Econ Final Exam Fall 2016
SCENARIO 4: Delta AIRBUS A320 has 12 First Class seats, 18 Economy Comfort seats, and 120 Economy seats. For a particular fully booked roundtrip from OKC to ATL, Delta Airlines charge First Class passengers $500, Economy Comfort $329, and Economy $300. Suppose the cost to Delta Airlines of providing the flight is $30,00, which includes the cost of the pilots, flight attendants, fuel, etc. How much profit will Delta Airlines earn if it sets the price of each ticket at $300? a. $15,000 b. $45,000 c. $50,000 d. $65,000
a. $15,000
Glenn used to work as a high school teacher for $40,000 per year but quit in order to start his own painting business. To invest in his painting business, he withdrew $20,000 from his savings, which paid 3 percent interest, and borrowed $30,000 from his uncle whom he pays 3 percent interest per year. Last year Glenn paid $25,000 for supplies and had revenue of $60,000. Glenn asked Mia, the accountant, and Diego, the economist, to calculate his painting business's cost and profit. Based on Mia's calculations, Glenn's implicit cost is $_______, while his explicit cost is $_________. a. 0, 25,900 b. 25,900, 0 c. 25,000, 900 d. 900, 25,000
a. 0, 25,900
Studies indicate that in the United States the price elasticity of demand for eggs is about 0.1. A government policy aimed at making eggs affordable to all consumers changed the price of a dozen eggs from $3 to $2. According to the midpoint method, the government policy increased egg demand by: a. 4% b. 40% c. 80% d. 100%
a. 4%
SCENARIO 3: Burgundi' competitive firm is producing Q=500 units of output. The marginal cost of the 500th unit is $17, and the average total cost of producing 500 units is $12. The firm sells its output for $20. At Q = 499, the firm's total costs equal a. $5,983 b. $5,988 c. $5,995 d. $5,999
a. 5,983
Tariffs and quotas are different in the sense that a. a tariff is a tax on goods produced abroad and sold domestically, while a quota is a quantitative limit on imports of a good b. tariffs cause deadweight losses, while quotas do not cause deadweight losses c. tariffs help domestic consumers, and import quotas help domestic producers d. tariffs enhance the well-being of domestic consumers, while quotas diminish the well-being of domestic consumers
a. a tariff is a tax on goods produced abroad and sold domestically, while a quota is a quantitative limit on imports of a good
Which of the following is NOT consistent with deadweight loss? a. a tax would cause a larger deadweight loss in the short run than in the long run b. the greater the elasticities of supply and demand the greater the deadweight loss of a tax c. the deadweight loss is the reduction in total surplus due to the tax d. a ta has a deadweight loss because it causes consumers to buy less and producers to sell less, thus shrinking the market below the level that maximizes total surplus
a. a tax would cause a larger deadweight loss in the short run than in the long run
A price floor is a legal minimum on the price of a good. If the price floor is _______ the equilibrium price, it is _______ and causes a _________. a. above, binding, surplus b. above, binding, shortage c. below, binding, surplus d. below, binding, shortage
a. above, binding, surplus
The supply of beachfront property is inelastic. The supply of new cars is elastic. Suppose population growth causes demand for both goods to double at each price, Qd doubles). a. beachfront property b. new cars c. both beachfront property and new cars d. an increase in the price of computers causes a decrease in quantity demanded for computers
a. beachfront property
If a monopolist is able to perfectly price discriminate, a. consumer surplus and deadweight losses are transformed into monopoly profits b. consumer surplus is always increased c. total surplus is always decreased d. the price effect dominates the output effect on monopoly revenue
a. consumer surplus and deadweight losses are transformed into monopoly profits
For a perfectly competitive market, a. if existing firms earn positive economic profit, new firms enter, short run market supply shifts right, price falls reducing profits and slowing entry b. if existing firms earn positive economic profit, new firms enter, short run market supply shifts left, price falls reducing profits and slowing entry c. if existing firms incur losses, new firms exit, short run market supply shifts right, price falls reducing profits and slowing entry d. the long run market supply curve is horizontal if all firms have different costs
