previous econ practice questions

Maya purchased two nonrefundable tickets to see a concert for $100. Because of recentpublicity and the release of a new album, Maya can sell the tickets on eBay for a total of $400. Ifshe and her boyfriend go to the concert, they will give up going to a party with theirfriends. Their cost of going to the concert is the enjoyment of party plus:

$400

An investor is franchising a new type of fitness studio and must determine how many locations to open.For each location, they will hire a manager for a salary of $6,500 per month and four part-time employees who willeach earn $3,000 per month. The investor values their own time spent overseeing each location at $8,500 permonth. Additional operating costs, including rent and utilities, will be $5,500 per month at each location. Theinvestor projects that when the business gains traction, the first location will have 1,300 members. The secondlocation will bring in 1000 members. The third and fourth locations will bring in 600 and 400 members, respectively.The monthly membership fee will be $53 per member. The investor has decided to definitely open two locations.Fill out the following information as you consider whether the investor should they open a third location A. Marginal benefit of the 3rd location

$53 * 600 = $31,800

B. marginal cost of the 3rd location

$6,500 + 4($3,000) + $8,500 + $5,500 = $32,500

The local city government is trying to decide whether to build a new community center. The cityalready owns the land, having purchased it 40 years ago for $43,000. The total development costs for the new community center would be $250,000. A commercial real estate developer has offered to buy the land from the city for $500,000. It is rational for the city government to build the new community center if the benefits of the new community center exceed

$750,000

A friend offers you a free ticket to a Dodgers game that night, and you decide to attend the game. Thegame takes five hours and costs you $25 for transportation. If you had not attended the game, you would haveworked at your part-time job for $12 per hour. What is the cost to you of attending the game?

$85

Consider the following statement: "An increase in the cost of oil will cause the price of a plane ticket toincrease. This increase in price will cause a decrease in demand for airline travel and a leftward shift in the demandcurve." What is the flaw in this reasoning?

An increase in the price of a ticket will not cause a decrease in demand, but rather a decrease in quantitydemanded

Which of the following statements about the market for chicken describes a change in the quantity demanded and which describes a change in demand? I. People are buying less chicken because the price of beef has fallen. II. People are buying less chicken because the price of chicken has increased. III. People are buying more chicken because the price of chicken has fallen. IV. The tastes and preference for chicken have gone down

I. and IV. are a change in demand and II. and III. are changes in the quantity demanded.

Assume that you buy non-refundable tickets to a baseball game for $40. After the 3rd inning, your team islosing 20-0, and you are no longer enjoying the game. You realize that if you left the game, you could go to workearly and pickup an extra $25. Should you leave or stay at the game?

Leave and work, because the net benefit of staying is zero, and the net benefit of leaving is $25

Suppose suppliers expect future prices to decrease, and simultaneously consumers' incomesdecrease. If the good under consideration is an inferior good, then what happens in the marketfor this good?

The equilibrium price adjustment is ambiguous, but the quantity will increase for sure

New research sheds light on the environmental damage posed by plastic bags from stores likeTarget, Walmart, grocery stores etc., causing people to start using reusable bags when shopping(rather than plastic bags). At the same time, plastic bag production technology improvesdramatically. Finally suppose the demand change is smaller than the supply change. Given thisinformation which of the following is TRUE?

The new equilibrium price of plastic bags will be lower, and the quantity will be higher.

Isadora recently bought some fishing equipment for $200 to join her friend on a fishing trip. On the weekbefore the trip, she discovers that she needs a fishing license, which would cost $100. The weather forecast predictsthere will be rain on the day of their trip. Should Isadora join her friend on the fishing trip?

Yes, if the benefit/enjoyment of going on the fishing trip exceeds the $100 cost despite the bad weather

A flower shop only has enough time and workers to either make bridal bouquet arrangements or graduation flower arrangements. If the price at which the flower shop can sell graduation arrangements rises, then this will lead to

a decrease in the supply of bridal arrangements

Mateo works eight hours per day. He is deciding whether to work overtime and stay one morehour in the office, or go back home and spend that hour studying for his economics exam. Hiscompany pays him $80 per day if he works eight hours, and $100 per day if he works nine hours.If Mateo studies one more hour, his exam score increases from 75 to 80. Mateo decides to workovertime only if he values

a five point increase on his exam less than $20

Suppose Jia only buys tea and biscuit, and she is currently in consumer equilibrium. Then,suddenly, the price of biscuits increases. This increase in the price of biscuits will immediately[ increases decreases ] the marginal utility per dollar for biscuits. Jia adjusts her consumptionof tea and biscuits in response to this price change. As Jia adjusts to her new consumerequilibrium, her marginal utility per dollar for biscuits [ increases decreases ].

dec/inc

was this shift an increase or a decrease

decrease

Consumers have caught wind of new developments in smartphone battery technology through news articles, tech forums, and leaked reports from reputable sources. Buyers believe that once this new battery technology hits the market, smartphones will become much more efficient and convenient to use. Answer the following questions on the answer sheet A. his new information causes which curve to shift, supply or demand?

demand

You just took an Uber from home to campus for the first time and were willing to pay $13 for the trip. Itwas so much easier than driving yourself that you are willing to pay $21 for the same trip tomorrow. Determine ifyou have violated the law of demand based on your choices and explain why or why not

did not violate the law of demand because your preference for the product changed after you experienced thegood

utility maximizing principle given chart of marginal utilities

divide MU/price and see where the numbers equal each other

The cost of ingredients used to make sunscreen decrease, and simultaneously researchers publish findings that wearing sunscreen on a daily basis greatly reduces the risk of skin cancer.The supply of sunscreen [ increases/decreases ] and the demand for sunscreen [ increases/decreases ], such that the new equilibrium quantity of sunscreen [ falls/rises ]

inc/inc/rises

To maximize utility, a consumer spends their entire allocated budget because

more consumption increases total utility, and thus only combinations that exhaust the budget can maximize total utility

C. should the investor open the 3rd location?

no -> MR < MC

find the new equilibrium if that curve shifted 200 thousand units in the direction you indicated earlier

price - 600 quantity - 200

Consumers consider pasta and rice to be substitutes. All else equal, if the price of pasta falls, we

shift the demand curve for rice to the left

During the pandemic, various factories around the world intermittently shutdown production, creating shortages of important inputs in the car manufacturing process. These factory shutdowns impacted the [ demand, quantity demanded, supply, quantity supplied ]of cars, which resulted in a [ shortage surplus] at the original equilibrium price for cars. This acted as the catalyst for the price of cars to start to [ rise fall ], and the quantity of cars bought and sold [ rose fell ] as the car market adjusted to its new equilibrium

supply/shortage/rise/fell

You can stay in school or you can quit school and get a full-time job.It is rational to stay in school if

the benefit of staying in school is greater than the cost of staying in school

Tiana's top four options for spring break all include travel, and all involve visiting friends ineither California, Colorado, Florida, or New Mexico. Her favorite option is New Mexico. Hersecond favorite is California. If the financial costs of travel are all the same, what is theopportunity cost of choosing New Mexico?

the enjoyment of visiting friends in california