Econ Midterm 2

This nation may not favor imposing tariffs on imports because. a. it raises prices for consumers. b. it raises social surplus for consumers. c. it reduces the work load of the government. d. it makes producers worse off.

A

When bargaining to deal with negative externalities a. the cost falls on the party with the most to gain. b. the cost falls on the party with the least to lose. c. the cost will only be paid if it is greater than the benefit of fixing it. d. the economically efficient outcome can never be achieved.

A

Market inefficiencies result from all of the following, except: a. Positive externalities. b. Social benefits or costs. c. Pecuniary externalities. d. Negative externalities.

B

If the market price of pizza in this competitive market is below the ATC curve and theprice of calzones is above the ATC curve,. The price of pizza will. a. firms currently making pizza will switch to making calzones; increase. b. firms currently making calzones will switch to making pizza; increase. c. firms currently making pizza will switch to making calzones; decrease. d. firms currently making calzones will switch to making pizza; decrease.

A

Positive externalities result in a________shift of the_________curve. There___________a deadweight loss with a positive externality. a. rightward; demand; will be. b. leftward; demand; will not be. c. rightward; demand; will not be. d. leftward; supply; will be.

A

Texas and Kentucky have the following opportunity cost for the production of wine andcotton. The terms of trade range of 1 cotton for wine is_______to______ a. 2/3; 7/3. b. 3/2; 3/7. c. 2/3; 3/2. d. 7/3; 3/7.

A

The long-run average total cost curve (ATC) lies_________ the short run ATC. The long run supply curve is the portion of the marginal cost (MC) curve that lies above the__________curve. a. below; Average Total Cost. b. above; Average Total Cost. c. below; Average Variable Cost. d. below; Marginal Cost.

A

Consider a market where there are many firms with different cost structures. When determining which firms enter the market first, we look at__________ a. average variable cost. b. average total cost. c. fixed costs. d. marginal costs.

B

If you produce at a point on your Production Possibility Curve, then you are producing at a point that is__________ a. unattainable. b. attainable and efficient. c. attainable if resource prices fall. d. attainable but inefficient.

B

Negative externalities impose an additional cost that: a. is reflected in the consumers demand curve. b. is not explicitly recognized by the buyers and sellers in the market. c. needs to be subtracted from the producers marginal cost to determine true market-price. d. is reflected in the producers supply curve.

B

Social surplus is the_________ a. difference between the amount that buyers actually pay and what they wish to pay. b. total value from trade in the market. c. excess of aggregate demand over aggregate supply. d. difference between consumer surplus and producer surplus.

B

Unless shutdown or exit is optimal, every firm expands production until___________ a. marginal product is maximized. b. marginal revenue, marginal cost, and price are all equal (MR = MC = P). c. marginal cost is minimized. d. marginal revenue is equal to the minimum of short-run average total cost.

B

Which of the following would be an example of the Coase Theorem? a. The homeowners association agrees to report anyone setting off fireworks after 10p.m. to the local authorities. b. The homeowners association provides a fireworks show that ends at 10 p.m c. The county commission approves a steep fine to be placed on anyone setting offfireworks after 10 p.m. d. The county commission agrees to a town meeting to hear concerns from citizensabout setting off fireworks after 10 p.m.

B

A non-market price imposition is called a price control. A price control set above theequilibrium price will result in a __________A price control set below the equilibriumprice will result in a__________ a. shortage; shortage. b. shortage; surplus. c. surplus; shortage. d. surplus; surplus.

C

Assume that the market for chocolates is perfectly competitive. Which of the following statements would be true in this case? a. Jessica, a chocolate seller, sometimes sets her price lower or higher than the price at which other sellers sell their chocolates. b. Pam wants to produce chocolates but she is unable to as Roy controls all the cocoa farms in the region. c. Jill starts to produce chocolates today, but the addition of her supply into the market does not decrease the market price. d. Terry uses soy milk for producing his chocolates, while Donna uses almond milk for producing hers.

C

If resources prices fall, what happens to the Production Possibility Curve? a. It will shift outwards .b. It will shift inwards .c. It does not change.

C

When the nation imposes a tariff, the imports of the nation falls to_________. However,government revenue increases by____________and producer surplus increases by__________ a. Q4-Q1; B and C; E and F. b. Q3-Q2; B and C; D. c. Q3-Q2; B; D. d. Q4-Q1; B; E and F.

C

If firms in a perfectly competitive market are earning profits or incurring losses in the short run, then in the long run these profits or losses will either cause new firms to enter or existing firms to leave the market. This will result in a shift in the________ until profits are__________ a. firm's average cost curve; zero. b. industry supply curve; postive. c. industry demand curve; zero. d. industry supply curve; zero.

D

In assessing the performance of a perfectly competitive market, we can say that. a. price efficiently allocates goods and services to buyers and sellers. b. no individual can be made better off without making someone else worse off. c. any departure from the equilibrium necessarily reduces social surplus. d. all of the above.

D

Negative externalities cause a__________shift of the supply curve and____________ in market quantity. Recognizing this deadweight loss_____________result in elimination of the externality. a. rightward; demand; will be. b. leftward; demand; will not be. c. rightward; demand; will not be. d. leftward; supply; will be.

D

When economists speak of a deadweight loss, they are referring to___________in__________caused by a market distortion. a. a decrease; consumer surplus. b. an increase; social surplus. c. an increase; pareto efficiency. d. a decrease; social surplus.

D