Slaughter house and processing plant
QFeed lots
66 Eric
Schlosser (2001) in his book, 'The Fast Food Nation' describes how
the use of vast feed lots have revolutionised beef production in the
USA (pp 201-204). For three months prior to slaughter up to 100,000
cattle will be corralled in feed lots which are next to the
processing plants (see picture left). During this time the steers
will be fed more than 3000 lbs of grain feed and will put on just 400
lbs in weight, in the process each steer will deposit 50lbs of manure
and urine a day. In the processing plant, the slaughtered beast is
"dis-assembled" (page 152) on a production line, where the
skilled tasks of the traditional butcher have been reduced to simple
tasks performed by a series of unskilled and non-unionised workers.
In terms of externalities,
which of the following are the likely consequences of this whole
process?
Contaminated meet
Contamination of the local water supply and a smell of epic proportions.
Cheaper hamburgers
Industrial injuries and death
Higher unemployment of skilled workers
Q67 When modelling a negative externality of production, and assuming no externalities of
consumption, the diagram below would be labelled in which of the following ways?
A = Price, B = MSB, C = Private Costs (or, MC), D = Private Benefits (or, MU),
E = Quantity.
A = Price, B = MSC, C = Private Costs (or MC), D = Private Benefits (or MU), E = Quantity.
A = Price, B = MSC, C = Private Costs
(or, MC), D = MSB, E = Quantity.
A = Quantity, B = MSC, C = Private
Benefits, D = Private costs, E = Price.
A = Price, B = MSC, C = Private Benefits
D = Private Costs, E = Quantity.
Q68 Given the wide spread nature of negative externalities, to correct for negative externalities in market economy governments can realistically do which of the following?
Fine the companies concerned.
Close down the firms responsible for creating the negative externalities
Tax the good and/or regulate its production.
Lodge a formal complaint with the World Health Organisation (WHO)
Run advertising campaigns to discourage people buying goods whose production generates negative externalities
Q69 In the context of positive externalities, governments may wish to subsidies goods that provide a social benefit, in this case subsidies will:
Shift the supply curve to the right (or down).
Q70 World Commission on Environment and Development defines sustainability as:
Forms of progress that meet the needs of the present without compromising the ability of future generations to meet their needs.
Figure 7-12
71. Refer to Figure 7-12. At the equilibrium price, consumer surplus is
-
a.
$150.
b.
$200.
c.
$300.
d.
$500.
72. Refer to Figure 7-12. At the equilibrium price, producer surplus is
-
a.
$150.
b.
$200.
c.
$300.
d.
$500.
73. Refer to Figure 7-12. At the equilibrium price, total surplus is
-
d.
$500.
74. Refer to Figure 7-12. If the government imposes a price floor of $120 in this market, then total surplus will decrease by
-
c.
$225.
75. Refer to Figure 7-12. If the government imposes a price ceiling of $120 in this market, then total surplus will be
-
a.
$0.
b.
$125.
c.
$375.
d.
$500.
76. Refer to Figure 7-12. If the government imposes a price floor of $70 in this market, then total surplus will be
-
a.
$0.
b.
$125.
c.
$375.
d.
$500.
Figure 7-13
77. Refer to Figure 7-13. Total surplus can be measured as the area
-
d.
JNL.
78. Refer to Figure 7-13. For quantities less than M, the value to the marginal buyer is
-
a.
greater than the cost to the marginal seller, so increasing the quantity increases total surplus.
79. Refer to Figure 7-13. For quantities greater than M, the value to the marginal buyer is
-
d.
less than the cost to the marginal seller, so decreasing the quantity increases total surplus.
Figure 7-14
80. Refer to Figure 7-14. Which area represents consumer surplus when the price is P1?
-
b.
B
81. Refer to Figure 7-14. When the price is P1, area B represents
-
c.
consumer surplus.
82. Refer to Figure 7-14. Which area represents producer surplus when the price is P1?
-
c.
C
83. Refer to Figure 7-14. When the price is P1, area C represents
-
b.
producer surplus.
84. Refer to Figure 7-14. When the price is P1, area A represents
-
d.
None of the above is correct.
85. Refer to Figure 7-14. When the price is P1, area B+C represents
-
a.
total surplus.
86. Refer to Figure 7-14. Which area represents total surplus in the market when the price is P1?
-
b.
B+C
Figure 7-15
87. Refer to Figure 7-15. At the equilibrium price, consumer surplus is
-
a.
$480.
88. Refer to Figure 7-15. If the price decreases from $22 to $16 due to a shift in the supply curve, consumer surplus increases by
-
b.
$360.
89. Refer to Figure 7-15. At the equilibrium price, producer surplus is
-
b.
$640.
90. Refer to Figure 7-15. At the equilibrium price, total surplus is
-
c.
$1,120.
91. Refer to Figure 7-15. Assume demand increases and as a result, equilibrium price increases to $22 and equilibrium quantity increases to 110. The increase in producer surplus due to new producers entering the market would be
-
a.
$90.
b.
$210.
c.
$360.
d.
$480.
92. Refer to Figure 7-15. Assume demand increases and as a result, equilibrium price increases to $22 and equilibrium quantity increases to 110. The increase in producer surplus to producers already in the market would be
-
a.
$90.
b.
$210.
c.
$360.
d.
$480.
93. Refer to Figure 7-15. Assume demand increases and as a result, equilibrium price increases to $22 and equilibrium quantity increases to 110. The increase in producer surplus would be
-
d.
$570.
94. Refer to Figure 7-15. The efficient price is
-
c.
$16, and the efficient quantity is 80.
95. Refer to Figure 7-15. If 110 units of the good are being bought and sold, then
-
c.
the marginal cost to sellers is greater than the marginal value to buyers.
96. Refer to Figure 7-15. If 40 units of the good are being bought and sold, then
-
a.
the marginal cost to sellers is equal to the marginal value to buyers.
b.
the marginal value to buyers is greater than the marginal cost to sellers.
c.
the marginal cost to sellers is greater than the marginal value to buyers.
d.
producer surplus would be greater than consumer surplus.
Figure 7-16
97. Refer to Figure 7-16. The equilibrium price is
-
b.
P2.
98. Refer to Figure 7-16. At equilibrium, consumer surplus is represented by the area
-
b.
A+B+C.
99. Refer to Figure 7-16. If the price were P3, consumer surplus would be represented by the area
-
a.
A.
100. Refer to Figure 7-16. At equilibrium, producer surplus is represented by the area
-
c.
D+H+F.
101. Refer to Figure 7-16. If the price were P1, producer surplus would be represented by the area
-
a.
F.
102. Refer to Figure 7-16. At equilibrium, total surplus is represented by the area
-
c.
A+B+C+D+H+F.
103. Refer to Figure 7-16. The efficient price-quantity combination is
-
b.
P2 and Q2.
Figure 7-17
104. Refer to Figure 7-17. At equilibrium, consumer surplus is measured by the area
-
b.
AFG.
105. Refer to Figure 7-17. At equilibrium, consumer surplus is
-
a.
$36.
b.
$72.
c.
$108.
d.
$144.
106. Refer to Figure 7-17. At equilibrium, producer surplus is measured by the area
-
d.
CFG.
107. Refer to Figure 7-17. At equilibrium, producer surplus is
-
a.
$36.
b.
$72.
c.
$108.
d.
$144.
108. Refer to Figure 7-17. At equilibrium, total surplus is measured by the area
-
a.
ACG.
109. Refer to Figure 7-17. At equilibrium, total surplus is
-
a.
$36.
b.
$72.
c.
$108.
d.
$144.
110. Refer to Figure 7-17. The equilibrium allocation of resources is
-
a.
efficient because total surplus is maximized at the equilibrium.
b.
efficient because consumer surplus is maximized at the equilibrium.
c.
inefficient because consumer surplus is larger than producer surplus at the equilibrium.
d.
inefficient because total surplus is maximized when 10 units of output are produced and sold.
111. Refer to Figure 7-17. If 4 units of the good are produced and sold, then
-
a.
the cost to sellers exceeds the value to buyers.
b.
producer surplus is maximized.
c.
total surplus is minimized.
d.
the allocation of resources is inefficient.
112. Refer to Figure 7-17. If 10 units of the good are produced and sold, then
-
a.
the marginal cost to sellers exceeds the marginal value to buyers.
b.
producer surplus is maximized.
c.
total surplus is minimized.
d.
the marginal value to buyers exceeds the marginal cost to sellers.
Table 13-5
The Flying Elvis Copter Rides
Quantity |
Total Cost |
Fixed Cost |
Variable Cost |
Marginal Cost |
Average Fixed Cost |
Average Variable Cost |
Average Total Cost |
0 |
$50 |
$50 |
$0 |
-- |
-- |
-- |
-- |
1 |
$150 |
A |
B |
C |
D |
E |
F |
2 |
G |
H |
I |
$120 |
J |
K |
L |
3 |
M |
N |
O |
P |
Q |
$120 |
R |
113. Refer to Table 13-5. What is the value of A?
-
a.
$25
b.
$50
c.
$100
d.
$200
114. Refer to Table 13-5. What is the value of B?
-
a.
$25
b.
$50
c.
$100
d.
$200
115. Refer to Table 13-5. What is the value of C?
-
a.
$25
b.
$50
c.
$100
d.
$200
116. Refer to Table 13-5. What is the value of G?
-
a.
$30
b.
$120
c.
$220
d.
$270
117. Refer to Table 13-5. What is the value of L?
-
a.
$60
b.
$135
c.
$240
d.
$270
118. Refer to Table 13-5. What is the value of O?
-
a.
$40
b.
$140
c.
$360
d.
$410
Table 13-7
Measures of Cost for ABC Inc. Widget Factory |
|||
Quantity of Widgets |
Variable Costs |
Total Costs |
Fixed Costs |
0 |
|
|
$10 |
1 |
$ 1 |
|
|
2 |
$ 3 |
$13 |
|
3 |
$ 6 |
$16 |
|
4 |
$10 |
|
|
5 |
|
$25 |
|
6 |
$21 |
|
$10 |
119. Refer to Table 13-7. The average fixed cost of producing five widgets is
-
a.
$1.00.
b.
$2.00.
c.
$3.00.
d.
$5.00.
120. Refer to Table 13-7. The average variable cost of producing four widgets is
-
a.
$2.00.
b.
$2.50.
c.
$3.33.
d.
$5.00.
121. Refer to Table 13-7. The average total cost of producing one widget is
-
a.
$1.00.
b.
$10.00.
c.
$11.00.
d.
$22.00.
122 Refer to Table 13-7. The marginal cost of producing the sixth widget is
-
a.
$1.00.
b.
$3.50.
c.
$5.00.
d.
$6.00.
123. Refer to Table 13-7. What is the variable cost of producing zero widgets?
-
a.
$0.00
b.
$1.00
c.
$10.00
d.
$10.00
124. Refer to Table 13-7. What is the marginal cost of producing the first widget?
-
a.
$1.00
b.
$10.00
c.
$11.00
d.
It can't be determined from the information given.
125. Refer to Table 13-7. What is the variable cost of producing five widgets?
-
a.
$13.00
b.
$14.00
c.
$15.00
d.
It can't be determined from the information given.