Micro HW Ch 1-4

How might an economically rational grocery store manager react to a day of unexpectedly low demand for both fresh chicken and rotisserie chicken?

By making more rotisserie chicken and sending it to the deli counter to make chicken soup and chicken salad.

f both the supply and demand decrease, then equilibrium

quantity will fall, but we cannot say for certain what will happen to price

An increase in demand is represented by a

rightward shift in the demand curve

13.) The figure below shows

a decrease in quantity demanded

If the price of apples increase by 2 percent, and in response, the quantity of apples demanded falls by 6 percent, then the price elasticity of demand is:

not 0.3

Consider a society consisting only of Helen, who allocates her time between sewing dresses and baking bread. Each hour she devotes to sewing dresses yields 4 dresses and each hour she devotes to baking bread yields 8 loaves of bread.

a. dot at (0,32) and (64,0) b.) 1.) unattainable 2.) not unattainable try again 3.) not attainable and efficient try again

Consider a society consisting only of Helen, who allocates her time between sewing dresses and baking bread. Each hour she devotes to sewing dresses yields 4 dresses and each hour she devotes to baking bread yields 8 loaves of bread. Suppose that a sewing machine is introduced that enables Helen to sew 8 dresses per hour rather than only 4

a.) Line one: Points at (0,32) and (64,0) Line two: Points at (0,64) and (64,0) b.) i: unatainable; attainable and efficient ii: attainable and effiecient; attainable and inefficient c.) An increase in output per hour for any one good frees up resources that can be devoted to the production of other goods

Suppose Martha and Julia both work at a bakery making bread and muffins. In an hour, Martha can either make 10 loaves of bread or 40 muffins, while Julia can either make 12 loaves of bread or 60 muffins. Both Martha and Julia work 8 hours a day.

a.) line from (0,80) to (320,0) b.) line from (0,96) to (480,0) c.) 4; 5 d.) o.25; 0.20 e.) martha f.) julia g.) Martha because her opportunity cost of making bread is lower than Julia's

Suppose Sansa and Arya divide their time between making daggers and shields. It takes Sansa 6 hours to make a dagger and 3 hours to make a shield, and it takes Arya 3 hours to make a dagger and 1 hour to make a shield. Sansa and Arya each work 30 hours a week.

a.) sansa: 5 Arya: 10 b.) sansa: 2 Arya: 3 c.) sansa d.) Arya

If two goods are complements and the price of one good increases, then demand for the other good will

decrease

If the price of golf clubs falls, then we would expect the demand for golf balls to

increase

Suppose the most you would be willing to pay to have a freshly washed car before going out on a date is $6. The smallest amount for which you would be willing to wash someone else's car is $3.50. You are going out this evening and your car is dirty. How much economic surplus would you receive from washing it?

$2.50

The table below shows your total benefit (measured in dollars) from drinking different amounts of coffee each day. What's your marginal benefit from a second cup of coffee? Number of cups of coffee per day Total benefit per day (in dollars) 0 0 1 5 2 9 3 12 4 14 5 15

$4

What are the respective price elasticities of supply at A and B on the supply curve shown in the figure below?

2/3 3/4

Ted can wax a car in 20 minutes or wash a car in 60 minutes. Tom can wax a car in 15 minutes or wash a car in 30 minutes. What is each man's opportunity cost of washing a car?

a.) 3 b.) 2 c.) tom

The price elasticity of demand is given by:

last option

Suppose Joe is trying to decide whether to buy a latte at a nearby coffee shop or make a cup of coffee at home. Joe would get $5 worth of value from the latte, and the price of a latte at the coffee shop is $3. Joe would get $2.50 worth of value from a cup of homemade coffee, and it would cost him $1 to make. How much economic surplus would Joe get from buying a latte at the coffee shop?

not $2 try again

If demand increases and supply decreases, then equilibrium

price will rise, but we cannot say for certain what will happen to quantity

If equilibrium price of soap rises, and the equilibrium quantity of soap falls, then this suggests that the:

supply of soap decreased.

Tom is a mushroom farmer. He invests all his spare cash in additional mushrooms, which grow on otherwise useless land behind his barn. The mushrooms double in weight during their first year, after which time they are harvested and sold at a constant price per pound. Tom's friend Dick asks Tom for a loan of $200, which he promises to repay after 1 year. How much interest will Dick have to pay Tom in order for Tom to recover his opportunity cost of making the loan?

$200

Relative to her next best alternative, what is Kamryn's economic surplus from going to the movies?

-3

If the price elasticity of demand is 0.25, then a 2 percent increase in price will lead the quantity demanded to fall by:

0.5 percent

The graph below shows the daily demand for potatoes in the city of Spudville. If the price of potatoes is $4 per pound, then the price elasticity of demand for potatoes is:

0.67

What is Kamryn's opportunity cost of going to the movies?

18

The table below shows your total benefit (measured in dollars) from drinking different amounts of coffee each day. If each cup of coffee costs you $2.50, then how many cups of coffee should you drink each day? Number of cups of coffee per day Total benefit per day (in dollars) 0 0 1 5 2 9 3 12 4 14 5 15

3

Why do moderately priced refrigerators have a light in the refrigerator compartment but not in the freezer compartment?

Because the refrigerator door is opened more frequently than the freezer door.

Why do many premium-priced refrigerators have lights not only in the refrigerator compartments but also in the freezer compartments?

Because willingness-to-pay for additional convenience is higher for high-income consumers than for low-income consumers

For each long-distance call anywhere in the continental United States, a new phone service will charge users $0.30 per minute for the first 2 minutes and $0.02 per minute for additional minutes in each call. Tom's current phone service charges $0.10 per minute for all calls, and his calls are never shorter than 7 minutes. If Tom's dorm switches to the new phone service, the average length of his calls would

Increase

To earn extra money in the summer, you grow tomatoes and sell them at a local farmers' market for $0.30 per pound. By adding compost to your garden, you can increase your yield as shown in the accompanying table.

Pounds of compost Pounds of tomatoes Additional pounds of tomatoes Additional revenue (or marginal benefit) 0 100.0 — — 1 120.0 20 $ 6.00 2 125.0 5 $ 1.50 3 128.0 3 $ 0.90 4 130.0 2 $ 0.60 5 131.0 1 $ 0.30 6 131.5 0.5 $ 0.15

Kamryn is deciding between three potential activities on Saturday evening: 1) Staying at home and watching her favorite television show, an activity that she values at $18 and that entails no out-of-pocket costs. 2) Going to the movies with her sister to see the latest blockbuster action film, an activity she values at $30 and that entails $15 in out-of-pocket costs. 3) Going out to dinner with her best friend, an activity she values at $40 and that entails $23 in out-of-pocket costs. a) Which activity should Kamryn choose?

Staying at home and watching her favorite TV show

The meal plan at University A lets students eat as much as they like for a fixed fee of $500 per semester. The average student there eats 250 pounds of food per semester. University B charges $500 for a book of meal tickets that entitles the student to eat 250 pounds of food per semester. If the student eats more than 250 pounds, he or she pays $2 for each additional pound; if the student eats less, he or she gets a $2 per pound refund. If students are rational, at which university will average food consumption be higher?

Uni A

Each day, Ted can wax 4 cars or wash 12 cars, and Tom can wax 3 cars or wash 6 cars. What is each man's opportunity cost of washing a car?

a.) o.33; 0.5 Ted

If a technological innovation reduces the cost of producing cars, and at the same time, an increase in income leads the demand for cars to rise, then the equilibrium:

not price and quantity of cars will rise try again and not price of cars will rise, but we cannot say for certain what will happen to quantity

Suppose the graph below shows Gilligan's daily production possibilities curve for coconuts and fish. What is Gilligan's opportunity cost of gathering 1 pound of coconuts?

not 5.3 lb try again not 6 fish either

The figure below shows:

not an increase in quantity demanded not an increase in demand.

Suppose the price of butter, a complement to bread, increases. At the same time, suppose the price of flour, a key ingredient to the production of bread, falls. How will both of these factors (the increase in the price of butter and the decrease in the price of flour) affect the equilibrium price and quantity of bread?

will decrease; could either increase or decrease

If the price of a good falls, then

not demand for that good will rise try again not demand for that good will fall.

Suppose the cost of the materials used to produce shoes falls. This is likely to lead the equilibrium price of shoes to ________ and the equilibrium quantity of shoes to _______.

not increase; decrease try again

The graph below shows the daily demand for potatoes in the city of Spudville. If the price of potatoes is more than $5 per pound, then the price elasticity of demand for potatoes will be:

not less than one

The higher is the price elasticity of demand, the:

not more responsive demand is to a change in price.

Which of the following formulas can be used to calculate the price elasticity of demand?

not ∈=∣∣∆Q/P∆P/Q∣∣ ∈ = ∆ Q / P ∆ P / Q

If the demand for candy increases, then the equilibrium price of candy will _______, and the equilibrium quantity of candy will _______:

not fall; rise try again not rise; fall

Why are rotisserie chickens less expensive than fresh chickens?

Because rotisserie chickens help solve the problem of unpredictable excess supplies of fresh chickens

Residents of your city are charged a fixed weekly fee of $6 for garbage collection. They are allowed to put out as many cans as they wish. The average household disposes of three cans of garbage per week under this plan. Now suppose that your city changes to a "tag" system. Each can of garbage to be collected must have a tag affixed to it. The tags cost $2 each and are not reusable. What effect do you think the introduction of the tag system will have on the total quantity of garbage collected in your city? Under the "tag" system, the total quantity of garbage collected in the city will

Decrease

What will happen to the equilibrium price and quantity of beef if the price of cattle feed increases?

Equilibrium price will increase and equilibrium quantity will decrease

Susan can pick 4 pounds of coffee beans in an hour or gather 2 pounds of nuts. Tom can pick 2 pounds of coffee beans in an hour or gather 4 pounds of nuts. Each works 6 hours per day. Assume that Tom and Susan specialize according to their comparative advantage to produce coffee beans and nuts

a.) $96/day b.) not 30 try again and not 12 try again. Next answer : yes c.) Line from (36,0) to (24,24) then to (36,0) next line from (0,48) to (48,0)

Nancy and Bill are auto mechanics. Nancy takes 4 hours to replace a clutch and 2 hours to replace a set of brakes. Bill takes 6 hours to replace a clutch and 2 hours to replace a set of brakes. State whether anyone has an absolute advantage at either task and, for each task, identify who has a comparative advantage.

a.) 0.50;0.33 b.) not nancy try again; not bill try again; not bill try again; nancy

Susan can pick 4 pounds of coffee beans in an hour or gather 2 pounds of nuts. Tom can pick 2 pounds of coffee beans in an hour or gather 4 pounds of nuts. Each works 6 hours per day.

a.) 36 pounds per day/36 pounds per day b.) Susan; 32 c.) Yes table from left to right top row 0;24 bottom row 20,2 d.) attainable and efficient e.) Line from (0,36) to (24,24) then from (24,24) to (36,0)

Suppose Joe is trying to decide whether to buy a latte at a nearby coffee shop or make a cup of coffee at home. Joe would get $5 worth of value from the latte, and the price of a latte at the coffee shop is $3. Joe would get $2.50 worth of value from a cup of homemade coffee, and it would cost him $1 to make. What is the opportunity cost to Joe of buying a latte at the coffee shop?

not $5.50 or $4 try again

The graph below shows the daily demand for brooms in the small town of Sweepwell. If the price of a broom is $6, then the price elasticity of demand for brooms is

not 0.5 try again

The absolute value of the slope of the production possibilities curve gives the:

opportunity cost of the good on the horizontal axis.

An increase in demand is represented by

rightward shift in the demand curve

If the demand for bread increases when the price of potatoes increases, then this suggests that potatoes and bread are

substitutes

The opportunity cost of an action is equal to:

the sum of it's explicit and implicit costs