econ final
24. Laws that are passed that cither require or forbid certain behaviors are examples of command-and-control policies.
a. True
26. Corrective taxes are more efficient than regulations for keeping the environment clean.
a. True
29. The majority of economists believe that the social benefit of mandating measles vaccines for all Americans (except those with compelling medical reasons) would exceed the social cost.
a. True
59. Variable costs usually change as the firm alters the quantity of output produced
a. True
60. The average total cost curve reflects the shape of both the average fixed cost and average variable cost curves
a. True
62. Average total cost and marginal cost express information that is already contained any firms total cost.
a. True
64. When average total cost rises if a producer either increases or decreases production, then the firm is said to be operating at efficient scale
a. True
66. As a firm moves along it's long run average cost curve it is adjusting the size of its factory to the quantity of production
a. True
67. Because of the greater flexibility that firms have in the long run, all short run cost curves light on or above the long run curve
a. True
17. Which of the following statements is not correct?
b. Corrective taxes set the maximum quantity of pollution, whereas tradable pollution permits fix the price of pollution,
20. Government subsidized scholarships are an example of a government policy aimed at correcting negative externalities associated with education.
b. False
68. Firm A is experiencing economies of scale
A. True
50. Which of the figures represent the total cost curve for a typical firm?
A. figure 2
80. Wynonna's fudge shop is maximizing profits by producing 1000 pounds of fudge per day. If Wynonna's fixed costs unexpectedly increase and the market price remains constant, in the short run profit maximizing level of output
A. is still 1000 pounds
56. when a firm experiences diseconomies of scale,
A. long run average total cost increases as output increases
44. Brady industries has average variable cost of one dollar and average total cost of three dollars when it produces 500 units of output. The firms total fixed costs equals
B. $1000
75. What is the total revenue from selling four units
B. $480
76. If the firm is currently producing 14 units what would you advise the owners
B. Continue to operate at 14 units
72. Suppose a firm in each of the two markets listed below where to increase its price by 25%. In which pair with the firm in at the first market listed experience a dramatic decline in sales but the firm in the second market listed might not
B. Corn and satellite radio
58. Economic profit is greater than or equal to accounting profit
B. False
63. When average total cost is above marginal cost average total cost is rising
B. False
65. The fact that many inputs are fixed in the short run but variable in the long run has a little impact on the firms cost curves
B. False
69. Adam Smith describes a visit to a car factory when discussing economies of scale in his book an inquiry into the nature and causes of the wealth of Nations.
B. False
70. Jackson borrows $10,000 from a bank and withdraw his $20,000 from his personal savings to open a tattoo parlor. The interest rate is 3% for both the bank loan and his personal savings. Jackson's implicit costs are $900.
B. False
71. The U-shaped average total cost curve reflects the U-shaped average fixed cost curve
B. False
47. For the firm who's production function and costs are specified in the table, it's total cost curve is
B. Increasing at an increasing rate
82. If the market price falls below six dollars, the firm will earn
B. Negative economic profit in the short run and shut down
48. For the firm who's production function and costs are specified in the table it's average variable cost curve is
D increasing
49. Which of the following can be inferred from the figure above
D marginal product is increasing at low level of output and decreasing at high level of output
45. What is the marginal product of the third worker?
D. 60 units
46. The marginal products of hiring additional workers are
D. Decreasing
52. In the short run a firm that produces and sells house paint can
D. How many workers to hire
79. If the market price is $16, this firm well
D. Produce five units of output in the short run and face competition from Newmarket entrance in the long run
57. Firm 4's efficient scale occurs at what quantity
D. Three
37. Eldin is a house painter. He paint three houses per week. He is considering hiring his friend Murphy. Murphy can paint five houses per week. What is th maximum total output possible if Eldin hires Murphy?
O d. 8 houses
51. When marginal cost is less than average total cost,
Hey. Average total cost is falling
32. planting $50 worth of seeds in her garden. Katherine gives piano lessons for $15 per hour. She also grows flowers, which she arranges and sells at the local farmer's market. oe day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer's market. Katherine's accounting profits are
a. $100, and her economic profits are $25.
35. Ziva's economic profit from farming equals
a. -$80.
each worker at the wooden chair factory cost $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. What is the daily total cost of producing at a rate of 55 chairs per hour if the factory operates eight hours per day
a. 520
83. The firm will earn negative negative economic profit but remain in business in the short run if the market price is
a. Less than $13 but more than $6.
The installation of a scrubber in a smokestack reduces the emission of harmful chemicals from the smokestack. Therefore, the socially optimal quantity of smokestack scrubbers is represented by point
a. Q5
39. On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?
a. The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers,
77. If the firm is maximizing profit, how much profit is it earning?
a. There is insufficient data to determine the firms profit.
