tax ______ the number of apartments rented.
ELASTIC; INELASTIC DECREASES BY A RELATIVELY SMALL AMOUNT
The graph illustrates the demand for haircuts and the costs of producing haircuts. How do we redefine the curves in the graph when a perfectly competitive industry is taken over by a single firm? When a perfectly competitive industry is taken over by a single firm, the competitive industry's _______ curve becomes the monopoly's _______ curve.
EM: (2.0,20) EC: (3.0,15) SUPPLY; MARGINAL COST
Cook's Tall Ship Cruises is a single-price monopoly. The table shows the demand schedule for cruises (columns 1 and 2) and Cook's total cost schedule (columns 2 and 3). Calculate Cook's total revenue and marginal revenue schedules and fill in the two right columns of the table.
FROM TOP TO BOTTOM: 0 140 140 120 260 100 360 80 440 60 500
Hannah's Salon is a single-price monopoly. The table shows the demand schedule for Hannah's haircuts (columns 1 and 2) and the firm's total cost schedule (columns 2 and 3). Calculate Hannah's total revenue and marginal revenue schedules.
FROM TOP TO BOTTOM: 0 9 9 7 16 5 21
Harvey's Day Spa is a single-price monopoly. The table shows the demand schedule for Harvey's Day Spa (columns 1 and 2) and the firm's total cost schedule (columns 2 and 3). What is Harvey's profit-maximizing output, price, and economic profit?
Harvey's profit-maximizing output is 3 treatments an hour. Harvey's profit-maximizing price is $7 a treatment. When Harvey's produces the profit-maximizing output and charges the profit-maximizing price, economic profit is $14 an hour.
When is price discrimination possible? Price discrimination is possible when a firm is able to _______.
IDENTIFY AND SEPARATE DIFFERENT TYPES OF BUYERS, AND SELL A PRODUCT THAT CANNOT BE RESOLD
Beijing loosens fuel prices in boon to refiners China moved to raise the price ceiling on gasoline and diesel on Tuesday. Lin Boqiang of Xiamen University advised the government on pricing reform and said the "move is in the right direction, even if it's not a complete market price." Source: The Wall Street Journal, March 26, 2013 How does raising the price ceiling on fuel change consumer surplus, producer surplus, and deadweight loss? As the price ceiling on fuel increases toward the market price, consumer surplus will _______. As the price ceiling on fuel increases toward the market price, producer surplus _______ and the deadweight loss _______.
INCREASE BECAUSE THE FUEL SHORTAGE WILL DECREASE AND PEOPLE WILL PURCHASE A LARGER QUANTITY OF FUEL INCREASES BECAUSE AT THE HIGHER PRICE CEILING PRODUCERS WILL SELL A LARGER QUANTITY OF FUEL'; DECREASES AS THE GAP BETWEEN MARGINAL BENEFIT AND MARGINAL COST AT THE QUANTITY SUPPLIED DECREASES
Expansion remains slow The Commerce Department reported that retail sales increased 1.3 percent in June. Net exports were up 0.8 percent in the first quarter and inventories held by businesses rose by 0.3 percent in June. Total sales by businesses rose 0.3 percent. What is the effect of the rise in net exports on GDP? The rise in net exports _______.
INCREASES GDP
If California introduces a minimum wage for tomato pickers of $16.00 an hour, is the minimum wage of $16.00 an hour efficient? Is it fair? Who gains and who loses from the minimum wage of $16.00 an hour? The graph shows the market for tomato pickers in southern California. If California introduces a minimum wage for tomato pickers of $16.00 an hour, the minimum wage is ______. With the minimum wage, ______ gain and ______ lose.
INEFFICIENT AND NOT FAIR TOMATO PICKERS WHO FIND WORK; TOMATO GROWERS AND UNEMPLOYED PICKERS
The graph shows the market for a vital-to-life drug. If the government imposes a tax on the drug, what determines how the tax is split between buyers and sellers? The more ______ the demand for the drug, ______.
