Micro_po_alfavitu
.docxA downward-sloping demand curve illustrates the law of demand.
A movement downward and to the right along a demand curve is called an increase in demand.
A movement upward and to the left along a demand curve is called a decrease in demand.
A supply schedule is a table that shows the relationship between price and quantity supplied.
A surplus exists in a market if the current price is above its equilibrium price.
A tax levied on the buyers of a good shifts the demand curve downward (or to the left).
A tax levied on the sellers of a good shifts the supply curve upward (or to the left).
A tax placed on buyers of tires shifts the demand curve for tires downward, decreasing the price received by sellers of tires and causing the quantity of tires to decrease.
A tradeoff exists between a clean environment and a higher level of income in that laws that reduce pollution raise costs of production and reduce incomes.
Competitive firms differ from monopolies in which of the following ways? (i), (ii), and (iii)
dairy farming
Economists use the word equality to describe a situation in which each member of society has access to abundant quantities of goods and services, regardless of his or her income.
Efficiency means that society is getting the maximum benefits from its scarce resources.
For a good that is taxed, the area on the relevant supply-and-demand graph that represents government’s tax revenue is a rectangle.
For a market for a good or service to exist, there must be a group of buyers and sellers.
For the general population, a 10 percent increase in the price of cigarettes leads to a 4 percent reduction in the quantity demanded of cigarettes.
Good X and good Y are substitutes. If the price of good Y increases, then the demand for good X will increase.
Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because buyers tend to be much less sensitive to a change in price when given more time to react.
If a surplus exists in a market, then we know that the actual price is above the equilibrium price and quantity supplied is greater than quantity demanded.
If Francis experiences a decrease in his income, then we would expect Francis’s demand for normal goods to decrease.
If the price elasticity of demand for a good is 0.25, then a 20 percent decrease in price results in a 5 percent increase in the quantity demanded.
If the price elasticity of demand for a good is 0.4, then a 10 percent increase in price results in a 4 percent decrease in the quantity demanded.
If the price elasticity of demand for a good is 0.8, then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded? a 5 percent increase in the price of the good
If the price elasticity of demand for a good is 1.5, then a 3 percent decrease in price results in a 4.5 percent increase in the quantity demanded.
If the price elasticity of demand for a good is 10.0, then a 4 percent increase in price results in a 40 percent decrease in the quantity demanded.
If, at the current price, there is a surplus of a good, then sellers are producing more than buyers wish to buy.
In a market economy, supply and demand are important because they All of the above are correct.
In a market economy, supply and demand determine both the quantity of each good produced and the price at which it is sold.
In the long run Firm A incurs total costs of $1,050 when output is 30 units and $1,200 when output is 40 units. Firm A exhibits economies of scale because average total cost is falling as output rises.
Janine would be willing to pay $50 to see Les Misérables, but she buys a ticket for only $30. Janine values the performance at $50.
Market failure can be caused by externalities and market power.
Production is efficient if the economy is producing at a point on the production possibilities frontier.
Refer 2-3 At which point is this economy producing its maximum possible quantity of tubas? N
Refer 2-3 Efficient production is represented by which point(s)? K, N
Refer 2-3 Inefficient production is represented by which point(s)? M
Refer 2-3 This economy cannot produce at which point(s)? J, L
Refer 2-3 This economy has the ability to produce at which point(s)? K, M, N
Refer 13-5. What is the value of A? $50
Refer 13-5. What is the value of B? $100
Refer 13-5. What is the value of C? $100
Refer 13-5. What is the value of G? $270
Refer 13-5. What is the value of L? $135
Refer 13-5. What is the value of O? $360
Refer 14-1. If the market price is P1, in the short run, the perfectly competitive firm will earn positive economic profits.
Refer 14-1. If the market price is P2, in the short run, the perfectly competitive firm will earn zero economic profits.
Refer 14-1. If the market price is P3, in the short run, the perfectly competitive firm will earn negative economic profits but will try to remain open.
Refer 14-1. If the market price is P4, in the short run, the perfectly competitive firm will earn negative economic profits and will shut down.
Refer 14-1. Which of the four prices corresponds to a perfectly competitive firm earning positive economic profits in the short run? P1
Refer 14-1. Which of the four prices corresponds to a perfectly competitive firm earning zero economic profits in the short run? P2
Refer 14-1. Which of the four prices corresponds to a perfectly competitive firm earning negative economic profits in the short run but trying to remain open? P3
Refer 14-1. Which of the four prices corresponds to a perfectly competitive firm earning negative economic profits in the short run and shutting down? P4
Refer 15-1. Which of the following statements are most likely to be true? (i) and (iii) only
Refer 15-11. If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to $1,000.
