Econ Exam 1
A doctor has worked as a general practitioner for several years, earning an annual salary of $150,000. They are now deciding whether they want to open their own private practice or continue as a team member in the existing office. One-time start-up costs for the practice would be $100,000. If they open their own practice, they will receive a salary of $50,000 from the business annually until the practice is well-established. They anticipate the practice will take two years to become fully established. They paid $200,000 for medical school. They should open their own practice if the future benefits exceed: $300,000. $200,000. $500,000. $400,000.
$300,000.
A friend comes up to you and offers you a free ticket to a Dodgers game that night, and you decide to attend the game. The game takes five hours and costs you $25 for transportation. If you had not attended the game, you would have worked at your part-time job for $12 an hour. What is the cost to you of attending the game? The cost is zero—the ticket is free. $85 $60 $55
$85
If income rises by 10% and the quantity demanded of an item falls by 30%, the income elasticity of demand for this item is: -0.33. 0.67. 0.33. -3.
-3
The state of Massachusetts recently saw a 10% increase in the price of electricity, which brought about a 2% fall in the quantity of electricity consumed. The price elasticity of demand is equal to _____, and demand is described as _____. 5; inelastic 0.2; inelastic 5; elastic 0.2; elastic
0.2; inelastic
A city economist is consulting with the public utility companies to determine an optimal pricing plan. When the price of water usage falls by 1%, the quantity demanded rises by 0.44%. The absolute value of the price elasticity of demand for water usage is _____. 0.44 44.0 2.27 1.00
0.44
Janelle recently received a promotion at her job, increasing her income from $940 per week to $1,060 per week. As a result, she decides to purchase 9% more sushi per week. Computed using the midpoint method, the income elasticity of Janelle's demand for sushi is: 0.90. 1.33. 0.75. 1.00.
0.75.
A heat wave in Las Vegas causes tourists to cancel their hotel room reservations and vacation elsewhere. 1. Which of the following will occur in the market for Las Vegas hotel rooms? supply will decrease demand will increase demand will decrease supply will increase 2. Will the heat wave result in a shortage or surplus of Las Vegas hotel rooms at the previous price? Will the price of hotel rooms rise or fall? shortage, fall shortage, rise surplus, rise surplus, fall
1. demand will decrease 2. surplus, fall
Suppose General Electric, one of the largest suppliers of light bulbs, decides to discontinue its production of light bulbs. 1. Which of the following will occur in the market for light bulbs? demand will decrease supply will increase supply will decrease demand will increase Will General Electric's exit from the light bulb market result in a shortage or surplus of light bulbs at the previous price? Will the price of light bulbs rise or fall? surplus, rise surplus, fall shortage, fall shortage, rise
1. supply will decrease 2. shortage, rise
a. New advances in recycling technology reduce the cost of producing paper made from recycled material. 1. Which of the following will occur in the market for paper made from recycled material? demand will decrease demand will increase supply will increase supply will decrease 2. Will the advancement in recycling technology result in a shortage or surplus of paper made from recycled material at the previous price? Will the price of paper made from recycled material rise or fall? surplus, rise surplus, fall shortage, fall shortage, rise
1. supply will increase 2. surplus, fall
Ashley Furniture sells 13,000 couches per month at a price of $800 per couch. When the price falls to $600, the quantity sold rises to 18,500. Use the midpoint formula to calculate the absolute value for price elasticity of demand for couches at Ashley Furniture. 1.69 0.82 0.59 1.22
1.22
Consider the data in the table. The price of gasoline is $3.99 per gallon. If Rexhall Fuel Supplies is a rational seller, how many gallons of gasoline should it be willing to sell? See google doc 7 42 million gallons per week 14 million gallons per week 30 million gallons per week 20 million gallons per week
20 million gallons per week
You're a management consultant hired by Sunco Lighting, Inc., to estimate the demand for high-efficiency LED light bulbs. The table shows the results of a survey you conducted of four representative consumers in a market of 40,000 consumers overall. You asked the four buyers how many high-efficiency LED light bulbs they would buy in a year at different prices. (Google doc image 4) What market quantity demanded would you project, based on these data, at a price of $7 per bulb? 1,100 2,400 240,000 960,000
