ECON TEST #2
The cost of producing the typical unit of output is the firm's
C. average total cost.
Refer to Figure 9-20. With trade, Vietnam will
C. export 1,500 units of rice.
If the government levies a $5 tax per MP3 player on buyers of MP3 players, then the price paid by buyers of MP3 players would likely
C. increase by less than $5.
If firms are competitive and profit maximizing, the price of a good equals the
C. marginal cost of production.
A view of a spectacular sunset along a private beach is an example of a
D. nonrival but excludable good.
Refer to Figure 9-4. The change in total surplus in Nicaragua because of trade is
B. $625, and this is an increase in total surplus.
When a government imposes a subsidy who gains more from the subsidy
B. The person with the relatively more elastic curve
In deciding whether a good is a public good, one must determine the
B. excludability of the good
The long-run supply curve for this market is
B. horizontal at a price of $5.
If the government removes a binding price ceiling from a market, then the price received by sellers will
B. increase, and the quantity sold in the market will increase.
Refer to Figure 10-1. This graph represents the tobacco industry. The industry creates
B. negative externalities.
One assumption that distinguishes short-run cost analysis from long-run cost analysis for a profit-maximizing firm is that in the short run,
B. the size of the factory is fixed.
Refer to Figure 9-1. When trade is allowed,
C. Guatemalan producers of coffee become better off and Guatemalan consumers of coffee become worse off.
Given the figure which of the following is NOT true.
C. In the case of a quota system the green box belongs to producers
Refer to Figure 7-22. At the equilibrium price, producer surplus is
$2,500.
Refer to Table 7-11. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 2 if the price is
A. $1,050
Refer to Table 13-14. What is the total cost of producing 7 units of output?
A. $153
Refer to Figure 8-6. Total surplus with the tax in place is
A. $4,500
Refer to Figure 14-10. If there are 500 identical firms in this market, what is the value of Q2?
A. 300,000
The average fixed cost curve
A. always declines with increased levels of output.
Producer surplus equals the
A. amount received by sellers minus the cost to sellers
In setting the production level, a firm's cost curves
A. by themselves do not tell us what decisions the firm will make.
Refer to Figure 6-2. The price ceiling
A. causes a shortage of 85 units
Refer to Figure 10-13. Each unit of plastics that is produced results in an external
A. cost of $8.
Both public goods and common resources are
A. nonexcludable.
A textbook is a
A. private good and the knowledge that one gains from reading the book is a public good.
The overuse of a common resource relative to its economically efficient use is called
A. the Tragedy of the Commons.
An externality is
A. the uncompensated impact of one person's actions on the well-being of a bystander.
Jamar used to work as an office manager, earning $40,000 per year. He gave up that job to start a life-coaching business. In calculating the economic profit of his life-coaching business, the $40,000 income that he gave up is counted as part of the life-coaching business's
C. opportunity costs.
Research into new technologies provides a
C. positive externality, and too few resources are devoted to research as a result.
The accountants hired by the Brookside Racquet Club have determined total fixed cost to be $75,000, total variable cost to be $130,000, and total revenue to be $125,000. Because of this information, in the short run, the Brookside Racquet Club should
C. shut down because staying open would be more expensive.
A tariff is a
C. tax on an imported good.
As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on, the
C. tax revenue increases at first, but it eventually peaks and then decreases.
At the equilibrium price of a good, the good will be sold by those sellers
C. whose cost is less than price
Which of the following could cause a DWL?
D. All of the Above. (Subsidy, Taxes, Price Floor and Price Ceilings)
Which of the following policies is not an example of a command-and-control policy?
D. None of the above is an example of a command-and-control policy. (Tradable Pollution permits, subsidies, Pigovian Taxes)
The government of Canada uses which mechanism to control the supply of dairy.
D. Quota System
For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should
D. import copper.
Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?
between $5 and $7
If a price floor is not binding, then
there will be no effect on the market price or quantity sold.