Surplus
When a market is in equilibrium
A. consumer surplus is maximized
B. all mutually beneficial transactions occur.
C. total welfare is maximized
D. consumer surplus equals producer surplus.
E. all of the above
F. A & D
G. C & D
H. B & C
I. A & B
H. B & C
Suppose a binding price floor is imposed in the market for manicures. So long as demand and supply are somewhat elastic, we can be sure that relative to a free market,
A. producer surplus will increase.
B. the harm to consumers is greater than the gain to producers.
C. the resulting shortage will lead to long lines of waiting customers.
D. producers will be able to selectively choose which customers to serve.
B. the harm to consumers is greater than the gain to producers.
Which of the following statements is correct?
A. If average total cost is rising, then marginal cost is greater than average total cost.
B. If marginal cost is rising, then average variable cost is falling.
C. If average variable cost is rising, then average total cost is rising.
D. If marginal cost is rising, then average total cost is rising.
E. If average variable cost is rising, then marginal cost is minimized.
A. If average total cost is rising, then marginal cost is greater than average total cost.
One similarity between socialism and the united order is that
A. both systems have central planners who give detailed instructions on how to use communal property.
B. both systems redistribute factors of production among the participants.
C. both systems abolish private property to hold all things in common.
D. both systems expect men to abandon selfish feelings before entering into the system.
B. both systems redistribute factors of production among the participants.
Suppose that the cost of producing apples increases. In the market for apples, we can be sure that
A. producer surplus decreases.
B. consumer surplus decreases.
C. total welfare decreases.
D. A & B
E. A & C
F. B & C
G. A & B & C
F. B & C
Suppose a market has demand represented by QD = 500 - 10 P and supply represented by QS = 10 P - 100. If a price floor of $20 is imposed, the impact on the market would be
A. A shortage of 200 units.
B. A deadweight loss of $1000.
C. An increase in consumer surplus of $500.
D. All of the above.
E. None of the above.
E. None of the above.
At Bert's Bootery, the total cost of producing twenty pairs of boots is $400. The marginal cost of producing the twenty-first pair of boots is $80. We can conclude that the
A. average variable cost of 20 pairs of boots is $16.
B. average total cost of 21 pairs of boots is $24.
C. marginal cost of the 20th pair of boots is $20.
D. A & B
E. B & C
F. A & C
G. A & B & C
H. None of the above
H. None of the above
Market require well enforced property laws because, without it,
A. people would only trade with the few people they know well enough to trust.
B. people would refrain from beneficial trades because of uncertainty about possible harm from the transaction.
C. people would be able to seek redistribution from the government.
D. people could steal from or threaten one another, creating involuntary trade.
E. people could not be certain whether they will still have their purchased items tomorrow.
E. people could not be certain whether they will still have their purchased items tomorrow.
Which of the following will cause a decrease in producer surplus?
A. an increase in the number of buyers of the good
B. the price of a complement decreases
C. income increases and buyers consider the good to be inferior
D. the imposition of a binding price floor in the market
C. income increases and buyers consider the good to be inferior
Suppose a binding price floor is imposed in the market for manicures. So long as demand and supply are somewhat elastic, we can be sure that relative to a free market,
A. producer surplus will increase.
B. the harm to consumers is greater than the gain to producers.
C. the resulting shortage will lead to long lines of waiting customers.
D. producers will be able to selectively choose which customers to serve.
B. the harm to consumers is greater than the gain to producers.
A competitive firm has been selling its output for $20 per unit and has been maximizing its profit, which is positive. Then, the price rises to $25, and the firm makes whatever adjustments are necessary to maximize its profit at the now-higher price. Once the firm has adjusted, its
A. average total cost is higher than it was previously.
B. quantity of output is higher than it was previously.
C. marginal revenue is higher than it was previously.
D. All of the above are correct.
D. All of the above are correct.
Based on the description of the following legal services, which is most likely to be a perfectly competitive market?
A. Intellectual property - when a lawyer and her client sue for patent damages, the defendant has to hire a lawyer even if the claim is false.
B. Criminal defense - the quality of the lawyer is hard to determine until after the case is over.
C. Estate planning - all lawyers recycle the same "boilerplate" language in writing wills.
D. Constitutional law - these issues can only be argued in front of the Supreme Court by a lawyer with a special certification.
E. None of these would be perfectly competitive.
C. Estate planning - all lawyers recycle the same "boilerplate" language in writing wills.
Suppose the federal government places a binding price ceiling on tuition prices. Which of the following could not happen as a result?
A. Students may end up paying above-market rent for on-campus housing to circumvent the tuition controls.
B. Colleges hold lotteries to determine which students are admitted.
C. Colleges (as a whole) can be financially harmed.
D. Colleges may offer discounts through "scholarships" not based on scholastic achievement.
E. Students (as a whole) can be financially harmed.
D. Colleges may offer discounts through "scholarships" not based on scholastic achievement.
Travelers from Boston to New York can use trains or airplanes for transit. Suppose that both have similar price, quantities, and supply curves, but that the demand for train travel is more inelastic than the demand for air travel. If a $50 tax per trip is imposed on the travel provider in both markets, we would predict:
A. The air travel tax will generate more revenue.
B. The air travel tax will generate more deadweight loss.
C. A larger portion of the air travel tax is paid by travelers.
D. A & B
E. A & C
F. A & B & C
G. None of the above
B. The air travel tax will generate more deadweight loss.
The Wacky Widget company has total fixed costs of $150,000 per year. The firm’s average variable cost is $10 for 10,000 widgets. At that level of output, the firm’s average total costs equal
A. $10
B. $15
C. $20
D. $25
D. $25
Which of the following is an accurate contrast between socialism and the United Order?
A. Under the United Order, private property is used for the common good, while in Socialism, all property is owned by the public at large.
B. Under Socialism, individuals decide their own careers, while in the United Order, the Bishop assigns employment.
C. Under the Socialism, individuals only join when they feel sufficiently selfless, while the United Order transforms all individuals to teach them selflessness.
D. Under the United Order, bishops will always be inspired to allocate stewardships efficiently, while socialist planners will often make mistakes in their allocations.
A. Under the United Order, private property is used for the common good, while in Socialism, all property is owned by the public at large.
When a binding price floor is imposed on a market, buyers (as a group) are ___________ and sellers (as a group) are _________.
A. always better off; always worse off.
B. always better off; possibly better or worse off.
C. always better off; always better off.
D. possibly better or worse off; always worse off.
E. possibly better or worse off; possibly better or worse off.
F. possibly better or worse; always better off.
G. always worse off; always worse off.
H. always worse off; possibly better or worse off.
I. always worse off; always better off.
H. always worse off; possibly better or worse off.
The city council chose to tax physical goods more heavily than intangible services. If these have similar demand elasticity but physical goods are more elastic in their supply, which of the following could be the city council's reasoning for this difference in taxes?
A. The council wants to maximize total welfare.
B. The council wants to maximize total revenue.
C. The council wants buyers to pay more of the tax than sellers.
D. A & B
E. A & C
F. B & C
G. A & B & C
C. The council wants buyers to pay more of the tax than sellers.
. Luke tells you that the perfectly-competitive lightsaber industry (which was at a long run equilibrium) has just experienced a decrease in costs, but he vanishes before you can ask whether the affected costs were marginal or fixed. Which of the following must hold in either case?
A. Each firm will produce strictly more lightsabers in the short run.
B. Each firm will produce strictly more lightsabers in the long run.
C. The market price of a lightsaber will strictly fall in the short run.
D. A & B
E. A & C
F. B & C
G. A & B & C
H. None of the above
H. None of the above
. A community sets up a farmers market for local farmers to sell their vegetables to residents, without any intervention in price. Which of the following illustrates the benefits of anonymity in this free market?
A. Bob will only buy Joe's vegetables if he thinks it is worth the price.
B. Ramona has access to the same high quality vegetables for her home cooking as the well connected local restaurants.
C. Diane raises the price of her vegetables after a demand increase, without even realizing what caused the demand shift.
D. Rachel finds that she can buy exactly as many vegetables as she wanted at the market price.
B. Ramona has access to the same high quality vegetables for her home cooking as the well connected local restaurants.