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107 Cards in this Set

  • Front
  • Back
Efficiency means that
a.
society's goods and services are distributed fairly, though not necessarily equally, among society's members.
b.
society is conserving resources in order to save them for the future.
c.
society's goods and services are distributed equally among society's members. d. society is getting the maximum benefits from its scarce resources
D
Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor. This redistribution of wealth
a.
is more efficient and more equal for society. b. is more equal but less efficient for society.
c.
is more efficient but less equal for society.
d.
is less equal and less efficient for society.
B
For which of the following individuals would the opportunity cost of going to college be highest?
a.
a promising young mathematician who will command a high salary once she earns her college degree b. a famous, highly-paid actor who wants to take time away from show business to finish college and earn a degree
c.
a student with average grades who has never held a job
d.
a student who is the best player on his college basketball team, but who lacks the skills necessary to play professional basketball
B
Sarah buys and sells real estate. Two weeks ago, she paid $140,000 for a house on Oak Street, intending to spend $20,000 on repairs sell the house for $175,000. Last week, the city government announced a plan to build a “halfway house” for convicted criminals on Oak Street. As a result of the city’s announced plan, Sarah is weighing two alternatives: She can go ahead with the $20,000 in repairs and then sell the house for $145,000, or she can forgo the repairs and sell the house as it is for $120,000. Sarah should a. go ahead with the $20,000 in repairs and sell the house for $145,000.
b. keep the house and live in it.
c. forgo the repairs and sell the house as it is for $120,000.
d. move the house from Oak Street to a more desirable location, irrespective of the cost of doing so.
A
The average cost per seat on the 50-passenger Floating-On-Air Bus company's trip from Kansas City to St. Louis, on which no refreshments are served, is $45. In advance of a particular trip, three seats remain unsold. The bus company could increase its profit only if it
a.
charged at least $15 for each of the three remaining seats. b. charged any ticket price above $0 for the three remaining seats.
c.
charged at least $45 for each of the three remaining seats.
d.
paid three people to occupy the three remaining seats.
B
Refer to Figure 2-1. Enid completes her first week of employment working as a hairdresser at a salon. On Friday of that week, she receives her first paycheck. To which of the arrows does this transaction directly contribute? a. C and D
b.
B only
c.
A and B
d.
C only
A
An economy’s production of two goods is efficient if
a.
all members of society consume equal portions of the goods. b. it is impossible to produce more of one good without producing less of the other.
c.
the goods are produced using only some of society’s available resources.
d.
the opportunity cost of producing more of one good is zero.
B
If a production possibilities frontier is bowed outward, then the opportunity cost of producing more of the first good is highest when
a.
the economy is producing equal amounts of the first and second goods. b. the economy is producing much of the first good and little of the second good.
c.
the economy is producing little of the first good and much of the second good.
d.
None of the above is correct because the opportunity cost of producing more of the first good is constant.
B
Refer to Figure 2-7. Point B represents an outcome in which
a.
production is inefficient. b. the economy is using all of its resources to produce books.
c.
some of the economy’s resources are unemployed.
d.
the economy is using all of its ribeye steaks to produce books.
B
Refer to Figure 2-7. In order to reach point C, the economy would have to
a.
begin using its available resources more efficiently than it is currently using them.
b.
shift resources away from the production of ribeye steaks and toward production of books. c. acquire more resources or experience a technological advance.
d.
None of the above are correct; the economy will never be able to reach point C.
C
The following table contains some production possibilities for an economy for a given month.
Bagels Donuts
40 150
60 ?
80 50
If the production possibilities frontier is bowed outward, then “?” could be
a. 50.
b. 125.
c. 75.
d. 100.
B
Which of the following is an example of a positive, as opposed to normative, statement?
a.
Income tax rates should not have been cut as they were a few years ago. b. When the quantity of money grows rapidly, inflation is a predictable consequence.
c.
The quantity of money has grown too slowly in recent years.
d.
All of the above are positive statements.
B
Refer to Figure 2-10. Which of the following events would explain the shift of the production possibilities frontier from A to B?
a.
The economy’s citizens developed an enhanced taste for batteries.
b.
More capital became available in the economy. c. The economy experienced a technological advance in the production of batteries.
d.
More labor became available in the economy.
C
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?
a.(200 airplanes, 5,000 cars) and (150 airplanes, 4,000 cars)
b. (300 airplanes, 15,000 cars) and (200 airplanes, 25,000 cars)
c.(200 airplanes, 10,000 cars) and (150 airplanes, 20,000 cars)
d.(300 airplanes, 25,000 cars) and (200 airplanes, 40,000 cars)
B
Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two countries do not trade, Cornland will produce and consume 400 bushels of corn and 100 bushels of oats, while Oatland will produce and consume 60 bushels of corn and 400 bushels of oats. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by a. 340 bushels of corn and 500 bushels of oats.
b.
360 bushels of corn and 520 bushels of oats.
c.
280 bushels of corn and 450 bushels of oats.
d.
360 bushels of corn and 640 bushels of oats.
A
Refer to Table 3-2. Assume that Aruba and Iceland each has 80 labor hours available. If each country divides its time equally between the production of coolers and radios, then total production is
a.
30 coolers and 9 radios. b. 60 coolers and 18 radios.
c.
28 coolers and 50 radios.
d.
120 coolers and 36 radios.
B
Refer to Table 3-2. Aruba’s opportunity cost of one cooler is
a.
0.4 radio and Iceland’s opportunity cost of one cooler is 4 radios. b. 0.4 radio and Iceland’s opportunity cost of one cooler is 0.25 radio.
c.
2.5 radios and Iceland’s opportunity cost of one cooler is 0.25 radio.
d.
2.5 radios and Iceland’s opportunity cost of one cooler is 4 radios.
B
Refer to Table 3-2. Assume that Aruba and Iceland each has 80 labor hours available. Originally, each country divided its time equally between the production of coolers and radios. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of coolers increased by a. 20.
b.
40.
c.
60.
d.
80.
A
Refer to Figure 3-4. The opportunity cost of 1 novel for Perry is
a. 1/6 poem.
b. 6 poems.
c. 2 poems.
d. 12 poems.
B
Refer to Figure 3-4. Perry has an absolute advantage in the production of
a. poems and Jordan has an absolute advantage in the production of novels.
b. novels and Jordan has an absolute advantage in the production of neither good.
c. neither good and Jordan has an absolute advantage in the production of novels.
d. novels and Jordan has an absolute advantage in the production of poems.
C
Refer to Figure 3-4. Suppose Perry is willing to trade 4 poems to Jordan for each novel
that Jordan writes and sends to Perry. Which of the following combinations of novels and poems
could Jordan then consume, assuming Jordan specializes in novel production and Perry specializes
in poem production?
a. 1 novel and 14 poems
b. 3 novels and 6 poems
c. 2 novels and 8 poems
d. 4 novels and 2 poems
C
The following table contains a demand schedule for a good.
Price
Quantity Demanded
$10
100
$20
?
If the law of demand applies to this good, then “?” could be
a.
100. b. 0.
c.
200.
d.
400.
B
Soup is an inferior good if
a.
the demand for soup falls when the price of a substitute for soup rises.
b.
the demand for soup rises when the price of soup falls. c. the demand for soup falls when income rises.
d.
the demand curve for soup slopes upward.
C
A higher price for batteries would result in a(n)
a.
increase in the demand for flashlights.
b.
increase in the demand for batteries. c. decrease in the demand for flashlights.
d.
decrease in the demand for batteries.
C
Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the a. supply of bicycles will shift to the left.
b.
demand for bicycle assembly workers will increase.
c.
supply of bicycles will shift to the right.
d.
firm must increase output to maintain profit levels.
A
Refer to Figure 4-8. Equilibrium price and quantity are, respectively,
a.
$15 and 200. b. $25 and 400.
c.
$25 and 600.
d.
$35 and 200.
B
Refer to Figure 4-8. At a price of $15,
a.
there would be a shortage of 200 units. b. there would be a shortage of 400 units.
c.
there would be a shortage of 600 units.
d.
there would be a surplus of 400 units.
B
Refer to Figure 4-12. All else equal, a sale on chicken would cause a move
a.
from DB to DA. b. from DA to DB.
c.
from x to y.
d.
from y to x.
