Eco 1

The output of U.S. citizens who work in Canada would be included in the

gross domestic product of Canada.

The endowment effect suggests that that people

have a strong attachment to their property, regardless of whether they paid to acquire it

With perfect price discrimination there is

no deadweight loss.

In economics, the term "free rider" refers to

one who waits for others to produce a good and then enjoys its benefits without paying for it

Real GDP will increase

only if the quantity of final goods and services produced rises.

Which of the following is not a source of technological advancement for a producer?

outsourcing some aspect of production

The difference between technology and technological change is that

technology refers to the processes used by a firm to transform inputs into output while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs

Suppose a decrease in the supply of bottled water results in a decrease in revenue. This indicates that

the demand for bottled water is elastic in the price range considered.

According to the law of one price, identical products should sell for the same price everywhere if

the transaction costs are zero

Vipsana's Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is $2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day. Calculate Vipsana's variable cost per day when she produces 50 gyros using two workers?

$220 $50x2) + (60x2 workers)

If an additional worker can produce an additional 20 units of output which can be sold for $4 per unit, what is the maximum wage that this perfectly competitive firm should pay to hire this worker?

$80

When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent, and the sale of dips (like salsa and bean dip) fell 8 percent. This set of facts indicates that the cross-price elasticity between tortilla chips and dips is ________, so the two are ________.

-0.8; complements

If a 6 percent increase in income leads to a 4 percent increase in quantity demanded for audio books, the income elasticity of demand is

.67

Trina's Tropical Fish Store sells goldfish for $2 each and angelfish for $10 each. What is the opportunity cost of buying a goldfish?

1/5 of an angelfish

Horatio can produce either a combination of 15 bird houses and 25 wind chimes or a combination of 30 bird houses and 15 wind chimes. If he now produces 30 bird houses and 15 wind chimes, what is the opportunity cost of producing an additional 10 wind chimes?

15 birdhouses

The price elasticity of supply of hot dog buns is estimated to be 1.5. Holding everything else constant, this means that a 10 percent decrease in the price of hot dog buns will cause the quantity of hot dog buns supplied to decrease by

15 percent

. The price elasticity of supply of hot dog buns is estimated to be 1.5. Holding everything else constant, this means that a 10 percent decrease in the price of hot dog buns will cause the quantity of hot dog buns supplied to decrease by

15 percent 15/10 =1.5

What is the opportunity cost of producing 1 bolt of cotton in Pakistan? 150 cashews 240 cotton

150/240 = 5/8 of a pound of cashews

If the GDP deflator rises from 185 to 190, what is the rate of inflation between the two years?

2.7%

If a consumer receives 22 units of marginal utility for consuming the first can of soda, 20 units from consuming the second, and 15 from the third, the total utility of consuming the three units is

57 utils

Suppose the cross-price elasticity of demand between grapefruit juice and orange juice is approximately -6. What does this mean?

A 1 percent decrease in the price of grapefruit juice leads to a 6 percent increase in orange juice consumption

Which of the following is a positive economic statement?

If the price of iPhones falls, a larger quantity of iPhones will be purchased

Jenna runs a small boutique in Capitola. She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more. On the basis of this information, what can you conclude about her price elasticity of demand for wool hand warmers?

It is perfectly elastic

Seth is a competitive body builder. He says he must have his 12-oz package of protein powder to "feed his muscles" every day. On the basis of this information, what can you conclude about his price elasticity of demand for protein powder?

It is perfectly inelastic

What is moral hazard?

It refers to the actions people take after they have entered into a transaction that makes the other party to the transaction worse off

Japan - 200 wristwatch 10 rice thailand 180 wristwatch 6 rice who should produce wristwatches?

Japan

Which of the following contributes to the efficiency of markets?

Markets promote competition and voluntary exchange

Which of the following is a normative economic statement?

Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study?

Real GDP grows by 2.3% in the second quarter.

Health clubs typically experience an increase in one-year memberships in January, but many new customers cancel their memberships before the end of the year. Which of the following is the best explanation for this behavior?

Some people are overly optimistic about their future behavior

How will an increase in labor productivity affect equilibrium in the labor market?

The demand for jobs will increase and the equilibrium wage and quantity of labor will increase.

Which of the following is a positive economic statement?

The government should revamp the health care system

Larry and Mike are equally skilled construction workers employed by the Brown and Root Company. Larry's job is riskier because he typically works on a scaffold 1,000 feet above ground. Larry's higher wage rate is the result of

a compensating differential.

Which of the following is a factor of production that generally is fixed in the short run?

a factory building

a cartel is

a groups of firms that enter into a formal agreement to fix prices to maximize joint profits

Which of the following is an example of a nonexcludable product

a public library

Which of the following is a possible solution when a scarce resource is subject to the tragedy of the commons?

access to the commons can be restricted through community norms and laws

Increases in real GDP would understate the well-being of a country over time if, over that time period, the

amount of pollution decreased.

The "ability-to-pay" principle of taxation is the normative idea that

an equitable tax system is one in which high income individuals should bear a greater burden of taxes than low income individuals

If an increase in income leads to a decrease in the demand for popcorn, then popcorn is

an inferior good

which of the following will prevent firms from engaging in price discrimination

arbitrage

What is the term that describes a situation in which one party to an economic transaction has less information than the other party?

asymmetric information

Arlene quits her $125,000-a-year job to take care of her ailing parents. What is the opportunity cost of her decision?

at least $125,000

If the marginal cost curve is below the average variable cost curve, then

average variable cost is decreasing

Suppose the demand curve for hybrid cars shifts to the right. This will cause a relatively small increase in the price of hybrid cars if

both demand and supply are elastic

Suppose you have worked at a local sandwich shop for six months and now you plan to ask your manager for a raise. How can you convince your manager that you are worth more money than you are currently being paid?

by showing your manager that your marginal revenue product has increased since your last wage increase

If a firm could practice perfect price discrimination it would

charge every buyer a different price

Investment, as defined by economists, would include the purchase of a

computer by an accounting firm

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called

consumer surplus.

In order to prove that Motrin and Ibuprofen are substitutes, one should measure the ________ and get a ________.

cross-price elasticity; positive number

If total utility increases at a decreasing rate as a consumer consumes more coffee, then marginal utility must

decrease

Economic costs of production differ from accounting costs in that

economic costs add the opportunity costs of a firm using its own resources while accounting costs do not

If, when a firm doubles all its inputs, its average cost of production decreases, then production displays

economies of scale

Collusion between two firms occurs when

firms explicitly or implicitly agree to adopt a uniform business strategy

Leela and Chance are equally skilled construction workers employed by the High and Low Company. Leela's job is riskier because she typically works on a scaffold 1,000 feet above ground. Leela's wage rate is

higher than Chance's because Leela's job is more dangerous

Suppose a competitive firm pays a wage of $12 an hour and sells its product at $3 per unit. Assume that labor is the only input. If hiring another worker would increase output by five units per hour, then to maximize profits the firm should

hire the additional worker.

A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements. This will

increase GDP and decrease well-being in the economy

When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent. This indicates that the demand for tortilla chips is

inelastic

If there is pollution in producing a product, then the market equilibrium price

is too low and equilibrium quantity is too high

If diminishing marginal returns have already set in for Golden Lark Woodworks, and the marginal product of the 6th carpenter is 8 chairs, then the marginal product of the 7th carpenter is

less than 8 chairs

If the production possibilities frontier is ________, then opportunity costs are constant as more of one good is produced.

linear

Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that

people with health insurance are more likely to be overweight than people without health insurance

The machines that workers have to work with are considered

physical capital

Which of the following is an example of a positive externality?

planting trees along a sidewalk which add beauty and create shade

When consumers are less confident about their jobs or incomes, they are more likely to

reduce purchases of durable goods than nondurable goods

Since lower-income people spend a larger proportion of their incomes on groceries than do higher-income people, if grocery stores were required by law to charge a 10-cent fee for disposable bags, this fee could be considered a

regressive tax

Economic decline (negative growth) is represented on a production possibilities frontier model by the production possibility frontier

shifting inward

Arnold Kim began blogging about Apple products during his fourth year of medical school. Kim's Website, MacRumors.com, became so successful that he decided to give up his medical career and work full time on his Website, despite the nearly $200,000 he had invested in his education. In making his decision, the $200,000 he spent on his education

should be ignored since it represents a sunk cost

If Marlowe obtains 9 units of utility per dollar spent on apples and 6 units of utility per dollar spent on oranges, then Marlowe

should buy more apples and fewer oranges

China - 100 hr camera 4 hours wheat South Korea - 60 hr camera 3 hours wheat Does china or south korea have an aboslute advantage

south korea has an absolute advantage in both

The demand curve for canned peas is downward sloping. If the price of canned peas, an inferior good, rises, then

the income effect which causes you to increase your canned peas purchases is smaller than the substitution effect which causes you to reduce your purchases, resulting in a net decrease in quantity demanded

Consider the stock of ocean tuna which is massively overfished. It is rational for an individual to exploit the resource rather than to conserve the stock because

the marginal private cost of harvesting the fish is lower than the marginal social cost

Most people would prefer to drive a luxury car that has all the options, but more people buy less expensive cars even though they could afford the luxury car because

the marginal utility per dollar spent on the less expensive car is higher than that spent on luxury cars

Suppose that nominal GDP in 2016 was less than real GDP in 2016. Given this information, we know for certain that

the price level in 2016 was less than the price level in the base year.

If the quantity of walkie-talkies supplied increases by 5 percent when price increases by 12 percent, then

the supply of walkie-talkies is inelastic

Suppose in 2016, you purchase a house built in 2003. Which of the following would be included in the gross domestic product for 2016?

the value of the services of the real estate agent

What is the incentive for a firm to join a cartel?

to be able to earn larger profits than if it was not part of the cartel

Health insurance companies impose deductibles on policies and co-payments on claims

to reduce moral hazard problems

Marginal analysis involves undertaking an activity

until its marginal benefits equal marginal costs.

If the percentage increase in price is 15 percent and the value of the price elasticity of demand is -3, then quantity demanded

will decrease by 45 percent