240,000
(Figure: Recliners and Couches) American Signature is a furniture company based in Columbus, Ohio. The graph represents American Signature's production possibility frontier for manufacturing couches and recliners. (Check Google Doc 1 for image) The sales team at American Signature has reported that sales of couches have increased. The company would like to increase manufacturing from 100,000 couches to 200,000 couches. As the company's economist, what is the opportunity cost of producing the 100,000 additional couches? 300,000 recliners 100,000 recliners 300,000 couches 100,000 couches
300,000 recliners
Metformin, a diabetes drug, is produced as a generic by Glumetza. The marginal cost of producing a bottle of Metformin is indicated in the table below in 1,000 unit increments per day. See google doc 8 If the market price of Metformin is $11.65, how many bottles of Metformin should Glumetza produce per day to maximize its profits? 2,000 4,000 3,000 5,000
3000
The price of chicken breast rises from $3.30 per pound to $3.63 per pound. In response to this price change, the quantity demanded for chicken breast falls by 40%. The absolute value of the price elasticity of demand for chicken breast is _____, and the price elasticity of demand is _____. 4.2; elastic 4.2; inelastic 0.24; inelastic 0.24; elastic
4.2; elastic
Which of the following statements are true? Your current economics course, the next election, and the dating scene can all be seen as markets. Markets are forums in which parties exchange goods and services at a "price," where the latter can be flexibly construed. Markets by definition involve the exchange of money for goods and services.
A and B
The average price of gasoline is $3.25 per gallon in your town. a. At a price of $0.50 per gallon, there would be a __________ as the amount of gasoline people are willing and able to buy ______ the amount of gasoline gas stations are willing and able to sell. b. At a price of $6.00 per gallon, there would be a ________ as the amount of gasoline people are willing and able to buy is ______ the amount of gasoline gas stations are willing and able to sell.
A. Shortage; exceeds B. Surplus; less than
The cost of lithium‑ion batteries, used for electric cars, has been dropping more steeply than expected. The equilibrium price of electric cars _________ .The equilibrium quantity of electric cars __________ . A: Increases or decreases B: increases or decreases
A: decreases b: increases
When a popular comedian announces a tour, tickets often sell out quickly. However, it is quite common for the tour coordinator to later announce additional shows in the form of matinees and late-evening performances. Why would the tour coordinator include unpublicized additional shows in the tour schedule? Additional shows create extra capacity and increase the tour's price elasticity of supply. People who purchased a ticket consider the comedian's show to be an inferior good. The tour coordinator knows that the price elasticity of demand for tickets is perfectly elastic. Attendees to the shows consider many other comedians' performances to be close substitutes.
Additional shows create extra capacity and increase the tour's price elasticity of supply.
In what ways does seeking a marriage partner resemble a market? The impulse to marry is deeply rooted in emotion. There is a demand side and a supply side: prospective partners both demand and supply time, effort, certain capabilities, and emotional commitment. Marriage is usually solidified with a legal contract. There is a "price," namely, the commitment one makes to love, support, and spend time with the prospective partner.
B,C,D
Identify which of the following you would act as a buyer/seller: A) You purchase coffee in a coffee shop b) You consider which politician to vote for in an upcoming election C) You seek employment in the industry for which you have trained D) You've written a book and several publishers are interested in purchasing the rights to publish your work E) You're considering which job applicant to hire at your company
Buyer/Demander: A, E Seller: B,C,D
The building contractor Wise Choice Construction is initially at point E in the multi-family apartment building market. When prices of single-family homes rise, Wise Choice starts to build more single-family homes and fewer multi-family apartment buildings. Which point represents a plausible supply choice for the company in the multi-family apartment building market? See google doc 12 C B A D
C
The demand curve for meals at a local Chick-fil-A will shift to the left if: Chick-fil-A offers a free sandwich to people who sign up for their new rewards app. the price of a meal at Chick-fil-A rises. incomes increase, and Chick-fil-A meals are a normal good. the price of gasoline falls in the area.
