Final Micro - Assignment Essays

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maximized by rational individuals.
revealed by observing choices an individual makes.
the satisfaction individuals get from different bundles of goods.

All are correct!

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Utility is:

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is the change in total utility that comes from consuming one additional unit of a good or service.

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The concept of marginal utility:

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is the principle that the additional utility gained from consuming successive units of a good or service tends to be smaller than the utility gained from the previous unit.

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The concept of diminishing marginal utility:

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Bella's total utility will be maximized if she eats three pieces.

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If Bella eats one piece of pie, she gains a utility of 10. If she continues, a second piece yields a marginal utility of 8, a third will yield a marginal utility of 2, and a fourth piece of pie will yield a marginal utility of -2. We can say:

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total utility will rise, peak, and then decline as more and more units are consumed.

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Thinking about the total utility gained from the consumption of a typical good, we can say in general that

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the marginal utility from studying for a fifth hour is less than the marginal utility from the first hour of exercise.

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Zachary spends his day studying for a total of four hours and exercising for one hour. Using the concept of utility to explain his choices, we can say

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This table shows the different combinations of goods that Jack can consume, given that his income to spend on these two items is $10.

Bundle Number of popsicles Utility from popsicles Number of ice cream cones Utility from ice cream cones
A 10 700 0 0
B 8 720 1 500
C 6 650 2 700
D 4 550 3 750
E 2 400 4 760
F 0 0 5 760

Considering the information in the table shown, the bundle of goods that will derive the highest total utility for Jack is:

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is not maximizing his utility.

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This table shows the different combinations of goods that Jack can consume, given that his income to spend on these two items is $10.

Bundle Number of popsicles Utility from popsicles Number of ice cream cones Utility from ice cream cones
A 10 700 0 0
B 8 720 1 500
C 6 650 2 700
D 4 550 3 750
E 2 400 4 760
F 0 0 5 760

Considering the information in the table shown, if Jack decides to consume bundle D, we can conclude that Jack:

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...

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A budget constraint is:

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5 Tanning sessions and 2 rounds of golf.

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Sam has $200 a month to spend on either tanning sessions or rounds of golf. Tanning sessions are $20 each, and a round of golf is $50. A point on Sam's budget constraint would be:

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$35,000

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Imagine Tom's annual salary as an assistant store manager is $30,000, he owns a building that rents for $10,000 yearly, and his financial assets generate $1,000 per year in interest. One day, after deciding to be his own boss, he quits his job, evicts his tenants, and uses his financial assets to establish a bicycle repair shop. To run the business, he outlays $15,000 in cash to cover all the costs involved with running the business, and earns revenues of $50,000. What are Tom's accounting profits?

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No, because he's earning an economic profit of -$6,000.

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close his shop and go back to what he was doing before with his time and assets, because it was earning him $6,000 more than he's earning now.

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Tom has an opportunity cost of $41,000.
Tom earns an accounting profit of $35,000.
Tom experiences an economic loss of $6000.
All are correct.

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$64,000

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Suppose Winston's annual salary as an accountant is $60,000, and his financial assets generate $4,000 per year in interest. One day, after deciding to be his own boss, he quits his job and uses his financial assets to establish a consulting business, which he runs out of his home. To run the business, he outlays $8,000 in cash to cover all the costs involved with running the business, and earns revenues of $150,000. What are Winston's implicit costs?

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$8,000

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The explicit cost of $8,000

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less than accounting profits.

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In general, economic profits are:

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All of these are possible.

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When accounting profits are positive, economic profits could be:

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positive.

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When economic profits are positive, accounting profits could be:

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total revenue minus explicit costs.

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Accounting profits are calculated as:

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total revenue minus all opportunity costs, explicit and implicit.

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Economic profits are calculated as:

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if it is making money with this venture; if it can make more money with a different venture

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Accounting profits can tell a business _______________________, and economic profits can tell a business ______________________.

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costs that don't depend on the quantity of output produced.

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Fixed costs are:

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costs that depend on the quantity of output produced.

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Variable costs are:

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Employee wages

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Suppose Larry's Lariats produces lassos in a factory, and uses nine feet of rope to make each lasso. The rope is put into a machine that automatically cuts it to the right length, then seals the ends to prevent fraying. The rope is then hand tied, dipped, and wound before being placed in a packaging machine to prepare it for retail sale. Which of the following would be considered a variable cost for this company?

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variable costs equal zero.

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If a firm produces nothing, then its:

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fixed costs stay the same.

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If a firm decreases production, then its:

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variable costs decrease.

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If a firm decreases production, then its:

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The variable cost of fabric would drop to zero.

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Suppose Bev's Bags makes two kinds of handbags—large and small. Bev rents an industrial space where she keeps the fabric, the industrial sewing machine, her measuring board and cutting shears, extra needles, thread and buttons, and labels. If Bev were to produce no bags, which of the following is true regarding Bev's costs?

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are able to sell as much as they want without affecting the market price.

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In a perfectly competitive market, producers:

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is equal to price multiplied by quantity sold.

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In a perfectly competitive market, total revenue:

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-constant, regardless of quantity sold.
-equal to average revenue for a firm.
-equal to marginal revenue for a firm.
All of these are true.

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For firms that sell one product in a perfectly competitive market, the market price is:

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can be influenced by one firm's output decision.

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For firms that sell one product in a perfectly competitive market, the market price:

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equal to marginal revenue.

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For firms that sell one product in a perfectly competitive market, average revenue is:

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always be the same as marginal revenue.

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For firms that sell one product in a perfectly competitive market, average revenue will:

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$10

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This table shows price and quantity produced for a single firm in a perfectly competitive market.

Price Quantity
$10 23
$10 24
$10 25
$10 26

Given the information in the table shown, what is the marginal revenue when 25 units are produced?

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$10

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$10

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stay the same.

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If a perfectly competitive firm faces a market price of $3 per unit, and it decides to produce 30,000 units, the market price will likely:

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$4.

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if a firm in a perfectly competitive market faces a market price of $4, and it decides to produce 700 units, the firm's average revenue will be:

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will stay the same.

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If a firm in a perfectly competitive market faces a market price of $2, and it decides to increase its production from 2,000 units to 4,000 units, the firm's marginal revenue:

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increase from $2,400 to $4,400.

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If a firm in a perfectly competitive market faces a market price of $8, and it decides to increase its production from 300 units to 550 units, the firm's total revenue will:

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temporarily increase.

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If the demand increases in a perfectly competitive market, the price will:

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increase.

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If demand increases in a perfectly competitive market, then in the short run supply will:

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-Firms will temporarily make a profit due to a higher price.
-Firms will enter the market in hopes of capturing some profits.
-The short-run supply curve will shift to the right, causing price to eventually fall.
All are correct.

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If the demand increases in a perfectly competitive market, what will likely occur?

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If the demand increases in a perfectly competitive market, what will likely occur?

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temporarily decrease.

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If the demand in a perfectly competitive market decreases, the price will:

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upward sloping; perfectly elastic

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The short-run supply curve is _______________ and the long-run supply curve is _______________ in a perfectly competitive market in which all firms have identical cost structures.

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$600

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This table represents the revenues faced by a monopolist.

Price Quantity Sold Total Revenue Average Revenue Marginal Revenue
$1,000 1 $1,000
$900 2 $1,800
$800 3 $2,400
$700 4 $2,800
$600 5 $3,000
$500 6 $3,000
$400 7 $2,800

Using the information in the table shown, the average revenue for 5 units is:

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lower than that of the 3rd unit.

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Market demand

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increase and eventually decrease as output increases.

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For a monopolist, total revenues will:

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are always equal to price.

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For a monopolist, average revenues:

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is the increase in revenues from selling a greater quantity at a lower price.

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For a monopolist, the quantity effect:

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lower the price.

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If a monopoly wishes to sell more output, it must:

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the same as that of the perfectly competitive firm.

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For a monopoly, for all units greater than one, the marginal revenue curve:

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1. to choose the quantity where marginal cost equals marginal revenue.
2. the same as that of the perfectly competitive firm.
3. to choose price according to demand.
All of the above

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The profit-maximizing decision for the monopoly is:

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MR is higher than MC.

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At any quantity of output below the intersection of the marginal revenue and marginal cost curves:

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average revenue is greater than price.

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For a monopolist, at the profit-maximizing level of output:

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-the firm's price is set above its marginal costs.
-there is no threat of competition.
-the firm can charge a price higher than its average total costs in the long run.
All of these statements are true.

