ECO 120 Midterm
Jeff decides that he would pay as much as $2,000 for a new laptop computer. He buys the computer and realizes a consumer surplus of $300. How much did Jeff pay for his computer?
$1,700.
Donald produces nails at a cost of $350 per ton. If he sells the nails for $500 per ton, his producer surplus is
$150.
At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for
$3.50 each.
Suppose that when the price of a 16 oz. to-go cup of gourmet coffee is $4.25, students purchase 750 cups per day. If the price decreases to $3.75 per cup, which of the following is the most likely outcome?
Students would purchase more than 750 cups per day.
The line that relates the price of a good and the quantity supplied of that good is called the supply
curve, and it usually slopes upward.
Suppose an airline determines that its customers traveling for business have inelastic demand and its customers traveling for vacations have an elastic demand. If the airline's objective is to increase total revenue, it should
decrease the price charged to vacationers and increase the price charged to business travelers.
Economists use the word equality to describe a situation in which
each member of society has the same income.
A good will have a more elastic demand, the
greater the availability of close substitutes.
If Kindle e-readers and Nook e-readers are substitutes, a higher price for Nooks would result in a(n)
increase in the demand for Kindles.
There are very few, if any, good substitutes for automotive tires. Therefore, the demand for automotive tires would tend to be
inelastic
On a bowed production possibilities frontier, as you move down along the curve
more of one good must be given up to receive one unit of the other good. the available production technology does not change. the opportunity cost increases.
Suppose that when income rises, the demand curve for doctor's visits shifts to the right. In this case, we know doctor's visits are
normal goods.
Pizza is a normal good if the demand
or pizza rises when income rises.
Each of the following is a determinant of demand except
production technology.
The production possibilities frontier is used to illustrate some basic economic ideas, including
scarcity. opportunity cost. economic growth.
A seller is willing to sell a product only if the seller receives a price that is at least as great as the
seller's cost of production.
Consumer surplus is
the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
If a change in the price of a good results in no change in total revenue, then
the demand for the good must be unit elastic.
Today's supply curve for iPods could shift in response to a change in
the expected future price of iPods.
Which of the following will cause a decrease in consumer surplus?
the imposition of a binding price floor in the market
Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that
the nation is not using all available resources or is using inferior technology or both.
When quantity demanded has increased at every price, it might be because
the price of a complementary good has decreased.
Which of the following is not a determinant of demand?
the price of a resource that is used to produce the good
The demand for Godiva mint chocolates is likely quite elastic because
there are many close substitutes. this particular type of chocolate is viewed as a luxury by many chocolate lovers. the market is narrowly defined.
When the price of a good or service changes
there is a movement along a given supply curve.
A seller's opportunity cost measures the
value of everything she must give up to produce a good.
The quantity demanded of a good is the amount that buyers are
willing and able to purchase.
The following table contains a demand schedule for a good. Price . Quantity Demanded $10 . 100 $20 . Q1 If the law of demand applies to this good, then Q1 could be:
0
Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is
1
If the price elasticity of supply is 0.4, and a price increase led to a 5% increase in quantity supplied, then the price increase is about
12.5%
Kelly is willing to pay $5.20 for a gallon of gasoline. The price of gasoline at her local gas station is $3.80. If she purchases ten gallons of gasoline, then Kelly's consumer surplus is
14.
Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?
50
If the price elasticity of demand for a good is 0.3, then a 20 percent decrease in price results in a
6 percent increase in the quantity demanded.
In which of the following situations would supply be the most elastic?
A furniture manufacturer is operating its factory 8 hours per day.
Which of the following events would cause a movement downward and to the left along the supply curve for mangos?
The price of mangos falls
Suppose that two supply curves pass through the same point. One is steep, and the other is flat. Which of the following statements is correct?
The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve.
Consumer surplus is the
amount a consumer is willing to pay minus the amount the consumer actually pays.
When demand is inelastic, an increase in price will cause
an increase in total revenue.
