Midterm Test 2 - Externalities, Market Structures & Costs Analysis | Microeconomics | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

1. Which statement best describes a negative externalitu?
Your neighbor has an ornamental pond that breeds mosquitoes
2. The difference between total revenue and total cost is Economic profit or loss
3. Assume that electricity producers generate a negative externality of
$5 per unit. Also, suppose that the government subsidizes $5 per
unit of output to manufacturers. What is the relationship between
the equilibrium quantity and the socially optimal amount of electricity to produce.
The equilibrium quantity is greater than the socially optimal quantity
4. Price-taker are indivuduals in a market who
have no ability to affect the price of a good in a market.
5. In the short run, if PDoes not produces output and incurs an economic loss
6. In the short run, if AVC < P < ATC, a perfectly competitive firm
produces output and incurs an economic loss
7. The short run supply curve for a perfectly competitive firm is the
Marginal cost above the shut-down price 8. A firm’s marginal cost is
The ratio of the change in total cost to the change in the quantity of output.
9. When marignal cost is above average variable cost Rising 10.
An advantage of tradable emissions permits is that
They provide incentives for firms to develop technologies that are less polluting.
11. when a vaccination program generates a positive externality, the:
market demand curve is below the marginal social benefit curve.
12. The u-shape of the long-run average total cost is primarily due to
economies and diseconomies of scale.
13. Automobile emissions generate pollution and cause higher costs and
discomfort to residents of a city. In this case:
the externality can be internalized into the market by imposing a specific tax on drivers.
14. The practice of charging different prices to different customers for the same good is known as: Price Discrimination
15. The profit-maximizing level of output for a perfectly competitive
firm in the short run occurs where: marginal cost equals price
16. Which statement is true regarding monopolies?
Monopolies produce too little and charge too much from the standpoint of efficiency.
17. If a firm’s economic profits are equal t zero, its accounting profits are most likely: Greater than economic profits
18. When diseconomies of scale occur: Long-run average cost rises
19. Jess owns a small deli that produces sandwiches, soups, and other
items for customers in her town. Which is most likely a fixed input for
the production function at jess’s deli
the dining room where customers eat their meals
20. If all firms in an industry are price-takers, then:
An individual firm cannot alter the market price even if it doubles its output.
21. John has decided…john withdrew $1,000…3%...2000…7%. What is
john’s annual OC of the financial capital that has been invested in the business $170
22. The socially optimal amount of pollution occurs where:
the marginal benefit of the last unit of pollution exactly equals the marginal cost of pollution.
23. Total revenue is a firm’s:
the market price multiplied by the quantity sold.
24. A market economy will produce ___ without any government regulation too much pollution
25. In order to maximize profits, an airline will offer ___ prices to customers with ___ demand higher; inelastic
26. the total cost curve for a snowmobile dealership shows how ____
costs depend on the quantity of____: total; output
27 if a perfectly competitive gardening shop sell 30 evergreen bushes at
a price of $10 per bush, its marginal revenue is $10 28. A pigouvian subsidy is
designed to encourage activities generating external benefits
29. A profit-maximizing firm in a competitive market is currently
producing 200 units of output. It has average revenue of $9 and average
total cost of $7. It follows that the firm's All of the above are correct.
30. The assumptions of perfect competition imply that:
Individuals in the market accept the market price as given.
31. the demand curve for a monopoly is the industry demand curve
32. Competitive firms differ from monopolies in which of the following ways? (i)
Competitive firms do not have to worry about the price effect lowering their total revenue. (ii)
Marginal revenue for a competitive firm equals price, while marginal
revenue for a monopoly is less than the price it is able to charge. (iii)
Monopolies must lower their price in order to sell more of their product, while competitive firms do not (i), (ii), and (iii)
33. A reduction in a monopolist’s fixed costs would:
not affect the profit-maximizing price or quantity
34. A monopolist is likely to___and___ relative to a comparable perfectly competitive firm produce less, charge more
35. which cost concept is correctly defined? ATC = AVC + AFC
36. the difference between long run and short run is that the long run allows for entry and exit of firms
37. Suppose a perfectly competitve market is suddenly transformed into
one that operates as a monopoly market. one would expect:
price to rise , output to fall , consumer surplus to fall , producer surplus
to rise , and deadweight loss to rise
38. the monopoly firm's profit-maximizing price is
given by the point on the demand curve for the profit-maximizing quantity.
39. suppose that some firms in perfectly competitive industry earn
negative economic profits. in the long run, the:
short-run industry supply curve will shift to the left.
40. the___ curve always declines as more output is produced in short run average fixed cost
Demand function of a monopolist is P= 18-0.05Q MC= 0.1Q+6, fixed cost is 60$
A firm in perfect competition markets has AVC= 2Q+9, market price is
33 USD, the firm is losing 216 USD