question
What is the marginal product of the fourth worker?
Labor Hours Output
0 0
1 10
2 18
3 25
4 30
5 33
6 34
7 35
Labor Hours Output
0 0
1 10
2 18
3 25
4 30
5 33
6 34
7 35
answer
D. 5 Units
question
If the workers are paid $8 per hour, the price of the product is $4, and the fixed cost of the business is $20,
then how many workers should the business employ?
then how many workers should the business employ?
answer
E. Seven
question
If positive economic profit exists in monopolistic competition, there is...
answer
A. Incentive for firms to enter.
question
"No matter the price, I will always buy five gallons of ice cream a week. I love ice cream!" This statement reflects a price elasticity of demand that is...
answer
E. Perfectly inelastic.
question
Profit maximization occurs when...
answer
B. A firm expands output until marginal revenue is equal to marginal cost.
question
The popular TV shows Ice Road Truckers and Ax Men portray workers engaged in dangerous jobs such as driving big trucks over ice and cutting down big trees. You would expect that these workers would earn a...
answer
C. High salary because they have dangerous jobs.
question
Firms are concerned with "effectiveness of effort." They examine how much output they receive from every unit of input, described simply as...
answer
B. Productivity
question
If a competitive firm can make enough revenue to cover its variable costs, the firm will...
answer
D. Choose to remain open.
question
It is important for a firm to know its minimum efficient scale of production because that is where...
answer
C. Long-run costs are minimized.
question
Assume all markets are in long-run equilibrium. The market quantity supplied in a duopoly would be________ the market quantity supplied in a monopoly and ________ the market quantity supplied in a
competitive market.
competitive market.
answer
E. Greater than or equal to; less than or equal to.
question
The Lorenz curve is especially helpful for seeing how income inequality
answer
C. Reflects the different causational factors.
question
Consider the market for refined oil. In the market equilibrium...
answer
E. There is no deadweight loss.
question
Market power is best described as when the firm's demand curve is...
answer
D. Downward sloping.
question
What is DiNozzo's opportunity cost of making a wooden boat?
answer
A. 20 solved crimes.
question
Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand?
answer
E. Coffee and cream.
question
Kit-N-Sit and Kittysitters are two cat-sitting services in Kent, Ohio. There are no other cat-sitting services, so the market is considered to be a duopoly.
19. According to the kinked demand curve theory, if Kit-N-Sit cuts prices, Kittysitters will...
19. According to the kinked demand curve theory, if Kit-N-Sit cuts prices, Kittysitters will...
answer
E. Respond aggressively by cutting prices.
question
The change in an equilibrium value is sometimes indeterminate due to the fact that...
answer
B. Demand always shifts less than supply.
question
In the case of a natural monopoly, which government response is LEAST practical?
answer
A. Leave the monopolist firm free to maximize profits.
question
Approximately ________ percent of the total national income is owned by the poorest 40 percent (bottom two quintiles) of households in the United States.
answer
C. 12
question
Monopolistic competition...
answer
C. Is just like a monopoly but with more market power.
question
Six firms are currently producing and selling in a market. When two of the six firms exit the market, economists expect that the equilibrium price will ________ and the equilibrium quantity will ________.
answer
B. Be higher, be lower.
question
Which graph shows a person who has a fixed quantity of hours that he or she is willing to work per week?
answer
D. Graph D (The line on the graph is vertical).
question
Which of the following is a characteristic of a monopoly but not a characteristic of a competitive market?
answer
C. A producer in a monopoly may earn long-run economic profits.
question
A profit-maximizing firm in a competitive market will employ more workers until the...
answer
E. Value of the marginal product equals the wage.
question
When firms in an oligopoly collude without an explicit agreement, economists say they are involved in________ collusion.
answer
B. Tacit.
question
Wage Workers Demanded Workers Supplied
$10 150 75
$20 100 100
$30 75 125
$40 60 135
$50 40 125
The equilibrium wage is...
$10 150 75
$20 100 100
$30 75 125
$40 60 135
$50 40 125
The equilibrium wage is...
answer
B. $20
question
Why does a surplus exist under a binding price floor?
answer
C. It makes the price so high that the quantity supplied exceeds the quantity demanded in the legal market.
question
An activity's marginal benefit is ________ at the optimal quantity.
answer
D. Equal to the marginal cost.
question
Preston shops frequently at his favorite store, Fully Clothes. He and other like-minded consumers are willing to pay a much higher price than they would at competing stores because Fully Clothes best suits their
particular preferences. Poor management causes Fully Clothes to go out of business. What is likely to happen to Fully Clothes' customers' demand curves?
particular preferences. Poor management causes Fully Clothes to go out of business. What is likely to happen to Fully Clothes' customers' demand curves?
answer
C. No change due to lack of production differentiation.
question
Use the following information to answer the next six questions.
Market for a new hardcover book:
Demand: Qd = 325 - 8P
Supply: Qs = -60 + 3P
What would be the quantity supplied if a price ceiling is set at $50?
Market for a new hardcover book:
Demand: Qd = 325 - 8P
Supply: Qs = -60 + 3P
What would be the quantity supplied if a price ceiling is set at $50?
answer
A. 90
question
What would be the quantity supplied if a price floor is set at $20?
answer
B. 45
question
The difference between the willingness to sell a good and the price a producer receives is also known as...
answer
B. Producer surplus.
question
What is the most preferred consumption point for a carbohydrate-loving society?
answer
E. Point F (The point on the graph is to the right of the line, so it is unobtainable)
question
The ________ is an incomplete picture because a single number cannot fully reflect the sources of the underlying differences in income.
answer
E. Lorenz Curve.
question
Why might a less developed country have a greater degree of income inequality?
answer
E. Less developed nations receive large amounts of foreign aid, which isn't taken into account with calculations of income inequality.
question
Consider the following scenario to answer the next five questions: Two friends, Monica and Chandler, enjoy baking bread and making apple pies. Monica takes two hours to bake 1 loaf of bread and one hour to make 1 pie. Chandler takes four hours to bake 1 loaf of bread and four hours to make 1 pie.
If Monica and Chandler decide to specialize in order to maximize their combined output, who should produce
what?
If Monica and Chandler decide to specialize in order to maximize their combined output, who should produce
what?
answer
B. Monica should specialize in making pies and Chandler should specialize in making bread.
question
Firm C's monthly profit increased by ________ due only to the output effect and decreased by ________ due only to the price effect, for a net increase of $500.
answer
C. $500; $0
question
Due only to the price effect, profits for each firm decline by $1,000. Due only to the output effect, profits for both Firm A and Firm B did not change, and profits for Firm C increased by $1,500. It was in Firm C's
interest to increase output because Firm C realized only ________ of the total $3,000 price effect, but it realized the full ________ of the total quantity effect.
interest to increase output because Firm C realized only ________ of the total $3,000 price effect, but it realized the full ________ of the total quantity effect.
answer
A. $1000, $1500
question
Listed below are four different collusive agreements that Nextflix and Flixbuster are considering. Assuming both firms will abide by the terms, which collusive agreement(s) would maximize total profit in the market?
I. Nextflix supplies 50 subscriptions and Flixbuster supplies 450 subscriptions.
II. Nextflix supplies 450 subscriptions and Flixbuster supplies 50 subscriptions.
III. Nextflix supplies 300 subscriptions and Flixbuster supplies 100 subscriptions.
IV. Nextflix supplies 100 subscriptions and Flixbuster supplies 100 subscriptions
I. Nextflix supplies 50 subscriptions and Flixbuster supplies 450 subscriptions.
II. Nextflix supplies 450 subscriptions and Flixbuster supplies 50 subscriptions.
III. Nextflix supplies 300 subscriptions and Flixbuster supplies 100 subscriptions.
IV. Nextflix supplies 100 subscriptions and Flixbuster supplies 100 subscriptions
answer
E. Agreements III and IV
question
Organizations like 5th Pillar, which report attempted bribery to authorities, are combating the forces of________ in society
answer
A. Corruption
question
When her income falls from $50,000 to $20,000, Arianna increases her monthly purchase of hamburger from 20 pounds to 35 pounds. From the midpoint method, Arianna's income elasticity of demand for hamburgers is...
answer
B. -0.63
question
/Firm 1 Emissions /Firm 1 MC/ Firm 2 Emissions/ Firm 2 MC/
0 $60 0 $120
1 $50 1 $100
2 $40 2 $80
3 $30 3 $60
4 $20 4 $40
5 $10 5 $20
6 $0 6 $0
The government allocates three allowances to each firm, where each allowance allows one unit to be emitted. The optimal outcome in this case is for ________ to sell one permit to the other firm, and a price that will be agreeable to both is ________.
0 $60 0 $120
1 $50 1 $100
2 $40 2 $80
3 $30 3 $60
4 $20 4 $40
5 $10 5 $20
6 $0 6 $0
The government allocates three allowances to each firm, where each allowance allows one unit to be emitted. The optimal outcome in this case is for ________ to sell one permit to the other firm, and a price that will be agreeable to both is ________.
answer
C. Firm 1; $50
question
How will a reduction in the national unemployment rate affect a nation's production possibilities frontier (PPF)?
answer
D. It will move society outward, to a point closer to or on the PPF.
question
Lorelei finds that she is consistently unable to fill all of the open positions at her bakery. This indicates that the wage she is offering is...
answer
E. Below the market rate.
question
Product differentiation...
answer
B. Refers to firms' attempts to make real or apparent differences in essentially substitutable products look different in the minds of consumers.
question
The citizens of Robbinsville notice that their friends and family in the neighboring city of Deville are earning higher wages. We would expect the labor supply in Robbinsville ________ and the labor supply in Deville to
________.
________.
answer
D. Shift left, shift right.
question
In 1974, the U.S. attorney general filed suit against which telecom company for violating antitrust laws?
answer
E. AT&T
question
When one producer has a comparative advantage in production, he or she....
answer
B. Can produce a good at a lower opportunity cost than someone else.
question
For a firm to be able to practice price discrimination, it must be a...
answer
A. Price maker.
question
Price discrimination allows firms to make more money by partitioning their customers into at least two distinct groups, those who...
answer
E. Are willing to pay more and those who buy whenever they see the word "discount".
question
Which company is most easily able to outsource its operations and have its good or service produced in another country?
answer
C. Queen's quilts.
question
Willow Park is a small community in Texas with only one gas station. The price of gasoline in Willow Park most likely...
answer
D. Is higher than in the big cities in Texas.
question
This profit-maximizing firm's total profit is equal to
answer
B. -$160 (Graph looks similar to this but with different numbers)
question
Leading economic indicators suggest that incomes will be going up next year. In response to these reports, companies are forecasting increased prices for future sales of their goods. As a result of these increases, the
supply curve will...
supply curve will...
answer
A. Shift to the right, causing the equilibrium price to decrease.
question
If the firm depicted in the graph had to pay higher rent to its landlord, we would expect its ________ curve to shift ________.
answer
C. The average total cost (ATC); Up
question
The firm is experiencing gains from specialization up to what level of output along the marginal cost curve?
answer
C. Q1 (There is a graph that goes with this one)
question
The long-run market supply curve would be a horizontal line...
answer
B. At $5 (There is a graph that goes with this one)
question
An example of a tying arrangement is...
answer
B. A car manufacturer installing expensive onboard GPS/navigation systems in all the cars it sells.
question
In the short run, average total costs at first decrease and then increase as more output is produced because...
answer
E. Marginal cost is at first less than the average total costs, then rises above it.
question
When an act of charity creates disincentives for recipients to take care of themselves, it is often called a(n)...
answer
D. Samaritan's Dilemma
question
Between two unionized firms, one would expect workers to receive higher wages in a firm....
answer
B. Where the threat of strike is high
question
Carmela's Churros is a perfectly competitive firm that sells desserts in Houston, Texas. Carmela's Churros currently is taking in $40,000 in revenues, and has $15,000 in explicit costs and $25,000 in implicit costs.
Holding all else constant, the price of churros in this market will...
Holding all else constant, the price of churros in this market will...
answer
E. Stay where it is.
question
In the context of market structures, franchising fees represent which aspect for monopolistic competition?
answer
C. Barriers to entry.
question
Taxing goods with very inelastic demand generates less deadweight loss than taxing goods with very elastic demand because...
answer
E. The change in consumer behavior is great.
question
Which of the following is a normative statement?
answer
C. Winters in Arkansas are too cold.
question
A 15 percent increase in the price of cookies results in a 9 percent decrease in the quantity of cookies sold. The revenue received by cookie suppliers will ________ because the price elasticity of demand for cookies is ________.
answer
E. Increase; Inelastic
question
In 2011, three firms were selling cellular phone service for a price of $40 per month in Pittsburgh, Pennsylvania. Each firm serviced 100 cell phone customers; thus, all firms together serviced a total of 300
customers. In 2012, five firms were selling cellular phone service for a price of $30 per month. Each firm serviced 70 cell phone customers; thus, all firms together serviced a total of 350 customers. Assume
marginal cost is $0 (zero) for all firms and thus total revenue is equal to total profit.
Which effect best describes the likely decrease in profits experienced by each of the three original firms due
only to the lower market price?
customers. In 2012, five firms were selling cellular phone service for a price of $30 per month. Each firm serviced 70 cell phone customers; thus, all firms together serviced a total of 350 customers. Assume
marginal cost is $0 (zero) for all firms and thus total revenue is equal to total profit.
Which effect best describes the likely decrease in profits experienced by each of the three original firms due
only to the lower market price?
answer
A. Competitive
question
The market price for a New York City taxi medallion is less today than it was in 2013. This is because...
answer
C. Ridesharing services like Uber have made the medallions less valuable.
question
The government controls for some indirect incentives in safety net social programs by...
answer
E. Establishing income limits for those who apply for safety net social programs.
question
The market for candles is perfectly competitive and is currently in equilibrium. What will happen if candles are later linked to more houses catching on fire?
answer
C. In the short run, firms will incur economic losses, but in the long run, firms will leave the market, bringing the economic profits back up to 0.
question
The short-run profit-maximizing output for the monopolistic competitive firm is ________ units per week.
answer
A. 0 (Zero)
There is a graph that goes with this one.
There is a graph that goes with this one.
question
The maximum long-run economic profit earned by this monopolistically competitive firm is...
answer
B. Represented by rectangle a, b, c, d.
There is a graph that goes with this one.
There is a graph that goes with this one.
question
Which of the following characteristics best defines a common-resource good?
answer
B. Rival and non excludable.
question
Coal mining is a dangerous occupation. For such a job, the passage of workplace safety laws would...
answer
A. At first increase but then decrease the severity of the negative compensating differential.
question
Jamie, an economics student, was just named Miss Florida, based in part on her answer to the question of why price gouging laws should be relaxed in that state. Jamie won because she gave which of the following
answers?
answers?
answer
A. They prevent customers who are willing to pay higher prices for needed products from doing so during the time of a disaster.
question
Willingness to Pay for Bottled Water
Quantity / City A / City B / City C
1 $20 $15 $14
2 $17 $13 $13
3 $14 $11 $12
4 $11 $9 $11
5 $8 $7 $10
Marginal Cost = $0
Kaleb is the only provider of bottled water for three cities. Because he has access to a natural spring, the marginal cost to produce an additional bottle is $0. Imagine he could price discriminate perfectly in this market. How much more profit would his firm earn if he practiced perfect price discrimination instead of practicing imperfect price discrimination (charging different prices in each city)?
Quantity / City A / City B / City C
1 $20 $15 $14
2 $17 $13 $13
3 $14 $11 $12
4 $11 $9 $11
5 $8 $7 $10
Marginal Cost = $0
Kaleb is the only provider of bottled water for three cities. Because he has access to a natural spring, the marginal cost to produce an additional bottle is $0. Imagine he could price discriminate perfectly in this market. How much more profit would his firm earn if he practiced perfect price discrimination instead of practicing imperfect price discrimination (charging different prices in each city)?
answer
C. $25
question
Indirect incentives create ________ consequences.
answer
E. Unintended
question
Market for Corn
Year / Price / Quantity Demanded / Quantity Supplied
1 $2.00 200,000 100,000
2 $2.50 186,000 125,000
3 $3.00 184,000 141,000
4 $3.50 169,000 169,000
5 $4.00 161,000 181,000
6 $4.50 155,000 200,000
7 $5.00 120,000 223,000
What would be the equilibrium price in the market for corn?
Year / Price / Quantity Demanded / Quantity Supplied
1 $2.00 200,000 100,000
2 $2.50 186,000 125,000
3 $3.00 184,000 141,000
4 $3.50 169,000 169,000
5 $4.00 161,000 181,000
6 $4.50 155,000 200,000
7 $5.00 120,000 223,000
What would be the equilibrium price in the market for corn?
answer
D. $3.50
question
From an initial examination, price discrimination may not seem like a social good because ________ is transferred from consumer to producer, but the overall benefit for society ________.
answer
B. Deadweight loss; increases.
question
When a particular strategy produces a better outcome for a person regardless of the strategies others choose, we say it is a(n)...
answer
B. Dominant strategy.
question
The tragedy of the commons occurs for goods that are...
answer
C. Nonrival and non excludable
question
Lenora and Uma own a dog-grooming business in upstate New York, called Pawkeepsie Groomers. There are many buyers and many sellers in the dog-grooming service market. Pawkeepsie Groomers experiences
normal cost curves, with the marginal cost (MC) curve crossing average variable cost (AVC) at $14 and average total cost (ATC) at $22.
____ 92. Pawkeepsie Groomers' short-run supply curve would be the...
____ 93. Pawkeepsie Groomers' long-run supply curve would be the...
normal cost curves, with the marginal cost (MC) curve crossing average variable cost (AVC) at $14 and average total cost (ATC) at $22.
____ 92. Pawkeepsie Groomers' short-run supply curve would be the...
____ 93. Pawkeepsie Groomers' long-run supply curve would be the...
answer
92. C. Marginal cost (MC) curve above $14.
93. D. Marginal cost (MC) curves above $22.
93. D. Marginal cost (MC) curves above $22.
question
A company produces at an output level where marginal revenue is equal to marginal cost and has the following revenue and cost levels:
Marginal cost curve intersects the average variable cost curve at $150.
Marginal cost curve intersects the average total cost curve at $200.
Marginal cost curve intersects the marginal revenue curve at $170.
What would you suggest this firm should do in the short run?
Marginal cost curve intersects the average variable cost curve at $150.
Marginal cost curve intersects the average total cost curve at $200.
Marginal cost curve intersects the marginal revenue curve at $170.
What would you suggest this firm should do in the short run?
answer
E. The firm should continue to produce at a loss.
question
In New York City's Chinatown, tourists flock to shops to buy souvenirs from local retailers. Each store sells similar items, but each salesperson tries to determine a customer's reservation price before reaching a deal. In this scenario, the salesperson is attempting...
answer
A. Perfect price discrimination.
question
Rational decision making under conditions of scarcity requires individuals to...
answer
D. Understand that trade offs are necessary.
question
A pizza can be divided among two or more people. Why is it nonetheless a rival good?
answer
E. Any slice consumed by one person cannot also be consumed by another.
question
When Noelle received a promotion at work, her income rose by 50 percent. The income elasticity of demand for steak was found to be 1.5. For her, steak is a(n)...
answer
E. Luxury.
question
What theory can partially explain why pink-collar jobs, such as nurse and dental hygienist, earn so little despite the important services they provide?
answer
E. Efficiency wage theory.
question
Which of the following is an accurate statement about the consequence of nonbinding price ceilings?
answer
D. They do no change the quantity of goods bought or sold in the legal market.
question
Price discrimination exists when a firm sells ________ goods at more than one price to ________ groups of customers.
answer
D. Indentical; Differential.
question
When the price elasticity of demand is 0.66, a decrease in price will...
answer
C. Reduce the total revenue.
question
A firm cannot price discriminate if it...
answer
A. Operates in a competitive market.
question
When supply is perfectly inelastic, the supply curve is...
answer
A. Horizontal.
question
According to economists, extreme couponing is not worth the effort if the ________ exceeds the ________from the coupons, when time is taken into account.
answer
C. Savings; Benefits.
question
When we say that firms must be price makers in order to practice price discrimination, it means that this activity cannot occur with...
answer
A. Competitive firms.
question
Firms will always stay in the market in the short run if the price they charge is...
answer
B. Less than their minimum average variable cost (AVC).
question
Which of the following is a common-resource good?
answer
D. Free public parking space.
question
Refer to the accompanying table. A firm participating in a competitive market with these costs would break even if the price is...
Price / Average Fixed Cost / Average Variable Cost
$2 $5 $6
$4 $3 $4
$6 $1 $5
$8 $0.50 $7
Price / Average Fixed Cost / Average Variable Cost
$2 $5 $6
$4 $3 $4
$6 $1 $5
$8 $0.50 $7
answer
A. $6
question
The marginal revenue lies ________ the demand curve because there is a(n) ________ effect whenever the price is lowered.
answer
C. Below; Output
question
For the market to work efficiently...
answer
A. All external costs must be paid.
question
As an Internet retailer, Luciana needs to find a location for her headquarters. If Luciana is primarily concerned with the cost of labor and wants to pay those she hires as little as possible, Luciana should
establish her business in a(n)...
establish her business in a(n)...
answer
B. Cold location in a rural area.
question
Why has India's economy grown faster than the United States' in recent years?
answer
D. India's production has focused more on capital goods.
question
The term ________ means "additional."
answer
A. Marginal.
question
Firm A prices its products so low that it drives competitors out of the market. After all of its competitors have been driven out of the market, Firm A raises prices significantly. The fact that Firm A ________ is sufficient
evidence of anticompetitive behavior.
evidence of anticompetitive behavior.
answer
E. Lowered its prices below average variable cost in an effort to drive competitors out of the market and then subsequently increased price.
question
A white male from the Midwest earns $50,000 a year and a white female earns $40,000 a year. What can we conclude about this situation?
answer
E. There is not enough information to know whether discrimination exists.
question
Christine's mother told her that she needed to go to college because it would be the only way she could get a high-paying job. What economic theory would justify her advice?
answer
D. Human capital.
question
When a good with a perfectly inelastic demand is taxed, the incidence of the tax is borne...
answer
D. Mostly by consumers.
question
Which of the following conditions is a requirement for price discrimination?
answer
A. There is no reselling allowed in the market.
question
When the total revenue is unchanged despite the change in price, demand is...
answer
C. Unitary elastic.
question
The opportunity cost of working rather than going to school is...
answer
D. The higher wages that come with additional education.
question
At what point does the profit-maximizing perfectly competitive firm produce?
answer
E. Where marginal revenue is equal to marginal cost.
question
A real-life, long-run example of a binding price ceiling is...
answer
B. Rent control.
question
As a recent college graduate, Dora has a temporary inability to pay her rent and is forced to move back to her old bedroom in her parent's house. Dora's parents, having taken an economics class decades ago, may be unconcerned with her current low-income situation because they think she...
answer
C. Is among the marginal poor.
question
There are four Jet Ski rental companies on a small tourist island. The following table shows the quantity of Jet Skis that each firm rents in a typical year and the per-hour price that each firm currently charges for each Jet Ski it rents. If Nautical Jet Skis raised its price to $60.25 and all other firms subsequently increased their prices by $10.00, all firms have...
