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ECON 395: Economic Policy Issues > Quiz 1 > Flashcards

Quiz 1 Flashcards

1
Q

Definition: Consumer Surplus

A

a

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2
Q

Definition: Producer Surplus

A

a

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3
Q

Definition: TC

A

a

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4
Q

Definition: TB

A

a

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5
Q

Minimum wages and labor surpluses Algebra of supply and demand—how to find equilibrium P and Q

A

a

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6
Q

Cost/benefit analysis using CS and PS: min wage, milk price floor

A

a

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7
Q

Indian cloth price support

A

a

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8
Q

Taxes: How the tax burden is divided between buyer and seller graph and algebra example

A

a

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9
Q

New Zealand tariff example: why a big country can gain from a tariff, but a small country loses

A

a

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10
Q

trade deficits and harmless cash outflows

A

a

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11
Q

Taxes: Using algebra to find after-tax prices, quantities, and tax burdens, and changes of CS and PS

A

a

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12
Q

Subsidies: show DWL and government expense using supply and demand curves—graphically and algebraically

A

a

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13
Q

Exhaustible resources: Graph showing loss from forced conservation

A

a

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14
Q

Profit-maximization by competitive firms: MC=MR=P (graph, and math)

A

a

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15
Q

Fixed cost, variable costs

A

a

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16
Q

Textbook explanation of why the shut-down price =minimum of AVC

A

a

17
Q

Accountant example contradicting the textbook shut-down rule

A

a

18
Q

Horizontal sum of firm supply curves to get industry supply

A

a

19
Q

Why harmful externalities make the industry supply steeper than the simple horizontal sum

A

a

20
Q

Economic profit vs accounting profit

A

a

21
Q

Zero-profit theorem and the paradox of why the firms earn zero profit while the industry has positive producer surplus

A

a

22
Q

Pareto and Kaldor improvements

A

a

23
Q

Pareto efficiency: production, consumption, and trade

A

a

24
Q

Criticisms of market efficiency: the rationality assumption and the micro/macroeconomics divide

A

a

25
Q

Monopoly definition: downward-sloping demand

A

a

26
Q

Monopoly: Profit-maximization condition: MC=MR

A

a

27
Q
  1. Market demand for wheat is given by the equation P=50-Q. Market supply is given by P=10+Q. A subsidy of $20 per unit is now introduced. With the subsidy in place, the equilibrium quantity of wheat is: a. 12 b. 30 c. 40 d. 20 e. 10
A

b. 30

28
Q
  1. Market demand for wheat is given by the equation P=50-Q. Market supply is given by P=10+Q. A subsidy of $20 per unit is now introduced. With the subsidy in place, the dollar value of consumer surplus is a. 120 b. 300 c. 400 d. 200 e. 450
A

e. 450

29
Q
  1. A monopolist faces a demand curve given by P=40-Q, while its marginal cost is given by MC=4+Q. Its profit maximizing output is a. 8 b. 9 c. 10 d. 11 e. 12
A

e. 12

30
Q
  1. At the profit-maximizing output of a competitive firm a. AC will be minimized b. AC will be parallel to AR c. MC will be parallel to MR d. TC will be parallel to TR e. TC will be minimized
A

d. TC will be parallel to TR

31
Q
  1. If the marginal cost of every producer in a market is the same, then a. production is Pareto-efficient b. consumption is Pareto-efficient c. trade is Pareto-efficient d. the market has achieved Edgeworth efficiency e. the market is monopolized.
A

a. production is Pareto-efficient

32
Q
  1. At the profit-maximizing output of a competitive firm a. AC will be minimized b. AC will be parallel to AR c. MC will be parallel to MR d. TC will be parallel to TR e. TC will be minimized
A

d. TC will be parallel to TR

33
Q

Figure 3.43. Q=quantity of output, TC=Total Cost, AC=Average Cost Q TC AC 0 5 1 8 2 12 3 17 4 5 5 22 8. See figure 3.43. The total cost of producing 4 units of output is: a) 17 b)18 c) 20 d) 21 e) 19

A

c) 20

34
Q

Figure 3.43. Q=quantity of output, TC=Total Cost, AC=Average Cost Q TC AC 0 5 1 8 2 12 3 17 4 5 5 22 9. See figure 3.43. The average cost of producing 5 units of output is: a) 3 b) 4.4 c) 5 d) 5.2 e) 5.5

A

b) 4.4

35
Q

Figure 3.43. Q=quantity of output, TC=Total Cost, AC=Average Cost Q TC AC 0 5 1 8 2 12 3 17 4 5 5 22 10. See figure 3.43. The marginal cost of producing the third unit of output is: a) 3 b) 4.4 c) 5 d) 5.2 e) 5.5

A

c) 5

36
Q
  1. A firm’s total cost function is given by the equation TC=20+2Q, for any quantity of output Q. For this firm
    a. MC>AC
    b. MC is less than AC
    c. MC=AC
    d. AFC rises s output rises
    e. AVC rises as output rises.
A

b. MC is less than AC

ECON 395: Economic Policy Issues (1 decks)

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