ECN 306 Midterm: ECN 306 Notes Exam 1.docx

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31 Oct 2013

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Ecn 306: key concepts, producer surplus (area a , remaining area above supply curve at given price minus area below, revenue-cogs=income above normal profit, real cost of domestic resources used to produce given quantity of domestic goods, consumer surplus. Factors of production and technology must be constant. Area under the supply curve: minimum amount producers require to produce first unit (profitably) Includes cost of all materials and normal profit. Area per unit is cost of each additional unit. Also value of resources in alternative use (cost to society, lost value, opportunity cost) Area is the value society gives up by using resources. Income and price of other goods held constant. Area under the demand curve: max price willing to pay for first unit. Total value of benefit from that unit. Net benefits under the curve, above the price level (benefits received, not paid for: demand: tastes & preferences, income, supply: tech**, cost of inputs**, conditions of competition.

Related Questions

1. Consumer surplus is not

a. the value of a good minus the price paid for it, summed over the quantity bought.

b. greater on the first unit sold than on the last unit sold.

c. greater on the last unit sold than on the first unit sold.

d. equal to the area below the demand curve and above the market price line.

2. The demand curve for hamburgers is the same as the

a. marginal benefit curve for hamburgers.

b. marginal cost curve of hamburgers.

c. consumer surplus curve of hamburgers.

d. All of the above.

3. A supply curve is

a. the same as a production possibilities frontier.

b. a marginal social benefit curve.

c. a marginal benefit curve.

d. a marginal cost curve.

e. a downward-sloping curve.

4. The opportunity cost of producing one more hot dog is $1.00. The price of a hot dog is $1.50. The producer surplus from selling one more hot dog is

a. $1.00

b. $1.50

c. $0.50

d. zero.

e. $2.50

5. Markets may not achieve an efficient allocation of resources when there are

a. external costs.

b. monopolies.

c. taxes.

d. all of the above.

Question 21

Reducing class size will

		improve student test scores.
		decrease student test scores.
		have no impact on student test scores.
		have an undetermined impact on test scores.

5 points

Question 22

Charter schools

		are public schools.
		operate under special state government charters.
		have some independence in making spending and hiring decisions.
		all of the above.

5 points

Question 23

Under school voucher systems, financial support goes to

		to the family.
		to the school.
		to the state.
		to the city.

5 points

Question 24

Standardized tests are used in efforts to

		save on paper waste.
		make schools more accountable.
		give teachers more time off.
		shorten school hours.

5 points

Question 25

The rate at which future money must be discounted is known as the

		rate of inflation.
		exposure rate.
		discount rate.
		time rate.

5 points

Question 26

The value that society places on consumption that is sacrificed in the present is called

		the social rate of discount.
		social marginal costs.
		social marginal damages.
		social returns.

5 points

Question 27

consumer surplus is

		The area above the market demand curve and above the market price
		The area above the market supply curve and below the market price
		The area below the market demand curve and above the market price
		The area below the market supply curve and below the market price

5 points

Question 28

The value of a human life

		can be subjected to cost-benefit analysis.
		can be estimated by potential future earnings.
		is a change in the probability of a person's death.
		is all of the above.

5 points

Question 29

The chain-reaction game

		was cancelled on network TV.
		counts secondary benefits without counting secondary costs.
		Compounds a bad decision by making more bad decisions, causing unwanted projects to get funded.
		is double-counting of benefits.

5 points

Question 30

When wages are viewed as benefits instead of the costs of a project, it is an example of the

		chain-reaction game.
		double-counting game.
		dating game.
		labor game.

aquamarinecheetah253

17. Which of the following is a determinant of supply?

A. Tastes and preferences

B. Price of a complementary good

C. Consumer income

D. Technology

18. A market is in equilibrium:

A. provided there is no surplus of the product

B. at all prices above that shown by the intersection of the supply and demand curves

C. if the amount producers want to sell is equal to the amount consumers want to buy

D. whenever the demand curve is downsloping and the supply curve is upsloping.

19. If the market price is above the equilibrium price:

A. A shortage will occur and producers will produce more and lower prices

B. A surplus will occur and producers will produce less and lower prices

C. A surplus will result and consumers will bid prices up

D. Producers will make extremely high profits

20. The market system automatically corrects a surplus condition in a competitive market by:

A. Raising the price of the commodity in question while increasing the quantity demanded

B. Raising the price of the commodity in question while decreasing the quantity demanded

C. Reducing the price of the commodity in question while increasing the quantity demanded

D. Reducing the price of the commodity in question while decreasing the quantity demanded

21. The price elasticity of demand measures:

A. buyer responsiveness to price changes.

B. the extent to which demand curve shifts as incomes change.

C. the slope of the demand curve.

D. how far business executives can stretch their fixed costs

22. The elasticity of demand for a product is likely to be greater:

A. if the product is a necessity, rather than a luxury good.

B. the greater the amount of time over which buyers adjust to a price change

C. the smaller the proportion of one's income spent on the product.

D. the smaller the number of substitute products available.

23. Market failure is said to occur whenever:

A. private markets do not allocate resources in the most economically desirable way

B. prices rise

C. some consumers who want a good do not obtain it because the price is higher than they are willing to pay

D. government intervenes in the functioning of private markets.

24. A negative externality or spillover cost occurs when:

A. firms fail to achieve allocative efficiency.

B. firms fail to achieve productive efficiency.

C. the price of the good exceeds the marginal cost of producing it.

D. the total cost of producing a good exceeds the costs borne by the producer

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ECN 306 Midterm: ECN 306 Notes Exam 1.docx

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