Microeconomics Final Exam
D. equal to
According to the marginal principle, keep increasing quantity until the marginal benefit of an additional item is _______ the marginal cost of an additional item. A. greater than B. two times C. less than D. equal to
A. $2.50
What is Marla's profit margin? A. $2.50 B. $5.00 C. $4.50 D. $3.50
B. 3/4 of a bracelet
Refer to Table 2-6. What is Haley's opportunity cost of making a necklace? A. 2 necklaces B. 3/4 of a bracelet C. 1 1/3 necklaces D. 3 bracelets
A. $7
At what price does this market experience a shortage of 70 units? A. $7 B. $5 C. $15 D. $13
C. may not make everyone happy.
Efficient outcomes: A. will make everyone better off. B. are equitable outcomes. C. may not make everyone happy. D. minimize producer surplus.
C. Firm D grazes the demand line
Which of the following diagrams represents the demand and average cost curves of a firm in the long run, given free entry and exit? A. Firm B average cost below demand B. Firm C doesnt touch at all C. Firm D grazes the demand line D. Firm A goes through demand line
C. are many sellers and each produces a differentiated version of the product.
A characteristic of monopolistic competition that is not present in other market structures is that there: A. are a small number of sellers and they have market power. B. are many sellers that produce identical products. C. are many sellers and each produces a differentiated version of the product. D. is only one seller and that seller holds high level of market power.
C. is one that is the best for a firm, no matter what strategies other firms use.
A dominant strategy: A. is one that a firm is forced into following by government policy. B. involves colluding with rivals to maximize joint profits. C. is one that is the best for a firm, no matter what strategies other firms use. D. involves deciding what to do after all rivals have chosen their own strategy.
C. customers who have the more inelastic demand for the product.
A firm that can effectively price discriminate will charge a higher price to: A. customers who have the more elastic demand for the product. B. buyers who are members of the smallest market segment. C. customers who have the more inelastic demand for the product. D. buyers who belong to the largest market segment.
B. the lowest wage that firms may pay for labor.
A minimum wage law dictates: A. the minimum qualifications for labor. B. the lowest wage that firms may pay for labor. C. the minimum quantity of labor that a firm must employ. D. the highest wage that firms must pay for labor.
D. raise the market price of a product.
A perfect competitor cannot: A. decrease its marginal cost. B. increase the amount of the item it produces. C. leave the industry. D. raise the market price of a product.
A. tax on imported products.
A tariff is a : A. tax on imported products. B. limit on the quantity of a good that can be imported. C. tax on exported products. D. limit on the quantity of a good that can be exported.
A. supply curve to the left.
A tax collected from sellers shift the: A. supply curve to the left. B. supply curve to the right. C. demand curve to the left. D. demand curve to the right.
D. 70,000; 40,000
According to the figure, f there is international trade in this market and the world price of a television is $500, the quantity demanded is __________, and the quantity supplied is _______ at the world price. A. 20,000; 80,000 B. 80,000; 20,000 C. 40,000; 70,000 D. 70,000; 40,000
A. demand for workers increased.
Alex and Marilyn started Ono Yo, an organic and fresh fruit frozen yogurt truck. As the demand for organic and healthier desserts rose, demand for Ono Yo's products grew. Because of the growth in demand for Ono Yo's product, Alex's and Marilyn's: A. demand for workers increased. B. equilibrium quantity is shifted to the left. C. supply decreased. D. employee wages fell.
A. an increase in the market demand for the firm's product.
An increase in a perfectly competitive firm's demand for labor could be caused by: A. an increase in the market demand for the firm's product. B. an increase in the quantity of labor supplied. C. a decrease in the marginal product or workers. D. a decrease in the market wage rate.
B. a good whose demanded has a negative relationship with changes in income.
An inferior good is: A. an item that is normally purchased by very few consumers. B. a good whose demanded has a negative relationship with changes in income. C. an item that is only purchased by high-income consumers. D. a good whose demand has a positive relationship with changes in income.
A. both firms have market power.
An oligopoly firm is similar to a monopolistically competitive firm in that: A. both firms have market power. B. both operate in a market in which there are significant entry barriers. C. both firms face the prisoner's dilemma. D. both firms are in industries characterized by an independent firm.
A. both countries
Argentina and Chile both produce copper and timber. If Chile produces copper much more efficiently than Argentina and timber slightly more efficiently than Argentina, ____________ can benefit from trading copper and timber with each other. A. both countries B. only Chile C. only Argentina D. neither country
C. fall, due to an increase in supply.
As a result of technological innovation, automated water pumps are being installed on the farms of Kenyan tomato farmers. As a result of the increased use of automated water pumps, the equilibrium price of tomatoes will: A. rise, due to an increase in demand. B. fall, due to a decrease in demand. C. fall, due to an increase in supply. D. rise, due to a decrease in supply.
