1. Suppose a new, improved variety of soybeans is developed which produces more
ID: 1177231 • Letter: 1
Question
1. Suppose a new, improved variety of soybeans is developed which produces more soybeans per acre than the existing varieties. As the soybean market adjusts to this innovation, the equilibrium price of soybeans will _______ and the quantity of soybeans sold at equilibrium will ________ .
Answer
A) decrease . . . increase
B) increase . . . decrease
C) decrease . . . decrease
D) increase . . . increase
Suppose a new, improved variety of soybeans is developed which produces more soybeans per acre than the existing varieties. In the long run, the effect of this innovation on soybean farmer's profits will be that
Answer
A) soybean farmers' profits will be higher than they had been before the innovation.
B) soybean farmers' profits will be lower than they had been before the innovation.
C) soybean farmers' profits will be about the same as they had been before the innovation.
D) none of the above.
Because agricultural demand curves and supply curves are usually quite steep,
Answer
A) small farmers tend to gain more from farm subsidies than large farmers do.
B) large farmers tend to gain more from farm subsidies than small farmers do.
C) crop prices tend to rise and fall greatly from year to year.
D) crop prices tend to be almost constant from year to year.
Allocative efficiency means that the markets are producing the quantities of goods that
Answer
A) maximize the profits of the producers.
B) minimize the amount of natural resources consumed by the economy.
C) minimize the costs of production.
D) maximize the total benefits to the consumers in the economy.
In the market for widgets, sellers are supplying 6,000 widgets a week. At that rate, the price on the demand curve is $48 and the price on the supply curve is $30. This means that in order to achieve allocative efficiency
Answer
A) more widgets should be produced.
B) fewer widgets should be produced.
C) the producers should reduce the price
D) the producers should continue to supply 6,000 units per week.
If producing a good has external benefits, then free, competitive markets will produce _______ of the good.
Answer
A) too little
B) too much
C) just the right amount
D) none of the above
Which of the following goods or services tends to create external benefits?
Answer
A) steel production
B) bicycles
C) water
D) vaccinations
Which is the best example of a public good?
Answer
A) city street lights
B) air pollution
C) clean air
D) food
When private firms produce public goods and sell them in private markets,
Answer
A) they produce just enough of the goods to maximize the net benefit to the public.
B) they tend to produce too few of the goods.
C) they tend to produce too many of the goods.
D) they will charge a price that is above the price that would be optimal for the public.
When a monopolist is maximizing its profits, it must have chosen the rate of output, Q, where
Answer
A) its total revenue equals its total costs.
B) its total revenue is the largest.
C) its total costs are lowest.
D) its marginal revenue equals its marginal cost.
Which of the following has tended to weaken OPEC's market power?
Answer
A) the fact that it controls 90% of the world's oil production.
B) the fact that its members are quite different had have diverse interests.
C) the fact that the world's demand for oil is very elastic in the short run.
D) the fact that it is easy to tell which country produced and sold each barrel of oil.
Explanation / Answer
more widgets should be produced.
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