question

Deadweight losses occur in markets in which

answer

the government imposes a tax

question

A tariff on a product

answer

increases the domestic quantity supplied

question

Which of the following statements is true?

answer

Free trade benefits a country both when it exports and when it imports

question

An optimal tax on pollution would result in which of the following?

answer

Producers will internalize the cost of the pollution

question

Economic profit

answer

will never exceed accounting profit

question

One characteristic of an oligopoly market structure is:

answer

firms in the industry have some degree of market power

question

A perfectly competitive market

answer

promotes general economic well-being, whereas a monopoly market may not be in the best interests of society

question

Negative externalities lead markets to produce

answer

greater than efficient output levels and positive externalities lead markets to produce smaller than efficient output levels

question

If a country is an exporter of a good, then it must be the case that

answer

the world price is greater than its domestic price

question

An entrepreneur's motivation to start a business arises from

answer

All of the above could be correct

question

A tariff on a product makes

answer

domestic sellers better off and domestic buyers worse off

question

The amount of money that a firm pays to buy inputs is called

answer

total cost

question

Firms that operate in perfectly competitive markets try to

answer

maximize profits

question

An agreement among firms in a market about quantities to produce or prices to charge is called

answer

collusion

question

In a perfectly competitive market

answer

no one seller can influence the price of the product

question

A seller in a competitive market

answer

All of the above are correct

question

For a firm in a competitive market, an increase in the quantity produced by the firm will result in

answer

no change in the products market price

question

The marginal product of labor can be defined as the change in

answer

output divided by the change in labor

question

Which of the following statements regarding a competitive market is not correct?

answer

Price exceeds marginal revenue

question

When taxes are imposed on a commodity

answer

some consumers alter their consumption by not purchasing the taxed commodity

question

The DeBeers company faces very little competition from other firms in the wholesale diamond market. Why isn't the price of the wholesale diamonds $10,000 per carat?

answer

because the company would sell so few copies that they would earn higher profits by selling at a lower price

question

The value of a business owner's time is an example of

answer

an opportunity cost

question

Which of the following is a characteristic of a monopoly?

answer

barriers to entry

question

Which of the following statements regarding a competitive market is not correct?

answer

Because of firm location or product differences, some firms can charge a higher price than other firms and still maintain their sales volume

question

A firm's opportunity costs of production are equal to its

answer

explicit costs + implicit costs

question

A positive externality

answer

is a benefit to someone other than the producer and consumer of the good

question

The fundamental source of monopoly power is

answer

barriers to entry

question

Within a country, the domestic price of a product will equal the world price if

answer

the country allows free trade

question

A major difference between tariffs and import quotas is that

answer

tariffs raise revenue for the government, but import quotas create surplus for those who get the licenses to import

question

Whenever marginal cost is greater than average total cost,

answer

average total cost is rising

question

An oligopoly is a market in which

answer

there are only a few sellers, each offering a product similar or identical to the products offered by other firms in the market

question

Diminishing marginal product suggests that

answer

marginal cost is upward sloping

question

In a competitive market

answer

no single buyer or seller can influence the price of the product

question

An optimal tax is one that minimizes the

answer

total deadweight loss from the tax

question

Which of the following statements is correct?

answer

If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit

question

The simplest type of oligopoly is

answer

duopoly

question

The average-fixed-cost curve

answer

is always decreasing

question

Economic profit is equal to total revenue minus the

answer

opportunity cost of producing goods and services

question

The marginal product of an input in the production process is the increase in

answer

quantity of output obtained from an additional unit of that input

question

A competitive firm's short-run supply curve is part of which of the following curves?

answer

marginal cost

question

Which of the following statements is correct?

answer

Internalizing a negative externality will cause an industry to decrease the quantity it supplies to the market and increase the price of the good produced

question

In an oligopoly, each firm knows that its profits

answer

depend on both how much output it produces and how much output its rival firms produce

question

If marginal cost is rising

answer

marginal product must be falling

question

When negative externalities are present in a market

answer

social costs will be greater than private costs

question

Microsoft faces very little competition from other firms for its Windows software. Why isn't the price of the software $1,000 per copy?