B
Refer to Figure 4-12. All else equal, an increase in the productivity of turkey farmers would cause a move
a.from DA to DB.
b.from DB to DA.
c. from y to x.
d.from x to y.
C
30. If the demand for a product decreases, then we would expect
a.
equilibrium price to increase and equilibrium quantity to decrease. b. equilibrium price and equilibrium quantity to both decrease.
c.
equilibrium price to decrease and equilibrium quantity to increase.
d.
equilibrium price and equilibrium quantity to both increase.
B
Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes?
a. The supply curve for saddle shoes will shift right, which will create a shortage at the current price. That will increase price, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity.
b. The demand curve for saddle shoes will shift right, which will create a shortage at the current price. That will increase price, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity.
c. The supply curve for saddle shoes will shift right, which will create a surplus at the current price. That will decrease price, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.
d. The demand curve for saddle shoes will shift right, which will create a surplus at the current price. That will decrease price, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.
B
Equilibrium quantity will unambiguously decrease when a. demand decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.
b.
demand increases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.
c.
demand increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease.
d.
demand decreases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease.
A
The signals that guide the allocation of resources in a market economy are
a.surpluses and shortages.
b. prices.
c.quantities.
d.government policies.
B
Which of the following is likely to have the most price inelastic demand?
a.white chocolate chip with macadamia nut cookies
b.Mrs. Field’s chocolate chip cookies
c.milk chocolate chip cookies
d. cookies
D
If the price elasticity of demand for a good is 0.25, then a 20 percent decrease in price results in a
a.
0.0125 percent increase in the quantity demanded.
b.
4 percent increase in the quantity demanded. c. 5 percent increase in the quantity demanded.
d.
80 percent increase in the quantity demanded
C
Refer to Table 5-2. Using the midpoint method, what is the elasticity of demand between $8 and $12? a. 0.56
b.
0.75
c.
1.33
d.
1.80
A
Refer to Table 5-2. Using the midpoint method, at a price of $8, what is the income elasticity of demand when income rises from $7,500 to $10,000?
a.
0.00
b.
0.41 c. 1.00
d.
2.45
C
Refer to Figure 5-4. If the price decreases in the region of the demand curve between points B and C, we can expect total revenue to
a.
increase.
b.
stay the same. c. decrease.
d.
first increase, then decrease until total revenue is maximized.
C
Harry's Barber Shop increased its total monthly revenue from $1,500 to $1,800 when it raised the price of a haircut from $5 to $9. The price elasticity of demand for Harry's Haircuts is
a.
0.567. b. 0.700.
c.
1.429.
d.
2.200.
B
Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, a. the cross-price elasticity of demand is -1.0, and X and Y are complements.
b.
the cross-price elasticity of demand is -1.0, and X and Y are substitutes.
c.
the cross-price elasticity of demand is 1.0, and X and Y are complements.
d.
the cross-price elasticity of demand is 1.0, and X and Y are substitutes.
A
If two supply curves pass through the same point and one is steep and the other is flat, which of the following statements is correct?
a.
The flatter supply curve represents a supply that is inelastic relative to the supply represented by the steeper supply curve. b. The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve.
c.
Given two prices with which to calculate the price elasticity of supply, that elasticity is the same for both curves.
d.
A decrease in demand will increase total revenue if the steeper supply curve is relevant, while a decrease in demand will decrease total revenue if the flatter supply cure is relevant.
B
Refer to Figure 6-6. Which of the following statements is correct?
a.
A price ceiling set at $4 will be binding and will result in a shortage of 3 units. b. A price ceiling set at $4 will be binding and will result in a shortage of 6 units.
c.
A price ceiling set at $7 will be binding and will result in a surplus of 6 units.
d.
A price ceiling set at $7 will be binding and will result in a surplus of 12 units.
B
If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would a. decrease by less than $500.
b.
decrease by exactly $500.
c.
decrease by more than $500.
d.
increase by an indeterminate amount.
A
Suppose that the demand for picture frames is inelastic and the supply of picture frames is elastic. A tax of $1 per frame levied on picture frames will decrease the effective price received by sellers of picture frames by a. less than $0.50.
b.
$0.50.
c.
between $0.50 and $1.
d.
$1.
A
Refer to Figure 6-14. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?
a.
less than 50 units
b.
50 units c. between 50 units and 100 units
d.
greater than 100 units
C
Refer to Table 7-3. If the market price for the good is $30, who will purchase the good?
a.
Carlos only
b.
Carlos and Quilana only
c.
Carlos, Quilana, and Wilbur only d. Wilbur and Ming-la only
D
Refer to Table 7-3. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?
a. Quilana
b. Wilbur
c. Ming-la
d. All three buyers experience the same loss of consumer surplus.
D
David tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $150 per tuning. One particular week, David is willing to tune the first piano for $115, the second piano for $125, the third piano for $140, and the fourth piano for $175. Assume David is rational in deciding how many pianos to tune. His producer surplus is
a.
$25.
b.
$35. c. $70.
d.
$95.
C
Kristi and Rebecca sell lemonade on the corner. It costs them 7 cents to make each cup. On a certain day, they sell 40 cups, and their producer surplus for that day amounts to $15.20. Kristi and Rebecca sold each cup for
a.
31 cents.
b.
38 cents. c. 45 cents.
d.
55 cents.
C
Refer to Figure 7-8. If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus?
a.
$625
b.
$1,250 c. $2,500
d.
$5,000
C
Refer to Figure 7-8. If the supply curve is S and the demand curve shifts from D to D’, what is the increase in producer surplus to existing producers?
a.
$625 b. $2,500
c.
$3,125
d.
$5,625
B
The Surgeon General announces that eating chocolate increases tooth decay. As a result, the equilibrium price of chocolate
a.
increases, and producer surplus increases.
b.
increases, and producer surplus decreases.
c.
decreases, and producer surplus increases. d. decreases, and producer surplus decreases.
D
If an allocation of resources is efficient, then
a.
consumer surplus is maximized.
b.
producer surplus is maximized. c. all potential gains from trade among buyers are sellers are being realized.
d.
the allocation achieves equality as well.
C
Refer to Figure 7-19. At the quantity Q3,
a.
the market is in equilibrium.
b.
consumer surplus is maximized.
c.
the sum of consumer surplus and producer surplus is maximized. d. the marginal value to buyers is less than the marginal cost to sellers.
D
Suppose that the equilibrium price in the market for widgets is $5. If a law reduced the maximum legal price for widgets to $4,
a.
any possible increase in consumer surplus would be larger than the loss of producer surplus. b. any possible increase in consumer surplus would be smaller than the loss of producer surplus.
c.
the resulting increase in producer surplus would be larger than any possible loss of consumer surplus.
d.
the resulting increase in producer surplus would be smaller than any possible loss of consumer surplus.
B
In the market for widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. The equilibrium quantity in the market for widgets is 200 per month when there is no tax. Then a tax of $5 per widget is imposed. The price paid by buyers increases by $2 and the after-tax price received by sellers falls by $3. The government is able to raise $750 per month in revenue from the tax. The deadweight loss from the tax is
a.
$250. b. $125.
c.
$75.
d.
$50.
B
Refer to Figure 8-4. The tax results in a loss of producer surplus that amounts to
a.
$90.
b.
$180.
c.
$420. d. $510.
D
Refer to Figure 8-4. The amount of tax revenue received by the government is equal to
a.
$210.
b.
$420. c. $980.
d.
$1,600.
C
Refer to Figure 8-4. The amount of deadweight loss as a result of the tax is a. $210.
b.
$420.
c.
$980.
d.
$1,600.
A
Table 8-1
MarketCharacteristic
A Demand is very inelastic.
B Demand is very elastic.
C Supply is very inelastic.
D Supply is very elastic.
27. Refer to Table 8-1. Suppose the government is considering levying a tax in one or more of the markets described in the table. Which of the markets will allow the government to minimize the deadweight loss(es) from the tax?
a.market A only
b. markets A and C only
c.markets B and D only
d.market C only
B
Refer to Figure 9-15. The amount of government revenue created by the tariff is
a.
B. b. E.
c.
D + F.
d.
B + D + E + F.
B
Refer to Figure 9-15. For the saddle market, area B represents
a.
government’s revenue from the tariff.
b.
the deadweight loss of the tariff.
c.
the increase in producer surplus, relative to the free-trade situation, as a result of the tariff. d. None of the above is correct.
D
Refer to Figure 9-12. With trade allowed, this country
a.
exports 200 units of the good. b. exports 400 units of the good.
c.
imports 200 units of the good.
d.
exports 800 units of the good.
B
Refer to Figure 9-12. Producer surplus after trade is
a.
$4,800.
b.
$5,600. c. $6,400.
d.
$7,000.
C
Refer to Figure 10-5. Which price and quantity combination represents the social optimum?
a. P0 and Q1.
b. P2 and Q1.
c. P1 and Q0.
d. P2 and Q0.
B
Suppose that Bill wants to dine at a fancy restaurant, but the only available table is in the smoking section. Bill dislikes the smell of cigarette smoke. He notices that only one person, Peter, is smoking in the smoking section. Bill values the absence of smoke at $15. Peter values the ability to smoke in the restaurant at $10. In order for Bill to pay Peter not to smoke, he will need to tip the waiter $10 to facilitate the transaction. Which of the following represents an efficient solution? a. Peter continues to smoke because the cost to Bill to pay him not to smoke is between $20 and $25, which exceeds the benefit to him of no smoking ($15).
b.
Bill offers Peter between $10 and $15 not to smoke, and he pays the waiter $10. Peter accepts, and both parties are better off.
c.
Bill offers Peter between $10 and $15 not to smoke, and he pays the waiter $10. Peter declines because he has a right to smoke in the smoking section.
d.
Bill offers Peter $5 not to smoke, and he pays the waiter $10. Peter accepts, and both parties are better off.
A
Governments can improve market outcomes for
A. Both public goods and common resources
B. Public goods but not common goods
C.Common Resources but not public goods
D.Neither public goods nor common resources
A
Refer to Table 11-2. Suppose the cost to install each streetlight is $450 and the families have agreed to split the cost of the streetlights equally. If the families vote to determine the number of streetlights to install, basing their decision solely on their own willingness to pay (and trying to maximize their own surplus), what is the greatest number of streetlights for which the majority of families would vote "yes"?
A. 3 streetlights
B. 4 streetlights
C. 2 streetlights
D.1 Streetlights
C
To increase safety at a bad intersection, you decide whether to install a traffic light in your hometown at a cost of $25000. If the traffic light reduces the risk of fatality by .3 percent, and the value of a human life is estimated to be $10 million, You should
A. not install the light because the expected benefit of $3000 is less than the cost.
B. install the light because the expected benefit of $30000 is greater than the cost.
C.install the light because the expected benefit of $25000 is greater than the cost.
D. not install the light because the expected benefits of $25000 is only equal to the cost
B
Refer to Figure 9-15. The amount of government revenue created by the tariff is
a.
B. b. E.
c.
D + F.
d.
B + D + E + F.
B
Refer to Figure 9-15. For the saddle market, area B represents
a.
government’s revenue from the tariff.
b.
the deadweight loss of the tariff.
c.
the increase in producer surplus, relative to the free-trade situation, as a result of the tariff. d. None of the above is correct.
D
Refer to Figure 9-12. With trade allowed, this country
a. exports 200 units of the good.
b. exports 400 units of the good.
c. imports 200 units of the good.
d. exports 800 units of the good.
B
Refer to Figure 9-12. Producer surplus after trade is
a.
$4,800.
b.
$5,600. c. $6,400.
d.
$7,000.
C
Refer to Figure 10-5. Which price and quantity combination represents the social optimum?
a.
P0 and Q1. b. P2 and Q1.
c.
P1 and Q0.
d.
P2 and Q0.
B
Suppose that Bill wants to dine at a fancy restaurant, but the only available table is in the smoking section. Bill dislikes the smell of cigarette smoke. He notices that only one person, Peter, is smoking in the smoking section. Bill values the absence of smoke at $15. Peter values the ability to smoke in the restaurant at $10. In order for Bill to pay Peter not to smoke, he will need to tip the waiter $10 to facilitate the transaction. Which of the following represents an efficient solution? a. Peter continues to smoke because the cost to Bill to pay him not to smoke is between $20 and $25, which exceeds the benefit to him of no smoking ($15).
b.