a. if existing firms earn positive economic profit, new firms enter, short run market supply shifts right ,price falls reducing profits and slowing entry
Price discrimination requires the firm to a. separate customers according to their willingness to pay b. differentiate between different units of its product c. engage in arbitrage d. use coupons
a. separate customers according to their willingness to pay
When both the demand and supply curves shift, a. the curve that shifts with the greater magnitude determines the effect on the undetermined equilibrium object the curve that shifts with the smaller magnitude determines the effect on the undetermined equilibrium object c. both the equilibrium price and quantity would always increase d. both the equilibrium price and quantity would always decrease
a. the curve that shifts with the greater magnitude determines the effect on the undetermined equilibrium object
What would happen to the equilibrium price and quantity of lattes if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, and scientists discovered that coffee prevents heart attacks? (hint: steamed milk is used to make lattes). a. the equilibrium quantity would increase, and the effect on equilibrium quantity would be ambiguous b. the equilibrium price would increase, and the effect on equilibrium quantity would be ambiguous c. both the equilibrium price and quantity would increase d. both the equilibrium price would decrease
a. the equilibrium quantity would increase and the effect on equilibrium quantity would be ambiguous
When a country allows trade and becomes an exporter of a good, a. the gains of the domestic producers of the good exceed the losses of the domestic consumers of the good b. the gains of the domestic consumers of the good exceed the losses of the domestic producers of the good c. te losses of the domestic producers of the good exceed the gains of the domestic consumers of the good d. the losses of the domestic consumers of the good exceed the gains of the domestic producers of the good
a. the gains of the domestic producers of the good exceed the losses of the domestic consumers of the good
If Maria and Jordan are the only sellers in the market for lattes, which of the following statements is NOT correct? a. the market supply for latte is the horizontal summation of Maria's and Jordan's supply curves b. the market supply for latte is the vertical summation of Maria's and Jordan's supply curves c. together Maria and Jordan determine the supply of lattes d. the market supply for latte is positively sloped
a. the market supply for latte is the horizontal summation of Maria's and Jordan's supply curves
Consider airfares on flights between Stillwater and Dallas. When the airfare is $250, the quantity demanded of tickets is 2000 per week. When the airfare is $280, the quantity demanded of tickets is 1700 per week. Using the midpoint method. a. the price elasticity of demand is about 1.43 and an increase in the airfare will cause the airlines' total revenue to decrease b. the price elasticity of demand is about 1.43 and an increase in the airfare will cause airline's total revenue to increase c. the price elasticity of demand is about 0.70 and an increase in the airfare will cause airlines' total revenue to decrease d. the price elasticity of demand is about 0.70 and an increase in the airfare will cause airlines' total revenue to increase
a. the price elasticity of demand is about 1.43 and an increase in the airfare will cause airlines' total revenue to decrease
All of the following statements are correct except a. when the marginal product of an input declines as the quantity of that input increases, the production function exhibits diminishing total product. b. when the marginal product of an input declines as the quantity of that input increases, the production of an input increases, the production function exhibits diminishing marginal product. c. the production function shows the relationship between the quantity of inputs used to produce a good and the quantity of output of that good d. the marginal product is the slope of the production function
a. when the marginal product of an input declines as the quantity of that input increases, the production function exhibits diminishing total product.
All of the following statements are correct EXCEPT a. in any market, the equilibrium of supply and demand maximizes the total benefits received by all buyers and sellers combined b. when the market price increases, total producer surplus decreases while total consumer surplus increases c. the equilibrium of supply and demand in a market maximizes the total benefits to buys and sellers of participating in that market d. Given the demand and supply curves, the producer surplus is the area between the market price and the supply curve while the consumer surplus is the area between the market and the demand curve
b when the market price increases, total producer surplus decreases while total consumer surplus increases
Charles walks Brooklynne's dog once a day for $50 per week. Brooklyne values this service at $60 per week, while the opportunity cost of Charle's time is $30 per week. The government places a tax of $35 per week on dog walkers. After the tax, what is the LOSS in total surplus? a. $50 b. $30 c. $25 d. $0
b. $30
SCENARIO 3: Burgundi' competitive firm is producing Q=500 units of output. The marginal cost of the 500th unit is $17, and the average total cost of producing 500 units is $12. The firm sells its output for $20. At Q = 500, the firm's profits equal a. $1,000 b. $4,000 c. $7,000 d. $10,000
b. $4,000
At Lauren's Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling 5 cakes, Lauren experiences a producer surplus in the amount of $17.50. Lauren must be selling her cakes for a. $6.50 each b. $7.50 each c. $9.50 each d. $10.50 each
b. $7.50 each
Scenario 1: The market demand and supply curves for coffee are given by Qd=600-2P and Qs=300+4P. The price elasticity of demand for coffee at the equilibrium price is ________, which means that demand for coffee at the equilibrium price is ________. a. 0.1; inelastic b. 0.2; inelastic c. 0.4; inelastic d. 2; elastic
b. 0.2; inelastic
In a scene from the movie "Pretty Woman", Richard Gere and Julia Roberts are bargaining over a price for her to "be at his beck and call" for one week. They agree on a price of $3000. A minute later, Richard says he would have pid $4000 and Julia says she would have accepted $2000. From this, we can deduce that the producer surplus is $___________ and the total surplus is $______________. a. 1000 , 1000 b. 1000 , 2000 c. 2000 , 3000 d. 2000 , 4000
b. 1000 , 2000
SCENARIO 5: A monopolist faces a demand curve P = 210 - 4Q and initially fees a constant marginal cost MC = $10 The profit-maximizing quantity (Q) for the monopolist is _________. At this quantity, the profit-maximizing price (P) is $ _________. a. 20 , $210 b. 25 , $110 c. 30 , $50 d. 35 , $10
b. 25 , $110
Alex's company has a total cost curve given by TC=100+5Q+Q2, and the total variable cost is VC=5Q+Q2. The corresponding marginal cost curve is MC=5+2Q. The minimum level of the average variable cost curve occurs at the point at which the average variable cost is ________. a. 0 b. 5 c. 10 d. 20
b. 5
Refer to Table 1. The slope of the supply function is _______, and the intercept is ___________. a. 2, -4 b. 5, 0 c. 2, 5 d. 0, 5
b. 5, 0
Glenn used to work as a high school teacher for $40,000 per year but quit in order to start his own painting business. To invest in his painting business, he withdrew $20,000 from his savings, which paid 3 percent interest, and borrowed $30,000 from his uncle whom he pays 3 percent interest per year. Last year Glenn paid $25,000 for supplies and had revenue of $60,000. Glenn asked Mia, the accountant, and Diego, the economist, to calculate his painting business's cost and profit. Based on Diego's calculations, Glenn's total cost is $_______, while his painting business's profit is a loss of $________. a. 40,000, 6,000 b. 66,500, 6,500 c. 25,900, 5,500 d. 66,500, 40,000
b. 66,500, 6,500
Which of the following statements IS NOT a reason why a monopolist does not have a supply curve? a. for the monopolist, price is endogenous, not exogenous. b. A monopoly firm is a "price-taker," not a "price-maker". c.the monopolist might supply the same quantity at two different prices. d. the unique association between price and quantity that exists for a perfectly competitive firm res not exist for a monopolist.
b. A monopoly firm is a "price-taker," not a "price-maker".
