Econ Exam 2: Chapters 7,8,9

Which of the following statements best describes the concept of consumer surplus?

"I was going to pay $200 for new sunglasses that I had seen at the Oakley store but I ended up paying only $140 for the same sunglasses"

The unemployment rate:

# of unemployed / labor force * 100

Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers, 60 have full time employment, 20 have part-time employment, 20 do not have employment, but are actively looking for employment, 10 would like employment but do not have employment and are not actively looking for employment. The official unemployment rate as calculated by the U.S. Bureau of Labor would equal

(20/100) * 100

If the number of unemployed workers is 200 million, and the number in the labor force is 500 million, what is the unemployment rate?

(200/500) * 100 = 40%

Select the statement that accurately interprets the data in the table:

1. Madison has an absolute advantage in making empanadas and tacos 2. Madisons opportunity cost for making tacos is less than Austin's 3. Madison has a comparative advantage in making tacos

If there was no quota, how many pounds of peanuts would domestic producers supply?

10 million

With a quota in place, what is the quantity supplied by domestic producers?

18 million pounds

If there was no quota, how many pounds of peanuts would be imported?

30 million

Without the quota that the U.S. used to limit the imports of peanuts, the domestic price of peanuts equals the world price with is $2.00 per pound. What is the quantity of peanuts demanded by domestic consumers in the absence of a quota?

40 million pounds

Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals

800+ 300+ 300+ 200= $1,600

What area represents consumer surplus at P2?

A

When Sophie, a French citizen, purchases a Dell computer in Paris that was produced in Texas, the purchase is

A U.S. export and a French import

What area represents producer surplus at P2?

B + D + G

Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports. Which of the following counter-arguments is made by economists who oppose trade restrictions?

Consumers pay a high cost for jobs saved through trade restrictions

With a quota in place, what is the quantity consumed in the domestic market and what portion of this is supplied by imports?

Domestic consumption equals 34 million pounds of which 16 million pounds are imports

Producer surplus is the difference between the highest price a firm is willing to accept for a product and the price it actually receives for the product

FALSE

The advice to "keep searching, there are plenty of jobs around here for which you are qualified," would be most appropriate for which of the following types of unemployment?

Frictional unemployment

A country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where

GDP is much larger than GNP

Which of the following accurately describes an effect of hurricane Katrina on GDP

GDP would increase reflecting the costs of cleanup

The value of what a U.S. owned McDonald's produces in South Korea is included in the U.S. ? and the South Korean ?

GNP ; GDP

The Labor Force Participation Rate:

Labor force / working-age population *100

The difference between the lowest price a firm would have been willing to accept and the price it actually receives from the sale of a product is called

Producer surplus

If nominal GDP rises we can say that

Production has risen or prices have risen or both have risen

Which of the following describes the national security argument for protectionism?

Some goods should be insulated from foreign competition to ensure an adequate supply of these goods in the event of an international conflict

Which of the following countries is not one of the top three exporting countries in the world?

South Korea

When an economy is at its natural rate of unemployment, which of the following will be true?

The unemployment rate will be greater than 0%

Protectionism is the use of ? to protect domestic firms from foreign compeition

Trade Barriors

If a German firm produces cars in the U.S., that production should count towards

U.S. GDP

Which of the following goods is directly counted in GDP?

a 12-inch Subway sandwich purchased by a student

Countries gain from specializing in producing goods in which they have ? and trading for goods in which other countries have ?

a comparative advantage; a comparative advantage

Cyclical unemployment is the result of

a slowdown in the economy

Increases in real GDP would understate the well-being of a country over time if, over that time period, the

amount of pollution decreased

An economic principle that explains why people pursue different occupations is

comparative advantage

Economic efficiency is achieved when there is a market outcome in which marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and

consumer surplus + producer surplus is maximized

To calculate GDP by the expenditure method, one must add

consumption spending, investment spending, government spending, and net exports

In 2015, JP Morgan Chase announced it was laying off employees. The employees who were laid off due to the business cycle would be considered

cyclically unemployed

Domestically produced goods and services sold to other countries are referred to as

exports

Your roommate Hansen argues that American producers cannot compete with foreign producers because wages are lower in foreign countries than in the United States. Hansen is:

incorrect. Free trade raises living standards by increasing economic efficiency

An advantage of the establishment survey over the household survey of the labor market is that the establishment survey

is based on actual payrolls, rather than on unverified answers

The area above the market supply curve and below the market price

is equal to the total amount of producer surplus in a market

The Philippines and Vietnam have roughly the same size population. Suppose the GDP of the Philippines is $1,000 billion and the GDP of Vietnam is $10,000 billion. You should conclude

it is not possible to make a good comparison of the economic well being of a typical individual in the 2 countries without additional information

Jack just received a promotion at work and now works 50 hours per week instead of 35. As a result,

neither the unemployment rate nor the labor force participation rate changed

A full-time student who is not working is categorized as

not in the labor force

If real GDP in 2016 (using 2009 prices) is lower than nominal GDP of 2015, then

prices in 2016 are higher than prices in 2015

Suppose the labor force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed. The labor force participation rate will

remain constant

Suppose that nominal GDP in 2016 was less than real GDP in 2016. Given this information, we know for certain that

the price level in 2016 was less than the price level in the base year

Suppliers will be willing to supply a product in all of the following situations except when

the price received is less than the additional cost of producing the product

If, in a competitive market, marginal benefit is greater than marginal cost

the quantity sold is less than the equilibrium quantity