Econ Final

Vipsana's Gyros House sells gyros. The cost of ingredients to make a gyro is $2, Vipsana pays her employees $60/day. She also incurs a fixed cost of $120/day. Calculate Vipsana's daily average fixed cost when she produces 50 gyros using two workers.

$2.40

Refer to Figure 4-4. What is the value of producer surplus at a price of $18?

$240

Refer to Figure 4-1. If the market price is $1.00, what is Arnold's consumer surplus

$3.00

Lucinda buys a new GPS system for $250. She receives a consumer surplus of $75. What value does Lucinda place on her GPS system?

$325

Refer to Figure 4-4. What is the value of consumer surplus at a price of $18?

$60

At a price of $10, how many units will be sold?

200

Increasing opportunity cost is represented by a ___ production possibilities frontier

bowed out

If the percentage increase in price is 15 percent and the value of the price elasticity of demand is -3, then quantity demanded

will decrease by 45 percent

If the demand for a product is perfectly inelastic, a decrease in the price of the product

will decrease total revenue.

If another worker adds 9 units of output to a group of workers who had an average product of 7 units, then the average product of labor

will increase

Refer to Figure 4-1. If the market price is $1.00, what is the consumer surplus on the third burrito?

$0.50

Refer to Figure 4-4. What is the value of the deadweight loss at a price of $18?

$100

Vipsana's Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is $2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day. What is Vipsana's daily total cost when she does not produce any gyros and does not hire any workers?

$120

DeShawn's Detailing is a service that details cars at the customers' homes or places of work. DeShawn's cost for a basic detailing package is $40, and he charges $75 for this service. For a total price of $90, DeShawn will also detail the car's engine, a service that adds an additional $20 to the total cost of the package. What is DeShawn's marginal benefit if he sells a basic detailing package?

$75

In Dec 2014, the average price go gas in the US was $2.50/gallon and consumers bought 7% more gas than they had during April 2014, when the average price was $3.60/gallon. Based on these numbers, what was the price elasticity of demand for gas from April 2014 to Dec 2014?

-0.19

Refer to Figure 2-2. What is the opportunity cost of one pound of meat?

1 & 1/3 pounds of vegetables

If 50 units are sold at a price of $20 and 80 units are sold at a price of $15, what is the absolute value of the price elasticity of demand? Use the midpoint formula.

1.62

Refer to Figure 11-1. The marginal product of the 3rd worker is

15

If four workers can produce 18 chairs a day and five can produce 20 chairs/day, the marginal product of the 5th worker is

2 chairs

Refer to Table 4-3. The table lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of The Waco Cowboy hats is $35, the waco kid will produce

2 hats

Bella can produce either a combination of 60 silk roses and 80 silk leaves or a combination of 70 silk roses and 55 silk leaves. If she now produces 60 silk roses and 80 silk leaves, what is the opportunity cost of producing an additional 10 silk roses?

25 silk leaves

Refer to Figure 2-2. What is the opportunity cost of one pound of vegetables?

3/4 pound of meat

Suppose the value of the price elasticity of demand is -3. What does this mean?

A 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent.

Hurricane Katrina damaged a large portion of refining and pipeline capacity when it swept through the Gulf coast states in August 2--5. As a result of this, many gasoline distributors were not able to maintain normal deliveries. At the pre-hurricane equilibrium price (i.e., at the initial equilibrium price), we would expect to see

A shortage of gasoline

Which of the following would result in a higher absolute value of the price elasticity of demand for a product?

A wide variety of substitutes are available for the good

Refer to Figure 4-2. What area represents the increase in producer surplus when the market price rises from P1 to P2?

A+B

Consider the following statements: a. Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area. b. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. Which of the statements demonstrates that economic agents respond to incentives?

A, B, C

What is the difference between an "increase in supply" and an "increase in quantity supplied"?

An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price

Which of the following statements is true?

An increase in supply causes a change in equilibrium price; he change in price does not cause a further change in demand or supply.

Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S1 (point C). Which of the following changes would cause the equilibrium to change to point B

An increase in the wages of apple workers and an increase in the price of oranges, a substitute for apples

Refer to Figure 3-2. A decrease in the price of the product would be represented by a movement from

B to A

If a producer is not able to expand its plant capacity immediately, it is

operating in the short run

Refer to Figure 3-1. An increase in the expected future price of the product would be represented by a movement from

D1 to D2

Refer to Figure 3-1. A decrease in the price of a substitute good would be represented by a movement from

D2 to D1

Refer to Table 3-1. The table shows the demand schedules for loose-leaf tea of two individuals, Sumil and Mia, and the rest of the market. If the price of loose-leaf tea rises from $3 to $4, the market quantity demanded would

Decrease by 32 lbs

_____ marginal opportunity cost implies that the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts.

Increasing

Which of the following statements about the price elasticity of demand along a downward-sloping linear demand curve is true?