Refer 15-11. If the monopoly firm is not allowed to price discriminate, then the deadweight loss amounts to $1000
Refer 15-11. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to $0.
Refer 15-11. If the monopoly firm perfectly price discriminates, then the deadweight loss amounts to $0.
Refer 15-11. If there are no fixed costs of production, monopoly profit without price discrimination equals $2,000.
Refer 15-11. If there are no fixed costs of production, monopoly profit with perfect price discrimination equals $4,000.
Refer 4-4. The graphs show the demand for cigarettes. In Panel (a), the arrows are consistent with which of the following events? A tax was placed on cigarettes.
Refer 4-4. The graphs show the demand for cigarettes. In Panel (a), the arrows are consistent with which of the following events? The price of cigarettes increased.
Refer 4-4. The graphs show the demand for cigarettes. In Panel (b), the arrows are consistent with which of the following events? The prohibition of cigarette advertisements on television
Refer 4-5. If the price were $4, a shortage of 25 units would exist and price would tend to rise.
Refer 4-5. If the price were $8, a surplus of 25 units would exist and price would tend to fall.
Refer 4-5. The equilibrium price and quantity, respectively, are $6 and 30.
Refer 4-8. At a price of $35, there would be a surplus of 400 units.
Refer 4-8. At the equilibrium price, 400 units would be supplied and demanded.
Refer 4-8. Equilibrium price and quantity are, respectively, $25 and 400.
Refer 5-1 Atog says he would buy one cup of coffee per day regardless of the price. If this is true, then Atog's demand for coffee is represented by demand curve A.
Refer 5-1 The demand curve representing the demand for a luxury good with several close substitutes is C.
Refer 5-2 Suppose that quantity demand falls by 30% as a result of a 5% increase in price. The price elasticity of demand for this good is elastic and equal to 6.
Refer 5-2 Suppose that quantity demand rises by 10% as a result of a 15% decrease in price. The price elasticity of demand for this good is inelastic and equal to 0.67.
Refer 5-2 Using the midpoint method, at a price of $12, what is the income elasticity of demand when income rises from $5,000 to $10,000? 1.00
Refer 5-2 Using the midpoint method, at a price of $16, what is the income elasticity of demand when income rises from $5,000 to $10,000? 1.00
Refer 5-2 Using the midpoint method, at a price of $8, what is the income elasticity of demand when income rises from $7,500 to $10,000? 1.00
Refer 5-2 Using the midpoint method, when income equals $5,000, what is the price elasticity of demand between $8 and $12? 0.56
Refer 5-2 Using the midpoint method, when income equals $7,500, what is the price elasticity of demand between $16 and $20? 1.80
Refer 7-10. At the equilibrium price, producer surplus is $200.
Refer 7-10. If the government imposes a price ceiling of $70 in this market, then the new producer surplus will be $50.
Refer 7-10. If the government imposes a price ceiling of $70 in this market, then producer surplus will decrease by $150.
Refer 7-3. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22? All three buyers experience the same loss of consumer surplus.
Refer 7-5. Who experiences the largest gain in consumer surplus when the price of an orange decreases from $1.05 to $0.75? Alex and Barb experience the same gain in consumer surplus, and Carlos’s gain is zero.
Refer 7-5. If the market price of an orange increases from $0.60 to $1.05, total consumer surplus decreases by $2.25.
Refer 7-5. If the market price of an orange increases from $0.70 to $1.40, total consumer surplus decreases by $2.50.
Refer 7-5. If the market price of an orange is $0.40, 7 oranges are demanded per day, and total consumer surplus amounts to $5.50.
Refer 7-5. If the market price of an orange is $1.20, consumer surplus amounts to $1.40.
Refer 7-5. The market quantity of oranges demanded per day is exactly 5 if the price of an orange, P, satisfies $0.75 < P < $0.80.
Refer 7-5. Who experiences the largest loss of consumer surplus when the price of an orange increases from $0.70 to $1.40? Alex
Refer 8-3. The amount of deadweight loss associated with the tax is equal to ABC.
Refer 8-3. The amount of tax revenue received by the government is equal to the area P3ACP1.
Refer 8-3. The amount of the tax on each unit of the good is P3 - P1.
Refer 8-3. The equilibrium price before the tax is imposed is P2.
Refer 8-3. The loss in consumer surplus caused by the tax is measured by the area P3ABP2.
Refer 8-3. The loss in producer surplus caused by the tax is measured by the area P1P2BC.
Refer 8-3. The per unit burden of the tax on buyers is P3 - P2.
Refer 8-3. The per-unit burden of the tax on sellers is P2 - P1.
Refer 8-3. The price that buyers effectively pay after the tax is imposed is P3.
Refer 8-3. The price that sellers effectively receive after the tax is imposed is P1.
Refer 8-3. Which of the following equations is valid for the deadweight loss of the tax?
Deadweight loss = (1/2)(P2 - P1)(Q2 + Q1)
Refer 8-3. Which of the following equations is valid for the tax revenue that the tax provides to the
government? Tax revenue = (1/2)(P3 - P1)(Q2 - Q1)
Sophia is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that
people face tradeoffs.
Suppose a tax is imposed on the buyers of fast-food French fries. The burden of the tax will be shared by the buyers and sellers of fast-food French fries but not necessarily equally.
Suppose that a decrease in the price of good X results in fewer units of good Y being sold. This implies that X and Y are substitute goods.
The adage, "There is no such thing as a free lunch," is used to illustrate the principle that people face tradeoffs.
The adage, "There is no such thing as a free lunch," means: people face tradeoffs.
The demand curve for textbooks shifts when a determinant of the demand for textbooks other than the price of textbooks changes.
The flatter the demand curve through a given point, the greater the price elasticity of demand at that point.
The following table contains a demand schedule for a good. If the law of demand applies to this good, then “?” could be 0.
The following table contains a supply schedule for a good. If the law of supply applies to this good, then “?” could be 150.
The greater the price elasticity of demand, the greater the responsiveness of quantity demanded to a change in price.
The law of demand states that, other things equal, an increase in price causes quantity demanded to decrease.
The law of demand states that, other things equal, when the price of a good falls, the quantity demanded of the good rises.
The most likely explanation for economies of scale is specialization of labor.
The price elasticity of demand for a good measures the willingness of consumers to buy less of the good as price rises.
The price elasticity of demand measures buyers’ responsiveness to a change in the price of a good.
The price elasticity of demand measures how much quantity demanded responds to a change in price.
The principle that "people face tradeoffs" applies to All of the above are correct.
The production possibilities frontier provides an illustration of the principle that people face trade-offs.
The smaller the price elasticity of demand, the steeper the demand curve will be through a given point.
The supply of a good or service is determined by those who sell the good or service.
The term "market failure" refers to the failure of a market to produce an efficient allocation of resources.
The value of the price elasticity of demand for a good will be relatively large when there are no good substitutes available for the good.
There are very few, if any, good substitutes for motor oil. Therefore, the demand for motor oil would tend to be inelastic.
Unemployment would cause an economy to produce inside its production possibilities frontier.
What is the opportunity cost to Batterland of increasing the production of pancakes from 150 to 300? 75 waffles
When a firm experiences constant returns to scale, long-run average total cost is unchanged, even when output increases.
When a firm's average total cost curve continually declines, the firm is a natural monopoly.
When a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good increases as more of the good is produced.
When a tax is imposed on a good, the equilibrium quantity of the good always decreases.
When buyers in a competitive market take the selling price as given, they are said to be price takers.
When firms are said to be price takers, it implies that if a firm raises its price, buyers will go elsewhere.
When the price of a good is higher than the equilibrium price, sellers desire to produce and sell more than buyers wish to purchase.
Which of the following concepts cannot be illustrated by the production possibilities frontier? equality
Which of the following industries is most likely to exhibit the characteristic of free entry? dairy farming
Which of the following is a characteristic of a natural monopoly? All of the above are correct.
Which of the following is not a determinant of the demand for a particular good? the prices of the inputs used to produce the good
Which of the following is not a determinant of the price elasticity of demand for a good? the steepness or flatness of the supply curve for the good
Which of the following quantities decrease in response to a tax on a good? the equilibrium quantity in the market for the good, producer surplus, and the well-being of buyers of the good
Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"? Kendra must decide between going to Colorado or Cancun for spring break.
Which of the following would cause price to decrease? a surplus of the good
Which of these statements best represents the law of demand? When the price of a good decreases, buyers purchase more of the good.
You have been asked by your economics professor to graph the market for lumber and then to analyze the change that would occur in equilibrium price as a result of recent forest fires in the west. Your first step would be to decide whether the fires affected demand or supply.
You lose your job and, as a result, you buy fewer romance novels. This shows that you consider romance novels to be a(n) normal good.