Econ Final- Daniel Keniston- tests

1.

Open Ended

30 sec

1 pt

Refer to Figure 3-10. If Alice produces only lemonade, she can produce

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Answer explanation

400 pitchers per day.

2.

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30 sec

1 pt

Refer to Figure 3-4. If Lisa and Bryce each divides his or her time equally between producing jackets and producing sweaters, then total production is... Lisa- 16 jackets and 4 sweaters. Bryce- 10 Jackets and 2 sweaters

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Answer explanation

3 sweaters and 13 jackets. 4/2 = 2 sweaters and 16/2 = 8 jackets. Similarly, Bryce will produce 2/1 = 1 sweater and 10/2 = 5 jackets. Thus, sweaters produced = 2 + 1 = 3 and jackets produced = 8 + 5 = 13.)

3.

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30 sec

1 pt

The most obvious benefit of specialization and trade is that they allow us to

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consume more goods than we otherwise would be able to consume.

4.

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30 sec

1 pt

Tom produces baseball gloves and baseball bats. Steve also produces baseball gloves and baseball bats, but Tom is better at producing both goods. In this case, trade could

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benefit both Steve and Tom.

5.

Open Ended

30 sec

1 pt

Canada and the U.S. both produce wheat and computer software. Canada is said to have the comparative advantage in producing wheat if

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Answer explanation

the opportunity cost of producing a bushel of wheat is lower for Canada than it is for the U.S.

6.

Open Ended

30 sec

1 pt

Economists generally support

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free international trade.

7.

Open Ended

30 sec

1 pt

Refer to Figure 3-20. If Canada and Mexico switch from each country dividing its time equally between the production of Good X and Good Y to each country spending all of its time producing the good in which it has a comparative advantage, then total production of Good X will increase by Canada good x- 8 Mexico's good x- 20

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Answer explanation

6 units.

8.

Open Ended

30 sec

1 pt

Refer to Figure 3-20. If Canada and Mexico switch from each country dividing its time equally between the production of Good X and Good Y to each country spending all of its time producing the good in which it has a comparative advantage, then total production of Good Y will increase by Canada good y- 16 Mexico good y- 10

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Answer explanation

3 units

9.

Open Ended

30 sec

1 pt

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 table is

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Answer explanation

6 chairs for Ken and 3 chairs for Traci.

10.

Open Ended

30 sec

1 pt

Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in Felinia can produce either 5 blankets or 1 meal per day. Each nation has 10 workers. For many years, the two countries traded, each completely specializing according to their respective comparative advantages. Now war has broken out between them and all trade has stopped. Without trade, Caninia produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day. The war has caused the combined daily output of the two countries to decline by

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Answer explanation

15 blankets and 35 meals.

11.

Open Ended

30 sec

1 pt

(Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate.) Refer to Table 3-20. What is Brad's opportunity cost of producing one pound of beef? Brad- 10 Brushel of wheat. 12 lbs of beef Theresa- 6 Brushels of wheat. 10 lbs of beef.

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Answer explanation

6/5 bushels of wheat. How to solve: 12 divided by 10. for every 6 lbs of meat, 5 Brussels of wheat are produced.

12.

Open Ended

30 sec

1 pt

(Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate.) Refer to Table 3-20. Assume that Brad and Theresa each has 60 minutes available. If each person spends all his or her time producing the good in which he or she has a comparative advantage, then total production is Minutes Needed to Make 1: Brad- 10 Brushel of wheat. 12 lbs of beef Theresa- 6 Brushels of wheat. 10 lbs of beef.

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Answer explanation

10 bushels of wheat and 5 pounds of beef. Opportunity cost of producing 1 bushel of wheat (Brad) = 10/12 pounds of beef Opportunity cost of producing 1 bushel of wheat (Theresa) = 6/10 pounds of beef Therefore, Theresa has a comparative advantage in producing wheat. (lower opportunity cost) Total production of wheat = 60/6 = 10 bushels Total production of beef = 60/12 = 5 pounds (Brad has comparative advantage in producing beef)

13.