Chick-fil-A offers a free sandwich to people who sign up for their new rewards app.
Which statement BEST illustrates the law of demand? An increase in food prices encourages more individuals to buy more food, owing to scarcity. Consumers buy more iPhones because prices have fallen. Tesla produces more cars as prices increase. Fewer people visit Disneyland because incomes have fallen.
Consumers buy more iPhones because prices have fallen.
Which of these scenarios depicts a rational buyer? Mary values a bag of salad at $2, but she buys the bag of salad even when the price is $4. John walks into a grocery store and purchases monthly groceries without paying attention to the prices of groceries. Darwin buys a can of shoe polish at $4.50 when his marginal benefit from it is $3.75. Damien buys a sandwich for $5 when the marginal benefit of the sandwich to him is $7.
Damien buys a sandwich for $5 when the marginal benefit of the sandwich to him is $7.
The demand for disposable diapers is inelastic. Which statement would explain this phenomenon? Disposable diaper purchases consume a large portion of most parents' income. Parents have a lot of time to adjust to price changes. Disposable diapers are a necessity for most parents of infants. There are many substitutes for disposable diapers.
Disposable diapers are a necessity for most parents of infants.
Figure: Four sample demands) A hotel in Cape Cod, Massachusetts, is completely booked during August. However, in September, tourism drops significantly, and some hotel rooms remain empty. Which of the graphs depicts this scenario? (See google doc image 5) Graph A Graph B Graph C Graph D
Graph A
If companies frequently start using drones to deliver products, which graph shows the effect this will have on the market for drones? See google doc 11 Graph A Graph B Graph D Graph C
Graph A
(Figure: Four Supply Curves) Which of these graphs shows what will happen in the market for bread if the price of organic wheat used in bread production rises? See google doc 11 Graph B Graph C Graph D Graph A
Graph C
Vincent makes handcrafted dining tables, and he is trying to decide how many tables to produce. He can sell each dining table for $1,000. The cost of the first table is $900, for the second it's $1,100. For each additional table he produces, the marginal cost of each table increases by $200. How many dining tables should Vincent produce, and what is the total cost of his production? Vincent will not make any tables. He will produce one table at a cost of $900. He will produce two tables at a cost of $2,000. He will produce three tables at a cost of $3,300.
He will produce one table at a cost of $900.
How is the economic surplus generated by a decision calculated? It is the total benefits minus total costs arising from the decision. It is the total benefits plus total costs arising from the decision. It is the sum of benefits arising from the decision. It is the sum of costs arising from the decision.
It is the total benefits minus total costs arising from the decision.
An investor is franchising a new type of fitness studio that will be the first in the city and must determine how many locations to open. For each location, they will hire a manager for a salary of $4,000 per month and two part-time employees who will earn $2,000 each per month. The investor values their time spent overseeing each location at $7,500 per month. Additional operating costs, including rent and utilities, will be $6,000 per month at each location. The investor projects that when the business gains traction, the first location will have 1,000 members. The second location will bring in 900 members. The third and fourth locations will bring in 300 and 200 members, respectively. The monthly membership fee will be $70 per member. The investor has decided to definitely open two locations. Should they open a third location? Yes, because marginal benefit would exceed marginal cost. Yes, because marginal cost would exceed marginal benefit. No, because marginal cost would exceed marginal benefit. No, because marginal benefit would exceed marginal cost.
No, because marginal cost would exceed marginal benefit.
Suppose that a rise in average income increases the demand for preventative dental visits. a. The increase in income leads to an increase in 1) ________ This is because, as demand increases, 2)_________________________. 1. Quantity supplied or supply 2. the supply curve shifts to the right to accommodate the increase in demand or the equilibrium quantity moves up the supply curve to a higher price and more quantity supplied
Quantity supplied; the equilibrium quantity moves up the supply curve to a higher price and more quantity supplied
Which of these items is a normal good? canned food instant noodles steak third-hand cars
Steak
You purchased a ticket to the musical Hamilton through a verified reseller for $457.00. When your ticket arrives, you see that the face value printed on it is $259.00. Which of the following is correct? The face value is above the equilibrium price because the rate in the secondary market is below the face value. The rate in the secondary market is above the equilibrium price because it exceeds the face value. The rate in the secondary market is below the equilibrium price because it falls below the face value. The face value is below the equilibrium price because the rate in the secondary market exceeds the face value.
The face value is below the equilibrium price because the rate in the secondary market exceeds the face value.
Paper producers can manufacture both printing paper and drawing paper. What effect would rising prices for printing paper have on the supply of drawing paper? The supply of drawing paper will decrease. The quantity of drawing paper supplied will increase. The supply of drawing paper will increase. The quantity of drawing paper supplied will decrease.
The supply of drawing paper will decrease.
You are a small business owner preparing to launch your first ad campaign to attract new customers, and must decide whether to learn about advertising yourself or hire a professional to launch the campaign. The campaign will last three months. If you hire a professional, you'll have to pay them a lump sum of $1,000 for the entire campaign. But if you decide to do it yourself, you'll take a course that costs $200 to introduce you to the skill. You'll also pay an employee $340 per month to work some of the hours you normally work while you manage the campaign. Would it be better to hire a professional rather than doing the campaign yourself? Yes, because your economic surplus is $220. Yes, because your full set of costs is only $540. No, because the benefit of not having to do it yourself is greater than the cost of the professional. No, because you can increase your economic surplus if you do it yourself.
Yes, because your economic surplus is $220.
Why might you underestimate the increase in market quantity demanded when you lower your price? You may not take into account potential new customers attracted by the lower price. Some of your current customers may switch to a rival's product, so a drop in price doesn't produce any additional sales. Lowering the price only increases the quantity demanded for inferior goods. A price reduction increases the quantity demanded for individuals but not for the entire market.
You may not take into account potential new customers attracted by the lower price.
You're the manager of an independent coffee bar with a loyal customer base, and you have accurate information about your current customers' demand curves. You lower the price on your lattes, but the new total quantity demanded for your lattes far exceeds your estimate. What is the MOST likely explanation? You neglected to factor in new customers entering your market due to the lower price. In response to your move, your competitors lowered their prices to remain competitive. Incomes have fallen, and your latte is a normal good. The price of bubble tea, which many of your customers see as a substitute for lattes, fell.
You neglected to factor in new customers entering your market due to the lower price.
You just moved into your new apartment, which has washer and dryer hookups, but your apartment complex doesn't provide washers and dryers. You don't want to go to a laundromat. You can rent a washer and dryer set from an appliance rental company for $30 per month. Alternatively, you could buy a set for $1,100, which you could sell after one year for $700, or $600 after two years. You plan to stay in this apartment for two years, since it's near your job. Should you buy or rent the set? You should rent the set because renting earns $40 worth of economic surplus. You should rent the set because renting earns $400 worth of economic surplus. You should buy the set because buying earns $220 worth of economic surplus. You should buy the set because buying earns $500 worth of economic surplus.
You should buy the set because buying earns $220 worth of economic surplus.
Antonio has a cell phone, and his service provider is AT&T. When he calls his wife, Erika, who is also an AT&T customer, he does not have to pay for those minutes. The more AT&T customers there are in the market, the greater the benefit Antonio receives. This is: a network effect. the Coase theorem. a Pigouvian subsidy. a technology spillover.
a network effect.
