You are given the following market data for Venus automobiles in Saturnia.
Demand: P = 200 – 0.25Q
Supply: P = 130 + 0.10Q
where P = Price and Q = Quantity. a. Calculate the equilibrium price and quantity.
b. Calculate the consumer surplus in this market.
c. Calculate the producer surplus in this market.
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. What area represents the portion of consumer
surplus that has been transferred to producer surplus as a result of the price floor?
A) B
B) B + C
C) B + E
D) E
Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in
the industry charges $21. Which of the following will happen?
A) The firm’s profits will increase.
B) The firm’s revenue will increase.
C) The firm will not sell any output.
D) The firm will sell more output than its competitors.
Figure 13-11
What is the productively efficient output for the firm represented in the diagram?
A) Q1 units
B) Q2 units
C) Q3 units
D) Q4 units
What does the phrase “internalizing an external cost” mean?
A) limiting the extent to which domestic firms can outsource production
B) prohibiting economic activities that create externalities
C) forcing producers to factor into their production costs the cost of the externalities
created in the production of their output
D) finding a way to address cross-border pollution
A decrease in consumer confidence can put your job at risk if
A) aggregate expenditures fall.
B) consumers expect their incomes to rise in the future.
C) aggregate expenditures rise.
D) consumers expect firms to increase investment in the future.
During the Great Depression, what appeared to be ________ fiscal policy was actually
not when the ________ budget deficit or surplus is examined.
A) expansionary; actual
B) expansionary; cyclically adjusted
C) contractionary; actual
D) contractionary; cyclically adjusted
To calculate GDP by the expenditure method, one must add
A) wages, rents, interest, and profits.
B) consumption spending, investment spending, government spending and net exports.
C) consumption spending, investment spending, government spending and exports.
D) labor, natural resources, entrepreneurship, and capital.
In most business situations where firms compete, often they can escape the prisoner’s
dilemma and reach the most profitable outcome. Which of the following is a reason for
this?
A) Firms engage in aggressive advertising to overcome the barriers to loyalty.
B) Most games are one-shot games so firms learn from their mistakes.
C) Most games are repeated games and firms can employ retaliation strategies against
those who do not cooperate.
D) Firms are constantly improving their products and anticipating changing consumer
tastes.
Figure 19-11
The graph above depicts supply and demand for British pounds during a trading day. At
a fixed exchange rate of $2.00 per pound, the pound is ________ versus the dollar. A
________ of the pound would correct the fundamental disequilibrium that exists in this
market.
A) undervalued; devaluation
B) undervalued; revaluation
C) overvalued; revaluation
D) overvalued; devaluation
A game in which pursuing dominant strategies results in noncooperation that leaves all
parties worse off is a
A) prisoner’s dilemma.
B) cooperative equilibrium.
C) first-price auction.
D) zero-sum game.