Macroeconomics Chapters 1-4

Answer the next question on the basis of the following diagram: Refer to the diagram. At the equilibrium price and quantity, consumer surplus in this market is:

$150

After his car broke down on a hot day, Jack walked more than a mile to the nearest convenience store and paid $1 for a bottle of water. Considering his thirst, he would willingly have paid $3. Jack's consumer surplus is:

$2

The following data show the supply and demand schedule for a competitively produced good. Refer to the above data. At the equilibrium price, the quantity exchanged in this market will be:

220

Answer the next question on the basis of the following information for a public good. PR and PS are the prices that Rafael and Sarki, respectively, are willing to pay for the marginal unit of a public good, rather than do without it. Rafael and Sarki are the only members of society. Refer to the table. Suppose the public good can be provided by the government at a constant marginal cost of $7. The optimal quantity of the public good is:

4 units

A firm can produce a single unit of output by combining labor and capital in any of the combinations shown in the following table. Labor costs $2 per unit and capital costs $4 per unit. (14.0K) Refer to the table. Which is the most efficient technique for producing the output?

A

For a laissez-faire system, which of the following best answers the question, "What goods and services will be produced?"

Any good that returns its producers sufficient revenue to cover its total costs

Answer the next question on the basis of the following information for four city beautification programs of increasing scope. All figures are in millions of dollars. Refer to the table. On economic grounds, the most efficient program is:

B

Refer to the following diagrams: Which one of the above diagrams best illustrates the effect of an increase in crude oil prices on the market for gasoline?

D

Refer to the following diagram of a circular flow model of the economy: In the diagram, consumer expenditures are represented by:

Flow 4

Refer to the following production possibilities diagram: Production of which of the points in the diagram is currently unattainable given the economy's resources?

Point D

If a change in consumer preferences results in many more consumers registering their "dollar votes" in favor of peaches, which of the following will most likely follow?

Profits of peach growers will rise and peach production will rise

Suppose two goods, X and Y, are economically desirable in that there is some positive output at which total benefits exceed total costs. If good X is characterized by nonrivalry and non-excludability but good Y is characterized by both rivalry and excludability, then:

Y can be efficiently provided by private firms but X must be financed through taxes

The command systems of the Soviet Union and Eastern Europe failed in part because:

central planners found it increasingly difficult to coordinate the economic decisions of consumers, resource suppliers, and businesses

An improvement in production technology for a specific good will cause a(n):

drop in price and increase in quantity demanded

Government has imposed a tax on the producers of good X and has subsidized the consumers of good Y. If these policies result in the production of the efficient amounts of both goods, it is likely the government is correcting for:

external costs in producing X and external benefits in consuming Y

Bees from a keeper's hive can pollinate fruit trees for many surrounding orchards. Therefore, the production of honey:

generates a positive externality and should be encouraged through subsidies

Economic profits and losses:

help determine which industries survive or fail

A microeconomist would most likely study:

how consumers respond to a change in gasoline prices

You should decide to study an extra hour tonight

if the marginal benefit of studying an extra hour exceeds its marginal cost

Human specialization, or the division of labor:

increases output by enabling workers to take advantage of differences in their skills

Answer the next question on the basis of the data given in the following production possibilities table: (24.0K)

increasing sacrifices of consumer goods

The fundamental problem of economics implies that:

individuals and communities must make choices among competing alternatives

Suppose you have a $20 iTunes gift card with which you can buy (download) songs or videos. Songs cost $1.00 each and videos cost $2.00 each. The opportunity cost of one video:

is constant and equal to 2 songs

A firm will earn a positive economic profit if:

its total sales revenue exceeds the sum of all its costs

Margaret decides to stay home and study for her exam rather than going out to a movie with her friends. Her dilemma is an example of:

opportunity cost

Use the following diagram to answer the next question; assume the demand and supply curves capture all relevant benefits and costs. Refer to the diagram. In this competitive market, total surplus (combined consumer and producer surplus) is maximized at:

output H

When drawing demand and supply curves, economists are assuming that the primary influence on production and purchasing decisions is:

price

The laissez-faire system is characterized by:

private property rights

Compared to the efficient amount, suppose too many resources are allocated to the production of some good. The most likely explanation is that:

production of this good creates external costs

The competitive market system encourages innovation and technological advance, primarily through:

profitable returns to innovative firms

When an economist says that the demand for a product has increased, this means that:

quantity demanded is greater at each possible price

Positive externalities are most likely to be found in the production of:

secondary education

Consider the problem Marsha faces of how to allocate her weekly allowance between books and videos. An increase in Marsha's allowance will:

shift her budget line to the right

"Because of unusually good growing conditions, the supply of strawberries has substantially increased." This statement indicates that:

the amount of strawberries that will be available at various prices has increased

Goods X and Y are complements while goods X and Z are substitutes. If the supply of good X increases:

the demand for Y will increase while the demand for Z will decrease

A decrease in the price of a product will increase the amount of quantity demanded because:

the lower price induces consumers to use this product instead of other products

Economics is primarily the study of:

the problem of scarce resources relative to human wants

When movie ticket prices increase, families tend to spend less time watching movies and more time at home watching videos instead. This best reflects:

the substitution effect

The negative slope of the production possibilities curve illustrates that:

when resources are fully employed, an economy can produce more of one thing only by producing less of something else

If consumer incomes increase, the demand for product Y:

will shift to the right if Y is a normal good