Macroeconomics-ECON 2301 Test 1 Chapters 1-4

In a typical week, Cheyenne buys four lattes at Starbucks. If the price of lattes doubles, what is the MOST likely number of lattes she will buy? two five eight four

two

A doctor has worked as a general practitioner for several years, earning an annual salary of $150,000. They are now deciding whether they want to open their own private practice or continue as a team member in the existing office. One-time start-up costs for the practice would be $100,000. If they open their own practice, they will receive a salary of $50,000 from the business annually until the practice is well-established. They anticipate the practice will take two years to become fully established. They paid $200,000 for medical school. They should open their own practice if the future benefits exceed: $300,000. $200,000. $500,000. $400,000.

$300,000

Suppose you manage a convenience store. If macaroni and cheese is an inferior good, what do you suppose would happen to the price and quantity sold if incomes fall?

Both price and quantity will increase

For Elandra, home-brewed coffee is an inferior good, and lattes from the coffee shop are a normal good. Recently, Elandra cut back on lattes and began brewing her own coffee at home. What may have caused this change?

Elandra's income fell

Vincent makes handcrafted dining tables, and he is trying to decide how many tables to produce. He can sell each dining table for $1,000. The cost of the first table is $900, for the second it's $1,100. For each additional table he produces, the marginal cost of each table increases by $200. How many dining tables should Vincent produce, and what is the total cost of his production? Vincent will not make any tables. He will produce one table at a cost of $900. He will produce two tables at a cost of $2,000. He will produce three tables at a cost of $3,300.

He will produce one table at a cost of $900

If drivers for ridesharing services like Uber and Lyft successfully negotiate for higher pay and parking lot operators in the city raise prices, what can you conclude about the new equilibrium for the rideshare market?

The equilibrium price will rise, but the impact on the quantity is unclear

Paper producers can manufacture both printing and drawing paper. What effect would rising prices for printing paper have on the market for drawing paper?

The supply of drawing paper will decrease

HelloFresh is a service that provides subscribers with recipes and all the necessary ingredients to prepare meals at home, delivered to their door once per week. Holding other things constant, what would happen if the company found a more efficient way to keep food fresh and safe during shipment?

There will be a movement down the market demand curve

You are a small business owner preparing to launch your first ad campaign to attract new customers, and must decide whether to learn about advertising yourself or hire a professional to launch the campaign. The campaign will last three months. If you hire a professional, you'll have to pay them a lump sum of $1,000 for the entire campaign. But if you decide to do it yourself, you'll take a course that costs $200 to introduce you to the skill. You'll also pay an employee $340 per month to work some of the hours you normally work while you manage the campaign. Would it be better to hire a professional rather than doing the campaign yourself? Yes, because your economic surplus is $220. Yes, because your full set of costs is only $540. No, because the benefit of not having to do it yourself is greater than the cost of the professional. No, because you can increase your economic surplus if you do it yourself.

Yes, because your economic surplus is $220

Dental services are: a normal good expenses that do not change with income an inferior good a natural good

a normal good

In the market for organic beef, what would cause a price increase?

a rise in the prices for grass and organic corn

For normal goods, an increase in income will result in:

an increase in the equilibrium price and quantity

Shifts in the market demand curve occur: because of all the factors that shift individual demand curves, along with changes in the types and number of buyers. only because of changes in income and preferences, along with changes in the types and number of buyers. only because of changes in the types and number of buyers. only because of the same factors that shift individual demand curves.

because of all the factors that shift individual demand curves, along with changes in the types and number of buyers.

The cost-benefit principle evaluates _________ costs and benefits, and willingness-to-pay considerations quantify ______ costs and benefits.

both monetary and nonmonetary; only nonmonetary

In employing the marginal principle, a seller may:

decide whether to supply one more unit of a good or service.

If the price of paint rises, we can expect the: quantity of paint demanded to increase. demand for paintbrushes to decrease. demand for paintbrushes to increase. quantity of paintbrushes demanded to remain unchanged.

demand for paintbrushes to decrease

As an equity analyst with an investment management company, you monitor market conditions in the dairy sector. Which of these would shift the market supply curve you've modeled for milk? an increase in the incomes of consumers expectations of a future decline in the price of milk an increase in population the rising popularity of milk

expectations of a future decline in the price of milk

The Rational Rule for Sellers says that sellers should supply one more unit of a good if the price is:

greater than or equal to the marginal cost

When there is a shortage of highly skilled workers...

highly skilled workers can negotiate higher salaries

Any change that leads businesses to produce a larger quantity at each price is considered a(n):

increase in supply

Following the rational rule, the economic surplus is maximized when:

marginal benefits equal marginal costs

The ________ is the increase in output obtained by hiring an additional worker.

marginal product

The interdependence principle states that your best choice today depends on all of these except: past decisions you have made expectations about the future other decisions you are currently making decisions others are currently making

past decisions you have made

An equilibrium in a market occurs when:

quantity supplied equals quantity demanded

We expect that price will fall when:

quantity supplied is greater than quantity demanded

If the price of jet fuel rises, the

quantity supplied of jet fuel increases

When plotting a supply curve, you measure:

quantity supplied on the horizontal axis.

A central and fundamental theme in economics is that:

resources are limited and cannot satisfy all the ways society wishes to use them

Dependencies over time reflect the fact that:

resources can be spread across time.

Diminishing the marginal product leads to:

rising marginal costs for a seller

The study of economics arises because of the necessity of choice. The necessity of choice arises due to the fundamental problem of...

scarcity

In your media studies class, you learn that Westerns were once a staple of network television but are now less common. If the production costs per episode of Westerns are comparable to those of other scripted shows, the most likely explanation for their disappearance is that, over time:

the market demand curve for Westerns shifted to the left

It is a rainy day, and you are considering taking an Uber one mile to meet some friends. You have decided you are willing to pay $20 to avoid getting wet from the rain. The trip would normally cost you $8, but due to the weather the surcharge is triple the regular cost. You should _____ because the benefit to you of taking the Uber is _____ than the cost.

walk; less

On a sweltering hot day, you feel thirsty and buy an ice cold soft-drink. Whether you buy a second drink or not will depend on:

whether the marginal benefit of the second drink exceeds the price of the drink

Juan is willing to pay $900 for a new iPad. He offers to pay $800 for an iPad at the Apple store. It costs Apple $700 to produce this iPad. A voluntary economic transaction between Juan and Apple _____ occur because _____ would be better off due to the transaction.

will; both Juan and Apple

How is the economic surplus generated by decision calculated?

It is the total benefits minus the costs arising from the decision

A friend comes up to you and offers you a free ticket to a professional baseball game that night. You decide to attend the game. The game takes five hours and costs you $15 for transportation. If you had not attended the game, you would have worked at your part-time job for $8 an hour. What is the cost to you of attending the game?

$65

The difference between a centralized economy and a market economy is that...

governments make the production decisions in a centralized economy and individuals make the decisions in a market economy

The law of supply refers to the:

positive relationship between price and quantity supplied

A shortage occurs when:

quantity demanded exceeds quantity supplied

You run an electronics store that sells big-screen TVs. As the market price for big-screen TVs decreases, the:

quantity of big-screen TVs supplied decreases

Which of these items is a normal good: canned food instant noodles steak thrid-hand cars

steak

Henderson Lumber is a lumber mill that produces both boards used in construction and sawdust, a byproduct of the board production, used in agriculture. When the housing market collapses, causing house prices along with the prices of boards used to build houses to fall, Henderson Lumber's _____ will likely _____. supply of sawdust; decrease quantity of boards supplied; increase supply of sawdust; increase quantity of sawdust supplied; increase

supply of sawdust; decrease

The marginal cost of an additional worker is:

the additional cost of hiring one more worker

The opportunity cost of a good is:

the value of the next best alternitve

If the price of chocolate chip cookies falls, then

there will be a rise in the quantity of chocolate chip cookies demanded

Is Facebook subject to the network effect?

yes

Why might you underestimate the increase in the market quantity demanded when you lower the price?

you may not take into account new customers, lured by the lower price

Charles is a manager at a coffee shop, and he has to decide how many workers to hire. One worker can make 25 drinks that sell for $5 on average in one hour. A second worker can make another 20 drinks in one hour. The marginal benefit of each additional worker decreases by five drinks, with each additional hire. Given that workers are paid $15 per hour and have eight-hour shifts, how many employees should Charles hire for each hour? three four five six

five