Econ Final (Micro) - Assignment Essays

question

The need to study economics would cease if

answer

there were enough resources to produce all the goods and services people would like to obtain

question

What is the opportunity cost of taking this exam?

answer

the highest valued alternative that you gave up to prepare for and attend the exam

question

In a growing number of cities, grocery stores are required to charge a fee to customers who use plastic bags. This is an example of which of the following?

answer

Negative incentive

question

The presence of resource scarcity and unlimited human wants means that choices come with which of the following?

answer

Trade-offs

question

The belief that a natural disaster can be good for the economy is an example of which of the following economic fallacies?

answer

Broken window fallacy

question

"I, Pencil" best illustrates which of the following basic economic ideas?

answer

Spontaneous order

question

Which of the following is true regarding water and diamonds for most people?

answer

The marginal utility of diamonds exceeds that of water

question

How are changes in opportunity cost related to decision-making, ceteris paribus?

answer

The lower the opportunity cost of doing activity X, the more likely activity X will be done

question

Kelly is an architect, and she is trying to decide whether to hire Lawrence, a draftsman, to assist with her work. Kelly could hire Lawrence at $20 per hour, but it would take him three times as long to complete a task as it takes Kelly. Kelly is able to earn $90 per hour and has more architectural jobs than she is able to handle. Which of the following is true?

answer

Lawrence should be hired at the $20 per hour wage rate

question

With which of the following statements concerning specialization would Adam Smith be least likely to agree?

answer

Specialized workers are more likely to enjoy their jobs than unspecialized workers

question

Which of the following best summarizes Bastiat's views regarding trade?

answer

Tariffs on foreign goods require more resources to be spent on things that could be obtained more cheaply elsewhere

question

Which of the following best summarizes economists' views regarding trade?

answer

Some people get hurt by specific trades, but everyone benefits from trade in general

question

Which of the following is not necessary for voluntary trade to take place between two parties?

answer

The gain from trade are equal for both parties

question

Two friends, Jerry and Newman, enjoy baking bread and making apple pies. Jerry takes two hours to bake 1 loaf of bread and one hour to make 1 pie. Newman takes four hours to bake 1 loaf of bread and six hours to make 1 pie.

If pies and bread are equally valuable, which of the following statements is true?

answer

Jerry has the comparative advantage in making pies

question

Which of the following accounts for why individual supply curves have a positive slope, ceteris paribus?

answer

The law of increasing opportunity costs

question

Which of the following is true, ceteris paribus?

answer

A decrease in price results in an increase in quantity demanded

question

Which of the following can we not infer from an individual's demand curve for a particular good?

answer

The price she actually pays for the good

question

When the price is _____ the equilibrium price, we would expect there to be a _____ , causing the market to put _____ pressure on the price until it returned to the equilibrium price.

answer

Above; surplus; downward

question

The price of Good X increases by 25%, causing the quantity consumed of Good Y to increase by 10%. Assuming ceteris paribus holds, we can say with certainty that Good X and Good Y are:

answer

Substitute goods

question

If the cost of flour increases from $3 to $5 per bag, we would expect the supply curve for bagels to:

answer

Shift to the left

question

If the equilibrium price and quantity for a normal good is $8 and 6 units, respectively, what is one possibility for the new equilibrium price and quantity if the income of buyers falls, ceteris paribus?

answer

$6 and 4 units

question

Suppose that the price of ground beef rises. Which of the following would necessarily happen, ceteris paribus?

answer

The price change would result in movement along the existing supply and demand curves for ground beef

question

Suppose drivers expect the price of gasoline to rise in coming days due to the weather. Which of the following is most likely to happen at present, ceteris paribus?

answer

The demand curve for gasoline shifts to the right

question

Ceteris paribus, an increase in supply:

answer

Is shown by a rightward shift of the supply curve

Causes a temporary surplus until prices fall

Results in a higher equilibrium quantity

question

Which of the following is true regarding the gains from trade in a market?

answer

The relative share of the gains from trade will depend on the price elasticity of supply and demand

question

What, according to Bastiat, is the difference between a good economist and a bad one?

answer

Good economists see immediate and foreseeable consequences of actions on all groups, whereas bad economists only see obvious effects

question

If a price ceiling is imposed at $12 per unit in a market where the equilibrium price is $15, there will be:

answer

A shortage

question

A binding price floor is:

answer

A minimum legal price above the equilibrium price

question

Suppose that a tax t is implemented in a market with supply and demand curvesthat are neither perfectly inelastic or perfectly elastic. Which of the following must be true?

answer

The tax creates deadweight loss

question

Which of the following statements is true?

answer

A firm facing an elastic demand curve can increase its revenue by lowering price

question

Which of the following is true regarding tax burden in a market?

answer

A tax will effectively burden both sides of the market

question

Suppose the price elasticity of demand in a market is PED = 2. This suggests that a change in price will result in a

answer

Disproportionately large change in quantity demanded

question

Which of the following items is likely to have the most price elastic demand?

answer

Luxury yachts

question

A given demand curve will:

answer

Have an elastic range, a unit elastic point, and an inelastic range

question

If we are only told that a firm earns positive economic profit, what do we know about its accounting profit?

answer

It is positive because whenever economic profit is positive, so is accounting profit

question

A firm earning positive accounting profit will earn

answer

Positive, negative, or zero economic profit

question

Which of the following is an example of an implicit cost?

answer

A foregone alternative

question

A firm earning positive economic profit:

answer

Is doing strictly better than it could in its next best alternative

question

Which of the following best describes the goal of a business firm?

answer

To maximize economic profit

question

As quantity q produced rises, a firm's average total cost ATC and average variable cost AVC will converge. This is because:

answer

Average fixed costs AFC decrease

question

Which of the following is true regarding fixed costs?

answer

There are no fixed costs in the long run

question

A firm should shutdown in the short run if:

answer

Price is less than average variable cost (P < AVC)

question

In a perfectly competitive industry, we would expect all firms to earn economic profits of zero in the long run because of which perfect competition assumption?

answer

Free entry and free exit

question

With which of the following would Israel Kirzner most likely agree?

answer

Competitive markets are desirable because the competitive process is socially beneficial

question

With which of the following would Israel Kirzner likely agree about the model of perfect competition?

answer

It describes a highly competitive economic process
There can be no real competition if the assumptions of the model hold

question

In perfect competition:

answer

Firms must sell at the market price

question

The demand curve facing a firm in a competitive market is __________, and the demand curve facing a monopolist is __________.

answer

Horizontal; downward sloping

question

In the long run, firms in perfect competition will:

answer

Produce at the minimum of average total cost

question

Why do monopolies generally create deadweight loss?

answer

They produce a lower quantity than competitive markets

question

Which of the following is not a natural barrier to entry?

answer

A patent gives a pharmaceutical company the exclusive right to manufacture an anti-cancer drug

question

Which of the following best describes William Baumol's contestability hypothesis of markets?

answer

It is impossible to have a monopoly if there are low barriers to entry

question

Which of the following is not true regarding price discrimination by a monopolist?

answer

Price discrimination is always illegal

question

Which of the following is necessary for price discrimination to occur?

answer

The firm must be able to prevent resale of the good

question

Two conditions allow a single seller to become a monopolist. Those two conditions are that the firm must

answer

Have something unique to sell and it must have a way to prevent potential competitors from entering the market

question

Which of the following is true regarding monopolistic competition?

answer

Firms cannot earn long-run economic profits

question

Firms in monopolistic competition will be price-setters in the short run due to _____ and price-takers in the long run due to _____.

answer

Product differentiation; low barriers to entry

question

Which of the following is generally true regarding advertising in a monopolistically competitive industry?

answer

If one firm advertises, all firms will want to advertise

question

Due to low barriers to entry, firms in monopolistically competitive markets will generally

answer

Face increasing competition over time

question

Which of the following is true regarding Bertrand competition?

answer

Firms in Bertrand competition generally have a difficult time colluding to raise price

question

Which of the following characteristics describes an oligopoly?

answer

Only a few firms in an industry

question

Consider a duopoly in Cournot competition. Which of the following is true?

answer

The Cournot duopoly creates deadweight loss

question

Being part of a cartel is generally good for a firm because it can reduce output while increasing prices and profits. Yet most cartels have failed. Why is this the case?

answer

Each member of the cartel faces an incentive to cheat and produce more than the other firms

question

One reason that firms may be unable to utilize price discrimination as a viable strategy is because

answer

It is always illegal to price discriminate

question

In a strategic game, a Nash equilibrium is a situation where:

answer

Neither player has an incentive to deviate, provided nobody else deviates

1 of 64

question

The need to study economics would cease if

answer

there were enough resources to produce all the goods and services people would like to obtain

question

What is the opportunity cost of taking this exam?

answer

the highest valued alternative that you gave up to prepare for and attend the exam

question

In a growing number of cities, grocery stores are required to charge a fee to customers who use plastic bags. This is an example of which of the following?

answer

Negative incentive

question

The presence of resource scarcity and unlimited human wants means that choices come with which of the following?

answer

Trade-offs

question

The belief that a natural disaster can be good for the economy is an example of which of the following economic fallacies?

answer

Broken window fallacy

question

"I, Pencil" best illustrates which of the following basic economic ideas?

answer

Spontaneous order

question

Which of the following is true regarding water and diamonds for most people?

answer

The marginal utility of diamonds exceeds that of water

question

How are changes in opportunity cost related to decision-making, ceteris paribus?

answer

The lower the opportunity cost of doing activity X, the more likely activity X will be done

question

answer

Lawrence should be hired at the $20 per hour wage rate

question

With which of the following statements concerning specialization would Adam Smith be least likely to agree?

answer

Specialized workers are more likely to enjoy their jobs than unspecialized workers

question

Which of the following best summarizes Bastiat's views regarding trade?

answer

Tariffs on foreign goods require more resources to be spent on things that could be obtained more cheaply elsewhere

question

Which of the following best summarizes economists' views regarding trade?

answer

Some people get hurt by specific trades, but everyone benefits from trade in general

question

Which of the following is not necessary for voluntary trade to take place between two parties?

answer

The gain from trade are equal for both parties

question

answer

Jerry has the comparative advantage in making pies

question

Which of the following accounts for why individual supply curves have a positive slope, ceteris paribus?

answer

The law of increasing opportunity costs

question

Which of the following is true, ceteris paribus?

answer

A decrease in price results in an increase in quantity demanded

question

Which of the following can we not infer from an individual's demand curve for a particular good?

answer

The price she actually pays for the good

question

When the price is _____ the equilibrium price, we would expect there to be a _____ , causing the market to put _____ pressure on the price until it returned to the equilibrium price.

answer

Above; surplus; downward

question

The price of Good X increases by 25%, causing the quantity consumed of Good Y to increase by 10%. Assuming ceteris paribus holds, we can say with certainty that Good X and Good Y are:

answer

Substitute goods

question

If the cost of flour increases from $3 to $5 per bag, we would expect the supply curve for bagels to:

answer

Shift to the left

question

answer

$6 and 4 units

question

Suppose that the price of ground beef rises. Which of the following would necessarily happen, ceteris paribus?

answer

The price change would result in movement along the existing supply and demand curves for ground beef

question

Suppose drivers expect the price of gasoline to rise in coming days due to the weather. Which of the following is most likely to happen at present, ceteris paribus?

answer

The demand curve for gasoline shifts to the right

question

Ceteris paribus, an increase in supply:

answer

Is shown by a rightward shift of the supply curve

Causes a temporary surplus until prices fall

Results in a higher equilibrium quantity

question

Which of the following is true regarding the gains from trade in a market?

answer

The relative share of the gains from trade will depend on the price elasticity of supply and demand

question

What, according to Bastiat, is the difference between a good economist and a bad one?

answer

Good economists see immediate and foreseeable consequences of actions on all groups, whereas bad economists only see obvious effects

question

If a price ceiling is imposed at $12 per unit in a market where the equilibrium price is $15, there will be:

answer

A shortage

question

A binding price floor is:

answer

A minimum legal price above the equilibrium price

question

Suppose that a tax t is implemented in a market with supply and demand curvesthat are neither perfectly inelastic or perfectly elastic. Which of the following must be true?

