Microeconomics Final Exam (Cengage)

outweighs the extra cost

charge a stand-by passenger more than $100.

the marginal benefit of the action exceeds the marginal cost of the action.

Congress should increase the legal minimum wage.

scarcity

the fallacy of composition

the marginal cost of teaching increased

Government programs can be implemented with good intentions but can lead to undesirable outcomes because of unintended consequences

additional costs of a particular activity or product

changes in incentives influence behavior in a predictable way--people will be less likely to choose an option as it becomes more expensive

limited resources to satisfy virtually unlimited wants

public interest would be served quite well

the additional benefits of the second car with the additional cost of the second car

Government control of rent decreases the number of new apartments constructed

scarcity imposed by nature

rational if Ayana values sleep more highly than the benefit she expects to receive from attending the class

shift the production possibilities curve outward

a strong incentive to take steps to reduce the chance that they will harm the property of others

an increase in the rate of investment as a share of total output

reduce the number of mutually beneficial exchanges that occur

Aiden has a comparative advantage in ironing

-moving goods from people who value the goods less to people who value the goods more
-permitting trading partners to expand output through specialization in areas where they each have a comparative advantage
-permitting trading partners to expand output through the adoption of mass production methods

Exchange tends to move each good toward those individuals who value the good more highly

Middlemen can be viewed as agents who create value by reducing transaction costs and, thereby, facilitating gains from exchange

With private ownership, owners are held accountable for using their resources in a manner that harms the resources of others

central planning and political bargaining will replace market forces

you can only produce more of one good only if you produce less of another good

it permits people to expand production and achieve rates of output that would otherwise be unattainable

The production possibilities curves for these countries would have shifted inward

demand curve has shifted to the right

producers are willing to supply larger amounts of a good as its price increases

decrease the quantity demanded for the good

inventories are falling

It would shift the supply curve for air travel to the left

supply curve has shifted to the right

a doubling of the price of bread

decrease the demand for salsa

price must be below the equilibrium price

shift the demand curve for automobiles to the right

$2,300

the supply curve has shifted to the left

a decrease in the price of bus travel will decrease the demand for air travel

it increases

an increase in the quantity demanded for grapes

buy 2 percent more of the product in response to a 1 percent drop in price

will always be positive

relatively elastic

45 percent decrease in quantity demanded

elastic

Mason will increase his total satisfaction by purchasing the candy bar

attractiveness of the substitutes for the good

normal goods

Demand is elastic, and price increases

reduce price elasticity of demand by stressing the uniqueness of the product

the number of good substitutes is large

a leftward shift in the demand curve for bus travel

compared to residents of Leon County, residents of Bay County will have a larger price elasticity of demand for barbeque pork sandwiches

the demand for hair dryers is inelastic

there are fewer available substitutes

$6,000

accounting profit does not consider the opportunity cost of the firm's equity capital and, therefore, generally overstates economic profit

Marginal cost is less than average variable cost

fixed cost at Q = 200 is $130

they often exclude the opportunity costs of the firm's equity capital

it must have increasing returns to scale at low levels of production and decreasing returns to scale at high levels of production

marginal cost rises

large-scale output allows greater specialization for both labor and machines in the production process

Economic profits are less than accounting profits

economies of scale

less than 51

an increase in input prices

economists include opportunity cost in zero economic profit, while accountants do not include opportunity cost in zero accounting profit

her economic profit from textbooks will fall

Marginal cost is less than average total cost

a price floor

Quantity supplied exceeds quantity demanded but price cannot fall to remove the surplus

They anticipate that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city

imposition of a price floor above the equilibrium price of grain

a price ceiling

a decrease in the wage rate of accountants

production (or opportunity) cost no longer corresponds to market price

a surplus of the good will develop

a decrease in the supply of automobiles causing the price of automobiles to rise

There will be a shortage of beef

with shortages and waiting lists, they have no incentive to maintain and improve their property

The supply of newly constructed homes will increase

There will be a shortage of corn

an increase in the supply of psychologists that would decrease the wage of psychologists and increase the number employed

the quantity of the resource demanded falls

competitive markets fail to give producers and consumers correct price signals

too much of a polluting good

result in output that is lower than the efficient output for the good with an external benefit and output that is higher than the efficient output for the good with an external cost

the nature of public goods makes it difficult for producers to withhold them from nonpaying consumers

the benefits will become smaller and smaller while the costs will rise

The efficient price would be higher than $30 while the efficient output would be greater than 220 units

too few resources devoted to its production

register a price that is lower than the efficient one

result in a market price that is lower than the efficient one

The amount available to others is unaffected

The efficient price would higher than $18 while the efficient output would be less than 400 units

because some of the costs and benefits of producing a good are not reflected in the market price

actual market outcomes provide less than the efficient quantity of education

efficient to stop well before perfection is achieved

the firm produced a larger output level

existing firms may see their costs rise as more firms compete for limited resources

increasing the value of resources

some firms will exit from the industry, and market price will rise until the remaining firms can earn the normal rate of return

cause the market supply to decline and the price of textiles to rise

decrease market supply and increase market prices

as long as marginal cost is less than price

reduce output

raise profits for firms that remain in the market

The firm must accept the price determined in the market if it is going to sell its product

the reward for creating value

is doing as well as it could in any other line of business

continue to produce a quantity such that marginal revenue equals marginal cost

it is covering all costs, including the opportunity cost of capital and labor

it adds more to revenue than it adds to cost

as long as the revenues from the production and sale of an additional unit exceeds the marginal cost of the unit

shift to the left

new firms will enter the market, and the current firms will experience a decrease in demand for their products until zero economic profit is again restored

rival firms will be attracted into the market

shift to the right

increase price and reduce its rate of output

New firms would enter the market, resulting in fewer sales by existing firms

lose only some of its sales

decrease and average total cost to be higher

lower the price of the product and expand its output

both economic profits and economic losses disappear in the long run

reduce its price and increase its output level

The marginal cost of producing the last unit is no greater than the marginal revenue derived from its sale

reduce output until marginal cost equals marginal revenue

An increase in demand for each firm and higher prices

each existing firm experiences a decrease in demand for its product

have at least two distinguishable groups of consumers

less than $22

charge a lower price to consumers with a more elastic demand for the firm's product

The demand of students and vacationers is generally more elastic than the demand of business travelers

has the most elastic demand

should be built

excessive advertising is encouraged

economic progress for society as a whole has normally been enhanced

low costs of entry into and exit from the market

be able to prevent consumers from reselling the product to other consumers

increase total revenue by charging higher prices to those with the most inelastic demand for the product and lower prices to those with the most elastic demand

the demand of senior citizens for the services of the restaurant must be elastic

They send a message that more value would be created if the resources were used to produce other goods

the opportunity to bring new and different products and services to the market.

the demand of these travelers is elastic, and therefore, the lower fares generate more revenue

reducing their output so they can raise their price

economies of scale

The regulators often come to represent the interests of the established firms and use their power to limit competition

control over an essential resource

increase output as long as the marginal revenue exceeds the marginal cost of producing that unit

the oligopolists earn the highest profit when they cooperate and behave like a monopolist

cooperate to maximize joint profits and the incentive to cheat on the agreement in order to increase the firm's share of the profit

raise price and decrease output

interdependent nature of oligopolistic decisions

the average costs of production will increase

are often unable to police the price and output policies of other members

Economists cannot predict the reactions that firms will have to the actions and decisions of other firms

low because there are no residual claimants to monitor and institute cost-reducing measures

firms in oligopolistic industries react to each other's behavior in many ways

temporarily provide the patent owner with monopoly power

price of its output changes

increase the demand for construction workers and architects

provide users with information concerning the relative scarcity of resources

workers' decisions about the labor-leisure tradeoff respond to a change in the wage

an increase in the wages of computer technicians, which will attract additional technicians in the long run

an increase in the marginal productivity of workers

demand for trees will also increase

$25.00 or less per hour

costs half as much as a unit of skilled labor

less of the resource should be used

a reduction in the future supply of accountants

an increase in the marginal revenue product of labor

resources will shift from other resource markets to this one

producers to substitute other inputs for the resource

an increase in the productivity of computer programmers

they reduce competition and prevent some voluntary exchanges from occurring

differential between the earnings of white males and those of minority males decreases

If minority and white employees in a skill category are equally productive, the profit motive provides employers with a strong incentive to hire minority employees if they are available at a lower wage.

more skill is required to perform well on the job

The average wages of minority employees are lower than the average wages of whites with similar productivity characteristics

A higher rate of investment in human and nonhuman capital

output per worker is high

Differences in output per worker

competitive forces will tend to reduce discrimination

Competition among employers for productive workers

demand for their services to decline, and their wages to fall

Occupational licensing laws reduce competition in some occupations and make it more difficult for new entrants to compete in these labor markets

Millionaires are far more likely than others to be self-employed entrepreneurs

a leftward shift in the supply curve for dishwashers

Encourage farmers to produce less milk

sellers will bear a larger share of the tax burden

the United Auto Workers union obtaining a substantial wage increase for auto workers

less output than is efficient

an increase in quantity supplied

The price would be too low, and the output would be too large

Price would increase, and quantity would increase

both the price and quantity of wine sold to increase

The price of wine will increase, fewer bottles will be purchased, and there will be a deadweight loss from this tax

less of the good will be produced than the amount consistent with economic efficiency

demand curve shifting to the right, with no change in supply

Demand would decrease, leading to a reduction in price and a reduction in quantity sold

demand for the product is highly elastic and the supply is relatively inelastic

regressive tax

larger for good X than good Y

demand is more inelastic than the supply

the quantity demanded of physicals increases and the quantity supplied of physicals decreases

the market price of the product will fall in response to the subsidy

sellers will bear a larger share of the tax burden

help to direct the items toward their highest valued uses

average tax rate remains constant at all levels of income

falls most heavily on the side of the market that is more inelastic

increases substantially

will fall primarily on consumers