Economics Micro

The invisible Hand

Daniel is a baker who has decided to create his own brand of chain restaurants, Short and Sweet. He negotiates with three suppliers for weeks and ultimately signs contracts with these suppliers. Francis, who owns a new sugar plantation, agrees to sell Daniel freshly refined sugar on the condition that Daniel helps him advertise his brand of sugar. Diana runs an orchard and provides Daniel with fruit. She enters into the partnership knowing that she can dramatically increase her profits if she can sell fruit to Daniel. Lastly, Ryan, who owns a mill, decides to purchase a new piece of machinery so that he can sell Daniel flour at a lower price than his competitor. The end result of Daniel's interactions with his suppliers is that folks in his neighborhood have a chance to buy delicious baked goods at reasonable prices. Daniel's situation with his suppliers is an example of?

Excess Demand: 4 million bags

Determine the size of the excess demand. -On graph: Excess demand line is on the 3 million line so look above the line for the answer.

a) 11.25 b) 8.75 c) 20

GRAPH: Demand: Price:9 | Quantity:10> Supply: Price:1 | Quantity:10> a) What is the value of consumer surplus? b)What is the value of producer surplus? c)What is the value of total (also called social or economic) surplus?

a. 4.25 b. 0.54 c. t-shirts & Ice cream

Ice Cream | T-Shirts Paulie: 4.00. 17.00. Vinny: 10.00. 12.00. a)What is Paulie's opportunity cost of producing a cup of ice cream? b) What is Vinny's opportunity cost of producing a t-shirt? c)Paulie has a comparative advantage in________and Vinny has a comparative advantage in________.

a) creamer b) consumers will try to find alternatives to coffee due to increases in the price of coffee

a) Which of the items is most likely to be a complement to coffee? b) Assume that a monsoon destroys the coffee crop in Vietnam, one of the world's largest coffee producers. What will likely occur?

a) neither good b) Both goods

a) kate has an absolute advantage in...... -Breads:4 | Cakes:8 b) sarah has an absolute advantage in...... -Breads:12 | Cakes:9

a) -An impending nucular war causes people to stock up on twonkies, a popular snack cake provided by many companies. b) -Sub-zero weather in New York, where the super bowl is being played, causes people to become disinterested in watching the super bowl live. What happens to ticket price in the scalping market? -The Nile River floods this year add an exceptional amount of silt to the soil, resulting in increased crops of cotton. - An outbreak of mad cow disease causes Americans to abstain from eating beef.

a) upward pressure on price.... b) downward pressure on price.....

-6.7 million pounds ....... the demand curve shifted to the right

chciken feet: | QD2008 | QD2018 $3.00 3.0 9.2 $2.50 3.2 9.9 $1.25 3.6 10.3 $1.00 4.1 12.2 $0.50 5.7 15.0 How many more chicken feet were demanded in 20182018, at a price of $2.50 a pound, than in 2008? Based on the demand schedule, you conclude.......

Germany has a comparative advantage in the production of televisions, while Korea has a comparative advantage in the production of personal computers.

# of TV | # of com. One worker Germany: 40 | 10 One worker in Korea: 16 | 8 Which statement is true?

a) $10 b) a surplus of 20 movies occurs

price per mov.|Q. films dem.|Q. films sup. $15 40 80 $12 50 70 $10 60 60 $7 70 50 $5 80 40 a) What is the equilibrium price per movie? b)At a price of $12 per movie,

-Sierra Leone has the highest child survival rate. -Healthcare is the only thing that improves as economic growth occurs. -Economic growth affects only the richest countries. ---The wealthiest countries have the lowest mortality rates.

what can you conclude?

a) an increase to the overall price level b) A person whose salary has increased is able to purchase fewer goods and services

a) What is inflation? b)Which of the examples provides the best evidence that inflation has occurred?

a) -consumer surplus -$5 b) -producer surplus -$0 c) -producer surplus -$25 d) -consumer surplus (-0.25)

-For each of the scenarios, calculate the surplus and indicate if it is a producer surplus or a consumer surplus. a) Alice is willing to spend $30$30 on a pair of jeans, and has a coupon for $10$10 off which she found online. She selects and purchases a $35$35 pair of jeans which cost $35$35 pre-discount. -Alice has a.... -Alice's surplus: b) Nicole has a hockey puck from the 2010 Winter Olympic Games and puts it up for sale on eBay. She will only sell the puck if the winning bid is greater than or equal to $500$500. After bidding closes, the last bid stands at $500$500. -Nicole has a..... -Nicole's surplus: c) Claire is trying to sell her used calculus textbook online. She asks for $150$150 or best offer, and is willing to sell for anything over $100$100. She is able to sell it for $125$125. -Claire has a..... -Claire's surplus: d) Roy is willing to pay $2.50 for a sports drink. He puts $5.00 into the vending machine and pushes the button for the sports drink without noticing that the price has increased to $2.75 until he counts the change he gets back. -Roy has a..... -Roy's surplus:

-false -true -true -true

-With enough careful planning, fiscal and monetary policy can prevent recessions. -Had the U.S. government used fiscal and monetary policy more effectively, many economists believe that the Great Depression would not have been as severe. -At the time of the Great Depression, fiscal and monetary policy were not well understood. -Booms and busts are natural responses to ever‐changing economic conditions

1. the supply curve changes 2. the supply curve changes 3. the demand curve changes 4. the demand curve changes 5. the supply curve changes

1. The price of goose feathers, an input for pillows, increases sharply. In the market for pillows,______________. 2. Researchers develop a higher-yielding, insect-repellant strain of rice. In the market for rice,__________. 3. During the Great Recession, the average income for an American worker fell sharply. During that time, families began preparing more of their own meals. In the market for meals from restaurants,_____________. 4. Spam unveils a new flavor, barbeque, which has students intrigued. The students transition from buying ham to Spam. In the market for Spam,_______________. 5. iDecide, a consulting firm, joins the market for accounting. In the market for accounting services,____________.

1. The price of lamps increases, so lamp producers increase the number of lamps they produce 2. Lamps become much more profitable to make, so furniture makers make fewer tables and more lamps. 3. The price of lamps increases, and lamp sales in Uptown drop. 4. Many people are buying bigger houses, and lamps sales increase.

1.Change in quantity supplied? 2. change in supply? 3. Change in quantity demanded? 4. Change in demand?

2.67 bushels of corn

A farmer produces both beans and corn on her farm. If she must give up 1616 bushels of corn to be able to get 66 bushels of beans, then her opportunity cost of 11 bushel of beans is

equal to one

A gardener can produce either beans or corn in her garden. The gardener's opportunity cost of a bushel of beans multiplied by her opportunity cost of a bushel of corn is

input requirements per unit of output.

Absolute advantage can be determined by comparing different producers'

- 4/3 Bags of patato chips:16 | Computer chips:12

What is the opportunity cost of computer chip production (in terms of bags of potato chips/computer chip)?

a) normal good b) inferior good c) a change in income

Andrew, a college student, loves drinking coffee late at night to study for exams. Having no income, he is used to buying cheap, bad-tasting coffee, such as Beanlightened, that he needs to grind and brew himself. The coffee tastes putrid but, with enough cream and sugar, Andrew is able to tolerate it. Occasionally, he does go out to Starbucks when he has spare money. -After graduation, Andrew gets a job working at a database firm as a programmer. His income is now a healthy $75,000 a year, and he decides he has had enough bad-tasting coffee. He ends up buying coffee daily from Starbucks, even though it costs significantly more than Beanlightened. a) In economic terms, Starbucks coffee is for Andrew a(n)....... b) Beanlightened coffee is for Andrew a(n)....... c) Andrew's demand for Starbucks coffee changed as a result of....

1. Egypt 2. Neither 3. Egypt 4. France

Assume France and Egypt can both produce grain and dates, and that the only limited resource is the farming labor force, meaning that land, water, and all other resources are plentiful in both countries. -Each farmer in France can produce 10 t of grain or 5 t of dates in a season. Each farmer in Egypt can also produce 10 t of grain or 25 t of dates. Please answer the four questions. 1. Which country has the absolute advantage in producing dates? 2. Which country has the absolute advantage in producing grain? 3. Which country has the comparative advantage in producing dates? 4. Which country has the comparative advantage in producing grain?

- 96 h -Christine will write music for-0- songs. -Paul will write music for -8- songs. -Christine will write lyrics for -12- songs. -Paul will write lyrics for -0- songs.

Christine and Paul are deciding how to split their time between writing music and lyrics for their new album. Their PPFs for 72 h of work are shown. Christine and Paul have to write music for 8 songs and lyrics for 12 songs (4 songs already have music). When they are done, they can go to a private island and relax from all their hard work. It is possible that they will use more than 72 h. -Once they start writing lyrics and music, assuming their hired help packs for them and their plane is waiting outside their door, in how many hours can they board the plane to their relaxing island getaway? Christina's PPF: -music written:8 | lyrics written:9 Paul's PPF: -music written:6 | lyrics written:4

