Final Exam - ECON

Which of the following statements is true?

An increase in market demand does not lead to an increase in quantity supplied under a price ceiling.

If the home country imposes a tariff on rolled steel and raises the price from Pw to Pw+𝜏 , revenues raised from the tariff is included in

Area G

Which statement expresses the law of demand?

There is a negative relationship between price and quantity demanded.

When a market is characterized by many sellers that produce goods that are similar, but are not perfect substitutes, economist refer to this type of market structure as ____________________.

monopolistic competition

A price floor is

the minimum price that a seller can charge in a market

Which of the following is NOT a factor that can shift supply?

the price of the product

A large amount of harvested grain used to make flour grows mold due to flooding. How will this affect the supply of flour in the market?

the supply of flour will decrease

The city of Clemson sets a price ceiling of $8 on restaurant meals in the city. Which areas reflect the lost gains from trade?

ce

The most likely reason the government would implement a price __________ is because it feels that the price is too high for _____________.

ceiling, customers

Gun buyback programs will be less effective if the

supply of guns is more elastic

An industry is said to be perfectly competitive when:

each firm has virtually no influence over the price of its product.

If a product that generates a negative externality is taxed so that polluters bear the cost of the externality, the price of the product will likely:

rise, and output will likely fall

For a given increase in the minimum wage, the new minimum wage will have the smallest impact on unemployment when:

the labor demand and the labor supply curve are relatively inelastic

For a given increase in the minimum wage, the new minimum wage will have the smallest impact on employment when:

the labor demand curve is relatively inelastic

Suppose that the absolute value of the elasticity of demand for sports drinks is 0.50 and the elasticity supply of soda is two. If there is a $1 tax imposed on all sports drinks, how much of the tax is paid by the sellers?

$0.25 (.50/2)

In market characterized by perfect competition, surpluses lead to:

lower prices

Marginal cost is:

the change in total cost from producing one more unit of output

In the graph of the soft drink market shown here, the original equilibrium price is $2.50 per bottle. A tax is placed on the sellers of soft drinks. The amount of the tax is _____________.

$1

The demand curve for Hershey's Kisses, a particular brand of chocolate candy, will _______ the demand curve for chocolate candy as a general category

be more elastic than

If a steel manufacturer does not beat the entire cost of the sulfur dioxide it emits, it will:

emit a higher level of sulfur dioxide than is socially efficient

When the absolute value of the price elasticity of demand is less than 1, demand is:

inelastic

In a market characterized by perfect competition in which, at a price of $10, the quantity supplied is 40 units and the quantity demanded is 50 units. Equilibrium price in this market:

is greater than $10

Scarcity

is when there isn't enough to satisfy all our wants

The marginal revenue product of labor curve is the same as the:

labor demand curve

Shifts in supply

lead to price and quantity to move in opposite directions

The demand curve is inelastic if the absolute value of the elasticity is

less than 1

When there is binding price ceiling, the price paid in the market will be:

less than the competitive equilibrium price

When the world price is lower than the domestic price, a tariff on a imported product leads to :

lower domestic consumption of the good than under free trade

The extra production that occurs from hiring an extra worker is known as the

marginal product of labor

Economists use the term _________ to refer to a situation where a firm can raise its price above marginal cost without worrying about losing customers to competitors.

market power

Price controls cause resources to be __________ not just geographically but also across different _____________ those resources.

misallocated; uses for

Coke and Pepsi are substitute soft drinks. Which of the following would cause the demand curve for Pepsi to shift to the left?

the price of Coke decreases

The Coase theorem says that private bargains can ensure an efficient market equilibrium even when externalities exist if

transaction costs are low and property rights are clearly defined.

Buyers bear a smaller incidence of the tax when:

demand is more elastic than supply

Suppose the government issues pollution permits that allows producers to pollute. What is the maximum amount that Harper's Tire is willing to pay for a permit?

$3/per ton

Suppose the government issues 80 tradeable pollution permits, each giving the hold the right to emit one ton of pollution, and the firms buy and sell the permits as desired. After all of the trading is done, what is the total cost of this pollution reduction?

