which of the following is an example of a price ceiling or price cap
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a regulation requires cable service to be provided for no more than $30 a month
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which of the following statements illustrates a rent ceiling
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bluestone properties is permitted to charge a rent of $2,30 for 2-bedroom apartments that would rent for $2,500 in an unregulated market
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which of the following statements best describes search activity
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tim spends time looking for jobs and sending applications to firms
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which of the following is an example of a black market transaction?
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annie rents an apartment in a rent controlled city by paying $1,000 for an extra set of keys
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a rent ceiling set below the equiibrium rent
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constrains the market forces
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a minimum wage is
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a price floor in the labor market
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a minimum wage set below the equilibrium wage
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has no effect on the equilibrium wage rate or the quantity of labor employed
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a minimum wage creates an inefficient allocation of labor resources because at the quantity of employment _____
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marginal social benefit exceeds marginal social cost
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in the labor market, the supply curve measures the marginal social cost of labor to ___ and the demand curve measures the
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workers
marginal social benefit from labor
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The ____ principle is the proposition that people should pay taxes equal to the benefits they receive from the services provided by the government.
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Benefits
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The ____ principle is the proposition that people should pay taxes according to how easily they can bear the burden of the tax.
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Ability-to-pay
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The incidence of tax depends on
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the price elasticity of demand and the price elasticity of supply
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The more ____ the demand, ____
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inelastic; the larger is the amount of the tax paid by buyers
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which of the following best describes a production quota?
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sugarcane growers want to influence the government to limit their production to raise the price.
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which of the following best describes a subsidy?
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the government pays farmers $100 per ton of wheat produced
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When the penalty imposed on sellers is greater than the penalty imposed on buyers, ____
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the price rises
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which statement best describes an economic argument for legalizing drugs
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a sufficiently high tax could be imposed to decrease supply, raise the price, and achieve the same decrease in quantity bought as with a prohibition of drugs
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in economics, the short run is the time frame in which _____ and the long run is the period of time in which ______
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the quantities of some factors of production are fixed; the quantities of all factors of production can be varied
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the past expenditure on a plant that has no resale value is called a _____ cost
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sunk
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to increase output in the short run, a firm must _____. to increase output in the long run, a firm can _____
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increase the quantity of a variable factor of production; choose whether to change its plant as well as the quantity of labor it hires
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total product
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the total quantity of a good produced in a given period
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marginal product is the change in ____ that results from a one-unit increase in the ____
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total, quantity of labor employed
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average product is the total product divided by the
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quantity of a factor of production
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which of the following illustrates diminishing marginal returns
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hiring more workers decreases the productivity of each additional worker
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the law of diminishing marginal returns states that as a firm uses more of a ____ factor of production with a given quantity of the _____ factor of production, the ____ product of the ____ factor eventually diminishes
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variable; fixed; marginal; variable
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that law of diminishing returns states that as a firm uses more of a ____ factor eventually diminishes
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variable factor of production with a given quantity of the fixed factor of production, the marginal product of the variable
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marginal product eventually diminishes because
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more and more workers are using the same capital and working in the same space
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when marginal product exceeds average product, ____ product is increasing
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average
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when average product exceeds marginal product, ____ product is decreasing
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average
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the marginal cost curve slopes downward at low outputs because of
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greater specialization and division of labor
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the marginal cost curve eventually slopes upward because of
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the law of diminishing returns
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The AFC curve has its shape because
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when output increases, the firm spreads it total fixed cost over a larger output
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The shape of the AVC curve arises because of
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increasing returns initially and eventually diminishing returns
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The shape of the ATC curve arises because
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the influence of two opposing forces- spreading total fixed cost over a larger output and eventually diminishing returns
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The long-run average cost curve is the relationship between the lowest attainable average total cost and output,
when plant size is ______ and labor is ______.
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varied; varied
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The long-run average cost curve is made up of the segments of individual average ______ cost curves with the lowest average ______ cost for a given output.
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total; total
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______ are features of a firm's technology that lead to falling long-run average cost as output increases that arise because of _______.
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Economies of scale; greater specialization of both labor and capital
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______ are features of a firm's technology that lead to rising long-run average cost as output increases that arise because of _______.
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Diseconomies of scale; the challenge of managing a large enterprise
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When economies of scale are present, the LRAC curve _____. When diseconomies of scale are present, the LRAC curve _____
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slopes downward; slopes upward
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a firm experiences constant returns to scale when
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average total cost does not change when output changes
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A firm's minimum efficient scale is the
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smallest quantity of output at which long-run average cost reaches its lowest level
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A firm in perfect competition is a price taker because _______.
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it produces a tiny proportion of the total output of a particular good and buyers are well informed about the prices of other firms
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In a perfectly competitive market, the market demand is _______ and the demand faced by the individual firm is _______.
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shown by a downward-sloping curve; perfectly elastic and the firm takes the market price as given
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In perfect competition, why is a firm's marginal revenue curve also the demand curve for the firm's output? Clara's marginal revenue curve _______.
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is also her firm's demand curve because the price remains the same regardless of how many purses she sells
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Perfect competition is a market in which there are _____ firms, each selling _____ product; many buyers; _____ to the entry of new firms into the industry; no advantage to established firms; and buyers and sellers _____ about prices.
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many; identical; no barriers; are well informed
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The shutdown point is the point at which price equals minimum average _____ cost and the quantity produced is that at which average _____ cost is at its _____.
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variable; variable; minimum
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What is the relationship between a firm's supply curve, its marginal cost curve, and its average variable cost curve?
A firm's supply curve is its ______.
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marginal cost curve above minimum average variable cost
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When new firms enter a perfectly competitive market in which firms are making an economic profit, the market supply curve shifts _______ and the market price _______. And each firm's output _____
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rightward; falls. Decreases
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When some firms exit a market in which firms incur economic losses, the market supply curve shifts ______ and the market price ______. Each remaining firms economic loss
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leftward; rises. Decreases
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In long-run equilibrium, each firm is _______.
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making zero economic profit
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In a market undergoing technological change, firms that adopt the new technology _______.
Firms that stick with the old technology _______.
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make an economic profit and there is entry by new-technology firms;
either exit the market or switch to the new technology
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Resources are allocated efficiently when _______.
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marginal social benefit equals marginal social cost, and the economy is producing the goods and services that people value most highly
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In a competitive market, the market demand curve measures ______.
In a competitive market, the market supply curve measures ______.
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marginal social benefit if the people who consume a good or service are the only ones who benefit from it;
marginal social cost if the firms that produce a good or service bear all the costs of producing it
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Monopoly is a market in which one firm sells a good or service that has _____ substitutes and _____ blocks the entry of new firms.
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no close; a barrier
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A natural monopoly is a market in which _______. A legal monopoly is a market in which _______.
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economies of scale enable one firm to supply the entire market at the lowest possible cost;
competition and entry are restricted by the granting of a public franchise, government license, patent, or copyright
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A single-price monopoly is a firm that ____ each unit of its output ____
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must sell; for the same price to all its customers
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A price-discriminating monopoly
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sells diff units of a good or service for diff prices
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A single price monopoly
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can sell a larger quantity only by setting a lower price
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Which of the following is an example of a price-discrimination
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IMAX charges $6 per movie ticket for children younger than 8, and $8.50 per movie ticket for adults.
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How does a single-price monopoly determine the price it will charge its customers?
A single-price monopoly _______.
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produces the quantity at which marginal revenue equals marginal cost and charges the highest price consumers will pay for that quantity from the demand curve
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Why can a monopoly make a positive economic profit even in the long run?
A monopoly can make positive economic profit in the long run because _______.
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barriers to entry prevent other firms from entering the market and sharing the profit
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A monopoly _______.
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never produces an output in the inelastic range of the market demand because it could charge a higher price, produce a smaller quantity, and increase its profit
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Any _____ - is called economic rent.
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surplus - consumer surplus, producer surplus, or economic profit
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Rent seeking is the lobbying for special treatment from the _____ to _____ or to divert consumer surplus or producer surplus away from others.
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government; create economic profit
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The amount of consumer surplus that is transferred from the consumer to the monopoly equals _______.
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the monopoly price minus the competitive price all multiplied by the monopoly quantity
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A single-price monopoly is inefficient because ______ at the quantity produced.
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marginal social benefit exceeds marginal social cost
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Price discrimination is _______.
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the practice of selling different units of a good or service for different prices according to the consumers' willingness to pay
