Principles of Microeconomics Final Study Guide

When a payroll tax is enacted, the wage received by workers

At present, the maximum legal price for a human kidney is $0. The price of $0 maximizes

The incidence of a tax falls more heavily on

Which of the following causes a shortage of a good?

Which of the following will cause an increase in producer surplus?

If a market is allowed to adjust freely to its equilibrium price and quantity, then an increase in demand will

When supply is perfectly elastic, the value of the price elasticity of supply is

Using the midpoint method, what is the price elasticity of supply between $4 and $6?

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

An early frost in the vineyards of Napa Valley would cause a(n)

If consumers view cappuccinos and lattes as substitutes, what would happen to the equilibrium price and quantity of lattes if the price of cappuccinos falls?

Suppose that a tax is placed on books. If the sellers pay the majority of the tax, then we know that the

Which of the following events must cause equilibrium price to fall?

When the price of a good is lower than the equilibrium price,

Reta's income elasticity of demand for steak dinners is 1.50. All else equal, this means that if her income increases by 20 percent, she will buy

Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? Drug interdiction

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

Good news for farming can be bad news for farmers because the

Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding?

Suppose the equilibrium price in the market for widgets is $5. If a law increased the minimum legal price for widgets to $6,

A binding price floor will reduce a firm's total revenue

For a monopoly, the level of output at which marginal revenue equals zero is also the level of output at which

The accountants hired by the Brookside Raquet Club have determined total fixed cost to be $75,000, total variable cost to be $130,000, and total revenue to be $145,000. Because of this information, in the short run, the Brookside Racquet Club should

The amount of money that a firm receives from the sale of its output is called

Which of the following statements is correct for both a monopolist and a perfectly competitive firm?
i. the firm maximizes profits by equating marginal revenue with marginal cost
ii. the firm maximizes profits by equating price with marginal cost
iii. demand equals marginal revenue
iv. average revenue equals price

A natural monopoly occurs when

Suppose a firm operates in the short run at a price above its average total cost of production. In the long run the firm should expect

One key difference between an oligopoly market and a competitive market is that oligopolistic firms

Trevor's Tire Company produced and sold 500 tires. The average cost of production per tire was $50. Each tire sold for a price of $65. Trevor's Tire Company's total costs are

The marginal product of an input in the production process in the increase in

Which of the following statements is not correct?

Cody builds mailboxes. If he charges $20 for each mailbox, his total revenue will be

Sizable economic profits can persist over time under monopoly if the monopolist

When firms in a perfectly competitive market face the same costs, in the long run they must be operating