Bill offers Peter between $10 and $15 not to smoke, and he pays the waiter $10. Peter accepts, and both parties are better off.
c.
Bill offers Peter between $10 and $15 not to smoke, and he pays the waiter $10. Peter declines because he has a right to smoke in the smoking section.
d.
Bill offers Peter $5 not to smoke, and he pays the waiter $10. Peter accepts, and both parties are better off.
A
Governments can improve market outcomes for
A. Both public goods and common resources
B. Public goods but not common goods
C.Common Resources but not public goods
D.Neither public goods nor common resources
A
Refer to Table 11-2. Suppose the cost to install each streetlight is $450 and the families have agreed to split the cost of the streetlights equally. If the families vote to determine the number of streetlights to install, basing their decision solely on their own willingness to pay (and trying to maximize their own surplus), what is the greatest number of streetlights for which the majority of families would vote "yes"?
A. 3 streetlights
B. 4 streetlights
C. 2 streetlights
D.1 Streetlights
C
To increase safety at a bad intersection, you decide whether to install a traffic light in your hometown at a cost of $25000. If the traffic light reduces the risk of fatality by .3 percent, and the value of a human life is estimated to be $10 million, You should
A. not install the light because the expected benefit of $3000 is less than the cost.
B. install the light because the expected benefit of $30000 is greater than the cost.
C.install the light because the expected benefit of $25000 is greater than the cost.
D. not install the light because the expected benefits of $25000 is only equal to the cost
B
Pete is a Non-union employee at The Electric Co. The majority of the employees at The Electric Co. are unionized. The union has negotiated very good benefits with The Electric Co. Even though he is not a union member and he does not have to pay union dues, Pete receives all the same benefits that the union has negotiated. Pete's behavior is and example of
A. free riding
B.rivalry
C.a barrier to entry
D.Taft-Hartly Opposition
A
Bev is opening her own court-reporting business. She financed the business by withdrawing money from her personal savings account. When she closed the account, the bank representative mentioned that she would have earned $300 in interest next year. If Bev hadn't opened her own business, she would have earned a salary of $25000. In her first year, Bev's revenues were $30000. Which of the following statements is correct?
A. Bev's total implicit costs are $300
B. Bev's economic profit is $4700
C. Bev's accounting profits exceed her economic profits by $300
D. Bev's total explicit costs are $25300
B
Suppose that for for a particular business there are no implicit costs. Then
A. the relationship between accounting profit and economic profit cannot be determined without more information
B. accounting profit will be the same as economic profit
C.accounting profit will be greater than economic profit.
D. accounting profit will be less than economic profit
B
Grace is a self-employed artist. She can make 20 pieces of pottery per week. She is considering hiring her sister Kate to work for her. Both she and Kate together can make 35 pieces of pottery per week. What is Kate's marginal product?
A. 35 pieces
B. 22.5 pieces
C. 55 pieces
D. 15 pieces
D
Refer to Table 13-1(exam 3) What is the total output when 3 workers are hired?
A. 70
B. 120
C. 10
D. 40
B
The marginal product of labor is equal to the
A. incremental cost associated with a one unit increase in labor
B. incremental profit associated with a one unit increase in labor
C. increase in labor necessary to generate a one unit increase in output.
D. increase in output obtained from a one unit increase in labor
D
Refer to Table 13-9. (exam 3) The average variable cost of producing 4 posters is
A. $5.00
B. $2.50
C. $2.00
D. $3.33
B
Refer to table 13-9.(exam 3) What is the marginal cost of producing the 1st poster?
A. $10.00
B. $11.00
C. $1.00
D. It cannot be determined with the information given
C
Refer to Table 13-13. (exam 3) What is average variable cost when output is 50 units?
A. $4.80
B. $3.60
C. $4.40
D. $4.00
D
Since the 1980's, Wal-Mart stores have appeared in almost every community in America. Wal-Mart buys its goods in large quantities and, therefore, at cheaper prices. Wal-Mart also locates its stores where land prices are low, usually outside of the community business district. Many customers shop at Wal-Mart because of low prices. Local retailers, like the neighborhood drug store, often go out of business because they lose customers. This story demonstrates that
A. there are diseconomies of scale in retail sales.
B. there are economies of scale in retail sales.
C. consumers do not react to changing prices.
D. there are diminishing returns to producing and selling retail goods
B
Refer to Table 13-14.(exam 3) Which firm is experiencing diseconomies of scale?
