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44 terms

Econ 103 final

n 2004, the Wall Street Journal reported that Starbucks was set to raise some of its prices. The article stated that "mass-market grocery brands such as Kraft Foods Inc.'s Folgers and Maxwell House coffees tend to be much more price-elastic" than Starbucks' coffees. This information about elasticities is telling us that
Starbucks' customers are not as responsive to price changes as are the customers of the grocery brands.
In general, the greater the elasticity the:
larger the responsiveness of quantity to changes in price.
Suppose a monopolist is at the profit-maximizing output level. If the monopolist sells another unit of output, then
producer surplus falls but consumer surplus rises.
A 2004 Wall Street Journal article reported, "Chinese Are Losing Dollar Faith." It stated, "From black marketeers to anxious grandmothers, Chinese have become disenchanted with the dollar...Many Chinese view the yuan, also called the renminbi, as the safer currency to hold." If dollars and yuan traded freely, this change in attitude would lead to:
an appreciation of the yuan and a depreciation of the dollar
If a negative externality is to be internalized to the decision maker the
producers' marginal costs should be increased by an amount equal to the marginal external cost resulting from production of the good.
What do economists mean when they say there is "market failure"
Free markets yield results that economists do not consider socially optimal.
Honus Wagner, a major league baseball player from 1897 to 1917 and one of the first five men inducted into the Baseball Hall of fame, had his baseball card pulled from cigarette packs because he wasn't being paid for their distribution. What best describes the effect of his action on the market for his baseball card?
Supply shifted to the left, price rose, and quantity demanded fell
Rent control makes apartments:
hard to find.
Oligopoly is characterized by:
Few sellers
A perfectly competitive firm's marginal revenue is:
equal to the selling price.
The demand for a good is elastic. Which of the following would be the most likely explanation for this?
The good is a large portion of one's total income.
An industry that has many sellers offering slightly differentiated products is called:
monopolistically competitive.
New York City has been experiencing a housing emergency for quite some time. Apartments are difficult to come by. In fact, the vacancy rate has been below 5 percent since World War II. The most likely cause of the housing emergency is:
a price ceiling on rent lower than equilibrium pric
To maximize profits, a perfectly competitive firm should produce where marginal:
cost equals marginal revenue.
Which policy is likely to be the most efficient in dealing with automobile emission pollution?
An emission tax
A perfectly competitive firm will be profitable if price at the profit-maximizing quantit
Suppose that the firms in the perfectly competitive oat industry are currently receiving a price of $2 per bushel for their product. The minimum possible average total cost of producing oats in the long-run is $1 per bushel. It follows that:
new firms will enter the oat industry.
A perfectly competitive firm in the long run:
make zero economic profits
he total satisfaction one gets from one's consumption of a product is called:
total utility
If the U.S. dollar appreciates against the Japanese yen, then:
Japanese goods will be cheaper in the United States.
he law of diminishing marginal productivity implies that the marginal product of a variable input
eventually declines
The demand for a good is inelastic. Which of the following would be an explanation for this?
the good is a necessity
The optimal quantity of pollution control occurs at the point where the:
marginal social cost equals the marginal social benefit of pollution.
The supply of leather jackets would be expected to increase as a result of:
a decrease in the cost of producing leather jackets
A natural monopoly:
occurs when a single firm can supply the entire market demand for a product at a lower average total cost than would be possible if two or more firms supplied the market.
Your opportunity cost of taking this course is:
the net benefit of the activity you would have chosen if you had not taken the course.
If a positive externality exists in the provision of education when education is provided in a perfectly competitive market without government intervention, then at the market equilibrium level of educatio
additional net gains to society are possible by raising the level of education.
Along a downward-sloping straight line demand curve beginning at the price where demand intersects the price axis, as price declines revenue:
rises then declines
An individual with a highly elastic demand for gasoline will:
cut consumption more than an individual with a highly inelastic demand when price goes up.
The unwillingness of individuals to share in the cost of a public good is called the:
free rider problem
If a positive externality is to be taken full advantage of the:
consumer of the good should receive a subsidy equal to the marginal external benefit resulting from production (or consumption) of the good.
Basic research is more likely to be funded by the federal rather than state and local government because:
Basic research is largely a public good; benefits flow to the whole world, not just the state.
Along a straight-line demand curve elasticity:
rises as price rises
In the early 2000s, analysts were predicting that although many legal music download sites would start up, that because of the technology, only a few, or perhaps even just one, would survive. A forecast that online music will end up with a few or only one seller will prove correct if online music firms:
have decreasing long-run average cost curves.
The opportunity cost for a student of attending college for a year is best measured by the:
value of the next-best activity forgone by attending college.
If there is an improvement in technology one would expect
a shift downward or to the right on the supply curve
The prisoner's dilemma is a well-known game in which:
independent action is not necessarily the best joint action, but is the best independent action.
The best example of a positive externality is:
Which of the following is not likely to change the supply of personal computers?
An increase in consumers' incomes.
When Americans find that the euro is rising in price, it is getting:
more expensive for Americans to buy European products but cheaper for Europeans to buy American products.
Countries gain from trade by producing:
the goods they can produce at the lowest opportunity cost.
The exchange rate is the:
price of one currency in terms of another.
At the socially optimum quantity of production price equals:
marginal cost
The consumption of an additional unit of a good provides additional satisfaction, which is called:
marginal utility.