What is the relationship between the marginal social benefit curve and the market demand curve. Explain.
What will be an ideal response?
Ques. 2Kirk consumes normal goods. If Kirk's income decreases and the prices of all goods remain unchanged, in his new consumer equilibrium, his marginal utility from each good will ________ and his total utility will ________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Ques. 3The market supply of labor curve has a positive slope if higher wages induce households to choose
A) leisure rather than supplying labor in the labor market.
B) supplying labor in the labor market rather than leisure.
C) demanding labor rather than supplying it.
D) None of the above answers is correct.
Ques. 4A firm's marginal cost is 82, its average total cost is 50, and its output is 800 units. Its total cost of producing 801 units is
A) less than 40,000.
B) between 40,000 and 40,050.
C) between 40,050 and 40,080.
D) greater than 40,080.
Ques. 5The tables above show the marginal costs and benefits from production and consumption of paper. From this information we can see that there are
A) external costs of producing paper.
B) external benefits of producing paper.
C) no externalities in production of paper.
D) external costs from consuming paper.
Ques. 6Which of the following would most likely be a private good?
A) a Mariah Carey CD
B) Sirius Satellite Radio is accessed through a subscription.
C) Michigan Radio is the state's most listened-to public radio service.
D) iTunes sells songs through their website.
Ques. 7Today, firms in a perfectly competitive market are making an economic profit. In the long run, firms will ________ the market until all firms in the market are ________.
A) exit; covering only their total fixed costs
B) enter; making zero economic profit
C) exit; producing at the minimum point on their long-run average cost curve
D) enter; making zero normal profit
Ques. 8Van, whose utility of wealth curve is shown in the above figure, owns a home that is valued at 100,000. Initially there is a 10 percent chance that the house will be destroyed by hurricane.
As the risk of destruction due to hurricane rises from 10 percent to 20 percent, the minimum cost of insurance A) stays the same.
B) increases by 10,000.
C) increases by 20,000.
D) increases by 30,000.
Ques. 9Which of the following is a reason why firms can be more efficient than markets as coordinators of economic activity?
A) economies of scale and scope
B) higher transactions charges
C) elimination of the principal-agent problem
D) all of the above
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