D. Opportunity Cost Principle
Consider the decision to read your textbook on economics. Which of the four core principles of economics applies to the notion that instead of reading this textbook you could be studying for your upcoming exam in a different course? A. Cost-Benefit Principle B. Marginal Principle C. Interdependence Principle D. Opportunity Cost Principle
D. not sell any milk.
Daisy is a milk farmer in a perfectly competitive market where there are many milk farmers. The market price of milk is $0.15 per gallon, which is also the marginal cost per gallon of milk. If Daisy charges $0.25 per gallon, she will: A. increase her profitability by $0.10 per gallon. B. sell more milk than the other farmers C. sell the same amount of milk as she did when she charged $0.15 per gallon. D. not sell any milk.
B. 2.5
Delilah's income rises by 8%. She decides to increase the number of movie tickets she purchases by 20%. Her income elasticity of demand for movie tickets is: A. 0.4 B. 2.5 C. -2.5 D. 0.8
B. can be seen in the upward of the supply curve.
Diminishing marginal benefit: A. can be seen in a downward slope of the demand curve. B. can be seen in the upward of the supply curve. C. means that consumers are more willing to pay for additional units of an item. D. does not affect a consumer's purchase decision.
C. P2
Figure 13-4 shows a short run cost and demand curve for a monopolistically competitive firm in the market for designer watches. Refer to Figure 13-4. If the firm represented in the diagram is currently producing and selling Qa units, what is the price charged? A. P0 B. P1 C. P2 D. P3
C. 4
Figure 17-1 shows the marginal revenue product for Dale's Hand-Sewn Dollies, a producer of linen dollies. Refer to 17-1. If the wage rate is $30, how many workers should Dale hire? A. 6 B. 5 C. 4 D. 3
D. $27
Figure 4-8 shows the market for beer. The government plans to impose a per-unit tax in this market. Refer to Figure 4-8. The price buyers pay after the tax is: A. $7 B. $20 C. $22 D. $27
D. Q2
Figure 5-6 shows the market for measles vaccinations, a product whose use generates positive externalities. Refer to figure 5-6. What is the economically efficient output level? A. Q2-Q1 B. Q1 C. Q1+Q2 D. Q2
C. $100
Gary Parker has decided he is willing to pay $700 for a new iPad. Apple is selling the new iPad for $600. It costs Apple $400 to produce the iPad. How much economic surplus does Gary receive if he purchases the iPad? A. $700 B. $200 C. $100 D. $600
D. An increase in the price of rice gives them a signal that rice is more valuable.
How do rice farmers in rural Indonesian villages figure out that they need to produce more rice when the demand for it has risen in other parts of the world? A. A decrease in sales communicates to them that they need to advertise more. B. An increase in sales communicates to them that inventories are rising. C. A decrease in the price of rice gives them a signal that there is insufficient quantity. D. An increase in the price of rice gives them a signal that rice is more valuable.
B. A decrease in quantity supplied.
In the graph, the movement from point E to point F represents: A. An increase in supply. B. A decrease in quantity supplied. C. A decrease in supply. D. An increase in quantity supplied.
A. The closest doughnut shop or bakery is 25 miles from Max's shop.
In which of the following situations would Max's Doughnut Shop have the greatest market power? A. The closest doughnut shop or bakery is 25 miles from Max's shop. B. The closest doughnut shop is 10 miles away, but there is a bakery with breakfast pastries two miles away. C. There are two rival doughnut shops and three bakeries that sell breakfast pastries. D. Within three miles, there are five other doughnut shops and three bakeries that sell breakfast pastries.
C. $4,000
Juan earns a yearly salary of $120,000 in his job and $1,000 per year in interest on his savings. After he quits his job to start a company, he uses all his savings to purchase manufacturing equipment for his company. Given the above information and the data summarizing his first year in business in the table, how much economic profit or loss does Juan earn? Revenue: $300,000; Bills: $175,000 A. $125,000 B. $126,000 C. $4,000 D. $5,000
A. at least as high as marginal private cost.
Mario is willing to sell an extra unit of his product as long as price is: A. at least as high as marginal private cost. B. at least as marginal social cost. C. higher than average cost. D. not below external cost.
D. an inefficient outcome.
Market failure occurs when market forces lead to: A. high price. B. high quantity. C. a marginal benefit equal to marginal cost. D. an inefficient outcome.
A. the product cannot be resold.
Price discrimination can be successful only if: A. the product cannot be resold. B. there are many sellers. C. the market is highly competitive. D. the company lacks market power.
D. charges different prices to different customers who are all buying the same product.
Price discrimination occurs when a company: A. produces different versions of its product. B. buys a given input from several sellers and pays a different price to each seller. C. refuses to sell its product to certain customers based on some distinguishing factor such as race or religion. D. charges different prices to different customers who are all buying the same product.
A. producer surplus of a unit sold.
Price minus marginal cost equal the: A. producer surplus of a unit sold. B. consumer surplus of a unit purchased. C. marginal benefit of a unit. D. economic efficiency of total sales.
A. $4
Refer to Figure 13-3. What is the marginal revenue of the sixth unit of output? A. $4 B. $5 C. $9 D. $54
C. S1 to S2
Refer to Figure 3-2 A decrease in price of inputs would be represented by a movement from: A. A to B B. B to A C. S1 to S2 D. S2 to S1
D. $2
Refer to Figure 4-8. How much of the tax is paid by producers? A. $45 B. $8 C. $3 D. $2
C. imports 16 million pounds of rice.
Refer to Figure 9-2. With the tariff in place, the United States: A. imports 15 million pounds of rice. B. exports 31 million pounds of rice. C. imports 16 million pounds of rice. D. imports 9 million pounds of rice.
D. 42 million pounds of rice.
Refer to Figure 9-2. Without the tariff in place, the United States consumes: A. 9 million pounds of rice. B. 15 million pounds of rice. C. 31 million pounds of rice. D. 42 million pounds of rice.
D. $150
Refer to Table 17-1. If the output is $3, what is the marginal revenue product of the fifth unit? A. $1,050 B. $360 C. $210 D. $150
C. Everyone will buy a ticket except for Esther.
Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one of the ticket is $10. A. Only Anya and Basil will buy tickets. B. Celeste's consumer surplus is $25. C. Everyone will buy a ticket except for Esther. D. the total consumer surplus from the purchase of tickets will $61.
A. there would be a shortage of 300 units
Refer to figure 3-4. If the price is $15, ____________________. A. there would be a shortage of 300 units B. there would be a surplus of 300 units C. there would be a surplus of 200 units D. there would a shortage of 200 units
D. The economic burden of this tax is greater on the seller.
Refer to the figure which shows the market for timber. Which of the following statements is correct? A. There is no economic burden for this tax. B. The economic burden of this tax is greater on the buyer. C. The economic burden of this tac is being split equally between buyer and seller. D. The economic burden of this tax is greater on the seller.
B. an upward-sloping supply curve.
Rising marginal costs imply: A. falling variable costs. B. an upward-sloping supply curve. C. a downward-sloping demand curve. D. rising fixed costs.
B. regardless of which decision is made.
Sunk costs are costs that are incurred: A. if a particular decision is made. B. regardless of which decision is made. C. only for some decisions. D. if a particular decision is not made.
B. The supply of drawing paper will decrease.
Suppose that the paper production industry can choose to produce both printing paper and drawing paper. What effect would rising market prices for printing paper have on the market for drawing paper? A. The supply of drawing paper will not change. B. The supply of drawing paper will decrease. C. The supply of drawing paper will increase. D. There will be an increase in the quantity supplied of drawing paper.
C. Jack has a comparative advantage in garden cultivating and George in lawn mowing.
Table 2-4 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. Refer to Table 2-4. Which of the following statements is true? A. Jack has a comparative advantage in both tasks B. Jack has a comparative advantage in lawn mowing and George in garden cultivating. C. Jack has a comparative advantage in garden cultivating and George in lawn mowing. D. George has a comparative advantage in both tasks.
A. be more elastic than
The demand curve for one particular brand of cough syrup will ____________ the demand curve for cough syrup as a general category. A. be more elastic than B. have perfectly elastic demand when compared to C. be less elastic than D. have the same elasticity as
D. 4; $8
The graph shows the marginal social cost, demand, and supply curves in the jigsaw puzzle market. What are socially optimal quantity and price in this market? A. 6; $6 B. 8; $4 C. 6; $10 D. 4; $8
D. the positive relationship between price and quantity supplied.
The law of supply refers to: A. the positive relationship between price and quantity demanded B. the inverse relationship between price and quantity demanded C. the inverse relationship between price and quantity supplied D. the positive relationship between price and quantity supplied.
D. the additional benefit from buying one more unit of the item.
The marginal benefit of consuming an item is: A. the total benefit from buying several units of the item. B. the additional number of consumers who buy a unit of the item. C. the difference between what the consumer is willing to pay and the actual market price of the item. D. the additional benefit from buying one more unit of the item.
A. $2
The marginal social cost and marginal private cost curves for a market are in the graph. What is the marginal external cost? A. $2 B. $4 C. $6 D. $12
C. Two
The price of coffee at a local coffee shop is $3. Cheryl is willing to pay $6 for her first cup of coffee each day. The marginal benefit to her of each additional cup of coffee, after her first, falls by $2. How many cups of coffee should Cheryl purchase? A. One B. Three C. Two D. Four
B. 0.4; inelastic
The price of milk at the local grocery store rises by 25%, and the quantity of milk demanded falls by 10%. The absolute value of the price elasticity of demand for milk is _________, and demand is _________. A. 2.5; elastic B. 0.4; inelastic C. 0.4; elastic D. 2.5; inelastic
D. 2; substitues
The price of product C rises by 10%. As a result, the quantity demanded of product D rises by 20%. The cross-price elasticity of demand between product C and product D is _________, and they are _______________. A. 1.5; complements B. 0.5; substitutes C. -2; substitutes D. 2; substitues
D. New firms that sell Italian ice will enter the market and Tony's demand curve will shift to the left.
Tony's Italian Ice is a monopolistically competitive firm. If Tony's earns a profit in the short run, which of the following is most likely to occur? A. New firms that sell Italian ice will enter the market and Tony's cost curves will shift to the left. B. New firms that sell Italian ice will enter the market and Tony's demand curve will become more inelastic. C. New firms that sell Italian ice will enter the market and Tony's demand curve will shift to the right. D. New firms that sell Italian ice will enter the market and Tony's demand curve will shift to the left.
B. $350
Use the graph of a demand curve for jars of laundry detergent to answer the question. What is the total consumer surplus if 50 jars are sold at a price of $6? A. $14 B. $350 C. $700 D. $750
A. $45
Use the market graph for pairs of socks to answer the question. The sock market is at equilibrium. How much economic surplus is being generated in the sock market? A. $45 B. $60 C. $90 D. $150
C. $4; $280
Use the table: If Maria charges $8, then Jose's best option would be to charge _________ in order to earn _______. A. $4; $150 B. $8; $180 C. $4; $280 D. $8; $40
A. $352; three
Using the rational rule for employers, the maximum profit Carmin could earn is ____________. She would employ ___________ workers to earn this profit. (TR-TC) A. $352; three B. $1,144; two C. $1,552; three D. $344; two
D. An increase in the price of white wine grapes
Vineyards can grow either red wine grapes or white wine grapes on their land. Which of the following would cause the supply of red wine grapes to decrease? A. An increase in the demand for red wine grapes B. A decrease in the price of white wine grapes C. An increase in the price of red wine D. An increase in the price of white wine grapes
A. The equilibrium wage and the equilibrium quantity of labor rise.
What happens to equilibrium wage and quantity of labor if output price rises? A. The equilibrium wage and the equilibrium quantity of labor rise. B. The equilibrium wage and the equilibrium quantity of labor falls. C. The equilibrium wage falls and the equilibrium quantity of labor rises. D. The equilibrium wage rises and the equilibrium quantity of labor falls.
B. A game in which players act in rational, self-interested ways that leave everyone worse off.
What is a prisoner's dilemma? A. A game in which players collude to outfox authorities. B. A game in which players act in rational, self-interested ways that leave everyone worse off. C. A game that involves no dominant strategies. D. A game in which prisoners are stumped because they cannot communicate with each other.
D. $50
What is the equilibrium price in this market? A. $35 B. $60 C. $45 D. $50
D. $2
What is the marginal revenue of the fourth unit in the following example? A. $20 B. $5 C. $1 D. $2
C. Largest economic surplus
What standard is used to determine the most efficient economic outcome? A. Lower cost B. Highest benefit C. Largest economic surplus D. Smallest inequality
A. Labor demand will decrease, resulting in lower wages and fewer hours of employment for nurses.
What will happen in the market for nurses in the United States if capital equipment replaces nurse labor to monitor vital statistics on patients in hospitals? A. Labor demand will decrease, resulting in lower wages and fewer hours of employment for nurses. B. Labor demand will increase, resulting in higher wages and more hours of employment for nurses. C. Labor demand will decrease, resulting in higher wages and fewer hours of employment for nurses. D. Labor demand will increase, resulting in lower wages and more hours of employment for nurses.
B. a larger output; a greater range of prices
When price discrimination is practiced, a company sells _____________ and charges _________ compared to what it would do without practicing price discrimination. A. a larger output; higher prices B. a larger output; a greater range of prices C. the same output; a greater range of prices D. a smaller output; higher prices
C. both trading partners end up better off.
When trade is based on comparative advantage: A. output may fall. B. specialization will diminish. C. both trading partners end up better off. D. one trading partner gains at the expense of the other.
B. Both the seller and the buyer gain, although not necessarily equally.
When trade is voluntary, who gains from it? A. Either the seller or buyer gains but not both. B. Both the seller and the buyer gain, although not necessarily equally. C. Both the seller and the buyer gain equal amounts. D. Neither the seller nor the buyer gains, but society in general gains.
B. the minimum price that a seller can charge in a market.
A price floor is: A. the maximum price that seller can charge in a market. B. the minimum price that a seller can charge in a market. C. the average price that a seller can charge in a market. D. any price below the equilibrium price.
B. Perfect competition
A product market has many buyers and many sellers, and its largest company produces 1% of the market output. In addition, all sellers produce identical goods. What market structure is consistent with this description? A. Monopolistic competition B. Perfect competition C. Oligopoly D. Monopoly
C. the quantity supplied exceeds the quantity demanded, and there is downward pressure on the world price.
According to the figure, at a world price of $600: A. the quantity demanded exceeds the quantity supplied, and there is downward pressure on the world price. B. the quantity demanded exceeds the quantity supplied, and there is upward pressure on the world price. C. the quantity supplied exceeds the quantity demanded, and there is downward pressure on the world price. D. the quantity supplied exceeds the quantity demanded, and there is upward pressure on the world price.
