Midterm

A  200

B  300

C  400

D  100

E  500

A  500

B  600

C  660

D  400

E  880

A  increasing returns to scale at low levels of production and decreasing returns to scale at high levels of production

B  decreasing returns to scale at low levels of production and specialization at high levels of production

C  the average variable cost curve increases at low levels of production but decreases at high levels of production

D  fixed costs are increasing at low levels of production but decreasing at high levels of production

E  fixed costs are decreasing at low levels of production but increasing at high levels of production

A  products A and B are substitutes, if the price falls for B the demand for A falls

B  products A and B are complements, if the price falls for B the demand for A falls

C  products A and B are complements, if the price falls for B the demand for A rises

D  products A and B are unrelated

E  products A and B are substitutes, if the price falls for B the demand for A rises

A  1

B  0

C  0.5

D  -0.5

E  None of these

A  Necessity

B  An item that consumers can quickly and easily change their consumption of

C  An item that represents a large portion of consumers’ income

D  An item with many substitutes

E  Luxury

A  Ed = 2.3, demand is elastic

B  Ed = 0.4, demand is inelastic

C  b. Ed = 0.4, demand is elastic

D  Ed = 0.9, demand is inelastic

E  Ed = 0.9, demand is elastic

A  increasing taxes

B  decreasing taxes

C  cutting subsidies for the agriculture industry

D  increasing interest rates

E  a public works project to rebuild a bridge

A  None of these

B  All of these

C  A subsidy to buyers

D  A subsidy to producers

E  A tax on producers

A  30,000 – which is more than the societally optimal amount since education is a positive externality

B  30,000 – which is less than the societally optimal amount since education is a positive externality

C  30,000 – which is less than the societally optimal amount since education is a negative externality

D  60,000 – which is less than the societally optimal amount since education is a positive externality

E  60,000 – which is more than the societally optimal amount since education is a positive externality

A  quantity sold decreases, price may increase or decrease

B  quantity sold increases, price may increase or decrease

C  price decreases, quantity sold may increase or decrease

D  price increases, quantity sold may increase or decrease

E  price decreases, quantity sold increases

A  price decreases, quantity sold increases

B  price decreases, quantity sold may increase or decrease

C  price decreases, quantity sold decreases

D  price increases, quantity sold decreases

E  price increases, quantity sold increases

A  the price of bicycles increases

B  the price of bicycles decreases

C  the price of gas decreases

D  the price of gas increases

E  None of these

A  $800 and 5m

B  $800 and 16m

C  $600 and 22m

D  $400 and 16m

E  $600 and 12m

A  The cost of gas increases.

B  The price of Toyota Priuses rises.

C  Consumers realize the Prius is a slow and tacky vehicle.

D  The government provides Toyota a subsidy for each car produced.

E  The price of steel used in the production of Priuses increases.

A  None of the choices

B  households buy resources/labor from firms and firms sell resources/labor to households.

C  All of the choices

D  firms buy resources/labor from households and households sell resources/labor to firms.

A  Monetary incentives exist for entrepreneurs who bear risk.

B  Neither are characteristic of a market economy.

C  Government services are limited to basic protections such as enforcing laws and protecting the public.

D  Individuals, not the government, own the factors of production.

E  Goods and services are sold in a competitive way.