Econ 102 Exam 2 Chapter 6, 8, and 9

-3

If income rises by 10% and the quantity demanded of an item falls by 30%, the income elasticity of demand for this item is:

Fall in Germany

In a single year, Germany can raise 100 tons of wheat or produce 1,000 boxes of daises, In the same growing season, France can raise 50 tons of wheat or produce 750 boxes of daisies. When the two countries begin trading wheat for daisies consumer surplus from wheat consumption will:

vertical; zero

In a small town in Kansas, the owner of the town's only gas station claims that he will sell the same quantity of gas no matter how high or low the price. If his assertion is correct, the demand curve for gas at his station must be _______ price elasticity is _______.

more; are willing to search for a low-cost alternative

In the markets for grocery and household items, some consumers have more elastic responses than others. Stores recognize this and often offer price reductions in the form of coupons. The price elasticity of demand for people who use coupons is ________ elastic than for other consumers because coupon users ______.

better allocation of its resources and more accurate predictions

Which benefit could a company gain from using internal markets

the U.S has a comparative advantage in iPhone design.

Why does Apple design iPhone in California but assemble in China?

That restricting imports allows for greater domestic production

The job creation argument for protection against free trade is:

Price-elastic

If quantity demanded responds substantially to a relatively small change in price, demand is:

negative; inferior

If the income elasticity of demand for a good is _______, the good is said to be _______

You got a task in which you have a comparative advantage

If you and your group partners assign various tasks for a project in the most efficient way possible, then it is likely that:

Disposable diapers are a necessity for most parents of infants.

The demand for disposable diapers is inelastic. Which statement would explain this phenomenon?

Greater than

If a country's domestic price of a good is below the world price of the good, then with trade, the domestic quantity of the good will be _________ the domestic quantity demanded

0.44

A city economist is consulting with the public utility companies to determine an optimal pricing plan. When the price of water usage falls by 1%, the quantity demanded rises by 0.44%. The absolute value of the price elasticity of demand for water usage is __________.

Price elasticity of demand

A measure of how responsive buyers are to price changes is the:

Perfectly elastic

A perfectly horizontal curve is

Vertical line

A perfectly inelastic demand curve looks like

Payoffs are linked to whether an uncertain event occurs

A prediction market is a market where

raise; decrease

A tariff or quota will _______ prices and _________ the consumption of the protected goods in the importing country

An extra cost incurred as a result of buying or selling a good abroad rather than domestically

A trade cost is:

0.75

Janelle recently received a promotion at her job, increasing her income from $940 per week to $1,060 per week. As a result, she decides to purchase 9% more sushi per week. Computed using the midpoint method, the income elasticity of Janelle's demand for sushi is:

positive; close to 0

Much like toilet paper, toothpaste is a necessity. The income elasticity of demand for toothpaste is likely to be ______ and ______

They should first each focus on that task in which they have a comparative advantage. When one finishes the assigned task. they can help the other

On camping trips, Katie is much faster than her husband, Brett, At putting up a tent and starting a fire. Who should do each task if they want to maximize their time sitting around the campfire

Is a line of communication between buyers and sellers in a market

Price is functioning as a message when it come

Rise; fall; rise

Suppose the U.S. places a tariff on Brazilian ipe. As a result of the tariff, the domestic price of lumber will ______, consumer surplus will _____, and producer surplus will ______.

substitutes; compliments

Suppose the cross-price elasticity of demand for apple sauce and avocados is 0.96, but the cross-price elasticity for soda and oranges is -0.80. This means that apple sauce and avocados are ________, whereas sodas and oranges are _______

Decrease by 6.1%

The cross-price elasticity of demand between Fanta and Dr. Pepper has been estimated at 0.61. If the price of Dr. Pepper falls by 10%, the quantity demanded of Fanta will:

4.2; elastic

The price of chicken breast rises from 3.30 per pound to 3.63 per pound. In response to this price change, the quantity demanded for the chicken breast falls by 40%. The absolute value of the price elasticity of demand for chicken breast is _________, and the price elasticity of demand is ________.