C. 40,000; 30,000
According to the figure, if there is international trade in this market and the world price of is $500, domestic consumers will purchase ___________ units from domestic producers and ________ units from foreign producers. A. 20,000; 30,000 B. 20,000; 60,000 C. 40,000; 30,000 D. 40,000; 60,000
C. Q=4; P=$7.00
According to the rational rule, what output and price should the firm in the following example choose? A. Q=8; P=$9.00 B. Q=6; P=$6.00 C. Q=4; P=$7.00 D. Q=4; P=$4.00
A. marginal benefits equal marginal costs.
Following the rational rule implies economic surplus is maximized when: A. marginal benefits equal marginal costs. B. marginal benefits exceed marginal costs. C. total benefits equal total costs. D. total benefits exceed total costs.
B. Beyond the first unit sold, marginal revenue is less than price.
How does marginal revenue compare to price for a seller with market power? A. Beyond the first unit sold, marginal revenue is higher than price. B. Beyond the first unit sold, marginal revenue is less than price. C. Marginal revenue is equal to price. D. Marginal revenue is always higher than price.
D. take an Uber; more
It is rainy day, and you are considering taking an Uber one mile to meet some friends. You have decided you are willing to pay $20 to avoid getting wet from the rain. The trip would normally cost you $8, but there is a two times surcharge due to weather. You should ____________ because the benefit to you of taking an Uber is _________ than the cost. A. walk; more B. take an Uber; less C. walk; less D. take an Uber; more
A. will; both Juan and Apple
Juan McDonald has decided he is willing to pay $800 for a new iPad. Apple is selling a new iPad for $700. It costs Apple $400 to produce this iPad. A voluntary economic transaction between Juan and Apple _______, occur because __________ would be better off due to the transaction. A. will; both Juan and Apple B. will not; only Apple C. will not; only Juan D. will; neither Juan nor Apple
D. gives up less to bake a cake than other bakers must give up to bake a cake.
Mana has a comparative advantage in baking cakes. This means that she: A. produces better-quality cakes than any other cake baker. B. has more education than other cake bakers. C. can bake a cake using fewer resources than any other baker. D. gives up less to bake a cake than other bakers must give up to bake a cake.
D. it is assuming that the demand for attending the school is inelastic.
Opera Estate Girls' School is considering increasing its tuition to raise revenue. If the school believes that raising tuition will increase revenue: A. it is assuming that the demand for attending is unit-elastic. B. it is assuming that the demand for attending school is elastic. C. it is assuming that the demand for attending the school is perfectly elastic. D. it is assuming that the demand for attending the school is inelastic.
D. a demand curve has shifted to the left
The phrase "demand has decreased" means that: A. these has been an upward movement along a demand curve. B. there has been a downward movement along a demand curve C. a demand curve has shifted to the right D. a demand curve has shifted to the left
D. An increase in the price of a substitute product
Which of the following market changes would lead to a shift of the demand curve from Old demand to New Demand? A. Lower costs in the production of the product. B. A technological advance in the production of the product C. Sellers charge a lower price for the product D. An increase in the price of a substitute product
C. $4,000; $3,500
With no cooperation, the Nash equilibrium yields Bella a profit of ____________ and Martin a profit of _____________. A. $1,000; $5,500 B. $6,000; $1,000 C. $4,000; $3,500 D. $5,000; $5,000
A. shampoo
You are given data on four products - toothpaste, shampoo, soap, and laundry detergent. The absolute value of the price elasticity of demand for toothpaste is 4. The absolute value of the price elasticity of demand for shampoo is 0.2. The absolute value of the price elasticity of demand for laundry detergent is 2. Which product has the most inelastic demand? A. shampoo B. soap C. laundry detergent D. toothpaste
B. fall in the quantity demanded for vanilla lattes.
You go to Starbucks and see that the price of your favorite tall vanilla latte has gone up 25 cents. In fact, all sizes of the vanilla lattes are now more expensive. As a result of this price increase, you would expect to see a: A. fall in the demand for vanilla lattes. B. fall in the quantity demanded for vanilla lattes. C. rise in the quantity demanded of vanilla lattes D. rise in the demand for vanilla lattes.
D. domestic producers will export 600 units.
According to the figure, if there is international trade in this market, and the world price of an engine is $1,000: A. domestic consumers will import 1,000 units. B. domestic producers will export 1,000 units. C. domestic consumers will import 600 units. D. domestic producers will export 600 units.
C. $6
Amanda Mendez goes to a local café and orders a sandwich. Her willingness to pay for that sandwich is $10. The price of the sandwich is $4. The cost to café to produce that sandwich is $1. How much economic surplus does Amanda receive when she purchases the sandwich. A. $3 B. $10 C. $6 D. $4
A. Nash equilibrium.
An equilibrium in which the choice that each player is a best response to the choices other players are making is the definition of a: A. Nash equilibrium. B. Coarse theorem equilibrium. C. Strategic equilibrium. D. Game-played equilibrium.
B. determined by the intersection of the demand and supply curves.
An equilibrium price is: A. the price that occurs when there is a surplus. B. determined by the intersection of the demand and supply curves. C. the price that prevails when quantity supplied is less quantity demanded. D. the price that prevails when there is a shortage.
D. Panel (d)
Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets. Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles? A. Panel (a) B. Panel (b) C. Panel (c) D. Panel (d)
C. It will experience zero economic profits.
Assume that there is free entry and exit in the pizza restaurant market. How profitable can Mario expect his Mario's pizza restaurant to be in the long run? A. It will earn positive economic profits. B. It will suffer economic profits. C. It will experience zero economic profits. D. It will experience continually rising economic profits.
A. total cost divided by output.
Average cost equals: A. total cost divided by output. B. the cost of producing one additional unit. C. price. D. total revenue divided by quantity.
C. demand is more elastic than supply.
Buyers bear a smaller incidence (share) of a tax when: A. the tax is higher. B. supply is more elastic than demand. C. demand is more elastic than supply. D. demand is perfectly inelastic.
D. $75,000; $4,000
Corrine is offered a job with a salary of $70,000, which she turns down to start her own business. She uses $20,000 of her own savings to help start the business, savings that had been providing her a return of $1,000 per year. Over her first year in business, Corrine collects total revenue of $180,000 and must cover explicit costs of $105,000. During her first year in business, Corrine's accounting profit is ____________, and her economic profit is ____________. A. $110,000; -$16,000 B. $75,000; -$16,000 C. $110,000; $4,000 D. $75,000; $4,000
C. Some regulations correct for market failure; other regulations cause inefficient outcomes.
How does government regulation affect market efficiency? A. Regulations increase the efficiency of how markets function. B. Regulations are a substitute for market efficiency C. Some regulations correct for market failure; other regulations cause inefficient outcomes. D. Regulations move markets further from efficiency.
A. encouraging research; creating a monopoly
Patents have a positive impact of ___________ and the negative impact of ____________. A. encouraging research; creating a monopoly B. creating more competition; reducing demand C. reducing price; increasing costs D. reducing costs; reducing competition
A. charges different prices to different customers who are all buying the same product.
Price discrimination occurs when a company: A. charges different prices to different customers who are all buying the same product. B. refuses to sell its product to certain customers based on some distinguishing factor such as race or religion. C. produces different versions of a product. D. buys a given inout from several sellers and pays a different price to each seller.
B. $2,000
Refer to the market for child care that is shown in the figure. The original equilibrium price $10,000. A subsidy is now introduced for parents who pay for child care. The amount of the subsidy is: A. $1,000 B. $2,000 C. $9,000 D. $11,000
A. only variable costs.
When you calculate marginal costs, they should include: A. only variable costs. B. both the variable and fixed costs. C. the market price of the product. D. only fixed costs.
C. If the government raises taxes, people will have less income available for purchases and saving.
Which of the following is a positive economic statement? A. The government ought to balance its budget and eliminate the deficit. B. That company with a 50% profit rate made too much profit at the expense of customers. C. If the government raises taxes, people will have less income available for purchases and saving. D. A 10% inflation rate is too high and should be reduced.
D. a benefit accruing to bystanders.
An external benefit is: A. a benefit enjoyed by the buyer of a good B. the total benefit to society of a good being consumed. C. the benefit that the buyer receives from consuming a good outside of market. D. a benefit accruing to bystanders.
A. a cost imposed on bystanders.
An external cost is: A. a cost imposed on bystanders. B. a cost paid for inputs by a producer to an entity outside the company. C. an adjustment in costs when the output is sold outside the normal circle of customers. D. the total of all costs minus those borne by bystanders
C. Ang has an absolute advantage over Bill in mowing the lawn.
Ang can mow the lawn in two hours. It takes Bill three hours to mow the same lawn. What can be concluded from this information? A. Ang has a comparative advantage over Bill in mowing the lawn. B. Bill has a comparative advantage over Ang in mowing the lawn. C. Ang has an absolute advantage over Bill in mowing the lawn. D. Bill has an absolute advantage over Ang in mowing the lawn.
B. A shortage of 300,000 houses.
Consider the market for environmentally friendly three-dimensional printed houses that is shown in the figure. The government wants to encourage buyers to buy such houses and places a price ceiling on the market at $200,000 per house. What occurs in this market after the implementation of the price ceiling? A. A shortage of 100,000 houses. B. A shortage of 300,000 houses. C. A surplus of 200,000 houses. D. A surplus of 100,000 houses.
A. price; less than the price
In a perfectly competitive market, a company's marginal revenue equals __________. For a company with market power, marginal revenue is ______________. A. price; less than the price B. marginal cost; less than marginal cost C. marginal cost; greater than marginal cost D. price; greater than price
B. game theory.
In economics, the study of the decisions of firms in industries where the profits of each firm depend on its interactions with other firms is called: A. decision theory. B. game theory. C. market structure analysis. D. profit analysis.
D. point N to point M.
Increasing the price of the item will cause the movement from: A. point Q to point P. B. point W to point V. C. point Q to point T. D. point N to point M.
B. Her market is highly competitive.
Inez owns a technology company. Which of the following conditions would make it difficult for her to price discriminate? A. She is eager to increase her profits. B. Her market is highly competitive. C. Her product cannot be resold. D. She is aware of how much each customer is willing to pay.
C. can deliver inefficient outcomes.
The Prisoner's Dilemma shows how markets: A. minimize costs. B. deliver the best possible outcomes. C. can deliver inefficient outcomes. D. are based on collusive agreements in most cases.
A. Group A: P=$10, Q=100; Group B: P=$9, Q=50
The diagram represents the demand and costs facing Bj's Smoothies from two different groups of consumers. What price and quantity should BJ choose for each group? A. Group A: P=$10, Q=100; Group B: P=$9, Q=50 B. Group A: P=$5, Q=200; Group B: P=$5, Q=50 C. Group A: P=$10, Q=200; Group B: P=$9, Q=100 D. Group A: P=$9, Q=100; Group B: P=$9, Q=100
B. The demand curve is inelastic, and thus the seller gains revenue by raising price $1.50 to $1.75.
The figure shows the market for avocados. Which of the following is correct about this market between points A and B? A. The demand curve is elastic, and thus the seller loses revenue by raising price $1.50 to $1.75. B. The demand curve is inelastic, and thus the seller gains revenue by raising price $1.50 to $1.75. C. The demand curve is elastic, and thus the seller gains revenue by raising price from $1.50 to $1.75. D. The demand curve is inelastic, and thus the seller loses revenue by raising price from $1.50 to $1.75.
A. decrease by 12%.
The price elasticity of demand for beef is estimated to be 0.60 (in absolute value). This means that a 20% increase in the price of beef, holding everything else constant, will cause the quantity of beef demanded to A. decrease by 12%. B. decrease by 26%. C. decrease by 32%. D. decrease by 60%.
B. decrease by 32 lbs.
The table above shows the demand schedules for loose-leaf tea of individuals (Samil and Mia) and the rest of the market. If the price of the loose-leaf tea rises from $3 to $4, the market quantity demanded would: A. decrease by 64 lbs. B. decrease by 32 lbs. C. increase by 64 lbs. D. increase by 32 lbs.
D. rises; rises
When an increase in demand for stand-up paddle boards rises, then the demand for skilled paddle board shapers ___________, and their marginal revenue product ________________. A. rises; falls B. falls; rises C. falls; falls D. rises; rises
B. marginal social; marginal social
When externalities are present, the socially optimal outcome occurs where the _________ benefit equals the _________ cost. A. marginal external; marginal external B. marginal social; marginal social C. total social; total social D. total external; total external
A. improve their standard of living or increase their leisure time.
When people focus on their comparative advantage and then trade for other things, they: A. improve their standard of living or increase their leisure time. B. focus their consumption on just a few things. C. increase the time they spend working and reduce the variety in their consumption. D. have a lower standard of living than if they focused on their absolute advantage.
D. The tax is equal to the marginal external cost.
Which of the following is the size of a corrective tax to resolve a negative externality problem? A. The tax is equal to the marginal social cost. B. The tax is equal to the total social cost. C. The tax is equal to the total external cost. D. The tax is equal to the marginal external cost.
A. purchased from foreign seller.
An import is a good or service: A. purchased from foreign seller. B. purchased from a domestic seller. C. sold to a foreign buyer. D. sold to a domestic.
C. Yes, Godrickporter's should increase its advertising budget.
Godrickporter and Star Connections are the only two airport shuttle and limousine rental service companies in the mid-sized of Godrick Hollow. Each firm must decide on whether to increase its advertising spending to compete for customers. Table 14-1 shows the payoff matrix for this advertising game. Refer to Table 14-1. Is there a dominant strategy for Godrickporter and if so, what is it? A. Yes, Godrickporter should not change its advertising budget. B. Yes, Godrickporter's dominant strategy is to collude with Star Connections. C. Yes, Godrickporter's should increase its advertising budget. D. No, its outcome depends on what Star Connections does.
B. Under price discrimination, some customers pay a higher price and some pay a lower price.
How does the price customers pay under price discrimination compare to the price with no price discrimination or the one that is set according to the marginal cost=marginal benefit? A. Under price discrimination, the price is lower. B. Under price discrimination, some customers pay a higher price and some pay a lower price. C. Under price discrimination, the price is higher. D. There is no difference in the prices.
