Econ 201 Hw Set #1

According to what we learned in class, the reason that LeBron James shouldn't own and operate a bakery, even if that bakery is profitable, is because: A) His opportunity costs are high because he will have to forego his NBA salary B) The fixed costs of opening a new business are too high C) Opening a bakery is a sunk cost

A

Conrad's restaurant is featured on Diners, Drive-Ins, and Dives (a show on the Food Network). Asa result, more people buy Conrad's wraps. This is an example of: A) An increase in demand B) A decrease in demand C) An increase in quantity demanded D) A decrease in quantity demanded

A

Dimensional lumber (wooden boards) and paper are complements in production because the sawdust produced by cutting trees into lumber can be used to make paper. Paper and pencils are complements in consumption. Suppose that demand for dimensional lumber increases and the price of pencils increases. How will this affect the price and quantity of paper? A) Price decreases. The effect on quantity is ambiguous B) Price increases. Quantity decreases C) The effect on price is ambiguous. Quantity increases D) Price decreases. Quantity decreases.

A

Michigan State University decides fine everyone who leaves an electric scooter on a walkway 20dollars. One day, you are in a hurry to get to class and don't have time to park your scooter where it goes. So, you leave your scooter on the walkway, knowing that you will get fined 20 dollars. Which of the following is most likely to be true: A) The benefit you got from being to class on time was greater than $20 B) Your willingness to pay to get to class on time was less than $20 C) You acted irrationally and didn't follow the cost-benefit principle

A

Ray's main goal in playing Valorant is to gain lots of XP (Experience Points), which he earns by playing the game well. The below table shows the total XP Ray earns playing Valorant. Hours Played Total XP Earned 1 1,000 2 1,750 3 2,000 4 2,200 What is the marginal benefit (in terms of XP) that Ray gets from the third hour of playing Valorant? A) 250 B) 667 C) 1000 D) 2,000

A

Supply slopes up because A) Marginal costs are increasing B) Marginal benefits are decreasing C) Demand slopes down D) Price and quantity are inversely related

A

Suppose Michigan passes a law which will outlaw the sale of gasoline-powered cars starting in 2024. Note that, even after the ban goes into effect, existing gasoline-powered cars can still bedriven in the state. How will that affect the demand for gasoline-powered cars today? A) Demand will increase B) Demand will decrease C) Demand will be unaffected

A

Suppose a law is passed increasing the jail sentences for people caught selling illegal drugs. What would be the effect on the price and quantity of illegal drugs sold? A) Price would decrease and quantity would increase B) Price would decrease and quantity would increase C) Price would increase and quantity would decrease D) Price would increase and quantity would increase

A

Suppose the price of roses decreases. Assume that roses and oranges tend to have similar growing climates, and that farmland that currently grows one of them can easily grow the other crop instead. Which of the following responses is likely? (Note: that we are looking for what happens after the price changes, not for what caused the price change) A) The price of oranges decreases B) Quantity of roses demanded decreases C) The quantity of oranges sold decreases

A

The Rational Rule says that, if something is worth doing, keep doing it until A) Marginal benefits are equal to marginal costs B) Marginal benefits are greater than marginal costs C) The opportunity cost is zero D) Your willingness to pay is zero

A

The demand for pickup trucks shifts left. At the same time, the supply curve for pickup trucks shifts right. What are the net effects on price and quantity? A) Price decreases. The effect on quantity is ambiguous. B) Price decreases. Quantity increases C) The effect on price is ambiguous. Quantity decreases D) Price increases and quantity decreases

A

When Karl gets a raise, his demand for Twix bars shifts to the right. This means that, for Karl, Twix bars are: A) A normal good B) An inferior good C) A network good D) A good with no marginal benefits

A

When you hang out with your friends, you often accidentally grab the wrong cell phone because you all have the same model of iPhone and black phone cases. You decide that you want to purchase a different colored cell phone case to prevent this from happening. This means that you consider a specific color of cell phone case to be a ________. A) Congestion good B) Network good C) Normal good D) Substitute for a cell phone

A

You are binge watching Riverdale on Netflix and have one episode left in the season. Which of the following would be describe the marginal benefit of watching that last episode? A) The enjoyment you get from watching the last episode B) The total enjoyment you received from the first season C) The hour that you could have spent studying economics (your best possible alternative use of the time, of course)

A

You are interested in learning whether increasing sales taxes would benefit the economy of East Lansing. This would be best described as: A) Microeconomics B) Macroeconomics

A

According to the Wikipedia article, Dvorak has not replaced QWERTY as the most common keyboard layout because QWERTY was introduced 60 years earlier. This sentence suggests that a computer keyboard layout is a ________. A) good with zero marginal benefits B) network good C) congestion good D) normal good

B

According to the law of demand, when the price of a good increases A) Marginal cost decreases B) The quantity demanded decreases C) Opportunity costs are zero D) Quantity demanded is unaffected

B

In class, we said that to find the opportunity cost of an action, ask yourself A) "One more?" B) "Or what?" C) "How many?" D) "What are the benefits?"