INELASTIC; THE LARGER IS THE AMOUNT OF THE TAX PAID BY THE BUYER OF THE DRUG DEMAND CURVE: (6,1) (6,10)
Which of the following statements describes a firm in a perfectly competitive market? In a perfectly competitive market, each firm _______.
IS A PRICE TAKER AND PRODUCES THE QUANTITY THAT MAXIMIZES ITS PROFIT IN BOTH THE SHORT RUN AND THE LONG RUN
Oakdale, a small isolated town, has one psychiatrist. For a 30-minute consultation, the psychiatrist charges an adult twice as much as a senior. Does the psychiatrist practice price discrimination? Is the psychiatrist using resources efficiently? Does the psychiatrist's pricing scheme redistribute consumer surplus? The psychiatrist _______ practicing price discrimination because _______. The psychiatrist _______ using resources efficiently because _______. This pricing system _______.
IS; ADULTS AND SENIORS ARE PAYING A DIFFERENT PRICE FOR THE SAME SERVICE IS NOT; A DEADWEIGHT LOSS IS CREATED TAKES SOME CONSUMER SURPLUS FROM THE CONSUMER AND REDISTRIBUTES IT TO THE PSYCHIATRIST AS ECONOMIC PROFIT
The graph shows the market for basketballs, when basketballs are not taxed. If buyers of basketballs are taxed $6 a ball, what price does the buyer pay and how many basketballs do they buy? What is the tax revenue collected?
If buyers are taxed $6 a ball, the price that buyers pay for a basketball is $16. The number of basketballs bought is 8 million. The tax revenue from the sale of basketballs is $48 million.
The graph shows the market for basketballs, when basketballs are not taxed. If sellers of basketballs are taxed $6 a ball, what price does the seller receive and how many basketballs do they sell? What is the tax revenue collected?
If sellers are taxed $6 a ball, the price that sellers receive for a basketball is $10. The number of basketballs bought is 8 million. The tax revenue from the sale of basketballs is $48 million.
The table shows the demand and supply schedules for on-campus housing. If the college puts a rent ceiling on rooms of $375 a month, what is the rent, how many rooms are rented, and is the on-campus housing market efficient?
If the college puts a rent ceiling on rooms of $375 a month, the rent is $325 and the number of rooms rented is 5250. The on-campus housing market is EFFICIENT.
The graph shows the short-run cost curves of a toy producer. The market has 1,000 identical toy producers. At a market price of $21 a toy, what quantity does the firm produce in the short run and does the firm make a positive economic profit, a zero economic profit, or an economic loss? The firm _______ in the short run.
In the short run, the firm produces 2000 toys a week. MAKES A POSITIVE ECONOMIC PROFIT
Minnie's Salon is a single-price monopoly. The table gives Minnie's demand schedule. Price (dollars per haircut) Quantity (haircuts per hour) 15 0 14 1 13 2 12 3 11 4 10 5 Draw the following points on the demand curve to show the quantity demanded
LABEL 1: (0,15) LABEL 2: (5,10) D: FROM POINT 1 TO 2 LABEL 3: (0.5,14) LABEL 4: (4.5,6) MR: FROM POINT 3 TO 4
Some Seattle restaurants struggle with $15 minimum wage 5 years later Seattle voted to raise the minimum wage to $15 an hour nearly five years ago. It radically changed the way restaurants do business. Whether that is good or bad depends on who's talking. Source: KOMO News, May 18, 2019 What is the effect of the $15 an hour minimum wage on employment? In the graph, when the minimum wage rises from $13 an hour to $15 an hour, employment _______.
LABEL 1: (199.8, 13.50) LABEL 2: (101.6, 15.00) DECREASES AND SOME WORKERS ARE UNEMPLOYED
Big Top is the only circus in the nation. The graph shows the demand curve for circus tickets, the average total cost curve, and the marginal cost curve. Draw a horizontal line at the price cap that regulators set that enables the Big Top to break even. Label it. Draw a shape to show the deadweight loss when regulators set a price cap that enables the Big Top to break even.
LINE: AT 8 SHAPE: TRIANGLE FROM (600,8) TO (600,6.5) ACROSS TO (700,6.5)
Big drops in prices for crops make it tough down on the farm Grain prices have become more closely tied to oil prices because of the expansion of the corn-based ethanol industry. What is the effect of the falling oil price on the market for ethanol? If the price of oil remains low for some years, what will be the long-run effects on the market for ethanol and the number of ethanol producers? The falling oil price _______ the price of ethanol. If the price of oil remains low for some years and ethanol producers are incurring an economic loss, then in the long run _______.
LOWERS; SOME PRODUCERS WILL EXIT THE MARKET, DEMAND WILL INCREASE, AND EACH FARMER THAT REMAINS IN THE MARKET WILL RECEIVE A HIGHER PRICE LABEL 1: (50, 1.00) MR1: (0, 0.75) TO (80, 0.75) LABEL 2: (30, 0.75) SHAPE: square from (0,0.75) up to (0,1.25) across to (30,1.25)
The table shows the demand schedule for Lila's Firewood. What is Lila's marginal revenue for each quantity demanded? Compare Lila's marginal revenue and price. In what type of market does Lila's Firewood operate? Lila's marginal revenue _______ price. Lila's Firewood operates in a market called_______.
Lila's marginal revenue for each bundle of firewood demanded is $15. EQUALS PERFECT COMPETITION
Perfect competition is a market in which there are _____ firms, each selling _____ product; many buyers; _____ to the entry of new firms into the industry; no advantage to established firms; and buyers and sellers _____ about prices.
MANY; IDENTICAL; NO BARRIERS; ARE WELL INFORMED
A firm will shut down in the short run if at the profit-maximizing quantity, ______.
MARGINAL REVENUE IS LESS THAN AVERAGE VARIABLE COST
How is price and quantity determined in a perfectly competitive market? How is economic profit calculated? In a perfectly competitive market in short-run equilibrium, _______. When a firm makes an economic profit in the short run, it is calculated as _______.
MARKET SUPPLY AND MARKET DEMAND DETERMINE THE PRICE AND QUANTITY BOUGHT AND SOLD IN THE MARKET MARKET PRICE MINUS AVERAGE TOTAL COST, MULTIPLIED BY THE QUANTITY PRODUCED
With the increased popularity of smartphones, the government imposes a tax of $20 a smartphone and a tax of 10¢ a call made on a smartphone. Suppose that the supply of smartphones is elastic and the demand for smartphones is inelastic. Suppose that the supply of calls is perfectly elastic and the demand for calls is elastic. Who pays more of the tax on smartphones? Who pays more of the tax on phone calls? What happens to the number of calls? The buyer pays _______ of the tax on a phone than the seller. The buyer pays _______ of the tax on a call than the seller. The number of calls _______ because _______.
MORE; MORE DECREASES; THE RISE IN THE PRICE OF A SMARTPHONE DECREASES THE DEMAND FOR CALLS, WHICH DECREASES THE NUMBER OF CALLS MADE
California plans to crack down on the use of fumigants by growers of strawberries. The biggest burden will fall on Ventura County's growers, who produce about 90 percent of the nation's crop. On the graph, show the long-run effects of the pollution crackdown.
MR1: HORIZONTAL LINE ACROSS 2 POINT: (8,2)
An unregulated natural monopoly bottles ReNew, a unique product with no substitutes. The monopoly's total fixed cost is $130,000 and its marginal cost is 10 cents a bottle. How many bottles of ReNew does the monopoly sell and what is the price of a bottle of ReNew? Is the monopoly's use of resources efficient? The firm _______ produce the efficient quantity because _______.