A Hound Chased a Rabbit

Consider four of Aesop's fables. A lion and a bear seized a lamb at the same moment, and fought fiercely until they collapsed, exhausted. A fox ran in, seized the lamb, and quickly ran off. The lion and the bear watched him and said, "Just our luck, that we fought, only to serve the reward up to the fox." A hound chased a rabbit, but gave up after a long run. A shepherd watched and said, "The rabbit is the better runner." The hound replied, "I only ran for dinner. He ran for his life." As Patty walked to market, her milk pail on her head, she planned what she would do with the money she earned. "I'll buy hens, and sell their eggs. Then I'll buy a new dress! Polly will be jealous, but I shall just toss my head like this." As she tossed her head back, the pail fell off, and all the milk was spilt. One day a farmer found an egg of pure gold in the goose's nest. The goose laid a golden egg every morning, and the farmer soon grew rich - and greedy. Thinking he would get all the gold at once, he killed it, but found no gold inside. Which fable from Aesop best illustrates the moral idea that incentive spurs effort?

There will be an increase in quantity supplied

If the price of baseballs goes up from $7.99 to $14.99, what can be expected from suppliers of baseballs as a result?

Rapid rise in price levels made the Zimbabwean dollar near worthless in terms of purchasing power.

In 2008, Bestiary was a 10-year-old quintrillionaire living in Bulawayo, Zimbabwe. He was literally rolling in money. In fact, Bestiary has so much money that he decided to make kites out of billion dollar bills instead of putting the money into the bank to earn interest. None of Bestiary's friends bothered to save their money, either. Rupert was Bestiary's American pen pal and heard of Bestiary's story and was extremely confused. He was taught that Zimbabwe was one of the poorer countries in the world, or at the least substantially poorer than the United States. Which statement best explains this phenomenon?

The idea of the margin is related to making decisions while thinking about the benefits and costs of small changes in behavior.

In economics, what is meant by "optimal decisions are made at the margin?"

total production of bread will be 12 loaves, and the total production of cake will be 8 units.

Kate -Breads:4 | Cakes:8 Sarah -Breads:12 | Cakes:9 If Kate and Sarah both specialize in the good in which they have a comparative advantage, the

Emily- Decreased Jacob- Increase Taylor- Increase Justin- Increase

Label each scenario by deciding whether the opportunity cost has increased or decreased. -Emily is deciding between her two favorite restaurants. One makes Indian food and the other makes Chinese food. The Indian restaurant has just raised its prices. The opportunity cost of Chinese food has -Jacob has a bagel or a muffin for breakfast. Muffins are on sale, so they cost $1$1 less than usual. The opportunity cost of eating a bagel has -Taylor has to take time off work to study. Since her wage has increased from $10$10/hour to$15$15/hour, the opportunity cost of studying has -Justin decides to take the bus to school instead of driving to school. The price of gasoline hasjust decreased. The opportunity cost of taking the bus has

?=161

Price of a movie | Q of films dem. $15 173 $17 ?

Demand curve shifts to the right. a) Increases b) Increases

Stone and brick are substitutes in home construction. Consider the market for bricks depicted below. Suppose the price of stone increases due to new regulations for the stone quarrying industry. Illustrate the impact this will have on the market for bricks. a) Equilibrium price.... b) Equilibrium quantity....

The demand shifts right. a) increases b) increases

Suppose that there has been a sudden influx of refugees in the small town of Dallon, leading to a doubling of the local population. The accompanying graph depicts Dallon's market for food. Adjust the graph to show the immediate impact that this rise in population has on the food market. Then determine what happens to equilibrium price and quantity. a) Equilibrium price.... b) Equilibrium quantity.....

Supply shift to the right. a) Decreases b) Increases

Suppose the cost of lithium-ion batteries, input into the production of electric vehicles, has dropped more steeply than expected. The accompanying graph depicts a market for electric vehicles. Demonstrate the effect of a reduction in the price of lithium-ion batteries by adjusting the accompanying diagram. a) Equilibrium price.... b) Equilibrium quantity.....

a) Draw it out. b) 50 beds c) $2000

The Generator is a popular youth hostel in London located near Kings Cross. The hostel provides a bed, showers, and breakfast in their nightly fee. Suppose the quantity demanded is 0 when the price is $90 per night and 90 when the price is $10 per night. Quantity supplied is 0 when the price is $10 and 100 when the price is $80. GRAPH^^^^^^ a. In the accompanying diagram, use this information to place the supply and demand curves. b. In equilibrium, how many beds are rented? c. what is the total surplus?

The supply curve shifts right. a) Increases b) Decreases

The U.S. government has subsidized ethanol production since 1978. With the advent of affordable electric cars, policymakers are considering whether to allow the subsidy to expire. The accompanying graph represents the market for ethanol. Move the supply and/or demand curves to show how reducing the subsidy will affect the ethanol market. a) Equilibrium price.... b) Equilibrium quantity.....

a) effect on supply curve to the right b) $10,500,000 c) $10,500,000 d) $21,000,000

The accompanying diagram represents the market for violins. Suppose that a new technology allows beginner-level violin producers to make violins at a substantially lower (marginal) cost while retaining the same quality. a. Use the graph to illustrate the effect that this will have on the supply and demand of beginner-level violins and then answer the following three questions. b. How much does this new technology increase consumer surplus? c. How much does this new technology increase producer surplus? d. How much does this new technology increase total (or social) surplus?

is a graphical representation of the relationship between price and quantity demanded.

The demand curve.....

The demand curve shifts left. a) decreases b) decreases

The figure shows the supply and demand for online music. Suppose that an economic downturn decreases household wealth and erodes consumer confidence. Move the supply and/or demand curves to reflect the primary effect this would have on the market for online music. You can assume that online music is a normal good. Also, select the end result of equilibrium price and quantity. a) Equilibrium price.... b) Equilibrium quantity.....

1. excess demand or shortage 2. equilibrium 3. excess supply or surplus 4. excess supply or surplus

The table shows information on the conditions of demand and supply for designer purses, where the quantity of designer purses is measured in thousands. For each price, select the correct category. Price | Quantity dem. | Quantity sup. $500 490 420 $700 450 450 $900 400 520 $1100 320 650 $500: $700: $900: $1100:

SUPPLY: price per pair:10 | pair of shoes:2,000 price per pair:25 | pair of shoes:12,000 price per pair:40 | pair of shoes:16,000

This year is expected to be a great one for selling walking shoes in Georgia. At very low prices, only the most efficient shoemakers are able to sell. There are two shoe producers that operate with the most cost-effective equipment and skilled personnel, each of which can put 1000 pairs of shoes in the market at $10.00. -At a higher price, eight more shoemakers will enter the market. Each producer makes 1200 pairs of shoes at $25.00 per pair. -If the price goes to $40.00 per pair, the existing firms increase production to 1400 pairs of shoes each, plus four small shops open, each of which produces 500 pairs of shoes. -Using the information above, graph the supply curve for walking shoes by dragging the provided red points to the correct coordinates of price and quantity.

Have each member specialize in the role that they are best in to take advantage of benefits from specialization.

Thom, Jimmy, D'arcy, and Sheila are trying to form a band. They each have some basic skills on most instruments, so their current plan is for each of them to rotate among vocals, guitar, bass, and drums. After a year of practice and rehearsals, the band still sounds awful. Thom cannot keep a steady beat when on bass or drums, D'arcy sounds terrible on everything except the bass, nobody except Jimmy can remember all the chords on the guitar, and even Sheila's own mother thinks her singing sounds like a dying cow. At their current rate, they expect it will be several years before they are good enough to land their first paid performance. None of them have enough money saved up to last that long. They all know you are taking economics and ask your advice. What would you say to them?

1. Jean 2. Jean 3. Vincent 4. Jean

Vincent and Jean are two cooks who work in a village. Each of them can either bake cakes or make pizzas. Every ingredient is readily available to them, and the only scarce resource is the cooks' time. -Vincent can bake 1010 cakes or make 55 pizzas in an hour. Jean can bake 1212 cakes or make 88 pizzas in an hour. Please answer the four questions. 1. Which cook has the absolute advantage in baking? 2. Which cook has the absolute advantage in making pizzas? 3. Which cook has the comparative advantage in baking cakes? 4. Which cook has the comparative advantage in making pizzas?

to satisfy as many wants as possible with our limited resources.

What is the great economic problem?

-It's Friday night and you stay up late talking and hanging out with your friends. -The chemistry club is giving out free pizza for lunch to all who come to their table to get it. -Naomi, age 8, is at a bookstore and chooses to buy a book about a young wizard instead of buying a math textbook that she would probably never open. -Chez Moi and Chez Nous, two premiere French restaurants with three Michelin stars, both offer you a full time sous chef job at the same salary. You are ecstatic because you know it is a win-win scenario and choose to work for Chez Nous. ---All of these scenarios have an opportunity cost.

Which demonstrates a scenario with no opportunity cost?

There is a lag between when policies are enacted and when the effects of those policies can be seen.

Which is an issue that makes central banking difficult for the Federal Reserve Bank (the Fed)?

In an effort to make people eat healthier, the city of Bakersville tells its residents to eat wheat bread instead of white bread.

Which scenario would least likely change an individual's behavior?

absolute advantage

Which term best describes the situation that, relative to England, France can produce beef at a lower cost of production (i.e., can produce beef using fewer inputs)?

a) the market price and the minimum price a seller is willing to accept. b) above the supply curve and below the market price.

a) Producer surplus is the difference between..... b) Producer surplus is shown graphically as the area.....

a) the ability to produce a good or service at a lower opportunity cost than another b) less developed countries have a comparative advantage in the production of some goods or services.

a) Select the correct definition of the term "comparative advantage." b) When trading with more developed countries,

a) 9 t-shirts b) 0.55 cups of ice cream

a) What is Paulie's opportunity cost of producing one cup of ice cream (round to two decimal places)? b) What is Vince's opportunity cost of producing one t-shirt (round to two decimal places)? Ice cream | T-shirts paulie: 2 18 Vince: 6 11

a) There has been economic growth in our society. b) Economics

a) Which of the following explains why modern Americans enjoy a higher standard of living than Americans 100 years ago? b) In which field do researchers focus on investigating the phenomena described?

a) -property rights -dependable legal system -competitive markets b) -political instability -corrupt government -trade restrictions

a) what encourages investments in physical and human capital? b) what doesn't encourage investments in the physical and human capital?

a) quantity demanded decreased b) quantity demanded increases c) quantity demanded decreased d) quantity demanded increases e) quantity demanded increases

a) Due to increases in hay prices, an input for raising cattle, the price of a gallon of 2% milk increases from $2.98 to $3.25. b) A company offers a coupon for $6 off the price of laser tag. c) A sharp increase in the price of wood causes increases in prices for dressers and desks. d) At a week‑long special at the grocery store, pork shoulder is on sale at $1.99/lb, down from $3.99/lb. e) A website offers a buy‑one‑get‑one‑free special for digital music albums.

a) Cake b) Bread

a) Kate has a competitive advantage in..... -Breads:4 | Cake:8 b) Sarah has a comparative advantage in...... -Breads:12 | Cakes:9

a) -After discovering the flash-streaming tuns before using mechanical processes to extract meat removes more tuna flesh, more cans of tuns arrive on the shelves at all major grocers. -Amplitude decides to join the smartphone market. b) - A national consumer products company produces less of it's premium quality soap as a result of lower soap prices -Americans sell their gold and silver jewelry as a result of rising prices.

a) Shirt of the supply curve b) movement along the supply curve

a) -When Juan and other farmers in Colombia sell their coffee beans to foreigners, they gain in the short run, but in the long run, will only impoverish their nation as a whole. -Juan thinks he is better off with this contract, but in reality, the wealthy American buyer is taking advantage of Juan's naiveté. -While this arrangement is good for Juan, he would be even better off if the government had negotiated the contract because they could have gotten a better price for Juan. -All three of these statements must be true. ---None of these statements must be true. b) -Cafe Emporium is a monopoly. -Juan has negotiated a a price that is favorable to him and therefore makes it difficult for Cafe Emporium to earn profits. ---Juan is better off as a result of his deal with Cafe Emporium. -Juan is earning zero economic profit selling coffee.

a) what must be of this arrangement? b) What can be inferred from the fact that Juan has voluntarily entered into a contract with Cafe Emporium?

a) the maximum price a buyer is willing to pay and the market price. b) under the demand curve and above the market price

a)Consumer surplus is equal to the difference between..... b)Consumer surplus is shown graphically as the area......

a) 4 million braces b) Demand shift to the right c) 6 million braces

a. At $8 a brace, how many will be supplied? b. Suppose that March becomes known as National Marathon Month, where every major city will host a marathon. Shift the supply curve to show the impact of new firms entering the market. c. After news of National Marathon Month, at a price of $8, how many braces will be supplied?

a) at $50 a pair Alex buys -5- pairs of shoes b) demand shift to the left c) At $50 a pair Alex buys -3- pairs of shoes

a. If shoes cost $50 a pair, how many pairs of shoes will Alex buy? b. Alex decides to quit her part-time job working at the student union. Adjust the graph to reflect any resulting change in her demand assuming that shoes are a normal good. c. After quitting her job, if shoes are still $50 a pair, Alex will now buy how many pairs of shoes?

a) Demand curve shift right due to a change in price of a -complementary good-. b) Demand curve shirt to the left due to a change in price of a -Substitute good-.

a. Move the supply and/or demand curve to illustrate how an across the board cut in the price of all apps on the Apple App Store affects the market for iPhones. b. Move the supply and/or demand curve to illustrate how a decrease in the price of Samsung's current Galaxy smartphone impacts the market for iPhones.