Liberty University ECON 213 quiz 10 complete solutions correct answers A+ work

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Question 1 Most economists are against monopolies because:

Question 2 Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the questions that follow. As production increases, the price consumers are willing to pay for the good:

Question 3 Lobbying the government to place harsh tariffs on imports is a form of:

Question 4 Refer to the accompanying figure to answer the questions that follow. When this firm is producing at the profitmaximizing price and quantity, its total revenue is:

Question 5 The government oversight and management of monopolies:

Question 6 The equation of a firm’s marginal revenue curve is estimated to be P = 50 – Q (quantity), and the equations of their marginal cost curve is estimated to be P = 10 + 3Q. The profitmaximizing price for this firm is:

Question 7 Barriers to entry:

Question 8 To maximize profits, a monopolist chooses the quantity where:

Question 9 Control of resources is an example of:

Question 10 Refer to the accompanying figure to answer the questions that follow. When the price changes from $50 to $30, the price effect leads to a loss of _________ in revenue.

Question 11 Christopher’s Campground is the only campground located in Abilene, Texas. Christopher’s Campground’s demand curve is:

Question 12 Refer to the accompanying figure to answer the questions that follow. When the price changes from $50 to $30, the output effect leads to an increase of _________ in revenue.

Question 13 When a competitive market becomes controlled by a monopoly, the price _________ and the output _________.

Question 14 Refer to the accompanying figure to answer the questions that follow. If the government forces a firm to produce at the point that generates the greatest welfare for society, that firm would make _________ in profits.

Question 15 Ash is the preferred wood to be used in the production of baseball bats. If a company were to buy the rights to harvesting the ash trees out of all the forests in North America, which of the following barriers of entry has this company created?

Question 16 Refer to the accompanying table, which represents the costs and production

for a monopolist, to answer the questions that follow. The profitmaximizing price for this firm is:

Question 17 The marginal revenue lies _________ the demand curve because there is a(n) _________ effect whenever the price is lowered.

Question 18 If a monopolist is producing a quantity where marginal revenue is equal to $16 and the marginal cost is equal to $17, the monopolist should:

Question 19 When marginal revenue intersects marginal cost on a graph:

Question 20 Inefficient output and price, few choices, and rent seeking are all problems associated with:

Question 1 When resources are used to secure monopoly rights through the political process:

Question 2 Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the questions that follow. The profit made by this profit-maximizing firm is:

Question 3 Refer to the accompanying figure to answer the questions that follow. If the government forces a firm to produce at the point that generates the greatest welfare for society, that firm would make _________ in profits.

Question 4 Patents and copyrights can:

Question 5 At low price levels, demand tends to be _________ and the price effect is _________, relative to the output effect.

Question 6 The _________ means that the government can regulate a natural monopoly to minimize deadweight loss without forcing the private firm out of the market.

Question 7 Refer to the accompanying figure to answer the questions that follow. Which of the following is the most efficient price and quantity combination for society?

Question 8 Refer to the accompanying figure to answer the questions that follow. The figure shows which type of market?

Question 9 Refer to the accompanying figure. The revenue received by the profit-maximizing monopolist in this market is represented by:

Question 10 The typical result of monopoly is __________ prices and __________ output than we find in a competitive market.

Question 11 The demand curve for Angel’s Airport Shuttle is downwardsloping. With only this information, it can be concluded that Angel’s Airport Shuttle:

Question 12 Problems raising capital is an example of:

Question 13 When marginal revenue is negative, the:

Question 14 Control of resources, problems raising capital, and economies of scale are all examples of:

Question 15 Refer to the accompanying figure to answer the questions that follow. The consumer surplus associated with this profitmaximizing monopoly is represented by areas:

Question 16 When a monopolist lowers a price from $80 to $70, the quantity that the firm is able to sell increases from 100 to 150. The change in revenue associated with the price effect is equal to:

Question 17 Papa Joe’s Car Dealership is the only dealership in Victorville, California. The owner, Papa Joe: experiences large economies of scale. Because he is the only seller of cars in the town,

Question 18 Willow Park is a small community in Texas with only one gas station. The price of gasoline in Willow Park most likely:

Question 19 Refer to the accompanying figure to answer the questions that follow. The profitmaximizing price and quantity are:

Question 20 Two governmentcreated barriers to entry are:

Question 1 A monopoly:

Question 2 When marginal revenue is negative, the:

Question 3 If a monopolist is producing a quantity where marginal revenue is equal to $125 and the marginal cost is equal to $125, the monopolist should:

Question 4 Refer to the accompanying figure to answer the questions that follow. When the price changes from $50 to $30, the price effect leads to a loss of _________ in revenue.

Question 5 The equation of a firm’s marginal revenue curve is estimated to be P = 50 – Q (quantity), and the equations of their marginal cost curve is estimated to be P = 10 + 3Q. The profitmaximizing price for this firm is:

Question 6 Which of the following is a characteristic of a monopoly but not of a competitive market?

Question 7 One way the government can restore competitiveness in a market is through:

Question 8 Refer to the accompanying figure to answer the questions that follow. The profit when a firm is profitmaximizing is:

Question 9 Economies of scale is an example of:

Question 10 Refer to the accompanying figure to answer the questions that follow. If the government forces a firm to produce at the point that generates the greatest welfare for society, that firm would make _________ in profits.

Question 11 Taxi medallions are an example of:

Question 12 One argument against patent and copyright laws is that they:

Question 13 A pricemaker:

Question 14 Which of the following is a characteristic of a monopoly but not a characteristic of a competitive market?

Question 15 Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the questions that follow. The profit made by this profit-maximizing firm is:

Question 16 When marginal revenue is positive, the:

Question 17 Both monopolies and competitive firms:

Question 18 Inefficient output and price, few choices, and rent seeking are all problems associated with:

Question 19 Refer to the accompanying figure to answer the questions that follow. Which of the following is the most efficient price and quantity combination for society?

Question 20 The best way to limit competition is to:

Both monopolies and competitive firms

Refer to the accompanying figure to answer the questions that follow.If this firm is profit-maximizing, society would experience _________ in deadweight loss

At the profit-maximizing output in a monopoly-controlled market, the price a monopolist charges is

Monopolists

When a competitive market becomes controlled by a monopoly, the price _________ and the output _________.

One argument against patent and copyright laws is that they

Rent-seeking occurs when

Monopolies result in a(n) __________ level of output and provide __________ choice to consumers

Ash is the preferred wood to be used in the production of baseball bats. If a company were to buy the rights to harvesting the ash trees out of all the forests in North America, which of the following barriers of entry has this company created

The profit-maximizing rule for a monopolist is

Refer to the accompanying figure to answer the questions that follow.Consumer surplus associated with a profit-maximizing monopoly is equal

to

Refer to the accompanying figure to answer the questions that follow.The profit-maximizing price and quantity are

If a monopolist is producing a quantity where marginal revenue is equal to $16 and the marginal cost is equal to $17, the monopolist should

Refer to the accompanying figure to answer the questions that follow.The total revenue when a firm is profit-maximizing is

Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the questions that follow.The profit made by this profit-maximizing firm is

Refer to the accompanying figure to answer the questions that follow.When this firm is producing at the profit-maximizing price and quantity, its total revenue is

When marginal revenue is negative, the

When a monopolist lowers a price from $80 to $70, the quantity that the firm is able to sell increases from 100 to 150. The change in revenue associated with the price effect is equal to

Licensing

Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the questions that follow.The profit-maximizing quantity for this firm is

Question 1By reducing trade barriers, the government:Question 2The price effect refers to how:Question 3When resources are used to secure monopoly rights through the political process:Question 4Barriers to entry:Question 5Reducing trade barriers creates _________ competition, _________ the influence of monopoly, and _________ the efficient use of resources.Question 6A big difference between a competitive firm and a monopolist is that a monopolist:Question 7The equation of a firm’s marginal revenue curve is estimated to be price = 50 – Q (quantity), and the equations of their marginal cost curve is estimated to be price = 10 + 3Q. The profitmaximizing quantity for this firm is:Question 8Patents and copyrights can:

Question 9Rentseeking:Question 10Refer to the accompanying table, which represents the costs and production for a monopolist, to answer the questions that follow.The profitmaximizing quantity for this firm is:Question 11Economists view rentseeking as: Question 12If a monopolist is producing a quantity where marginal revenue is equal to $32 and the marginal cost is equal to $30, the monopolist should:Question 13Raising capital to compete against an entrenched monopolist:Question 14Taxi medallions are an example of:Question 15The government oversight and management of monopolies:Question 16Beer prices at major league baseball stadiums are usually much higher than prices at a bar or restaurant. This is mainly because:Question 17When a town has a single cable provider:Question 18Refer to the accompanying figure to answer the questions that follow.The total cost when a firm is profitmaximizing is:Question 19Problems raising capital is an example of:Question 20Refer to the accompanying figure to answer the questions that follow.A profitmaximizing firm without any price regulations would make __________ in profits.