$30

In the market for pesticides shown here, the original equilibrium price is $25. In an effort to reduce the usage of pesticides, a tax is then placed on the buyers in this market. The economic burden of this tax on the seller is _________.

6 (3+3)

When S1 is the supply of drugs with no prohibition, the area that represents total revenue with drug prohibition is ______, and the area that represents total revenue with no prohibition is __________.

A+C, C+D

Referring to the labor market diagram depicted above. A minimum wage of $18 per hour is introduced. The implementation of the minimum wage leads to a ________ of _____________.

surplus, 12, 000

The price paid by buyers minus the price received by sellers equals the

tax whether it is imposed on the buyers or on the sellers

A ___________ creates a situation in which the price paid by buyers is ___________ price received by sellers.

tax, exceeds

A major factor behind the exceptionally high salaries of superstars is:

technological advance, which has expanded the market for superstar talent

To economists, the term "consumer surplus" means:

the consumer gain from trading

The movement from point S to point T is caused by

a decrease in the price of the item

In the green tea market, depicted below, the pretax equilibrium price is $3, and the pretax equilibrium quantity is 20 cups. A tax, charged on suppliers, is levied on each cup of green tea, shifting the supply curve upward. What is the tax rate?

$1.75 (4-2.25)

Suppose a $5 tax is imposed on the market and the outcome is depicted below. The deadweight loss (DWL) of the tax is __________________.

$1250

Suppose government officials impose a tariff so that there are zero imports in the industry depicted above. The deadweight loss from the lost consumption that is not transferred to the producer or the government is:

$17.50

Tricia normally travels back home to Kalamazoo, Michigan on a Greyhound bus. The normal cost is for the trip from Anderson, SC to Kalamazoo, MI is $200. She is willing to pay as much as $250 to see her family and friends and Greyhound is willing to take to Kalamazoo for $80. Recently, there was a tax imposed on all bus carriers and this increased the cost of the fair to $280. Tricia decided not to go. The deadweight loss of the tax in this case is

$170 (250-80)

What is the dollar value of the consumer surplus that consumers would gain if the trade restrictions were removed and the country went from no trade to importing the good?

$18, 750

Gary Parker is willing to pay $700 for a new iPad. Apple (the producer of iPads) is selling a new iPad for $600. It costs Apple $400 to produce this iPad. How much economic surplus does Apple receive if Gary purchases this iPad?

$200

The cost-benefit principle evaluates __________ costs and benefits, and willingness-to-pay considerations evaluate _______________ costs and benefits.

both monetary and nonmonetary; only nonmonetary

Suppose there is an increase in demand in a market and no change in supply. What will happen to the market equilibrium price and quantity?

Equilibrium price will rise; equilibrium quantity will rise

Most people, when asked, cannot name the price of a canister of table salt at the grocery store within a factor of 25%. Which elasticity argument explains why?

Expenditures on table salt make up a tiny fraction of the average person's budget; demand is highly inelastic

If the figure represents the market for a popular soda, which figure shows the effect of an increase in the price of a competing energy drink?

Figure C

If the figures represent the market for heated blankets, which figure shows the effect of an unseasonably warm winter?

Figure D

If these figures represent the market for new cars, which figure shows the effect of an economic recession?

Figure D

Which of the following scenarios does not illustrate the law of demand?

Freya buys more doughnuts when the price of doughnuts is higher.

If the economy heads into a recession and consumer income falls, which graph shows the effect of an economic slowdown on the market for holiday cruises?

Graph A

A meat processing plant produces both steak and ground beef. What effect would raising market prices for steak on the market for ground beef?

The supply of ground beef will decrease

A senator has recently stated, "It is time to put people before profits; that is why I am sponsoring legislation that requires businesses to purchase health insurance for their workers." Given that the demand for labor is relatively more elastic than the supply of labor, what will be the result of the leglisation?

Workers will pay for most of the employer-provided health insurance in the form of lower wages.

Alena manages a small theme park. She hires one more custodian at $450 per week, and her park is cleaner and more attractive. As a result of this improvement, ticket sales rise by 40 tickets per week. Tickets sell for $12. Use the Rational Rule for Employers to determine if hiring the extra custodian was a good move.

Yes, it would be a good move because it added more to revenue than cost.

Suppose that you have a pumpkin stall at a farmer's market, and the Halloween season arrives. You know that your customers will want to buy many pumpkins to decorate their houses and make pumpkin pies. Which of the following is a likely result of this scenario?

You can charge a higher price per pumpkin

According to the Coase Theorem, which situation would most likely result in a private bargaining solution and yield an efficient market?

Your neighbor's dog routinely gets out of his yard and does his "business" in your yard

When we levy a tariff on imported goods, the country will likely experience

a decrease in imports, a decrease in consumer surplus, and an increase in producer surplus

Rising marginal costs imply

a downward-sloping demand curve

A product with a network effect is _____________.

a social media tool such as WhatsApp

When quantity supplied exceeds demanded, ______________ exists.

a surplus

The government of Kenya implements a minimum wage of 15, 000 Kenyan shillings per month. What occurs in this labor market after the implementation of the minimum wage?

a surplus of 15, 000 workers

Which of the 4 panels shows an increase in the quantity supplied?

Panel C

If consumers pay 100% of a commodity tax, what could one conclude?

The commodity in question has a perfectly elastic supply curve.

Suppose government officials impose a tariff so that there are zero coffee imports depicted above. The deadweight loss from the misallocation resources in the domestic economy that increases domestic production is:

$148.75 (3.50*85/2)

Assume the local government decides to cut pollution in half. If the government decided that each firm should cut its pollution in half what would be the cost of pollution abatement?

$155

The deadweight loss from the $18 minimum wage is _________________.

$18, 000

When an employer makes decisions based on statistical discrimination, it is:

using observation about the average characteristics of a group to make inferences about an individual

When comparing a monopoly with a competitive industry, monopoly quantity:

will be lower, and monopoly price will be higher, than that of a competitive firm.

What is the marginal external cost?

$2

Suppose that the absolute value of the elasticity of demand for soft drinks (soda) is two and the elasticity of supply of soda is four. If there is a $1 tax imposed on all soda drinks, how much of the tax is paid by the sellers?

$0.33

Human capital is:

accumulated knowledge and skills that make a worker more productive

Suppose Clemson town officials think the students are getting too much caffeine and decide to impose a $1.50 tax on brown sugar lattes. Of the $1.50 tax on lattes, consumers will pay ___________ and producers will pay _______________.

$0.50, $1

If a certain item has many substitutes, its demand curve will be

relatively flat

Kevin Williamson goes to a local coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $6. The price of the latte is $2. The cost to the coffee shop to produce the latte is $1. How much economic surplus does Kevin gain when he purchases the latte?

$1 (2-1)

A price ceiling creates a _________ when it is set _____________ the equilibrium price.

shortage; above

An efficient equilibrium occurs when:

social costs equal social benefits

Working conditions, prestige, location, freedom, variety, and employee safety are all examples of:

sources of compensating differentials.

"Ban the Box" policies prevent employers from asking about an applicant's criminal history early in the application process. In response, some employers began using an applicant's race to substitute for criminal history. This is an example of:

statistical discrimination

Star actors in live theater typically do not earn as much as star actors in movies. A key reason for this is that:

technology allows many more people to view movies than plays

The social cost of driving an SUV is equal to:

the cost of both the vehicles' pollution and its operation (gas, etc)

There are 100 consumers, each of whom values a concert ticket at a unique whole number dollar amount between $1 and $100. One customer is willing to pay $1, a second willing to pay $2, a third willing to pay $3, and so on. An unlimited number of concert tickets are on sale for $20 each. What is the total consumer surplus in this market?

$3, 200

Suppose the government issues 40 permits, each giving the holder the right to emit one ton of pollution, and the firms buy and sell the permits as desired. Which could be the equilibrium price at which the firms trade permits?

$3.50

Suppose Clemson town officials think the students are getting too much caffeine and decide to impose a $1.50 tax on brown sugar lattes. According to the table, after the tax consumers will pay ________ for each latte and consume ________.

$3.50, 760

The figure shows a market for cans of bathroom cleaner that causes environmental damage, imposing costs on people other than the consumers and producers of the cleaner. If consumers were taxed such that they only purchased the efficient quantity of the product, how much deadweight loss would be removed from this market?

