Exam 7: Efficiency, Exchange, and the Invisible Hand in Action

Barriers to entry are forces that:

The figure below shows the supply and demand curves for oranges in Smallville. At the price of $4 per pound, sellers offer ________ pounds of oranges per day, and buyers want to purchase ________ pounds of oranges a day.

E-commerce and an internet presence are important to many firms, requiring employees with specialized skills that are in short supply. The invisible hand solves the employment problem by:

Explicit costs:

A price ceiling that is set below the equilibrium price will cause:

Adam Smith's theory of the invisible hand posits that the most efficient allocation of resources is often achieved by:

Pat used to work as an aerobics instructor at the local gym earning $35,000 a year. Pat quit that job and started working as a personal trainer. Pat makes $50,000 in total annual revenue. Pat's only out-of-pocket costs are $12,000 per year for rent and utilities, $1,000 per year for advertising and $3,000 per year for equipment. Pat's accounting profit is ________, and Pat's economic profit is ________.

Last year Christine worked as a consultant. She hired an administrative assistant for $15,000 per year and rented office space (utilities included)for $3,000 per month. Her total revenue for the year was $100,000. If Christine hadn't worked as a consultant, she would have worked at a real estate firm earning $40,000 a year. Last year, Christine's explicit costs were ________, and her implicit costs were ________.

If the firms in a market are earning an economic profit, then, in the long run, the market ________ curve will shift to the ________.

Suppose a small island nation imports sugar for its population at the world price of $1,500 per ton. The domestic market for sugar is shown below. If the government provides a subsidy of $500 per ton, then relative to before the subsidy, consumer surplus will ________ by ________ per day.

If the market demand curve does not capture all of the benefits to society of buying an additional unit of good, then:

Angelina Jolie's economic rent from starring in a movie is equal to the difference between:

A market equilibrium is only efficient if:

The sum of producer surplus and consumer surplus is:

Unlike economic profit, economic rent:

Refer to the figure below. When the market is unregulated, consumer surplus is represented by the area:

Refer to the figure below. If a price ceiling were imposed at point G, the consumer surplus would be represented by the area ________.

The allocative function of price cannot operate unless there is:

Refer to the table below. Suppose all firms in this industry have identical costs to this firm and are producing 15 units of output. One can predict that: \ Quantity Total Revenue Explicit Casts Implicit Casts 10 50 36 5 15 75 63 6 20 100 93 7 25 125 125 8 30 150 161 9

Curly told Larry about his new business venture: Curly pays Acme International $1,000 per month for supplies, works out of his apartment on his own computer and earns a monthly revenue of $1,500. Should Larry quit his job and do what Curly is doing?