Firm Quantity Price
Wide Island Waves/ 50 $50.00
Nautical Jet Skis/ 1,200 51.25
Rapid Ocean Rentals/ 78 51.69
Ocean Rider Emporium/ 140 50.99
Firm Quantity Price
Wide Island Waves/ 50 $50.00
Nautical Jet Skis/ 1,200 51.25
Rapid Ocean Rentals/ 78 51.69
Ocean Rider Emporium/ 140 50.99
answer
D. Likely participated in tacit collusion and they have not broken antitrust laws because tacit collusion is not illegal.
question
Most of the total income made in the U.S. economy is paid as...
answer
D. Wages and benefits to laborers.
question
Firm A notices that Firm B is making a profit by producing footballs. There is nothing stopping Firm A from entering the football market, so it does. Holding all else constant, the number of firms in the market will...
answer
E. Increase, causing the supply to increase.
question
No matter how high his wage rises, Johann will always work more. His labor supply curve is...
answer
D. Upward sloping.
question
The federal government often gives out tax credits for individuals who purchase fuel-efficient or electric vehicles. A car dealership, which attempts perfect price discrimination, would respond to this knowledge by...
answer
C. Targeting a higher price. The tax credit increases the buyers maximum willingness to pay.
question
Refer to the accompanying figure. What event would cause the supply curve to shift out?
answer
D. Firms entered the market.
question
Common resources are...
answer
A. Overused.
question
Why does the Department of Justice NOT investigate and block the many mergers of large firms that have occurred recently in oligopolistic industries such as the cellular phone industry and the airline industry that obviously lessen competition?
answer
C. t is difficult for the Department of Justice to determine whether a firm has violated the law as written because antitrust law is complex and cases are hard to prosecute.
question
Income elasticity of demand is defined as...
answer
D. The percentage change in demand divided by percentage change in income.
question
Which of the following statements best describes the price, output, and profit conditions of monopolistic competition?
answer
C. Marginal revenue will equal marginal cost in the short run at a profit-maximizing level of output; in the long run, economic profit will be zero.
question
The backward-bending labor supply curve occurs because workers value leisure...
answer
A. and income differently as wages change.
question
It is important to adjust the poverty threshold every year because of...
answer
D. Changing prices.
question
Hassan enjoys lifting weights in his spare time, but his gain in strength has come to a plateau. He is considering giving up weight lifting altogether, unless he experiences significant gains in the near future.
Hassan is seeking a ________ incentive.
Hassan is seeking a ________ incentive.
answer
D. Positive.
question
The pay for journalists is quite varied. A top-tier journalist often receives a steady flow of assignments, such as two weekly columns, and so earns generous pay. A lower-tier journalist, however, often experiences
sporadic work assignments with little to no pay. What economic theory explains this situation?
sporadic work assignments with little to no pay. What economic theory explains this situation?
answer
C. Efficiency wage.
question
The following table shows two firms in a single-stage duopoly game. Each firm makes its decision without knowledge of the other firm's decision. The payoffs for each firm represent economic profits, and each firm strictly prefers more economic profit than less. If both firms were able to write a binding contract, this contract would specify that Bobbles.com agrees to produce ________ bobbleheads and Bobbles R' Us agrees to produce ________ bobbleheads.
answer
D. $5000; $5000
The question has a game theory graph.
The question has a game theory graph.
question
In the short run, wages in the home country will ________ when a company outsources its operations because labor demand in the home country has ________.
answer
E. Fall, Fallen
question
The production function for bookshelves includes...
answer
D. Wood, nails, carpenters, saws, and hammers.
question
Variables that are NOT accounted for in a model are called...
answer
B. Exogenous factors.
question
EJH Cinemas, a movie theater next to your university, attracts two types of customers—those who are associated with the university (students, faculty, and staff) and locals who live in the surrounding area. There are 10,000 university customers interested in purchasing movie tickets from EJH Cinemas, with a maximum willingness to pay of $7 per ticket. There are 20,000 local customers interested in purchasing tickets, with a maximum willingness to pay of $9 per ticket. The movie theater incurs a constant marginal cost of $4 per ticket. For simplicity, assume each customer purchases, at most, one ticket.
What will be the amount of EJH Cinemas' total revenue if the price is $9 per ticket?
What will be the amount of EJH Cinemas' total revenue if the price is $9 per ticket?
answer
C. $180000
question
How does price discrimination help us understand how many markets actually function?
answer
C. Instances of perfectly competitive markets and monopoly are rare
question
When a new major league baseball stadium is built in the suburbs of a large city, the rents of apartments surrounding the stadium skyrocket because...
answer
D. Everyone wants to live near a stadium.
question
Firms will break even if the price they charge is...
answer
E. equal to their minimum average total cost (ATC).
question
Sculptures / Paintings
Mikhail 10 5
Stefan 6
What is Mikhail's opportunity cost of a sculpture?
Mikhail 10 5
Stefan 6
What is Mikhail's opportunity cost of a sculpture?
answer
A. 2 painting.
question
If antitrust laws did not prohibit efforts to restrict competition in markets, then...
answer
C. Attempts at collusion with rival firms would probably often fail.
question
What is the marginal product of the fourth worker?
answer
C. 2 Units
This question has a graph.
This question has a graph.
question
If there are gains from specialization in a workplace, hiring another employee means that the marginal product of labor will...
answer
C. Increase.
question
Macroeconomics is the study of...
answer
D. The operation of the economy as a whole.
question
The consequence of a price floor set below the equilibrium price is...
answer
D. A shortage, where the quantity supplied exceeds the quantity demanded.
question
The labor supply curve is given by the equation LS = 3W - 20 and the labor demand curve is given by the equation LD = 80 - 2W. The equilibrium number of workers in this labor market is...
answer
A. 12
question
The use of farm machinery to plant and harvest crops has increased because it is more productive than the typical farmhand. Demand for farmhands has...
answer
C. Decreased
question
When a nightclub advertises "ladies night" and allows women to enter the club without a cover charge (whereas men are still required to pay an entrance fee), the club is charging different prices in an attempt to...
answer
C. appeal to different segments of its customer base by allowing certain groups to sometimes gain free entry.
question
Jones owns a factory that is dumping toxic waste into a river where Smith owns a resort. At present, Jones is not filtering the water that he dumps into the river. There is a filter he could install that would remove a
significant amount of the toxic elements from the water before it is dumped in the river. Jones and Smith have each assessed the situation and come up with the following data:
Gains To / No Factory / Factory with Filter / Factory with No Filter
Jones $0/day $350/day $400/day
Smith $200/day $125/day $50/day
If property rights over the river are assigned to Smith, then...
significant amount of the toxic elements from the water before it is dumped in the river. Jones and Smith have each assessed the situation and come up with the following data:
Gains To / No Factory / Factory with Filter / Factory with No Filter
Jones $0/day $350/day $400/day
Smith $200/day $125/day $50/day
If property rights over the river are assigned to Smith, then...
answer
D. Jones will install a filter and pay smith at least $75 per day.
question
Airlines have first-class or business-class seating, for which customers pay a higher price to receive more room, extra amenities, and more attentive service. Would this illustrate price discrimination?
answer
C. Yes, because airlines are able to charge different prices to customers seeking an improved flying experience.
question
If a monopoly firm suddenly lost its barriers to entry and faced new competition, yet consumers thought that the former monopoly's products were somewhat different than its new competitors, then...
answer
C. the industry has probably become a monopolistically competitive industry.
question
Positive externalities exist because ________ benefits are ________ than ________ benefits.
answer
E. Internal, Less, Social.
question
The following table shows two firms in a single-stage duopoly game. Each firm makes its decision without knowledge of the other firm's decision. The payoffs for each firm represent economic profits, and each firm strictly prefers more economic profit than less. Assume the firms are not able to collude. The Nash equilibrium total quantity of potatoes on the market is...
answer
D. 14,000
There is a table included with this question.
There is a table included with this question.
question
When Franklin earns more income but still works less, leisure is a ________ good for him.
answer
E. Normal
question
The personal decisions of consumers and firms are based on ________ cost(s).
answer
C. Internal
question
When the price of softballs is high, a ________ in price will raise total revenue. When the price is low, the seller should ________ the price to increase total revenue.
answer
E. Decrease, not change.
question
Airlines require every passenger with a ticket to have a matching, government-issued photo identification. Price discrimination is made easier because...
answer
A. this practice prevents a passenger who purchased a discounted fare from reselling that ticket to another customer who is willing to pay more.
question
Which of the following would be true in a city with rent-controlled apartments?
answer
D. Rents for those fortunate enough to find an apartment are lower than rents in nearby cities ad lack rent controls.
question
Q / Internal Cost / External Cost / P
1 $2 $4 $14
2 $4 $4 $12
3 $6 $4 $10
4 $8 $4 $8
5 $10 $4 $6
6 $12 $4 $4
The market equilibrium occurs where price is __________ and quantity is _________.
1 $2 $4 $14
2 $4 $4 $12
3 $6 $4 $10
4 $8 $4 $8
5 $10 $4 $6
6 $12 $4 $4
The market equilibrium occurs where price is __________ and quantity is _________.
answer
C. $10, 3
question
Monopolistically competitive firms are troublesome to regulate for all of the following reasons, EXCEPT...
answer
D. Regulating prices only magnifies the inefficiency typical of these firms.
question
Refer to the accompanying figure. Point ________ corresponds to the profit-maximizing quantity that a competitive firm would produce.
answer
C. C
question
Demand is almost always more price elastic in the long run because...
answer
D. More options become available and people can make different choices.
question
When two goods are complements to each other, the cross-price elasticity will...
answer
E. Be negative.
question
If the marginal product of labor for a firm decreases as more workers are hired, we know that...
answer
C. The gains from specialization are exhausted.
question
Why do shortages develop under a binding price ceiling?
answer
C. It makes the price so low that the quantity demanded exceeds the quantity supplied in the legal market.
question
Another term for factors of production is...
answer
B. Inputs
question
What is the quantity demanded when the price floor is $0.75 in the market for public transportation?
answer
B. 86,000
There is a table that goes with this question.
There is a table that goes with this question.
question
The demand for ice cream sandwiches is...
answer
B. Elastic
question
Ireland's tax on plastic shopping bags successfully reduced consumer use of these bags because the...
answer
C. Demand for plastic bags was increasing.
question
The equation of a firm's marginal revenue curve is estimated to be P 50 Q (quantity), and the equation of its marginal cost curve is estimated to be P 10 3Q. The profit-maximizing price for this firm is...
answer
B. $10
question
Reese Witherspoon plans to visit her hometown of New Orleans, Louisiana. When her assistant checked the hotel reservation website, there were four published rates available, which are summarized in the following table. Use this table to answer the next two questions:
Best-available rate $289
90-day advance purchase $230
AARP member rate $260
Military/government rate $135
Why would the hotel require a guest to provide appropriate identification to receive the American Association of Retired Persons (AARP) member rate, the military rate, or the government rate?
Best-available rate $289
90-day advance purchase $230
AARP member rate $260
Military/government rate $135
Why would the hotel require a guest to provide appropriate identification to receive the American Association of Retired Persons (AARP) member rate, the military rate, or the government rate?
answer
A. To prevent resale of discounted rooms to other buyers who are not eligible for the discounted price.
question
Consumers will lose no consumer surplus due to a tax if demand in their market is perfectly elastic because...
answer
A. Consumers can effortlessly change their behavior in response to the tax.
question
When production of a good creates an external benefit...
answer
C. There is a positive externality.
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 went back to the equilibrium price.
answer
E. Above, Surplus, Downward
question
After a patent on a product expires...
answer
C. Rivals can start to mimic the product.
question
Total revenue minus total cost equals...
answer
D. Profit
question
Which of the following have greater incentives to collude and to form cartels in an effort to achieve monopoly-like profits?
answer
E. Oligopolies
question
"For every $1 men make, women make, on average, 82 cents," is used to describe the gender wage gap. Which is the best description for this statement?
answer
D. Based on differences in profession, education, and lifestyle—as well as gender bias and other factors—women earn, on average, 82 percent as much as their male counterparts.
question
An increase in the number of buyers would cause the demand curve to...
answer
C. Shift from D1 to D2
This question has a graph.
This question has a graph.
question
Which point represents an output that was efficient before the shift but is inefficient afterward?
answer
D. Point D
This question comes with a graph. (There are two lines, and point D is on the innermost line)
This question comes with a graph. (There are two lines, and point D is on the innermost line)
question
The movie You've Got Mail features a successful small bookstore competing with a new book superstore around the block. The big superstore offers deep discounts, while the small independent bookstore has better service and a more knowledgeable staff. The movie best illustrates which of the following?
answer
C. Product differentiation occurs because consumers perceive the bookstores as different.
question
Using a compensating differential wage theory, some individuals earn more than others because workers...
answer
B. Need to earn more to be willing to accept dangerous working conditions.
question
Lila shares a house with two other people. She is a concert pianist and often practices at home. One roommate enjoys listening to her practice, but the other does not. For the roommate who enjoys listening to Lila play, this is an example of ________; for the other roommate, it is an example of ________.
answer
B. A positive externality; a negative externality.
question
Productive ________ is/are considered an indicator of social benefit.
answer
B. Efficiency
question
If a monopolistically competitive firm is incurring losses, then at the profit-maximizing output amount.
answer
B. Price is below average total cost curve.
question
Old Navy stocks more Bermuda shorts during the summer months than in the winter months. The resulting shift in supply explains...
answer
C. Price expectations.
question
Which of the following is true of a positive externality?
answer
C. There are no internal benefits.
question
Because of scarcity...
answer
B. Individuals and societies must choose which wants and needs to satisfy.
question
Consumer surplus is the difference between...
answer
D. The willingness to pay for a good and the amount that is paid to get it.
question
In agriculture, a "bumper crop" refers to a particularly productive harvest. If there is a bumper crop for wheat at the same time that more people become allergic to wheat and all else is held constant, what will happen to the equilibrium price and quantity for wheat?
answer
C. The equilibrium price will go down and equilibrium quantity will be indeterminate.
question
Companies outsource their operations because...
answer
D. Labor costs are lower.
question
Economies of scale exist...
answer
C. When long-run average total costs decrease.
question
Which of the following is an example of derived demand?
answer
C. Garment industry demand for workers who sew depends on the number of garments produced.
question
Number of Workers Output
1 20
2 30
3 38
4 42
5 44
The marginal product of labor of the fourth worker is
1 20
2 30
3 38
4 42
5 44
The marginal product of labor of the fourth worker is
answer
C. 4
question
If the price of output is $2 and the wage for worker is $4, how many worker will the firm hire?
answer
E. Five
question
If the price of output falls from $5 to $2, the value of the marginal product of labor of all workers...
answer
E. Decreases.
question
Number of Workers Output
1 20
2 30
The marginal product of the first worker is
1 20
2 30
The marginal product of the first worker is
answer
D. 20
question
In a market where supply and demand are both somewhat elastic, but demand is more elastic than supply, consumers will bear less of the burden of a tax because...
answer
E. producers have a greater ability to change their behavior in response to the tax than consumers do.
question
Hotwire.com, an online travel company specializing in cheap and discounted hotel rates and airfares, often asks customers if their travel dates are flexible when pricing potential bookings. This practice helps
Hotwire.com practice price discrimination by allowing it to...
Hotwire.com practice price discrimination by allowing it to...
answer
A. Easily distinguish between different groups of buyers.
question
Successful advertising...
answer
C. normally causes demand for the firm to shift right.
question
Post-Thanksgiving consumers are already separated into distinct groups: those who shop on Black Friday and those who do not shop on Black Friday: A carnival of capitalism, Black Friday is the day after Thanksgiving, when retailers across the country dangle
deep discounts to lure customers out of bed. Black Friday is also the official beginning of the holiday-buying frenzy. As retailers battled to draw customers into their stores on Black Friday, online merchants were
plotting a cunning ambush—offering an arsenal of mobile-only deals intended to pick off shoppers as they wait in line. In 2011, with a record-breaking Black Friday—shoppers spent $816 million online, 26 percent
more than in 2010. Cyber Monday, the Monday after Thanksgiving, might have started as a made-up occasion to give underdog e-commerce sites a day of their own, but it has become an undeniably real
thing—surprising even to the people who invented it.
The excerpt indicates that Cyber Monday and online sales
deep discounts to lure customers out of bed. Black Friday is also the official beginning of the holiday-buying frenzy. As retailers battled to draw customers into their stores on Black Friday, online merchants were
plotting a cunning ambush—offering an arsenal of mobile-only deals intended to pick off shoppers as they wait in line. In 2011, with a record-breaking Black Friday—shoppers spent $816 million online, 26 percent
more than in 2010. Cyber Monday, the Monday after Thanksgiving, might have started as a made-up occasion to give underdog e-commerce sites a day of their own, but it has become an undeniably real
thing—surprising even to the people who invented it.
The excerpt indicates that Cyber Monday and online sales
answer
D. further separate Black Friday shoppers into two distinct groups: those who like to find deals in person and those willing to get better deals online.
question
If the price and quantity for an inferior good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay
constant?
constant?
answer
C. $6 and 4 units.
question
A firm expands its scale of production and finds that it is able to negotiate better prices with its suppliers. Which of the curves best applies to this firm?
answer
D. LRATC1 and LRATC2
There is a graph that goes with this question.
There is a graph that goes with this question.
question
Why do governments issue patents?
answer
E. The prospect of large profits is an incentive to innovation
question
An economist is an individual who would be LEAST able to answer which research question?
answer
E. How firms decide to produce goods or services.
question
When people elect to spend more years in school, this results in a ________ externality because there are ________ associated with this decision.
answer
E. Positive; Internal benefits
question
A formerly quiet town with fantastic weather becomes "the place" to live for people from colder climates. We can expect the rental price of land to ________ and ________ land to be devoted to housing...
answer
C. Increase, More
question
The following table shows two firms in a duopoly. Each firm makes its decision without knowledge of the other firm's decision. The payoffs for each firm represent economic profits, and each firm strictly prefers
more economic profit than less. If both firms were able to collude and make their supply decisions collectively, Flixbuster would sell ________ subscriptions per month and Nextflix would sell ________ subscriptions per month.
more economic profit than less. If both firms were able to collude and make their supply decisions collectively, Flixbuster would sell ________ subscriptions per month and Nextflix would sell ________ subscriptions per month.
answer
A. 200, 200
This question has a game theory chart.
This question has a game theory chart.
question
The branch of economics that studies strategic decision making is called ________ theory.
answer
B. Game
question
If Bo and Kenzi were to specialize and trade, at what exchange rate would they find some quantity of trade to be mutually beneficial?
answer
B. 1 pizza for 1 stromboli.
This question has two graphs to compare.
This question has two graphs to compare.
question
Corporate leadership sometimes waits until after presidential elections in order to make major business decisions. An economist would maintain that this is in anticipation of future....
answer
A. Forecasting
question
The government places warnings on cigarette and liquor packages. These warnings serve as a(n)...
answer
B. Negative incentive.
question
One drawback to advertising might be that it could easily...
answer
A. Raise costs but not increase demand.
question
Which of the following is an example of an unintended consequence?
answer
B. A tax rebate on electric cars results in increased household electricity consumption.
question
Market for used cars:
Demand: Qd = 154,000 - 86P
Supply: Qs = -100 + 14P
What would be the equilibrium price for used cars?
Demand: Qd = 154,000 - 86P
Supply: Qs = -100 + 14P
What would be the equilibrium price for used cars?
answer
D. $1154
question
The market is currently at market equilibrium. If a binding price ceiling of P1 is imposed, by how much would the quantity supplied change?
answer
B. It would decrease by 18000 units.
This question has a graph.
This question has a graph.
question
What theory can explain why a CEO might earn so much more than other managers with similar experience and education at the same company?
answer
A. Efficiency wage.
question
If a tax is imposed on a good where both supply and demand are somewhat elastic, but demand is more elastic than supply, the burden of the tax will be borne...
answer
E. Mostly by producers but partially by consumers.
question
Why is it often difficult to remove a binding price floor after it exists?
answer
A. in general, because consumers benefit from the lower prices and would lobby their elected officials to keep the price control
question
Which of the following is a real-world example of an attempt at perfect price discrimination?
answer
C. A car dealership selling an automobile.
question
It is said that taxes drive a wedge between prices. This statement is true because taxes cause...
answer
A. Both consumer and producer prices to increase.
question
Entry by firms in the long run means that, for a monopolistic competitor, price...
answer
A. increases.
question
Which of the following is a question that a firm must answer in the long run but not in the short run?
answer
C. What is the optimal amount of capital to employ?
question
Firm A and Firm B are duopolists. They are choosing the price at which they will sell their products and the quantity they will sell. Both firms make their decisions simultaneously. The ________ equilibrium in this
situation occurs when Firm B chooses a pricing strategy given the strategy that Firm A chooses, and Firm A chooses a pricing strategy given the strategy that Firm B chooses.
situation occurs when Firm B chooses a pricing strategy given the strategy that Firm A chooses, and Firm A chooses a pricing strategy given the strategy that Firm B chooses.
answer
B. Nash
question
Firm A and Firm B are the only two companies that sell mail-order DVD rental subscriptions. For several years, Firm A priced its subscriptions below average variable cost. Firm B tried to compete by also selling
subscriptions below average variable cost, but went bankrupt and exited the market. Several months after Firm B exited the market, Firm A raised prices by 40 percent and is currently earning large, positive
economic profits. Based only on this information, an argument can be made that...
subscriptions below average variable cost, but went bankrupt and exited the market. Several months after Firm B exited the market, Firm A raised prices by 40 percent and is currently earning large, positive
economic profits. Based only on this information, an argument can be made that...
answer
E. Firm A engaged in predatory pricing.
question
Which term best defines the pricing differences between monopolistic competition and competitive markets?
answer
B. Discrimination.
question
If a firm sells only pharmaceutical grade aspirin (and no other products) and is currently pricing the aspirin below average variable costs, the firm is currently making ________ economic profits.
answer
A. Negative.
question
A monopoly...
answer
E. Exists when a single company supplies the entire market for a particular good or service.
question
The government imposes a tax on the sale of a good whose production is creating a negative externality. The value of the tax is $4 per unit sold. In the new equilibrium, we would expect...
answer
D. less to be sold and the price to increase by less than $4.
question
With no barriers to entry or exit and when firms in a market are operating at a loss, we can expect other firms to exit, causing the ________ curve to shift to the ________ and making the equilibrium price ________ and
the equilibrium quantity ________.
the equilibrium quantity ________.
answer
E. Supply, Left, Increase, Decrease
question
In competitive markets...
answer
C. Firms are at the mercy of market forces.
question
Which of the following factors does not lead to income inequality?
answer
B. Income mobility.
question
Benefits from trade would not include...
answer
B. Less competition.
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