$45

What is the maximum price per book that buyers are willing to pay for 2, 500 books?

$45

What is the dollar value of the producer surplus that producers would lose if the trade restrictions were removed and the country went from no trade to importing the good?

$9, 375 (25*250 + 25*250/2)

When Joe's Pizzeria increases the price of its pizzas by 33%, the quantity of pizzas sold drops by 9%. The price elasticity of demand for Joe's pizza is __________, and Joe can expect his revenue to _________________.

-3; decrease (33/9)

In the market for plastic bags shown here, the original equilibrium price is 50 cents per bag. In an effort to reduce plastic usage, a tax is placed on the buyers of plastic bags. The amount of the tax is ____________ cents.

10

When a price ceiling of $10 is instituted by the government, consumers are able to buy how many units of the product?

270 units

The government of Kenya implements a minimum wage of 15, 000 Kenyan shillings per month. After the implementation wage, ___________ workers are hired.

30, 000

If there was no tax on brown sugar lattes, the equilibrium quantity would be

800

Which statement is correct?

A change in quantity demanded is a movement along the demand curve, and a change in demand is a shift of the demand curve.

Consider the figure Gain in Consumer Surplus from the Sale of Cappuccino Machines. Which areas represent consumer surplus when the price equal to P2?

A, B, and C

In the long run, a large increase in the minimum wage will likely lead to fewer minimum wage jobs because:

All of the above

If the home country imposes a tariff on rolled steel and raises the price from Pw to Pw+𝜏 , the gain in producer surplus is

Areas A+A'

If the home country imposes a tariff on rolled steel and raises the price from Pw to Pw+𝜏 , the loss to consumer surplus is

Areas A+A'+B+D+G

If the home country imposes a tariff on rolled steel and raises the price from Pw to Pw+𝜏, the deadweight loss of the tariff is

Areas B+D

Consider the above figure. After the tariff is imposed, the deadweight loss is areas ____________.

B + D

Which observation would be consistent with the impact of price ceilings?

Books are printed on lower-quality paper

Suppose Winston's loud music eternalizes a cost to his neighbor, Chloe. Suppose Winston and Chloe decide to solve this problem using the Coase theorem. If they are successful, what is the possible result of the execution of this theorem?

Chloe pays Winston weekly to refrain from playing music loudly.

The proposition that private parties with clearly defined property rights and low transaction costs can resolve externalities on their own is called.

Coase Theorem

The city of Vaughan in Ontario, Canada, opened a new subway line that extended the existing subway system between the greater Toronto area and the city of Vaughan. The route previously only had bus service. Which of the following graphs depicts the effect you would expect to see on the demand for bus rides on this route after the introduction of the subway?

Graph A

In 2018, Hurricane Michael hit Florida and destroyed some shrimp wholesale facilities. Which graph correctly depicts the effect of the hurricane on the equilibrium price and quantity in the shrimp market?

Graph C

In 2020, the government in China instituted a series of lockdowns that disrupted auto part production. As a result, auto parts that were sourced from China became more expensive or unavailable. Which graph shows the effect of this shortfall?

Graph C

Lenovo produces laptops and desktop computers. Which graph shows what will happen in the market for Lenovo desktops if the demand for laptops increases?

Graph C

Suppose that wool becomes less expensive. Which panel best illustrates how this development will affect the market for winter socks, which are made from wool?

Graph C

Which of the following statements are TRUE about manufacturing production and manufacturing employment in the United States over the last 50 years? 1) Manufacturing employment has declined by about 25%. 2) Manufacturing output has declined dramatically since 1970. 3) Robotics, technology, outsourcing, and trade have contributed to the decline in manufacturing employment.

I and II are true

If there is free trade and a good is imported into a market, we typically think the imports 1) Benefit consumers and harm producers. 2) Benefits producers and harms consumers. 3) Benefits the government.

I only

Workers earn higher wages: 1) when the demand for labor rises in an industry 2) when they possess a greater amount of human capital 3) they perform more dangerous jobs

I, II, III

Which of the following statements is true? 1) In the long run, rent control laws create incentives to turn apartments into hotels, condos, or parking garages. 2) Apartment owners are less likely to do routine maintenance when the government control apartment rents. 3) Rent-controlled apartments are more likely to result in potential tenants being discriminated against by race, gender, sex, and/or martial status.

I, II, and III are all true

Which of the following statements is true? The buyer will pay more of the tax burden if the good: 1) is a luxury good 2) is a necessity 3) has no substitutes

II and III only

If a tax on gasoline of $1.10 per gallon is imposed, the price paid by consumers will:

Increase by $0.50

As the price of scanners with high-resolution cameras dropped, Ford began using them instead of human inspectors to check the quality of the painted surfaces of its cars. What is the relationship between capital and labor in this example?

Labor and capital are substitutes in production.

Suppose that jobs A and B are equally attractive, requiring the same amount of skills, education, and training. It is suddenly learned that working at job B will lower your life expectancy by 4.5 years. What will happen in the labor markets for jobs A and B?

Labor supply in job B will decrease, causing wages to rise for job B, and labor supply in job A will increase, causing wages to fall for job A

What is the profit-maximizing condition for a monopolist?

MR=MC

If we look over time and across space, the data supports the following about tariffs: 1) Tariffs can increase production and employment in the industry where the tariff is imposed. 2) Tariffs increase overall employment in an economy or decrease the economy's unemployment rate. 3) Tariffs reduce imports without impacting exports.

Only I is supported by the data.

Suppose the absolute value of the price elasticity of demand for Lexus SUVs is 6.25 and the price of elasticity of supply for Lexus SUVs is 0.50. If congress implements a luxury tax on luxury SUVs, who will pay more of the tax?

Producers of the SUVs will pay more.

Consider a small open economy that is importing the good depicted above. Before the tariff is imposed, the quantity of imports is

Qd0-Qs0

Consider a small open economy that is importing the good depicted above. After the tariff is imposed, the quantity of imports is

Qd1-Qs1

Which of the following statements is true about cigarette taxes?

The elasticity of cigarette supply in all states is very large, so cigarette manufacturers receive about the same after-tax price in all states.

The price elasticity of demand for an item is impacted by

all of these options

When looking at a demand and supply graph, if a tax is implemented on a seller, the vertical distance between the old and new supply curves at the new equilibrium quantity will be equivalent to the

amount of the tax

When a tax is imposed on sellers, the supply curve shifts upward, so that the vertical distance between the original supply and the new supply curve that incorporates the tax equals the:

amount of the tax paid per unit

In the diagram, which of the following factors would cause the demand curve to shift from D1 to D2?

an increase in income if this is an inferior good

After a hurricane in Florida destroys half of the orange crop, economists predict:

an increase in orange prices and a decrease in orange sales

People with more education on average earn:

more than people with less education

Holding all else constant, if people eat out more at expensive restaurants when they earn more, then expensive restaurant meals are _________________.

normal goods

The basic postulate of economics indicates that changes in incentives influence the:

choices of individuals with regard to a wide range of activities, including those generally perceived as social or political

In 2016, Amazon began charging a 5.75% sales tax on products it sells in the District of Columbia. Holding all else constant, the effect of this tax would be to __________ in the District of Columbia.

decrease Amazon sales

In 2018, the state of Kentucky raise the tax on cigarettes by 50 cents per pack. Holding all else constant, the effect of this tax would be to _____________ in Kentucky.

decrease smoking of cigarettes

If supply is upward sloping, a decrease in demand with no change in supply will lead to a(n) ____________ in equilibrium quantity and a(n) _____________________ in equilibrium price.

decrease, decrease

As more workers are hired, the marginal revenue product of labor typically:

decreases

Consider the above figure. After the tariff is imposed, producer surplus ___________ by the areas ___________.

decreases, G + D

An employer prefers to hire women only. This is an example of:

employer discrimination

In the case of a nonbinding price ceiling, the price paid in the market will be:

equal to the free market equilibrium price

Which would most likely result after setting a price ceiling on automobiles?

fewer safety features on auotmobiles

After a hurricane, the prices of many items rise. How best might the government help poor people afford to buy goods and services?

give poor people debit cards for use in purchasing essential items, while leaving prices unregulated

A firm is willing to hire a worker when the marginal revenue product of labor is:

greater than the wage

A college education in the United States

has been shown to earn a wage premium.

Compensating differentials leads to:

higher salaries for more unpleasant jobs

A tax on buyers causes which of the following? 1) A leftward shift of the demand curve 2) A decrease in the quantity sold 3) An increase in the price buyers pay

i, ii, and iii

Which of the following would be considered in a cost-benefit analysis to decide if a person should cycle to work or ride the subway? 1) The air pollution that the cyclist has to breathe. 2) The cost of the subway tickets. 3) The time it takes to cycle to work versus the time it takes to ride the subway to work. 4) The cost per gallon of gasoline.

i, ii, iii

If the demand curve for a normal good shifts downward and to the left:

income has decreased

If the price of gas is expected to rise sharply in the future, all else the same, the demand for gas today will:

increase

If price increases from $10 to $20, total revenue will

increase by $800, so the demand curve must be inelastic (10*90-10*10)

Assuming a normal upward-sloping supply curve and downward-sloping demand curve, if the government imposes a $25 tax on expensive handbags and collects the tax from suppliers, the price of expensive handbags will:

increase by less than $25

Since the demand for illegal drugs is quite inelastic, an increase in the price of illegal drugs:

increases seller revenues

The demand for most goods tends to become ________ over time.

more elastic

Suppose Keith values wearing a face mask at $3, while those he comes into contact with value wearing a face mask at $5. Each use of a face mask costs $5. Keith will:

not purchase the face mask because the social benefit is greater than the private benefit

The most important determinant of the elasticity of demand is the

number of substitutes

Ivan has inherited his grandmother's 1963 Chevrolet Corvette, which he values at $50, 000. He decides that he might be willing to sell it, so he posts it on Craigslist for $55, 000. Samantha is interested and willing to pay up to $72, 000 for such a car. A voluntary economic exchange ________ between Ivan and Samantha because ___________ positive economic surplus from the transaction.

occurs; both Ivan and Samantha receive

When there are only a few producers that dominate a market, economists refer to this type of market structure as

oligopoly

Rent control in New York has resulted in

people bribing owners of apartment complexes to get apartments

An external cost is paid by:

people other the consumer and producer trading in the market.

A plague called the Black Death swept medieval Europe. At the time, people believed that cats spread the plague (cats were associated with the Devil) and started killing them to prevent the spread of disease. In reality, rats spread the plague, and the slaughter of their natural predators only hastened the disease's proliferation. With this in mind, a market for cats would have had a ____________ externality because the cats ___________.

positive; killed rats regardless of whom those rats would infect

In 2018 when the United States imposed tariffs on imported goods from China

prices paid by U.S. consumers increased by the amount of the tariff

NFL quarterback Trevor Lawrence is contracted to be paid over $9 million by the Jacksonville Jaguars for the 2022-2023 season. We can conclude that:

the Jacksonville Jaguars expected Trevor Lawrence to increase the team's revenue by at least $9 million

In the market for pesticides shown here, the original equilibrium price is $25. In an effort to reduce the usage of pesticides, a tax is then placed on the buyers in the market. Who bears the statutory burden of this tax?

the buyer

Recently, more substitutes for milk have entered the market. We can expect that

the demand curve for milk has become more elastic

If an employer discriminates against certain applicants:

the employer will risk earning lower profits

Emissions from large pulp and paper factories create health risks for pedestrians and discomfort for residents of the city of Teaneck, New Jersey. In this case:

the externality can be solved by imposing a specific tax on the pulp and paper factories

While there are moral reasons for limiting price increases following a natural disaster, most economists are opposed to strict laws that prohibit price increases (price gouging) because:

the increase in prices provided a signal and incentive for suppliers to increase the amount of the needed goods to the impacted areas

Which of the following statements is true?

the market supply of labor is always upward sloping, but an individual's labor supply may not be upward sloping throughout its entire range.

Deadweight loss is:

the total of lost consumer and producer surplus when not all mutually profitable gains from trade are exploited.