Dental services are: a normal good. expenses that do not change with income. an inferior good. a natural good.
a normal good
Figure: Netflix subscriptions) The graph represents monthly Netflix subscriptions. If Hulu, another streaming service, raises its price, what is MOST likely to happen to the demand curve for Netflix? (See google doc 6) a shift from Old demand to New demand 1 a shift from Old demand to New demand 2 a movement from point A to point B a movement from point B to point A
a shift from Old demand to New demand 1
See Google doc 13 for all Consider the following data from the market demand and supply for apartments. a. Suppose that the average monthly rent for apartments is $1,200. At this price, how many apartments will be rented in this market? _________ b. Is the market currently in equilibrium, experiencing a shortage, or experiencing a surplus? surplus equilibrium shortage c. What do you expect to happen to the average rent? will not change rise fall d) What is the equilibrium rent and quantity in the market? Rent:_____ Quantity:_____
a) 11,000 b)shortage c) rise d) 1400;14000
When you arrive at a gas station, there is a line of cars wrapped around the block waiting for gas, so you go to the gas station down the road only to find another line of cars! You get in line and end up waiting over an hour just to get to the pump and be told that they've run out of gas. This market is a)___________ because b)___________________ a: In equilibrium or not in equilibrium b: the quantity of gasoline being supplied has been exhausted, clearing the market or people are still willing and able to purchase gasoline, even though quantity supplied has been exhausted
a) not in equilibrium b)people are still willing and able to purchase gasoline, even though quantity supplied has been exhausted
When British regulators were forced to suspend the license of a flu vaccine plant in Liverpool operated by the Chiron Corporation due to concerns over bacterial contamination, the number of flu vaccines available in the United States market decreased by 48 million doses. This was nearly half of the total supply of vaccines in the market. As a result of the decline in available flu vaccines, the equilibrium price should a)_______________, and the equilibrium quantity should b)__________ a: fall somewhat rise significantly fall significantly rise somewhat b: fall somewhat rise significantly fall significantly rise somewhat
a: rise significantly b: fall significantly
According to a 2016 article in the Wall Street Journal, "After years of relative equilibrium, the job market for nurses is heating up in many markets, driving up wages and sign-on bonuses for the nation's fifth-largest occupation." Many nurses who had delayed their retirement due to the 2008 recession began to retire, resulting in a retirement wave that caused nurses to exit the workforce in greater numbers than new nurses were entering. At the same time, demand for nurses had increased due to the additional health care coverage associated with job growth over the previous decade since the recession and the Affordable Care Act. A) The developments described have a ________ effect on the equilibrium wage of nurses. B) The developments described have an _________ on the equilibrium quantity of nurses A: Postive, negative, or indeterminate B: Postive, negative, or indeterminate
a; positive b: indeterminate
Shifts in the market demand curve occur: because of all the factors that shift individual demand curves, along with changes in the types and number of buyers. only because of changes in income and preferences, along with changes in the types and number of buyers. only because of changes in the types and number of buyers. only because of the same factors that shift individual demand curves.
because of all the factors that shift individual demand curves, along with changes in the types and number of buyers.
The cost-benefit principle evaluates _____ costs and benefits, and willingness-to-pay considerations quantify _____ costs and benefits. both monetary and nonmonetary; only nonmonetary only monetary; both monetary and nonmonetary only nonmonetary; only monetary both monetary and nonmonetary; only monetary
both monetary and nonmonetary; only nonmonetary
Three gas stations make up the market for gasoline in your town. The number of gallons of gasoline that each gas station is willing to supply per week at various prices is indicated in the accompanying table. See Google doc 9 C D B A
c
A farmer finds that when he produces more pumpkins, he also has more pumpkins he can sell as decorations. To the farmer, pumpkins and decorative pumpkins are: inferior goods. unrelated goods. substitutes in production. complements in production.
complements in production.
(Figure: Leo's marginal benefit) The graph depicts Leo's marginal benefit curve for ride-shares per week. If the price is $4, how many rides will he order this week? (Google Doc image 2) two rides three rides four rides five rides
three rides
In employing the marginal principle, a seller may: compare production of a good or service to the next best alternative. decide whether to supply one more unit of a good or service. decide whether to charge the perfectly competitive price. consider the choices made by other sellers in the market.
decide whether to supply one more unit of a good or service.
The cross-price elasticity of demand between Fanta and Dr. Pepper has been estimated at 0.61. If the price of Dr. Pepper falls by 10%, the quantity demanded of Fanta will: not change because many people prefer Fanta to Dr. Pepper. increase. decrease by less than 6.1%. decrease by 6.1%.
decrease by 6.1%.
If the price of paint rises, we can expect the: quantity of paint demanded to increase. demand for paintbrushes to decrease. demand for paintbrushes to increase. quantity of paintbrushes demanded to remain unchanged.
demand for paintbrushes to decrease.
Over the past several years, sushi has become increasingly popular among consumers. This means that the _____ has _____. quantity of sushi demanded; increased demand for sushi; decreased demand for sushi; increased quantity of sushi demanded; decreased
demand for sushi; increased
As an equity analyst with an investment management company, you monitor market conditions in the dairy sector. Which of these would shift the market supply curve you've modeled for milk? an increase in the incomes of consumers expectations of a future decline in the price of milk an increase in population the rising popularity of milk
expectations of a future decline in the price of milk
Charles is a manager at a coffee shop, and he has to decide how many workers to hire. One worker can make 25 drinks that sell for $5 on average in one hour. A second worker can make another 20 drinks in one hour. The marginal benefit of each additional worker decreases by five drinks, with each additional hire. Given that workers are paid $15 per hour and have eight-hour shifts, how many employees should Charles hire for each hour? three four five six
five
The Rational Rule for Sellers says that a seller should sell one more unit of an item if the price is: less than the marginal cost. greater than or equal to the marginal cost. greater than or equal to the marginal benefit. less than the marginal benefit.
greater than or equal to the marginal cost.
In the graph, the movement from point L to point K is caused by a(n): See google doc 10 increase in the price of the item. decrease in the supply of the item. increase in the supply of the item. decrease in the price of the item.
increase in the price of the item.
Facebook is subject to network effects because: its value to an individual declines when the number of other people using it increases. its value is determined only by its marginal private benefit. its value to an individual increases when the number of other people using it increases. it yields negative externalities.
its value to an individual increases when the number of other people using it increases.
You are an economist for a prestigious private university, and the Board of Trustees tasks you with determining how much a tuition increase would impact university enrollment for different types of students. The proposed tuition increase is 10%. The absolute value of the price elasticity of demand for legacy students, that is, students whose parents graduated from the university, is 0.15 and for nonlegacy students it is 0.33. The demand curve for legacy students is _____ elastic than the demand curve for nonlegacy students. The rise in tuition would lower legacy student enrollment by _____%. more; 1.5 less; 3.3 more; 3.3 less; 1.5
less; 1.5
Following the Rational Rule, the maximum economic surplus occurs when: total benefits equal total costs. total benefits exceed total costs. marginal benefits equal marginal costs. marginal benefits exceed marginal costs.
marginal benefits equal marginal costs.
The _____ is the increase in output that is produced when a business hires an additional worker. marginal product marginal cost total product average product
marginal product
You run an electronics store that sells, among other items, big screen televisions. As the market price of big screen televisions decreases, the: supply of big screen televisions increases. quantity of big screen televisions supplied decreases. quantity of big screen televisions supplied increases. supply of big screen televisions decreases.
quantity of big screen televisions supplied decreases.
Gasoline prices have been rising. As time passes, people will adjust to the higher price, and the demand for gasoline becomes: steeper. higher. more elastic. more inelastic.
more elastic.
