Econ 200 Final Exam

80 terms by mjleger

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false

An economic model is an ideal or utopian type of economy that society should strive to obtain through economic policy

false

normative statements are expressions of facts

false

certain inherently desirable products such as education and health care should be produced so long as resources are available

true

the production possibilities curve shows various combinations of two products that an economy can produce when achieving full employment

true

products and services are scarce because resources are scarce

false

although sleeping in on a work day or school day has an opportunity cost, sleeping late on the weekend does not

true

the wants of consumers are expressed in the product market with "dollar votes"

true

the guiding function of prices tends to keep resources flowing toward their most highly valued uses

false

central planning in the Soviet Union and prereform China emphasized the expansion of the production of consumer goods to raise the domestic standard of living

true

central planning is plagued with a coordination problem and an incentive problem

false

surpluses drive market prices up; shortages drive them down

true

if demand increases and supply simultaneously decreases, equilibrium price will rise

false

an increase in quantity supplies might be caused bu an increase in production costs

false

an increase in quantity supplied might be caused by an increase in business taxes

true

consumers buy more of normal goods as their incomes rise

false

toothpaste and toothbrushes are substitute goods

false

if market demand increases and market supply decreases, the change in equilibrium price is unpredictable without first knowing the exact magnitudes of the demand and supply changes

false

a decrease in supply of x increases the equilibrium price of x, which reduces the quantity for x and automatically returns the price of x to its initial level

false

a price door in a competitive market will result in persistent shortages of a product

false

a cieling price in a competitive market will result in persistent surpluses of a product

false

the smaller the number of good substitutes for a product, the greater will be the price elasticity of demand for it

true

if price and total revenue are directly related, demand is inelastic

true

if price changes and total revenue changes in the opposite directions, demand is relatively elastic

false

the income effect explains an exception to the law of demand

false

if marginal utility is diminishing, total utility must also be declining

false

the substitution effect suggest that, when consumers judge product quality by price, they will substitute high-priced products for low-priced products

true

when a consumer is maximizing total utility, he or she cannot increase total utility by reallocating expenditures among different products

false

a demand curve for a public good is determined bu summing horizontally the individual demand curves for the public good

false

the optimal (economically-efficient) level of air pollution is zero emission

true

the real opportunity cost of producing product x is the amounts of products y, z, and so forth, that night have been produced if resources had not been used to produce x

false

the short run is a period of time during which all costs are fixed costs

true

variable costs are costs that vary directly with output

false

the law of diminishing returns explains why the long-run average total curve is U-shaped

true

diseconomies of scale stem primarily from the difficulties in managing and coordinating a large-scale business enterprise

true

at zero units of output a firm's variable costs are zero

true

average fixed costs diminish continuously as output increases

true

if the marginal-cost curve lies below the average-variable-cost-curve, the average-variable-cost-curve must be falling

false

economic profit is found by subtracting accounting costs from total revenue

true

the law of diminishing returns explains why short-run marginal cost curves are upward sloping

false

the law of diminishing returns explains diseconomies of scale

false

in maximizing profit a firm will always produce that output where total revenues are at a maximum

false

in the short run a competitive firm will always choose to shut down if product price is less than the lowest attainable average total cost

true

after all long-run adjustments have been completed, a firm in a competitive industry will produce that level of output where average total cost is at a minimum

false

a competitive firm will produce in the short run so long as its price exceeds its average fixed cost

true

marginal cost is a measure of the alternative goods which society forgoes in using resources to produce an additional unit of some specific product

true

price and marginal revenue are identical for an individual purely competitive seller

true

because the equilibrium position of a purely competitive seller entails an equality of price and marginal costs, competition produces up to an efficient allocation of economic resources

false

the demand curve for a purely competitive industry is perfectly elastic, but the demand curves faced by individual firms in such an industry are down-sloping

true

the total revenue curve of a competitive seller graphs as a straight, up-sloping line

true

marginal revenue is the addition to total revenue-resulting from the sale of one more unit of output

false

although individual purely competitive firms can influence the price of their product, these firms as a group cannot influence market price

false

in a purely competitive industry competition centers more on advertising and sales promotion than on price

false

in the long run a pure monopolist must produce at that output where average total cost is at a minimum

false

in the short run a pure monopolist will maximize profits by producing at that level of output where the difference between price and average total cost is at minimum

false

in the short run a pure monopolist will charge the highest price the market will bear for its product

false

pure monopolists always earn economic profits

true

the XYZ company can sell 4 units per week at $10 per unit and 5 units per week at $9 per unit, the marginal revenue of the fifth unit is $5

false

because of their large -scale level of production, pure monopolists overallocate resources to their industry by producing beyond the P=MC output

false

because of the ability to influence price, a pure monopolist can increase price and increase volume of sales simultaneously

false

price discrimination occurs every time a firm sells a good for two different prices

true

natural monopoly may result where products produce substantial network effects and can be simultaneously consumed by a large number of consumers

true

price discrimination will result in consumers with more elastic demand purchasing more of the good than when a single price is charged to all consumers in the market

false

successful price discrimination requires that buyers charged the different prices be physically seperated

false

price discrimination is illegal in the inited states under antitrust regulations

true

extensive network effects may drive a market toward natural monopoly because consumers tend to choose a common, standard product that everyone is using

false

in the long run monopolistically competitive firms make normal profits because they are forced to operate at the minimum point on their average total cost curve

false

the monopolistically competitive seller maximizes profits by equating price and marginal cost

false

monopolitically competitive firms are inefficient because they produce at a point on the rising segment of their average cost curves

true

the demand curve of a monopolistically competitive producer is less elastic than that of a purely competitive producer

true

the larger the number of firms and the less the degree of product differentiation, the greater will be the elasticity of a monopolistically competitive seller's demand curve

true

the economic profits earned by monopolitisically competitive sellers are zero in the long run

true

the excess capacity problem associated with monopolistic competition implies that fewer firms could produce the asme industry output at a lower cost

true

the demand curve of amonopolistically competitive firm is more elastic than that of a pure monopolist

false

the monopolistically competitive seller equates price and marginal cost in the maximizing profits

true

if three or four homogeneous oligopolists collude, the resulting price and production outcomes will be similar to those of a pure monopoly

true

generally speaking, the larger the number of firms in an oligopolist industry, the more difficult it is for those firms to collude

false

the marekt structure called "oligopoly" includes industries with one or a small number of firms

true

the u.s. breakfast cereal industry is an example of a differentiated oligopoly

true

the us steel industry is an example of homogeneous oligopoly

false

monopolistically competitive sellers produce efficiently because they obtain only normal profits in the long run

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