In the labor market for computer programmers, the labor supply represents:

the workers seeking to sell their labor as programmers

Economics profits are:

total revenue less total costs, including explicit and implicit costs

If the price falls from $60 to $40, the total revenue goes __________, so demand is __________.

up to $120; elastic

Assume that the market depicted above is characterized by perfect competition, what are the total gains from trade in equilibrium?

$1, 000 (10x100)

If the market price of coffee is $4, how much producer surplus do suppliers earn?

$22.50 (3*15/2)

Nerida Kyle is thinking of buying a car to avoid taking Lyft to work. She is using the cost-benefit principle to evaluate this decision and is calculating the costs and benefits to owning the car over the next year. She's gathered the following information to help her make her decision. The car costs $15, 000 to purchase, but she can resell it after a year of use for $13, 500. She thinks gas will cost her about $1, 200 for the year. The annual insurance premium for her car is $800. Maintenance and repairs will cost about $300 for the year. Using Lyft to get to work would cost her $4, 000 for the year. The cost of the car for the year is

$3, 800 (15000-13500 =1500+800+1200+300)

This summer gasoline prices in the United States increased by 50% which brought about a fall in the quantity of gasoline purchased of 10%. The price elasticity of demand is equal to _________, and demand is described as ___________.

0.2; inelastic

If the price of good X rises from $4 to $5, and the quantity demanded of good X falls from 200 units to 180 units, the absolute value of the price elasticity of demand is:

0.47

The price of milk at the local grocery store is cut by 15%, and the quantity of milk demanded increases by 10% in response. What is the absolute value of the price elasticity of demand for milk?

0.67 (.10/.15)

Prior to the pandemic, China produced about 10 million face masks per day which was roughly half of the world's face mask production. At the time, a box of 50 face masks sold for $10. By March of 2020, China was producing 130 million face masks. The price of a box of 50 masks increased to $60. Assuming that China's production was still producing half of the world's face masks, the elasticity of supply for face masks is ___________.

1.2

Butter producers know that the price elasticity of demand for butter is 0.2. If they want to increase sales by 4%, they will have to lower price by:

20%

Uber cuts the price of a ride in Greenville by 15%. Thereafter, the quantity of rides demanded rises by 45%. The absolute value of the price elasticity of demand for Uber rides is _________ and total revenues would __________ after the price cut.

3, increase

Uber increases the price of a ride in Clemson by 10%, and the quantity of rides demanded falls by 30%. The absolute value of the price elasticity of demand for Uber rides is _________, and the price elasticity of demand is ______________.

3; elastic

Which of the following sellers will achieve their desired result for total revenue?

A florist raises the price of roses before and on Valentine's day and hopes to raise total revenue. The florist is the only flower shop in town.

Which of the following is an example of self-interest that attempts to promote public interest?

An entrepreneur creates a crowd-funding WEB site to provide funding for a public school's fine arts program.

In the market for pharmaceuticals, the issue of "drug loss" illustrates which of the following ideas?

Because of the higher cost of testing a drug, fewer drugs are made, and more lives are lost.

Which of the following statements is true?

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and its market price.

Consider the figure Gain in Producer Surplus from the Sale of Cappuccino Machines. Which areas represent producer surplus when the price is equal P2?

D, E, and F

The graph shows how supply and demand might shift in response to specific events. Suppose a fungus destroys one-quarter of the nation's tomatoes. Which panel best illustrates how this event will affect the market for ketchup?

Graph C

The fidget spinner toy fad is over, and children are not buying them with the same enthusiasm as they did earlier. Which graph depicts the situation in the market for fidget spinners?

Graph D

When demand and supply have their normal shapes (slopes), which of the following statements are true regarding a commodity tax: 1) The burden of the tax is typically incurred by the party that has to write the check to the government. 2) The price consumers pay will increase by the size of the tax. 3) Compared to the case when the market for the good was not taxed, producer and consumer surplus is less. 4) Some of producer surplus and consumer surplus is transferred to the government as tax revenues.

Only III and IV are correct

The COVID -19 pandemic caused many consumers to be quarantined in their homes. The supply and demand model would predict which of the following events in the market for home entertainment equipment for online retailers?

The demand for home entertainment equipment sold by online retailers would increase, resulting in a higher equilibrium price and a higher equilibrium quantity.

Many car buyers use credit to purchase their new cars. What effect does a decrease in interest rates have on the market for new cars?

The demand for new cars increases, increasing the price of new cars.

As the Federal Reserve Bank has changed its policy stance and has worked to increase short-term interest rates, longer terms like mortgage rates have also increased. We would expect the higher mortgage rates to have what impact on the housing market.

The higher mortgage rates will shift the demand for housing back, decrease housing prices, and reduce the equilibrium quantity supplied.

What will happen in the market for clothing when a major department store shifts its production of clothing to a low-labor-cost country?

The lower cost of production will lead to an increase in supply and a fall in the price of clothing.

Which principle tells you that the true cost of something is the next best alternative you have to give up to get it?

The opportunity cost principle

You eat M&Ms every day. When you go to the store to buy some, you find that M&Ms are more expensive than they were last month. Which of the following could explain why M&Ms are more expensive?

The supply of cacao beans, used to produce chocolate, has fallen around the world

Weather forecasters predict that Hurricane Ian will strike Clemson this weekend. Which would occur today based on the expected storm?

an increase in people's willingness to pay for rain jackets and ponchos

Suppose the demand curve for monthly subscriptions to Netflix has shifted to the right. What could have caused this?

an increase in the incomes of consumers

Price elasticity of demand measures how responsive _________ are to ________ changes.

buyers; price

Spaghetti and salad are related goods. Holding everything else constant, if the price of spaghetti decreases and the demand for salad increases, spaghetti and salad are probably

complements

Suppose that apples and pomegranates are substitute goods. The __________ pomegranates will increase when apple prices rise.

demand for

Walter provides lawn-cutting services and notices that his total revenue increases when he cuts prices. The elasticity of demand for his services is:

elastic

You go to Starbucks and see that the price of your favorite tall vanilla latte has gone up by 25 cents. All sizes of vanilla lattes are now more expensive. As a result of this price increase, you would expect to see a

fall in the quantity demanded of vanilla lattes

You are considering whether you should go out to dinner at a restaurant with your friend. The meal is expected to cost you $50, you typically leave a 20% tip, and a round-trip Uber ride will cost you $15. You value the restaurant meal at $30, and the time spent with your friend at $50. You should ________ to dinner with your friend because the benefit of doing so is _______ than the cost.

go; greater

An increase in price from $40 to $50 would cause the change in quantity demanded for D1 to be:

greater than the change in quantity demanded for D2, so D1 is more elastic than D2.

A supply curve 1) plots the quantities a seller is willing to sell at different prices 2) shows the total cost to the seller 3) shows rising marginal costs 4) shows rising fixed costs

i and iii

The United Kingdom plans to end the use of gas-powered and diesel-powered cars by the year 2040. At the same time, car manufacturers, such as General Motors and Nissan, are increasing the # of electric car models they produce. Based on this information, which of the following statements is correct? 1) If the supply of new electric cars is greater than the demand for new electric cars, then the price of electric cars will fall in the future. 2) The demand for gasoline will fall in the future. 3) The demand for electricity will rise in the future. 4) The demand for diesel will rise in the future.

i, ii , iii

Many companies pay their factory employees based on piece rates- the more they produce, the more they get paid. This practice highlights the role of ____________.

incentives

Asking "one more" allows the __________ principle to be analyzed as a simple question.

marginal

Which variable does not shift the demand curve?

none of the above; they all shift the demand curve

You are given data on four products - toothpaste, shampoo, soap, and laundry detergent. The absolute value of the price elasticity of demand for toothpaste is 4. The absolute value of the price elasticity of demand for shampoo is 0.2. The absolute value of the price elasticity of demand for soap is 0.5. The absolute value of the price elasticity of demand for laundry detergent is 2. Which product has the most inelastic demand?

shampoo

Carolyn Bates is a junior in college studying economics. She has created a new software application that applies the four principles of economic decision-making to any potential decision that a user faces. She is considering leaving school after this academic year to pursue further development of her app. Carolyn should ignore all of the following costs when calculating the opportunity costs of leaving college EXCEPT the

skills she may gain from her final year of economics courses