119 terms

Full Econ Exam Questions

Table 14-10: The marginal cost of producing the 4th unit is
Table 14-10: At which level of production will the firm maximize profit?
3 units
Tax incidence refers to
who bears the tax burden
Figure 13-9: Which of the curves is most likely to characterize the short-run average total cost curve of the smallest factory?
Externalities tend to cause markets to be
Sally's cat causes Mike to sneeze. Sally values her cat's companionship at $300 per year. The cost to mike of tissues and his allergy medication is $350 per year. Based on the Coase theorem,
Mike should pay Sally $325 to give away her cat.
Figure 13-5: Which curve is most likely to represent average total cost?
Figure 13-5: Curve C represents which type of cost curve?
Average total Cost
Figure 13-5: Curve a represents which type of cost curve?
average fixed cost
Figure 13-5: Which of the curves is most likely to represent average fixed cost?
The old lyric "the best things in life are free"
refers to goods provided by nature or the government
Figure 10-15: Which graph illustrates a pollution permit program?
the right graph
Over the past 100 years, as the U.S. economy's income has grown,
both tax rates and tax revenues have increased
An example of an oppurtunity cost that is also an implicit cost is
the value of the business owner's time
For a firm in a perfectly competitive market, the price of the good is always
equal to marginal revenue
Using a toll to reduce traffic when congestion is greatest is an example of a
corrective tax
both public goods and common resources are
rival in consumption
The government's health plan for the elderly is called
A lighthouse is typically considered to be a public good because
all passing ships are able to enjoy the benefits of the lighthouse without paying.
The marginal product of an input in the production process is the increase in
quantity of output obtained from an additional unit of that input
Table 13-2: What is the marginal product of the first worker?
200 units
Which of the following represents the firm's long-run condition for exiting a market?
exit if P<ATC
Table 13-1: What is the total output when 1 worker is hired?
If a tax takes a smaller fraction of income as income rises, it is
At the profit-maximizing level of output
marignal revenue equals marginal cost
Which of the following is most likely to face extinction?
tigers living in the wild
Four roomates share an off-campu house and equally share the cost of rent. Everyone says that she values a clean house, yet the house is usually dirty. To an economist, a clean house in this case represents
a common resource problem
when a good is excludable
people can be prevented from using the good
Externalities can be corrected by each of the following except
normal market adjustments
Figure 10-1: This graph represents the tobacco industry. the industry creates
negative externalities
The largest source of income for the federal government is
individual income taxes
A budget deficit
occurs when government receipts are less than spending
Because public goods are
not excludable, people have an incentive to be free riders.
In choosing the form of a tax, there is often a tradeoff between
efficiency and fairness
If darren sells 300 glasses of iced tea at $0.50 each his total revenues are
The U.S. tax burden is
lower that most European countries
Most people agree that the tax system
should be both efficient and equitable
A key characteristic of a competitive market is that
producers sell nearly identical products
If the government were to impose a fine of $1,000 for each unit of air-pollution released by a steel mill, the policy would be considered
a corrective tax
The U.S. income tax
discourages saving
The shift from S to S' is called
increase in supply
Most studies indicate that tobacco and marijuana tend to be
at a price of $20, which statement is not correct
equilibrium price is equal to equilibrium quantity
another term for equilibrium price is
market clearing price
the word economy comes from the Greek word oikonomos, meaning
one who manages a household
the property of society getting the most it can from its scarce resources is called
the combination of president Obama's strategies and the federal reserves reaction tot he deep economic downturn int he US in 2008 and 2009
intended to reduce unemployment and may lead to excessive inflation over time
which of the following is an important cause of inflation in an economy
growth in the quantity of money in the economy
a production possibilities frontier can shift outward if
there is a technological improvement
what is the opportunity cost to Batterland of increasing the production of pancakes from 150 to 300
75 waffles
at which point is this economy producing its maximum possible quantity of pans?
on the pan axis, N
this economy has the ability to produce at which points?
any inside or on the line, KMN
movement from point M to K could be caused by
which arrow represents the flow of good and services?
the flow from markets of goods and services to households, arrow B
elasticity is the measure of
how much buyers and sellers respond to changes in market conditions
the price elasticity of demand measures how much
quantity demanded responds to a change in price
assume that the UK and the USA each has 80 labor hours available. If each country divides its time equally between the production of coolers and radios, then total production is
60 coolers and 18 radios
marquis and serena would like to wear sweaters and eat tasty food. The gains from trade between them are most obvious in which of the following cases?
marquis's skills are such that he can produce only sweaters, and serena's skills are such that she can produce only tasty food
assume Andia and Zardia each has 360 min available. If each person divides his time equally between the production of wheat and beef, then total production is
21 bushels of wheat and 33 lbs of beef
which of the following combinations of wheat and beef could andia produce in one 8 hour day
9 bushels of wheat and 25 pounds of beef
which of the following combinations of wheat and beef could zardia not produce in one 10 hour day
25 bushels of wheat and 25 lbs of beef
uppose him and tom can both produce two goods: baseball bats and hockey sticks. Which of the following is not possible?
jim has a comparative advantage in the production of baseball bats and in the production of hockey sticks
when each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy
trade can make everybody better off because it
allows people to specialize according to comparative advantage
for an economist, the idea of making assumptions is regarded generally as a
good idea, since doing so helps to simplify the compile world and make it easier to understand
a model that shows how dollars flow through markets among households and firms is called the
circular flow diagram
the adage "there is no such thing as a free lunch" means,
people face tradeoffs
in economics, the cost of something is
what you give up to get it
making rational decisions at the margin means that people
compare the marginal costs and marginal benefits of each decision
people are willing to pay more for a diamond than for a bottle of water because
the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water
for a competitive market
if a seller charges more than the going price, buyers will go elsewhere to make their purchases
if the law of demand applies to this good, then Q1 could be
at a price of FIG 4-14
$7, there is a surplus of 4 units
a likely example of substitute goods for most people would be
pencils and pens
which of the following is not held constant in a demand schedule
when drawing a demand curve
price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis
Table 4-1 if the market consists of Michelle and Laura only and the price falls by $1, the quantity demanded in the market increase by
3 units
the short run tradeoff between inflation and unemployment implies that, in the short run,
a decrease in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate
when the price of a good or service changes
there is a movement along a given demand curve
a minimum wage that is set below a market's equilibrium wage will result in an excess
none of the above is correct
a binding floor is shown in
panel B only
Fig 8-8 after the tax goes into effect, producer surplus is the area
Fig 8-8 the government collects tax revenue that is the area
Fig 9-1 when trade in wool is allowed, producer surplus in Scotland
increases by the area B+D+G
Fig 9-1 in the absence of trade, total surplus in SCotland is represented by the area
Fig 6-4 which of the following statements is not correct
when the price is $6, there is a surplus of 8 units
when a country allows trade and becomes an importer of a good
the gains of the winners exceed the losses of the losers
which of the following is not an example of a public policy
equilibrium laws
if a country allows trade and for a certain good the domestic price without trade is lower than the world price
the country will be an exporter of the good
at present, the maximum legal price for a human kidney is $0. The price of $0 maximizes
neither consumer nor producer surplus
Fig 7-16 total surplus can be measured as the area
Table 7-1 if the price of the product is $15, then who would be willing to purchase the product?
Lori, Audrey and Zach
if a price ceiling is not binding then
the equilibrium price is below the price ceiling
Fig 7-2 when the price rises from P1 to P2, consumer surplus
decreases by an amount equal to B+C
necessities such as food and clothing tend to have
low price elasticities of demand and low income elasticities of demand
when a country allows trade and becomes an exporter of a good, which of the following is not a consequence
the losses of domestic consumers of the good exceed the gains of domestic producers of the good
Fig 8-9 the imposition of the tax causes the quantity sold to
decrease by 20 units
the decrease in total surplus that results from a market distortion, such as a tax, is called a
deadweight loss
the invisible hand refers to
the marketplace guiding the self interests of market participants into promoting general economic well being
assume, for the US, that the domestic price of wheat without international trade is higher tan the world price of wheat. This suggests that, in the production of wheat,
other countries have a comparative advantage over the US and the US will import wheat
Fig 6-2 the price ceiling causes a
shortage of 85 units
when a tax is placed on the sellers of a product, buyers pay
more and sellers receive less than they did before the tax
when a tax is imposed on a good for which the supply is relatively elastic and the demand is relatively inelastic
buyers of the good will bear most of the burden of the tax
if the cross price elasticity of two goods is negative, then the two goods are
price controls
can generate inequities of their own
a decrease in supply will cause the largest increase in price when
both supply and demand are inelastic
when a nation first begins to trade with other countries and the nation becomes an exporter of soybeans,
all of the above
the study of how the allocation of resources affects economic well being is called
welfare economics
which of the following is not a commonly advanced argument for trade restrictions
the efficiency argument
total surplus with a tax is equal to
consumer surplus plus producer surplus plus tax revenue
Fig 5-14 along which of these segments of the supply curve is supply least elastic
a tax on an imported good is called a
fig 7-19 if the price were P3, consumer surplus would be represented by the area
the goal of rent control is to
help the poor by making housing more affordable
cross price elasticity of demand measures how
the quantity demanded of one good changes in response to a change in the price of another good
suppose raymond and victoria attend a charity benefit and participate in a silent auction. Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist. This maximum is called
willingness to pay
table 5-6 using the midpoint method, the income elasticity of demand for good Y is
-2.33 and good Y is an inferior good
the laffer curve relates
the tax rate revenue raised y the tax
ronald reagan believed that reducing income tax rates would
raise economic well being and perhaps even tax revenue