In the markets for grocery and household items, some consumers have more elastic responses than others. Stores recognize this and often offer price reductions in the form of coupons. The price elasticity of demand for people who use coupons is _____ elastic than for other consumers because coupon users _____. less; have higher incomes than the average consumer more; are willing to search for a low-cost alternative more; have higher incomes than the average consumer less; are willing to search for a low-cost alternative
more; are willing to search for a low-cost alternative
If the income elasticity of demand for a good is _____, the good is said to be _____. negative; inferior negative; a complement positive; a substitute positive; inferior
negative; inferior
The interdependence principle states that your best choice today depends on all of these EXCEPT: past decisions you have made. expectations about the future. other decisions you are currently making. decisions others are currently making.
past decisions you have made.
(Figure: Graph) Refer to the graph to answer the question. A decrease in the price of an item will cause the movement from: (Google Doc Image 3) point P to point W. point N to point M. point T to point P. point Q to point P.
point Q to point P.
The law of supply refers to the: inverse relationship between price and quantity demanded. positive relationship between price and quantity demanded. positive relationship between price and quantity supplied. inverse relationship between price and quantity supplied.
positive relationship between price and quantity supplied.
Much like toilet paper, toothpaste is a necessity. The income elasticity of demand for toothpaste is likely to be _____ and _____. positive; above 1 negative; below −1 negative; close to 0 positive; close to 0
positive; close to 0
A measure of how responsive buyers are to price changes is the: price elasticity of demand. price elasticity of supply. cross-price elasticity of demand. income elasticity of demand.
price elasticity of demand.
If quantity demanded responds substantially to a relatively small change in price, demand is: price-elastic. insensitive to changes in price. price-inelastic. positively sloped.
price-elastic.
The figure shows four different demand curves for four different products. Which of the products has a perfectly inelastic demand curve? See google doc 14 product D product A product C product B
product A
If the price of jet fuel rises, the: supply of jet fuel will increase. quantity of jet fuel supplied will increase. supply of airline flights will increase. supply of jet fuel will decrease.
quantity of jet fuel supplied will increase.
When plotting a supply curve, you measure: quantity supplied on the vertical axis. quantity supplied on the horizontal axis. price on the horizontal axis. quantity demanded on the vertical axis.
quantity supplied on the horizontal axis.
A central and fundamental theme in economics is that: for me to have something, someone else must be willing to give it up. the United States is a rich country, but we are simply not aware of it. resources are limited and cannot satisfy all the ways a society wants to use them. we can build as much as we want, since resources are unlimited.
resources are limited and cannot satisfy all the ways a society wants to use them.
Dependencies over time reflect the fact that: you have limited resources. society has limited resources. resources are spread across varying markets. resources can be spread across time.
resources can be spread across time.
If the supply of green tea rises, the equilibrium quantity will 1)______, and the equilibrium price will 2)______. This is because the 3)_________________________. 1. rise or fall 2. rise or fall 3. the demand curve shifts to the right to accommodate the increase in supply or the equilibrium quantity shifts to the right to accommodate the increase in supply
rise; fall; the equilibrium quantity shifts to the right to accommodate the increase in supply
Diminishing marginal product leads to: increased supply of an item. rising marginal costs for a seller. lower opportunity costs of producing an item. decreased profitability for a seller.
rising marginal costs for a seller
The study of economics arises because of the necessity of choice, and the necessity of choice arises because of the fundamental problem of: inefficiency. equilibrium. inequity. scarcity.
scarcity
Suppose the cross-price elasticity of demand for apple sauce and avocados is 0.96, but the cross-price elasticity for soda and oranges is -0.80. This means that apple sauce and avocados are _____, whereas soda and oranges are _____. substitutes; complements inelastic goods; elastic goods complements; substitutes elastic goods; complements
substitutes; complements
Henderson Lumber is a lumber mill that produces both boards used in construction and sawdust, a byproduct of the board production, used in agriculture. When the housing market collapses, causing house prices along with the prices of boards used to build houses to fall, Henderson Lumber's _____ will likely _____. supply of sawdust; decrease quantity of boards supplied; increase supply of sawdust; increase quantity of sawdust supplied; increase
supply of sawdust; decrease
The marginal cost of an additional worker is: always equal to the cost from the first worker hired. always equal to the benefit of hiring the additional worker. the total cost of all workers hired. the additional cost of hiring one more worker.
the additional cost of hiring one more worker.