MR: (0,100) TO (10,0) MC: HORIZONTAL LINE ACROSS 10 POINT: (9,55) ReNew sells 9 million bottles a year and the price is 55 cents a bottle. DOES NOT; MARGINAL BENEFIT EXCEEDS MARGINAL COST
Tiny is an isolated community served by one newspaper that can meet the market demand at a lower cost than two or more newspapers could. The Tiny Intelligencer is the only source of news. The graph shows the marginal cost of printing the paper and the market demand curve. The Tiny Intelligencer is a profit-maximizing, single-price monopoly.
MR: FROM (0,120) TO (300,0) LABEL 1: SQUARE FROM (0,70) TO (0,90) ACROSS TO (150,90) LABEL 2: TRIANGLE FROM (150,90) TO (150,60) ACROSS TO (250,70)
A natural monopoly cans Mt. McKinley air, a unique clean air that has no substitutes. The graph illustrates the demand curve for this clean air. How many cans a year does the monopoly sell and what is the price of a can?
MR: FROM (0,70) TO (14.5,0) MC: FROM (O,70) TO (28,0) POINT: (10,45) The monopoly sells 10000 cans a year and the price is 45 cents a can.
Under what conditions does monopoly arise? Under what conditions can a monopoly price discriminate? A monopoly arises when there are _______. A monopoly can price discriminate only if _______.
NO CLOSE SUBSTITUTES AND A BARRIER TO ENTRY IT SELLS GOOD AND SERVICES THAT CANNOT BE RESOLD
Rick is a potato farmer and the world potato market is perfectly competitive. The market price is $13 a basket. Rick sells 1,300 baskets a week and his marginal cost is $18 a basket. Is Rick maximizing profit? Why or why not? Rick is _______.
NOT MAXIMIZING PROFIT BECAUSE MARGINAL COST IS GREATER THAN MARGINAL REVENUE
Consider the markets for strawberries, computers, dog food, ice cream, and cable TV in a town with one cable company. In what type of market is each good or service sold? The market in which the firms that sell strawberries operate is _______. The firms that sell computers operate in _______ Firms that sell dog food operate in _______. Producers of ice cream operate in _______. Cable TV in a town with one cable company is an example of_______.
PERFECT COMPETITION; MONOPOLISTIC COMPETITION AN OLIGOPOLY; MONOPOLISTIC COMPETITION A MONOPOLY
The graph shows the market for chocolate bars. If a new tax of $1.50 a chocolate bar is imposed, what is the change in the quantity of chocolate bars bought, who pays most of the tax, and what is the deadweight loss?
POINT 1: (6,3.00) S TAX: (3.50,0) (7,5.00) POINT 2: (4,4.00) POINT 3: (4,2.50) The BUYER pays most of the tax. The deadweight loss is $1.5 million.
Lila's firm produces fortune cookies. Draw Lila's short-run supply curve. Why is only part of Lila's short-run supply curve the same as its marginal cost curve? When market price is _______, Lila's short-run supply curve runs along the y-axis and is not the same as the marginal cost curve.
POINT 1: (7.5, 73) POINT 2: (6,41) POINT 3: (5,25) S1: FROM POINT 3 TO POINT 1 S2: (0, 41) BELOW MINIMUM AVERAGE VARIABLE COST
Big Top is the only circus in the nation. The graph shows the demand curve for circus tickets, the average total cost curve, and the marginal cost curve. When Big Top is regulated to charge a price equal to average total cost, what is its economic profit?
POINT: (600,8.00) Economic profit is $0.
Turkey farming is a perfectly competitive industry and all turkey farms have the same cost curves. When the market price is $38 a turkey, farms maximize profit by producing 800 turkeys a week. At this output, average total cost is $36 a turkey, and average variable cost is $14 a turkey. Minimum average variable cost is $9 a turkey. If the price falls to $36 a turkey, will a turkey farm produce 800 turkeys a week? If the price falls to $36 a turkey, a turkey farm will _______.
