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20 Cards in this Set

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Assume for the United States that the opportunity cost of each airplane is 100 cars. Then which of these pairs of points could be on the United States' production possibilities frontier?
(300 airplanes, 15,000 cars) and (200 airplanes, 25,000 cars)
The opportunity cost of 1 quilt for Hilda is
3 dresses.
If the number of buyers in a market decreases, then
demand will decrease.
Which of the following would not shift the supply curve for mp3 players?
an increase in the price of mp3 players
At a price of $35,
An excess supply would exist and the price would tend to fall from $35 to a lower price.
Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.75. Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?
13.33 percent increase in the price of the good
When supply is perfectly elastic, the value of the price elasticity of supply is
infinity.
Table 6-1

Price
Quantity
Demanded
Quantity
Supplied
$0
12
0
$1
10
2
$2
8
4
$3
6
6
$4
4
8
$5
2
10
$6
0
12


Refer to Table 6-1. Which of the following price floors would be binding in this market?
$4
When a payroll tax is enacted,
the wage received by workers falls and the wage paid by firms rises.
Table 7-3
The only four consumers in a market have the following willingness to pay for a good:

Buyer
Willingness to Pay
Carlos
$15
Quilana
$25
Wilbur
$35
Ming-la
$45


Refer to Table 7-3. If the market price for the good is $30, who will purchase the good?
Wilbur and Ming-la only
At the equilibrium price, producer surplus is
$200.
We can say that the allocation of resources is efficient if
total surplus is maximized.
Refer to Figure 8-8. The tax causes producer surplus to decrease by the area
D+F
Suppose that policymakers are considering placing a tax on either of two markets. In Market A, the tax will have a significant effect on the price consumers pay, but it will not affect equilibrium quantity very much. In Market B, the same tax will have only a small effect on the price consumers pay, but it will have a large effect on the equilibrium quantity. Other factors are held constant. In which market will the tax have a larger deadweight loss?
b. Market B
If education produces positive externalities and the government does not intervene in the market, we would expect
d. both a and b are correct
Which of the following is not an advantage of corrective taxes?
c. They subsidize the production of goods with positive externalities.
A good is excludable if
d. people can be prevented from using it.
Refer to Table 11-1. Suppose the cost to build the park is $30 per acre. How many acres should the park be to maximize total surplus from the park in Tritown?
c. 3 acres
A firm's opportunity costs of production are equal to its
d. explicit costs + implicit costs.
Refer to Table 13-2. The marginal product of the fourth worker is
d. 10 units.