Mircofinal

Front 1

The four types of economic goods discussed at the beginning of the semester are:

Back 1

private goods, public goods, club goods, and common property resources (or common property goods)

Front 2

A good would be considered non-excludable in consumption if:

Back 2

individuals who do not pay for the good can not be kept from enjoying its benefits

Front 3

Which of the following examples best represents a common property resource (or common property good)?

Back 3

an aquifer used by farmers and ranchers

Front 4

In moving up or down a demand curve for a particular good:

Back 4

all non-price determinants of demand are held constant

Front 5

It is reasonable to expect that:

i. demand curves for a given good differ between consumers

ii. demand curves for a given good are identical between consumers

iii. an individual has different demand curves for different goods

iv. an individual has identical demand curves for different goods

Back 5

i and iii

Front 6

The law of demand states that as price decreases:

Back 6

quantity demanded will increase, all else held constant

Front 7

If the demand curve for a good is vertical, then:

Back 7

the law of demand fails to hold, and consumer purchases are completely insensitive to changes in price

Front 8

Which of the following is not a characteristic of a perfectly competitive market?

Back 8

the ability of an individual firm or individual consumer to influence the market price

Front 9

A goods choke price is the dollar amount at which none of the good will be purchased and below which units will be purchased. If an individuals demand function for a good is given by the linear equation Q = 200 - 4P, then the choke price is:

Back 9

$50

Front 10

An individuals total expenditures on a good per-period (e.g., weekly) are equal to the price of the good times the number of units of the good purchased. If an individuals demand function for a good is given by the linear equation Q = 400 - 2P, then as price is lowered from the choke price to zero his/her total expenditures:

Back 10

increase initially and then decrease

Front 11

Surplus units of a good (or commodity) will arise in a market if its price is sustained:

Back 11

above the equilibrium price, resulting in the quantity supplied exceeding the quantity demanded

Front 12

Which of the following will result in an increase in the supply of a good or service?

Back 12

an increase in government subsidies given to the producers of the good or providers of the service

Front 13

In moving up or down an individual or market supply curve for a particular good:

Back 13

all non-price determinants of supply are held constant

Front 14

The determinants of supply are:

i. factors other than price that will affect the quantity of a good or service a firm is willing and able to produce

ii. factors that affect a producers minimum willingness-to-accept (WTA) to produce various quantities of a good

iii. factors that affect a producers maximum willingness-to-accept (WTA) to produce various quantities of a good

Back 14

i and iii

Front 15

The market demand for a good will decrease when there is:

Back 15

a decrease in income if the good is normal

Front 16

Using the demand and supply framework developed in class and chapter 3 of the text, one can conclude that in order for a good to be exchanged between a seller and a buyer, it must be that:

Back 16

buyer maximum willingness-to-pay is greater than or equal to seller minimum willingness-to-accept

Front 17

An increasing concern regards the affects of sustained summer droughts (water shortages) on the domestic supply of wheat. Noting that wheat is a primary ingredient in the production of bread and that potatoes are a substitute for bread, if the supply of wheat declines then it is reasonable to expect:

Back 17

the price of wheat to rise, the supply of bread to decrease, and the demand for potatoes to increase

Front 18

If the supply of a good increases and the demand for the good simultaneously decreases, then the equilibrium:

Back 18

price will fall, but equilibrium quantity may either rise, fall, or remain unchanged

Front 19

Consider a market for a good that is comprised of two identical producers whose supply functions are P = 40 + Q. Given this information, the market supply function is:

Back 19

P = 40 + 0.5Q

Front 20

Consider a perfectly competitive market described by the supply function P = 20 + 0.3Q and demand function P = 80 - 0.1Q. The equilibrium price and quantity are:

Back 20

P = $65 and Q = 150

Front 21

Which of the following examples best represents a public good:

Back 21

a lighthouse protecting boats from a rocky coastline

Front 22

The distinction between public goods and private goods is that:

Back 22

public goods are non-excludable and non-rival, whereas private goods are excludable and rival

Front 23

In 2011 the company Netflix began streaming movies over the internet. The monthly fee for unlimited downloads is $7.99. Given this information, what type of economic good is a subscription to Netflix?

Back 23

club good

Front 24

Which of the following examples best represents a common property good:

Back 24

a stretch of beach allowing open-access recreational fishing

Front 25

The distinction between club goods and common property goods is that:

Back 25

club goods are excludable and non-rival, whereas common property goods are non-excludable and rival

Front 26

{calc} A good is considered to be non-rival in consumption if:

Back 26

one individuals consumption of the good does not affect the amount available for others to consume

Front 27

Suppose that for each surfboard Australia produces with its domestic resources (e.g., raw materials and labor), it must forego the production of 25 boomerangs, whereas for each surfboard New Zealand produces with its domestic resources, it must forego the production of 15 boomerangs. It follows that:

Back 27

Australia has a comparative advantage in boomerangs

Front 28

If a country has a comparative advantage in the production of a good over another country, then it can:

i. engage in mutually beneficial trade with other countries

ii. increase the variety of products that it can consume without increasing its use of resources

iii. consume a combination of goods that lies outside its production possibilities frontieriv. produce a combination of goods that lies outside its production possibilities frontier

Back 28

i, ii, and iii

Front 29

From a production possibilities frontier (or curve) it may be concluded that:

Back 29

if an economys resources are fully employed, then production of some goods must be sacrificed if resources are allocated to the production of other goods

Front 30

An individual who has an absolute advantage in accomplishing a particular task:

Back 30

can accomplish the task using fewer resources than others

Front 31

Which of the following will not produce an outward shift of the production possibilities curve?

Back 31

a reduction in unemployment

Front 32

If a country has a comparative advantage in the production of a good over another country, this means that it has the ability to produce the good:

Back 32

at a lower opportunity cost than the other country

Front 33

Which of the following is not a characteristic of a perfectly competitive market?

Back 33

the ability of an individual firm to influence the market price

Front 34

A consumers demand curve for a good can be used to identify:

i. how much of the good will be purchased (i.e., quantity demanded) at a given price

ii. the amount by which purchases of the good (i.e., quantity demanded) will change as a result of a change in price

iii. total expenditures on the good at a given price

Back 34

i, ii, and iii

Front 35

The income effect, substitution effect, and diminishing marginal utility are all explanations for:

Back 35

why demand curves are downward sloping

Front 36

The market demand for a good will increase when there is:

Back 36

a decrease in income if the good is inferior

Front 37

The determinants of demand are:

i. factors other than price that affect the quantity of a good or service a consumer is willing and able to purchase

ii. factors that affect a consumers maximum willingness-to-pay for various quantities of a good or service

iii. factors that affect a consumers minimum willingness-to-pay for various quantities of a good or service

Back 37

i and ii

Front 38

If an individuals demand function for a good is given by the linear equation Q = 80 - 2P, then as price is lowered from the choke price to zero his/her total expenditures:

Back 38

increase initially and then decrease

Front 39

Consider a market for a good that is comprised of identical two consumers whose demand functions are P = 20 - 2Q. Given this information, the market demand function is:

Back 39

P = 20 - Q

Front 40

The law of supply states that as price increases:

Back 40

quantity supplied will increase, all else held constant

Front 41

If the supply curve for a good is vertical, then:

Back 41

the law of supply fails to hold, and producer output is completely insensitive to changes in price

Front 42

If there is an improvement in the level of technology used in the production of a good then:i. more output may be obtained with a given amount of inputs compared to before the technological improvementii. a given amount of output may be obtained with fewer inputs compared to before the technological improvementiii. the firm will increase its use of other inputs, such as the number of workers it employs

Back 42

i and ii

Front 43

The market supply curve for a good that is produced and traded in a perfectly competitive market is derived by:i. horizontally summing the supply curves of the individual firms in the marketii. vertically summing the supply curves of the individual firms in the marketiii. summing the quantity supplied by each firm at a given price and then repeating this over the range of prices

Back 43

i and iii

Front 44

Consider a perfectly competitive market described by the demand function P = 60 - 0.3Q and supply function P = 10 + 0.2Q. The equilibrium quantity and price are:

Back 44

Q = 100 and P = $30

Front 45

A shortage of a good will arise in a market if its price is sustained:

Back 45

below the equilibrium price, resulting in the quantity demanded exceeding the quantity supplied

Front 46

Using the demand and supply framework developed in class and chapter 3 of the text, one can conclude that in order for a good to be exchanged between a seller and a buyer, it must be that:

Back 46

buyer maximum willingness-to-pay is greater than or equal to seller minimum willingness-to-accept

Front 47

If the demand for a good decreases and the supply of the good simultaneously decreases, then the equilibrium:

Back 47

quantity will fall, but equilibrium price may either rise, fall, or remain unchanged

Front 48

If the demand for a good increases and the supply of the good simultaneously decreases, then the equilibrium:

Back 48

price will rise, but equilibrium quantity may either rise, fall, or remain unchanged

Front 49

Suppose that both the demand for and supply of a good change simultaneously. You observe that the quantity of the good that is produced and traded increased, however, the equilibrium price remained the same. Given this information you may concluded that:

Back 49

demand and supply increased by an equal amount

Front 50

Suppose the supply of oranges produced in Florida declines as a result of an unusually cold winter season. Noting that oranges are the key input used in the production of orange juice and that grape juice is a substitute for orange juice, then it is reasonable to expect:

Back 50

the price of oranges to rise, the supply of orange juice to decrease, and the demand for grape juice to increase

Front 51

Which of the following examples best reflects the law of supply?

Back 51

the price of a product falls and as a result the quantity supplied decreases

Front 52

Maximum willingness-to-pay (WTP) is to ________________ , as consumer surplus is to ________________ .

Back 52

total value (or total benefit), net value (or net benefit)

Front 53

Graphically, consumer surplus is represented by:

Back 53

the area below the demand curve and above the price of the good

Front 54

The producer surplus derived by a firm from producing and selling a good or providing a service:

Back 54

is the difference between the minimum prices producers are willing to accept and the price they actually receive

Front 55

Suppose an individuals demand for a good is described by the demand function P = 60 - 2Q. If the equilibrium price in the market is P0= $40, then consumer surplus is:

Back 55

$100

Front 56

Suppose an individuals demand for a good is described by the demand function P = 80 - Q. If a change in market supply results in price decreasing from P0 = $60 to P1 = $50, then the change in consumer surplus is:

Back 56

$250

Front 57

Consider a perfectly competitive market described by the supply function P = 10 + 0.3Q and demand function P = 60 - 0.2Q. Suppose the market is initially in equilibrium. If the government intervenes in the market and imposes of a price restriction of P = $25, the result rounded to the nearest unit will be a:

Back 57

shortage of 125 units

Front 58

An example of an ad valorem tax is:

i. the 18.3 cent federal tax charged on each gallon of gasoline purchased

ii. a per-pack tax imposed by a local municipality on the sale of cigarettes, irrespective of the cigarette brand

iii. a residential property tax paid by a homeowner that depends upon the propertys value as determined by a county tax appraiser

iv. a sales tax charged by a local grocery store on products other than food i

Back 58

iii and iv

Front 59

If a tax is imposed upon a good that is produced and traded in a perfectly competitive market, then:

Back 59

both buyers and sellers are worse off

Front 60

If a binding price ceiling (i.e., a maximum price that may be charged) is imposed upon a good that is produced and traded in a perfectly competitive market, then relative to the initial (unregulated) market equilibrium:

Back 60

the quantity of the good that consumers are willing to purchase will increase

Front 61

Consider a perfectly competitive market described by the supply function P = 20 + 0.3Q and demand function P = 120 - 0.2Q. Suppose the market is initially in equilibrium. If a specific tax of t = $10 per unit of output sold is imposed upon sellers, then:

i. the total economic surplus (consumer surplus + producer surplus) will fall by $900

ii. the total economic surplus (consumer surplus + producer surplus) will fall by $1900

iii. $1800 will be collected in tax revenues, and a deadweight loss of $100 will result

iv. $1800 will be collected in tax revenues, and a deadweight loss of $200 will result

Back 61

ii and iii