MICROECONOMICS FINAL EXAM 2025-2026!!
While pollution regulations yield the benefit of a cleaner environment and the improved
health that comes with it, the regulations come at the cost of reducing the incomes of
the regulated firms' owners, workers, and customers. This statement illustrates the
principle that
people face tradeoffs
What are two possible causes of market failure?
externality and market power
Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10
empty seats on a flight. If the marginal cost of flying a passenger is $200 and a standby
passenger is willing to pay $300, the airline should
sell the ticket because the marginal benefit exceeds the marginal cost
We have an expert-written solution to this problem!
trade between countries tends to
increase both competition and specialization.
In the short run, an increase in the money supply is likely to lead to
increased inflation and decreased unemployment
if the government were to intervene in a market economy and fix the price of visiting a
health care provider below the market price, then we would expect, relative to the
,market outcome,
an increase in the number of visits people want to make and a decrease in the number of
visits health care providers want to provide
Rational people make decisions at the margin by
comparing marginal costs and marginal benefits
Suppose that you have a choice between going to the movies with a friend for 3 hours or
working at your job. If you go to the movie, you will spend $12 on a ticket and $6 on
popcorn. If you choose to work, you will earn $10 an hour. What is your opportunity cost
of going to the movies?
30+18=$48
Suppose that you have a choice between going to the movies with a friend for 3 hours or
working at your job. If you go to the movie, you will spend $12 on a ticket and $6 on
popcorn. If you choose to work, you will earn $10 an hour. What is your opportunity cost
of working?
Time spent with not with friend, but earning money
Thousands of people develop lung cancer from second-hand exposure to cigarette
smoke. This is an example of
market failure caused by an externality
If Mike can produce more donuts in one day than Sue can produce in one day, then
Mike has an absolute advantage in the production of donuts
,As a student, Jordyn spends 40 hours per week writing term papers and completing
homework assignments. On one axis of her production possibilities frontier is measured
the number of term papers written per week. On the other axis is measured the number
of homework assignments completed per week. Jordyn's production possibilities
frontier is a straight line if
she can switch between writing term papers and completing homework assignments at
a constant rate
Assume that England and France each has 20 labor hours available. If each country
divides its time equally between the production of bread and lemonade, then total
production is
12 unites of bread and 7.5 units of lemonade
a popular celebrity that is paid highly for her time should probably not mow her own
lawn because
her opportunity cost of mowing her lawn is higher than the cost of paying someone to
mow it for her
Charlotte can produce pork and beans and can switch between producing them at a
constant rate. If it takes her 10 hours to produce a pound of pork and 5 hours to produce
a pound of beans, what is her opportunity cost of pork?
10/5 = 2 pounds of beans
Charlotte can produce pork and beans and can switch between producing them at a
constant rate. If it takes her 10 hours to produce a pound of pork and 5 hours to produce
a pound of beans, what is her opportunity cost of beans?
, 5/6 = 1/2 pound of pork
The fact that the line slopes downward reflects the fact that
Peru will face a trade-off between producing peanuts and producing cashews
Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of
oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels
of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two
countries do not trade, Cornland will produce and consume 400 bushels of corn and 100
bushels of oats, while Oatland will produce and consume 60 bushels of corn and 400
bushels of oats. If each country made the decision to specialize in producing the good in
which it has a comparative advantage, then the combined yearly output of the two
countries would increase by
380 bushels of corn and 100 bushels of oats
Absolute Advantage
the ability to produce a good using fewer inputs than another producer
Comparative Advantage
the ability to produce a good at a lower opportunity cost than another producer
Does absolute advantage or comparative best determine trade patterns?
Comparative advantage
While pollution regulations yield the benefit of a cleaner environment and the improved
health that comes with it, the regulations come at the cost of reducing the incomes of
the regulated firms' owners, workers, and customers. This statement illustrates the
principle that
people face tradeoffs
What are two possible causes of market failure?
externality and market power
Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10
empty seats on a flight. If the marginal cost of flying a passenger is $200 and a standby
passenger is willing to pay $300, the airline should
sell the ticket because the marginal benefit exceeds the marginal cost
We have an expert-written solution to this problem!
trade between countries tends to
increase both competition and specialization.
In the short run, an increase in the money supply is likely to lead to
increased inflation and decreased unemployment
if the government were to intervene in a market economy and fix the price of visiting a
health care provider below the market price, then we would expect, relative to the
,market outcome,
an increase in the number of visits people want to make and a decrease in the number of
visits health care providers want to provide
Rational people make decisions at the margin by
comparing marginal costs and marginal benefits
Suppose that you have a choice between going to the movies with a friend for 3 hours or
working at your job. If you go to the movie, you will spend $12 on a ticket and $6 on
popcorn. If you choose to work, you will earn $10 an hour. What is your opportunity cost
of going to the movies?
30+18=$48
Suppose that you have a choice between going to the movies with a friend for 3 hours or
working at your job. If you go to the movie, you will spend $12 on a ticket and $6 on
popcorn. If you choose to work, you will earn $10 an hour. What is your opportunity cost
of working?
Time spent with not with friend, but earning money
Thousands of people develop lung cancer from second-hand exposure to cigarette
smoke. This is an example of
market failure caused by an externality
If Mike can produce more donuts in one day than Sue can produce in one day, then
Mike has an absolute advantage in the production of donuts
,As a student, Jordyn spends 40 hours per week writing term papers and completing
homework assignments. On one axis of her production possibilities frontier is measured
the number of term papers written per week. On the other axis is measured the number
of homework assignments completed per week. Jordyn's production possibilities
frontier is a straight line if
she can switch between writing term papers and completing homework assignments at
a constant rate
Assume that England and France each has 20 labor hours available. If each country
divides its time equally between the production of bread and lemonade, then total
production is
12 unites of bread and 7.5 units of lemonade
a popular celebrity that is paid highly for her time should probably not mow her own
lawn because
her opportunity cost of mowing her lawn is higher than the cost of paying someone to
mow it for her
Charlotte can produce pork and beans and can switch between producing them at a
constant rate. If it takes her 10 hours to produce a pound of pork and 5 hours to produce
a pound of beans, what is her opportunity cost of pork?
10/5 = 2 pounds of beans
Charlotte can produce pork and beans and can switch between producing them at a
constant rate. If it takes her 10 hours to produce a pound of pork and 5 hours to produce
a pound of beans, what is her opportunity cost of beans?
, 5/6 = 1/2 pound of pork
The fact that the line slopes downward reflects the fact that
Peru will face a trade-off between producing peanuts and producing cashews
Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of
oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels
of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two
countries do not trade, Cornland will produce and consume 400 bushels of corn and 100
bushels of oats, while Oatland will produce and consume 60 bushels of corn and 400
bushels of oats. If each country made the decision to specialize in producing the good in
which it has a comparative advantage, then the combined yearly output of the two
countries would increase by
380 bushels of corn and 100 bushels of oats
Absolute Advantage
the ability to produce a good using fewer inputs than another producer
Comparative Advantage
the ability to produce a good at a lower opportunity cost than another producer
Does absolute advantage or comparative best determine trade patterns?
Comparative advantage
