Microeconomics 5th Edition

Figure 11-13 Refer to Figure 11-13. The lines shown in the diagram are isocost lines. If the price of labor is $50 per unit, then along the isocost AF, the total cost A) is $500. B) is $750. C) is $1,250. D) cannot be determined without the price of capital. Answer: A Answer: A Answer: A The way

In the market for factors of production, firms earn income by selling factors of production to households. Answer: FALSE Answer: FALSE Answer: FALSE In economics, technology only refers to the development of new products. Answer: FALSE Answer: FALSE Answer: FALSE Those who favor changes in the market for health care that would make it more like

Firms in perfect competition produce the productively efficient output level in the short run and in the long run. Answer: FALSE Answer: FALSE Answer: FALSE Holding everything else constant, government approval of horizontal mergers is more likely to be granted if the "market" that firms are in are broadly defined rather than narrowly

A merger between firms at different stages of production of a good A) is a vertical merger. B) was made illegal by the Sherman Act. C) was made legal by the Clayton Act. D) is a horizontal merger. Answer: A Answer: A Answer: A The rules of accounting generally require that ________ costs be used for purposes

The basis for trade is comparative advantage, not absolute advantage. Answer: TRUE Answer: TRUE Answer: TRUE Even if the population declines, scarcity will still exist. Answer: TRUE Answer: TRUE Answer: TRUE Higher wages that compensate workers for unpleasant aspects of a job are called compensating differentials. Answer: TRUE Answer: TRUE Answer: TRUE An economic model is a simplified version

Figure 1-4 Refer to Figure 1-4. Which of the following statements is false? A) The slope of the tangent at E is positive. B) The slope of the tangent at F is negative. C) The slope of the tangent at E and the slope of the tangent at F are equal. D) Neither the

Damian shares a small food truck with his sister. His share of the expenses is $500 per month. He has decided to get his own, newer food truck which he will not have to share with anyone. His expenses for the newer truck are $1,400 per month. Damian is as rational

Table 17-5 Refer to Table 17-5. Oil Can Harry's, a new automobile service shop, is ready to start hiring. The table above shows the relationship between the number of mechanics the firm hires and the quantity of oil changes it produces. a. Suppose the price of an oil change is $20. Complete

Who controls a sole proprietorship? A) owner B) stockholders C) bondholders D) employees Answer: A Answer: A Answer: A Figure 11-10 Refer to Figure 11-10. Identify the minimum efficient scale of production. A) Qa B) Qb C) Qc D) Qd Answer: B Answer: B Answer: B Which of the following would explain why economic profit might be less than accounting profit? A)

Because leisure is a normal good, an increase in the wage rate will result in A) an increase in the quantity of labor supplied because of both the substitution effect and the income effect. B) a decrease in the quantity of labor supplied because of the substitution effect and an increase in

Figure 6-4 Refer to Figure 6-4. Which of the following statements is true about the price elasticity of demand? A) The elasticity coefficient is constant along the demand curve. B) The elastic portion of a straight-line downward sloping demand curve corresponds to the segment above the midpoint. C) The inelastic portion of the demand curve

Figure 4-6 Figure 4-6 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. Refer to Figure 4-6. What is the area that represents producer surplus after the imposition

Which of the following are separate flows in the circular flow model? A) the flow of goods and the flow of services B) the flow of costs and the flow of revenue C) the flow of income earned from the sale of resources and the flow of expenditures on goods and services. D) the flow

Compensating differentials are associated most closely with which of the following? A) hazardous jobs B) comparable worth C) economic discrimination D) differences in education Answer: A Answer: A Answer: A Assume that Bulgaria has a comparative advantage in producing sandals and Finland imports sandals from Bulgaria. We can conclude that A) Bulgaria also has an absolute advantage in

Consider the market for pilots. What is likely to happen to the equilibrium wage and quantity of pilots if the government enforces a lower mandatory retirement age, say from age 65 to age 62? A) The equilibrium wage and the equilibrium quantity of pilots rise. B) The equilibrium wage and the equilibrium

Holding the price of a firm's output constant, if the marginal product of labor increases A) the marginal revenue product of labor decreases. B) the marginal revenue product of labor also increases. C) the marginal products of other inputs also increase. D) the marginal revenue product of labor may increase or decrease. Answer: B Answer:

The law of one price holds exactly only if A) antitrust laws are being enforced. B) buyers have complete information. C) transactions costs are zero. D) it is impossible for buyers to resell the good. Answer: C Answer: C Answer: C Figure 12-18 Use the figure above to answer the following questions. a. How can you determine that the

If, as your taxable income decreases, you pay a smaller percentage of your taxable income in taxes, then the tax is A) regressive. B) proportional. C) progressive. D) unfair. Answer: C Answer: C Answer: C Figure 15-2 Figure 15-2 above shows the demand and cost curves facing a monopolist. Refer to Figure 15-2. The firm's profit-maximizing price is A)

A profit-maximizing firm should hire workers up to the point where labor's marginal revenue product equals the wage rate. Answer: TRUE Answer: TRUE Answer: TRUE Maximizing average profit is equivalent to maximizing total profit. Answer: FALSE Answer: FALSE Answer: FALSE Merger guidelines developed by the Antitrust Division of the U.S. Department of Justice use four-firm concentration

International firms tend to support reasonable labor and environmental laws to expand future local markets for their businesses. Answer: TRUE Answer: TRUE Answer: TRUE Due to adverse selection,very few lemons will be sold in the market for used cars. Answer: FALSE Answer: FALSE Answer: FALSE Research shows that pollution-intensive U.S. companies tend to invest in nations

Which of the following would not occur as a result of a monopolistically competitive firm suffering a short-run economic loss? A) The firm could exit the industry in the long run. B) If the firm does not exit the industry in the long run its demand curve will shift to the left. C) If

Economists have used the ultimatum game and the dictator game in experiments designed to determine A) whether consumers care about fairness when they make decisions. B) whether consumers believe it is fair for producers to raise the price of a product for which there is excess demand. C) whether consumers understand the difference

Health insurance companies impose deductibles on policies and co-payments on claims to reduce the problem of adverse selection. Answer: FALSE Answer: FALSE Answer: FALSE An increase in the supply of capital, which is a substitute to labor, will lead to a decrease in the demand for labor. Answer: TRUE Answer: TRUE Answer: TRUE If marginal cost

In a sequential game, one firm will act first and then other firms will respond. Answer: TRUE Answer: TRUE Answer: TRUE The marginal product of labor curve is the demand curve for labor. Answer: FALSE Answer: FALSE Answer: FALSE A public franchise gives the exclusive right to produce a product for 20 years from the date

BHP Billiton is a Canadian company that owns mines in Canada that A) produce nickel. After World War II, BHP Billiton began to compete with another Canadian firm, the International Nickel Company. This competition eventually ended International Nickel's monopoly in this market. B) produces bauxite, the mineral needed to produce aluminum. BHP

Of the following high-income countries, which has the lowest mortality ratio for cancer? A) Canada B) Japan C) the United Kingdom D) the United States Answer: D Answer: D Answer: D The paradox of American farming is A) the demand for imported luxury food products has risen as the demand for domestic food products has fallen. B) the demand

Because consumers who have insurance provided by their employers usually only pay a deductible for a visit to the doctor's office A) they demand a larger quantity of health care services than they would if they paid a price that better represented the true cost of providing the service. B) they demand a

A firm that is the only seller of a good or service that does not have a close substitute is called A) a monopoly. B) an oligopolist. C) a market maker. D) a price maker. Answer: A Answer: A Answer: A Consumers have to make tradeoffs in deciding what to consume because A) not all goods give them

Crystal inc. is a multifaceted company that deals with the mining, cutting, and selling of diamonds. It gives distributors and suppliers access to its database to place orders or restock inventories electronically and automatically. Which of the following is the network implemented in the company? A) intranet B) chaosnet C) extranet D) ethernet Answer: C Answer:

Tax laws affect A) economic efficiency but not equity. B) equity but not economic efficiency. C) consumption and production, not efficiency and equity. D) both efficiency and equity. Answer: D Answer: D Answer: D Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. Refer to Figure 4-1. If the market price is $1.50, what is the consumer surplus

Table 9-1 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. Refer to Table 9-1. Select the statement that accurately interprets the data in the table. A) Sandy has a greater opportunity

If a natural monopoly regulatory commission sets a price where marginal cost is equal to demand A) the firm would earn monopoly profits. B) economic efficiency would not be achieved. C) the firm would incur a loss. D) the firm would break even. Answer: C Answer: C Answer: C Compared to other high-income countries, health care spending

Peet's Coffee and Teas produces some flavorful varieties of Peet's brand coffee. Is Peet's a monopoly? A) Yes, there are no substitutes to Peet's coffee. B) No, although Peet's coffee is a unique product, there are many different brands of coffee that are very close substitutes. C) Yes, Peet's is the only supplier of

Figure 10-4 Refer to Figure 10-4. What is the marginal rate of substitution between h and j? A) cookie. B) cookie. C) 2 cookies. D) 4 cookies. Answer: B Answer: B Answer: B At low wages, the labor supply curve for most people slopes upward because A) the supply of labor is perfectly inelastic at low wages. B) as

Figure 3-4 Refer to Figure 3-4. If the current market price is $15, the market will achieve equilibrium by A) a price increase, increasing the supply and decreasing the demand. B) a price decrease, decreasing the supply and increasing the demand. C) a price decrease, decreasing the quantity supplied and increasing the quantity demanded. D)

Table 4-1 Refer to Table 4-1. The table above lists the highest prices three consumers, Tom, Dick and Harriet, are willing to pay for a short-sleeved polo shirt. If the price of one of the shirts is $28 dollars A) Tom will buy two shirts, Dick will buy one shirt and Harriet

Anything of value owned by a person or a firm is A) an asset. B) a liability. C) wealth. D) owner's yield. Answer: A Answer: A Answer: A Which of the following is true for a monopolist? A) Being the only seller in the market, the monopolist faces a perfectly inelastic demand curve. B) Being the only seller in

If price exceeds average variable cost but is less than average total cost, a firm A) should further differentiate its product. B) should stay in business for a while longer until its fixed costs expire. C) is making some profit but less than maximum profit. D) should shut down. Answer: B Answer: B Answer: B Goods with

If production displays increasing marginal returns, then A) total product rises by a constant amount throughout. B) each new worker hired adds more to output than previous hires. C) the firm must be adding new capital to keep boosting productivity. D) total product reaches a maximum sooner than if production displayed decreasing returns. Answer:

Figure 15-9 Figure 15-9 shows the demand and cost curves for a monopolist. Refer to Figure 15-9. At the profit-maximizing quantity, what is the difference between the monopoly's price and the marginal cost of production? A) $8 B) $11.50 C) $21 D) There is no difference. Answer: C Answer: C Answer: C Only one of the following statements is

Figure 3-8 Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S1 (point C). Which of the following changes would cause the equilibrium to change to point B? A) A positive change in the technology used to

An increase in income results in an outward shift of an indifference curve. Answer: FALSE Answer: FALSE Answer: FALSE Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it. Answer: TRUE Answer: TRUE Answer: TRUE A market failure arises when an entire sector of the

Many economists believe that when the federal government establishes an agency to regulate a particular industry, the regulated firms try to influence the agency even if these actions do not benefit the public. Economists refer to this result of government regulation by which of the following terms? A) regulatory capture B) logrolling C)

The marginal productivity theory of income distribution states that A) as more and more units of labor are added to a fixed quantity of capital, eventually labor's contribution to a firm's income will decrease. B) income distribution is determined by the marginal productivity of the factors of production that individuals own. C) factors

When a firm produces 50,000 units of output, its total cost equals $6.5 million. When it increases its production to 70,000 units of output, its total cost increases to $9.4 million. Within this range, the marginal cost of an additional unit of output is A) $41.43. B) $134.29. C) $135. D) $145. Answer: D Answer: D Answer:

In January, buyers of gold expect that the price of gold will rise in February. What happens in the gold market in January, holding all else constant? A) The supply curve shifts to the right. B) The demand curve shifts to the left. C) The demand curve shifts to the right. D) The quantity

Table 2-1 Production choices for Tomaso's Trattoria Refer to Table 2-1. Assume Tomaso's Trattoria only produces pizzas and calzones. A combination of 36 pizzas and 30 calzones would appear A) along Tomaso's production possibilities frontier. B) inside Tomaso's production possibilities frontier. C) outside Tomaso's production possibilities frontier. D) at the horizontal intercept of Tomaso's production possibilities

According to the law of one price, identical products should sell for the same price everywhere if A) consumers have knowledge of the prices charged for products in different markets. B) transactions costs are zero. C) firms can prevent consumers from engaging in arbitrage. D) there are no tariffs or other restrictions on imports

Price discrimination A) is the practice of charging different prices to different customers based on a seller's personal preferences and prejudices. B) is the practice of charging different prices to different customers based on the different costs of supplying the product to different customers. C) is the practice of charging different prices to

Scenario 1-2 Suppose a hat manufacturer currently sells 2,000 hats per week and makes a profit of $5,000 per week. The plant owner observes, "Although the last 300 hats we produced and sold increased our revenue by $1,000 and our costs by $1,100, we are still making an overall profit of

Table 17-3 Hotspur Incorporated, a manufacturer of microwave ovens, is a price taker in its input and output markets. The firm hires labor at a constant wage rate of $800 per week and sells microwave ovens at a constant price of $80. Table 17-3 shows the relationship between the quantity of

Total revenue is equal to A) the amount of funds earned by a firm minus its costs of production. B) the total quantity sold of a product over a given period of time. C) the price of a product multiplied by the number of units of the product sold. D) the monetary value of

Psychologists Daniel Kahneman and Amos Tversky conducted the following experiments by asking a sample of people the following questions: Scenario A: "Imagine that you have decided to see a play and paid the admission price of $10 per ticket. As you enter the theater you discover that you have lost the

The rules of the international monetary system are enforced by the World Bank. Answer: FALSE Answer: FALSE Answer: FALSE The substitution effect of a wage decrease examines the effect of the decrease in wage income on a worker's ability to consume goods and services. Answer: FALSE Answer: FALSE Answer: FALSE Corporations are legally owned by their

Seth's grandmother gave him a $50 savings bond for his birthday. The bond pays $50 at maturity, which is in five years. If the interest rate is 5%, the bond has a present value of $43.19. Answer: FALSE Answer: FALSE Answer: FALSE Suppose the supply curve for digital cameras shifts to the right.

All Gini coefficients must lie between 0 and 1. The lower the value A) the more unequal the income distribution. B) the closer the income distribution is to being equal. C) the greater the degree of poverty. D) the lower the degree of poverty according to the federal government's definition of poverty. Answer: B Answer:

What is the dominant strategy in a second-price auction? A) bidding below one's true value B) bidding above one's true value C) bidding one's true value D) There is no dominant strategy. Answer: C Answer: C Answer: C Figure 15-9 Figure 15-9 shows the demand and cost curves for a monopolist. Refer to Figure 15-9. What is the difference

Max Shreck, an accountant, quit his $80,000-a-year job and bought an existing tattoo parlor from its previous owner, Sylvia Sidney. The lease has five years remaining and requires a monthly payment of $4,000. Max's explicit cost amounts to $3,000 per month more than his revenue. Should Max continue operating his business? A)

Reporters from the Wall Street Journal found that the office supply store Staples charged different prices for the same product to different online customers based primarily on A) the age of the customer. B) how close the customer's zip code was to competitors' stores. C) the gender of the customer. D) how many times

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximizing outputs? A) Marginal revenue is less than price. B) Marginal revenue equals marginal cost. C) Price equals marginal cost. D) Average revenue equals average cost. Answer: A Answer: A Answer: A Whereas relocating production to low-cost locales

Consider a downward-sloping demand curve. When the price of a normal good increases, the income and substitution effects A) work in the same direction to increase quantity demanded. B) work in the same direction to decrease quantity demanded. C) work in opposite directions and quantity demanded increases. D) work in opposite directions and quantity

A public franchise A) is a corporation that is owned by stockholders. B) results from ownership of a key raw material. C) is a government designation that a private firm is the only legal producer of a good or service. D) is an unregulated monopoly necessary for the public good. Answer: C Answer: C Answer: C What

Briefly describe are the 6 main provisions of the Patient Protection and Affordable Care Act (ACA)? Answer: 1. Individual mandate requiring that every resident of the United States have health insurance or be subject to a fine.2. State health exchanges which offer health insurance policies are required to be established

Assuming zero transaction cost, if your local grocer buys oranges at a low price from an orchard and resells them to you at a higher price, then the grocer's revenue minus costs is known as A) arbitrage profits. B) transactions profits. C) pure profits. D) excess profits. Answer: A Answer: A Answer: A Which is the least common

Table 10-6 Table 10-6 lists Jay's marginal utilities for burgers and Pepsi. Jay has $7 to spend on these two goods. The price of a burger is $2 and the price of a can of Pepsi is $1. Refer to Table 10-6. If Jay can eat all the burgers he wants for

Table 9-6 Production and Consumption Production Without Trade With Trade Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade. Refer to Table 9-6. If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are

If you purchase a share of stock from your friend who initially purchased the stock three years ago, your purchase of the stock represents a transaction in the secondary financial market Answer: TRUE Answer: TRUE Answer: TRUE When there is a negative externality, the competitive output is more than the economically efficient output

Two stores - Lazy Guys and Ralph's Recliners - are located in the same city. Both stores buy recliner chairs from the same manufacturer at the same price and both stores are about the same size, so that the fixed costs of production for both stores are the same. Ralph's Recliners

Natural resource cartels such as OPEC are inherently unstable because their members operate with excess capacity and have an incentive to cheat on their output quotas. Answer: TRUE Answer: TRUE Answer: TRUE The marginal cost curve is U-shaped because of the law of increasing opportunity costs. Answer: FALSE Answer: FALSE Answer: FALSE Firms in perfect competition produce

Natural monopolies in the United States are generally regulated by A) the Federal Trade Commission. B) the Department of Justice. C) local or state regulatory commissions. D) the Department of Commerce. Answer: C Answer: C Answer: C All of the following would be considered explicit costs of operating a business except A) rent paid to a landlord. B)

Marginal utility can be A) negative. B) zero. C) positive. D) positive, negative or zero. Answer: D Answer: D Answer: D A perfectly competitive firm in a constant-cost industry produces 3,000 units of a good at a total cost of $36,000. The prevailing market price is $15. What will happen to the number of firms in the

All of the following are examples of explicit cost a firm might incur except A) the out-of-pocket expense to hire employees. B) taxes owed to the state government. C) the rental value of the warehouse space the company owns and uses for itself. D) the revenue a firm generates in using its resources.

One reason Starbucks experienced a decline in sales in the late 2000s is because A) the product they offered was becoming less differentiated from their competitors' products. B) the coffeehouse market transitioned from being monopolistically competitive to perfectly competitive. C) barriers to entry became more restrictive in the coffeehouse market. D) the number of

As women's wages have risen relative to men's wages, the opportunity cost to women of doing housework has ________ than has the opportunity cost to men. A) increased less B) increased more C) decreased more D) decreased less Answer: B Answer: B Answer: B Which of the following is a factor of production? A) an oven in a

In what way does long-run equilibrium under monopolistic competition differ from long-run equilibrium under perfect competition? A) Firms in perfect competition achieve productive and allocative efficiency while firms in monopolistic competition achieve neither allocative nor productive efficiency. B) The only difference is that in a monopolistically competitive market there are many brands

In the real world we don't observe countries completely specializing in the production of goods for which they have a comparative advantage. One reasons for this is A) comparative advantage works better in theory than in practice. B) some countries have more resources than other countries. C) tastes for many traded goods are

The costs in time and other resources that parties incur in the process of agreeing to and carrying out an exchange of goods or services are called A) exchange costs. B) implicit costs. C) transactions costs. D) selling costs. Answer: C Answer: C Answer: C Assume that the market for barley is in equilibrium and the demand for

If a firm decreases its plant size and finds that its long-run average costs have decreased, then A) its labor is more productive in a smaller plant. B) its diseconomies of scale are less. C) the firm should reduce its plant size even more. D) the firm is now profitable. Answer: B Answer: B Answer: B Studies

Two economists from Northwestern University estimated the benefit households received from subscribing to broadband Internet service. The economists found that A) the consumer surplus from dial-up Internet service exceeded the consumer surplus from broadband Internet service. B) the average consumer of broadband Internet service received a marginal benefit equal to $36. C) most

The demand for most farm products is relatively inelastic. All else constant, what is the effect on farm revenues as a result of the introduction of new and better farm equipment which increases in productivity? A) Farm revenues increase. B) Farm revenues decrease. C) Farm revenues remain constant because consumers will not increase their

If the demand for a product decreases and the supply of the same product decreases, the equilibrium price will decrease. Answer: FALSE Answer: FALSE Answer: FALSE One reason why McDonald's charges a single price for its products is that it is difficult and costly for the company to determine each individual consumer's willingness to

Rent seeking behavior, unlike profit maximizing behavior in competitive markets, wastes society's scarce resources. Answer: TRUE Answer: TRUE Answer: TRUE Market equilibrium occurs where supply equals demand. Answer: FALSE Answer: FALSE Answer: FALSE Joe Santos owns the only pizza parlor in a small town that is also home to a McDonald's, a Taco Bell and a

Logrolling may result in A) legislation that yields economy-wide benefits, the funding for which is borne primarily by a few of the smallest states. B) a majority of Congress supporting legislation that benefits the economic interests of a few, while harming the economic interests of a much larger group. C) members of Congress

Being a price-taker, a perfectly competitive firm cannot receive a producer surplus in the short run. Answer: FALSE Answer: FALSE Answer: FALSE The application of economic analysis to human resources issues is called personnel economics. Answer: TRUE Answer: TRUE Answer: TRUE If firms are protected by substantial barriers to entry, short-run profits can turn into long-run

At the minimum efficient scale A) all possible economies of scale have not been exhausted. B) the firm has achieved the lowest possible average cost of production. C) any increases in the scale of operation will encounter further economies of scale. D) marginal cost is at its minimum. Answer: B Answer: B Answer: B If tolls on

The marginal productivity theory of income distribution was developed by A) Edward Lazear. B) George Akerlof. C) William Stanley Jevons. D) John Bates Clark. Answer: D Answer: D Answer: D If Dawson prefers pizza to hamburgers and hamburgers to hot dogs, then if preferences are transitive A) at times she could be indifferent among the three items. B) she

Figure 1-1 Refer to Figure 1-1. Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2008 and 2011. A) 23.1% B) 23.8% C) 30% D) 42.9% Answer: D Answer: D Answer: D Figure 5-6 Figure 5-6 shows the market for measles vaccinations, a product whose use generates positive externalities. Refer to Figure

The first important law regulating monopolies in the United States was A) the Grant Act, which was passed in 1890. B) the Clayton Act, which was passed in 1890. C) the Sherman Act, which was passed in 1890. D) the Federal Trade Commission Act, which was passed in 1914. Answer: C Answer: C Answer: C Figure 6-4 Refer

The following equations represent the demand and supply for bottles of nail polish. QD = 25 - P QS = -15 + 3P What is the equilibrium price (P) and quantity (Q - in thousands) of bottles of nail polish? A) P = $5; Q = 20 thousand B) P = $15; Q = 30

Allocative efficiency best explains ________, and productive efficiency best explains ________. A) how something will be produced; when something will be produced B) when something will be produced; why something will be produced C) why something will be produced; what will be produced D) what will be produced; how something will be produced Answer:

Figure 14-3 Rainbow Writer (RW) is a small online company selling a highly rated software package for printing color labels directly onto CDs. The firm currently earns a profit of $2 million per year selling its package exclusively on its Web site. Odeon, the producer of the most popular software package

Which of the following is an example of a way in which a firm in oligopoly can escape the prisoner's dilemma? A) producing more of its product B) advertising that it will match its rival's price C) reneging on a previous tacit agreement with rival firms to charge identical high prices D) ignoring the

Demand in factor markets differs from demand in product markets in that A) the demand for a factor of production is difficult to determine. B) the demand for a factor of production is influenced by workers' productivity and by the producers' expected sales revenues, not by tastes and preferences of consumers. C) demand

Under autarky, consumer surplus is represented by the area A) above the supply curve and below the equilibrium price. B) above the supply curve and below the demand curve. C) below the demand curve and above the equilibrium price. D) above the demand curve and below the supply curve. Answer: C Answer: C Answer: C Collusion A) is

According to projections for 2013 by the Tax Policy Center, the 20 percent of U.S. taxpayers who make the highest incomes A) use loopholes and tax exemptions to reduce their share of federal income taxes to less than 20 percent. B) pay almost 68 percent of federal income taxes. C) pay about 92

Assume that two interior design companies, Alistair and Baine, are competing for customers and if they both advertise, they would each earn $30 million in profits. If neither advertises, they each earn $50 million in profits. If one advertises and the other doesn't, the firm that advertises earns $40 million

When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent, and the sale of dips (like salsa and bean dip) fell 8 percent. This set of facts indicates that A) the cross-price elasticity between tortilla chips and dips is 0.8, so the two

How do the owners of a partnership relate to the business? A) The owners and the business are not separate legal entities. B) The owners and the business are separate legal entities. C) The assets of the owners are considered separate from the asset of the business. D) None of these describe the legal

As former competitors in many industries link up to challenge others on a worldwide basis, ________ occurs. A) segregation B) denationalization C) consolidation D) technological stagnation Answer: C Answer: C Answer: C The town of Saddle Peak has a fixed supply of mountain view lots. In this case, the price per square foot of mountain view lots

If, in response to an increase in the price of chocolate the quantity of chocolate demanded decreases, economists would describe this as A) a decrease in demand. B) a decrease in quantity demanded. C) a change in consumer income. D) a decrease in consumers' taste for chocolate. Answer: B Answer: B Answer: B A firm could continue

Consider this quote from an article in the Wall Street Journal: "The stock of educated workers isn't increasing fast enough to keep up with rising demand.... Employers are paying the typical four-year college graduate [without graduate school] 75% more than they pay high-school grads. Twenty-five years ago, they were paying

Which of the following is the best example of a perfectly competitive industry? A) wheat production B) steel production C) electricity production D) airplane production Answer: A Answer: A Answer: A Figure 13-11 Refer to Figure 13-11. What is the monopolistic competitor's profit maximizing output? A) Q1 units B) Q2 units C) Q3 units D) Q4 units Answer: B Answer: B Answer: B The marginal

Which of the following represents the true economic cost of production when firms produce goods that cause negative externalities? A) the private cost of production B) the social cost of production C) the external cost of production D) the explicit cost of production Answer: B Answer: B Answer: B Households ________ factors of production and ________ goods

Consider a good whose consumption takes place publicly. Your decision to buy that good depends A) both on the characteristics of the product and on how many other people are buying the good. B) only on the characteristics of the good. C) only on how many other people buy the good. D) only on

Which of the following is an advantage of starting a new business as a corporation? A) double taxation B) ease in setting up C) low expenses of legally organizing D) greater ability to raise funds Answer: D Answer: D Answer: D Which of the following will not cause the labor demand curve to shift to the right? A)

If the paint on your house was eaten away by the fumes from a factory nearby and you hired a lawyer to sue the polluting firm, your legal fees would be considered A) external costs. B) transaction costs. C) marginal benefits. D) social costs of the pollution. Answer: B Answer: B Answer: B Which of the following

Economist Jerry Hausman estimated the price elasticity of demand for "Post Raisin Bran" and "All types of breakfast cereals." He found that the price elasticity of demand for Post Raisin Bran was -2.5 and the price elasticity of demand for "All types of breakfast cereals" was -0.9. Which of the

The U.S. government's focus on supply reduction efforts in its "war on drugs" has been relatively unsuccessful at addressing illegal drug use. Some economists believe that a successful anti-drug program must concentrate on reducing demand; for example, through drug education and voluntary treatment programs for addicts. a. Suppose the price elasticity

Laura's Pizza Place incurs $800,000 per year in explicit costs and $100,000 in implicit costs. The restaurant earns $1.3 million in revenues. Based on this information, what is accounting profit for Laura's Pizza Place? A) $200,000 B) $400,000 C) $500,000 D) $900,000 Answer: C Answer: C Answer: C Which of the following statements is false? A) An explicit

How do current tax laws in the United States favor employer-based health care insurance? A) Individuals who receive health insurance benefits are allowed to deduct the value of these benefits from their taxable income. B) Employers who provide health insurance benefits are reimbursed by the government and are not taxed on these

Figure 16-5 Refer to Figure 16-5. Suppose the firm represented in the diagram decides to practice perfect price discrimination. What is the total revenue collected by the firm? A) $6,720 B) $7,680 C) $10,240 D) $13,440 Answer: D Answer: D Answer: D Holding everything else constant, an increase in the price of MP3 players will result in A) a