The price of wallets falls. People who have higher levels of human capital will tend to: receive higher salaries than those who have lower levels of human capital. Assuming that diminishing marginal utility applies to both goods, the price of baseball cards is $10, and the price of candy is $2: Juan should increase his consumption of candy and decrease his consumption of baseball cards. If a monopoly market structure was transformed into a perfectly competitive one, one would find that price would _____ and output would _____. In terms of labor supply, the substitution effect of a higher wage will: A labor market in which there is only one firm hiring labor is called an oligopoly. If Roadway concentrated all of its resources on the production of boats, it could produce 10,000 boats. If the production possibility frontier is a straight line, which statement is true? If it uses all of its resources to produce steel, it can produce 250 tons of steel and 0 tons of wheat. In order to get an extra fish, he must sacrifice two coconuts, and to get another coconut, he must sacrifice one-half of a fish. There was a decrease in demand or a decrease in supply. How will this affect an economy? If a firm has to increase output suddenly to meet an increase in demand, its average total cost will decrease in the short run until it has time to add physical capital. In economics, the cost of anything refers to whatever is given up in order to get that thing. B) point B (a decrease in coconut production and an increase in fish production). Consider two competing motorcycle manufacturers: Harley-Davidson and Honda. The table shows the maximum amount of fish and coconuts that Tom and Hank can produce if they produce only one good. Demand for Wendy's hamburgers is more inelastic than the demand for all fast food. Increases in resources or improvements in technology will tend to cause a society's production possibility frontier to: (Table: Production Possibilities Schedule II) Examine the table Production Possibilities Schedule II. (Table: Production of Good Z and Good X in Urbanville) Examine the table Production of Good Z and Good X in Urbanville. You can think of the production-possibilities frontier as the way economists visualize scarcity. The amount by which total utility rises when an additional slice of pie is consumed is called: Resources are being used efficiently when: every opportunity to make people better off without making others worse off has been utilized. the flow of money going into each sector or market is equal to the flow of money coming out of that market or sector. A monopolistically competitive industry, such as corn snack chips, and a perfectly competitive industry, such as wheat farming, are alike in that: increasing returns to scale in the industry. If they spend all night writing computer programs, Laurence can write 10 programs whereas Carrie Anne can write 5. Gehrig is willing to pay $90 for a cap made of raccoon skin. The opportunity cost of Mary Ann catching an additional fish is 2 coconuts. The Bountiful Bakery is considering hiring another pastry chef. In the short run, a perfectly competitive firm produces output and earns an economic profit if: A firm should continue to produce in the short run as long as price is at least equal to. google_color_bg = "FFFFCC"; a firm's total revenue is found by multiplying the market price by the firm's quantity of output. In order to encourage consumption of a good that generates positive externalities, the best option for policymakers would be to: provide a subsidy per unit of the good consumed in order to achieve the socially optimal level. Which of the following is true for a perfectly competitive industry? There is only one resource available in both countries, labor hours. D The opportunity cost of fish falls as more time is devoted to fishing. If the price of good X increases and the demand curve for good Y shifts left, these goods are: A share in the ownership of a company held by a shareholder is considered a(n): A Giffen good is NOT correctly described by which statement? This means that: Jon and Tom Cruise benefited from this transaction. To maximize profits after the variable cost increase, Zoe's Bakery will _____ its price and _____ its level of production. In a perfectly competitive industry, each firm: A monopolistically competitive industry is characterized by a: large number of firms producing similar products, with relatively easy entry for firms. If Harley-Davidson raises the price of its motorcycles, one would expect to see: a shift to the right in the demand curve for Hondas and higher prices for Hondas. The quantity demanded is the same as the quantity supplied. He has flown this route long enough to know that each airline is essentially a perfect substitute for the others. Jim being paid $7.25 an hour to work at a restaurant is an example in the circular flow of a: household selling a resource in the factor market. Suppose that the market for candy canes operates under conditions of perfect competition, that it is initially in long-run equilibrium, that the price of each candy cane is $0.10, and that the market demand curve is downward sloping. The most likely reason the government implements a _____ is because it feels the price is too high for _____. Total surplus is the excess of consumer surplus over producer surplus. Juan spends all of his income on baseball cards and candy. Suppose a drought destroys one-third of the nation's peanut crop. In an industry characterized by extensive economies of scale: large companies are more profitable than small companies. Mary goes ahead and buys a new car because she expects to receive a 10% increase in her salary next year. Tim studies only an hour on the morning of his economics exam because he is satisfied just to make a passing grade. If these are your only three choices, what is the opportunity cost of reading? Concepts covered include efficiency, inefficiency, economic growth and contraction, and recession. An important assumption underlying the marginal productivity theory of income distribution is that: factor markets are perfectly competitive. An agreement among several producers to restrict output and increase profit is necessary for. Christine has a linear demand curve for candy. google_ad_height = 600; Suppose the number of buyers decreases by 10. As millions of Americans switch to the new diet, one would expect to see: an increase in the demand for beef, leading to a shift to the right in the demand curve for beef and higher beef prices. In the long run, when a firm adds physical capital, its variable cost will decrease. Bluefin tuna travel in schools throughout the world's oceans. if she feels that the first If the regulation of a monopoly results in a price equal to marginal cost but the price is below average total cost: the firm will require subsidization or it will go out of business. If they introduce a new technology where customers pay at the pump, thus decreasing production costs, there will be: a shift to the right in the supply curve and lower gas prices. It is designed to increase the demand for Budweiser. Which of the following is true for an oligopoly? The graph below illustrates Crusoe's production-possibilities frontier (and his consumption-possibilities frontier). Both have been policemen in Memphis for 10 years. The motivation for a monopolist to engage in price discrimination is to: Alison has a linear production possibility frontier in the production of bracelets and necklaces. 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