0.2; inelastic

The state of Massachusetts recently saw a 10% increase in the price of electricity, which brought about a 2% fall in the quantity of electricity consumed. The price elasticity of demand is equal to ______, and demand is described as ________.

Some industries in the country will shrink and possibly disappear

When a country's production mix becomes more specialized due to increased international trade based on comparative advantage

task is assigned to the workers with the lowest opportunity cost for performing the task

When a manager uses comparative advantage to assign tasks in the workplace, then each

Additional shows create extra capacity and increase the tour's price elasticity of supply.

When a popular comedian announces a tour, tickets often sell out quickly. However, it is quite common for the tour coordinator to later announce additional shows in the form of matinees and late-evening performances. Why would the tour coordinator include unpublicized additional shows in the tour schedule?

Less; 1.5

You are an economist for a prestigious private university, and the Board of Trustees tasks you with determining how much a tuition increase would impact university enrollment for different types of students. The proposed tuition increase is 10%. The absolute value of the price elasticity of demand for legacy students, that is, students whose parents graduated from the university, is 0.15 and for nonlegacy students it is 0.33. The demand curve for legacy students is _________ elastic than the demand curve for nonlegacy students. The rise in tuition would lower legacy student enrollment by _________ %

Only the plumber experiences gains from trade because they received money.

You pay a plumber to install a new dishwasher in your home. Which statement is FALSE?

Design an internal prediction market for employees to indicate their expectations

You recently renovated a large historic building in the heart of your city to convert it into a boutique hotel, of which you're now the owner and operator. After a few months, you've noticed that the quantity of hotel bookings vary. Sometimes more rooms are booked on weekends, but sometimes certain events through the week result in a greater quantity of rooms booked. You now want to forecast when to expect the most bookings, but you don't know which events will bring the most people to the hotel. The MOST accurate forecast would likely result if you:

Which statement describes a source of comparative advantage?

hawaii has a more favorable climate for the cultivation of tropical fruit than England has

Opportunity costs

As long as people have different _______, everyone has a comparative advantage in something

incentive

Chantelle grows tomatoes and sells them at the farmer's market. Because the price of tomatoes rises, she is encouraged to grow and sell more. This is an example of price functioning as a(n)

consume more than they could consume in the absence of trade

Collectively, people in nations that engage in Interational trade are likely to

Message to potential buyers that the marginal cost of manufacturing new cars is rising

During the coronavirus pandemic, global supply chain issues caused the supply of new cars to shift left, Which role did price play in the new car market

They can produce the product while forgoing fewer alternative products than any other person

Ecnomists generally believe that a person should specialize in the production of a good or service if:

More elastic

Gasoline prices have been rising. As time passes, people will adjust to the higher price, and the demand for gasoline becomes

Both trading partners end up better than when there is no trade

When trade is based on comparative advantage

incentive

You're performing a competitive analysis for Dove, a leading personal care brand in the United States. Your findings indicate a trend toward consumer preference for deodorants made with more naturally derived ingredients. Because of the high price competitors are receiving for natural deodorants, Dove follows your recommendation and enters the natural deodorant market by launching the Dove Care by Plants line. For Dove, the high price acted as a(n):

Economies of scale

Your family's business, a manufacturer of plastic containers, depends on imports of recycled plastic pellets from Asia. Your supplier offers substantial volume discounts, so the larger is your order of plastic pellets, the lower are your production costs. Your family benefits from:

1.22

Ashley Furniture sells 13,000 couches per month at a price of $800 per couch. When the price falls to $600, the quantity sold rises to 18,500. Use the midpoint formula to calculate the absolute value for price elasticity of demand for couches at Ashley Furniture.

absolute advantage

Cornell can type reports faster and more accurately than Alice, so Cornell has a(n) _______________________ in typing reports