ECON 1100 COMPLETE LATEST EXAM 2
BASED QUESTIONS AND ANSWERS
price ceilings & price floors - ANSWER-causes surpluses and shortages to persist since price cannot
adjust to the market equilibrium price
surpluses of the good - ANSWER-ceteris paribus, an effective (binding) price floor for a good leads to....
marginal benefit is equal to marginal cost - ANSWER-the efficient level of an activity is at the point
where...
marginal cost is - ANSWER-the cost of producing one more unit of a good or service
less - ANSWER-a buyer gains consumer surplus when the market price is _____ than the maximum price
the buyer is willing to pay
true - ANSWER-true or false? is a correct statement about tax burdens?
"a tax burden falls most heavily on the side of the market that is inelastic."
decrease, increase - ANSWER-an increase in the supply of lettuce, ceteris paribus, leads to a ___ in the
equilibrium price of lettuce, and consumer surplus to the lettuce buyers will ____
underproduced, overproduced - ANSWER-goods that generate positive externalities tend to be ____,
while goods that generate negative externalities tend to be ____ by private markets
taxing, subsidizing - ANSWER-when dealing with externalities, the market equilibrium can be moved
closer to the social optimum by...
_______ activities that have negative externalities & ______ activities that have positive externalities.
true it is a public good - ANSWER-true or false? basic research is an example of a public good.
ANSWER with:
"_______ it is a public good" OR "______ it is not a public good"
private parties - ANSWER-The Coase theorem suggests that....
______ __________may be able to solve the problem of externalities on their own.
free rider problem - ANSWER-the "____ ____ _____" refers to the situation where the benefits
associated with public goods cannot be denied to consumers who are unwilling to pay for them so the
good is underproduced.
common resources - ANSWER-goods that are rival and non-excludable are called:
owned by no one - ANSWER-why do elephants face the threat of extinction while cows do not? cows are
owned by ranchers, while most elephants are ______ __ ____ ________.
$5,000 - ANSWER-Stella left her $30,000 per year job as an office manager to paint houses and be her
own boss. in her first year, Stella received $50,000 in payments from her customers and paid $15,000 for
paint and supplies. Stella's economic profit in her first year is?
building another wing - ANSWER-which of the following represents a long-run decision for the firm?
___________ __________ __________ on the plant in order to add a new assembly line.
diseconomies of scale - ANSWER-if long-run average cost increases as output increases, then...
firms experience _______ ___ ______.
sells it product at the price determined by the market - ANSWER-if a firm is a price taker, then it...
horizontal, downward-sloping - ANSWER-in perfect competition, the demand curve is ____ for the
individual firm, while the demand curve is ____ for the market.
MR=MC - ANSWER-the profit maximizing "rule" is for firms to produce the amount of output where:
false (they are a characteristic) - ANSWER-true or false? numerous barriers to entry is characteristic of
firms in a perfectly competitive industry
P<AVC - ANSWER-a firm should definitely shut down production to minimize its losses in the shirt run if...
BASED QUESTIONS AND ANSWERS
price ceilings & price floors - ANSWER-causes surpluses and shortages to persist since price cannot
adjust to the market equilibrium price
surpluses of the good - ANSWER-ceteris paribus, an effective (binding) price floor for a good leads to....
marginal benefit is equal to marginal cost - ANSWER-the efficient level of an activity is at the point
where...
marginal cost is - ANSWER-the cost of producing one more unit of a good or service
less - ANSWER-a buyer gains consumer surplus when the market price is _____ than the maximum price
the buyer is willing to pay
true - ANSWER-true or false? is a correct statement about tax burdens?
"a tax burden falls most heavily on the side of the market that is inelastic."
decrease, increase - ANSWER-an increase in the supply of lettuce, ceteris paribus, leads to a ___ in the
equilibrium price of lettuce, and consumer surplus to the lettuce buyers will ____
underproduced, overproduced - ANSWER-goods that generate positive externalities tend to be ____,
while goods that generate negative externalities tend to be ____ by private markets
taxing, subsidizing - ANSWER-when dealing with externalities, the market equilibrium can be moved
closer to the social optimum by...
_______ activities that have negative externalities & ______ activities that have positive externalities.
true it is a public good - ANSWER-true or false? basic research is an example of a public good.
ANSWER with:
"_______ it is a public good" OR "______ it is not a public good"
private parties - ANSWER-The Coase theorem suggests that....
______ __________may be able to solve the problem of externalities on their own.
free rider problem - ANSWER-the "____ ____ _____" refers to the situation where the benefits
associated with public goods cannot be denied to consumers who are unwilling to pay for them so the
good is underproduced.
common resources - ANSWER-goods that are rival and non-excludable are called:
owned by no one - ANSWER-why do elephants face the threat of extinction while cows do not? cows are
owned by ranchers, while most elephants are ______ __ ____ ________.
$5,000 - ANSWER-Stella left her $30,000 per year job as an office manager to paint houses and be her
own boss. in her first year, Stella received $50,000 in payments from her customers and paid $15,000 for
paint and supplies. Stella's economic profit in her first year is?
building another wing - ANSWER-which of the following represents a long-run decision for the firm?
___________ __________ __________ on the plant in order to add a new assembly line.
diseconomies of scale - ANSWER-if long-run average cost increases as output increases, then...
firms experience _______ ___ ______.
sells it product at the price determined by the market - ANSWER-if a firm is a price taker, then it...
horizontal, downward-sloping - ANSWER-in perfect competition, the demand curve is ____ for the
individual firm, while the demand curve is ____ for the market.
MR=MC - ANSWER-the profit maximizing "rule" is for firms to produce the amount of output where:
false (they are a characteristic) - ANSWER-true or false? numerous barriers to entry is characteristic of
firms in a perfectly competitive industry
P<AVC - ANSWER-a firm should definitely shut down production to minimize its losses in the shirt run if...
