Eco 2023 U3M

3. Luz sells cupcakes. According to market economics, which is the BEST signal that consumers value her product highly? a. Her customers readily pay the full price per cupcake. b. They often write glowing Yelp reviews. c. Her customers form a line out the door every Sunday morning. d. There are many competing companies that imitate her business.

A

Suppose that a customer's willingness-to-pay for a product is $5, and the seller's willingness-to-sell is $2. If the negotiated price is $3, how much is producer surplus? a. $1 b. $2 c. $5 d. $8

A

1. For any given product, _____ is determined by what the market will bear. a. quantity b. price c. quality d. None of the answers is correct.

B

10. Refer to Figure 1-1. A movement from Point B to Point C: a. involves sacrificing bread in order to produce a greater quantity of wine. b. involves sacrificing wine in order to produce a greater quantity of bread. c. involves no sacrifice, as the opportunity cost of production is zero everywhere along the production possibilities curve. d. will increase the level of unemployment in the economy. e. will decrease the level of unemployment in the economy

B

4. The law of demand states that _____ during a given period. a. the lower a product's price, the less of that product consumers will purchase b. the lower a product's price, the more of that product consumers will purchase c. higher prices will lead producers to offer fewer of their products for sale d. higher prices will lead producers to offer more of their products for sale

B

6. Suppose that a customer's willingness-to-pay for a product is $1,480, and the seller's willingness-to-sell is $1,210. If the negotiated price is $1,300 a. consumer surplus is negative. b. consumer surplus is greater than producer surplus. c. producer surplus is negative. d. producer surplus is greater than consumer surplus.

B

6. Which pair does NOT relate? a. capital - interest b. land - revenue c. Labor - Wages d. entrepreneurial ability - profit

B

Consumer surplus is the difference between _____ is willing to pay and the market price. a. minimum price the buyer b. maximum price the buyer c. minimum price the seller d. maximum price the seller

B

Suppose that a customer's willingness-to-pay for a product is $79, and the seller's willingness-to-sell is $64. If the negotiated price is $68, how much is consumer surplus? a. $4 b. $11 c. $15 d. $21

B

7. Refer to Figure 1-1 above, currently, it is not possible to produce at: a. Point A. b. Point B. c. Point E. d. Point G. e. either Point E or Point G.

C

Refer to Figure 1-1. An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from: a. A to B. b. B to E. c. C to F. d. G to F.

C

2. An institution that enables buyers and sellers to interact and transact with one another is known as a(n) a. bank. b. economy. c. stock exchange. d. market.

D

5. Trade is a. a way for rich countries to take advantage of poor countries. b. good for rich countries and bad for poor countries. c. a factor that slows down the economies of the trading countries. d. a driver of economic growth

D

9. Refer to Figure 1-1. The maximum use of resources is depicted on the PPF is: a. Point B. b. Point C. c. Point A. d. All points on the production possibilities curve are equally efficient.

D

Consider the market for new homes. Ceteris paribus, which event will cause consumer surplus to increase, assuming the market sells at the equilibrium prices? a. Burdened with student loan debt, many millennials delay marriage, children, and buying homes. b. Tariffs on lumber from Canada increase construction costs. c. A new tax law decreases the amount that homeowners can deduct on their mortgages. d. Low mortgage interest rates provide an incentive for potential homeowners to buy now.

D

1. Scarcity applies to decision makers in macroeconomics but not in microeconomics. (T or F)

F

Consumer surplus equals the quantity supplied minus the quantity demanded. (T or F)

F

Consumer surplus increases whenever the price of a good increases due to a leftward shift of the supply curve. (T or F)

F

If the price of Good A increases and the demand for Good B increases as well, Goods A and B are most likely complements. (T or F)

F

If two producers had identical supply curves, but one sold at a lower price than the other, the one receiving the lower price would receive more producer. (T or F)

F

Increasing government taxation or regulation of an industry generally increases the supply of goods. (T or F)

F

Marginal analysis is when a person continues to make decisions until the value is zero (T or F)

F

Other things equal, a price ceiling will increase consumer surplus by allowing customers to buy more at the lower price. (T or F)

F

Two goods are complements if an increase in the price of one causes an increase in the demand for the other good. (T or F)

F

When two variables change simultaneously a causal relationship exists between them. (T or F)

F

A downward slope is an inverse slope (T or F)

T

If consumers were originally willing to buy 500 units of a good at a price of $20 are now willing to buy 500 units of the same good at a price of $10, that change would be described as a decrease in demand. (T or F)

T

If input prices fall, it will lower the cost of production, causing the supply curve to shift to the right. (T or F)

T

The deadweight loss from a tax is the reduction in producer and consumer surplus minus the tax revenue transferred to the government. (T or F)

T

When the price of corn falls, the market supply of wheat (which can be grown using the same land) is likely to increase. (T or F)

T