Recent research suggests that certain refillable plastic water bottles may leech cancer-causing particles into the containers with repeated usage. As a result of this research being made public, one would expect: the demand for such containers to decrease. the quantity demanded of such containers to increase. no effect. the price of the containers to change because of a movement along the demand curve.
the demand for such containers to decrease.
While attending college, you are also working as a freelance writer, writing product descriptions for catalogues for $40 per piece. You start each morning writing product descriptions when your mind is fresh. However, at a certain point, you recognize that the more product descriptions you write, the less quality time you can devote to your studies, worsening your grades and somewhat dampening your long-term income prospects. You should stop writing product descriptions when: the perceived opportunity cost of writing another product description in terms of foregone long-term income falls below the $40 you could earn writing another description. you've fully exhausted your creative powers for the day and so can write no more product descriptions. you'd prefer studying to writing product descriptions. the perceived opportunity cost of writing another product description in terms of foregone long-term income rises above the $40 you could earn writing another product description.
the perceived opportunity cost of writing another product description in terms of foregone long-term income rises above the $40 you could earn writing another product description.
Rose's parents have booked and paid for a family trip to Aspen, Colorado, during her spring break. Rose's friends recently decided to drive to Destin, Florida, for spring break. Rose needs to decide whether to join her parents in Aspen or drive to the beach with her friends. The opportunity costs of joining her friends on the trip to Destin include each of these EXCEPT: her parents' anger if she skips the family trip to Aspen. her contribution to gas money for the drive to Destin. the ski lift ticket her parents have already purchased for her. the hotel costs she will split with her friends in Destin.
the ski lift ticket her parents have already purchased for her.
The opportunity cost of a good is: smaller during periods of economic recession. equal to the monetary cost of the good. larger during economic booms. the value of the next best alternative given up to acquire the good.
the value of the next best alternative given up to acquire the good.
In a typical week, Cheyenne buys four lattes at Starbucks. If the price of lattes doubles, what is the MOST likely number of lattes she will buy? two five eight four
two
In a small town in Kansas, the owner of the town's only gas station claims that he will sell the same quantity of gas no matter how high or low the price. If his assertion is correct, the demand curve for gas at his station must be _____, and the price elasticity is _____. horizontal; infinite vertical; infinite horizontal; zero vertical; zero
vertical; zero
It is a rainy day, and you are considering taking an Uber one mile to meet some friends. You have decided you are willing to pay $20 to avoid getting wet from the rain. The trip would normally cost you $8, but due to the weather the surcharge is triple the regular cost. You should _____ because the benefit to you of taking the Uber is _____ than the cost. walk; less walk; more take an Uber; less take an Uber; more
walk; less
On a hot sweltering day, you feel thirsty and buy an ice-cold soft drink, which you gulp down. Whether you buy a second drink or not will depend on: how you feel about soft drinks. the total quantity of soft drinks you have consumed that week. the price of the soft drink. whether the marginal benefit of the second soft drink exceeds the price of the drink.
whether the marginal benefit of the second soft drink exceeds the price of the drink.
Juan is willing to pay $900 for a new iPad. He offers to pay $800 for an iPad at the Apple store. It costs Apple $700 to produce this iPad. A voluntary economic transaction between Juan and Apple _____ occur because _____ would be better off due to the transaction. will; neither Juan nor Apple will; both Juan and Apple will not; only Juan will not; only Apple
will; both Juan and Apple
