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Question;Question 1 of 20;If the government imposes a maximum price for milk that is;above the equilibrium price __________.;A. this maximum price for milk will have no economic impact;B. quantity demanded of milk will be less than quantity;supplied;C. demand for milk will be greater than supply;D. the available milk supply will have to be rationed;Question 2 of 20 5.0;Points;The difference between the maximum amount a person is;willing to pay for a good and its current market price is known as __________.;A. the paradox of value;B. profits;C. revealed preferences;D. consumer surplus;Question 3 of 20 5.0;Points;Laura makes hand-made jewelry and she would be willing to;sell pairs of earrings for $50. If Laura sells each pair of earrings for $65;her producer surplus per pair of earrings sold would be equal to __________.;A. $115;B. $65;C. $15;D. $50;Question 4 of 20 5.0;Points;Assume that production costs rise and demand remains;constant. The equilibrium price will __________ and the producer surplus will;A. increase, increase;B. increase, decrease;C. decrease, decrease;D. decrease, increase;Question 5 of 20 5.0;Points;Suppose that you are willing to pay $25 for a new shirt and;the market price is $35. In this case __________.;A. you will not buy the good;B. you will buy the good and receive a consumer surplus of;$5;C. you will buy the good and receive a consumer surplus of;?$10;D. you will buy the good and receive a consumer surplus of;?$35;Question 6 of 20 5.0;Points;Jody's bakery makes cakes and would be willing to sell each;cake for $12.50. If Jody's bakery sells 10 cakes for $13 each, the total;producer surplus for Jody's bakery would be equal to __________.;A. $5.00;B. $12.50;C. $125.00;D. $130.00;Question 7 of 20 5.0;Points;If the equilibrium price of gasoline is $2.75 per gallon and;the government will not allow oil companies to charge more than $2.00 per;gallon, which of the following will happen?;A. Demand must eventually decrease so that the market will;come into equilibrium at a price of $2.00.;B. Supply must eventually increase so that the market will;come into equilibrium at a price of $2.00.;C. Total surplus in the market will be lower than it would;be if the price was $2.75 per gallon.;D. The market will be in equilibrium at a price of $2.00.;Question 8 of 20 5.0;Points;Tom would be willing to pay a maximum of $2,500 to attend;the Super Bowl this year, and he can buy a ticket for $2,050. His consumer;surplus is __________.?;A. $25;B. $50;C. $275;D. $450;Question 9 of 20 5.0;Points;Assume that there is rent control in Chicago. Which of the;following is true??;A. All consumers in the rental market will benefit because;the rent will be lower.;B. The total surplus will fall because there will be a;shortage of apartments.;C. The total surplus will rise because consumer surplus will;increase.;D. Consumer surplus will increase and as a result all;consumers in the rental market will benefit.;Question 10 of 20 5.0;Points;If the market price of salmon is $8.99 per pound but the;government will not allow salmon farmers to charge more than $4.99 per pound;which of the following will happen?;A. The supply curve for salmon will shift to the left.;B. There will be an excess demand for salmon.;C. There will be an excess supply of salmon.;D. The market will be in equilibrium at a price of $4.99.;Question 11 of 20 5.0;Points;Suppose you receive a consumer surplus of $50. The $50;represents __________.;A. a monetary payment from the store;B. a monetary payment from the government;C. a reduction in the original price of the good;D. the fact that you paid $50 less than you were willing to;pay for the good;Question 12 of 20 5.0;Points;At the free market equilibrium, the efficient level of;output is produced because __________.;A. government regulates the output level that must be;produced;B. firms are maximizing profit;C. willingness to pay is the same for all consumers;D. total surplus is maximized;Question 13 of 20 5.0;Points;Assume that the supply of smartphones remains constant, but;the price of smartphones increases. Producer surplus __________.;A. will decrease;B. will increase;C. will remain constant;D. may increase or decrease depending on the amount of the;price increase;Question 14 of 20 5.0;Points;Consumer surplus can be defined as the __________.;A. value a consumer receives from a good minus the price;paid for that good;B. maximum amount the consumer would pay for a good;C. actual amount paid for a good minus the benefit of using;that good;D. marginal utility of a good divided by its price;A ban on imported avocados would result in __________.;A. an increase in total surplus because domestic production;will increase;B. no change in total surplus because the reduction in;consumer surplus will offset the increase in producer surplus;C. a reduction in total surplus because a deadweight loss is;created;D. It is impossible to say what will happen to total;surplus.;Question 16 of 20 5.0;Points;In the market equilibrium, with a price of $500 there are;2000 apartments. If the government decides to enact a rent control policy, with;a maximum price of $400, it reduces the quantity to 1500 apartments. Due to the;rent control decreasing the total surplus of the market, the policy generates;a(n) __________.;A. excess supply;B. equilibrium;C. higher price;D. deadweight loss;Question 17 of 20 5.0;Points;If the government sets a minimum price above the equilibrium;price for soybeans, which of the following statements will be correct?;A. There will be an efficient level of output produced.;B. There will be excess supply.;C. There will be excess demand.;D. all of the above;Question 18 of 20 5.0;Points;Which of the following would result from a quota imposed on;the quantity of cars that can be imported into the United States?;A. an increase in the total surplus;B. an increase in producer surplus;C. an increase in prices for consumers;D. an increase in consumer surplus;Question 19 of 20 5.0;Points;If the government sets a maximum price for gasoline above;the equilibrium price, __________.;A. quantity demanded of gasoline will be equal to quantity;supplied of gasoline;B. there will be excess demand for gasoline;C. there will be excess supply of gasoline;D. demand for gasoline will be less than supply of gasoline;Question 20 of 20 5.0;Points;Assume that Crystal's demand for handbags remains constant;but the price of handbags increases. Crystal's consumer surplus __________.;A. decreases;B. increases;C. remains constant;D. may increase or decrease depending on the amount of the;price decrease;Question 1 of 40 2.5;Points;In the absence of government, an under-allocation of;resources generally exists for __________.;A. goods with external costs;B. imported goods and services;C. public goods;D. all of the above;Question 2 of 40 2.5;Points;Once a firm is forced to consider an external cost, the;price of its product will __________.?;A. increase and output will decrease;B. increase and output will increase;C. decrease and output will decrease;D. decrease and output will increase;Question 3 of 40 2.5;Points;The biggest problem with using a tax as a way to solve an;externality problem is that __________.;A. the tax sometimes increases the external cost;B. damages must be estimated in financial terms to determine;the correct level of the tax;C. the firm will pass the entire tax onto the consumer;D. the commerce clause forbids such taxes;Question 4 of 40 2.5;Points;If a producer is imposing an external cost on society, the best;response would be to __________.?;A. lower the producer's taxes to offset pollution;B. increase the production;C. internalize the externality;D. subsidize the producer;Question 5 of 40 2.5;Points;When the government imposes a tax on a firm that generates;external costs, the tax is __________.;A. always borne entirely by the firm;B. always borne entirely by the consumer;C. usually borne by both the firm and the consumer;D. borne only by the government;Recall the application about the marginal cost and marginal;benefit of reducing methane emissions. What does the optimal level of methane;abatement depend on?;A. the level at which the polluting firms are able to;maximize their profits;B. the total cost of abatement;C. the marginal benefit of abatement;D. It is not possible to determine an optimal level of;methane.;Which of the following would be an example of an external;benefit?;A. More people start to ride the bus and as a result air;pollution is reduced.;B. Firms are able to reduce their costs of production by;using a more efficient technology.;C. The government requires polluting firms to pay a special;tax.;D. A firm has just gotten permission to open a landfill on;property that is adjacent to your home.;Question 8 of 40 2.5;Points;The idea behind the pollution tax equal to the external cost;per unit of pollution is to __________.;A. increase the social benefit to be above the marginal cost;B. internalize the externality;C. allow the firm to evade external costs;D. drive polluting firms out of developed countries;Question 9 of 40 2.5;Points;When the government taxes a firm that generates an external;cost, the profit maximizing firm will produce __________.;A. more units of output than before the tax was imposed;B. the same number