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

Which of the following best describes how a perfectly competitive industry would respond to a sudden increase in popularity of the product? The market demand curve would shift to the right, leading to:

If a firm is earning zero economic profit, then:

Adam Smith believed that the individual pursuit of self-interest:

The figure below shows the supply and demand curves for oranges in Smallville. The marginal buyer values the tenth pound of oranges at ______.

If the demand curve fails to capture all of the benefits of consumption, then the:

If the market supply curve does not capture all of the costs to society of producing an additional unit of good, then:

A cost-saving innovation in a perfectly competitive industry will lead to:

One difference between the long run and the short run in a perfectly competitive industry is that:

Suppose farmers in a given market can either grow soy beans or corn on their land. In addition, suppose an increase in the demand for corn causes the price of corn to increase. All else equal, an increase in the price of corn creates an incentive for farmers to:

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. Christine's opportunity cost of working as a consultant last year was ______.

A price ceiling that is set below the equilibrium price will result in:

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 ______.

Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive. In the long run, how much profit will each firm in this industry earn each week?

Suppose that in an effort to help single parents, the government decides to pay part of the cost of childcare. This measure would increase ______ in the market for childcare.

If the owners of a business are receiving total revenues just sufficient to cover all of their explicit and implicit costs, then they are:

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 Costs Implicit Costs 10 50 36 5 15 75 63 6 20 100 93 7 25 125 125 8 30 150 161 9

Refer to the figure below. If this market is unregulated, the economic surplus received by consumers is:

In an industry with free entry and exit, positive economic profit:

The figure below shows the supply and demand curves for oranges in Smallville. What is the marginal cost of producing the tenth pound of oranges?

In a free market economy, the decisions of buyers and sellers are: