O (PC - PP) x QE Zoom out (PC - PP) x (QE - Q") x Question 3(Multiple Choice Worth 1 points) (03.02 MC) Use the graph to answer the question that follows. Price MC ATC ATC, Quantity (units) The shift indicated on the graph could be explained by a decrease in fixed costs an increase in fixed costs increased productivity O decreased productivity a demand increase Question 4(Multiple Choice Worth 1 points) (01.06 MC) Below is the total benefit Kenneth estimates he would get for jars of chocolate-flavored hazelnut butter. Jars Total Benefit (dollars) 5 9 12 4 14 15 6Jars Total Benefit (dollars) 10 What is Kenneth's optimal quantity consumed if the price of each jar is $4? 01 O2 O5 O7 Question 5(Multiple Choice Worth 1 points) (01.04 MC) In the country Gamma, it takes 6 hours to produce 1 automobile and 1 hour to produce a bale of cotton. In the country Delta, it takes 4 hours to produce 1 automobile and 1 hour to produce a bale of cotton. Which country should specialize in automobiles and which should specialize in cotton? ONeither Delta nor Gamma should specialize in automobiles or cotton. O Delta should specialize in automobiles and cotton. O Delta should specialize in automobiles, and Gamma should specialize in cotton. O Gamma should specialize in automobiles and cotton. O Gamma should specialize in automobiles, and Delta should specialize in cotton. Question 6(Multiple Choice Worth 1 points) (06.03 MC) Doctors often complain that the patents of pharmaceutical companies make newer medicines hard to obtain and overpriced for their patients. This describes how the patents cause the new medicines to be O artificially scarce O common pool goods non-excludable O perfectly competitive O rival goods Question 7(Multiple Choice Worth 1 points) (05.02 MC) If consumer tastes and preferences cause the equilibrium price of a product to decrease steadily over time, ceteris paribus, what will happen to the market wage for the labor to produce that product? O It will increase. O It will decrease. O It will not be affected.O It will decrease and then increase back to its original equilibrium. O Insufficient information to determine. Question 8(Multiple Choice Worth 1 points) (02.06 MC) Which model illustrates the relationships between price and quantities and the relative benefits of producers and consumers in a market over time? O Circular flow O Production possibility curve O Supply and demand O Marginal cost O Total utility Question 9(Multiple Choice Worth 1 points) (01.06 MC) The table below shows the total utility that Sarah enjoys based on the quantity of pizza slices she consumes. Pizza Slices Consumed Total Utility(utils) 7 9 11 12 Based on the table above, which slice of pizza gives Sarah the highest marginal utility? O Slice 1 O Slice 2 O Slice 3 O Slice 4 O Slice 5 Question 10(Multiple Choice Worth 1 points) (02.07 MC) Use the graph to answer the question that follows.Price Supply PI P2 P3 Demand Q1 02 03 Quantity (units) An excess of supply will exist in this market whenever the price is O below P2 O above P3 O above P2 O equal to P3 O indeterminate Question 11(Multiple Choice Worth 1 points) (03.03 MC) Use the graph to answer the question. Long Run Average Total Costs $ 5 B C 6 Output Which of the following would accurately describe firms unable to achieve the minimum efficient scale? O They would produce closer to point D.They would be unable to cross the range from B to C. They are producing between A and B. O They are producing between C and D. O They are producing beyond point D. Question 12(Multiple Choice Worth 1 points) (06.01 MC) Use the graph to answer the question that follows. MSC S=MPC Price ($) D-MPB-MSB Quantity Which of the following can cause the relationship shown between the MSC and MPC? O An increase in cases of asthma due to pollution O A decrease in financial instability from unlawful investing O An increase in investment to support educational funding O A decrease in air pollution caused by a nuclear energy plant O An increase in research and development funding of a product Question 13(Multiple Choice Worth 1 points) (03.07 MC) What is true of a firm's production if it operates in a perfectly competitive market with short-run economic profits? O Marginal revenue = demand = marginal cost > average total cost O Marginal revenue = marginal cost = average fixed cost O Average total cost = price = average variable cost O Marginal cost Price Average total cost O Price > Average total cost Question 16(Multiple Choice Worth 1 points) (06.05 MC) Which of the following policies will most likely help a government to achieve a goal of reducing the wealth gap between those with great wealth and those with no wealth? Increasing