Quiz 1 From one year to the next, price of corn rises and the quantity bought and sold

also rises. Which of the following things could NOT happen during the year? - Supply fell and demand fell Shortage of water, but at the same time they complain of surplus of oranges. What explains this? - Price of water has been set below equ while price of oranges has been set above equ Firm increases the price of some good, as a result, the quantity sold falls so much that total revenue from sales of that good are lower than before, then the demand for the good must be - Elastic President claimed that if we destroyed half the nations stock of water, its price would rise so high that the remainder would be more valuable in economic terms than the original - Inelastic If the demand curve bows in toward the origin, so that it is steep when the price is high and flat when the price is low, then price set $1 above equ will tend to cause____ and set $1 above equ will tend to cause ____. - a small surplus, a large shortage Quiz 2 If demand curve is relatively steep compared to the supply curve, a tax on the good will be paid ___ by the _____. - Mostly, buyer When supply curve is vertical, a tax on that good will be paid ___ by the ____. - Only, seller When supply curve is relatively steep compared to the demand curve, the benefits of a subsidy to that good will go___ to ___. - Mostly, buyers Two generations of people: this years people and next years people. If next years demand curve for some exhaustible resources is 15% higher than this years demand, and if the interest rate is 10% than next years people will consume ____ this years people. - More than * Tax on demand = producers pay more * Tax on supply = consumers pay more Quiz 3 A firm owns 2 plants which produce the same good. The firm is operating the plants efficiently if - Marginal Cost is equal for both plants If a firm faces a horizontal demand curve: - MR=AR Suppose a perfectly competitive firm is earning profits. By the zero-profit theorem, we know this situation cannot persist, as new firms will enter. As zero-profit equ is

approached, which of the following will occur? (Assume cost curve are unchanged) - output per firm will shrink Two competive firms in an industry. Firm A has a supply function given by P=10q and for firm B P=20+.5q. What is the industry output when P=30? - 40

Quiz 4

If marginal cost of every producer in a market is the same, then - production is pareto-efficient Quiz 5 Divided marginal factor cost MFC by marginal cost MC, the result would be - marginal product MP A monopolist that sells in 2 separate markets will charge a higher price in the more ____ market. - inelastic A monopolistic competitior is operating at an output where MC=MR and AC=AR. If the firm expanded its output by a small amount, then___ - the firm would move down along its AC curve Wage = $60 1st gets sick, production down by $50; gains co. $50 in revenue 2nd gets sick, production down by $70; gains co. $70 in revenue The right to fish in a lake is an unowned resource. We would expect that for the LAST fisherman to enter the lake: - the value of additional fish caught is equal to the wage he could earn elsewhere Economist usually find that when goods are advertised more heavily, ____.

- those goods go down in price By definition of a natural monopoly, which of the following must be true: - MC less than AC Wage = $10 MP= 3 MR= $4 each worker increase the output by 3 increase the revenue by $12 VMP = 3x4 = $12 If a natural monopolist produces at zero-profit, then it will create a DWL - smaller than at its profit-maximizing output Quiz 6 Output generated by an externality = amount of tax per unit Public goods, sum their willingness to pay The writer (issuer) of a hypothecated share of GM stock: - has the right to receive dividends payment from GM

To close out or end a short position in GM stock, the short seller would ____ a share of GM and _____. - buy, repay it to the lender