of units of output as before the tax was;imposed;C. fewer units of output than before the tax was imposed;D. either more or fewer units of output than before the tax;was imposed;Based on society's perspective, what are the benefits from;pollution abatement?;A. better health;B. increased enjoyment of the natural environment;C. lower production costs;D. all of the above;Question 11 of 40 2.5;Points;An external cost of production is __________.;A. a cost incurred by someone other than the producer;B. the production cost borne by a producer;C. the result of the sum of private and social cost;D. another word for a tax;Question 12 of 40 2.5;Points;If, while producing goods and services, a factory is;producing pollution and not incurring the cost of this pollution, then a(n);exists.;A. government failure;B. market failure;C. acceptable outcome;D. none of the above;Question 13 of 40 2.5;Points;Sirens located around a town to warn citizens of the;approach of a tornado are an example of __________.;A. an external cost;B. a private good;C. a common resource;D. a public good;Question 14 of 40 2.5;Points;The government imposes taxes on firms that generate external;costs in an effort to __________.;A. make it easier for economists to measure external costs;B. lead to a zero level of output;C. force decision makers to consider the full costs of their;actions;D. lower the firms' costs of production;Question 15 of 40 2.5;Points;Goods that are nonrival in consumption and that have;benefits that are nonexcludable are __________.;A. private goods;B. neighbor effects;C. public goods;D. none of the above;Question 16 of 40 2.5;Points;Markets that have external costs will produce;output than the socially efficient level, whereas markets that have external;benefits will produce __________ output than the socially efficient level.;A. less, less;B. more, more;C. more, less;D. less, more;Question 17 of 40 2.5;Points;A harbor lighthouse that guides approaching ships is an;example of __________.;A. a public good;B. a private good;C. a monopoly;D. a good that is rival;Question 18 of 40 2.5;Points;Private goods are __________.;A. rival in consumption and their benefits are excludable;B. nonrival in consumption and their benefits are excludable;C. nonrival in consumption and their benefits are;nonexcludable;D. rival in consumption and their benefits are nonexcludable;Question 19 of 40 2.5;Points;Public goods are __________.;A. rival in consumption and their benefits are excludable;B. nonrival in consumption and their benefits are excludable;C. nonrival in consumption and their benefits are;nonexcludable;D. rival in consumption and their benefits are nonexcludable;Question 20 of 40 2.5;Points;If the government taxes a firm that is generating an;external cost, the price of the firm's product will __________.;A. increase and output will decrease;B. increase and output will increase;C. decrease and output will decrease;D. decrease and output will increase;Question 21 of 40 2.5;Points;The short run can be defined as any period of time;A. less than one year;B. in which some inputs are fixed;C. in which all inputs are variable;D. in which price is fixed;Question 22 of 40 2.5;Points;Dan owns a factory that manufactures smartphones. He has;many costs every month to keep his factory running. Which of the following is;one of Dan's fixed costs?;A. plastic used to make the smartphones;B. his electricity bill for the factory;C. his mortgage on the factory;D. memory devices used to store music and video on the;smartphones;Question 23 of 40 2.5;Points;Dan is an entrepreneur who invests in commercial and;residential real estate. He has a savings account with $100,000 that earns 1%;APY. Dan wants to buy a house that will give him a monthly cash inflow of $200.;What will be the opportunity cost of investing in the house?;A. $1,000;B. $1,200;C. $800;D. $200;Question 24 of 40 2.5;Points;Juan is consuming three sandwiches and six sodas. If a;sandwich costs twice as much as a soda, then __________.;A. Juan should buy more sodas;B. Juan should buy more sandwiches;C. Juan is maximizing his utility if he derives twice as;much utility from the last soda as from the last sandwich;D. Juan is maximizing his utility if he derives twice as;much utility from the last sandwich as from the last soda;Question 25 of 40 2.5;Points;Consumers should allocate their scarce income so that;A. the marginal utility for all goods consumed is zero;B. the marginal utility for all goods consumed is equal;C. the marginal utility divided by price is equal for all;goods consumed;D. the marginal utility divided by price is maximized for;all goods consumed;Question 26 of 40 