It is elastic at high prices and inelastic at low prices.

Refer to Figure 11-2. Short run output is maximized at

L3

Refer to Table 9-1. Select the statement that accurately interprets the data in the table.

Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming

A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?

Marginal revenue

DeShawn's Detailing is a service that details cars at the customers' homes or places of work. DeShawn's cost for a basic detailing package is $40, and he charges $75 for this service. For a total price of $90, DeShawn will also detail the car's engine, a service that adds an additional $20 to the total cost of the package. Should DeShawn continue to offer the engine detailing service?

No, is marginal benefit is less than his marginal cost

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for women's clothing. Which panel best describes what happens in this market when the wages of seamstresses rise?

Panel B

Refer to Figure 3-7. Assume the graphs in this figure represent the demand and supply curves for Fruitopia, a soft drink. Which panel best describes what happens in the market for Fruitopia when the price of Snapple, a substitute product, decreases?

Panel D

Refer to figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for ramen noodles, an inferior good. Which panel best describes what happens in this market as a result of an increase in income

Panel D

Which of the following is a fixed cost?

Payment to hire a security worker to guard the gate to the factory around the clock.

Rank these three items in terms of the elasticity of demand for them at any given price, from most elastic to least elastic: hot beverages, coffee, and Peet's Coffee

Peet's Coffee, coffee, hot beverages

Holding all other personal characteristics--such as age, gender, and income-constant, economists would expect that

People with health insurance are more likely to be overweight than people without health insurance

Total Revenue Equals

Price per unit times quantity sold

Which of the following is an implicit cost of production?

Rent that could have been earned on a building owned and used by the firm

Olive oil producers want to sell more olive oil at a higher price. Which of the following events would have this effect?

Research finds that the consumption of olive oil reduces the risk of heart disease

Refer to Figure 3-2. An increase in the price of substitutes in production would be represented by a movement from

S2 to S1

Suppose when Nablom's Bakery raised the price of its breads by 10 percent, the quantity demanded fell by 15 percent. What was the effect on sales revenue?

Sales revenue decreased

Suppose the demand for milk is relatively inelastic. What happens to sales revenue if the government imposes a price floor above the free-market equilibrium price in the market for milk?

Sales revenue rises.

Which of the following statements about scarcity is true?

Scarcity refers to the situation in which unlimited wants exceed limited resources

Buyers rush to purchase stocks in CA vineyards following a forecast of a 30 percent decline in this year's grape harvest. What happens in the CA wine market as a result of this announcement?

The demand curve for CA wine shifts to the right in anticipation of higher prices in the future

Prices of CA merlot wine (assume this is a normal good) have risen steadily in recent years. Over this same period, prices for French oak barrels used for wine storage have dropped and consumer incomes have risen. Which of the following best explains the rising prices of CA Merlots?

The demand curve for Merlot has shifted to the right more than the supply curve has shifted to the right

Refer to Table 6-2. Assume that an economist has estimated the price elasticity of demand values in the table above. Use the data in the table to select the correct statement.

The difference in elasticity values is explained by the fact that the more narrowly we define a market the more elastic the demand will be

The principle of opportunity cost is that

The economic cost of using a factor of production is the alternative use of that factor that is given up

Refer to Figure 6-4. Which of the following statements about price elasticity of demand is true?

The elastic portion of a straight-line, downward-sloping demand curve corresponds to the segment above the midpoint

Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (point A). If the price of oranges, a substitute for apples, decreases and the wages of apple workers increase, how will the equilibrium point change?

The equilibrium point will move from A to E

Red Stone Creamry currently hires 5 workers. When it added a 6th worker, its output actually fell. Which of the following statements is true?

The marginal product of the 6th worker must be negative

If Canada imports fishing poles from Mexico and Mexico imports bacon from Canada, which of the following would explain this pattern of trade?

The opportunity cost of producing fishing poles in Canada is higher than the opportunity cost of producing bacon in Mexico

Which of the following statements about price elasticity of demand is false?

The value of the price elasticity of demand is the reciprocal of the value of the demand curve's slope.

Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because

They believe the restrictions will protect their jobs

Which of the following statements is true?

Total cost=fixed cost + variable cost

Perfectly inelastic demand is represented by a demand curve which is __ and relatively inelastic demand is represented by a demand curve which is ____.

Vertical; downward sloping

When Roxanne, a US citizen, purchases a designer dress from Barneys of NY that was made in Milan, the purchase is

a US import and an Italian export

Refer to Figure 11-2. Diminishing returns to labor set in

after L1

A characteristic of the long run is

all inputs can be varied

Refer to Table 2-1. Assume Tomaso's Trattoria only produces pizzas and calzones. A combination of 24 pizzas and 30 calzones would appear

along Tomaso's production possibilities frontier

If an increase in income leads to a decrease in the demand for popcorn, then popcorn is

an inferior good

Refer to Table 6-3. Over what range of prices is the demand elastic?

between $14 and $16

Studies have shown that smoking cigarettes can cause heart disease. Assume this is new information recently shared with the public, and favorable weather has increased the tobacco harvest in North Carolina. In the market for cigarettes, these two developments would

decrease demand and increase supply, resulting in a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of cigarettes

Which of the following can a firm do in the long run but not in the short run?

decrease the size of its physical plant

An article in the Wall Street Journal in early 2001 noted two developments in the market for laser eye surgery. The first development concerned side effects from the surgery, including blurred vision. The second development was that the companies renting eye-surgery machinery to doctors had reduced their charges. In the market for laser eye surgeries, these two developments

decreased demand and increased supply, resulting in a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of laser eye surgeries.

A service station owner in Staten Island, New York, was worried that raising the price of gasoline would cause the quantity demanded to fall by so much that he would be in a worse situation than if he did not raise the price. If raising the price of gasoline would cause the owner to receive less total revenue from the sale of gasoline, the demand for gasoline is

elastic

If the absolute value of the price elasticity of demand for DVD movies is 0.8, then the elasticity of demand for the DVD for the movie The Hangover should be

greater than 0.8 in absolute value

The production possibilities frontier model shows that

if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good.

A tariff is a tax imposed by a government on

imports

The market for smartwatches has begun to grow, due in part to the success of the Apple Watch. Following the successful launch of the Apple Watch in 2015, companies such as samsung, Sony, and LG have all developed precepts to compete with the Apple Watch. The smartwatches introduced to compete with the Apple Watch would be considered

inferior goods compared to the Apple Watch

Refer to Figure 11-1. The average product of the 4th worker

is 17

Refer to Figure 6-4. The inelastic segment of the demand curve

lies below the midpoint curve

In economics, the term ____ refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade

market

The production possibilities frontier shows the ___ combinations of two products that can be produced in a particular time period with available resources

maximum attainable

If the opportunity costs of production for two goods is different between two countries, then

mutually beneficial trade is possible

Refer to Figure 6-4. The absolute value of the price elasticity of demand at the midpoint of the demand curve is

one

Refer to Table 4-3. The table lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of The Waco Cowboy hats is $40

producer surplus will equal $28

If a firm raised its price and discovered that its total revenue fell, then the demand for its product is

relatively elastic

If, for a given percentage increase in price, quantity demanded falls by a proportionately smaller percentage, then demand is

relatively inelastic

If the demand for a life-saving drug was perfectly inelastic and the price doubled, the quantity demanded would

remain constant

Refer to Figure 2-1. Point B is

technically efficient

Refer to Figure 11-1. Diminishing marginal productivity sets in after

the 2nd worker is hired

Refer to Figure 11-2. The curve labeled "F" is

the average product curve

By definition, economics is the study of

the choices people make to attain their goals, given their scarce resources

Suppose a decrease in the supply of paper results in an increase in revenue. This indicates that

the demand for paper is inelastic

Refer to Figure 11-2. The curve labeled "E" is

the marginal product curve

When demand is unit elastic, a change in price causes total revenue to stay the same because

the percentage change in quantity demanded exactly offsets the percentage change in price

The law of demand implies, holding everything else constant, that as the price of bagels increases

the quantity of bagels demanded will decrease

Refer to Figure 3-4. If the price is $10,

there would be a shortage of 600 units

Refer to Table 11-3. The table refers to the relationship between the quantity of workers employed and the number of cardboard boxed produced per day by Manny's House of Boxes. The capital used to produce the boxes is fixed. Diminishing returns to labor are first observed in this example after Manny hires the ____ worker.

third