Final Micro. Exam
Rent controls can cause
a decline in the quality of housing available for rent, the development of a black market to allocate apartments to renters, longer search times for renters attempting to locate an apartment.
When the government attempts to improve equality in an economy the result is often
a reduction in efficiency
If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell, then a. the supply curve or mopeds shifts downward by $200 b. sellers of mopeds receive $200 less per moped than they were receiving before the tax c. buyers of mopeds are unaffected by the tax d. none of the above
d. none of the above
If the demand for bananas is elastic, then an increase in eh price of bananas will
decrease total revenue of banana sellers.
Which of the following is likely to have the most price inelastic demand?
gasoline in the short run
David's firm experiences diminishing marginal product for all ranges of inputs. The total cost curve associated with David's firm
gets steeper as output increases
The short-run supply curve for a firm in a perfectly competitive market is
horizontal
Normative conclusions
involve value judgments
If the cross-price elasticity of two goods is positive, then the two goods are
substitutes
In an y economic system, scarce resources have to be allocated among competing uses. Market economies harness the forces of
supply and demand to allocate scarce resources.
Suppose that a tax is placed on books. If the sellers pay the majority of the majority of the tax, then we know that the
supply is more inelastic than the demand
Refer to Figure 4-20. If the price is $25, then there would be an excess
supply of 300 units, and price would fall.
If sellers do not adjust their quantity supplied at all in response to a change in price, the price elasticity of supply is
zero, and the supply curve is vertical
If the price elasticity of demand for a good is 0.3, the a 20 percent decrease in price results in a
6 percent increase in the quantity demanded
Refer to Table 4-4. Suppose the market consists of Barb and Carl only. If the price falls by $2, the quantity demanded in the market increase by
8 units
In the long run, each firm in a competitive industry earns
zero economic profits
Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. Then the firm hires 6 workers, it produces 90 units of output. Fixed cost of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the total cost of production when the firm hires 7 workers?
$76
Using the midpoint method, when price rises from $8 to $12, the price elasticity of demand is
1
Refer to Figure 6-29. The buyers and sellers will bear an equal share of the tax burden if the demand is
D1, and the supply is S1
Refer to Figure 5-2. As price falls from Pa to Pb, we could use the three demand curves to calculate three different values of the price elasticity of demand. Which of the three demand curves would produce the smallest elasticity?
D3
If the government places a $2 tax in the market, the buyer pays $4.
False
In a perfectly competitive market, buyers and sellers are price setters.
False
The market demand curve shows how the total quantity demanded of a good varies as the income of buyers varies, while all other factors that affect how much consumers want to buy are held constant.
False
The two characteristics of a competitive market are 1) Many buyers and sellers in the market 2) The goods offered by the various sellers are highly differentiated
False
First Exam
First Exam
GRAPH
GRAPH
Mary and Martha both can make cookies and cakes of the same quality, though Mary can make more of both cookies and cakes per hour than Martha. With the bake-sale quickly approaching, they want to make as many cookies and cakes as possible. In which of the following situation will the most cookies and cakes be made?
Mary and Martha specialize in what they are better at making.
Refer to Figure 4-26. Which of he following movements would illustrate the effect in the market for paper napkins and a result of "go Green" advertising campaign encouraging people to use cloth napkins?
Point C to Point D
Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?
Quantity will rise, and the effect on price is ambiguous.
TOO LONG
TOO LONG
It once took 90 percent of our population to grow our food. It now takes only 3 percent of the population to grow our food. Which of the following statements is true?
This is progress because freed-up labor is used to produce other goods.
A firm is currently producing 100 units of output per day. The manager reports to the owner that producing the 100th unit costs the firm $5. The firm can sell the 100th unit for $5. The firm should continue to produce 100 units in order to maximize its profits (or minimize its losses)
True
A technological advance in the production of the first good increases the opportunity cost of the first good in terms of the second good
True
Buyers and sellers rarely share the burden of a tax equally.
True
Cocoa and marshmallows are complements, so a decrease in the price of cocoa will cause an increase in the demand for marshmallows.
True
Economists may disagree about the validity of alternative positive theories about how the world works.
True
Refer to Figure 2-14. Point B represents an inefficient outcome for this economy.
True
Regardless of whether a tax is levied on sellers or buyers, taxes discourage market activity.
True
The average-total-cost curve reflects the shape of both the average-fixed-cost and average-variable-cost curves.
True
The government can potentially improve market outcomes if market inequalities or market failure exists.
True
The indifference curves for nickels and dimes are straight lines
True
For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?
a. unemployment insurance premium that the firm pays to the state of Missouri that is calculated based on the number of worker-hours that the firm uses b. the cost of steel that is used in producing automobiles c. the cost of the electricity of running the machines on the factory floor
Refer to Figure 14-1. The firm will earn a positive economic profit in the short run if the market price is
above $6.30
The rate at which a consumer is willing to trade one good for another to maintain the same level of satisfaction is affected by the
amount of each good the consumer is currently consuming
If mayonnaise and Miracle Whip are substitutes, then which of the following would increase the demand for Miracle Whip?
an increase in the price of mayonnaise
Under rent control, bribery is a mechanism to
bring the total price of an apartment (including the bribe) closer to the equilibrium price
Refer to Figure 6-29. Suppose D1 represents the demand curve for paperback novels, D2 represents the demand curve for gasoline, and S1 represents the supply curve for paperback novels and gasoline. After the imposition of the $2 on paperback novels and on gasoline, the
buyers of gasoline bear a higher burden of the $2 tax than buyers of paperback novels.
The price elasticity of demand measures
buyers' responsiveness to a change in the price of a good
Price ceilings and price floors that are binding
cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price.
A legal maximum on the price at which a good can be sold is called a price
ceiling
When a consumer experiences a price decrease for an inferior good, if the income effect is
less than the substitution effect, the demand curve will be downward sloping and greater than the substation effect, the demand curve will be upward sloping
Refer to Figure 6-2. The price ceiling
makes it necessary for sellers to ration the good
In a competitive market, no single producer can influence the market price because
many other sellers are offering a product that is essentially identical
A competitive market is a market in which
no individual buyer or seller has any significant impact on the market price.
Holding the nonprice determinants of supply constant, a change in price would
result in a movement along a stationary supply curve.
Refer to Figure 4-20. If the price is $10, then there would be a
shortage of 600 units, and price would rise
Harry's Hotdogs is a small street vendor business owned by Harry Huggins. Harry is trying to get a better understanding of his costs by categorizing them as fixed or variable. Which of the following costs are most likely to be considered fixed costs?
the cost of bookkeeping services
If there is a shortage of farm laborers, we would expect
the wage of farm laborers to increase
The y-coordinate of an ordered pair specifies the
vertical location of the point
For which of the following goods is the income elasticity of demand likely lowest
water