Question 1

Suppose the demand for coffee is given by $$Q_d = 100 - 2P$$ and the supply is given by $$Q_s = 20 + 3P. $$What is the equilibrium price in this market?

Accepted Answer

Question 2

Which of the following best describes a public good?

Accepted Answer

A good that is non-rival and non-excludable

Question 3

A market is in equilibrium when:

Accepted Answer

$$Q_d = Q_s$$

Question 4

If the world price of steel is below the domestic equilibrium price and a country opens to free trade, what will happen in the domestic market?

Accepted Answer

Domestic consumers will import steel

Question 5

Suppose a monopolist can perfectly price discriminate (first-degree). What is the resulting deadweight loss?

Accepted Answer

Deadweight loss is zero

Question 6

A negative externality exists when:

Accepted Answer

Marginal social cost is greater than marginal private cost

Question 7

Which of the following is an example of a common resource?

Accepted Answer

Fish in the ocean

Question 8

If a country imposes a tariff on imported cars, what is the effect on domestic producer surplus and consumer surplus?

Accepted Answer

Producer surplus increases, consumer surplus decreases

Question 9

A perfectly competitive firm maximizes profit by producing the quantity where:

Accepted Answer

$$MC = MR$$

Question 10

Suppose the total cost for a firm is $$TC = 500 + 10Q$$, where $$Q is $$the quantity produced. What is the average total cost (ATC) when $$Q = 50$$?

Accepted Answer

$$ATC = 20$$

Question 11

Which of the following statements about comparative advantage is correct?

Accepted Answer

A country should specialize in the good for which it has the lowest opportunity cost

Question 12

If the price of a good is set below the equilibrium price, what will occur in the market?

Accepted Answer

A shortage

Question 13

A monopolist faces the following demand curve: $$P = 100 - 2Q. If $$the monopolist can sell 10 units at $$P = 80$$, what is the total revenue (TR) at this quantity?

Accepted Answer

$$TR = 800$$

Question 14

Which of the following is NOT a barrier to entry for monopolies?

Accepted Answer

Perfect information

Question 15

Suppose a country can produce either 100 units of wine or 200 units of cheese with its resources. What is the opportunity cost of producing one unit of wine?

Accepted Answer

2 units of cheese

Question 16

If a market is experiencing a surplus, which of the following must be true?

Accepted Answer

$$Q_s \u003e Q_d$$

Question 17

Which formula correctly calculates producer surplus in a market?

Accepted Answer

Area above the supply curve and below the market price

Question 18

A club good is characterized by which of the following properties?

Accepted Answer

Non-rival and excludable

Question 19

Suppose a country imposes a tariff of $$5$$ per unit on an imported good. If 1,000 units are imported after the tariff, what is the tariff revenue?

Accepted Answer

$$5,000$$

Question 20

Which of the following is a common argument against free trade?

Accepted Answer

It can harm domestic industries

Principles of Microeconomics: Final Exam Study Guide

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