QUESTION 1 1 points Save Answer 2.50 2.00- 1.50 Quantity 20 Refer to the market graph shown above. A black market where the price is $2.00 could result from a price ceiling set at $1.50 O floor set at $1.50. ceiling set at $2.50 floor set at $2.00. QUESTION 2 1 points Save Answer Concentration ratios measure the geographic distribution of the largest corporations in each industry. degree to which a particular firm accounts for sales in a given metropolitan area. percentage of total industry sales accounted for by the largest firms in the industry. Od dependence of an industry on its resource suppliers. QUESTION 3 1 points Save Answer 10- 8 5 6- Quantity of D N 2 4 6 8 10 Quantity of C Refer to the budget line shown in the diagram. If the consumer's money income is $20, the prices of C and D cannot be determined price of C is $4 and the price of D is $2 price of C is $2 and the price of D is $4. consumer can obtain a combination of 5 units of both C and D. QUESTION 4 1 points Save Answer The "pork" in pork-barrel politics refers to government projects that politicians try to secure in favor of the common good for the whole nation. O True O FalseQUESTION 5 1 points Save Answer In game theory, sequential games can be displayed or summarized in two forms, collusive form and strategic form. O extensive form and game-tree form. O payoff matrix form and strategic form. strategic form and extensive form. QUESTION 6 1 points Save Answer Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community. A proposed public good has a total cost of $1,000. All five citizens will share an equal portion of this cost in taxes. The benefit of the public good is $220 to Abby, $210 to Ben, $210 to Clara, $180 to Joe, and $120 to Matt. In a majority vote, this proposal will most likely be accepted; the public good is produced, even though it is economically inefficient. defeated; the public good is not produced, even though it would have been efficient to do so. defeated; the public good is not produced, which is the proper outcome. accepted; the public good is produced, which is economically efficient. QUESTION 7 1 points Save Answer Natural monopoly may result where products produce substantial network effects and can be simultaneously consumed by a large number of consumers. True False QUESTION 8 1 points Save Answer Last month Laura saw the value of her stock portfolio rise by $20,000. This month she saw the value of her portfolio decline by $20,000. According to behavioral economics, O Laura should not invest in stocks unless the utility she receives from gains is at least as great as the disutility she feels from losses. the positive utility Laura received from seeing her portfolio value rise was equal to the disutility she felt when its value declined O the positive utility Laura received from seeing her portfolio value rise was greater than the disutility she felt when its value declined. O the positive utility Laura received from seeing her portfolio value rise was less than the disutility she felt when its value declined. QUESTION 9 1 points Save Answer Suppose you are given the following data on demand for a product. The price elasticity of demand (based on the midpoint formula) when price decreases from $9 to $7 is Price Quantity Demanded 10 30 40 50 60 70 O 1.16. 1.60 O 0.63. O 2.27. QUESTION 10 1 points Save Answer When there is overproduction of a good, the allocation efficiency is enhanced. O the marginal cost of the good exceeds its marginal benefit. O the net benefit of producing extra units if the good is positive. O the marginal benefit of the good exceeds its marginal cost.QUESTION 11 1 points Save Answer Political corruption occurs whenever government officials use unlawful misdirection of governmental resources for their own personal gain. there is pork barrel politics involved. special interest groups contribute to elected officials, who in turn support legislation that benefits the special interest group. logrolling is used to secure votes for controversial legislation. QUESTION 12 1 points Save Answer Price Price Qo Qe Qe Qo Quantity Quantity (a) (b) Refer to the diagrams for two separate product markets. Assume that society's optimal level of output in each market is Q o and that government purposely shifts the market supply curve from S to S , in diagram (a) on the left and from S to S 2 in diagram (b) on the right. The shift o the supply curve from S to 5 2 in diagram (b) might be caused by a per-unit O tax on the producers of this product subsidy paid to the buyers of this product. tax on the buyers of this product. subsidy paid to the producers of this product. QUESTION 13 1 points Save Answer symmetric information occurs when the two parties in a market transaction do not have the same amount of information regarding the product or process involved in the transaction. True False QUESTION 14 1 points Save Answer The operation of the invisible hand means the pursuit of private interests promotes social interests in pure competition. True False QUESTION 15 1 points Save Answer Assume a round of golf requires four hours of leisure time, and attending a concert requires two hours. If the price of a round of golf is $40 and the price of a concert is $80, ceteris paribus, Joe will play golf but not attend concerts, since golf is cheaper. golf twice as often as he attends concerts. less golf whenever he receives a large raise. relatively less golf and attend relatively more concerts whenever his leisure time becomes more scarce. QUESTION 16 points Save Answer Monopolistic competition is characterized by a few dominant firms and low entry barriers. few dominant firms and substantial entry barriers. large number of firms and substantial entry barriers. large number of firms and low entry barriers.QUESTION 17 1 points Save Answer The short-run marginal-cost curve is upward-sloping because of the law of diminishing marginal returns. True False QUESTION 18 1 points Save Answer If product Y is an inferior good, a decrease in consumer incomes will shift the demand curve for product Y to the right. not affect the sales of product Y. make buyers want to buy less of Product Y. O shift the demand curve for product Y to the left. QUESTION 19 1 points Save Answer Price D , Quantity Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. If the initial demand and supply curves are Do and S o, equilibrium price and quantity will be O OF and OA, respectively O OF and OC, respectively. O OG and OB, respectively. O OE and OB, respectively. QUESTION 20 1 points Save Answer If the newspapers report that there is a shortage of strawberries, it must mean that the current price of strawberries is below the equilibrium price. True False QUESTION 21 1 points Save Answer C F H Demand G Q 1 Q2 Q3 Q Quantity Demanded Refer to the above graph. If the price decreases from P 3 to P 2, then the total revenue will lose area O A + B + C + D, but it will gain area E + F + G.QUESTION 21 I points Save Answer P4 H Demand G J 21 22 23 Q Quantity Demanded Refer to the above graph. If the price decreases from P 3 to P 2, then the total revenue will lose area O A + B + C + D, but it will gain area E + F + G. O E + F + G, but it will gain area H + 1 + J. O H + 1, but it will gain area A + B + C. B + E, but it will gain area H + 1. QUESTION 22 1 points Save Answer Total Revenue q1 92 93 Output Refer to the diagram for a nondiscriminating monopolist. The profit-seeking monopolist will always produce more than 92. never produce an output larger than q1. never produce an output larger than 92. always produce at output 92. QUESTION 23 1 points Save Answer P Price and Costs SupplyQUESTION 1 points Save Answer T Price and Costs Supply Demand Q 2 Q Q 1 Quantity The accompanying graph shows the long-run supply and demand curves in a purely competitive market. The curves suggest that in this industry, the marginal benefit to consumers of each extra unit of the product is increasing. constant decreasing. not indicated in the graph. QUESTION 24 1 points Save Answer When high-school and college graduates apply for jobs in the labor markets, job applicants and employers are both "sellers" in the market. job applicants and employers are both "buyers" in the market. job applicants are the "sellers" while employers are the "buyers." job applicants are the "buyers" while employers are the "sellers." QUESTION 25 1 points Save Answer Which of the following is not a precondition for price discrimination? The commodity involved must be a durable good. The good or service cannot be profitably resold by original buyers. The seller must possess some degree of monopoly power. The seller must be able to segment the market, that is, to distinguish buyers with different elasticities of demand. QUESTION 26 1 points Save Answer If in the short run a firm's total product is increasing, then its O marginal product must also be increasing O marginal product could be either increasing or decreasing. average product must also be increasing marginal product must be decreasing. QUESTION 27 1 points Save Answer A competitive market produces the economically efficient outcome if the following conditions are met, except the market supply curve reflects all costs of production. the market demand curve reflects the buyers' full willingness to pay. the market produces only units for which costs are at least equal to benefits. the market produces only units for which benefits are at least equal to cost.QUESTION 28 1 points Save Answer Output Refer to the diagram, which pertains to a purely competitive firm. Curve A represents total revenue and marginal revenue. total revenue only. total revenue and average revenue. marginal revenue only. QUESTION 29 1 points Save Answer The income effect of a price increase for a normal good causes an increase in the consumption of the good. True False QUESTION 30 1 points Save Answer A firm can sell as much as it wants at a constant price. Demand is thus relatively elastic. perfectly inelastic. relatively inelastic. perfectly elastic. QUESTION 31 1 points Save Answer A state government seeking to increase its excise-tax revenues is more likely to increase the tax rate on items with elastic demand. True False QUESTION 32 1 points Save Answer Government in a market system can increase economic efficiency by collecting taxes in order to subsidize the production of private sector goods. goods with negative externalities. complementary goods. goods with positive externalities.QUESTION 33 MC ATC AVC Demand Dollars = MR A B D Quantity In the accompanying diagram, if the firm produced D units of output at price G, it would earn a normal profit. O True False QUESTION 34 In monopolistic competition, which of the following would make an individual firm's demand curve less elastic? O an increase in the price of the firm's product an increase in the number of rival firms increased brand loyalty toward the firm's product the purchase of more efficient machinery QUESTION 35 The dictator and ultimatum games reveal that fairness and concern for others motivate people's behavior. O True False QUESTION 36 Price Quantity The accompanying graph represents the purely competitive market for a product. When the market is at equilibrium, the value of the total benefits derived by consumers from this product would be represented by the area Da+b+ c+d. Ob + c. Oa+ b+C. a.QUESTION 36 Price Quantity The accompanying graph represents the purely competitive market for a product. When the market is at equilibrium, the value of the total benefits derived by consumers from this product would be represented by the area Oatb+ c+d. Ob+c. Oa+b+c. a QUESTION 37 Neoclassical economics tends to make inaccurate predictions of human behavior in situations involving price changes. firms' profits uncertainty and fairness. financial incentives. QUESTION 38 (Last Word) Oil wells and seasonal resorts will often shut down temporarily because government regulations require seasonal shutdowns for maintenance purposes. O variable costs for pumping oil and operating resorts fluctuate significantly. O fixed costs temporarily rise, making production unprofitable. prices for their output temporarily fall below their average variable costs of production. QUESTION 39 The ABC Corporation decreases all of its inputs by 12 percent and finds that its output falls by only 8 percent. This means that initially it was producing at the point of minimum efficient scale. O in the range of economies of scale. where AP is less than MP. in the range of diseconomies of scale. QUESTION 40 In response to the financial crisis that began in 2007, the government began to bail out banks deemed "too big to fail." Critics of this action argued that this would create the prospect of future bailouts and encourage banks to be fiscally irresponsible in the future. This illustrates the principal-agent problem. the adverse selection problem. the moral hazard problem. logrolling