Open Ended

30 sec

1 pt

Refer to Table 3-20. At which of the following prices would both Brad and Theresa gain from trade with each other? Minutes Needed to Make 1: Brad- 10 Brushel of wheat. 12 lbs of beef Theresa- 6 Brushels of wheat. 10 lbs of beef.

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Answer explanation

12 bushels of wheat for 8 pounds of beef

14.

Open Ended

30 sec

1 pt

Trade can make everybody better off because it

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Answer explanation

allows people to specialize according to comparative advantage.

15.

Open Ended

30 sec

1 pt

The figure illustrates the market for calculators in a country. Refer to Figure 9-2. With free trade, consumer surplus is

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Answer explanation

$320 CS= 1/2 base times height CS= (1/2)(28-20)(80)

16.

Open Ended

30 sec

1 pt

Refer to Figure 9-2. With free trade, producer surplus is

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Answer explanation

$1,620. PS= (1/2)(base)(height) base= line to the right of equilibrium (1/2)(20-2)(180)

17.

Open Ended

30 sec

1 pt

Refer to Figure 9-2. As a result of trade, total surplus increases by

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Answer explanation

$250. 0.5*(20-15)*(180-80) increase in surplus is the area between Qd and Qs and between two prices increase in total surplus =0.5* change in price * (Qs-Qd)

18.

Open Ended

30 sec

1 pt

When the nation of Duxembourg allows trade and becomes an importer of software,

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Answer explanation

residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg rises.

19.

Open Ended

30 sec

1 pt

Assume Leo buys coffee beans in a competitive market. It follows that

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Answer explanation

Leo cannot influence the price of coffee beans even if he buys a large quantity of them.

20.

Open Ended

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1 pt

An example of a perfectly competitive market would be the market for

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Answer explanation

wheat.

21.

Open Ended

30 sec

1 pt

3. Refer to Figure 4-7. The movement from Da to Db in the market for potato chips could be caused by a

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Answer explanation

increase in the price of a pretzels.

22.

Open Ended

30 sec

1 pt

Most studies indicate that alcohol and marijuana tend to be

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Answer explanation

complements.

23.

Open Ended

30 sec

1 pt

Opponents of alcohol taxes often argue that liquor and marijuana are substitutes so that high liquor prices

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Answer explanation

encourage marijuana use, but the evidence does not support this argument.

24.

Open Ended

30 sec

1 pt

If Max experiences a decrease in his income, then we would expect Max's demand for

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normal goods to decrease.

25.

Open Ended

30 sec

1 pt

If textbooks and study guides are complements, then an increase in the price of textbooks will result in

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fewer study guides being sold.

26.

Open Ended

30 sec

1 pt

Which of the following events could cause an increase in the supply of ceiling fans?

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Answer explanation

The number of sellers of ceiling fans increases.

27.

Open Ended

30 sec

1 pt

Refer to Figure 4-18. At a price of $15, there would be a

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shortage of 400 units.

28.

Open Ended

30 sec

1 pt

If a shortage exists in a market, then we know that the actual price is

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Answer explanation

below the equilibrium price, and quantity demanded is greater than quantity supplied.

29.

Open Ended

30 sec

1 pt

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to

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Answer explanation

fall now.

30.

Open Ended

30 sec

1 pt

Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for convertible automobiles of an increase in the price of steel?

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Answer explanation

Point C to Point D

31.

Open Ended

30 sec

1 pt

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

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Answer explanation

Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

32.

Open Ended

30 sec

1 pt

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés cause heart attacks?

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Answer explanation

The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous.

33.

Open Ended

30 sec

1 pt

Consider the market for portable air conditioners in equilibrium. A summer of unseasonably cool weather would cause

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Answer explanation

both the equilibrium price and quantity to decrease.

34.

Open Ended

30 sec

1 pt

Which of the following changes would not shift the supply curve for a good or service?

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Answer explanation

a change in the price of the good or service

35.

Open Ended

30 sec

1 pt

Suppose you make jewelry. If the price of gold falls, then we would expect you to

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Answer explanation

be willing and able to produce less jewelry than before at each possible price.

36.