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The monopolist is able to enjoy profits in the long run because:

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causes a loss of total surplus.

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The equilibrium price and quantity in a monopoly market:

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lower quantity than the perfectly competitive one.

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The monopolist's outcome happens at a:

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higher than that of a competitive market.

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With a monopolist's outcome, producer surplus is:

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product differentiation.

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Offering goods that are similar to competitors' products but more attractive in some ways is called:

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act like a monopolist.

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In the short run, product differentiation enables firms in monopolistically competitive markets to:

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monopolies; perfectly competitive firms

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In the short run, monopolistically competitive firms behave like ________________, but in the long run, the profit of a firm is similar to that of ________________.

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have excess capacity.

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In the long-run, monopolistically competitive firms:

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faces a downward sloping demand curve.

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Like the monopolist, the monopolistically competitive firm:

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the availability of close substitutes.

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For the monopolistically competitive firm, the steepness of the demand curve depends on:

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the less differentiated the good is.

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For the monopolistically competitive firm, the demand curve it faces will be flatter:

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can earn positive economic profits by acting like a monopolist.

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In the short run, monopolistically competitive firms:

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is not efficient.

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The long run outcome of the monopolistically competitive firm:

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creates welfare loss.

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The long run outcome of the monopolistically competitive firm:

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-measures the benefit that people receive when they buy something for less than they would have been willing to pay.
-measures the benefit that people receive when they sell something for more than they would have been willing to accept.
-is the best way to look at the benefits people receive from successful transactions.
All are correct.

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In economics, the concept of surplus:

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is the maximum price that a buyer would be willing to pay for a good or service.

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A consumer's willingness to pay:

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If Billy's willingness to pay for one snowboard is $250 and his willingness to pay for a second snowboard is $400, how many snowboards would he buy if the market price of snowboards is $500?

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$37

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Which of the following prices could represent Eli's willingness to pay for a baseball glove if he observed the market price of $43 and decided not to buy one?

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is the minimum price that a seller is willing to accept in exchange for a good or service.

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A seller's willingness to sell:

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is represented by the demand curve.

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The willingness to pay of buyers' in a market:

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$4.01

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If Thelma's willingness to sell her homemade fudge is $4, then at which of the following prices would Thelma sell her fudge?

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Sam would sell a sweater at any of these prices.

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If Sam's opportunity cost of a sweater is $37, which of the following prices would he have to observe in the market in order to sell a sweater?

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$170.

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A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill.

If the market price of grills is $300, given the scenario described, the total consumer surplus would be:

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Abe's consumer surplus increases from $5 to $60, and total consumer surplus increases from $5 to $70.

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A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill.

Given the scenario described, if the market price of grills falls from $395 to $340, then we can say:

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$9.

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Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer this hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13.

Given the scenario described, if the market price of hammers was $13, then total producer surplus would be:

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is the difference between the total surplus occurring in a market and the maximum total surplus achievable.

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Deadweight loss:

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-to make it illegal to charge higher prices for those goods.
-to hire more producers of those goods.
-to subsidize the price of those goods.
All of these are ways government can try to address rising prices of a basic necessity.

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A type of public policy set in response to rising prices of a basic necessity, such as food, might be:

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-shift the distribution of surplus.
-create unintended side effects.
-reduce efficiency of a market.
All are correct.

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Government attempts to lower, raise, or simply stabilize prices can:

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setting a minimum price on milk.

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Governments may attempt to protect dairy farmers from low milk prices by:

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the price is set inefficiently high.

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If there is a sole producer of a good, and he faces no threat of competition, it is likely that:

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redistribute surplus in a market.

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The government imposing a minimum wage is an example of an attempt to:

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are regulations that sets a maximum or minimum legal price for a particular good.

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Price controls:

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a legal maximum price.

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A price ceiling is:

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must be set above the equilibrium price, and will likely cause a surplus.

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A price floor that is binding:

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will cause quantity demanded to exceed quantity supplied.

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A binding price ceiling:

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Supply shifts vertically upward by the amount of the tax.

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A tax on sellers has what effect on a market?

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-the price the buyer pays is higher than the amount the seller receives.
-the buyers' equilibrium tax-inclusive price increases and the equilibrium quantity decreases.
-fewer total transactions take place in the market.
All are correct.