the interest rate on bank loans O Switching from a regressive tax system to a progressive tax system O Lowering taxes on income from interest earned on investments O Increasing the nation's per capita incomeO Encouraging actions that yield increased returns to entrepreneurs Question 17(Multiple Choice Worth 1 points) (06.01 MC) A market in which private businesses do not pay all of the production costs themselves represents a and will produce than the socially optimal quantity. O negative externality; less O negative externality; more O positive externality; more O positive externality; less O natural monopoly; less Question 18(Multiple Choice Worth 1 points) (06.02 MC) A perfectly competitive market will not produce the socially optimal quantity in long-run equilibrium if O there are external costs or benefits along with unclear property rights O there is no government intervention the government institutes a lump-sum tax or lump-sum subsidy the individual firms have achieved minimum efficient scale O there is perfectly symmetric information Question 19(Multiple Choice Worth 1 points) (03.07 MC) Use the graph to answer the question below. The quantity is measured in thousands of units.$40 L $30 $20 Price $10 0 1 2 3 4 5 6 i) Quantity At the current market price of P, will this firm produce output in the short run? The firm will produce goods in the short run because the price is below the average total cost. O The firm will produce goods in the short run because the price is above the average variable cost. O The firm will not produce goods in the short run because the price is above the average variable cost. O The firm will not produce goods in the short run because the price is below the average total cost. The firm will not produce goods in the short run because the price is between the average variable cost and average total cost. Question 20(Muttiple Choice Worth 1 points) (04.02 MC) The defining trait of a natural monopoly is O diseconomies of scale at the profittmaximizing quantity O a patent preventing competitors from entering the market O a low minimum efficient scale on the product's long-run average total cost curve O persistent economies of scale across the full market demand O allocative and productive inefficiency at the profit-maximizing quantity ATC AVC O To increase market competition (0 To correct for a positive externality ) To correct for a negative externality O To encourage production of private goods O To increase profit and encourage production Question 22(Multiple Choice Worth 1 points) (02.09 MC) How would the creation of an import quota affect the market for a good? ) Imported supply increases ) Domestic supply decreases () Market price increases ) Consumer surplus increases O Producer surplus decreases Question 23(Multiple Choice Worth 1 points) (03.04 MC) A firm has a total revenue of $90,000. Its total explicit costs are $50,000, and its total implicit costs are $40,000. What economic profit is the firm earning? ) $50,000 ) 340,000 ) $10,000 O Indeterminate ) Normal Question 24(Muttiple Choice Worth 1 points) (01.03 LC) Product 1 E Product 2 Which of the following points represents a failure to maximize productive resources? O D only OE only O A and E O B and D OB, C, and D Question 25(Multiple Choice Worth 1 points) (02.08 MC) If the supply for a good is very elastic and the demand is very inelastic, who would pay more for an excise tax? O Consumers O Producers O Consumers and producers share the burden equally O The government O Indeterminate Question 26(Multiple Choice Worth 1 points) (03.05 MC) A firm operates in a perfectly competitive market and is producing at the profit-maximizing output. It is incurring economic losses. Based on this information, which of the following must be true?Question 26(Multiple Choice Worth 1 points) = (03.05 MC) A firm operates in a perfectly competitive market and is producing at the profit-maximizing output. It is incurring economic losses. Based on this information, which of the following must be true? O Average total cost = price; marginal cost > marginal revenue () Average total cost = price; marginal cost = marginal revenue - ) Average total cost > price; marginal cost = marginal revenue om O Average total cost > price; marginal cost > marginal revenue O Average total cost marginal revenue Question 27 (Multiple Choice Worth 1 points) = (04.04MC) At 120 units of output, a monopolistically competitive firm's demand is $12, marginal revenue is $8, its marginal cost is $8, and its average total cost is $12. Based on this, which of the following is true? O The firm will produce more than 120 units of output. O The firm will produce fewer than 120 units of output. O The firm is earning normal profit at its profit-maximizing quantity. O The firm will earn $960 in profit. O The firm will earn $480 in profit. Question 28Muitiple Choice Worth 1 points) = (05.03 MC) If the wage in a perfectly competitive labor market is $20 and the firm can sell all the output it wants at $4 per unit, then the marginal product of the last worker employed must be () 5 units (16 units O 24 units ) 80 units O indeterminate Question 29(Multiple Choice Worth 1 points) = (04.05 MC) In the context of aligopoly, which of the following describes a situation in which no firm can improve its outcome by independently changing its course of action? O Price collusion O Prisoner's dilemma () Nash equilibrium ) Deminant strategy ) Game theory Question 30(Multiple Choice Worth 1 points) = (06.01 MC) In long-run equilibrium, the marginal social cost exceeds the marginal private cost, but the marginal social benefit is equal to the marginal private benefit. This describes which of$he following markets? om ' O Oligopoly with no externalities O Monopoly with perfect information O Perfect competition with a positive externality O Perfect competition with a negative externality O Perfect competition with asymmetric information Question 31(Multiple Chaice Worth 1 points) (03.06 MC) The following information is available for a company that operates in a perfectly competitive market. Current output 5000 units Current market price | 55 Total cost $25,000 Marginal cost 56 Total variable cost | $20,000 What is the best action for this firm? O Increase output in the short run and exit the market the long run ) Increase output in the short run and stay in the market in the long run ) Reduce output in the short run and exit in the long run ) Reduce output in the short run and stay in the market in the long run ) Shut down in the short run and produce in the long run Question 32(Multiple Choice Worth 1 points) (01.02 LC) Which of the following is a basic question that must be answered in resource allocation? ) How much education should workers have? J What goods and services should be produced? ) What is a fair price for a particular good or service? ) How much should a good or service cost the consumer? ) What sort of technology should be used to produce goods? (02.08 MC) Businesses in which market structure(s) would be affected if a per-unit excise tax were imposed? O Perfect competition Monopolistic competition O Oligopoly O Monopoly O All of the above Question 34(Multiple Choice Worth 1 points) (01.01 MC) Why might salt be a resource with a high cost in one market and a very low cost in another market? O Trade could affect costs. O Its supply could be scarce in one market and very great in another. O The higher cost market might have a much lower demand for salt than its supply. O The higher cost market might have no demand for salt. The lower cost market might have more trade-offs for salt harvesting Question 35(Multiple Choice Worth 1 points) (03.02 MC In the short run, a firm's total cost is $150 if it does not produce any units of output. Its variable cost is $5 per unit. If the firm produces 5 units, variable costs are while total costs are _ O $5; $50 O $5; $70 O $10 O $25; $175 O $25; $775Question 36(Multiple Choice Worth 1 points) (06.04 MC) Use the graph to answer the question that follows. Price ($) v b3 Quantity 360 540 What is the seller's price after the tax? (O Above $5 O35 O 54 o LUL.UD VIL) Elasticity can disregard specific units of measurement by doing what? Converting everything to dollar values (0 Using anly curves rather than demand schedules O Averaging changes in quantities (0 Using the percentage change in quantity and price ) Applying the midpoint formula so the direction of calculation does not matter Question 38(Multiple Choice Worth 1 points) = {02.01 MC) Which of the following would cause the demand curve for milk to shift to the right? Assume it is a normal good. O The number of people who cannot drink milk increases. ) Amajor economic downturn lowers the average household income. O The price of one of its substitutes goes down. O A significant number of people move into the market. () News of a new technology in the milking process makes consumers expect prices to lower soon. - 0w Question 39(Multiple Choice Worth 1 points) = (01.05 MC) Ruby is an accountant. She is considering leaving her 9-to-5 job so she can have more time for leisure and to bond with her family. She currently earns $139,000 per year. She plans to start her accounting firm and render accounting services to small enterprises. She also intends to learn fashion design and make dresses. The table below shows all of the econemic benefits and associated costs for her plans. Accounting Firm Fashion Design Annual rent & salary cost | 561,200 | Cost of leaming fashion $10,000 Annual earnings $200,000 | Monthly earnings from sale of dresses | $800 Consider total costs and benefits, calculate the net benefits, and advise Ruby whether to quit her job, using knowledge of cost-benefit analysis. C Ruby should quit her job because the net benefit is $200,900. () Ruby should keep her job because the net benefit is -$200. O Ruby should keep her job because the net benefit is -$8,300. () Ruby should quit her job because the net benefit is $139,600. ) Ruby should quit her job because the net benefit is $600. Question 40(Multiple Choice Worth 1 points) = (03.07 MC) Ryan owns a beet farm. If his farm is perfectly competitive, what profits and losses can he expect to make in the short and in the long run? (0 Ryan may earn economic profits or losses in the short run and in the long run. ) Ryan may earn economic profits or losses in the short run but not in the long run. () Ryan may earn zero economic profit in the short run and profits in the long run. ) Ryan may earn zero economic profit in the short run and losses in the long run. (O Ryan may earn economic profits or losses in the long run but not in the short run. Question 41 (Multiple Choice Worth 1 points) = (06.02 MC) Review the table below, which shows the quantity supplied and quantity demanded for a private good. Price | Quantity Supplied | Quantity Demanded 51 3 7 $3 4 6 $5 5 5 57 6 4 Assume that it becomes impossible to exclude non-payers from consuming this good. What will be the maximum guantity of the good transacted in the market? O3 O4 Os ~ o Os O Indeterminate Question 42(Multiple Choice Worth 1 points) = (02.04 MC) What is the price elasticity of supply for a good that sees a 1% increase in quantity supplied for a 5% increase in price? Doz Os Question 43(Multiple Choice Worth 1 points) (05.04 MC) Which of the following is correct about a monopsonistic factor market? () Resources are efficiently allocated. O There is one seller and many buyers. () The monaopsony has the same quantity transacted as in a perfectly competitive input market. O The supply curve is upward sloping and below the marginal factor cost curve. O Purchase of an additional item decreases the price of the item and of the existing items being purchased. Question 44(multiple Choice Worth 1 points) {03.01 MC) Abusiness hires workers to help detail car interiors at a car wash. The following table shows the marginal productivity of each worker in number of cars detailed. Number of Workers | Marginal Product 1 5 2 9 3 12 4 13 5 13 6 10 Which number of workers produces a total product of 26 cars detailed? O2 O3 0 Oe Question 45(Multiple Choice Worth 1 points) (03.02 MC) Company X produces good Y. The entire market's demand for is 100,000 units, and Company X has achieved minimum efficient scale at 50,000 units. This market is most likely ) a monopoly O highly concentrated O fragmented O price discriminating O competitive Question 46(Multiple Choice Worth 1 points) (04.03 MC) A monopolist engages in perfect price discrimination. What will happen to the consumer surplus? O 1t significantly increases as it absorbs the producer surplus. O It disappears and becomes deadweight loss. It decreases based on the elasticity of demand. O 1t is unchanged. O It i entirely converted to producer surplus. Question 47 (Multiple Choice Worth 1 points) (01.03 MC) A production possibility curve would if the availability of an input increased and would if a lack of technology decreased production efficiency. () shift outward: shift inward ) not move; shift outward ) not move; not move O shift outward: shift outward ) shift inward: shift inward Question 48(Multiple Choice Worth 1 points) = (04.05 HC) Company A and Company B are competing oligopolists. Both companies are considering increasing or maintaining their prices. The payoff matrix shows the profits of the companies in millions based on their possible actions. om Company B Increase Price | Maintain Price Company A | Increase Price | $50, 540 $35, 530 Maintain Price | $55, $45 $60, 35 The government offers a $5 million subsidy to maintain current pricing. What is the expected outcome of the new payoff matrix, given the subsidy? O The Nash equilibrium changes, and both companies will maintain their prices. ) The Nash equilibrium changes, and both companies will increase their prices. J The Nash equilibrium remains the same, and both companies will increase their prices. ) Company A will increase its price, while Company B maintains its price. ) Company A will maintain its price, while Company B increases its price. Question 49(Multiple Choice Worth 1 points) = (02.02 MC) What would be the effect of a decrease in government taxes on a good's supply curve, ceteris paribus? ) No change O A shift to the left O A shift to the right ) A decrease in price ) A decrease in quantity supplied Question 50(Multiple Choice Worth 1 points) (06.01 MC) Which of the following describes a situation where the marginal social benefit is equal to the marginal social cost at equilibrium? O Oligopoly ) Monopoly O Positive externality O Allocative efficiency O Negative externality Question 51 (Multiple Choice Worth 1 points) (05.01 MC) Use the graph to answer the question that follows. 