16341935
Description
Flashcards by Jordyn McEvoy, updated more than 1 year ago
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Created by Jordyn McEvoy
over 5 years ago
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| Question | Answer |
| R | |
| 24 Pounds | |
| An epidemic that wipes out 15% of the population | |
| 2 units of capital goods | |
| Amos makes cookies, Debbi makes brownies | |
| 1 sausage to between 5/4 to 4 olives | |
| A. Consumer Spending and B. Business Income | |
| I and III | |
| If resources are overallocated to production of a good, this means that | marginal costs of production are greater than the marginal benefits. |
| A quantity of 3 represents underallocation of resources to production of premium coffee | |
| 40 | |
| P4 and Q4 | |
| With conventional supply and demand curves, If both demand and supply increase, | both equilibrium price and quantity would increase. |
| shortage of 30 units | |
| Price will increase, quantity demanded will decrease and quantity supplied will increase | |
| Blue jeans are a normal good and incomes increase, and the price of cotton, used to produce denim, increases. | |
| Which of the following best describes the law of demand? | If the price of a product increases, the quantity demanded will decrease. |
| Which of the following best describes the law of supply | The relationship between price and quantity is direct, all other things equal. |
| Which of the following are determinants for the supply of paper? I. A change in expectations about future prices of paper II. A change in the number of companies selling paper III. A change in the price of wood pulp used to make paper IV. A change in the price of substitutes for paper | I, II, and III |
| he demand for lemonade made with real lemons has increased, and a newly invented machine decreases the cost of harvesting lemons. | |
| Which of the following do economists expect to occur when the government sets effective price ceilings or floors in markets that are currently allocatively efficient? | All of the above |
| ere would be a shortage of 100 tickets. | |
| shortage of 900 rental units | |
| Which of the following correctly describes a goal of the government when imposing a price control? | The government sets an effective price ceiling on a particular product in an attempt to benefit consumers by lowering the price of that product. |
| The cross-elasticity of demand coefficient for lettuce and tomatoes is −2.4. Based on this information, what is the relationship between these two goods? | complements |
| If the government wants to increase revenue by imposing a per-unit excise tax, which of the following types of goods would allow it to BEST achieve that objective? | Goods with perfectly inelastic demand. |
| All of the following are determinants of elasticity of demand EXCEPT | expectations concerning price |
| If the coefficient for elasticity of demand is 0, the demand is | perfectly inelastic |
| A bookstore raises the price of its coffee by 10%, and the spending by its customers on coffee (the total revenue) does not change. This indicates that, in this price range, demand for this store's coffee is | unit elastic |
| If the elasticity of demand coefficient for sunglasses is 0.25, which of the following price changes would decrease the quantity demanded by 10%? | increase by 40% |
| If total gate receipts for sales of concert tickets decrease when the price is increased | the demand for the tickets is elastic. |
| As income increases from $10,000 to $20,000, the quantity of hot dogs demanded decreases from 100 to 20. This means that hot dogs | are inferior goods. |
| Eggs and bacon are complements, and eggs and cereal are substitutes. Which of the following could be true based on this information? | The cross-elasticity coefficient for eggs and cereal is 1.8. |
| The computer market includes two manufacturers, Peach and Kiwi. When the price in the market is $100, Peach will produce 100 computers and Kiwi will produce 200. When the price rises to $200, Peach will produce 200 computers, and Kiwi will produce 300. When the market price increases from $100 to $200, what is the market elasticity of supply using the midpoint formula? | 0.75 |
| Which of the following is an example of producer surplus? | When the price of gummy bears is $3 a bag, the quantity supplied is 25,000 and the quantity demanded is 17,000. |
| $150 | |
| Which of the following explains why the law of diminishing marginal returns occurs? | Additional variable resources crowd fixed resources |
| A unique short-run problem in the production of a particular good is the Law of Diminishing Marginal Returns. Which of the following statements best explains this phenomenon? | As more workers are added to work on a project that has a fixed amount of capital resources for them to work on, beyond some point the resulting extra output will begin to decline. |
| In the long run, a firm increases its inputs by 15%, and its outputs increase by 25%. Which of the following is TRUE? | The firm's total costs are increasing. |
| All of the following can be used to explain why a firm experiences economies of scale EXCEPT | fixed factory size. |
| Each year you give the workers of your company an increase in wages. This would cause | a shift upward of the AVC, ATC, and MC |
| $40 | |
| Consider the following market structure types. In which of the market structures above are long-run economic profits possible? | III AND IV |
| Which of the following below would be subtracted from total revenue to calculate economic profits? I. Property taxes II. Electricity costs III. Wages from job sacrificed to start new business IV. Interest forgone when funds are used to buy equipment | I, II , III and IV |
| Which of the following describes a situation in which a firm is earning normal profits? | The firm's accounting profits are equal to its implicit costs |
| Which of the following describe(s) the output at which an individual firm would be profit-maximizing? I. Marginal cost exceeds marginal revenue by the greatest amount. II. Marginal revenue is equal to marginal cost. III. Total revenue exceeds total cost by the greatest amount. IV. Marginal revenue exceeds marginal cost by the greatest amount. | II and III only |
| Which of the following correctly describe methods for calculating a firm's economic profits or losses? | II and III only. |
| If positive externalities exist in a perfectly competitive market with no government intervention, which of the following is TRUE? | The marginal social benefit will exceed the marginal private benefit. |
| Which of the following is an example of a positive externality? | "Herd" immunity that leads to protection from disease as a result of others being vaccinated against the disease |
| If the production of doughnuts creates a pleasant smell that benefits those who live near the doughnut factory, even though they are not involved in the production or purchase of the doughnuts. Assuming doughnuts are produced and sold in a perfectly competitive market, which of the following would be TRUE? | Marginal social benefit would exceed marginal social cost at equilibrium |
| Which of the following describes an appropriate remedy for a specific market failure? | The government provides free whooping cough vaccines because these vaccines create positive externalities |
| $2 per-unit tax. | |
| Negative externality. | |
| $15 | |
| P1 | |
| Assuming it should produce, if a perfectly competitive firm is currently producing output such that the price of the last unit produced is $15 and the marginal cost of the last unit is $10, that firm could increase its profit by | increasing its output. |
| In which of the following situations will a perfectly competitive firm produce the productively efficient output? | It is earning normal profits in the long-run. |
| Which of the following statements can be said of a perfectly competitive firm in long-run equilibrium? | A and B only |
| If a firm shuts down in the short-run, its losses will equal | its total fixed costs. |
| Industry supply would increase; price would decrease; quantity would increase. | |
| P2 and Q2 | |
| A perfectly-competitive firm should always shut down in the short-run if which of the following is true? | Market price is below average variable cost. |
| Earning a profit equal to area PABC | |
| It falls, leaving all firms at a break-even point | |
| $2 | |
| $80 | |
| $320 | |
| $80 | |
| Which of the following is true about a perfectly competitive firm’s supply curve? | It is the portion of the marginal cost curve lying above the average variable cost curve. |
| pafd | |
| A perfectly-competitive firm will operate in the short-run only if | otal revenue exceeds total variable cost |
| $45 | |
| $30 | |
| 4 | |
| P4 | |
| The firm's price will increase, and the firm's output will increase. | |
| The output of the industry will increase, and the output of the firm will decrease. | |
| The wool industry is perfectly competitive and currently in long-run equilibrium. The government grants a lump-sum subsidy to firms operating in the wool industry. Assuming the government continues to provide the lump-sum subsidy, what do economists predict will happen to the profit-maximizing output and price for individual producers of wool as it adjusts to a new long-run equilibrium? | Output and price will both decrease |
| As compared to a perfectly-competitive industry with the same costs, the equilibrium price for a monopoly would be | higher, and its output would be lower. |
| A pharmaceutical company owns a patent for an antibiotic, and it is currently earning positive economic profits from sales of the medication. Following the expiration of the patent, what is the most likely impact on the market price and the company's profit for this medication? | Market price will decrease, and profits will decrease. |
| Entry barriers that lead to the creation of monopolies include | ownership of resources. |
| Regardless of whether a firm is a monopoly or a member of an oligopolistic or monopolistically competitive industry, a graph of any non-discriminating, imperfectly competitive firm will have which of the following characteristics? | The marginal revenue curve will reside below the demand curve because any reduction in price applies to all units sold. |
| In which of the following situations is a firm likely to have the GREATEST market power? | The firm sells a unique product with no close substitutes. |
| Which of the following is NOT a characteristic of a monopoly? | Price taker |
| The relative elasticity of the slope of the monopolist’s demand curve is impacted significantly by the level of barriers to entry by rival firms. Which of the following statements reflects an accurate relationship between barriers to entry and the price elasticity of demand for the monopolists’ product? | The stronger the barriers to entry, the more inelastic is the monopolist’s demand curve. |
| The following are the four different types of market structures for product markets. I. Perfect Competition II. Monopolistic Competition III. Oligopoly IV. Monopoly In which of the above market structures would a firm be a price maker (searcher)? | II, III, and IV |
| The minimum condition for a monopoly to continue to operate in the long run is that it must | earn at least a normal profit. |
| C only | |
| Which of the following describes how perfect price discrimination by a monopoly affects the amount of consumer surplus? | Consumer surplus falls to zero because consumers must pay the maximum price they are willing to pay. |
| increase from Q1 to Q2. | |
| he will obtain a marginal revenue of $6. | |
| The firm's total revenue is represented by area 0P4DQ1. | |
| P4, P1, and P3 respectively. | |
| a profit of P2P3ab | |
| Which of the following is true at the profit-maximizing output for a perfectly competitive firm but NOT for a monopoly, if both are earning economic profits? | P=MC |
| Which of the following statements regarding the allocation of resources is NOT true? | Resources are efficiently allocated when positive externalities exist in a perfectly-competitive market. |
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