Econ 224 quizzes (final review)

suppose a firm operating in a competitive market has the following cost curves. if the market price is $6, what is the firm's short-run economic profit?

$0

if in some year real GDP was $5 trillion and the GDP deflator was 200, what was the nominal GDP?

$10 trillion

Suppose a basket of goods and services has been selected to calculate the CPI and 2009 has been selected as the base year. In 2007, the basket's cost was $64; in 2009, the basket's cost was $68; and in 2011, the basket's cost was $70. The value of the CPI in 2011 was

$102.94

a profit-maximizing monopolist would create a deadweight loss to society valued at...

$12

a profit-maximizing monopolist would earn profits of...

$120

the table below contains data for the country of Batterland, which produces only waffles and pancakes. the base year is 2013. in 2013, this country's real GDP was...

$1200

the diagram depicts the market situation for a monopoly pastry shop called Bearclaws. based upon the information show, what price will Bearclaws charge to maximize profits?

$14

what is the consumer surplus of the price is $100

$2,500

in a market economy, government intervention...

may improve market outcomes in the presence of externalities

cyclical unemployment is caused by...

neither frictional nor structural unemployment

the labor force equals the...

number of people employed plus the number of people unemployed

changes in the GDP deflator reflect

only changes in prices

research into new technologies provides a...

positive externality, and too few resources are devoted to research as a result

suppose that when the price of wheat is $2 per bushel, farmers can sell 10 million bushels. when the price of wheat is $3 per bushel, farmers can sell 8 million bushels. which of the following statements is true? the demand for wheat is...

price inelastic, so an increase in price of wheat will increase the total revenue of wheat farmers.

if the monopoly firms wants to maximize its profit, it should operate at a level of output equal to...

q3

an increase in demand is represented by a...

rightward shift of a demand curve

a supply curve can be used to measure producer surplus because it reflects..

sellers' costs

what area represents the total surplus lost due to monopoly pricing?

the triangle 1/2[(A-C)*(Y-X)]

we can say that the allocation of resources is efficient if...

total surplus is maximized

the section of the demand curve at point B represents the...

unit elastic section of the demand curve

in a market, the marginal buyer is the buyer...

who would be the first to leave the market if the price were any higher

frictional unemployment can be the consequence of...

workers leaving existing jobs to find ones they like better, one industry declining while another is growing, and changes in the working conditions offered by competing firms.

a positive externality arises when a person engages in an activity that has...

a beneficial effect on a bystander who does not pay the person who causes the effect

the consumer price index tries to gauge how much incomes must rise to maintain

a constant standard of living

a quota is

a limit on the quantity of imports

the CPI is a measure of the overall cost of the goods and shrives bought by..

a typical consumer, and the CPI is computed and reported by the Bureau of Labor Statistics

a negative externality arises when a person engages in an activity that has...

an adverse effect on a bystander who is compensated by there person who causes the effect

the impact of one person's actions on the well-being of a bystander is called...

an externality

a tariff is a tax placed on...

an imported good and it raises the domestic price of the good above the world price

suppose a firm in a competitive market, like the one depicted in panel (a), observes market price rising from p1 to p2. which of the following could explain this observation?

an increase in market demand from d0 to d1

which of the following includes everyone in the adult population that the Bureau of Labor Statistics counts as "unemployed?"

anyone who is not employed, is available for work, has looked for work in the past four weeks, and anyone who is waiting to be recalled from a job from which they have been laid off

"other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." this relationship between price and quantity demanded...

applies to most goods in the economy, is represented by a downward-sloping demand curve, and is referred to as the law of demand

at the equilibrium price, producer surplus is...

$400

labor data for Aridia. the unemployment rate of Aridia in 2012 was...

11.1%

the table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. assume 2005 is used as the base year. what belongs in space A?

154

in the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms. if there are 700 identical firms in this market, what is the value of q1?

210,000

if the price elasticity of demand for a good is 1.2, then a 3 percent decrease in price results in a...

3.6 percent increase in the quantity demanded

when the price is P1, consumer surplus is...

A+B+C

as price falls from Pa to Pb, which demand curve represents the most elastic demand?

D1

which area represents the deadweight loss from monopoly?

G

the figure illustrates the market for coffee in Guatemala. when trade is allowed...

Guatemalan producers of coffee become better off and Guatemalan consumers of coffee become worse off

what is included in the calculation of GDP? a. The purchase of ink and paper supplies by a textbook company for the production of new textbooks. b. The purchase of a new edition of a foreign textbook that was produced in a different nation. c. The purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country. d. The purchase of a used textbook from a friend who took the same class last year.

c. the purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country

according to the circular-flow diagram GDP...

can be computed as the total income paid by firms or as expenditures on final goods and services

area c represents the...

consumer surplus to new consumers who enter the market when the price falls from p2 to p1

if total spending rises from one year to the next, then...

either the economy must be producing a larger output of goods and services, or goods and services must be selling at higher prices, or both

when the price of an eBook is $15.00, the quantity demanded is 400 eBooks per day. when the price falls to $10.00, the quantity demanded increases to 700. given this information and using the midpoint method, we know that the demand for eBooks is...

elastic

the figure illustrates the market for calculators in a country. with free trade, this country will...

export 100 calculators

other things equal, the demand for a good tends to be more inelastic, the...

fewer the available substitutes

GDP includes the value of all...

final goods and services produced within a country using primarily market prices to measure the value of goods and services

in competitive markets,

firms produce identical products, no individual buyer can influence the market price, and no individual seller can influence the market price

the steps involved in calculating the consumer price index and the inflation rate, in order, are as follows:

fix the basket, find the prices, compute the basket's cost, choose a base year and compute the index, and compute the inflation rate

elasticity of demand is closely related to the slope of the demand curve. the more responsive buyers are to a change in price, the...

flatter the demand curve will be

negative externalities lead markets to produce...

greater than efficient output levels and positive externalities lead markets to produce smaller than efficient output levels

in a competitive market, the actions of any single buyer or seller will...

have negligible impact on the market price

the efficiency-wage theory of worker turnover suggests that firms with higher turnover will have...

higher production costs and lower profits

a consumer's willingness to pay directly measures...

how much a buyer values a good

the shift from S to S' is called a(n)

increase in supply

the effects of unionization on wages in the sectors of the economy that are unionized causes the supply of labor in the other sectors of the economy to...

increase, reducing wages in industries that are not unionized

the figure illustrates the market for coffee in Guatemala. when trade in coffee is allowed, producer surplus in Guatemala...

increases by the area B+D+G

Josiah installed a metal sculpture in his front yard. a positive externality arises if the sculpture...

increases the value of the other properties in the neighborhood

suppose that a firm in a competitive market has the following cost curve. the firm should shut down if the market price is...

less than $4.50

when studying how some event or policy affects a market, elasticity provides information on the...

magnitude of the effect on the market

when externalities exist, buyers and sellers...

neglect the external effect of their actions, and the market equilibrium is not efficient

real GDP will increase...

only when output increases

what is the socially efficient price and quantity?

price = B, quantity = y

correct statement about nominal GDP and real GDP...

real GDP is a better gauge of economic well-being than nominal GDP

an increase in quantity demanded...

results in a movement downward and to the right along a demand curve

a CPA recently has come to expect higher prices for expert tax advice in the near future. we would expect

the CPA to supply less expert tax advice now than she was supplying previously

the figure illustrates the market for calculators in a country. as a result of trade, total surplus increases by..

$250

the diagram depicts the market situation for a monopoly pastry shop called Bearclaws. given that Bearclaws chooses the profit maximizing price and quantity, what profit level will it obtain?

$280

suppose a certain competitive firm is producing q=500 units of output. the marginal cost of the 500th unit is $17, and the average total cost of producing 500 units is $12. the firms sells its output for $20. at q=499, the firm's profits equal...

$3,997

if the government imposes a price floor of $100 in this market, then consumer surplus will decrease by...

$325

assume a certain firm is producing q=1,000 units of output. at q=1,000, the firm's marginal cost equals $20 and its average total cost equals $25. the firm sells its output for $30 per unit. at q=1,000, the firm's profits equal...

$5,000

suppose a firm in a competitive market has the following cost curve. if the market price is $10, what is the firm's total revenue

$50

the diagram depicts the market situation for a monopoly pastry shop called Bearclaws. based upon the information show, what is the deadweight loss created by Bearclaws?

$70

the figure illustrates the market for coffee in Guatemala. in the absence of trade, the equilibrium price of coffee in Guatemala is..

$90

what expression can be used to compute the price elasticity of demand?

(q2-q1)/(q1+q2) x (p1+p2)/(p2-p1)

the figure illustrates the market for coffee in Guatemala. with trade, total surplus in the Guatemalan coffee market amounts to...

1,870

the price index was 220 in one year and 238.2 in the next year. what was the inflation rate?

8.3 percent

the figure illustrates the market for coffee in Guatemala. in the absence of trade, total surplus in Guatemala is represented by the area...

A+B+C+D+F

suppose you make jewelry. if the price of gold falls, then we would expect you to...

be willing and able to produce more jewelry than before at each possible price

Olga owns her own business. Sven is an unpaid worker in his family's business. who is included in the Bureau of Labor Statistics' "employed" category?

both Olga and Sven

President Bigego is running for re-election against Senator Pander. Bigego proclaims that more people are working now than when he took office. Pander says that the unemployment rate is higher now than when Bigego took office. You conclude that

both of them could be telling the truth if the labor force grew faster than employment

holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten year period because...

buyers tend to be much more sensitive to a change in price when given more time to react

if demand for leather decreases, producer surplus in the leather market...

decreases

the figure illustrates the market for coffee in Guatemala. when trade in coffee is allowed, consumer surplus in Guatemala...

decreases by area B+D

good x and good y are substitutes. if the price of good y increases, then the...

demand for good x will increase

when the quality of a good improves while its price remains the same, the purchasing power of the dollar

increases, so the CPI overstates the change in the cost of living if the quality change is not accounted for

suppose a firm in a competitive industry has the following cost curve. if the price is $6 in the short run, what will happen in the long run?

individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry

if an increase in income decreases the demand for a good, then the good is a(n)

inferior good

a group of buyers and sellers of a particular good or service is called a(n)

market

what policy is the government most inclined to use when faced with a positive externality?

subsidies

One problem with the consumer price index stems from the fact that, over time, consumers tend to buy larger quantities of goods that have become relatively less expensive and smaller quantities of goods that have become relatively more expensive. This problem is called

substitution bias

an important difference between the GDP deflator and the consumer price index is that

the GDP deflator reflects the prices of all final goods and services produced domestically, whereas the consumer price index reflects the prices of goods and services bought by consumers

economists use the term inflation to describe a situation in which...

the economy's overall price level is rising

in the long run the unemployment rate equals...

the natural rate of unemployment

suppose that large-scale pork production has the potential to create ground water pollution. why might this type of pollution be considered an externality?

the pollution has the potential for creating a health risk for water users in the region surrounding the pork production facility

the short-run supply curve for a firm in a perfectly competitive market is...

the portion of its marginal cost curve that lies above its average variable cost