Microeconomics Rutgers New Brunswick Exams 1 + 2

Microeconomics

Positive statement

Example of positive statement

Name a real flow of a factor of production from the circular flow model

Social security is a tax deducted from your paycheck. In the circular flow model this is shown as

Moving from one point to another on a production possibilities frontier implies

If an economy cannot produce more of one good without producing less of another good , what does this imply?

Why is a production possibilities frontier bowed out (concave)?

Consider a PPF with consumption goods on the horizontal axis and capital goods on the vertical axis. If the country operates on its PPF near its ___________ axis, this country ___________.

A country has a comparative advantage in the production of a good if it can

What do specialization and trade allow nations to do?

What is a competitive market?

Gasoline prices increase by 50% and other things remain the same. As a result, there is

Hot dogs and buns are compliments. What will happen if the price of a hotdog falls?

What happens when the price of oranges increase

Oil refiners can refine a barrel of petroleum so that it yields either more home heating oil or more diesel fuel. If the price of diesel fuel falls, there is

Suppose over the next few years the productivity of firms producing electric cars improved dramatically. The advance in productivity leads to

The initial equilibrium price in the market for web pages is $200 per page and 1000 web pages are created a month. Many new web page design firms enter the market. As a result,

If the demand curve for desktop computers shifts rightward and at the same time the supply curve shifts leftward, then

If both producers and consumers believe that a products price will rise in the future, then at the present, demand _______________ and supply _________________

Suppose improvements in technology cause the supply of natural gas to increase and at the same time the demand for natural gas increases. What are we sure of?

If the percentage change in price is 10% and the demand is elastic, then the percentage change in the quantity demanded is

Suppose the demand for rescue services in our national parks is perfectly inelastic. This fact would mean that a 31% increase in rescue fees leads to

If a product is narrowly defined it is likely to

You own a small store, your cashier thinks you should raise prices to increase your total revenue and your customer thinks you should lower prices to increase your total revenue. The cashier thinks the price elasticity of demand is ______________ and the customer believes the price elasticity of demand is _______________

What does the supply curve look like for a good with a perfectly elastic supply?

If a 1% increase in the price of X increases the quantity demanded of Y by 2%, then X and Y are

People eat at restaurants less often when their incomes fall because of a recession. Eating at restaurants must be

The phrase "decreasing marginal benefit" means thag

A point on the demand curve shows the

Jake just bought a new hockey stick. When he was leaving the shop, he thought that he got such a great deal and would have otherwise paid $50 more dollars for the stick. Jack received

What does the supply curve show

The supply curve is the same as a

Hester owns an ice cream shop. It costs her $2 per cone to make 10 ice cream cones. If she sells 10 cones for $4 each, her producer surplus on the 10 cones is equal to

Efficiency occurs in a market when

At a competitive equilibrium, if there are no taxes, subsidies, price regulation, quantity regulations, or externalities, then

The incidence of a tax refers to

If the average tax rate increases as income increase, then what type of tax is this?

The sales tax in Dutches County, NY is 7.5%. This sales tax is

Using fuel taxes to pay for maintaining public highways is an example of

Economics studies how

Example of a microeconomic topic

Mary is currently buying apples and oranges such that the last unit of apples has 30 units of utility and the last unit of oranges has 40 units of utility. She has allocated her entire budget. If the price of an apple is 10 cents and the price of an orange is 20 cents, to ,animists her utility, what should Mary do?

The demand curve for macadamia nuts is downward sloping. This slope is because consumers maximize their utility and an increase in price of macadamia nuts leads to

When economist uses the term "cost" referring to a firm, the con omits refers to the

What are these
- the salary Jim could earn at another job
- the it wrest Jim lost when he used his savings to help open his business

Define a normal profit

Suppose that a firm earned 500,000 in total revenue. At the same time, isn't incurred labor costs of 200,000, economic depreciation of 50,000, normal profit of 75,000, interest paid to the bank of 25,000, and used other factors of production that cost 100,000. The economic profit earned by the firm equals

True or false
When the marginal product exceeds the average product, the average product must be increasing

What does the long run average cost curve show

In the long run, if 1000 units are produced at a cost of 8000 and 1200 units at a cost of $9200 then over this range of output there are
A. Constant diseconomies of scale
B. Constant economies of scale
C. Constant returns to scale
D. Economies of scale
E. Diseconomies of scale

A firm decrease its scale of operation and discovers that it's long- run average costs decrease. What does this indicate?

How does the demand for any one sellers product in perfect competition compare to the market demand for that product?

In perfect competition, what does marginal revenue equal?

A perfectly competitive market is in equilibrium and then demand decreases. The decrease in demand means the market price will ___________ and eventually there will be ________

Suppose the cost of a CD is $20. As o line retailers enter the market with new technology, the price of CDS ____________, and traditional music stores find that _______________

If a single firm can meet the entire market demand at a lower average total cost than a larger number of smaller firms, the single firm is

The marginal revenue for a single price-monopoly with a downward sloping demand curve

Suppose a monopoly can sell 10 units of output for $21. In order to sell 11 units of output, the price must fall to $20. What is the marginal cost of revenue of the 11th unit?

Allegiant Air holds a natural monopoly on most of the routes it serves in the United States. Allegiant Air ___________ operate on the ___________ portion of its demand curve when total revenue is _____________

A single price monopoly has marginal cost of $23 and marginal revenue of $28. True or false
To increase profit, it should produce more

With perfect price discrimination, a monopoly can extract the __________ price each customer is willing to pay and thereby obtain the entire ____________ surplus

With perfect price discrimination, the quantity of output produced by a monopoly is __________ the quantity produced by a perfectly competitive industry

Which market structure do the following characteristics represent?
- a large number of firms compete
- each firm produces a differentiated product
- firms are free to enter and exit

Each of the four firms in an industry has a market share of 25%. The Herfindahl-Hirschman Index equals

In the long run, a firm in monopolistic competition will

Excess capacity exists when a firm produces

Advertising costs and other selling costs are

What is found ONLY in oligopoly

Imagine a duopoly in which two firms, A and B, produce the monopoly profit- maximizing output and equally share the economic profit. If firm A increases its output, the market price __________ and total economic profit of the two firms combined ___________

What is a Nash equilibrium in the duopoly game?

The focus of antitrust legislation is to

What market structure results in allocative efficiency