2.5;Points;Suppose that / < /. This implies that __________.;A. spending a dollar less on Y and spending a dollar more on;X increases utility;B. spending a dollar less on X and spending a dollar more on;Y increases utility;C. X is more expensive than Y;D. Y is more expensive than X;Question 27 of 40 2.5;Points;Brandon eats four slices of pizza on a Sunday night but;admits each slice of pizza doesn't taste as delicious as the previous one. This;suggests that for Brandon __________.;A. the marginal utility of a slice of pizza is positive but;decreasing;B. the marginal utility of a slice of pizza is negative but;increasing;C. the total utility of slice of pizza is declining by;larger and larger increments;D. the total utility of slice of pizza is increasing by;larger and larger increments;Question 28 of 40 2.5;Points;Sarah has a savings account with a $1,000 balance that earns;3% APY. She decides to withdraw the entire balance to buy a laptop computer.;What will be her opportunity cost in buying the laptop?;A. the cost of the laptop;B. the foregone interest;C. the foregone interest and the cost of the laptop;D. the cost of the laptop minus the foregone interest;Question 29 of 40 2.5;Points;The equimarginal rule __________.;A. equates the marginal utility per dollar spent on each;good purchased;B. states that in order to maximize utility the consumer;should buy more of those goods with a high marginal utility;C. states that in order to maximize utility the consumer;should buy more of those goods that cost less;D. none of the above;Question 30 of 40 2.5;Points;According to the law of diminishing marginal utility;A. as the consumption of a particular good increases;marginal utility increases;B. as the consumption of a particular good increases;marginal utility decreases;C. total utility is negative;D. Both B and C are correct.;Question 31 of 40 2.5;Points;The budget line shows __________.;A. the different combinations of two goods that a consumer;can buy;B. the quantity of a single good that a consumer is willing;to buy at different prices;C. the maximized utility from a good;D. none of the above;Question 32 of 40 2.5;Points;Total economic costs include __________.?;A. a normal rate of return;B. out-of-pocket costs;C. opportunity costs of all inputs;D. all of the above;Question 33 of 40 2.5;Points;The period of time when a firm is unable to change all;inputs, or factors of production, is called the __________.;A. economic term;B. short run;C. accounting term;D. long run;Question 34 of 40 2.5;Points;Marginal utility is the __________.?;A. total amount of satisfaction gained by the consumption of;a good or service;B. additional satisfaction gained by the consumption or use;of one more unit of something;C. price of a good relative to the prices of other goods and;services;D. comparison of utility between two different people;Question 35 of 40 2.5;Points;Maxine has a fixed income per month to spend on goods and;services, so in allocating her limited income over a set of goods, she should;purchase the goods that __________.;A. have the highest utility regardless of price;B. have the highest marginal utility;C. provide the most utility per dollar spent;D. have equal marginal utilities;Question 36 of 40 2.5;Points;If marginal product is negative, then __________.;A. total product will decrease if more of the input is hired;B. total product is equal to zero;C. marginal product will increase if more of the input is hired;D. average product will increase if more of the input is;hired;Question 37 of 40 2.5;Points;A firm's objective is to maximize its economic profit, which;is __________.;A. total revenue minus economic cost;B. total profit minus total cost;C. economic cost minus profit;D. economic cost minus total revenue;Question 38 of 40 2.5;Points;As more of any one good is consumed in a given period, its;A. total utility decreases, then remains constant;B. marginal utility decreases;C. total utility decreases, then increases;D. marginal utility increases;Question 39 of 40 2.5;Points;Which of the following statements about fixed costs is;correct??;A. Fixed costs are not opportunity costs.;B. Fixed costs must be paid even if the firm's output is;zero.;C. Fixed costs are always the largest portion of total;costs.;D. none of the above;Question 40 of 40 2.5;Points;The principle of opportunity cost is __________.;A. what someone sacrifices to get something;B. the satisfaction of obtaining the best next alternative;C. the choice someone has to make between two different;goods;D. the cost of paying for something someone needs

 

Paper#56989 | Written in 18-Jul-2015

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