ECB101 - Midterm 1
How much revenue does this tax produce for the government?
$18 (look at the difference between what the buyers are paying at [$6] and the price that the sellers are receiving [$3] and then multiply the # of units [6])
Refer to Figure 6-18. The price that buyers pay after the tax is
$24
Alexis is a lawyer. She bills her clients $100 an hour for her services. She can also mow her lawn in 30 minutes. She can hire someone to mow her lawn who takes an hour. Of the following prices, which is the highest Alexis would pay someone to mow her lawn?
$49
Assume for the United States that the opportunity cost of each airplane is 50 cars. Which of these pairs of points could be on the United States' production possibilities frontier?
(200 airplanes, 12,500 cars) and (150 airplanes, 15,000 cars)
Invisible Hand Theory
Adam Smith's theory that the actions of independent, self-interested buyers and sellers will often result in the most efficient allocation of resources
During Supply & Demand (S&D) game, there were periods of time where no trading occurred, even though we shortened the period from 10 to 7 min. How do you account for this?
Buyers bids were too low and the seller's prices were too high (couldn't meet in the middle)
Refer to Table 3-40. Germany should specialize in the production of
Cars and import boats
(T/F) Tariffs are generally good for the nation because they protect jobs in industries which are hurt by foreign competition
F (shortage is still there - placing a burden on both consumers and producers while creating Dead Weight Loss)
The production possibilities frontier provides an illustration of the principle that
People face trade-offs
During S&D Game, what caused trading activity to increase dramatically in period 4?
The demand increased curve moved to the right increased
In the broadest sense, economics is the study of a. production methods b. how society manages its scarce resources c. how households decide who performs which tasks d. the interaction of business & govt
b. how society manages its scarce resources
A price ceiling will be binding only if it is set
below the equilibrium price
In a competitive market, the quantity of a product produced and the price of the product are determined by
both buyers and sellers
Suppose the U.S. and Japan both produce airplanes and televisions and the U.S. has a comparative advantage in the production of airplanes while Japan has a comparative advantage in the production of televisions. If the U.S. exports airplanes to Japan and imports televisions from Japan,
both countries, as a whole, will be better off
A circular-flow model and production possibilities frontier are similar in that:
both make use of assumptions
The word "economy" comes from the Greek word oikonomos, which means a. "environment" b. "production" c. "one who manages a household" d. "one who makes decisions"
c. "one who manages a household"
If this country allows free trade in tricycles,
consumers will gain more than producers will lose
Suppose Susan can wash three windows per hour or she can iron six shirts per hour. Paul can wash two windows per hour or he can iron five shirts per hour. a. Susan has an absolute advantage over Paul in washing windows b. Susan has a comparative advantage over Paul in washing windows c. Paul has a comparative advantage over Susan in ironing shirts d. All of the above
d
An increase in the price of a good will
decrease in quantity demanded
Which of the following events must cause equilibrium price to fall?
demand decreases and supply increases
In a competitive market free of govt regulation, price adjusts until quantity demanded ___________ quantity supplied.
equals
Production is efficient if the economy is producing at a point _________________. (where? in/on/outside)
on the production possibilities frontier
The "invisible hand" refers to
the marketplace guiding the self-interests of market participants into promoting general economic well-being
We can say that the allocation of resources is efficient if
total surplus is maximized
