Microeconomics final

All externalities

cause markets to fail to allocate resources efficiently

Between a movie in an empty theater, an outdoor movie at a park, a movie on cable, or a dvd, which is rival in consumption and excludable?

A dvd

Monopolies are socially inefficient because the price they charge is

Above marginal cost

What can defeat the profit-maximizing strategy of price discrimination

Arbitrage

Which of the following is not a characteristic of a public good?

Because it is a free good, there is no opportunity cost

Which of the following is a characteristic of a competitive market?

Buyers and sellers are price takers

One key difference between an oligopoly market and a competitive market is that oligopolistic firms

Can affect the profit of other firms in the market by the choices they make while competitive firms do not affect each other

Pay per view broadcasts are

Club goods

Suppose that a firms long run average total cost of producing televisions decreases as it produces between 10,000 and 20,000 televisions. From this range of output, the firm is experiencing

Economies of scale

explicit costs

Enter into the economists and the accountants measurement of a firms profit

A pizza is

Excludable and rival in consumption

In the short run, if a firm produces nothing, total costs are zero (T/F)

F

Pete is a non-union employee. The union has arranged for good benefits that Pete experiences, Pete's behavior is an example of a

Free riding

What regulates a toll roads effectiveness to reduce traffic?

It varies based on the amount of traffic present

Dog owners do not bear the full cost of the noise their barking dogs create and often take too few precautions to prevent their dogs from barking. Local governments address this problem by

Making it illegal to "disturb the peace"

What is not a characteristic of a perfectly competitive market?

Many firms have market power

What is not a reason for the existence of a monopoly?

Marginal-cost pricing

Which type of market is described by many firms, differentiated products, and free entry

Monopolistic competition

All remedies for externalities share the goal of

Moving the allocation of resources toward the socially optimal equilibrium

Between a garbage collection service, music broadcast over the airwaves, cable TV, electricity, which is the best example of a public good?

Music broadcast over the airwaves

If a road is congested, then the use of it by an additional person would lead to a

Negative externality

The things that must be foregone to acquire a good are called

Opportunity costs

the relationship between advertising and product differentiation is

Positive; the more differentiated the product, the more a firm is likely to spend on advertising

I'm perfectly competitive firms are characterized by

Price making ability

Suppose that despite the tolls, many motorists in the urban areas use the turnpike causing traffic to slow during peak times. What type of good would the turnpike be classified as in this case?

Private good

A cheeseburger is a

Private good, because it is excludable and rival in consumption

Stewart is a lobsterman. His traps are what kind of goods? And the lobster?

Private goods, common resources

The deadweight loss from monopoly arises because

Quantity is lower than the socially-optimum quantity

Tradable pollution permits

Reduce carbon emissions, are widely viewed as cost effective, helped reduce sulfur dioxide emissions

A vacation home in Malibu is

Rival in consumption and excludable

When price is below average variable cost, a firm in a competitive market will

Shut down and incur fixed costs

When fixed costs are ignored because they are irrelevant to a business's production decision, they are called

Sunk costs

(T/F) the efficient provision of public goods is intrinsically more difficult than the efficient provision of private goods.

T

The marginal cost curve intersects the average total cost curve at the minimum point of the average-total-cost curve (T/F)

T

Toll roads can either be public goods or common resources, depending on the degree of congestion (T/F)

T

If everyone benefits from helping the poor,

Taxing the wealthy to raise living standards of the poor can potentially make everyone better off

In Lee benham's 1972 article examining the impact of advertising on the average price paid for a pair of eyeglasses, Benjamin found that

The average price paid per pair was 20% lower in states that did not restrict advertising

A government-created monopoly arises when

The government gives a firm the exclusive right to sell some good or service

Competitive markets are characterized by

free entry and exit by firms

in the long run, a firm will enter a competitive industry if

They can earn economic profits, total revenues exceed total cost, the price exceeds average total cost

A difference between explicit and implicit costs is that

implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do.

The two types of imperfectly competitive markets are

monopolistic competition and oligopoly

The market for novels is

monopolistically competitive

Free entry means that

no legal barriers prevent a firm from entering an industry

An internet radio broadcast is

not excludable and not rival in consumption.

Total revenue equals

price x quantity

An externality is

the uncompensated impact of one person's actions on the well-being of a bystander.