Deck 3: Benefits and Costs, Supply and Demand

Question 1

In the following figure,the marginal willingness to pay for the 10^th unit of the good is ________.

A)$12
B)$20
C)$160
D)$200

Answer 1

A

Question 2

The production function of the firm is its supply curve.
The marginal cost curve of the firm represents its supply curve.

Answer 2

False

Question 3

The following figure shows the impact of technological change on the marginal cost of producing a certain good.Producing Q* units with the new technology reduces total cost by an amount equal to ________.

A)area a
B)area b
C)area c
D)areas a + b

Answer 3

B

Question 4

Suppose there are only three individuals in the market for a certain good.Individual A's inverse demand equation is P = 12 - Q^D,individual B's inverse demand equation is P = 4 - Q^D and individual C's inverse demand equation is P = 6 - 1/3Q^D.What is the aggregate demand equation for this market?

Question 5

Suppose there are three firms in the market for a certain good.Firm 1's marginal cost equation is MC = 4 + 0.25Q^S,firm 2's marginal cost equation is MC = 0.5Q^S and firm 3's marginal cost equation is MC = 2 + Q^S.What is the aggregate supply equation for this market?

Question 6

The following figure shows the impact of technological change on the marginal cost of producing a certain good.With MC₁ the total cost of producing Q* units is equal to ________.

A)areas a + b + c
B)areas b + c
C)area b
D)area c

Question 7

In the following figure the total cost of producing the 500^th unit of output is ________.

A)$550
B)$150,000
C)$212,500
D)$275,000

Question 8

In the following figure the marginal cost of producing the 500^th unit of output is ________.

A)$500
B)$550
C)$150,000
D)$212,500

Question 9

Suppose there are four individuals in the market for a certain good.Individual 1's demand equation is Q^D = 11 - P,individual 2's demand equation is Q^D = 18 - 5P,individual 3's demand equation is Q^D = 30 - 0.5P and individual 4's demand equation is Q^D = 25 - 2P.What is the aggregate demand equation for this market?

Question 10

Suppose there are three firms in the market for a certain good.Firm 1's marginal cost equation is MC = 2 + 1/3Q^S,firm 2's marginal cost equation is MC = 4 + 2Q^S and firm 3's marginal cost equation is MC = 10 + Q^S.What is the aggregate supply equation for this market?

Question 11

One criterion for evaluating environmental policies is whether or not they generate ________ for individuals,firms and industries to engage in ________.

A)disincentives;expansion activities
B)incentives;expansion activities
C)disincentives;abatement activities
D)incentives;R&D activities

Question 12

Technological progress results in a downward shift of the marginal cost curve.

Question 13

Suppose there are four individual firms in the market for a certain good.Firm 1's supply equation is Q^S = 2P - 3,firm 2's supply equation is Q^S = 0.5P - 3,firm 3's supply equation is Q^S = 1.5P - 8 and firm 4's supply equation is Q^S = 4P - 2.What is the aggregate supply equation for this market?

Question 14

In the following figure,the total willingness to pay for the 10^th unit of the good is ________.

A)$12
B)$20
C)$160
D)$200

Question 15

Total benefits are equal to total willingness to pay which is equal to the area under the demand curve for a given level of consumption.

Question 16

Suppose there are only three individuals in the market for a certain good.Individual A's inverse demand equation is P = 5 - 1/2Q^D,individual B's inverse demand equation is P = 20 - Q^D and individual C's inverse demand equation is P = 4 - 2/3Q^D.What is the aggregate demand equation for this market?