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When a tax is imposed on a market:

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Tax incidence:

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is an economic term for the division of a tax burden between buyers and sellers.

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the sellers will bear a greater tax incidence than buyers.

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If the demand curve is more elastic than the supply curve, then:

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external cost.

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Any cost that is imposed without compensation on someone other than the person who caused it is called:

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create either a cost or benefit to a person other than the person who caused it.

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All externalities:

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the effect that an additional user of a good or participant in an activity has on the value of that good or activity for others.

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A network externality is:

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-individuals don't take into account all the costs associated with their market choice.
-society bears part of the cost borne of private transactions.
-production and consumption is above the socially optimal level.
All of these statements are true.

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When negative externalities are present, it means that:

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private benefits are less than social benefits.

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When positive externalities are present in a market, it means that:

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-Producers
-Consumers
-Those affected by the externality
All of these groups would be affected.

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Who is affected when a Pigouvian subsidy is imposed on a market with a positive externality?

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what people pay often does not reflect the real value they put on a good.

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When the free rider problem is present in a market:

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national defense.

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An example of a public good is:

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set a very specific consumer quota on consumption.

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When goods are subject to market failure, all of the following are possible solutions to the market failure except:

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it is possible for sellers to prevent its use by those who have not paid for it.

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When a good is excludable:

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Normative statement

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Which type of statement is most likely to include the word "should"?

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subjective beliefs.

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A normative statement is generally based upon:

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positive

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A factual claim about how the world actually works is a ______________ statement.

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Positive

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Economies that adopt more open trade policies have often historically enjoyed faster economic growth rates as a result. This is an example of what kind of statement?

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can actually be false.

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A positive statement:

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Individuals with a bachelor's degree earn higher average incomes than those with only a high school diploma.

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Which of the following is an example of positive statement?

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shows all the possible combinations of outputs that can be produced using all available resources.

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A production possibilities frontier is a line or curve that:

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the opportunity cost of producing one good in terms of the other good.

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The slope of a production possibilities frontier measures:

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have a concave shape.

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If we consider the reality that each worker has different skills, then the production possibilities frontier would:

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would display an increasing opportunity cost of a good as more of that good is produced.

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If we consider the reality that each worker has different skills, then the production possibilities frontier

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shift out.

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If society were to experience an increase in its available resources its production possibilities frontier would:

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(8 dishes, 2 fences), or (4 dishes, 3 fences).

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Tom and Jerry have two tasks to do all day: make dishes and build fences. If Tom spends all day making dishes, he will make 16 dishes. If he instead devotes his day to building fences, Tom will build 4 fences. If Jerry spends his day making dishes, he will make 14 dishes; if he spends the day building fences, he will build 7 fences. At the end of the day, Tom could have:

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will gain the comparative advantage in the production of another good.

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When a country loses its comparative advantage in the production of a good it:

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comparative; tablets

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Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPods or 10 tablets each year. Country B has 200 workers. Country B has the _______________ advantage in the production of tablets, which means they should specialize in __________________.

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1 tablet in Country A is 2 iPods.

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Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPods or 10 tablets each year. Country B has 200 workers. Which of the following is true? The opportunity cost of:

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a shift of the demand curve.

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A change in a nonprice factor of demand will cause:

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a movement to the right along the demand curve for spaghetti.

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A decrease in the price of spaghetti is likely to cause:

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BP gasoline increases.

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Demand for Shell gasoline will increase if the price of:

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The demand curve shifts horizontally.

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What happens to the demand curve when a nonprice determinant of demand changes?

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decrease, and his demand curve will shift to the left.

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Roy just got a big promotion at work which includes a sizable pay increase. Roy's demand for Ramen Noodles, an inferior good, will likely:

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The costs of inputs

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Which of the following would not affect an individual's demand?

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increase each summer and decrease each winter.

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The city of Burlington gets very hot each summer and very cold each winter. We would expect the demand for lemonade to:

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better technology allows them to be produced more cheaply.

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One reason the supply of cell phones has increased is:

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the supply of leather shoes to decrease.

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A recent epidemic of mad cow disease caused the government to mandate that thousands of cows be completely destroyed. This will likely cause:

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quantity will definitely rise, while the equilibrium price cannot be predicted.

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Consider a market that is in equilibrium. If it experiences both an increase in demand and an increase in supply, what can be said of the new equilibrium? The equilibrium:

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price will definitely rise, while the equilibrium quantity cannot be predicted.

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Consider a market that is in equilibrium. If it experiences both an increase in demand and a decrease in supply, what can be said of the new equilibrium? The equilibrium:

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Price of related good, price of input

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Consider the market for ride-on lawn mowers and the recent increases in the price of oil. The recent increase in the price of oil makes it more expensive to manufacture ride-on lawn mowers. An increase in the price of oil also makes it more expensive to run a ride-on mower. What factors of demand and/or supply are affected by the changing price of oil?

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- 1.25

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Suppose when the price of calculators is $18, the quantity demanded is 90, and when the price is $22, the quantity demanded drops to 70. Using the mid-point method, the price elasticity of demand is:

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-1.75

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Suppose when the price of a can of tuna is $1.30, the quantity demanded is 9, and when the price is $1.50, the quantity demanded is 7. Using the mid-point method, the price elasticity of demand is:

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unit elastic.

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If the price of a cup of coffee increases by 50 percent, the quantity demanded decreases by 50 percent. The price elasticity of demand is:

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0.15

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Suppose when the price of shoe laces goes from $1 to $2 per pair, production increases from 95 million pairs to 105 million pairs per year. Using the mid-point method, the price elasticity of supply is:

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goods are substitutes or complements.

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Whether a cross-price elasticity of demand is positive or negative indicates whether the:

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complements.

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The cross-price elasticity of two goods is -2. This tells us the two goods are:

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a normal good.

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A good with an income elasticity of 0.4 is:

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- 0.2

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If the price of cereal increases by 10 percent and the amount of milk demanded decreases by 2 percent, then the cross-price elasticity of these goods is:

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-1.5 and is elastic.

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If the price of a DVD decreases by 50 percent, the quantity demanded increases by 75 percent. The price elasticity of demand is:

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-0.1 and is inelastic.

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If the price of hairbrushes decreases by 20 percent, the quantity demanded increases by 2 percent. The price elasticity of demand is:

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much consumers or producers respond to a change in market price.

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Price elasticity is a measure of how

1 of 148

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maximized by rational individuals.
revealed by observing choices an individual makes.
the satisfaction individuals get from different bundles of goods.

All are correct!

answer

Utility is:

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is the change in total utility that comes from consuming one additional unit of a good or service.

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The concept of marginal utility:

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is the principle that the additional utility gained from consuming successive units of a good or service tends to be smaller than the utility gained from the previous unit.

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The concept of diminishing marginal utility:

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Bella's total utility will be maximized if she eats three pieces.

answer

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total utility will rise, peak, and then decline as more and more units are consumed.

answer

Thinking about the total utility gained from the consumption of a typical good, we can say in general that

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the marginal utility from studying for a fifth hour is less than the marginal utility from the first hour of exercise.

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Zachary spends his day studying for a total of four hours and exercising for one hour. Using the concept of utility to explain his choices, we can say

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answer

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is not maximizing his utility.

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This table shows the different combinations of goods that Jack can consume, given that his income to spend on these two items is $10.

Bundle Number of popsicles Utility from popsicles Number of ice cream cones Utility from ice cream cones
A 10 700 0 0
B 8 720 1 500
C 6 650 2 700
D 4 550 3 750
E 2 400 4 760
F 0 0 5 760

Considering the information in the table shown, if Jack decides to consume bundle D, we can conclude that Jack:

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...

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A budget constraint is:

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5 Tanning sessions and 2 rounds of golf.

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Sam has $200 a month to spend on either tanning sessions or rounds of golf. Tanning sessions are $20 each, and a round of golf is $50. A point on Sam's budget constraint would be:

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$35,000

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No, because he's earning an economic profit of -$6,000.

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close his shop and go back to what he was doing before with his time and assets, because it was earning him $6,000 more than he's earning now.

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Tom has an opportunity cost of $41,000.
Tom earns an accounting profit of $35,000.
Tom experiences an economic loss of $6000.
All are correct.

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$64,000

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$8,000

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The explicit cost of $8,000

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less than accounting profits.

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In general, economic profits are:

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All of these are possible.

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When accounting profits are positive, economic profits could be:

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positive.

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When economic profits are positive, accounting profits could be:

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total revenue minus explicit costs.

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Accounting profits are calculated as:

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total revenue minus all opportunity costs, explicit and implicit.

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Economic profits are calculated as:

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if it is making money with this venture; if it can make more money with a different venture

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Accounting profits can tell a business _______________________, and economic profits can tell a business ______________________.

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costs that don't depend on the quantity of output produced.

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Fixed costs are:

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costs that depend on the quantity of output produced.

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Variable costs are:

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Employee wages

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variable costs equal zero.

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If a firm produces nothing, then its:

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fixed costs stay the same.

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If a firm decreases production, then its:

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variable costs decrease.

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If a firm decreases production, then its:

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The variable cost of fabric would drop to zero.

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are able to sell as much as they want without affecting the market price.

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In a perfectly competitive market, producers:

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is equal to price multiplied by quantity sold.

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In a perfectly competitive market, total revenue:

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-constant, regardless of quantity sold.
-equal to average revenue for a firm.
-equal to marginal revenue for a firm.
All of these are true.

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For firms that sell one product in a perfectly competitive market, the market price is:

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can be influenced by one firm's output decision.

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For firms that sell one product in a perfectly competitive market, the market price:

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equal to marginal revenue.

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For firms that sell one product in a perfectly competitive market, average revenue is:

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always be the same as marginal revenue.

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For firms that sell one product in a perfectly competitive market, average revenue will:

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$10

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$10

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$10

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stay the same.

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If a perfectly competitive firm faces a market price of $3 per unit, and it decides to produce 30,000 units, the market price will likely:

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$4.

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if a firm in a perfectly competitive market faces a market price of $4, and it decides to produce 700 units, the firm's average revenue will be:

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will stay the same.

answer

If a firm in a perfectly competitive market faces a market price of $2, and it decides to increase its production from 2,000 units to 4,000 units, the firm's marginal revenue:

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increase from $2,400 to $4,400.

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If a firm in a perfectly competitive market faces a market price of $8, and it decides to increase its production from 300 units to 550 units, the firm's total revenue will:

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temporarily increase.

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If the demand increases in a perfectly competitive market, the price will:

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increase.

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If demand increases in a perfectly competitive market, then in the short run supply will:

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answer

If the demand increases in a perfectly competitive market, what will likely occur?

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answer

If the demand increases in a perfectly competitive market, what will likely occur?

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temporarily decrease.

answer

If the demand in a perfectly competitive market decreases, the price will:

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upward sloping; perfectly elastic

answer

The short-run supply curve is _______________ and the long-run supply curve is _______________ in a perfectly competitive market in which all firms have identical cost structures.

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$600

answer

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lower than that of the 3rd unit.

answer

question

answer

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Market demand

answer

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increase and eventually decrease as output increases.

answer

For a monopolist, total revenues will:

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are always equal to price.

answer

For a monopolist, average revenues:

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is the increase in revenues from selling a greater quantity at a lower price.

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For a monopolist, the quantity effect:

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lower the price.

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If a monopoly wishes to sell more output, it must:

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the same as that of the perfectly competitive firm.

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For a monopoly, for all units greater than one, the marginal revenue curve:

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1. to choose the quantity where marginal cost equals marginal revenue.
2. the same as that of the perfectly competitive firm.
3. to choose price according to demand.
All of the above

answer

The profit-maximizing decision for the monopoly is:

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MR is higher than MC.

answer

At any quantity of output below the intersection of the marginal revenue and marginal cost curves:

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average revenue is greater than price.

answer

For a monopolist, at the profit-maximizing level of output:

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answer

The monopolist is able to enjoy profits in the long run because:

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causes a loss of total surplus.

answer

The equilibrium price and quantity in a monopoly market:

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lower quantity than the perfectly competitive one.

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The monopolist's outcome happens at a:

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higher than that of a competitive market.

answer

With a monopolist's outcome, producer surplus is:

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product differentiation.

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Offering goods that are similar to competitors' products but more attractive in some ways is called:

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act like a monopolist.

answer

In the short run, product differentiation enables firms in monopolistically competitive markets to:

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monopolies; perfectly competitive firms

answer

In the short run, monopolistically competitive firms behave like ________________, but in the long run, the profit of a firm is similar to that of ________________.

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have excess capacity.

answer

In the long-run, monopolistically competitive firms:

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faces a downward sloping demand curve.

answer

Like the monopolist, the monopolistically competitive firm:

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the availability of close substitutes.

answer

For the monopolistically competitive firm, the steepness of the demand curve depends on:

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the less differentiated the good is.

answer

For the monopolistically competitive firm, the demand curve it faces will be flatter:

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can earn positive economic profits by acting like a monopolist.

answer

In the short run, monopolistically competitive firms:

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is not efficient.

answer

The long run outcome of the monopolistically competitive firm:

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creates welfare loss.

answer

The long run outcome of the monopolistically competitive firm:

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answer

In economics, the concept of surplus:

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is the maximum price that a buyer would be willing to pay for a good or service.

answer

A consumer's willingness to pay:

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answer

If Billy's willingness to pay for one snowboard is $250 and his willingness to pay for a second snowboard is $400, how many snowboards would he buy if the market price of snowboards is $500?

question

$37

answer

Which of the following prices could represent Eli's willingness to pay for a baseball glove if he observed the market price of $43 and decided not to buy one?

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is the minimum price that a seller is willing to accept in exchange for a good or service.

answer

A seller's willingness to sell:

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is represented by the demand curve.

answer

The willingness to pay of buyers' in a market:

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$4.01

answer

If Thelma's willingness to sell her homemade fudge is $4, then at which of the following prices would Thelma sell her fudge?

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Sam would sell a sweater at any of these prices.

answer

If Sam's opportunity cost of a sweater is $37, which of the following prices would he have to observe in the market in order to sell a sweater?

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$170.

answer

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Abe's consumer surplus increases from $5 to $60, and total consumer surplus increases from $5 to $70.

answer

A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill.

Given the scenario described, if the market price of grills falls from $395 to $340, then we can say:

question

$9.

answer

question

is the difference between the total surplus occurring in a market and the maximum total surplus achievable.

answer

Deadweight loss:

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answer

A type of public policy set in response to rising prices of a basic necessity, such as food, might be:

question

-shift the distribution of surplus.
-create unintended side effects.
-reduce efficiency of a market.
All are correct.

answer

Government attempts to lower, raise, or simply stabilize prices can:

question

setting a minimum price on milk.

answer

Governments may attempt to protect dairy farmers from low milk prices by:

question

the price is set inefficiently high.

answer

If there is a sole producer of a good, and he faces no threat of competition, it is likely that:

question

redistribute surplus in a market.

answer

The government imposing a minimum wage is an example of an attempt to:

question

are regulations that sets a maximum or minimum legal price for a particular good.

answer

Price controls:

question

a legal maximum price.

answer

A price ceiling is:

question

must be set above the equilibrium price, and will likely cause a surplus.

answer

A price floor that is binding:

question

will cause quantity demanded to exceed quantity supplied.

answer

A binding price ceiling:

question

Supply shifts vertically upward by the amount of the tax.

answer

A tax on sellers has what effect on a market?

question

answer

When a tax is imposed on a market:

question

Tax incidence:

answer

is an economic term for the division of a tax burden between buyers and sellers.

question

the sellers will bear a greater tax incidence than buyers.

answer

If the demand curve is more elastic than the supply curve, then:

question

external cost.

answer

Any cost that is imposed without compensation on someone other than the person who caused it is called:

question

create either a cost or benefit to a person other than the person who caused it.

answer

All externalities:

question

the effect that an additional user of a good or participant in an activity has on the value of that good or activity for others.

answer

A network externality is:

question

answer

When negative externalities are present, it means that:

question

private benefits are less than social benefits.

answer

When positive externalities are present in a market, it means that:

question

-Producers
-Consumers
-Those affected by the externality
All of these groups would be affected.

answer

Who is affected when a Pigouvian subsidy is imposed on a market with a positive externality?

question

what people pay often does not reflect the real value they put on a good.

answer

When the free rider problem is present in a market:

question

national defense.

answer

An example of a public good is:

question

set a very specific consumer quota on consumption.

answer

When goods are subject to market failure, all of the following are possible solutions to the market failure except:

question

it is possible for sellers to prevent its use by those who have not paid for it.

answer

When a good is excludable:

question

Normative statement

answer

Which type of statement is most likely to include the word "should"?

question

subjective beliefs.

answer

A normative statement is generally based upon:

question

positive

answer

A factual claim about how the world actually works is a ______________ statement.

question

Positive

answer

Economies that adopt more open trade policies have often historically enjoyed faster economic growth rates as a result. This is an example of what kind of statement?

question

can actually be false.

answer

A positive statement:

question

Individuals with a bachelor's degree earn higher average incomes than those with only a high school diploma.

answer

Which of the following is an example of positive statement?

question

shows all the possible combinations of outputs that can be produced using all available resources.

answer

A production possibilities frontier is a line or curve that:

question

the opportunity cost of producing one good in terms of the other good.

answer

The slope of a production possibilities frontier measures:

question

have a concave shape.

answer

If we consider the reality that each worker has different skills, then the production possibilities frontier would:

question

would display an increasing opportunity cost of a good as more of that good is produced.

answer

If we consider the reality that each worker has different skills, then the production possibilities frontier

question

shift out.

answer

If society were to experience an increase in its available resources its production possibilities frontier would:

question

(8 dishes, 2 fences), or (4 dishes, 3 fences).

answer

question

will gain the comparative advantage in the production of another good.

answer

When a country loses its comparative advantage in the production of a good it:

question

comparative; tablets

answer

question

1 tablet in Country A is 2 iPods.

answer

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPods or 10 tablets each year. Country B has 200 workers. Which of the following is true? The opportunity cost of:

question

a shift of the demand curve.

answer

A change in a nonprice factor of demand will cause:

question

a movement to the right along the demand curve for spaghetti.

answer

A decrease in the price of spaghetti is likely to cause:

question

BP gasoline increases.

answer

Demand for Shell gasoline will increase if the price of:

question

The demand curve shifts horizontally.

answer

What happens to the demand curve when a nonprice determinant of demand changes?

question

decrease, and his demand curve will shift to the left.

answer

Roy just got a big promotion at work which includes a sizable pay increase. Roy's demand for Ramen Noodles, an inferior good, will likely:

question

The costs of inputs

answer

Which of the following would not affect an individual's demand?

question

increase each summer and decrease each winter.

answer

The city of Burlington gets very hot each summer and very cold each winter. We would expect the demand for lemonade to:

question

better technology allows them to be produced more cheaply.

answer

One reason the supply of cell phones has increased is:

question

the supply of leather shoes to decrease.

answer

A recent epidemic of mad cow disease caused the government to mandate that thousands of cows be completely destroyed. This will likely cause:

question

quantity will definitely rise, while the equilibrium price cannot be predicted.

answer

Consider a market that is in equilibrium. If it experiences both an increase in demand and an increase in supply, what can be said of the new equilibrium? The equilibrium:

question

price will definitely rise, while the equilibrium quantity cannot be predicted.

answer

Consider a market that is in equilibrium. If it experiences both an increase in demand and a decrease in supply, what can be said of the new equilibrium? The equilibrium:

question

Price of related good, price of input

answer

question

- 1.25

answer

Suppose when the price of calculators is $18, the quantity demanded is 90, and when the price is $22, the quantity demanded drops to 70. Using the mid-point method, the price elasticity of demand is:

question

-1.75

answer

Suppose when the price of a can of tuna is $1.30, the quantity demanded is 9, and when the price is $1.50, the quantity demanded is 7. Using the mid-point method, the price elasticity of demand is:

question

unit elastic.

answer

If the price of a cup of coffee increases by 50 percent, the quantity demanded decreases by 50 percent. The price elasticity of demand is:

question

0.15

answer

question

goods are substitutes or complements.

answer

Whether a cross-price elasticity of demand is positive or negative indicates whether the:

question

complements.

answer

The cross-price elasticity of two goods is -2. This tells us the two goods are:

question

a normal good.

answer

A good with an income elasticity of 0.4 is:

question

- 0.2

answer

If the price of cereal increases by 10 percent and the amount of milk demanded decreases by 2 percent, then the cross-price elasticity of these goods is:

question

-1.5 and is elastic.

answer

If the price of a DVD decreases by 50 percent, the quantity demanded increases by 75 percent. The price elasticity of demand is:

question

-0.1 and is inelastic.

answer

If the price of hairbrushes decreases by 20 percent, the quantity demanded increases by 2 percent. The price elasticity of demand is:

question

much consumers or producers respond to a change in market price.

answer

Price elasticity is a measure of how

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