Micro Econ Final Review

Front 1

The equilibrium solution for the payoff below matrix is:

Back 1

1.1

Front 2

Refer to the graph above. If this monopolist produces 700 units of output per day, it:

Back 2

can increase profit by producing less

Front 3

The total satisfaction one gets from one's consumption of a product is called:

Back 3

Total Utility

Front 4

Refer to the table above. Diminishing marginal productivity begins when the:

Back 4

Fifth worker is hired

Front 5

Which of the following is not likely to change the supply of personal computers?

Back 5

An increase in consumers' incomes.

Front 6

Refer to the graph below.

Assuming a marginal external cost equal to the tax shown in the above graph, the market price necessary to induce consumers to purchase the efficient quantity each year is:

Back 6

P2

Front 7

To maximize profits, a perfectly competitive firm should produce where marginal:

Back 7

cost equals marginal revenue.

Front 8

The supply of leather jackets would be expected to increase as a result of:

Back 8

a decrease in the cost of producing leather jackets.

Front 9

Basic research is more likely to be funded by the federal rather than state and local government because

Back 9

Basic research is largely a public good; benefits flow to the whole world, not just the state.

Front 10

The demand for a good is inelastic. Which of the following would be an explanation for this?

Back 10

The good is a necessity.

Front 11

When Americans find that the euro is rising in price, it is getting:

Back 11

more expensive for Americans to buy European products but cheaper for Europeans to buy American products.

Front 12

The opportunity cost for a student of attending college for a year is best measured by the:

Back 12

value of the next-best activity forgone by attending college.

Front 13

An individual with a highly elastic demand for gasoline will:

Back 13

cut consumption more than an individual with a highly inelastic demand when price goes up.

Front 14

Refer to the graph above. Suppose Country X exports agricultural goods to Country Y in exchange for industrial goods. This pattern of trade increases consumption in both countries only if:

Back 14

X's production possibility curve is B while Y's is A.

Front 15

Rent control makes apartments:

Back 15

hard to find.

Front 16

A perfectly competitive firm will be profitable if price at the profit-maximizing quantity is above:

Back 16

ATC

Front 17

Oligopoly is characterized by:

Back 17

Few Sellers

Front 18

The law of diminishing marginal productivity implies that the marginal product of a variable input:

Back 18

Eventually declines

Front 19

The consumption of an additional unit of a good provides additional satisfaction, which is called:

Back 19

marginal utility

Front 20

A perfectly competitive firm's marginal revenue is:

Back 20

equal to the selling price.

Front 21

Along a straight-line demand curve elasticity:

Back 21

rises as price rises.

Front 22

If there is an improvement in technology one would expect

Back 22

a shift downward (or to the right) of the supply curve.

Front 23

The demand for a good is elastic. Which of the following would be the most likely explanation for this?

Back 23

The good is a large portion of one's total income.

Front 24

The best example of a positive externality is:

Back 24

education.

Front 25

The profit-maximizing condition for a perfectly competitive firm is:

Back 25

P = MC.

Front 26

An industry that has many sellers offering slightly differentiated products is called:

Back 26

monopolistically competitive.

Front 27

A natural monopoly:

Back 27

occurs when a single firm can supply the entire market demand for a product at a lower average total cost than would be possible if two or more firms supplied the market.

Front 28

Which policy is likely to be the most efficient in dealing with automobile emission pollution?

Back 28

An emission tax

Front 29

Along a downward-sloping straight line demand curve beginning at the price where demand intersects the price axis, as price declines revenue

Back 29

rises then declines.

Front 30

What do economists mean when they say there is "market failure"?

Back 30

Free markets yield results that economists do not consider socially optimal.

Front 31

Refer to the graph above. Areas C and D represent:

Back 31

the loss of surplus by consumers resulting from a monopoly.

Front 32

Your opportunity cost of taking this course is:

Back 32

the net benefit of the activity you would have chosen if you had not taken the course.

Front 33

If the U.S. dollar appreciates against the Japanese yen, then:

Back 33

Japanese goods will be cheaper in the United States

Front 34

In general, the greater the elasticity the:

Back 34

larger the responsiveness of quantity to changes in price.

Front 35

The unwillingness of individuals to share in the cost of a public good is called the:

Back 35

free rider problem.

Front 36

A perfectly competitive firm in the long run:

Back 36

makes zero economic profits.

Front 37

Refer to the graph above. If government establishes a minimum wage at $5.15 per hour:

Back 37

the number of job seekers will exceed the number of job vacancies, resulting in some unemployment.

Front 38

Countries gain from trade by producing:

Back 38

the goods they can produce at the lowest opportunity cost.

Front 39

The optimal quantity of pollution control occurs at the point where the:

Back 39

marginal social cost equals the marginal social benefit of pollution

Front 40

The exchange rate is the

Back 40

price of one currency in terms of another.

Front 41

Refer to the graph above. The areas that represent the net gain to society of eliminating monopoly are:

Back 41

D and B.

Front 42

Suppose a monopolist is at the profit-maximizing output level. If the monopolist sells another unit of output, then:

Back 42

producer surplus falls but consumer surplus rises.

Front 43

If a positive externality exists in the provision of education when education is provided in a perfectly competitive market without government intervention, then at the market equilibrium level of education:

Back 43

additional net gains to society are possible by raising the level of education.

Front 44

The prisoner's dilemma is a well-known game in which:

Back 44

independent action is not necessarily the best joint action, but is the best independent action

Front 45

If a negative externality is to be internalized to the decision maker the

Back 45

producers' marginal costs should be increased by an amount equal to the marginal external cost resulting from production of the good.

Front 46

New York City has been experiencing a housing emergency for quite some time. Apartments are difficult to come by. In fact, the vacancy rate has been below 5 percent since World War II. The most likely cause of the housing emergency is:

Back 46

a price ceiling on rent lower than equilibrium price.

Front 47

If a positive externality is to be taken full advantage of the:

Back 47

consumer of the good should receive a subsidy equal to the marginal external benefit resulting from production (or consumption) of the good.

Front 48

At the socially optimum quantity of production price equals:

Back 48

marginal cost.