D. Their demand curves will shift to the left.
If a new company enters a monopolistically competitive market, what will happen to the existing companies in the market? A. The average cost curves will shift up. B. Their marginal revenue curves will shift to the right. C. Their demand curves will shift to the right. D. Their demand curves will shift to the left.
A. an inferior good
If an increase in income leads to a decrease in the demand for popcorn, then popcorn is ____________. A. an inferior good B. a normal good C. a neutral good D. a necessity
B. inelastic; higher
If demand is ________, a higher price yields _______ total revenue. A. elastic; no change in B. inelastic; higher C. inelastic; lower D. elastic; higher
A. mutually beneficial trade is possible.
If the opportunity costs of production for two goods is different between two countries, then: A. mutually beneficial trade is possible. B. trade will only benefit both countries if one can lower its opportunity costs. C. trade cannot benefit either county. D. only one country can be made better off by trade.
C. a negative externality exists.
If the social cost of producing a good or service exceeds the private cost: A. the market achieves economic efficiency. B. the sum of consumer surplus and producer surplus is maximized. C. a negative externality exists. D. a positive externality exists.
B. an eventual fall in the equilibrium price.
If there is a technological advance in the production of the Amazon Echo smart speaker, then you would expect to see ________ in the market for Amazon Echos. A. an eventual fall in the equilibrium quantity. B. an eventual fall in the equilibrium price. C. no change in equilibrium price. D. an eventual rise in the equilibrium price.
D. have a comparative advantage at the task.
If you can complete a task at a lower opportunity cost than anyone else, then you: A. produce the good using fewer inputs than anyone else. B. produce the good using more inputs than anyone else. C. have an absolute advantage at the task. D. have a comparative advantage at the task.
B. International trade may lead to job loss.
In 2018, the unemployment rate in the United States went as low as 3.7%, as measured by the Bureau of Labor Statistics. This historically low level of unemployment occurred simultaneously with a large trade deficit. This provides evidence against which of the following arguments against international trade? A. International trade may hurt national security. B. International trade may lead to job loss. C. International trade may hurt infant industries. D. International trade may promote unfair competition.
C. the change in total revenue that results from hiring another worker.
Marginal revenue product for a perfectly competitive seller is equal to: A. the output price multiplied by the total product of labor. B. the output price multiplied by the number workers hired. C. the change in total revenue that results from hiring another worker. D. the marginal cost of production.
A. who value the product more; who are especially price-sensitive
The two rules to use in setting group prices are to charge higher prices to those ________ and charge lower prices to those _________. A. who value the product more; who are especially price-sensitive B. with lower marginal benefit; with higher marginal benefit C. with elastic demand; with unit-elastic demand D. with low reservation prices; with higher reservation prices
A. surplus; 12,000
Refer to the labor market shown here. Suppose a minimum wage of $18 per how is introduced. The implementation of the minimum wage leads to a _________ of __________ workers. A. surplus; 12,000 B. shortage; 6,000 C. surplus; 10,000 D. shortage; 24,000
D. 5 slices
Take a look at Leonard's individual weekly demand curve for pizza slices. How many slices of pizza is Leonard willing to buy at $3 per slice? A. 3 slices B. 9 slices C. 7 slices D. 5 slices
B. the wage equals the marginal revenue product of the last worker hired
The rational rule for employers implies that they keep hiring until: A. total revenue equals total cost. B. the wage equals the marginal revenue product of the last worker hired C. the wage equals the marginal product of the last worker hired D. marginal product equals the marginal revenue.
D. The total quantity in the market falls by 23 cans.
The table shows the monthly individual demand schedules of four students for soda. What is the change in the total market demand for soda when the price changes from $1.50 per can to $2 per can? A. The total quantity in the market rises by 23 cans. B. The total quantity in the market rises by 26 cans. C. The total quantity in the market falls by 18 cans. D. The total quantity in the market falls by 23 cans.
C. $2,000; $2,000
Use the check mark method to determine which cell has a Nash equilibrium. When there is a Nash equilibrium, Vlad earns profits or ____________, and Assad earns profits of ___________. A. $3,500; $500 B. $3,000; $3,000 C. $2,000; $2,000 D. $500; $3,500
D. Existing sellers in the market earning economic profits.
What attracts new sellers into a market? A. A large number of sellers already in the market. B. A market that has not changed in several years. C. Fewer sellers in the market than a yea previously. D. Existing sellers in the market earning economic profits.
C. The equilibrium quantity rises, and the equilibrium price ambiguous.
What happens to equilibrium price and equilibrium quantity when demand and supple increase simultaneously but we do not know the relative size of the shifts? A. The equilibrium price rises, and the equilibrium quantity is ambiguous. B. The equilibrium quantity falls, and the equilibrium price is ambiguous. C. The equilibrium quantity rises, and the equilibrium price ambiguous. D. The equilibrium price falls, and the equilibrium is ambiguous.
