final econ test

all this monopolist's profit-maximizing level of output, deadweight loss equals ______

$1000 (triangle between demand, MC, and MR line up)

At this monopolist's profit-maximizing level of output, the deadweight loss at society equals (last graph)

$24

the total revenue from selling 6 units is ________, and the marginal revenue of selling the 6th unit is ______

$30, 0

the monopolist maximizes its profit by producing _____ textbooks per week and charging a price of ______ per textbook

100 (MR= MC); 80$ (up to Demand line)

This monopolist maximizes its profit by producing ______ units per day and charging a price of ______ per unit.

4: $18

in the case of either a positive or negative externality, a good's market price will

not fully reflect a good's social marginal cost or social marginal benefit

Curly and Moe are considering living alone or being roommates and splitting the rent for the next twelve months. If they live alone, they each rent a one bedroom, one bath apartment for $500 per month, while if they are roommates, they can split a two bedroom, one bath apartment for $800 per month. The one difficulty they have is that Moe snores very loudly. Curly estimates the cost of poor sleep due to Moe's snoring at $150 per month. Moe could obtain a snore-eliminating device for $50 per month. Who will compensate the other?

Either Moe will compensate Curly or Curly will compensate Moe because the alternative, renting separate apartments, leaves each off worse

all profit maximizing firms chose the level of output at which

MR = MC

Curly and Moe are considering living alone or being roommates and splitting the rent for the next twelve months. If they live alone, they each rent a one bedroom, one bath apartment for $500 per month, while if they are roommates, they can split a two bedroom, one bath apartment for $800 per month. The one difficulty they have is that Moe snores very loudly. Curly estimates the cost of poor sleep due to Moe's snoring at $150 per month. Moe could obtain a snore-eliminating device for $50 per month. The least costly solution to the externality present in this situation is for:

Moe to eliminate his snoring

the existence of a negative externality will result in:

a greater than optimal level of production

a pure monopoly exists when

a single firm produces a good with no close substitutes

A good is characterized by network economies

becomes more valuable as more people own it

aaron's neighbor Cliff keeps his front yard well-manicured and plants beautiful flowers which aaron enjoys. if local law prevents Cliff from fencing his yard, the beauty of Cliff's front yard is

both nonrival and nonexcludable

the Coase Theorem states that if private parties can negotiate the purchase and sale of the right to perform activities that cause externalities, then they:

can always arrive at efficient solutions to the problems caused by externalities

goods like wifi networks that are nonrival but excludable are known as

collective goods

a good or service that is rival but nonexcludable is called a _______ a good or service that is nonrival but excludable is a ________

commons good: collective good

picking up the 20th bag of litter would

create deadweight loss

price discrimination means charging

different prices to different buyers for essentially the same good or service

for perfectly competitive firms, marginal revenue_________ price; for monopolist marginal revenue ________ price

equals price; is less than

when a graph has a social MC to the left of the Private MC then a good would be

generating negative externalities

if the monopolist decreases it price from $12 to $10, its total revenue will

increase by $600

numerous studies have shown that breathing in second-hand smoke is harmful for your health. this suggests that a tax on cigarettes will:

increase total economic surplus

at the socially optimal level of output, this monopolist would (last graph)

incur an economic loss of $64

At this monopolist's profit maximizing level of output, it

incurs an economic loss of $16 per day

if you were to draw the monopolist marginal revenue curve, it would (when demand line is at 70)

intersect the horizontal axis at 35

an external benefit implies that private markets will provide_______ then the socially optimal price, and an external cost implies that private markets will provide _______ than the socially optimal quantity

less: more

if a good can be consumed by one person without reducing its availability to others, then it is a ______good

nonrival

A monopoly that results from economies of scale is called

natural monopoly

if it is difficult, or costly, to prevent people who do not pay for a good from consuming the good, then the good is

nonexcludable

your state department of transportation is considering installing toll booths with gates on a quiet section of highway. if this is done, a good that is currently a

nonexcludable good will become an excludable good

which of the following items is an example of a good that is nonrival and excludable

pay-per-view movies

a good or service that is both rival and excludable is

private good

suppose the latest Hunger Games movie first played in theaters, where it sold out during its opening week. Several months later it was available on pay-per-view TV. Two years later it was shown on CBS, a broadcast television network. When the movie was playing in theaters, it was a ______ good; when it was available on pay-per-view TV, it was a ______ good; and when it was shown on CBS, it was a ______ good.

private; collective; public

because monopolists charge a price in excess of marginal cost, it must be the case that monopolists

product less than the socially optimal level of output

the monopolist maximizes its profits by:

product the level of output at which marginal revenue equals marginal cost

a highway without any tolls between 12 am and 5 am when there is very little traffic is an example of a

public good

a good that is highly nonrival and highly nonexcludable is a

pure public good

"Market Power" refers to a firm's ability to:

raise its price without losing all its sales

a policy maker has argued for higher taxes on gasoline to reduce the negative externalities associated with driving. This policy will lead to a relatively _______ reduction in driving if demand is___

small : relatively inelastic

which of the following is an example of an activity with an external cost?

speeding on the interstate

if an activity generates a positive externality, the government can increase total economic surplus by ______ the activity, and if an activity generates a negative externality, the government can increase total economic surplus by _____ the activity

subsidizing : taxing

Economies of scale exist when:

the average cost of production falls as output rises

if a natural monopoly decreases the quantity of output it produces, then

the average will increase

Suppose a perfectly competitive firm and a monopolist are both charging $5 for their respective products. From this, one can infer that:

the marginal benefit from selling an additional unit of output is %5 for the competitive firm and less than $5 for the monopolist

from the graph, one can infer

the marginal benefit of picking up the 10th bag of litter exceed the marginal cost

when a perfectly competitive firm sells additional units of output, ______, and when monopolists sell additional units out output, ________

total revenue always rises; total revenue could rise, fall, or remain unchanged

the socially optimal level of output is:

where MC = D