answer

The tax creates deadweight loss

question

Which of the following statements is true?

answer

A firm facing an elastic demand curve can increase its revenue by lowering price

question

Which of the following is true regarding tax burden in a market?

answer

A tax will effectively burden both sides of the market

question

Suppose the price elasticity of demand in a market is PED = 2. This suggests that a change in price will result in a

answer

Disproportionately large change in quantity demanded

question

Which of the following items is likely to have the most price elastic demand?

answer

Luxury yachts

question

A given demand curve will:

answer

Have an elastic range, a unit elastic point, and an inelastic range

question

If we are only told that a firm earns positive economic profit, what do we know about its accounting profit?

answer

It is positive because whenever economic profit is positive, so is accounting profit

question

A firm earning positive accounting profit will earn

answer

Positive, negative, or zero economic profit

question

Which of the following is an example of an implicit cost?

answer

A foregone alternative

question

A firm earning positive economic profit:

answer

Is doing strictly better than it could in its next best alternative

question

Which of the following best describes the goal of a business firm?

answer

To maximize economic profit

question

As quantity q produced rises, a firm's average total cost ATC and average variable cost AVC will converge. This is because:

answer

Average fixed costs AFC decrease

question

Which of the following is true regarding fixed costs?

answer

There are no fixed costs in the long run

question

A firm should shutdown in the short run if:

answer

Price is less than average variable cost (P < AVC)

question

In a perfectly competitive industry, we would expect all firms to earn economic profits of zero in the long run because of which perfect competition assumption?

answer

Free entry and free exit

question

With which of the following would Israel Kirzner most likely agree?

answer

Competitive markets are desirable because the competitive process is socially beneficial

question

With which of the following would Israel Kirzner likely agree about the model of perfect competition?

answer

It describes a highly competitive economic process
There can be no real competition if the assumptions of the model hold

question

In perfect competition:

answer

Firms must sell at the market price

question

The demand curve facing a firm in a competitive market is __________, and the demand curve facing a monopolist is __________.

answer

Horizontal; downward sloping

question

In the long run, firms in perfect competition will:

answer

Produce at the minimum of average total cost

question

Why do monopolies generally create deadweight loss?

answer

They produce a lower quantity than competitive markets

question

Which of the following is not a natural barrier to entry?

answer

A patent gives a pharmaceutical company the exclusive right to manufacture an anti-cancer drug

question

Which of the following best describes William Baumol's contestability hypothesis of markets?

answer

It is impossible to have a monopoly if there are low barriers to entry

question

Which of the following is not true regarding price discrimination by a monopolist?

answer

Price discrimination is always illegal

question

Which of the following is necessary for price discrimination to occur?

answer

The firm must be able to prevent resale of the good

question

Two conditions allow a single seller to become a monopolist. Those two conditions are that the firm must

answer

Have something unique to sell and it must have a way to prevent potential competitors from entering the market

question

Which of the following is true regarding monopolistic competition?

answer

Firms cannot earn long-run economic profits

question

Firms in monopolistic competition will be price-setters in the short run due to _____ and price-takers in the long run due to _____.

answer

Product differentiation; low barriers to entry

question

Which of the following is generally true regarding advertising in a monopolistically competitive industry?

answer

If one firm advertises, all firms will want to advertise

question

Due to low barriers to entry, firms in monopolistically competitive markets will generally

answer

Face increasing competition over time

question

Which of the following is true regarding Bertrand competition?

answer

Firms in Bertrand competition generally have a difficult time colluding to raise price

question

Which of the following characteristics describes an oligopoly?

answer

Only a few firms in an industry

question

Consider a duopoly in Cournot competition. Which of the following is true?

answer

The Cournot duopoly creates deadweight loss

question

Being part of a cartel is generally good for a firm because it can reduce output while increasing prices and profits. Yet most cartels have failed. Why is this the case?

answer

Each member of the cartel faces an incentive to cheat and produce more than the other firms

question

One reason that firms may be unable to utilize price discrimination as a viable strategy is because

answer

It is always illegal to price discriminate

question

In a strategic game, a Nash equilibrium is a situation where:

answer

Neither player has an incentive to deviate, provided nobody else deviates

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order