Macro Econ Online Test 1

Suppose Rebecca needs a dog sitter so that she can travel to her sister's wedding. Rebecca values dog sitting for the weekend at $200. Susan is willing to dog sit for Rebecca so long as she receives at least $150. Rebecca and Susan agree on a price of $175. Suppose the government imposes a tax of $10 on dog sitting. The tax has made Rebecca and Susan worse off by a total of

$10

With free trade, consumer surplus is

$108,000 and producer surplus is $12,000

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

$131,000

With free trade, total surplus is

$2,000

Without trade, producer surplus amounts to

$3,240

If the market price is $5.50, the consumer surplus in the market will be

$4.50

Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be

$45

With trade, total surplus is

$7,760

Assume for the United States that the opportunity cost of each airplane is 50 cars. Which of these pairs of points could be on the United States' production possibilities frontier?

(200 airplanes, 12,500 cars) and (150 airplanes, 15,000 cars)

Assume for Brazil that the opportunity cost of each cashew is 100 peanuts. Which of these pairs of points could be on Brazil's production possibilities frontier?

(200 cashews, 30,000 peanuts) and (150 cashews, 35,000 peanuts)

When demand is unit elastic, price elasticity of demand equals

1, and total revenue does not change when price changes

Using the midpoint method, at a price of $12, what is the income elasticity of demand when income rises from $5,000 to $10,000?

1.00

If Dina must work 0.25 hour to produce each taco, then her production possibilities frontier is based on how many hours of work?

100 hours

Colombia would incur an opportunity cost of 24 pounds of coffee if it increased its production of soybeans by

12 pounds

If the production possibilities frontiers shown are each for two days of production, then which of the following combinations of bolts and nails could Uzbekistan and Azerbaijan together not make in a given 2-day production period?

21 bolts and 98 nails

If the market consists of Michelle, Laura, and Hillary and the price falls by $1, the quantity demanded in the market increases by

5 units

When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?

ABC

The tax causes a reduction in consumer surplus that is represented by area

B+C

When policymakers are considering a particular action, they can use consumer surplus as a(n)

Both b) and c) are correct

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then

Dallas's consumer surplus would increase

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous

Suppose the demand for peanuts increases. What will happen to producer surplus in the market for peanuts?

It increases

Assume, for Japan, that the domestic price of automobiles without international trade is lower than the world price of automobiles. This suggests that, in the production of automobiles,

Japan has a comparative advantage over other countries and Japan will export automobiles

Which of the following conclusions should not be drawn from observing this graph?

No other factors besides the frequency of service affect the number of passengers

Which of the following movements would illustrate the effect in the market for chocolate chip cookies of an improved high-speed mixer that allows bakers to produce cookies in less time?

Point A to Point B

What will happen to the equilibrium price and quantity of traditional camera film if traditional cameras become more expensive, digital cameras become cheaper, the cost of the resources needed to manufacture traditional film falls, and more firms decide to manufacture traditional film?

Price will fall, and the effect on quantity is ambiguous

In a given market, how are the equilibrium price and the market-clearing price related?

They are the same price

Which of the following is not an example of a group responding to an incentive?

Universities offer fewer online classes when they generate more revenue than traditional classes.

Elasticity is

a measure of how much buyers and sellers respond to changes in market conditions

Which of the following is not an example of a graph of a single variable?

a scatterplot

A government-imposed price floor of $12 in this market results in

a surplus of 4 units

Rent controls can cause

all of these are possible results of rent controls

When demand is inelastic, an increase in price will cause

an increase in total revenue

For a price ceiling to be binding in this market, it would have to be set at

any price below $3

A price ceiling is binding when it is set

below the equilibrium price, causing a shortage

A government-imposed price of $24 in this market is an example of a

binding price floor that creates a surplus

Italy should specialize in the production of

boats and import cars

In a market economy, supply and demand determine

both the quantity of each good produced and the price at which it is sold

When a country that imports a particular good imposes a tariff on that good,

consumer surplus decreases and total surplus decreases in the market for that good

The goal of an economist who formulates new theories is to

contribute to an understanding of how the world works.

To say that government intervenes in the economy to promote equality is to say that government is aiming to

create a more fair distribution of income

When the nation of Isoland opens up its steel market to international trade, that change

creates winners and losers, regardless of whether Isoland ends up exporting or importing steel

The imposition of the tax causes the quantity sold to

decrease by 20 units

A tax on the sellers of coffee will increase the price of coffee paid by buyers,

decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee

The imposition of a tariff on roses

decreases the number of roses imported by 200

When a certain price control is imposed on this market, the resulting quantity of the good that is actually bought and sold is such that buyers are willing and able to pay a maximum of P1 dollars per unit for that quantity and sellers are willing and able to accept a minimum of P2 dollars per unit for that quantity. If P1 - P2 = $3, then the price control is

either a price ceiling of $2.00 or a price floor of $5.00

When a tax is imposed on a good, the

equilibrium quantity of the good always decreases

When an economist evaluates a positive statement, he or she is primarily

examining evidence, acting as a scientist, & concerned with verifying how the world is

The x-coordinate of an ordered pair specifies the

horizontal location of the point.

Microeconomics is the study of

how individual households and firms make decisions.

The before-trade price of fish in Germany is $8.00 per pound. The world price of fish is $6.00 per pound. Germany is a price-taker in the fish market. If Germany allows trade in fish, then Germany will become an

importer of fish and the price of fish in Germany will be $6.00

A movement upward and to the right along a supply curve is called a(n)

increase in quantity supplied

An increase in price causes an increase in total revenue when demand is

inelastic

Suppose a tax of $1 per unit is imposed on a good. The more elastic the supply of the good, other things equal, the

larger is the deadweight loss of the tax

Demand is inelastic if the price elasticity of demand is

less than 1

Minimum-wage laws dictate the

lowest price employers may pay for labor

Perry has an absolute advantage in the production of

neither good and Jordan has an absolute advantage in the production of novels.

When markets fail, public policy can

potentially remedy the problem and increase economic efficiency.

The welfare of sellers is measured by

producer surplus

Suppose the American Medical Association announces that men who shave their heads are less likely to die of heart failure. We could expect the current demand for

razors to increase

For a good that is taxed, the area on the relevant supply-and-demand graph that represents government's tax revenue is a

rectangle

The North American Free Trade Agreement

reduced trade restrictions among Canada, Mexico and the United States

If, at the current price, there is a surplus of a good, then

sellers are producing more than buyers wish to buy

Suppose after graduating from college you get a job working at a bank earning $30,000 per year. After two years of working at the bank earning the same salary, you have an opportunity to enroll in a one-year graduate program that would require you to quit your job at the bank. Which of the following should not be included in a calculation of your opportunity cost?

the $45,000 salary that you will be able to earn after having completed your graduate program

A shortage exists in a market if

the current price is below its equilibrium price

Assume the section of the demand curve from A to B corresponds to prices between $6 and $12. Then, when the price increases from $8 to $10

the percent decrease in the quantity demanded exceeds the percent increase in the price

We could use the information in the table to draw a production possibilities frontier for Japan and a second production possibilities frontier for Korea. If we were to do this, measuring airplanes along the horizontal axis, then

the slope of Japan's production possibilities frontier would be -0.2 and the slope of Korea's production possibilities frontier would be -0.33

In the ordered pair (5, 3), 3 is the

the y-coordinate

The movement from point M to point K could be caused by

unemployment