Open Ended

30 sec

1 pt

Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for sail boats?

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Answer explanation

a decrease in the price of fiberglass and sail cloth

37.

Open Ended

30 sec

1 pt

Refer to Figure 4-23. In this market for watermelons, a severe drought occurs which affects the watermelon crop. The equilibrium price

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increases and the equilibrium quantity decreases.

38.

Open Ended

30 sec

1 pt

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive?

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Price will fall.

39.

Open Ended

30 sec

1 pt

If macaroni and cheese is an inferior good, what would happen to the equilibrium price and quantity of macaroni and cheese if consumers' incomes rise?

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Answer explanation

Both the equilibrium price and quantity would decrease.

40.

Open Ended

30 sec

1 pt

If there is a shortage of farm laborers, we would expect

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Answer explanation

the wage of farm laborers to increase.

41.

Open Ended

30 sec

1 pt

Which of the following events must cause equilibrium quantity to rise?

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Answer explanation

demand and supply both increase

42.

Open Ended

30 sec

1 pt

Refer to Figure 5-12. Using the midpoint method, the price elasticity of demand between point X and point Y is

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Answer explanation

2.5. % change in quantity demanded/ % change in price 600-200= 400 600+200/2= 800 24-36= -12 24+36/2= 60 400/800= .5 -12/60= -0.2 final answer: 0.5/-0.2= -2.5

43.

Open Ended

30 sec

1 pt

Hilda's Hair Hysteria earned $3,750 in total revenue last month when it sold 125 haircuts. This month it earned $3,600 in total revenue when it sold 90 haircuts. The price elasticity of demand for Hilda's Hair Hysteria is

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Answer explanation

$1.14 Elasticity of demand=(change in quantity/average quantity)/(change in price/average price) price when 120 haircut =3750/120=31.25 price when 90 haircut =3600/90=40 Change in quantity=90-125=-35 average quantity=(90+125)/2=107.5 change in price= 40-31.25= 8.75 average price=(40+31.25)/2= 30.625 Elasticity of demand=(-35/107.5)/(8.75/30.625)= -$1.14

44.

Open Ended

30 sec

1 pt

The demand for grape-flavored Hubba Bubba bubble gum is likely

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Answer explanation

elastic because there are many close substitutes for grape-flavored Hubba Bubba.

45.

Open Ended

30 sec

1 pt

Suppose the price of a bag of tortilla chips decreases from $3.00 to $2.50 and, as a result, the quantity of tortilla chips demanded increases from 200 bags to 300 bags. Using the midpoint method, the price elasticity of demand for tortilla chips in the given price range is

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Answer explanation

2.20. Mid point theorem = new price - old price / old price

46.

Open Ended

30 sec

1 pt

If the demand for donuts is elastic, then a decrease in the price of donuts will

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increase total revenue of donut sellers.

47.

Open Ended

30 sec

1 pt

For which of the following goods is the income elasticity of demand likely lowest?

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Answer explanation

water

48.

Open Ended

30 sec

1 pt

Refer to Figure 21-1. If the price of a CD is $12, then the consumer's income amounts to

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Answer explanation

$240 Maximum CDs that caan be consumed = 20 Price per CD = 12 Budget = 12 * 20 = 240

49.

Open Ended

30 sec

1 pt

The following diagram shows two budget lines: A and B. Which of the following could explain the change in the budget line from A to B?

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Answer explanation

a decrease in the price of Y

50.

Open Ended

30 sec

1 pt

On a graph we draw a consumer's budget constraint, measuring the number of apples on the horizontal axis and the number of light bulbs on the vertical axis. If the slope of the budget constraint is -2, then

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Answer explanation

an apple costs twice as much as a light bulb.

51.

Open Ended

30 sec

1 pt

A decrease in income will cause a consumer's budget constraint to

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shift inward, parallel to its initial position.

52.

Open Ended

30 sec

1 pt

Refer to Figure 21-12. If the consumer moves from bundle V to bundle X, the

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Answer explanation

total utility increases.

53.

Open Ended

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1 pt

When two goods are perfect complements, the indifference curve is

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Answer explanation

a right angle.

54.

Open Ended

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1 pt

The consumer's optimum is where

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Answer explanation

MUx/MUy = Px/Py.

55.

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1 pt

The goal of the consumer is to

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maximize utility.

56.

Open Ended

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1 pt

Billie spends all of her income on soccer balls and jeans, and the price of a pair of jeans is three times the price of soccer balls. In order to maximize total utility, Billie should

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Answer explanation

buy both items until the marginal utility of a pair of jeans is three times the marginal utility of soccer balls.

57.

Open Ended

30 sec

1 pt

A consumer maximizes utility when she consumes at a point where

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Answer explanation

the marginal utility per dollar spent on each good is the same.

58.

Open Ended

30 sec

1 pt

Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?

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Answer explanation

ABC

59.

Open Ended

30 sec

1 pt

Consumer surplus is equal to the

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Answer explanation

Value to buyers - Amount paid by buyers.

60.

Open Ended

30 sec

1 pt

When there is a technological advance in the pork industry, consumer surplus in that market will

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increase.

61.

Open Ended

30 sec

1 pt

The only four consumers in a market have the following willingness to pay for a good: Refer to Table 7-3. If the price is $20, then consumer surplus in the market is

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Answer explanation

$45, and Quilana, Wilbur, and Ming-la purchase the good.

62.

Open Ended

30 sec

1 pt

Refer to Figure 7-15. When the price rises from P1 to P2, what area represents the increase in producer surplus?

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Answer explanation

A+B

63.

Open Ended

30 sec

1 pt

Suppose consumer income increases. If grass seed is a normal good, the equilibrium price of grass seed will

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Answer explanation

increase, and producer surplus in the industry will increase.

64.

Open Ended

30 sec

1 pt

Total surplus is equal to

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Answer explanation

value to buyers - cost to sellers.

65.

Open Ended

30 sec

1 pt

A tax imposed on the buyers of a good will lower the

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Answer explanation

effective price received by sellers and lower the equilibrium quantity.

66.

Open Ended

30 sec

1 pt

Refer to Figure 6-21. In the after-tax equilibrium, how much revenue does the government collect from the tax on this good?

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Answer explanation

$420 (12-8)x105

67.

Open Ended

30 sec

1 pt

Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

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Answer explanation

20 units

68.

Open Ended

30 sec

1 pt

Which of the following is correct? A tax burden

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Answer explanation

falls more heavily on the side of the market that is less elastic.

69.

Open Ended

30 sec

1 pt

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

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Answer explanation

not change, and the price received by sellers will not change.

70.

Open Ended

30 sec

1 pt

Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The per-unit burden of the tax on sellers is

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Answer explanation

$3.

71.

Open Ended

30 sec

1 pt

Taxes cause deadweight losses because taxes

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Answer explanation

All of the above are correct.

72.

Open Ended

30 sec

1 pt

The demand for chicken wings is more elastic than the demand for razor blades. Suppose the government levies an equivalent tax on chicken wings and razor blades. The deadweight loss would be larger in the market for

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Answer explanation

chicken wings than in the market for razor blades because the quantity of chicken wings would fall by more than the quantity of razor blades.

73.

Open Ended

30 sec

1 pt

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

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Answer explanation

increase by less than $5.

74.

Open Ended

30 sec

1 pt

Refer to Figure 6-22. Buyers pay how much of the tax per unit?

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$1.50.

75.

Open Ended

30 sec

1 pt

Assume the demand for cigarettes is relatively inelastic, and the supply of cigarettes is relatively elastic. When cigarettes are taxed, we would expect

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Answer explanation

most of the burden of the tax to fall on buyers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government.

76.

Open Ended

30 sec

1 pt

If the labor supply curve is nearly vertical, a tax on labor

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Answer explanation

has little impact on the amount of work that workers are willing to do.

77.

Open Ended

30 sec

1 pt

Refer to Figure 6-21. Suppose buyers, rather than sellers, were required to pay this tax (in the same amount per unit as shown in the graph). Relative to the tax on sellers, the tax on buyers would result in

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Answer explanation

the same amount of tax revenue for the government.

78.

Open Ended

30 sec

1 pt

Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The amount of deadweight loss resulting from this tax is

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Answer explanation

$25.

79.

Open Ended

30 sec

1 pt

Suppose that the demand for light bulbs is inelastic, and the supply of light bulbs is elastic. A tax of $2 per bulb levied on light bulbs will increase the price paid by buyers of light bulbs by

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Answer explanation

between $1 and $2.

80.

Open Ended

30 sec

1 pt

Suppose a tax of $4 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 2,000 units to 1,700 units. The deadweight loss of the tax is

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Answer explanation

$600.

81.

Open Ended

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1 pt

Deadweight loss is the

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Answer explanation

decline in total surplus that results from a tax.

82.

Open Ended

30 sec

1 pt

An example of a price floor is

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Answer explanation

the minimum wage.

83.

Open Ended

30 sec

1 pt

Refer to Figure 6-2. The price ceiling

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Answer explanation

makes it necessary for sellers to ration the good.

84.

Open Ended

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1 pt

Refer to Figure 10-17. How large would a corrective tax need to be to move this market from the equilibrium outcome to the socially-optimal outcome?

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Answer explanation

An amount equal to the external cost.

85.

Open Ended

30 sec

1 pt

Once tradable pollution permits have been allocated to firms,

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Answer explanation

firms that can reduce pollution only at high cost will be willing to pay the most for the pollution permits.

86.

Open Ended

30 sec

1 pt

Refer to Figure 10-1. This graph represents the tobacco industry. The socially optimal price and quantity are

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Answer explanation

$1.80 and 35 units, respectively.

87.

Open Ended

30 sec

1 pt

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States. Any farmer with land above the aquifer can at present pump water out of it. Which of the following statements about the aquifer is correct?

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Answer explanation

The aquifer is a common resource which will be overused if no one owns it.

88.

Open Ended

30 sec

1 pt

Markets do not ensure that the air we breathe is clean because

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Answer explanation

property rights are not well established for clean air.

89.

Open Ended

30 sec

1 pt

Without government intervention, public goods tend to be

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Answer explanation

underproduced and common resources tend to be overconsumed.

90.

Open Ended

30 sec

1 pt

Most lighthouses are operated by the government because

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Answer explanation

of the free-rider problem.

91.

Open Ended

30 sec

1 pt

Which of the following is NOT an example of a negative externality?

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Answer explanation

a decrease in your property value from neglecting your lawn and garden.

92.

Open Ended

30 sec

1 pt

Abe owns a dog; the dog's barking annoys Abe's neighbor, Jenny. Suppose that the benefit of owning the dog is worth $200 to Abe and that Jenny bears a cost of $400 from the barking. Assuming Abe has the legal right to keep the dog, a possible private solution to this problem is that

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Answer explanation

Jenny pays Abe $300 to give the dog to his parents who live on an isolated farm.

93.

Open Ended

30 sec

1 pt

A good is excludable if

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Answer explanation

people can be prevented from using it.

94.

Open Ended

30 sec

1 pt

The U.S. military defends Jacob from foreign attackers. The fact that Jacob enjoys this protection does not detract from others Americans' enjoyment of it. For this reason, we say that national defense is

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Answer explanation

not rival in consumption.

95.

Open Ended

30 sec

1 pt

Which of the following goods is not excludable and not rival in consumption?

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Answer explanation

a tornado siren

96.

Open Ended

30 sec

1 pt

A rain barrel is a container that captures and stores rainwater for landscape and garden use during dry periods. Rain barrels provide an external benefit to the community through water conservation. What can the government do to equate the equilibrium quantity of rain barrels and the socially optimal quantity of rain barrels?

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Answer explanation

offer a subsidy on rain barrels that is equal to the per-unit externality

97.

Open Ended

30 sec

1 pt

Suppose the nation of Kenistonia has a tax system in which individuals pay a marginal tax of 10% on all income between $0 and $50,000, then a marginal tax of 25% on all income above $50,000. You live in Kenistonia, and last year you earned $90,000. It is now tax day--what is your total tax bill?

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Answer explanation

$15,000

98.

Open Ended

30 sec

1 pt

Larry's Lunchcart is a small street vendor business. If Larry makes 15 pretzels in his first hour of business and incurs a total cost of $16.50, his average total cost per pretzel is

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Answer explanation

$1.10. TC/Q = 16.5 / 15 = 1.1

99.

Open Ended

30 sec

1 pt

Riva crafts and sells hard cider as a part-time job. She can bottle and sell four cases in a week. She is considering hiring her friend Atul to help her. Together, Riva and Atul can bottle and sell seven cases per week. What is Atul's marginal product?

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Answer explanation

3 cases After Atul came in they together can produce 7 units an extra of 3.

100.

Open Ended

30 sec

1 pt

Tom quit his $65,000 a year corporate lawyer job to open up his own law practice. In Tom's first year in business his total revenue equaled $150,000. Tom's explicit cost during the year totaled $85,000. What is Tom's economic profit for his first year in business?

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Answer explanation

$0 Revenue - explicit cost - opportunity cost" = "150,000-85,000-65,000 = $0

101.

Open Ended

30 sec

1 pt

Sonia opened a yoga studio where she teaches classes and sells yoga clothing. Variable costs for Sonia's yoga studio include the cost of the

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Answer explanation

(i) and (ii) only

102.

Open Ended

30 sec

1 pt

If Franco's Pizza Parlor knows that the marginal cost of the 500th pizza is $3.50 and that the average total cost of making 499 pizzas is $3.30, then

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OFF

Answer explanation

average total costs are rising at Q = 500.

103.

Open Ended

30 sec

1 pt

Economies of scale occur when a firm's

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Answer explanation

long-run average total costs are decreasing as output increases.

104.

Open Ended

30 sec

1 pt

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets. The Big Blue Sky jet company is experiencing

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Answer explanation

constant returns to scale.

105.

Open Ended

30 sec

1 pt

The minimum points of the average variable cost and average total cost curves occur where the

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Answer explanation

marginal cost curve intersects those curves.

106.

Open Ended

30 sec

1 pt

Refer to Figure 14-1. The firm will earn a positive economic profit in the short run if the market price is

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Answer explanation

above $6.30.

107.

Open Ended

30 sec

1 pt

Which of the following industries is least likely to exhibit the characteristic of free entry?

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Answer explanation

satellite radio

108.

Open Ended

30 sec

1 pt

Which of the following statements best reflects a price-taking firm?

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Answer explanation

If the firm were to charge more than the going price, it would sell none of its goods.

109.

Open Ended

30 sec

1 pt

A competitive market is in long-run equilibrium. If demand decreases, we can be certain that price will

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Answer explanation

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.

110.

Open Ended

30 sec

1 pt

Refer to Figure 14-3. If the market price is $10, what is the firm's total revenue?

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Answer explanation

$50

111.

Open Ended

30 sec

1 pt

Refer to Figure 14-3. The firm will earn zero economic profit if the market price is

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OFF

Answer explanation

$6.

112.

Open Ended

30 sec

1 pt

In a competitive market the current price is $5. The typical firm in the market has ATC = $5.50 and AVC = $4.50.

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Answer explanation

In the short run firms will continue to operate, but in the long run firms will leave the market.

113.

Open Ended

30 sec

1 pt

Which of these types of costs can be ignored when an individual or a firm is making decisions?

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Answer explanation

sunk costs

114.

Open Ended

30 sec

1 pt

Comparing marginal revenue to marginal cost

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Answer explanation

(i) and (ii) only

115.

Open Ended

30 sec

1 pt

Mr. Rogers sells colored pencils. The colored-pencil industry is competitive. Mr. Rogers hires a business consultant to analyze his company's financial records. The consultant recommends that Mr. Rogers increase his production. The consultant must have concluded that Mr. Roger's

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Answer explanation

marginal revenue exceeds his marginal cost.

116.

Open Ended

30 sec

1 pt

Refer to Table 14-11. If the firm is producing 3 units of output, it should produce

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Answer explanation

more units of output because its marginal revenue is greater than its marginal cost.

117.

Open Ended

30 sec

1 pt

A perfectly competitive firm produces where

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Answer explanation

marginal cost equals price, while a monopolist produces where price exceeds marginal cost.

118.

Open Ended

30 sec

1 pt

Drug companies are allowed to be monopolists in the drugs they discover in order to

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Answer explanation

encourage research.

119.

Open Ended

30 sec

1 pt

After the patent runs out on a brand name drug, generic drugs enter the market. What happens next in the market?

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Answer explanation

Price decreases, and total surplus increases.

120.

Open Ended

30 sec

1 pt

Which of the following is not a reason for the existence of a monopoly?

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Answer explanation

diseconomies of scale

121.

Open Ended

30 sec

1 pt

Refer to Figure 15-7. In order to maximize profits, the monopolist should produce

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Answer explanation

12 units. Mr=MR

122.

Open Ended

30 sec

1 pt

Refer to Figure 15-7. In order to maximize profits, the monopolist should charge a price of

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Answer explanation

$20

123.

Open Ended

30 sec

1 pt

Refer to Figure 15-7. A profit-maximizing monopolist would earn profits of

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Answer explanation

$120

124.

Open Ended

30 sec

1 pt

Refer to Table 15-19. If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to equate marginal revenue with marginal cost?

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Answer explanation

4 units

125.

Open Ended

30 sec

1 pt

When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is

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Answer explanation

$22. TR=P*Q TR(64)=64*8=512 TR(60)=60*10=600 MR(64 to 60)=(512-600)/(64-60)=-22

126.

Open Ended

30 sec

1 pt

Refer to Figure 15-11. Which area represents the deadweight loss from monopoly?

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Answer explanation

J+H

127.

Open Ended

30 sec

1 pt

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 is $6. The socially efficient level of production is 12 units. The demand curve and marginal cost curves are linear. What is the value of the deadweight loss created by the monopolist?

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Answer explanation

$6 (1/2)(12-6)(12-10)

128.

Open Ended

30 sec

1 pt

The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly

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Answer explanation

quantity is lower than the socially-optimal quantity.

129.

Open Ended

30 sec

1 pt

Suppose executives at an art museum know that 100 adults are willing to pay $12 for admission to the museum on a weekday. Suppose the executives also know that 200 students are willing to pay $8 for admission on a weekday. The cost of operating the museum on a weekday is $2,000. Refer to Scenario 15-9. How much profit will the museum earn if it engages in price discrimination?

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Answer explanation

$800

130.

Open Ended

30 sec

1 pt

Which of the following is not an example of price discrimination?

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Answer explanation

An ice cream parlor charges a higher price for ice cream than for sherbet.

131.

Open Ended

30 sec

1 pt

The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a

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Answer explanation

natural monopoly.

132.

Open Ended

30 sec

1 pt

The firm has total fixed costs of $9 and a constant marginal cost of $3 per unit. The firm will maximize profit with (theres a chart)

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Answer explanation

15 units of output.

133.

Open Ended

30 sec

1 pt

A monopolistically competitive market is characterized by

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Answer explanation

differentiated products, but not long run profits.

134.

Open Ended

30 sec

1 pt

Suppose that monopolistically competitive firms in a certain market are earning positive profits. In the transition from this initial situation to a long-run equilibrium,

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Answer explanation

each existing firm experiences a decrease in demand for its product.

135.

Open Ended

30 sec

1 pt

Which of the following examples illustrates an oligopoly market?

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Answer explanation

a city with two firms who are licensed to sell school uniforms for the local schools

136.

Open Ended

30 sec

1 pt

Refer to Table 17-13. If both stores follow a dominant strategy, Lopes's annual profit will grow by

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OFF

Answer explanation

$1.0 million. Dominant strategies are considered as better than other strategies, no matter what other players might do.HomeMax and lopes both have dominant strategy Increase the size of store and parking lot.thus, Lopes's annual profit will grow by $1.0 million.

137.

Open Ended

30 sec

1 pt

A group of firms that act in unison to maximize collective profits is called a

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Answer explanation

cartel

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