B

Jane enjoys streaming The Office, but she finds that, because she has seen every episode several times, she gets bored of them quickly. In fact, in a given binge-watch session, she enjoys each episode less than the one before it. Jane uses her parent's logins for streaming services, so it doesn't cost her any money to watch the episodes. For Jane, watching The Office on has _____ marginal benefits and _____ marginal costs. (Assume the only costs are monetary costs.) A) Decreasing; Increasing B) Decreasing: Constant C) Constant; Increasing D) Increasing; Decreasing

B

Maria is deciding how big of a house to build. She gets decreasing marginal benefits from house size (so, the marginal benefit of the first square foot is greater than the marginal benefit of the second square foot and so on). The builder charges $100 per square foot. Maria decides to build a 1,700 square foot house. What if, instead, the builder offered a discount, where the first 1,000 square feet were half price ($50 per square foot)? How big of a house would Maria choose to build: A) Less than 1,700 square feet B) Still 1,700 square feet C) More than 1,700 square feet

B

Suppose the three buyers in the table are the only buyers in the market. If the price of a hamburger decreases from $6 to $4, the quantity of hamburgers demanded will: A) Increase from 3 to 6 B) Increase from 3 to 8 C) Decrease from 6 to 3 D) Increase from 0 to 2

B

Surya is hoping to buy tickets for the MSU-Ohio State football game. He looks at some online message boards and it appears that everyone is charging $200 for a ticket. However, he notices that the listings have been active for several days, and from what he has heard, most of these people haven't been able to find a buyer. This is an example of a A) Shortage B) Surplus C) Equilibrium

B

The main reason why you cannot have everything you want is that: A) Taxes are too high B) Resources are limited C) Opportunity costs are equal to zero

B

This is an old economics joke: A hundred-dollar bill is lying on the ground. An economist walks past it. A friend asks: "Didn't you see the money there?" The economist replies: "I thought I saw something, but I must've imagined it. If there had been $100 on the ground, someone would've picked it up."1 Which of the following would best explain why the economist doesn't believe that there is a $100 bill on the ground? A) He believes that supply slopes up B) He believes that most situations quickly move toward equilibrium C) He believes that picking up a $100 bill would not be rational behavior D) He believes that the marginal benefit of picking up a $100 bill is negative

B

This table shows the weekly supply for protein bars in a market where there is just one seller. Price Quantity Supplied $2 5 $3 9 $4 11 Which of the following statements is true? A) If price increases from $2 to $3, the supply curve will shift to the right B) If price increases from $2 to $3, the quantity supplied will increase, but the supply curve will not move C) The eighth unit supplied has a marginal cost of $0

B

You are the fifteenth caller for a contest at your favorite radio station and win your choice of three concert tickets: Post Malone, Taylor Swift, and the Jonas Brothers. You choose Post Malone, because that is your favorite performer. Your second choice would have been the Jonas Brothers. What is the opportunity cost of the concert tickets? A) Zero, because they were free B) The Jonas Brothers tickets C) The Jonas Brothers tickets and the Taylor Swift tickets

B

Alphatown is 10 miles from Bravoville. At first, everyone travelling from Alphatown to Bravoville takes the highway. There is a lot of traffic on the highway, so it takes 30 minutes to get there. Then people start using Waze, and Waze finds a non-highway route from Alphatown to Bravoville that only takes 20 minutes. Is this an equilibrium? Note: suppose everyone has easy access to Waze. A) Yes B) No, people will switch from the highway to the Waze-recommended route. Eventually, nobody will ever take the highway, even though the Waze-recommended route now takes longer than the highway because of all the extra traffic C) No, some people will switch from the highway to the Waze-recommended route. Eventually, both routes will take less than 30 minutes D) No, some people will switch from the highway to the Waze recommended route. Eventually, both routes will take more than 30 minutes

C

Blake is considering vaping. One of his friends just quit vaping and has offered Blake his Juul for free, but only if Blake is going to use it himself. If Blake does start vaping, he will spend $20 per week on Juul pods. Additionally, Blake's girlfriend will break up with him if he starts vaping. What is the opportunity cost of vaping for Blake? A) $20 per week B) Zero, because he got the Juul for free C) $20 per week and his girlfriend

C

Early in the Covid-19 pandemic, many places had a shortage of toilet paper. Jack is worried that that there will be a shortage of toilet paper in his neighborhood in a few days. How will this affect Jack's demand for toilet paper today? A) Movement up and to the left on the demand curve B) Movement down and to the right on the demand curve C) The demand curve shifts right D) The demand curve shifts left

C

Hours Played Total XP Earned 1 1,000 2 1,750 3 2,000 4 2,200 Each hour that Ray studies will improve his score by 5 percentage points. Ray has decided he is indifferent between a 5 percentage point score increase and 500 points of XP. How should Ray spend his next 4 hours? A) Spend 4 hours studying B) Spend 1 hour playing Valorant and 3 hours studying C) Spend 2 hours playing Valorant and 2 hours studying D) Spend 3 hours playing Valorant and 1 hour studying