If firms in a competitive market are making positive economic profits, you would expect firms to

A good economist will ignore _________ and focus on _________ when it comes to making the right decisions

The presence of many buyers and sellers is an important characteristic of competitive markets because it allows:

Which of the following lists the three main characteristics of a competitive market?

The marginal cost curve is the short-run supply curve:

Marginal revenue is the change in total:

Firms will break even if the price they charge is:

Firms will always make a positive economic profit if the price they charge is:

Which characteristic of competitive markets is mainly responsible for firms making zero economic profits in the long run?

Two government-created barriers to entry are:

The accompanying payoff matrix depicts the possible outcomes for two players involved in a game of Rock, Paper, Scissors. If a player receives a payoff of 1, the player wins; if

the player receives a payoff of –1, the player loses; if both players receive 0 (zero), the players tie. If Stan chooses scissors and Kyle chooses rock, Stan’s payoff is __________ and Kyle’s payoff is __________.

Refer to the accompanying table. If Keisha keeps quiet, Larry will spend __________ years in jail if he confesses and __________ years in jail if he also keeps quiet.

Three natural barriers to entry are:

To maximize profits, a monopolist chooses the quantity where:

Which of the following is a characteristic of a monopoly but not of a competitive market?

At the profit-maximizing output in a monopoly-controlled market, the price a monopolist charges is:

A monopoly:

Because the demand curve for a monopolist is downward sloping:

Question 1 Ash is the preferred wood to be used in the production of baseball bats. If a company were to buy the rights to harvesting the ash trees out of all the forests in North America, which of the following barriers of entry has this company created? Select one: a. licensing b. economies of scale c. control of resources d. problems raising capital e. patents and copyright law Question 2 Problems raising capital is an example of: Select one: a. consumer surplus.

b. a government-created barrier. c. a natural barrier. d. communism e. an externality. Question 3 Thomas has developed a new social media site that he feels can compete heavily with Facebook. Unfortunately he cannot find someone to lend him enough money to market his product to consumers. Thomas is facing which kind of barrier to entry? Select one: a. economies of scale b. patents and copyright law c. licensing d. problems raising capital e. control of resources Question 4 Economies of scale exist: Select one: a. when long-run average total costs decrease. b. when long-run average total costs are constant. c. when governments create barriers to entry. d. when long-run average total costs increase. e. only for monopolists. Question 5 A natural monopoly: Select one: a. exists when many sellers experience lower average total costs than potential competitors do. b. exists when a firm has sole ownership of a natural resource. c. is needed to make a profit in the long run. d. is an example of a government-created barrier. e. exists when a single seller experiences lower average total costs than any potential competitor. Question 6 Both monopolies and competitive firms: Select one: a. are price-makers. b. make long-run economic profits. c. are price-takers. d. face barriers to entry. e. try to maximize profits. Question 7 The profit-maximizing rule for a monopolist is: Select one: a. average total cost = marginal cost. b. average total cost = marginal revenue. c. price = marginal revenue. d. price = marginal cost. e. marginal revenue = marginal cost. Question 8 The demand curve for the product of a firm in a competitive market is _________, and the demand curve for the product of a monopolist is _________. Select one: a. horizontal; perfectly inelastic b. downward-sloping; horizontal c. perfectly inelastic; downward-sloping d. perfectly elastic; downward-sloping e. downward-sloping; perfectly elastic Question 9 If a monopolist is producing a quantity where marginal revenue is equal to $125 and the marginal cost is equal to $125, the monopolist should:

Select one: a. increase production and lower the price to maximize profits. b. increase production and increase the price to maximize profits. c. continue producing at the current price to maximize profits. d. decrease production and increase the price to maximize profits. e. decrease production and decrease the price to maximize profits. Question 10 Which of the following is a characteristic of a monopoly but not of a competitive market? Select one: a. price > marginal cost b. price = marginal cost c. price < marginal cost d. A monopoly is a price-taker. e. A monopoly contains many firms. Question 11 Refer to the accompanying figure to answer the questions that follow. If a firm is producing a quantity of 100 and charging a price of $25, it: Select one: a. should raise production to 150 units but lower the price to $10 to maximize profits. b. should keep production at 100 units but lower the price to $13 to maximize profits. c. should keep production at 100 units and lower the price to $10 to maximize profits. d. is already maximizing profits and should not change the price or quantity produced. e. should raise production to 150 units and continue to charge $25 to maximize profits. Question 12 Beer prices at major league baseball stadiums are usually much higher than prices at a bar or restaurant. This is mainly because: Select one: a. baseball team owners have market power and can charge a higher price when they are the only sellers of the beer. b. demand is much higher at a baseball game than at a bar. c. it costs the owners of the baseball teams more money to buy the beer from distributors. d. the owners’ baseball teams are not profit-maximizing. e. the government forces the owner of baseball teams to charge a high price. Question 13 Refer to the accompanying figure to answer the questions that follow. When a competitive market comes under the control of a monopoly, the price changes from: Select one: a. A to C. b. C to A. c. B to A. d. D to E. e. C to B. Question 14 Refer to the accompanying figure to answer the questions that follow. Which areas of the graph represent the consumer surplus transferred to the monopolist as a result of the monopolist taking over the market? Select one: a. A + B b. C + D c. 87 d. B + D + G + E + H e. A + B + C + D + E Question 15 Most economists are against monopolies because: Select one: a. monopolies offer more choices than are needed. b. monopolists do not maximize profits. c. monopolies can never produce the quantity that a perfectly competitive market would produce.

d. monopolies produce too much of product. e. monopolies do not offer any choice. Question 16 If cable companies were in a highly competitive market, you would expect: Select one: a. customers to be unhappy about their cable package options. b. deadweight loss in the market. c. cable companies to force you to choose between buying a little more cable than you really need or going without cable altogether. d. a company to be willing to sell specific channels as well as packaged options. e. cable companies to make profits in the long run. Question 17 Rent-seeking occurs when: Select one: a. resources are used to deregulate a market through the political process. b. resources are used to maximize profits. c. two firms try to enter the same market. d. resources are used to secure monopoly rights through the political process. e. landlords attempt to raise the rent on tenants. Question 18 When the government passes antitrust laws in an industry, we see: Select one: a. lower prices, higher output, and fewer choices. b. higher prices, higher output, and more choices. c. higher prices, lower output, and more choices. d. lower prices, higher output, and more choices. e. higher prices, lower output, and fewer choices. Question 19 Refer to the accompanying figure to answer the questions that follow. The figure shows which type of market? Select one: a. a monopolistically competitive market incurring an economic loss b. a monopolistically competitive market in the long run c. a competitive market in the long run d. a natural monopoly e. a competitive market in the short run Question 20 One way the government could regulate a natural monopoly at the marginal cost level would be to: Select one: a. allow the natural monopoly to produce at the profit-maximizing point. b. give the monopoly a patent. c. subsidize the monopoly. d. place a tariff on the monopoly. e. tax the monopoly.

1. Opportunity cost is the ______________ alternative forfeited when a choice is made.

a. least-valued

b. highest-valued

c. most recently considered

d. most convenient

e. first

2. You decide whether to eat one more slice of pizza based on how hungry you feel. This statement best represents this economic concept:

A) resources are scarce.

B) the real cost of something is what you must give up to get it.

C) “How much” is a decision at the margin.

D) there are gains from trade.

3. Positive economics:

A) describes opinions and perspectives on how the world should work.

B) is based on opinion polls.

C) describes how the world does work

D) is the same as normative economics.

4. Economists use models to explain real-life situations because:

A) such models tend to be exactly what is occurring in each situation.

B) assumptions found in such models tend to make the problem more difficult.

C) simplifications and assumptions often yield answers that can help to explain the more difficult real-life situations

D) they do not; real-life situations are not relevant to the building of models.

5. Bob can hire someone to paint his house for $2,000, or he can do it himself at no out-of-pocket cost. It will take him 5 days. Bob earns $500 a day when he works outside the home. Which option has the greater economic cost?

a. hiring a painterb. painting the house himself c. they are the same costd. not enough information to decide—one needs to know the marginal cost

6. When one producer has a comparative advantage in production,

a. she can produce more output than someone else using the same quantity of resources.

b. she can produce a good at a lower opportunity cost than someone else.

c. she will not benefit from trade with other producers.

d. she is unable to reach her production possibilities frontier (PPF).

e. she will only trade with others who have the same comparative advantage.

7. The slope of a production possibilities frontier

a. has no economic relevance or meaning.

b. is always constant.

c. is always varying.

d. measures the opportunity cost of producing one more unit of a good

8. Increases in resources or improvements in technology will tend to cause a society's production possibility frontier to:

A) shift inward to the left.

B) shift outward to the right

C) remain unchanged.

D) become vertical.

9. Which point(s) in the PPF above are unattainable?

a) Point A because it is outside the production possibilities frontierb) All the points because the production of each has an opportunity cost.c) None of the points because they all are feasible.d) Points B, C, and D because they are on the production possibilities frontier.e) Point E because it is inside the production possibilities frontier.

10. Michael and Angelo are both artists who can create sculptures or paint paintings each day. The following table describes their maximum outputs per day. Does either person have an absolute advantage?

Sculptures Paintings

Michael 10 5

Angelo 6 2

a. Yes, Michael has an absolute advantage in both sculptures and paintingsb. Yes, Angelo has an absolute advantage in both sculptures and paintings.c. Yes, Michael has an absolute advantage in paintings, and Angelo has an absolute advantage in

sculptures.d. Yes, Michael has an absolute advantage in sculptures, and Angelo has an absolute advantage in

paintings.e. No, neither has an absolute advantage.

11. Michael and Angelo are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. What is Angelo’s opportunity cost of a sculpture?

Sculptures Paintings

Michael 10 5

Angelo 6 2

a. 1/2 paintingb. 1/3 paintingc. 3 paintingsd. 1/3 sculpturee. 6/10 sculpture

12. The accompanying figure depicts the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. If Jim and Pam were to specialize and trade, at what exchange rate would they find some quantity of trade to be mutually beneficial?

a. 3 pizzas for 1 strombolib. 1 pizza for 1 strombolic. 10 pizzas for 2 strombolid. 1 pizza for 1/2 strombolie. 1 pizza for 1/4 of a stromboli

Figure: Production Possibility Frontier Curve for Tealand

13. (Figure: Production Possibility Frontier for Tealand) In the figure, Tealand is producing at point C on its production possibility frontier. What is the opportunity cost in Tealand of increasing the production of tea from 20 million cups to 30 million cups?

A. 10 million cups of tea

B. 5 million scones

C. 10 million scones

D. The answer is impossible to determine from the information given.

14. Consider the production possibilities frontier below. Which line(s) represents a change in technology for producing good A?

a. 1

b. 2

c. both

d. neither

15. Consider the production possibilities frontier below. Which line(s) represents a change in the economy’s resources?

a. 1b. 2c. bothd. neither

16. Use the accompanying diagram to answer the question.

An increase in the number of buyers would cause the demand curve to:

a. shift from D to D2.

b. remain at D.

c. shift from D to D1.

d. shift from D1 to D.

e. shift from D1 to D2.

Figure: Demand and Supply of Gasoline

17. (Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. The initial equilibrium price and quantity (at intersection of S1 and D) of gasoline are:

A.$2.00 and 450 gallons.

B. $1.50 and 400 gallons.

C. $2.00 and 200 gallons.

D. $2.50 and 300 gallons

18. (Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. Given the initial equilibrium of S1 and D, any price lower than ________ will create pressure for the price to ________.

A. $2.00; fall

B. $2.50; rise

C. $3.00; rise

D. $2.50; fall

19. (Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of

Gasoline. A factor that may have changed supply from S1 to S2 is:

A. better technology in the production of gasoline

B. increased demand.

C. lower labor productivity in gasoline production.

D. increased prices of substitutes for gasoline.

20. “In 2008, air travel decreased substantially despite significant reductions in ticket prices.” If this information is correct, it indicates that the law of demand did not apply to air travel in 2008.

A. True

B. False

21. A supply curve is:

a. downward sloping because suppliers prefer lower costsb. upward sloping because suppliers prefer lower costsc. upward sloping because suppliers will offer for sale more at a higher priced. downward sloping because suppliers will offer more for sale at a higher price

22. The demand curve shift shown in the figure above was caused by a(n):

a. increase in the input cost of the good.

b. increase in the price of a substitute of the good.

c. decrease in the number of firms selling the good.

d. decrease in the number of buyers in the market for the good.

e. expectation that the future price of this good will be higher than it currently is.

23. According to the diagram above, if the price is at $10, there is a:

a. shortage of 15 units.

b. surplus of 15 units

c. shortage of 30 units.

d. surplus of 30 units.

e. surplus of 22 units.

24. When both supply and demand shift to the left,

a. the equilibrium price will always rise.

b. the equilibrium price will always fall.

c. the equilibrium quantity will always fall.

d. the equilibrium quantity will always rise.

e. the equilibrium quantity is indeterminate.

25. According to the figure below, at the price of $5:

a. the equilibrium quantity is 500.

b. the quantity demanded is 500.

c. the demand is 500.

d. there is a surplus.

e. there is a shortage.

26. When the price increases by 30% and the quantity demanded drops by 30%, the price elasticity of demand is:

a. perfectly inelastic.

b. inelastic.

c. unitary elastic.

d. elastic.

e. perfectly inelastic.

27. What good is most likely to have an income elasticity of demand equal to 0.3?

a. medication

b. take-out dinner

c. used clothing

d. laptop

e. a download on iTunes

28. Demand for Coca-Cola is _____ price elastic than cola products in general.

a. Moreb. lessc. equally

29. Peanut butter and jelly are complements. If a tax is imposed on peanut butter, how will that affect the market for jelly?

a. Demand for jelly will increase along with the price.

b. Demand for jelly will decrease along with the price

c. The supply of jelly will increase and the price will decrease.

d. Both the supply and demand for jelly will increase along with the price.

e. The supply of jelly will decrease and the price will increase.

30. Pepsi and Coke are considered substitute goods. Because of this, one would predict that, holding all else constant, if the price of Pepsi increases,

a. we would see the demand curve for Coke shift to the right.

b. we would see the demand curve for Coke shift to the left.

c. we would see no change in the demand for Coke.

d. we would see the demand curve for Pepsi shift to the right.

e. we would see the demand curve for Pepsi shift to the left.

31. Technological advances have resulted in lower prices for digital cameras. What is the impact of this on the market for traditional (non-digital) cameras?

a. The demand curve for traditional cameras shifts to the right.

b. The supply curve for traditional cameras shifts to the right.

c. The demand curve for traditional cameras shifts to the left.

d. The supply curve for traditional cameras shifts to the left.

32. A recent news story reported that ice cream producers will increase the supply of ice cream during the summer. Summer is traditionally a time of increased demand for ice cream. How would an economist expect the price and quantity of ice cream to change from the spring to the summer given knowledge of these two changes in the market for ice cream?

A. An increase in the price and quantity.

B. An increase in the price and an unpredictable change in the quantity.

C. An unknown change in both the price and quantity.

D. An unknown change in the price and an increase in the quantity.

33. Suppose the demand curve for a product is vertical and the supply curve is upward sloping. If a unit tax is imposed in the market for this product,A) sellers bear the entire burden of the tax.B) buyers bear the entire burden of the tax. C) the tax burden will be shared equally between buyers and sellers.D) buyers share the burden of the tax with government.

34. If demand is more elastic than supply then:A) sellers bear more of the burden of the tax. B) buyers bear more of the burden of the tax.C) the tax burden will be shared equally between buyers and sellers.D) buyers share the burden of the tax with government.

35. In 1990 the U.S. government imposed a special sales tax on yachts with a price of at least $100,000. The tax was repealed in 1993 since it generated far less revenue than expected and led to significant job losses in the yacht building industry. The sales tax was unsuccessful because:

a) the supply and the demand for yachts were relatively elastic.

b) the supply and the demand for yachts were relatively inelastic.

c) the tax rate was too low.

d) yachts are a necessity.

36. Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

A) demand

B) supply

C) production possibilities

D) marginal cost

Use this information for questions 36.1-36.3. Alfred has a willingness to pay for one car of $35,000. The second car offers him a marginal benefit of $25,000. A third car is worth $10,000, and his willingness to pay for a fourth is 0. The market price for the car is $24,999.

36.1 Alfred’s willingness to pay for the marginal car is falling. This pattern is called

a. opportunity cost

b. diminishing marginal utility

c. price effect

d. consumer surplus

36.2. At the market price, Alfred would buy ___ cars.

a. 0

b. 1

c. 2

d. 3

e. 4

36.3 At this market price, his consumer surplus is

a. 35,000

b. 24,999

c. 1

d. 10,002

Figure 4-6 above 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.

37. Refer to Figure 4-6. What area represents consumer surplus prior to the imposition of the price floor?A) A + B + EB) A + B + CC) A + B + C + D + ED) E + F

38. Refer to Figure 4-6. What area represents consumer surplus after the imposition of the price floor?A) A + B + EB) A + B C) A + B + E + FD) A

39. The costs of a market activity paid for by an individual NOT engaged in the market activity are:

a. external costs.

b. internal costs.

c. free-rider costs.

d. social costs.

e. common costs.

40. The total costs of a market activity paid for by individuals in the market as well as individuals not engaged in the market activity are:

a. external costs.

b. internal costs.

c. free-rider costs.

d. social costs.

e. common costs.

41. A firm’s willingness to supply their product in the short run is represented on a graph by:

a. the market supply curve.

b. the entire marginal cost (MC) curve.

c. the marginal revenue (MR) curve.

d. the part of the marginal cost (MC) curve above minimum average total cost (ATC).

e. the part of the marginal cost (MC) curve above minimum average variable cost (AVC).

42. Rachel quit her job as a chef making $30,000 per year to start her own restaurant in New York City. The first year, Rachel's restaurant earned $120,000 in revenue. Rachel pays $50,000 per year in wages to the waitresses and hostess, $20,000 per year to buy food and other supplies. She paid $10,000 for rent and utilities, instead of earning 10% on that money in a bank CD. What is Rachel's economic profit for the year?A) $0B) $9,000C) $40,000D) $80,000

43. What directly drives the entry and exit of firms?

a. Revenues

b. Costs

c. Profits and losses

d. Marginal product of labor

44. The law of diminishing returns states that

a) dividing the tasks to be performed through division of labor will increase the marginal product of labor.

b) the long-run average cost of production falls as output increases.

c) adding more of a variable input to the same amount of a fixed input will eventually cause the marginal product of the variable input to decline.

d) producing more output by adding more of a variable input will eventually cause the marginal cost of production to decline.

e) adding more of a variable input to the same amount of a fixed input will eventually cause the marginal product of the fixed input to decline.

45. According to the accompanying figure, if a firm is producing a quantity of 100 and charging a price of $10,

a. the firm should continue to produce 100 units but raise the price to $13 to maximize profits.

b. the firm should increase production to 150 units but raise the price to $25 to maximize profits.

c. the firm should continue to produce 100 units but raise the price to $25 to maximize profits.

d. the firm should increase production to 100 units and raise the price to $13 to maximize profits.

e. the firm is already maximizing profits and should not change the price or quantity produced.

46. Which of the following is not a characteristic of a perfectly competitive market structure?A) There are a very large number of firms that are small compared to the market.B) All firms sell identical products.C) There are no restrictions to entry by new firms.D) There are restrictions on exit of firms.

47. Both individual buyers and sellers in perfect competitionA) can influence the market price by their own individual actions.B) can influence the market price by joining with a few of their competitors. C) have to take the market price as a given. D) have the market price dictated to them by government.

48. In economics, we assume that firms make decisions in order to:

a. maximize revenues.

b. minimize cost

c. maximize profit.

d. maximize production

e. maximize the marginal product of labor

49. A firm reflected in the following graph expanded its scale of production and found that its average costs did not change. Which of the curves shown would reflect this situation?

a. LRATC1 and LRATC2b. LRATC3c. LRATC2d. LRATC1e. LRATC1 and LRATC3

50. A firm’s economic profit will always be less than its accounting profit because:

a. accounting profit considers explicit costs, which economic profit does not.

b. economic profit considers implicit costs, which accounting profit does not

c. economic profit is always zero, no matter what kind of firm it is.

d. accounting profit considers implicit costs, which economic profit does not.

e. accounting profit is always positive, no matter what kind of firm it is.

51. Competitive markets exist when:

a. there are so many buyers and sellers that each has only a small impact on the market price and the market output

b. there are more buyers than sellers, giving the buyers market power.

c. there are more sellers than buyers, giving the sellers market power.

d. accounting profits become zero because of price wars.

e. prices are so low that everyone who wants the good or service gets the good or service.

52. According to the figure below, this firm’s short-run supply curve is represented by:

a. the average total cost (ATC) curve above $20.b. the marginal cost (MC) curve above $15. c. the marginal cost (MC) curve above $8.d. the marginal cost (MC) curve above $20.

Figure: Long-Run Average Cost

53. Look at the figure Long-Run Average Cost. This firm has ________ in the output region from 0 to A.

A. decreasing returns to scale

B. constant returns to scale

C. increasing returns to scale

D. negative costs of production

54. (Figure: Long-Run Average Cost) Look at the figure Long-Run Average Cost. This firm has ________ in the output region from B to C.

A. constant returns to scale

B. decreasing returns to scale

C. increasing returns to scale

D. falling marginal cost

55. According to the figure, when this firm is producing at the profit-maximizing price and quantity, its total revenue is:

a. $1,000b. $1,950c. $2,500d. $3,750e. $5,000

56. Which statement about firms’ economic profits is true?

a. Monopolists and perfectly competitive firms can earn profit in the short run only.

b. Monopolists can earn profit in the long run; perfectly competitive can earn profit in the short run only.

c. Monopolists and perfectly competitive firms can earn profit in the long run only.

d. All firms always earn profit, else they would exit the market.