23. Suppose a certain good provides an external benefit. If the private cost of the last unit of the good that was produced is equal to the social value of that unit, then the sum of producer and consumer surplus is maximized.
a. True
38. What is the marginal product of the first worker?
b. 300 units
15. The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 1,000" gallon of gasoline entails the following: *a private cost of $3.10; a social cost of $3.55: •a value to consumers of $3.70.
a. external cost of $0.45
31. A difference between explicit and implicit costs is that
a. implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do.
40. Suppose that Charles's math tutoring has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As outpue increases from 45 to 70 students, Charles's total cost curve
a. increases and gets steeper
1. an externality is the uncompensated impact of
a. one persons actions on the well being of a bystander
7. When negative externalities are present in a market
a. social costs will be greater than private costs.
2. this graph represents the tabacco industry. without any government intervention, the equilibrium price and quantity are.
b. $2.07 and 38 unites, respectively
33. If Kachina can work additional hours at either job, what is the opportunity cost if she spends one hour reading a novel?
b. $25
What is the socially optimal quantity of output in this market?
b. 2 units
21. Negative externalities lead markets to produce a smaller larger quantity of a good than is socially desirable. quantity of a good than is socially desirable, while positive extemalities lead markets to produce a
b. False
22. Government intervention in the economy with the goal of promoting technology-producing industries is known as patent policy.
b. False
25. Corrective taxes cause deadweight losses, reducing economic efficiency.
b. False
27. All externalities impose a cost on others.
b. False
28. The socially optimal price and quantity are $250 and 250 units, respectively.
b. False
3. without government intervention, the equilibrium quantity will be
b. Q3
61. The marginal cost curb intersex the average total cost curb at the minimum point of the marginal cost curve
b. false
8. When Moniane drives to work every morning, she drives on a congested highway. What Monique does not realize is that when she enters the highway each morning she increases the travel time of all other drivers on the highway. In this case, the external cost of Monique's highway trip
b. increases the social cost above the private cost.
30. Total revenue cquals
b. price x quantity.
26. Corrective taxes are more efficient than regulations for keeping the environment clean.
b. true
This market
b. would be more efficient with a tax on the product.
34. Ziva's accounting profit from farming equals
c. $ 170
81. Assume a firm in a competitive industry is producing 800 units of output, and it sells each unit for six dollars. It's average total cost is four dollars. It's profit is
c. $1600
How large would a corrective tax need to be to move this market from the equitibrium outcome to the socially optimal outcome?
c. $2
18. If the government wanted to reduce pollution from 16 units to 6 units, which of the following fees per unit of pollution would achieve that goal?
c. $83
The market equilibrium quantity of output is
c. 3 units.
The socially optimal quantity of output is
c. 420 units, since the value to society of the 420th unit is equal to the cost incurred by the seller of the 420th unit.
78. If a competitive firm is currently producing a level of output up with marginal cost exceeds marginal revenue, then
c. A one unit decrease and I'll put will increase the firms profit.
55. If a firm experiences constant returns to scale at all output levels, then it's long run average total cost curve would
c. Be horizontal
42. Which of the following costs of publishing a book is a fixed cost
c. Composition typesetting and jacket design for the book
74. If a firm in a perfectly competitive market triples the quantity of output sold, then total revenue will
c. Exactly triple
73. Free entry means that
c. No legal barriers prevent a firm from entering a market
43. For a large firm that produces and sells automobiles, which of the following cost would be a variable cost?
c. The cost of the steel that is used in producing automobiles
16. The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 1,000" gallon of gasoline entails the following: a private cost of $3.10; •a social cost of $3.55; *a value to consumers of $3.70.
d. $3.30.
Take into account private and external costs and assume the quantity of output is always a whole number (that is, fractional units of output are not possible). The maximum total surplus that can be achieved in this market is
d. $46.
19. The following table shows the marginal costs for cach example, for Firm A to eliminate one unit of pollution, it would cost S54, and for Firm A to of four firms (A, B, C, and D) to eliminate eliminate a second units of pollution from their production unit of pollution it would cost an additional $67. processes. If the government wanted to eliminate exactly 11 units of pollution, which of the following fees per unit of pollution would achieve that goal?
d. $87
A benevolent social planner would prefer
d. 420 units to any other quantity of output.
The installation of a scrubber in a smokestack reduces the emission of harmful chemicals from the smokestack. Therefore, a government policy that internalized the externality would move the quantity of smokestack scrubbers installed from point
d. Q4 to point Q5
36. If a firm uses labor to produce output, the firm's production function depicts the relationship between
d. the number of workers and the quantity of output.
53. Which of the following explains why long run average total cost at first decreases as output increases
hey. Gains from specialization of inputs
54 in the long run a company that produces and sells popcorn incurs total cost of $1050 when output is 90 canisters and $1,200 when output is 120 canisters. The popcorn company exhibits
see. Economies of scale because average total cost is falling as output rises