A. Firm A and B only
B. Firm B only
C. Firm A only
D. Firm C only
C
Refer to Table 13-14.(exam 3) Which firm is experiencing constant returns to scale?
A. Firm B only
B. Firm A and Firm B only
C. Firm A only
D. Firm C only
A
Suppose a firm in a competitive market received $1000 in total revenue and had a marginal revenue of $10 for the last unit produced and sold. What is the average revenue per unit, and how many units were sold?
A. $5 and 100
B. $10 and 50
C. $5 and 50
D. $10 and 100
D
Marcia is a fashion designer who runs a small clothing business in a competitive industry. Marcia specializes in making designer dresses. Marcia sells 10 dresses per month. Her monthly total revenue is $5000. The marginal cost of making a dress is $500. In order to maximize profits, Marcia should
A. continue to make 10 dresses per month
B. make fewer than 10 dresses per month
C. make more than 10 dresses per month
D. We do not have enough information with which to answer the question
A
Refer to Table 14-5.(exam 3) This is a perfectly competitive market. The marginal revenue of the 12th unit is
A. $9
B. $11
C. $10
D. The marginal revenue cannot be determined without knowing the total revenue when 11 units are sold.
B
Refer to table 14-10.(exam 3) The marginal cost of producing the 4th unit is
A. $8
B. $23
C. $10
D. $7
A
Refer to Table 14-10.(exam 3) At which level of production will the firm maximize profit?
A. 3 units
B. 6 units
C. 5 units
D. 4 units
A
Refer to Table 14-10.(exam 3) At which level of output in the table is average variable cost equal to $6?
A. 3 units
B. 4 units
C. 2 units
D. 5 units
D
Refer to #23 on Exam 3. What is the lowest price at which this firm might choose to operate?
A. $5
B. $3
C. $2
D. $4
B
Refer to Figure 14-3.(exam 3) If the market price is $10, what is the firms short-run economic profit?
A. $50
B. $15
C. $9
D. $30
B
Refer to figure 14-3. (exam 3) The firm will earn zero economic profit if the market is
A. $10
B. $6
C. $0
D. $7
B
In the long run, each firm in a competitive industry earns
A. positive, negative, or zero economic profits
B. zero economic profits
C. positive economic profits
D. zero accounting profits
B
A competitive market is in long-run equilibrium. If demand increases, we can be certain that price will
A. not rise in the short run because firms will enter to maintain the price
B. fall in the short run. All, some, or no firms will shut down, and some of them will exit the industry. price will then rise to reach the new long-run equilibrium
C. rise in the short run. Some firms will enter the industry. Price will then fall to reach the new long-run equilibrium price.
D. rise in the short run. Some firms will enter the industry. Price will then rise to reach the new long-run equilibrium
C
If the monopolist's linear demand curve intersects the quantity axis at Q=30. then the monopolists marginal revenue will be equal to zero at
A. Q=20
B. Q=15
C. Q=10
D. Q=30
B
Refer to table 15-5.(exam 3) The monopolist has total fixed costs of $60 and has a constant marginal cost of $15. What is the profit-maximizing level of production?
A. 3 units
B. 5 units
C. 4 units
D. 2 units
C
Refer to figure 15-3.(exam 3) Profit will be maximized by charging a price equal to
A. P4
B. P2
C. P3
D. P1
A
Refer to figure 15-3.(exam 3) A profit-maximizing monopoly's profit is equal to
A. (P4-P3)xQ2
B. P4xP3
C. (P4-P2)xQ2
D. P3xQ4
C
Consider a profit-maximizing monopoly pricing under the following conditions. The profit-maximizing price charged for goods produced is $12. The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost $6.The socially efficient level of production is 12 units. The demand curve and marginal cost curves are linear. what is the deadweight loss?
A. $6
B. $12
C. $16
D. $4
A
Refer to figure 15-16.(exam 3) If there are no fixed costs of production, monopoly profit with perfect price discrimination equals
A. $1
B. $3125
C. $6250
D. $1562.5
C