If the price elasticity of demand for a good is 6, then a 3 percent decrease in price results in a. a 20 percent increase in the quantity demanded b. an 18 percent increase in the quantity demanded c. a 2 percent increase in the quantity demanded d. a 1.8 percent increase in the quantity demanded
b. an 18 percent increase in the quantity demanded
If computers and software are complements, which of the following statements is NOT correct? a. an increase in the price of computers causes a decrease in demand for software b. an increase in the price of computers causes an increase in demand for software c. the cross-price elasticity between computers and software is negative d. an increase in the price of computers causes a decrease in quantity demanded for computers
b. an increase in the price of computers causes an increase in demand for software
Which of the following statements is correct? a. assuming that explicit costs are positive, economic profit is greater than accounting profit b. assuming that implicit costs are positive, accounting profit is greater than economic profit c. assuming that explicit costs are positive, accounting profit is equal to economic profit d. assuming that implicit costs are positive, economic profit is positive
b. assuming that implicit costs are positive, accounting profit is greater than economic profit
Becca's butter company sells butter to a broker in Oklahoma City. Because the market for butter is generally considered to be competitive, Becca's butter company a. can choose the price at which it sells its butter but not the quantity of butter that it produces b. can choose the quantity of butter that it produces but not the price at which it sells its butter c. can choose both the price at which it sells its butter and the quantity of butter that it produces d. cannot choose either the price at which it sells its butter or the quantity of butter that it produces
b. can choose quantity of butter that it produces but not the price at which it sells its butter
Which of the following is NOT correct? a. when demand is inelastic, price and total move in the same direction b. demand is more elastic in the short run for necessities, for broadly defined goods, and for goods with few close substitutes c. the flatter the demand curve, the more elastic is price elasticity of demand d. price elasticity of supply is greater in the long run than in the short run
b. demand is more elastic in the short run for necessities, for broadly defined goods, and for goods with few close subsitutes
Which of the following statements is NOT correct? a. economies of scale occur when a firm's long run average total costs are increasing as output increases. b. economies of scale occur when a firm's long run average total costs are increasing as output increases. c. economies of scale is a long run concept d. the long run average total cost curve is known as the "envelope curve" because it encloses all short run average cost curves
b. economies of scale occur when a firm's long run average total costs are increasing as output increases
Refer to Table 1. At a price of $3, which of the following statements is NOT correct? a. supply and demand curves intersect b. equilibrium price is equal to equilibrium quantity c. there is no pressure for price to change d. quantity demanded equal quantity supplied
b. equilibrium price is equal to equilibrium quantity
Which of the following statements about elasticity is NOT correct? a. if demand is linear (a straight line), then price elasticity of demand is elastic in the upper portion and inelastic in the lower portion b. if demand is linear (a straight line), then price elasticity of demand is inelastic in the upper portion and elastic in the lower portion c. as one moves downward and to the right along a linear demand curve, total revenue first increases, then decreases d. the slope of a linear demand curve is constant, but its elasticity is not
b. if demand is linear (a straight line), then price elasticity of demand is inelastic in the upper portion and elastic in the lower portion
Over time, housing shortages caused by rent control a. increase, because the demand for and supply of the housing are less elastic in the long run b. increase, because the demand for and supply of housing are more elastic in the long run c. decrease, because the demand for and supply of housing are less elastic in the long run d. decrease because the demand for and supply of housing are more elastic in the long run
b. increase, because the demand for and supply of housing are more elastic in the long run
A firm cannot price discriminate if it a. has perfect information about consumer demand b. operates in a competitive market c. faces a downward-sloping demand curve d. is regulated by the government
b. operates in a competitive market
Which of the following is correct? a. rent control is an example of a price floor, and the minimum wage b. rent control is an example of a price ceiling, and the minimum wage is an example of a price floor c. rent control and the minimum wage are both examples of price ceilings d. rent control and the minimum wage are both examples of price floors
b. rent control is an example of a price ceiling, and the minimum wage is an example of a price floor
Economists disagree on whether labor taxes cause small or large deadweight losses. This disagreement arises primarily because economists hold different views about a. the size of labor taxes b. the elasticity of labor supply c. the elasticity of labor demand d. the importance of labor taxes imposed by the various states
b. the elasticity of labor supply
Which of the following quantities DECREASE in response to a tax on a good? a. the equilibrium quantity in the market for the good, the price of the good paid by buyers, and consumer surplus b. the equilibrium quantity in the market for the good, producer surplus, and the well-being of buyers of the good c. the price received by sellers of the good, the wedge between the price paid by buyers and the price received by sellers and consumer surplus d. none of the above is necessarily correct unless we know whether the tax is levied on buyers or on sellers
b. the equilibrium quantity in the market for the good, producer surplus, and the well-being of buyers of the good
If a firm can increase its level of production and lower its average total cost of production at the same time then a. the firm has a product-variety opportunity b. the firm has excess capacity c. the firm has a business-stealing opportunity d. the firm is producing a quantity of output higher than its efficient scale of production
b. the firm has excess capacity
Suppose that a competitive market is initially in equilibrium. Then demand increases. If entering firms face the same costs as existing firms and sufficient resources are available for entering firms, a. the long run market supply curve will be upward sloping b. the long run market supply curve will be perfectly elastic c. in the long run firms will suffer economic losses, leading them to exit the industry d. the number of firms will decrease, and the market will become a monopoly
b. the long run market supply curve will be perfectly elastic
Scenario 1: The market demand and supply curves for coffee are given by Qd=600-2P and Qs=300+4P. The price elasticity of supply of coffee at the equilibrium price is _________, which means that supply of coffee at the equilibrium price is _____________. a. 0.1; inelastic b. 0.2; inelastic c. 0.4; inelastic d. 4; elastic
c. 0.4; inelastic
SCENARIO 4: Delta AIRBUS A320 has 12 First Class seats, 18 Economy Comfort seats, and 120 Economy seats. For a particular fully booked roundtrip from OKC to ATL, Delta Airlines charge First Class passengers $500, Economy Comfort $329, and Economy $300. Suppose the cost to Delta Airlines of providing the flight is $30,00, which includes the cost of the pilots, flight attendants, fuel, etc. How much profit will Delta Airlines earn if it engages in price discrimination? a. $6,000 b. $5,922 c. $17,922 d. $47,922
c. $17,922
SCENARIO 3: Suppose Burgundi' competitive firm is producing Q=500 units of output. The marginal cost of the 500th unit is $17, and the average total cost of producing 500 units is $12. The firm sells its output for $20. At Q = 499, the firm's profits equal a. $3,980 b. $3,992 c. $3,997 d. $4,017
c. $3,997
Scenario 1: The market demand and supply curves for coffee are given by Qd=600-2P and Qs=300+4P. The market equilibrium price of coffee is _____ and the market equilibrium quantity of coffee ________. a. $20; 300 b. $30; 400 c. $50; 500 d. $60; 550
c. $50; 500
Suppose a tax of $4 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 2,000 units to 1,700 units. The tax decreases consumer surplus by $3,000 and decreases producer surplus by $4,400. The deadweight loss of the tax is a. $200 b. $400 c. $600 d. $1,200
c. $600
The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the (i) average revenue curve (ii) marginal cost curve (iii) demand curve a. (i) only b. (i) and (ii) only c. (i) and (iii) only d. (iii) only
c. (i) and (iii) only
Corian is a retired teacher who lives in Stillwater and does some consulting work for extra cash. At a wage of $50 per hour, she is willing to work 7 hours per week. At $65 per hour, she is willing to work 10 hours per week. Using the midpoint method, the elasticity of Corian's labor supply between the wages of $50 and $65 per hour is approximately ________, which means that Corian's supply of labor over this wage range is _________. a. 0.09; inelastic b. 0.74; inelastic c. 1.35; elastic d. 42.5; elastic
c. 1.35; elastic
Glenn used to work as a high school teacher for $40,000 per year but quit in order to start his own painting business. To invest in his painting business, he withdrew $20,000 from his savings, which paid 3 percent interest, and borrowed $30,000 from his uncle whom he pays 3 percent interest per year. Last year Glenn paid $25,000 for supplies and had revenue of $60,000. Glenn asked Mia, the accountant, and Diego, the economist, to calculate his painting business's cost and profit. Based on Mia's calculations, Glenn's total cost will be $______ and his painting business's profit will be $_________. a. 900, 60,000 b. 25,000, 6,500 c. 25,900, 34,100 d. 66,500, 40,000
c. 25,900, 34,100
SCENARIO 5: A monopolist faces a demand curve P = 210 - 4Q and initially fees a constant marginal cost MC = $10 At this price and quantity, the total revenue (TR) will be _________. a. 2000 b. 2500 c. 2750 d. 3750
c. 2750
Alex's company has a total cost curve given by TC=100+5Q+Q2, and the total variable cost is VC=5Q+Q2. The corresponding marginal cost curve is MC=5+2Q. From the above information, the equation for the average variable cost is _______. a. 5Q+Q2 b. 5+2Q c. 5+Q d. 5+Q2
c. 5+Q
Refer to Table 1. Based on your answers in (1) and (2), we can write the demand equation for Lattes as a. Qd=32-4P, Qs=4P b. Qd=32-3P, Qs=5+5P c. Qd=24-3P, Qs=5P d. Qd=24-4P, Qs=5+5P
c. Qd=24-3P, Qs=5P
A monopolist maximizes profits by a. producing an output level where marginal revenue equals marginal cost b. charging a price that is greater than marginal revenue c. both a and b are correct. d. earning a profit of (P - MC) x Q
c. both a and b are correct.
Both tariffs and import quotas a. increase the quantity of imports and raise the domestic price of the good b. increase the quantity of imports and lower the domestic price of the good c. decrease the quantity of imports and raise the domestic price of the good d. decrease the quantity of imports and lower the domestic price of the good
c. decrease the quantity of imports and raise the domestic price of the good
Which of the following expressions is correct? a. accounting profit=economic profit-implicit cost b. accounting profit=total revenue-implicit cost c. economic profit=accounting profit-implicit cost d. economic profit= total revenue-implicit cost
c. economic profit=accounting profit-implicit cost
Which of the following statements is not correct? a. if P>AVC, a firm maximizes profit by producing the quantity where MR=MC b. if P<AVC, a firm will shut down in the short run and if P<ATC, a firm will exit in the long run c. for a firm in a perfectly competitive market, P=AR>MR=MC d. for a firm in a perfectly competitive market with free entry and exit, profits =0 in the long run, and P= minimum ATC
c. for a firm in a perfectly competitive market, P=AR>MR=MC
The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production. These taxes a. benefit the United States as a whole, because they generate revenue for the government. In addition, because the goods are priced below cos, the taxes do not harm domestic consumers b. benefit the United States as a whole, because they generate revenue for the government and increase producer surplus c. harm the United States as a whole, because they reduce consumer surplus by an amount that exceeds the gain introducer surplus and government revenue d. harm the United States as a whole, because they reduce producer surplus by an amount that exceeds the gain in consumer surplus and government revenue
c. harm the United States as a whole, because they reduce consumer surplus by an amount that exceeds the gain introducer surplus and government revenue
Equilibrium quantity must increase when demand a. decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply increase b. increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease c. increases and supply does not change, when demand does not change and supply increases, and when both demand and supply increase d. decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease
c. increases and supply does not change, when demand does not change and supply increases, and when both demand and supply increase
Other things equal, the deadweight loss of a tax a. decreases as the size of the tax increases b. increases as the size of the tax increases, but the increase in the deadweight loss is less rapid than the increase in the size of the tax c. increases as the size of the tax increases, and the increase in the deadweight loss is more rapid than the increase in the size of the tax d. increases as the price elasticities of demand and/or supply increase, but the deadweight loss does not change as the size of the tax increases
c. increases as the size of the tax increases, and the increase in the deadweight loss is more rapid than the increase in the size of the tax
A price increase has two effects on total revenue: an increase in revenue from higher price, and a fall in revenue from lower quantity due to the law of demand. Which of these two effects is bigger? a. an increase in revenue from higher price b. a fall in revenue from lower quantity c. it depends on the price elasticity of demand d. none of the above
c. it depends on the price elasticity of demand
The Laffer curve illustrates that a. deadweight loss rises by the square of the increase in a tax b. deadweight loss rises exponentially as a tax increases c.tax revenue first rises, then falls as the size of the tax increases d. deadweight loss increases as the size of a tax increases
c. tax revenue first rises, then falls as the size of the tax increases
Competitive firms differ from monopolies in which of the following ways? (i) Competitive firms do not have to worry about the price effect lowering their total revenue. (ii) Marginal revenue for a competitive firm equals price, while marginal revenue for a monopoly is less than the price it is able to charge. (iii) Monopolies must lower their price in order to sell more of their product, while competitive firms do not. a. (i) and (ii) only b. (ii) and (iii) only c. (i) and (iii) only d. (i), (ii), and (iii)
d. (i), (ii), and (iii)
SCENARIO 5: A monopolist faces a demand curve P = 210 - 4Q and initially fees a constant marginal cost MC = $10 What is the marginal revenue (MR) function for the firm? a. 210 - 2Q b. 210 - 4Q c. 210 - 6Q d. 210 - 8Q
d. 210 - 8Q
Refer to Table 1. The absolute value of the slope of the demand function is ______, and the intercept is _____________. a. 21, 4 b. 3, 21 c. 24, 3 d. 3, 24
d. 3, 24