C

Julie's demand for Uber rides slopes down. This is because: A) Julie doesn't really like Uber rides B) If Uber rides get too expensive, she will never ride an Uber C) She has decreasing marginal benefits from Uber ride

C

Marco went to Buffalo Wild Wings to watch a football game. Chicken wings there cost $0.75each. Marco bought and ate 20 chicken wings. Afterwards, he regretted his decision and decided that next time he would buy fewer chicken wings. This means that A) Marco's marginal benefit from the 20th chicken wing was zero B) Marco's marginal benefit from the 20th chicken wing was negative C) Marco's marginal benefit from the 20th chicken wing was less than $0.75

C

Suppose Uber decided to implement "negative surge" pricing, where during certain times they would offer discounted rides while also cutting driver pay. When would we expect them to do this? A) When there are lots of drivers and lots of riders B) When there are very few drivers and lots of riders C) When there are lots of drivers and very few riders D) When there are very few drivers and very few riders

C

Surya is hoping to buy tickets for the MSU-Ohio State football game. He looks at some online message boards and it appears that everyone is charging $200 for a ticket. However, he notices that the listings have been active for several days, and from what he has heard, most of these people haven't been able to find a buyer. What would you recommend Surya do? A) Offer $200 for the tickets B) Buy as many tickets as he can for $200, then plan to sell them for more than $200 on the day of the game C) Wait for the price to come down

C

The price of mystery novels is $11 each, and Mara buys 5 novels per year. Which of the following is most likely to be true: A) Mara's total benefit from buying novels is $55 B) If the price of novels went down to $8 each, Mara would buy fewer novels C) Mara's marginal benefit from the fourth novel she buys is more than $11 D) If Mara bought a sixth novel, her marginal benefit from that novel would be negative

C

The value of the British pound has fallen relative to the dollar. As a result, it has become more expensive for residents of the United Kingdom to vacation in the United States.2 Suppose this makes people less eager to buy tickets on British Airways, so a quick search on Kayak reveals lots of unsold tickets. What do we expect to happen to tickets next? A) There will be a persistent (long-lasting) surplus B) There will be a persistent (long-lasting) shortage C) Equilibrium price will decrease D) Equilibrium price will increase

C

This table shows the weekly supply for protein bars in a market where there is just one seller. Price Quantity Supplied $2 5 $3 9 $4 11 What is the marginal cost of producing the ninth protein bar? A) $0 B) $2 C) $3 D) $4

C

o keep the local professional football team from leaving, the city of San Diego proposed a tax on hotel rooms that would be used to fund a new football stadium. Many people are opposed to using tax revenues to fund sports stadiums. The mayor argued that, because the tax would be paid by out-of-town visitors, the new stadium would be "free" for residents. Which of the following statements is most accurate? A) The mayor is correct B) The mayor is forgetting about the opportunity cost of having a football team instead of having another sports team C) The mayor is forgetting about the opportunity cost of spending the tax revenue on a new stadium instead of on something else D) The mayor is forgetting about the marginal benefits residents receive from the football stadium

C

Straw is an agricultural byproduct consisting of the dry stalks of cereal plants after the grain and chaff have been removed. It makes up about half of the yield of cereal crops such as barley, oats, rice, rye and wheat. It has a number of different uses, including fuel, livestock bedding and fodder, thatching and basket making. How would the supply of straw be affected by an increase in the price of wheat? A) Movement up and to the right on the supply curve B) Movement down and to the left on the supply curve C) Supply increases D) Supply decreases

C Straw and wheat are complements in production. When the price of wheat increases, produce more wheat. This causes more straw to be produced, even if the price of straw is unchanged. Hence, an increase in supply.

For the past several weeks, the price of ice cream has $4 per pint, and Aviv has bought 2pints per week. This week, the price has increased to $5 per pint, and Aviv only bought 1pint. This is best characterized as a A) Increase in demand B) Decrease in demand C) Increase in quantity demanded D) Decrease in quantity demanded.

D

Suppose instead that the three buyers in the table were picked from a total market of 9,000people. What is the total market quantity demanded if the price is $5? A) 6 B) 6,000 C) 9,000 D) 18,000

D

Suppose the price of butter increases. Assume that butter and margarine are substitutes in consumption. Which of the following responses is likely? (Note: that we are looking for what happens after the price changes, not for what caused the price change) A) Quantity of margarine decreases B) Quantity of butter sold increases C) Price of margarine decreases D) Quantity of margarine increases

D

Which of the following is definitely an example of someone not acting in their self-interest? A) A drug addict using heroin B) A criminal robbing a bank C) A person buying an expensive car D) None of the above; each of these could be an instance where someone is acting rationally and in their own best interest.

D