0 Marginal Product S 10 Assume that the first unit of labor in the graph above produces 23 units of output. What would the total output be if this firm employed three units of labor? O 23 units () 25 units ) 30 units ()78 units ) 158 units Question 52(Multiple Chaice Worth 1 points) = (D4.02 MC) Use the graph below. Q Q. Quantity (units) What does the area formed by P1, M, Q2, and 0 represent? () The firm's total revenue at the profit-maximizing quantity O The firm's profit at the profit-maximizing quantity ) The firm's total cost at the profit-maximizing quantity O The deadweight loss in the market because of the monopoly 0 The firm's missed revenue if it charges less than the profit-maximizing price 0w Question 53(Multiple Choice Worth 1 points) P (01.05 LC) Every choice requires a sacrificed or foregone best alternative. Economists call this the O fixed cost O accounting cost ) normative cost O positive cost ) opportunity cost Question 54(Multiple Choice Worth 1 points) (02.08 HC) Use the graph to answer the question that follows. Q1 Q2 Q3 Quantity (units) When prices are set away from the market equilibrium there is a loss in total economic surplus. If the market was initially in equilibrium and then the price was set at P1, what is the loss in total economic surplus or the deadweight loss? OA OB+E OE+F OE+F+H+J OB+C+D+E+F Question 55(Multiple Choice Worth 1 points) = (02.02 MC) If a firm with a supply schedule with positive units at every price leaves a market, ceteris paribus, what gk happen to the market supply? ' 1t will shift right by that firm's output quantity at every price. O It will shift left or decrease by that firm's output quantity at every price. O It will not change. O 1t will become more elastic. O Insufficient data to determine. Question 56(Muttiple Choice Worth 1 points) = (01.04 MC) Country A can produce gadgets at a lower opportunity cost than any other producer of gadgets. As a result, County A must have O a superior gadget making technology O an absolute advantage in gadget production () a comparative advantage in gadget production O a constant opportunity cost associated with gadget production O more factors of production devoted to gadget production than any other country Question 57 (Multiple Choice Worth 1 points) = (02.05 MC) The income elasticity of demand for a good is -4 and average consumer income goes down by 10%. The good's quantity demanded O is indeterminant (0 must have increased by 40% and it is a normal good O must have increased by 40% and it is an inferior good (0 must have decreased by 2.5% and the good is inferior ) must have decreased by 0.4% and it is a normal good Question 2(Multiple Choice Worth 1 points) (06.02 MC) Use the graph to answer the question that follows. MSC Price ($) MPC pc PE PP MSB Q' QE Quantity What is the deadweight loss that results from this externality? O QE - Q* O pc - PE O pc - pp O (PC - PP) x QE O (PC - PP) X (QE - Q*) x _Use the table to answer the question that follows. Quantity of Labor | MP of Labor | Quantity of Capital MP of Capital 1 40 1 50 2 45 2 40 3 35 3 35 4 20 4 20 5 5 5 5 What combination of labor and capital would satisfy the input hiring rule that minimizes the cost of production, if the price of labor is $5 and the price of capital is $207 O 1 unit of labor; 3 units of capital O 2 units of labor; 1 unit of capital O 3 units of labor; 2 units of capital O 3 units of labor; 3 units of capital O 5 units of labor; 4 units of capital Question 59(Multiple Choice Worth 1 points) (06.05 MC) Use the graph to answer the question that follows. 100 g 8 Percentage of Income Percentage of Houscholds In 2015, what percentage of households in this economy earned 60 percent of the income? O 20 percent O 38 percent O 40 percent O 55 percent O 80 percent Question 60(Multiple Choice Worth 1 points) (04.01 MC) If barriers to entry or product differentiation , competition in a market will O increase; increases; decrease O increase; increases; increase O increase; decreases; increase O decrease; increases; increase O decrease; decreases; decrease