ECO 102 MACRO

Which of the following events could shift the demand curve for gasoline to the left?

Public service announcements run on television encourage people to walk or ride bicycles instead of driving cars.

Jacqui decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jacqui's economic profit from running her own business?

$5,000

Refer to Figure 4-18. At what price would there be an excess demand of 200 units of the good?

NOT $35

Refer to Figure 5-1. Between point A and point B, the slope is equal to

NOT -1/4, and the price elasticity of demand is equal to 2/3.

Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point C and point D is about

NOT 2.0.

Refer to Scenario 13-1. If Korie purchases the factory with her own money, what is the annual implicit opportunity cost of purchasing the factory?

NOT 3,000

Refer to Table 4-1. If the market consists of Laura and Hillary only and the price falls by $1, the quantity demanded in the market increases by

NOT 5 UNITS

Refer to Figure 4-11. The movement from point A to point B on the graph is caused by

NOT a decrease in the price of the good.

Refer to Figure 4-19. If price in this market is currently $14, then there would be a(n)

NOT excess supply of 20 units. The law of supply and demand predicts that the price will fall from $14 to a lower price.

Refer to Figure 5-12. If the price decreased from $36 to $12, total revenue would

NOT increase by $7,200, and demand is elastic between points X and Z.

If we observe a great deal more advertising for Mucinex, an over-the-counter drug, than for a Grainger drill press, we can infer that

NOT more money is spent on Mucinex than on Grainger drill presses.

When quantity supplied decreases at every possible price, we know that the supply curve has

NOT shifted to the right.

Refer to Figure 4-21. At a price of $16, there is a

NOT surplus of 1 unit.

Which of the following statements is true?

Policymakers have the difficult task of determining whether some firms' decisions have legitimate purposes even though they appear anti-competitive.

Last year, Max bought 6 pairs of athletic shoes when his income was $35,000. This year, his income is $42,000, and he purchased 8 pairs of athletic shoes. Holding other factors constant, it follows that Max

considers athletic shoes to be normal goods.

Suppose an airline determines that its customers traveling for business have inelastic demand and its customers traveling for vacations have an elastic demand. If the airline's objective is to increase total revenue, it should

decrease the price charged to vacationers and increase the price charged to business travelers.

Josh mows lawns. If the demand for lawn-mowing service is elastic and Josh wants to increase his total revenue, he should

decrease the price of his lawn-mowing service.

The English word that comes from the Greek word for "one who manages a household" is

economy.

The law of demand states that, other things equal, when the price of a good

falls, the quantity demanded of the good rises.

Economists claim that a resale price maintenance agreement is not anti-competitive because

if a supplier has market power, it will be likely to exert that power through wholesale price rather than retail price.

Just like models constructed in other areas of science, economic models

incorporate assumptions that contradict reality.

Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor, Toysorama, is mass-producing an excellent copy and plans to flood the market with their $5 doll in six weeks. Funsters should

increase the supply of its doll now before the other doll hits the market.

The University of Iowa was voted the #1 "party school" in 2013. The University of Iowa is located in Iowa City. At the end of August each year, the market demand for beer in Iowa City

increases.

Monopolistic competition is a type of

market structure.

The adage, "There is no such thing as a free lunch," means

people face tradeoffs.

The phrase "no such thing as a free lunch" means

people must face tradeoffs.

A market demand curve shows how the total quantity demanded of a good varies as

price varies.

Shrimp Galore, a shrimp harvesting business in the Pacific Northwest, has a 30-year loan on its shrimp harvesting boat. The annual loan payment is $25,000 and the boat has a market (salvage) value that exceeds its outstanding loan balance. Prior to the 2010 shrimp harvesting season, Shrimp Galore's accountant predicted that at expected market prices for shrimp, Shrimp Galore would have a net loss of $75,000 dollars after paying all 2010 expenses (including the annual loan payment). In this case, Shrimp Galore should

produce nothing and experience a loss of $25,000.

Economists assume that the goal of the firm is to maximize total

profits.

Demand is said to be inelastic if the

quantity demanded changes proportionately more than price.

Economics deals primarily with the concept of

scarcity

A model can be accurately described as a

simplification of reality.

The analysis of competitive firms sheds light on the decisions that lie behind the

supply curve.

If there is a shortage of farm laborers, we would expect

the price of the good

Suppose that gasoline prices increase dramatically this month. Lola commutes 100 miles to work each weekday. Over the next few months, Lola drives less on the weekends to try to save money. Within the year, she sells her home and purchases one only 10 miles from her place of employment. These examples illustrate the importance of

the time horizon in determining the price elasticity of demand.

Which of the following can be added to profit to obtain total revenue?

total cost

The amount of money that a firm pays to buy inputs is called

total cost.

A monopolistically competitive firm is currently earning a positive economic profit. If other firms enter the market, we would expect that the added competition will cause this firm to adjust its output such that it

will operate further from its efficient scale.

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that when the firm hires 2 workers, the total cost of production is $100. When the firm hires 3 workers, the total cost of production is $120. In addition, assume that the variable cost per unit of labor is the same regardless of the number of units of labor that are hired. What is the firm's fixed cost?

$60

Refer to Figure 4-3. If these are the only two consumers in the market, then the market quantity demanded at a price of $6 is

19 units.

For a construction company that builds houses, which of the following costs would be a fixed cost?

All of the above are correct.

The principle that "people face tradeoffs" applies to

All of the above are correct.

Which of the following is a subject that economists study?

All of the above are correct.

Which of these statements about economic models is correct?

All of the above are correct.

Refer to Scenario 13-8. What are Wanda's implicit costs per glass?

NOT $0.08

Which of the following events must result in a lower price in the market for Snickers?

Demand for Snickers decreases, and supply of Snickers increases.

Which of the following is correct?

Economists study the management of scarce resources.

Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because

buyers tend to be much more sensitive to a change in price when given more time to react.

If demand is price inelastic, then

buyers do not respond much to a change in price.