PRODUCE FEWER THAN 800 TURKEYS A WEEK
Sandy Cove is the only beach resort on a small island and the only beach activity it offers is jet ski rides. The graph shows the marginal cost of a ride and the demand for rides. The resort is a single-price monopoly. What is the number of rides taken each hour and the price of a ride?
REVENUE CURVE: FROM (0,30) TO (3,0) The number of rides taken each hour is 1.50. The price of a ride is $22.50.
Quebec losing hold over maple syrup industry to U.S. competition The Federation of Quebec Maple Syrup Producers tries to limit production and stockpiles a "strategic reserve" to keep the price of syrup high. But Quebec producers are feeling increased competition from Vermont, New York, and Maine, where market share has increased and is expected to increase further in 2017 and 2018. If the demand for maple syrup increases, what will happen to price, quantity, and the economic profit of a producer in the short run and in the long run? As a result of an increase in the demand for maple syrup, the price of maple syrup _______. In the long run, the price of maple syrup _______ and producers _______.
RISES MR1: HORIZONTAL LINE ACROSS 40 POINT: (500,35) SHAPE: (0,38) TO (0,40) ACROSS TO (600,40) FALLS; MAKE ZERO ECONOMIC PROFIT
The graph shows the market for basketballs, when sellers are taxed $6 a ball. What is the excess burden of the tax? Is the demand for basketballs or the supply of basketballs more inelastic?
SHAPE: (8,16) (8,10) (12,15) The excess burden of the tax on basketballs is $12 million. The supply of basketballs is more _______ than the demand for basketballs, and the _______ pays most of the tax. inelastic; seller
The following statements give some information about six firms. a. Coca-Cola cuts its price below that of Pepsi-Cola in an attempt to increase profit. b. A single firm, protected by a barrier to entry, produces a personal service that has no close substitutes. c. A barrier to entry exists, but the good has some close substitutes. d. A museum offers discounts to students and seniors. e. A firm can sell any quantity it chooses at the going price. f. A firm experiences economies of scale even when it produces the quantity that meets the entire market demand. Which are natural monopolies and which are legal monopolies? Can any of them price discriminate? If so, why? The firm described in _______ is a natural monopoly. The firm described in _______ is a monopoly and it may be a legal monopoly. The firm described in _____ can price discriminate because _____.
STATEMENT F; STATEMENT B STATEMENT B; A PERSONAL SERVICE CANNOT BE RESOLD
The graph shows the market for dog groomers organized by the Dog Groomers' Union in Toledo, Ohio. What is the wage rate that dog groomers earn and how many dog groomers are employed? When the Dog Groomers' Union sets the minimum wage for dog groomers at $40.00 an hour, how many dog groomers are employed how much do they earn? How many dog groomers are unemployed?
The wage rate that dog groomers earn is $30 an hour and the number of dog groomers employed is 300. When the Dog Groomers' Union sets the minimum wage for dog groomers at $40.00 an hour, 150 dog groomers are employed and they earn $40 an hour. The number of dog groomers unemployed is 300.
Tom's Family Photos is a photographic portrait business in a perfectly competitive market in Fargo. The market price of a portrait is $75.00. The table shows Tom's total costs. How many portraits does Tom sell in an hour and what is Tom's economic profit in the short run?
Tom's Family Photos sells 5 portraits an hour. In the short run, Tom's MAKES AN ECONOMIC PROFIT of $35 an hour.
The table shows the demand and supply schedules for yoga instructorsin Texas. If Texas introduces a strictly enforced minimum wage for yoga instructors of $7.00 an hour, who gains and who loses from the minimum wage, and is the labor market efficient or fair? With the minimum wage, _______ gain and _______ lose. The strictly enforced minimum wage for yoga instructors of $7.00 an hour _______.
YOGA INSTRUCTORS WHO FIND WORK; EMPLOYERS AND UNEMPLOYED YOGA INSTRUCTORS INEFFICIENT AND NOT FAIR
At the shutdown point, the firm _______.
incurs a loss equal to total fixed cost