Total revenue minus total cost equalSelect one:a. producer surplus.b. dividends.c. consumer surplus.d. profit.e. retained earnings.Steve owns a bike store. He currently sells 1,200 bikes per year. If he doubles the size of his store so he can sell 2,400 bikes per year and his long-run average total cost per bike decreases, we know that Steve is experiencingSelect one:a. diseconomies of scale.b. diminishing marginal product.c. increasing marginal product.d. economies of scalE.e. constant returns to scale.Lauren is the owner of a bakery that earns zero economic profit. Last year her total revenue was $145,000, her rent was $12,000, her labor costs were $65,000, and her overhead expenses were $15,000. From this we know that her total explicit costs wereSelect one:a. $80,000.b. $92,000.c. $15,000.d. $77,000.e. $53,000.If you were told that a firm earns positive accounting profit and nothing else, what would you know is true about its economic profit?Select one:a. Its economic profit is positive, because whenever accounting profit is positive, so is economic profit.b. Its economic profit cannot be determined without knowing about the firm’s implicit costs.c. Its economic profit is zero, because all firms earn zero economic profit regardless of the industry.d. Its economic profit is equal to its accounting profit.e. Its economic profit is negative, because its accounting profit is probably not high enough to earn positive economic profit.The change in total output divided by the change in input is known asSelect one:a. marginal product.b. marginal cost.c. specialization.d. total product.e. marginal profit.If a firm hires another worker and her marginal product of labor is negative, we know that the firm’s total output isSelect one:a. increasing.b. decreasing.c. equal to the marginal product of that worker.d. unchanged.e. 0 (zero).Steve owns a bike store. His total costs are $1.2 million per year, his variable costs are $750,000, and his fixed costs are $450,000 per year. Last year Steve sold 1,200 bikes. This means that his average total cost was ________ per bikeSelect one:a. $625b. $1,000c. $375d. $1,200e. $600When the average total cost curve is at its minimum, we know thatSelect one:a. the average variable cost curve intersects the average total cost curve.b. the average variable cost curve is above the average total cost curve.c. the marginal cost curve intersects the average total cost curve.d. the marginal cost curve is above the average total cost curve.e. the average fixed cost curve is above the marginal cost curve.Should a firm always produce the level of output where marginal cost is lowest?Select one:a. Yes: that is the level of output where costs will be lowest.b. No: that is the level of output where employees are most efficient.c. No: firms should produce where marginal cost equals average variable cost.d. No: that might be the best choice, but it depends on the firm’s profits.e. Yes: any other level of output will have higher marginal cost.According to the table below, profits are maximized when producing:qty TR   TC0     0     31     5     52   10     93   15     134   20     19Select one:a. 0 (zero) units.b. 1 unit.c. 2 units.d. 3 units.e. 4 units.

According to the figure below, if the firm is maximizing profits, profit is represented by the area:The market for candles is perfectly competitive and is currently in equilibrium. If candles are later linked to more houses catching on fireSelect one:a. in the short run, firms will experience economic profits; but in the long run, firms will leave the market, bringing economic profits back down to zero.b. in the short run, firms will experience economic profits; but in the long run, firms will enter the market, bringing economic profits back down to zero.c. in the short run, firms will incur economic losses; but in the long run, firms will leave the market, bringing economic profits back up to zero.d. in the short run, firms will incur economic losses; but in the long run, firms will enter the market, bringing economic profits back up to zero.e. in both the short run and the long run, firms will experience zero economic profits.Marginal revenue isKimberly owns a cupcake shop in Newport Beach, CaliforniA. The market for cupcakes is very competitivE. At Kimberly’s current production level, her marginal cost is $25 and her marginal revenue is $29. To maximize profits, Kimberly shouldSelect one:a. decrease production.b. keep production the same.c. increase the price.d. decease the price.e. increase production.Tom’s Campgrounds is a firm conducting business in a competitive market. Tom realizes he is making a loss and is trying to decide whether or not to shut down or stay open. He should stay openSelect one:a. regardless of the price being charged.b. if the price being charged is less than his minimum average variable cost (AVC).c. if his revenues do not cover his variable costs.d. if his revenues cover his variable costs.e. as long as he is making revenue.Jim and Lisa own a dog-grooming business in Champlain, New York, called JL Groomers. There are many buyers and many sellers in the dog-grooming service market. JL Groomers experiences normal cost curves with the marginal cost (MC) curve crossing average variable cost (AVC) at $14 and average total cost (ATC) at $22. JL Groomers will make positive economic profits ifSelect one:a. the market price is $14.b. the market price is between $14 and $22.c. the market price is below $14.d. the market price is $22.e. the market price is above $22.Which of the following lists the three main characteristics of a competitive market?Select one:a. many buyers and sellers, similar products, easy entry into the marketb. many buyers and few sellers, similar products, easy entry into the marketc. many buyers and sellers, differentiated products, easy entry into the marketd. many buyers and sellers, similar products, barriers to entry into the markete. many buyers and few sellers, unique products, barriers to entry into the marketA firm will shut down in the long-run ifSelect one:a. the price is above the minimum average total cost (ATC).b. the price is equal to the minimum average total cost (ATC).c. the price is anywhere above the minimum average variable cost (AVC).d. the price is anywhere below the minimum average total cost (ATC).e. the firm is making zero economic profits.Sunk costs:

Select one:a. should be taken into consideration when making decisions about future production.b. are costs that have been incurred as a result of past decisions.c. cause the profit-maximizing rule to no longer be useful.d. are future costs that you have to incur.e. are included only in economic profits.If Nicole’s Knick-Knacks is a perfectly competitive firm and is making zero economic profitsSelect one:a. firms will enter the market.b. firms will exit the market.c. Nicole’s Knick-Knacks will stay in the market.d. the market supply curve will shift to the left.e. the market supply curve will shift to the right.

The following table represents costs and production for a monopolist. The profit made by a profit-maximizing firm isSelect one:a. $8.b. $4.c. $3.d. $7.e. $9.

According to the accompanying figure, if a firm is producing a quantity of 100 and charging a price of $10,Select one:a. the firm should continue to produce 100 units but raise the price to $13 to maximize profits.b. the firm should increase production to 150 units but raise the price to $25 to maximize profits.c. the firm should continue to produce 100 units but raise the price to $25 to maximize profits.d. the firm should increase production to 100 units and raise the price to $13 to maximize profits.e. the firm is already maximizing profits and should not change the price or quantity produced.

According to the accompanying figure, consumer surplus associated with a profit-maximizing monopoly is equal to:Select one:a. $900.b. $600.c. $300.d. $100.e. $450.Thomas has developed a new social media site that he feels can compete heavily with Facebook. Unfortunately he cannot find someone to lend him enough money to market his product to consumers. Thomas is facing which kind of barrier to entry?Select one:a. control of resourcesb. problems raising capitalc. economies of scaled. licensinge. patents and copyright lawIt is unrealistic to regulate a natural monopoly at marginal cost pricing because:Select one:a. the government is not allowed to regulate markets.b. marginal cost pricing ends up having the natural monopoly firm earn zero economic profits.c. with this type of regulation the firm will want to shut down, and that outcome is not desirable for society.d. regulating a market causes more deadweight loss.e. firms do not need to follow regulations from the government.Patents and copyright law:Select one:a. are natural barriers.b. create more competition.c. cause more varieties of goods and services at different price levels.d. assure inventors that no one else will sell their idea.e. always result in zero economic profits.Two conditions allow a single seller to become a monopolist. Those two conditions are:Select one:a. the firm must have something unique to sell and it must be able to estimate their demand curve.b. the firm must have something unique to sell and must have a way to prevent potential competitors from entering the market.c. the firm must be able to estimate its demand curve and it must have a way to prevent potential competitors from entering the market.d. the firm must be able to segregate its consumers and it must have a way to prevent potential competitors from entering the market.e. the firm must have something unique to sell and must be able to segregate its consumers.Christopher’s Campground is the only campground located in Abilene, Texas. Christopher’s Campground’s demand curve is:

Select one:a. perfectly elastic.b. perfectly inelastic.c. horizontal.d. the market demand curve.e. upward sloping.To maximize profits, a monopolist chooses the quantity where:Select one:a. revenues are maximized.b. marginal revenue equals zero.c. marginal cost equals zero.d. marginal revenue equals marginal cost.e. costs are minimized.Beer prices at Major League Baseball stadiums are usually much higher than prices at a bar or restaurant. This is mainly because:Select one:a. it costs the owners of the baseball teams more money to buy the beer from distributors.b. demand is much higher at a baseball game than at a bar.c. since the baseball team owners are the only sellers of beer, they have market power and can charge a higher price.d. the government forces the owner of baseball teams to charge a high price.e. the owners’ baseball teams are not profit maximizing.The best way to limit competition is to:Select one:a. charge a low price.b. control a resource that is essential in the production process. c. lobby for a government-created barrier.d. produce a high quantity.e. minimize costs.The typical result of monopoly is ____________ prices and __________ output than we find in a competitive market.Select one:a. lower; lowerb. lower; higherc. higher; higherd. higher; lower e. higher; the sameMonopolies and competitive firms:a. are both price makers. b. both try to maximize profits.c. both face barriers to entry.d. both can make long-run economic profits.e. are both price takers.The demand curve for Angel’s Airport Shuttle is downward sloping. With only this information, it can be concluded that Angel’s Airport Shuttle:Select one:a. is a price maker.b. will make economic profits.c. is currently maximizing profits.d. is the only firm in the market for airport shuttles. e. should produce where the demand curve crosses marginal cost.The output effect refers to:Select one:a. how lower prices affect the quantity sold.b. how lower output affects the price.c. how firms choose their quantity.d. how lower prices affect revenue.e. how firms can set their prices.

The following table represents costs and production for a monopolist. The profit-maximizing quantity for this firm is:Select one:a. 1. b. 3.c. 4.d. 0 (zero).e. 5.The marginal revenue lies __________ the demand curve because there is a(n) __________ effect whenever the price is lowered.Select one:a. on; priceb. below; pricec. below; outputd. above; outpute. above; priceWhen a town has a single cable provider,Select one:a. the consumers experience no consumer surplus.b. the government regulates the cable provider’s offerings.c. customers must buy some cable channels that they don’t want in order to get the channels that they do want.d. the cable provider is a price taker.e. the cable company usually offers many different cable packages to satisfy customers’ wants.

When resources are used to secure monopoly rights through the political process,Select one:a. consumers are profit maximizing.b. the government is deregulating.c. firms are rent seeking.d. prices decrease.e. total surplus is maximized.

According to the figure below, if this firm is profit maximizing, society would experience __________ in deadweight loss.Select one:a. $240b. $0c. $525d. $720e. $112.50

If a firm has total costs of $535,000 and its implicit costs are $165,000, how much are its explicit costs?Implicit costs areIf a firm generates $240,000 in revenue, earns $120,000 in economic profit, and its explicit costs are $80,000, how much are its implicit costs?Economists consider both explicit and implicit costs when measuring economic profit. The reason they consider implicit costs is that:Ralph owns a small pizza restaurant, where he works full-time in the kitchen. His total revenue last year was $100,000, and his rent was $3,000 per month. He pays his one employee $2,000 per month, and the cost of ingredients and overhead averages $500 per month. Ralph could earn $35,000 per year as the manager of a competing pizza restaurant nearby. His total accounting profit for the year was:A firm's economic profit is always less than its accounting profit because:Lauren is the owner of a bakery. Last year, her total revenue was $145,000, her rent was $12,000, her labor costs were $65,000, and her overhead expenses were $15,000. If she could earn $53,000 working for another bakery nearby, we know that her economic profit was:If workers are unable to specialize and become more productive as more labor is hired, the amount of total output produced:If there are gains from specialization in a workplace, hiring another employee means that the marginal product of labor will:Lauren owns a bakery that produces, among other things, wedding cakes. She currently has 6 employees; with 6 employees, her bakery can produce 9 wedding cakes per day. If

she hired a seventh employee, she'd be able to produce 12 wedding cakes per day. Therefore, the marginal product of the seventh employee is __________ wedding cakes.In the short run, the cost of __________ is variable, whereas the cost of __________ is fixed.The average total cost (ATC) and average variable cost (AVC) converge as the level of output produced increases because:Which of the following is the best example of a variable cost in the short run?The change in total cost given a change in output is also known as:If a firm experiences diminishing marginal product of labor, its marginal cost:Steve owns a bike store. He currently sells 1,200 bikes per year. If he doubles the size of his store so he can sell 2,400 bikes per year and his long-run average total cost per bike decreases, we know that Steve is experiencing:When firms grow larger, they sometimes acquire more market power, meaning that they havegreater ability to negotiate lower prices with their suppliers. This ability to negotiate lower prices with their suppliers leads to:The University of California at Irvine (UCI) allows student organizations and private firms to sell items on campus to raise funds for various activities. Many of the organizations sell boba, a Taiwanese tea drink, because boba is popular with students. The market for boba on the UCI campus is very competitive. If legislation is passed to restrict the entry of private firms into the boba market at the UCI campus, theAll firms, no matter what type of firm structure they are producing in, make their production decisions based on the point where their:Firms will always make a positive economic profit if the market price is:Chuck Diesel Burger is a food truck in Houston, Texas. Imagine that Chuck Diesel Burger's minimum average total cost (ATC) is $3.75 and that its minimum average variable cost (AVC) is $2.50. Assume there are no barriers to entry into or exit from the food-truck market. Chuck Diesel Burger will break even if the price is equal to:A firm's short-run supply curve is equal to the firm's:It's easy to determine if a firm is making long-run production decisions by looking at its cost structure because, in the long run, a firm does not have any:Costs that have been incurred as a result of past decisions are known as:If the short-run supply curve and the demand curve intersect below the long-run supply curve, firms will experience _________ economic profits, meaning the price is _________ the minimum point on the average total cost curve.One difference between implicit costs and explicit costs is that:explicit costs are included in accounting profits, whereas implicit You can tell a firm is operating in a market that is in long-run competitive equilibrium if:If Nicole's Knick-Knacks is a perfectly competitive firm and is making zero economic profits:If Tommy's Tank Tops is a perfectly competitive firm and is currently making positive economic profits of $1,000:The market for candles is perfectly competitive and is currently in equilibrium. What will happen if candles are later linked to more houses catching on fire?Ash is the preferred wood to be used in the production of baseball bats. If a company were to buy the rights to harvesting the ash trees out of all the forests in North America, which of the following barriers of entry has this company created?Problems raising capital is an example of:Thomas has developed a new social media site that he feels can compete heavily with Facebook. Unfortunately he cannot find someone to lend him enough money to market his product to consumers. Thomas is facing which kind of barrier to entry?

Economies of scale exist:A natural monopoly:Both monopolies and competitive firms:The profit-maximizing rule for a monopolist is:The demand curve for the product of a firm in a competitive market is _________, and the demand curve for the product of a monopolist is _________.If a monopolist is producing a quantity where marginal revenue is equal to $125 and the marginal cost is equal to $125, the monopolist should:Which of the following is a characteristic of a monopoly but not of a competitive market?Beer prices at major league baseball stadiums are usually much higher than prices at a bar or restaurant. This is mainly because:Most economists are against monopolies because:If cable companies were in a highly competitive market, you would expect:Rent-seeking occurs when:When the government passes antitrust laws in an industry, we see:One way the government could regulate a natural monopoly at the marginal cost level would be to:Like a pure monopoly, an oligopoly is characterized by:__________ have a greater incentive to collude and to form cartels in an effort to achieve monopoly-like profits.Economists measure oligopoly power present in an industry by using:If antitrust laws did not prohibit efforts to restrict competition in markets:Economists use __________ to better understand what might happen in situations where strategic interactions are involved.When decision-makers face incentives that make it difficult to achieve mutually beneficial outcomes, we say they are in a(n):If attorneys can prove beyond a reasonable doubt that a merger between two major airlines lessens competition, then the merger likely violates the:If network externalities exist in an industry, the __________ firm to enter the market is often the one that succeeds in dominating the industry.The marginal cost curve above the minimum point on the average variable cost curveResources expended to protect a monopoly position. These are used for such activities as lobbying, extending patents, and restricting the number of licenses permittedCharging different consumer groups different prices for the same productAn outcome that occurs when all players choose their optimal strategy in response to all other players' potential moves. At a Nash equilibrium, no player can be better off by unilaterally deviating from the non-cooperative outcomeThe study of how individuals and firms make strategic decisions to achieve their goals when other parties or factors can influence that outcome

When a negative externality is not internalized, then the equilibrium price of the good produced is too ___ and the equilibrium quanity produced is too___A free-rider problem exists whenWhich good is excludable?(a) apples on a tree in a public park(b) a fireworks display(c) swimming in the ocean(d) a walk in a park(e) education at a community collegeImplicit costs are

Economists consider both explicit and implicit costs when measuring economic profit. The reason they consider implicit costs is that::auren is the owner of a bakery. Last year her total revenue was $145,000 her rent was $12,000, her labor costs were $65,000, and her overhead expenses were $15,000. If she could earn $53,000 working for another bakery nearby, we know that her economic profit was:Lauren owns a bakery that produces, among other things, wedding cakes, She currently has 7 employees: with 7 employees, her bakery can producee 12 wedding cakes per day. If she hired an eigth employee, she'd be able to produce 16 wedding cakes per day. Therefor, the marginal product of the eigth employee is _____wedding cake(s)Assume that a firm hires an additional employee. If the marginal product for that employee is greater than for the previous employee hired, it must becauseThe average total cost (ATC) and average variable cost (AVC) converge as the level of output produced increases becauseThe change in total cost given a change in output is also known asLauren owns a bakery. She currently bakes around 10,000 loaves of bread per year. If she increases the size of her bakery so that she can bake even more bread, and her long-run average total cost remains unchanged, we know that Lauren is experienceKathleen owns a photography business in Mobile, Alabama. The market for photography is very competitive. At Kathleen's current production level, her marginal cost is $15 and her marginal revenue is $12. In order to maximize profits, Kathleen should"Chuck Diesel Burger is a food truck in Houston, Texas. Imagine that chuck Disel Burger's minimum average total cost (ATC) is $3.75 and that its minimum average variable cost (AVC) is $2.50. In the short run, Chuck Diesel Burger will suffer a loss but still produce if the price is equal toWhen marginal costs equal average total costs the firm is makingIn the long run, if a firm is making a loss, it willIn a competative market where firms have a typical cost function, the long-run market supply curve is a(n)If firm A is making zero economic profitsHolding all else constant and considering the short-run, an increase in the market demand for a proudct in a competative market would causeThe typical result of monopoly is ___ priceses and ____output than we find in a competitive marketAsh is the preferred wood to be used in the prodction of baseball bats. If a company were to buy the rights to harversting the ash trees out of all the forests in North America, which of the following barriers of entry has this company created?a. control of resourcesb. problems raising capitalc. economies of scaled. licensinge. patents and copyright lawBecause the demand curve for a monopolist is downward slopingThe marginal revenue lies _____ the demand curve because there is (an) _____ effect wheneveer the output is increasedAs production increases, the price consumers are willing to pay for the goodWhen a monopolists lowers its price from $80 to $70, the quantity it is able to sell increases from 100 to 150 then the change in revenue associated with the output effect is equal toA big difference between a competitive firm and a monopolist is that a monopolist

Reducing trade barriers creates ___competition, ___ the influence of monopoly and _____ the socially efficient use of resources

Decision treeThe short-run profit-maximizing output for the monopolistic competitive firm isThe maximum long-run economic profit earned by this monopolistic competitive firm isIn the long run, the demand curve for the monopolistically competitive firm wouldIn the long run, which of the following is true for the profit-maximizing firm?In the long run, surviving firms in monopolistic competition earnIf this market were highly competitive instead of a duopoly, the market price would be __________ and the quantity of streaming movie subscriptions purchased each month would be __________.If this market were a monopoly instead of a duopoly, the market price would be __________ and the quantity of streaming movie subscriptions purchased each month would be __________.If the two firms operating in this market agreed to each supply one-half of the quantity a monopolist would supply, the contract would specify thatAn agreement between Nextflix and Flixbuster to each supply 250 subscriptions is an example ofListed below are four different collusive agreements that Nextflix and Flixbuster are considering. III. Nextflix supplies 250 subscriptions and Flixbuster supplies 250 subscriptions.IV. Nextflix supplies 100 subscriptions and Flixbuster supplies 400 subscriptions.Listed below are four different collusive agreements that Nextflix and Flixbuster are considering. I.Nextflix supplies 50 subscriptions and Flixbuster supplies 450 subscriptions.II. Nextflix supplies 450 subscriptions and Flixbuster supplies 50 subscriptions.Refer to the accompanying table. If Jeff confesses, Gerry will spend _________ years in jail if he also confesses and _________ years in jail if he keeps quiet.The accompanying table shows two firms in a single-stage duopoly game. Each firm makes its decision without knowledge of the other firm's decision. The payoffs for each firm represent economic profits, and each firm strictly prefers more economic profit than less. This game would be considered a prisoner's dilemma if X is betweenThe accompanying matrix depicts two firms in a single-stage duopoly game. Each firm makes its decision without knowledge of the other firm's decision. The payoffs for each firm represent economic profits, and each firm strictly prefers more economic profit than less. If X is greater than $3,500, thenThe equation of a firm's marginal revenue curve is estimated to be price = 50 − Q (quantity), and the equations of their marginal cost curve is estimated to be price = 10 + 3Q. The profit-maximizing quantity for this firm is:When a monopolist lowers a price from $80 to $70, the quantity that the firm is able to sell increases from 100 to 150. The change in revenue associated with the price effect is equal toThe profit-maximizing price and quantity areWhen this firm is producing at the profit-maximizing price and quantity, its total revenue isIf a firm is producing a quantity of 150 and charging a price of $13, itIf a firm is producing a quantity of 100 and charging a price of $10, itIf a firm is producing a quantity of 100 and charging a price of $25, it

If the market price of a product is between the minimum average variable cost (AVC) and minimum average total cost (ATC) of a firm, that firm will...When a tax is imposed on some good, the lost consumer surplus and producer surplus both typically end up as:You share a house with two people . You are a concert pianist and often practice at home. One roommate enjoys listening to you practice, but the other does not. For the roommate who enjoys listening to you play, this is an example of ______; for the other roommate it is an example of _____.An example of price discrimination is when:Monopolistically competitive firms that are earning zero economic profit would most likely:If government regulation forces firms in an industry to internalize the externality, then we can expect the equilibrium price of the good to _____ and the equilibrium quantity to _____.The change in total cost given a change in output is also known as:What is necessary for price discrimination to occurKim owns a cupcake shop in Newport, CA. The market for cupcakes is very competitive. At Kim's current production level, her marginal cost is $25 and her marginal revenue is $29. To maximize profits, Kim should?Accounting profit is equal to:Compared to producers, consumers will lose the lesser amount of surplus from a tax if:Total revenue minus total cost is equal to:What is an example of a good that is non rivalA tax on apples would cause consumers to suffer because:Price discrimination exists when a firm is able to sell the same good at more than one price to different groups of:If a monopolistically competitive firm is incurring losses, then at the profit maximizing output amount:In 1996 Victoria's Secret shipped different catalogs to customers based on their buying habits. Frequent customers received catalogs with lower prices, whereas new customers received catalogs with high prices for those same items. What is the firm's motivation for practicing price discrimination, despite knowing that if their customers' found out, the company could potentially experience a loss in sales?If Tommy's Tank Tops is a perfectly competitive firm and is currently making a positive economic profits of $1,000:Charlie's Churros is a perfectly competitive firm that sells desserts in Houston, Texas. Charlie's Churros currently is taking in $40,000 in revenues, and has $15,000 in explicit costs and $25,000 in implicit costs. Charlie's Churro's economic profits are:Holding all else constant, a decrease in the market demand for a product in a competitive market would cause:Compared to producers, consumers will lose the greater amount of surplus from a tax if:You can tell a firm is operating in a market that is in long run competitive equilibrium if:When talking about economic profits in a perfectly competitive market, the difference between the long run and the short run is that, in the short run, firms:When a negative externality is not internalized, then the equilibrium price of the good purchased is too___ and the equilibrium quantity produced is too ___.Consumer surplus is defined as the:At current production levels, the marginal revenue of a competitive firm is $15 and the marginal cost of the firm is $15. The firm should:A tax on apples would cause apple growers to suffer because:Both monopolies and competitive firms:

If a firm's average total costs decrease as it increases its scale of production, the firm is experiencing:Which of the following is a question that a firm must answer in the long run but not in the short run?Fast food restaurants are a good illustration of:If a monopolist is producing a quantity where marginal revenue is equal to $32 and the marginal cost is equal to $30, the monopolist should:The incidence of a tax is determined by:It is unrealistic to regulate a natural monopoly at marginal cost pricing because:Two government created barriers to entry are:Compared to consumers, producers will lose the greater amount of surplus from a tax if:In competitive markets:The fast food, bottled water, and cereal markets are all examples of:When demand is perfectly inelastic, the demand curve is:The government imposes a tax on sale of a good whose production is creating a negative externality. The value of the tax is $4 per unit sold. In the new equilibrium, you would expect:Nathan owns a coffee roasting company. He buys raw coffee beans, roasts them, grinds them, and sells them to stores. He recently moved into a larger factory so that he can sell coffee to more stores. How would Nathan know if he is experiencing constant returns to scale from increasing the size of his factory?If a tax is imposed on a good where both supply and demand are somewhat elastic, but demand is more elastic than supply, the burden of tax will be borne:If a firm hires another worker and her marginal product of labor is zero, we know that the firm's total output is:To maximize profits, a monopolist chooses the quantity where:If Nicole's Knick Knacks is a perfectly competitive firm and is making zero economic profits:Despite creating maximum market efficiency, perfect price discrimination is often disliked by consumers because it transfers the gains in trade from:

Maximize ProfitExplicit costsIf a firm has total costs of $535,000 and its implicit costs are $165,000, how much are its explicit costs?Lauren is the owner of a bakery that earns 0 (zero) economic profit. Last year, her total revenue was $145,000, her rent was $12,000, her labor costs were $165,000, and her overhead expenses were $15,000. From this information, we know that explicit costs were:Implicit CostsIf a firm generates $240,000 in revenue, earns $120,000 in economic profit, and its explicit costs are $80,000, how much are its implicit costs?Economists consider both explicit and implicit costs when measuring economic profit. The reason they consider implicit costs is that:The three primary inputs are:As a firm hires more labor and each worker is able to specialize, what happens to each additional worker's marginal productivity?The change in total output divided by the change in input is known as:When output is 100 units, the firms total fixed cost is $500. What will this firm's total fixed cost be if output doubles to 200 units?Where would we find a firm's minimum efficient scale of production?

A firm characterized as a price-taker:List three main characteristics of a competitive market?Example of an almost perfectly competitive market?Characteristic of competitive markets is mainly responsible for firms making zero economic profits in the long run?Marginal revenue is the change in total:Profit maximization occurs when:If a competitive firm can make enough revenue to cover its variable costs, the firm will:What conditions will result in the firm making zero economic profits?Chuck Diesel Burger is a food truck in Houston. Imagine that Chuck Diesel Burger's minimum average total cost (ACT) is $3.75 and that its minimum average variable cost (AVC) is $2.50. Assume there are no barriers to entry into or exit from the food truck market. Chuck Diesel Burger will make a positive economic profit if the price is equal to:Sunk costsSignalsIf Dirk's Doughnuts is a perfectly competitive firm and is currently incurring economic losses of $500:Monopolists:Two conditions allow a single seller to become a monopolist. Those two conditions are that the firm must:They typical result of monopoly is _______ prices and ______ output than we find in a competitive market.Three natural barriers to entry are:Ash is the preferred wood to be used in the production of baseball bats. If a company were to buy the rights to harvesting the ash trees out of the forests in North America, which of the following barriers of entry has this company created?Economies of scale exist:A natural monopoly:Patents and copyright law:A price-maker:The output effect refers to how:If a monopolist is producing a quantity where marginal revenue is equal to $32 and the marginal cost is equal to $30, the monopolist should:This firm:To maximize profits, a monopolist chooses the quantity where:Which of the following is a characteristic of a monopoly but not of a competitive market?The profit-maximizing price and quantity are:When this firm is producing at the profit-maximizing price and quantity, its total revenue is:The deadweight loss associated with this profit-maximizing monopoly is represented by areas:When resources are used to secure monopoly rights through the political progress:Harnessing the benefits of competition, reducing trade barriers, and regulating markets are three:Antitrust laws are designated to:

Decision treeThe short-run profit-maximizing output for the monopolistic competitive firm isThe maximum long-run economic profit earned by this monopolistic

competitive firm is

In the long run, the demand curve for the monopolistically competitive firm would

In the long run, which of the following is true for the profit-maximizing firm?In the long run, surviving firms in monopolistic competition earnIf this market were highly competitive instead of a duopoly, the market price

would be __________ and the quantity of streaming movie subscriptions purchased each month would be __________.

If this market were a monopoly instead of a duopoly, the market price would be __________ and the quantity of streaming movie subscriptions purchased each month would be __________.

If the two firms operating in this market agreed to each supply one-half of the quantity a monopolist would supply, the contract would specify that

An agreement between Nextflix and Flixbuster to each supply 250 subscriptions is an example of

Listed below are four different collusive agreements that Nextflix and Flixbuster are considering. III. Nextflix supplies 250 subscriptions and Flixbuster supplies 250 subscriptions.IV. Nextflix supplies 100 subscriptions and Flixbuster supplies 400 subscriptions.

Listed below are four different collusive agreements that Nextflix and Flixbuster are considering. I.Nextflix supplies 50 subscriptions and Flixbuster supplies 450 subscriptions.II. Nextflix supplies 450 subscriptions and Flixbuster supplies 50 subscriptions.

Refer to the accompanying table. If Jeff confesses, Gerry will spend _________ years in jail if he also confesses and _________ years in jail if he keeps quiet.

The accompanying table shows two firms in a single-stage duopoly game. Each firm makes its decision without knowledge of the other firm's decision. The payoffs for each firm represent economic profits, and each firm strictly prefers more economic profit than less. This game would be considered a prisoner's dilemma if X is between

The accompanying matrix depicts two firms in a single-stage duopoly game. Each firm makes its decision without knowledge of the other firm's decision. The payoffs for each firm represent economic profits, and each firm strictly prefers more economic profit than less. If X is greater than $3,500, then

The equation of a firm's marginal revenue curve is estimated to be price = 50 − Q (quantity), and the equations of their marginal cost curve is estimated to be price = 10 + 3Q. The profit-maximizing quantity for this firm is:

When a monopolist lowers a price from $80 to $70, the quantity that the firm is able to sell increases from 100 to 150. The change in revenue associated with the price effect is equal to

The profit-maximizing price and quantity areWhen this firm is producing at the profit-maximizing price and quantity, its total

revenue isIf a firm is producing a quantity of 150 and charging a price of $13, itIf a firm is producing a quantity of 100 and charging a price of $10, itIf a firm is producing a quantity of 100 and charging a price of $25, it