answer

because the company would sell so few copies that they would earn higher profits by selling at a lower price

question

Because a monopolist does not face competition from other firms, the outcome in a market with a monopoly

answer

is often not in the best interest of society

question

Several arguments for restricting trade have been advanced. Those arguments do not include

answer

the no-deadweight-loss argument

question

In studying oligopolistic markets, economists assume that

answer

each oligopolist cares only about its own profit

question

The average-total-cost curve intersects

answer

marginal cost at the minimum of average total cost

question

When negative externalities are present in a market

answer

producers will supply too much of the product

question

Deadweight losses are associated with

answer

taxes that distort the incentives that people face

question

If marginal cost is below average total cost, the average total cost

answer

is falling

question

A negative externality will cause a private market to produce

answer

more than is socially desirable

question

Private markets fail to reach a socially optimal equilibrium when negative externalities are present because

answer

social costs exceed private costs at the private market solution

question

One of the defining characteristics of a perfectly competitive market is

answer

a similar product

question

Which of the following statements is not correct?

answer

Both monopolistic competition and perfect competition are characterized by product differentiation

question

Changes in the output of a perfectly competitive firm, without any change in the price of the product, will change the firm's

answer

total revenue

question

Which of the following statements is correct?

answer

A competitive firm is a price taker, whereas a monopolist is a price maker

question

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

answer

producer surplus increases and total surplus decreases in a market for that good

question

Economists normally assume that the goal of a firm is to earn

answer

(i) and (ii) only

question

A seller in a competitive market can

answer

sell all he wants at the going price, so he has little reason to charge less

question

A monopoly

answer

can set the price it charges for its output but faces a downward-sloping demand curve so it cannot earn unlimited profits

question

Taxes create deadweight losses because they

answer

distort incentives

question

Economist normally assume that the goal of a firm is to

answer

(iii) only

question

Imperfectly competitive firms are characterized by

answer

price making ability

question

One difference between a perfectly competitive firms and a monopoly is that a perfectly competitive firm produces where

answer

marginal cost equals price, while a monopolist produces where price exceeds marginal cost

question

The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

answer

A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost

question

Which of the following statements is (are) true of a monopoly?

answer

(i) only

question

Diminishing marginal product suggest that the marginal

answer

product of an extra worker is less than the previous worker's marginal product

question

Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly is often

answer

All of the above are correct

question

Taxes create deadweight loss when they

answer

distort behavior

question

A negative externality

answer

is an adverse impact on a bystander

question

Which of the following is not a characteristic of a monopoly?

answer

one buyer

question

For a profit-maximizing monopolistically competitive firm, price exceeds marginal cost in

answer

both the short run and long run

question

A difference between explicit and implicit costs is that

answer

implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do

question

A distinguishing feature of an oligopolistic industry is the tension between

answer

cooperation and self interest

question

The marginal product of labor is equal to the

answer

increase in output obtained from a one unit increase in labor

question

Firms in industries that have competitors but do not face so much competition that they are price takers are operating in either a(n)

answer

oligopoly or monopolistically competitive market

question

Trade enhances the economic well-being of a nation in the sense that

answer

trade results in an increase in total surplus

question

A special kind of imperfectly competitive market that has only two firms is called

answer

a duopoly

question

The difference between accounting profit and economic profit is

answer

implicit costs

question

Which of the following statements is correct?

answer

All of the above are correct

question

An oligopoly

answer

is a type of imperfectly competitive market

question

A production function describes

answer

how a firm turns inputs into output

question

In a market that is characterized by imperfect competition,

answer

there are at least a few firms that compete with one another

question

An agreement between two duopolists to function as a monopolist usually breaks down because

answer

each duopolist wants a larger share of the market in order to capture more profit

question

Marginal cost is equal to average total cost when

answer

average total cost is at its minimum

question

Deadweight losses represent the

answer

inefficiency that taxes create

question

Both tariffs and import quotas

answer

decrease the quantity of imports and raise the domestic price of the good

question

Negative externalities occur when one person's actions

answer

adversely affect the well-being of a bystander who is not a party to the action

question

In a perfectly competitive market

answer

no one seller can influence the price of the product

question

A seller in a competitive market

answer

All of the above are correct

question

In a perfectly competitive market

answer

no one seller can influence the price of the product

question

A seller in a competitive market

answer

All of the above are correct

question

An entrepreneur's motivation to start a business arises from

answer

All of the above could be correct

Intro to Microeconomics – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards