Econ 1+3

The price elasticity of demand for a good is 5, then a 10% increase results in a

50% decrease in quantity demanded.

What was the opportunity cost to supertown of increasing production of toys from 200 to 300? (glasses goes from 600 to 1100)

500 glasses

If Mary goes to college she will spend $24,000 on tuition, $12,000 on room and board, $1900 on books. If she does not go to college, she will earn $16000 working in a store and spend $8000 on room and board. Miray's cost of going to college is

$45,900.

A manufacturer produces 350 units when the market price is $10 per unit and produces 460 units when the market price is $14 per unit. Using the midpoint method, for this range of prices, the price elasticity of supply is about

.81.

Efficiency means that

society is getting the most it can from its scarce resources.

On a demand curve, when the price moves from 7 to 5 and the quantity moves up from 12 to 20, the price elasticity of demand is equal to

1.5.

For which of the following individuals would the opportunity cost of going to college be the highest

A famous, highly paid actor who wants to take time away from show business to finish college and earn a degree.

Total revenue when price is P1 is represented by

B+D

Which of the following statements about comparative advantage is not true?

Comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources.

Fossil fuels are nonrenewable. Which is correct?

Fossil fuels are scarce resources.

Which of the following is likely to have the most price elastic demand?

Haagen-Dazs vanilla bean ice cream (specific brand and flavor vs ice cream in general)

For which pairs of goods is the cross-price elasticity most likely to be positive?

Pens and pencils

Shifting a curve out so it intersects the x and y axes at higher values represents

a general technological advance

IN the markets for goods and services in the circular-flow diagram,

firms provide households with output.

Suppose that the price falls along a demand curve and the quantity increases. The area between the initial and final price represents

additional consumer surplus to initial consumers when the price falls.

Trade between countries

allows each country to consume at a point outside its production possibilities frontier.

Dale is a guitar teacher and Terrence is a tile layer. If Dale teaches Terrence's daughter to play guitar in exchange for Terrence tiling Dale's floor,

both Dale and Terrence are made better off by trade.

demand is said to be price elastic if

buyers respond substantially to changes in the price of the good

Steak and chicken are substitutes. A sharp reduction in supply of steak would

decrease consumer surplus in the market for steak and increase producer surplus in the market for chicken.

The Surgeon General announces that eating chocolate increases tooth decay. As a result, the equilibrium price of chocolate,

decreases, and the producer surplus decreases.

Cadence says that she would smoke one pack of cigarettes each day regardless of price. Cadence's

demand for cigarettes is perfectly inelastic.

The distinction between efficiency and equality can be described as follows:

efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society.

An example of positive analysis is studying

how market forces produce equilibrium.

If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus?

increase by $3,125

Absolute advantage is found by comparing different producers'

input requirements per unit of output.

The adage, "there aint no such thing as a free lunch," means

people face tradeoffs

Candice is planning her activities for a hot summer day. She wants to swim at the pool and see the latest movie. She can only choose one activity cuz they are at the same time. This is the principle that

people face tradeoffs.

Assume that a 4% increase in income results in a 2% increase in quantity demanded of a good. The income elasticity of demand is

positive, and the good is a normal good.

Alana decides to spend 2 hours working overtime rather than going shopping with her friends. She earns $11 per hour for overtime work. Her opportunity cost of working is

the enjoyment she would have received had she gone shopping.

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manger recommends reducing the price of the day pass. You realize that

the mayor thinks demand is inelastic and the city manager thinks demand is elastic.

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.

Efficiency is represented by what points on a curve

the points on the curve itself (not inside or above it)

Income elasticity of demand measures how

the quantity demanded changes as consumer income changes.

Efficiency in a market is achieved when

the sum of producer surplus and consumer surplus is maximized.

The marginal benefit Joseph gets from purchasing a fourth pair of shoes is

the total benefit he gets from purchasing four pairs of shoes minus the total benefit he gets from purchasing three pairs of shoes.

Economics is the study of how society manages its

unlimited wants and limited resources

A seller's opportunity cost measures the

value of everything she must give up to produce a good.

The opportunity cost of an item is

what you give up to get that item.

The maximum price that a buyer will pay for a good is called

willingness to pay.