Microeconomics- Test 4 Ch. 7

Explicit costs:

The cumulative difference between the price producers actually receive for a good and the lowest price for which they would have been willing to sell it is called:

Mary Jane is willing to babysit for $6 an hour. Her neighbor has asked her to babysit for $8 an hour. Assuming Mary Jane accepts the offer:

A situation is efficient if it is:

Efficiency is an important goal because when markets are efficient:

E-commerce and an internet presence are important to many firms, requiring employees with specialized skills that are in short supply. The invisible hand solves the employment problem by:

Suppose the production of cotton causes substantial environmental damage because the pesticides used by cotton farmers often make their way into nearby rivers and streams, and are very harmful to fish and other wildlife. Economists would consider the environmental damage that results from the production of cotton to be a(n):

Suppose a small island nation imports sugar for its population at the world price of $1,500 per ton.
With no subsidy, the equilibrium price of sugar is ______ per ton, and the equilibrium quantity is ______ tons per day.

The No-Cash-on-the-Table Principle states that there are:

Suppose a small island nation imports sugar for its population at the world price of $1,500 per ton.
If the government provides a subsidy of $500 per ton, the equilibrium price of sugar will be ______ per ton, and the equilibrium quantity will be ______ tons per day.

If a price ceiling were imposed at point G, the loss in total economic surplus would be represented by the area ______.

A price ceiling that is set above the equilibrium price will result in:

If a price ceiling were imposed at point G, the consumer surplus would be represented by the area ______.

The figure below shows the supply and demand curves for oranges in Smallville.
What is the marginal cost of producing the tenth pound of oranges?

If this market is unregulated, the economic surplus received by consumers is:

When the market is unregulated, consumer surplus is represented by the area:

Suppose a small island nation imports sugar for its population at the world price of $1,500 per ton. The domestic market for sugar is shown below.
If the government provides a subsidy of $500 per ton, then relative to before the subsidy, consumer surplus will ______ by ______ per day.

Professor Plum, who earns $100,000 per year, read in the paper today that the university pays its basketball coach one million dollars per year in exchange for his agreement to remain at the university for at least three more years. The coach earns more than Professor Plum because:

The role that prices play in directing resources away from overcrowded markets and towards markets that are underserved is known as the ______ function of price.

Unlike economic profit, economic rent:

If a firm is earning zero economic profit, then:

Pat used to work as an aerobics instructor at the local gym earning $35,000 a year. Pat quit that job and started working as a personal trainer. Pat makes $50,000 in total annual revenue. Pat's only out-of-pocket costs are $12,000 per year for rent and utilities, $1,000 per year for advertising and $3,000 per year for equipment.

For Pat to earn normal profit, Pat's accounting profit would have to be ______.

Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive.
If the market supply curve is given by S1, then in the long run firms will:

Which of the following is an example of the rationing function of price?

Adam Smith's theory of the invisible hand posits that the most efficient allocation of resources is often achieved by:

Which of the following is NOT an example of an explicit cost?

Adam Smith coined the term "invisible hand" to describe the process by which the actions of independent, self-interested buyers and sellers will:

Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive.
In the long run, the equilibrium price will be _____ per gallon, and each firm's profit-maximizing quantity will be ______ gallons per week.

Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive.
If the market supply curve is given by S3, then we would expect firms to:

Economic theory assumes that a firm's goal is to: