Microeconomics final study guide

Suppose Colin brews beer and makes cheese. If Colin can increase his production of beer without decreasing his production of cheese, then he is producing at an: inefficient point. efficient point. unattainable point. ideal point.

inefficient point.

Which is the most likely substitute good for ice cream? a bowl popsicles a freezer chocolate syrup

popsicles

If the price of jelly goes up by 10 percent, we observe a decrease in the quantity demanded of peanut butter of 20 percent. The cross-price elasticity of these goods is: -2. 0.5. 2. -0.5.

-2

A 5% increase in the price of Good C leads to a 20% decrease in the quantity demanded of Good D. The cross-price elasticity of these goods is: -4 -0.25 -8 -0.125

-4

If the price of a good increases by 10 percent, its quantity demanded drops by 50 percent. The price elasticity of demand is: -5. -1. -0.2. -2.

-5

Suppose that when the average family income rises from $30,000 per year to $40,000 per year, the average family's purchases of toilet paper rise from 100 rolls to 105 rolls per year. The income-elasticity of demand for toilet paper is _______, suggesting toilet paper is ________________. 0.17; a normal good. 0.17; an inferior good. 0.05; an inferior good. 0.05; a normal good.

0.17; a normal good.

Dean should play golf instead of preparing for tomorrow's exam in economics if:

the economic surplus from playing golf is greater than the economic surplus from studying.

Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. What is Larry's economic surplus from attending State College instead of his next best alternative?

$5,000

Blanton really loves treats. He likes both cheese, and bacon treats. Given the indifference curve below, if Blanton is currently at 10 cheese, 1 bacon, what is Blanton's current marginal rate of substitution? -5 Cheese/Bacon -5 Bacon/Cheese -0.2 Cheese/Bacon 0.2 Bacon/Cheese

-5 Cheese/Bacon

Refer to the accompanying table below. The marginal cost of the 3rd unit of this activity is: question 9 hw 2

20

Refer to the accompanying table. Martha's opportunity cost of making of a pie is: Time to Make a PieTime to Make a CakeMartha60 minutes80 minutesJulia50 minutes60 minutes

3/4 of a cake.

hw 10 Where is the first player located on a chart? Left right

Left

Ben and Oakley are planting a garden together. If Oakley devotes all his time to planting trees, he can plant 5 trees an hour, and if he devotes all his time to planting flowers, he can plant 40 flowers an hour. If Ben devotes all his time to planting trees, he can plant 10 trees an hour, and if he devotes all his time to planting flowers, he can plant 50 flowers an hour. Which of the following statements is correct? Oakley has the comparative advantage in flowers, but Ben has the absolute advantage in flowers. Ben has both the absolute advantage and the comparative advantage in flowers. Oakley has both the absolute advantage and the comparative advantage in flowers. Ben has the comparative advantage in flowers, but Oakley has the absolute advantage in flowers.

Oakley has the comparative advantage in flowers, but Ben has the absolute advantage in flowers.

When price decreases from $70 to $60, demand is ___________ and total revenue

elastic; increases

Alex received a four-year scholarship to State U. that covered tuition and fees, room and board, and books and supplies. If Alex becomes a full-time student, then:

the opportunity cost of attending State U. includes the money Alex could have earned working for four years.

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

Your coffee shop is doing well so far! Last month you had revenues equal to $50,000. You spent $30,000 on coffee, cups, employees, and other variable costs, and the combination of all of your fixed costs, including rent for the store came out to be $10,000. You know you could have become a banker and earned $6,000 last month, but you followed your dreams and are now the proud owner of a profitable coffee shop! Speaking of profits, what is your economic profit of running the coffee shop last month? $4,000 $20,000 $10,000 $30,000

$4,000

Your friends from the University of Cincinnati are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfare is $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1,400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Cincinnati-Atlanta round-trip airfare is $450. What is the opportunity cost of using the coupon for the Miami trip?

$450

Suppose when the price of calculators is $10, the quantity demanded is 100, and when the price is $12, the quantity demanded drops to 80. Using the mid-point method, the price elasticity of demand is: -1.22. -0.81. -150 percent. -81 percent.

-1.22.

Quinn's income to spend on either bowling or eating out each month is $100. It costs $10 to bowl for the night and it costs $20 for Quinn to eat at a restaurant. A point on Quinn's budget constraint would be: 10 nights of bowling and 5 trips to the restaurant. 4 nights of bowling and 3 trips to the restaurant. 3 nights of bowling and 4 trips to the restaurant. 2 nights of bowling and 5 trips to the restaurant.

4 nights of bowling and 3 trips to the restaurant.

Suppose the price elasticity for a good is 5. This means a 1% increase in the price of the product will lead to a ____ % change in the quantity supplied. 5 0.2 0.5 2

5

Suppose the total benefit of watching 1 baseball game is 100, the total benefit of watching 2 games is 120, and the total benefit of watching 3 games is 125. In this case, the marginal benefit of watching the 3rd game is:

5

Why is the market for used cars not considered perfectly competitive? All of these are reasons why the used car market is not considered perfectly competitive. there is no standardized good. the buyers are not price takers. there is incomplete information.

All of these are reasons why the used car market is not considered perfectly competitive.

If Ana devotes all her time to making fudge, she can make 3 pounds of fudge an hour, and if she devotes all her time to making toffee, she can make 2 pounds of toffee an hour. If Leo devotes all his time to making fudge, he can make 4 pounds of fudge an hour, and if he devotes all his time to making toffee, he can make 5 pounds of toffee an hour. Which of the following statements is correct? Ana has the comparative advantage in fudge, but Leo has the absolute advantage in fudge. Ana has both an absolute advantage and the comparative advantage in fudge. Ana has the comparative advantage in toffee, but Leo has the absolute advantage in toffee. Leo has both the absolute advantage and the comparative advantage in fudge.

Ana has the comparative advantage in fudge, but Leo has the absolute advantage in fudge.

After browsing several pairs of shoes, Bob buys a pair of Nike running shoes. Economists would say that: Bob will get more utility per dollar from the Nike running shoes than any other in the store. Bob is revealing he will always choose Nike over any other shoe brand. Bob is revealing his strong distaste for New Balance running shoes. Bob made a poor choice, if he really prefers Adidas.

Bob will get more utility per dollar from the Nike running shoes than any other in the store.

Prohibition has been repealed in the United States, and the USA is re-entering the world market for whiskey. What effect will this have on the market pictured above? There will be no change in the world market when the USA enters World supply will increase and world demand will decrease when the US enters the market, because it is a large economy World supply will decrease and world demand will increase when the US enters the market, because it is a large economy Both world supply and world demand will increase when the US enters the market, because it is a large economy

Both world supply and world demand will increase when the US enters the market, because it is a large economy

In which of the following markets could the government improve social welfare by implementing a tax to offset a negative externality? Vacations, which people enjoy Education, which leads to a smarter population, which could advance our knowledge of the world Apple pies, which smell delicious Cigarette smoke, which leads to second hand smoke and can cause lung cancer to non smokers

Cigarette smoke, which leads to second hand smoke and can cause lung cancer to non smokers

Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie. Which of the following statements is correct? Dan should specialize in sandwiches, and Tracy should specialize in smoothies. Tracy should specialize in sandwiches and smoothies. an should specialize in smoothies, and Tracy should specialize in sandwiches. Dan should specialize in both sandwiches and smoothies.

Dan should specialize in sandwiches, and Tracy should specialize in smoothies.

The total surplus in a market lost to market inefficiencies is also known as Producer Surplus Deadweight Loss Consumer Surplus Total Surplus

Deadweight Loss

Use the market below to answer the following question: Suppose the world price for this good is $400, and the local economy is already engaging in free trade. How much total surplus change if the country implemented a $50 per unit tariff? Decrease $6,250 Increase $6,250 Decrease $1,875 Increase $1,875

Decrease $1,875 hw 9 question 8

Which of the following markets would benefit the most from a government subsidy? Inelastic market with positive externalities Elastic market with negative externalities Elastic market with positive externalities Inelastic market with negative externalities

Elastic market with positive externalities

There are many reasons a government should get involved in an economic market. Which of the following is not one of the reasons we discussed in class? Encouraging or discouraging the consumption of goods with externalities Changing the distribution of economic surplus Correcting market failures Government officials disliking certain individuals in a marketplace

Government officials disliking certain individuals in a marketplace

After getting a raise at work, Marcus now regularly buys steak in lieu of ground beef. Which factor of demand has influenced Marcus's demand for steak? Price of a complementary good Income Price of a substitute good Preferences

Income

Which of the following is not an example of unintended consequences? Increasing the price of a good and seeing the quantity demanded decrease Sinking ships in shallow waters during wars leading to more habitats for coral reefs Taking asprin for pain, which also lowers your blood pressure Paying ransoms leading to more kidnappings

Increasing the price of a good and seeing the quantity demanded decrease

Government intervention can come in many forms. Which of the following would not be considered a government intervention into an economic market? Capping the price of gasoline for wholesalers Subsidizing the production of a good with positive externalities, such as education Instituting a tax on goods with negative externalities, such as cigarettes Individuals buying goods from a company because they believe in what the company stands for

Individuals buying goods from a company because they believe in what the company stands for

Which of the following is an example of a positive externality? The delicious scent of fresh donuts from walking by Murray Donuts in the morning Consuming fresh fruit Air pollution from increased traffic Rescuing a puppy

The delicious scent of fresh donuts from walking by Murray Donuts in the morning

Tortuga and Port Royal are island nations that can produce rum and cannonballs. Their production schedules are given below. TortugaPort RoyalRumCannonballsRumCannonballs020015216112412296836844310050 What would be a fair trade scenario between Tortuga and Port Royal? Port Royal gives 1 rum for 2.5 cannonballs Port Royal gives 1 rum for 0.4 cannonballs Tortuga gives 1 rum for 3.5 cannonballs Tortuga gives 1 rum for 2.5 cannonballs

Tortuga gives 1 rum for 2.5 cannonballs hw 9 question 2

Suppose a market goes from being in equilibrium without any government regulations, to having a binding price ceiling enacted. What will happen to consumer and producer surplus in this market? We cannot know what will happen to PS without more information, but CS will decrease We cannot know what will happen to CS without more information, but PS will decrease CS will increase, but PS will decrease CS will decrease, but PS will increase

We cannot know what will happen to CS without more information, but PS will decrease

The minimum amount a person would take in order to give a good or service to another individual is also known as Equilibrium Quantity Demanded Willingness to Sell Willingness to Pay

Willingness to Sell

You want to buy a TV that regularly costs $250. You can either buy the TV from a nearby store or from a store that's downtown. Relative to going to the nearby store, driving downtown involves additional time and gas. The downtown store, however, has a 10 percent off sale this week. Last week you drove downtown to save $20 on some concert tickets, a 15 percent savings. Should you drive downtown to buy the TV? Yes, because you will save more than $20. No, because you will save more than $20. Yes, because you will save 10 percent, which is better than nothing. No, because you will only save 10 percent, which is less than 15 percent.

Yes, because you will save more than $20.

A historic drought causes most carrot crops to fail, decreasing the amount of available carrots. The carrot cake market would see: no change in the supply of carrot cake, but the demand would decrease. a decrease in the supply of carrot cake. no change in the supply of carrot cake, but the demand would increase. an increase in the supply of carrot cake.

a decrease in the supply of carrot cake.

The price of chew toys has gone down, and all other variables have remained constant. This makes Blanton very happy because he gets a new toy since he's such a good boy! If I wanted to show this change graphically it would be: a shift in the demand curve to the right. a movement along the demand curve to the right. a shift in the demand curve to the left. a movement along the demand curve to the left.

a movement along the demand curve to the right.

Look at graphs from each homework

alright

The most likely complementary good for burgers would be: charcoal. hot dogs. buns. a tailgate.

buns

A 5% increase in the price of Good C leads to a 20% decrease in the quantity demanded of Good D. Theses goods are: compliments substitutes unrelated none of these

compliments

All externalities: are beneficial to society and create benefits external to the decision maker. are addressed by the government through taxation. create either a cost or benefit to a person other than the person who caused it. are harmful to society and create costs external to the decision maker.

create either a cost or benefit to a person other than the person who caused it.

If the price of milk is above the equilibrium price, then there will be: neither excess supply and excess demand. excess supply of dairy products. excess demand for cheese. both excess supply and excess demand.

excess supply of dairy products.

Jamie purchases a new watch for $300. One can infer that: she paid too much. her willingness to pay was exactly $300. her willingness to pay was at least $300. her willingness to pay was less than $300.

her willingness to pay was at least $300.

Ben is asked to rate the utility he would get from reading different types of publications for the next hour. If he read a graphic novel he would get utility of 5. If he read a biography, he would get utility of 4, and if he read his economics textbook, he would get utility of 9. An economist would predict that Ben will spend his next hour reading: his economics textbook. It is impossible to predict how Ben will spend his time. a biography. a graphic novel.

his economics textbook.

If the price of a cup of Dunkin' Donuts coffee rises, while the price of a Starbucks latte doesn't, we expect the quantity of lattes demanded to: increase as some people switch from coffee to the relatively less expensive latte. decrease as some people switch from coffee to the relatively less expensive latte. increase as some people switch from coffee to the relatively more expensive latte. decrease as some people switch from coffee to the relatively more expensive latte.

increase as some people switch from coffee to the relatively less expensive latte.

Suppose Karl divides his time between making birdhouses and growing artichokes. Karl's friend recently gave Karl some new woodworking tools that greatly reduced the amount of time it takes Karl to make each birdhouse, but the new tools had no impact on the amount of time it takes Karl to grow artichokes. Thus, the new tools _____ Karl's opportunity cost of growing artichokes. increased decreased had no effect on shrug emoji

increased

A baker of chocolate chip cookies is likely to have a ______________ price elasticity of supply than the seller of rare baseball cards due to ______________. more elastic; the availability of inputs less elastic; the availability of inputs less elastic; a shorter adjustment time less elastic; a more flexible production process

more elastic; the availability of inputs

Which protectionist policy leads to an increase in producer surplus when importing a good, but does not necessarily provide the local government with any tax revenue? quota tariff opportunity cost price ceiling

quota

You are thinking of opening a coffee shop. Before you begin your journey as an entrepreneur, you think it may be best to consider all of the costs likely to be involved. You know you will need to constantly resupply coffee essentials, such as cups, coffee beans, and sugar. You will also have to hire baristas to work at your coffee shop, and find a storefront to run the coffee shop out of. Which of these costs is an example of a fixed cost? renting a storefront baristas coffee cups sugar

renting a storefront

Jen spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for food and drinks rather than spending an equal amount of money to go to a movie. Her opportunity cost of going to the beach is:

the value she places on seeing the movie.