Suppose that Ashley receives a pay increase, We would expect a. to observe Ashley moving down and to the right along her given demand curve Ashley's demand for inferior goods to increase c. Ashley's demand for each of the two goods that are complements to increase d. Ashley's demand for normal goods to increase
d. Ashley's demand for normal goods to increase
Which of the following is NOT true when the price of a good or service falls? a. buyers who were already buying the good or service are better off b. some new buyers, who are now willing to buy, enter the market c. the total consumer surplus in the market increases d. the total value of purchases before and after the price change is the same
d. The total value of purchases before and after the price change is the same
The incidence of a tax falls more heavily on a. consumers than producers if demand is more inelastic than supply b. producers than consumers if supply is more inelastic than demand c. consumers than producers if supply is more elastic than demand d. all of the above are correct
d. all of the above are correct
The incidence of tax a. is the division of the burden of the tax between buyers and sellers b. does not depend on whether the tax is imposed on buyers or sellers c. depends on the price elasticities of supply and demand d. all of the above are correct
d. all of the above are correct
Efficiency in a market is achieved when a. the goods are consumed by the buyers who value them most highly b. the goods are produced by the producers with the lowest cost c. raising or lowering the quantity of a good would not increase total surplus d. all the above are correct
d. all the above are correct
Which of the following statements is NOT correct? a. if marginal cost (MC) is greater than average total cost (ATC), then ATC rises at quantity rises. b. if marginal cost is less than average total cost, then ATC will decrease as quantity rises c. the marginal cost curve crosses the average total cost curve at its minimum d. for a U-shaped average total cost curve, when the marginal cost curve is below the average total cost curve, the average total cost must be rising.
d. for a U-shaped average total cost curve, when the marginal cost curve is below the average total cost curve, the average total cost must be rising
The competitive firm's short run supply curve is its a. marginal revenue curve, but only the portion where marginal revenue exceeds marginal cost b. marginal cost curve c. marginal cost curve, but only the portion above the minimum of average total cost d. marginal cost curve, but only the portion above the minimum of average total cost
d. marginal cost curve, but only the portion above the minimum of average variable cost
A firm that exits its market has to pay a. its variable costs but not its fixed costs b. its fixed costs but not its variable costs c. both its variable costs and its fixed costs d. neither its variable costs nor its fixed costs
d. neither its variable costs nor its fixed costs
What is the effect of simultaneous decrease in price of CDs and a decrease in the cost of royalties on the equilibrium price and quantity of music downloads? (Hint: royalties are part of sellers' cost; CDs and music downloads are considered substitutes). a. both the equilibrium price and quantity would increase b. both the equilibrium price and quantity would decrease c. the equilibrium quantity would increase, and the effect on the equilibrium price would be ambiguous d. the equilibrium price would increase, and the effect on equilibrium quantity would be ambiguous
d. the equilibrium price would increase, and the effect on equilibrium quantity would be ambiguous
Chile is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Chile imposes a $7 tariff on chips. Which of the following outcomes is possible? a. the price of chips in Chile increases to $19; the quantity of Chilean-produced chips decreases; and the quantity of chips imported by Chile decreases b. the price of chips in Chile increases to $16; the quantity of Chilean-produced chips decreases; and the quantity of chips imported by Chile does not change c. the price of chips in Chile increases to $16; the quantity of Chilean-produced chips decreases; and the quantity of chips imported by Chile decreases d. the price of chips in Chile increases to $19; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases
d. the price of chips in Chile increases to $19; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases
Which of the following equations is NOT valid? a. consumer surplus = Value to buyers - Amount paid by buyers b. producer surplus = Amount received by sellers - Cost to sellers c. total surplus = Value to buyers - Amount paid by buyers + Amount received by sellers - Cost of sellers d. total surplus = Value to sellers - Cost to sellers
d. total surplus = Value to sellers - Cost to sellers