Econ 1100 test

Kevin Williamson goes to a local coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $6. The price of the latte is $2. The cost to the coffee shop to produce the latte is $1. How much economic surplus does Kevin gain when he purchases the latte?

4

#6 The accompanying graph shows Mia's demand curve for ice cream, how many cones would Mia be willing to buy at $4 per cone?

6

The price of a carton of eggs is $2, and 100 cartons are sold. The consumer surplus is $80, and total surplus (or total welfare) equals $150. What is the producer surplus?

70

(Equilibrium in the market for mechanical pencils)

ADI

In March 2019, airlines around the world grounded their Boeing 737 Max aircraft after two of them crashed. What would we expect to happen in the market for this aircraft?

The demand for the Boeing 737 Max would would decrease due to concerns about the safety of the aircraft.

People gain consumer surplus when they purchase an item:

at a price below the value of the benefit they receive from the item.

For normal goods An inferior good is a good whose demand decreases when income rises.

a good whose demand decreases when income rises.

Economists use money equivalents to compare costs and benefits because money is

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Nerida Kyle is thinking of buying a car to avoid taking lyft to work. She is using the cost-benefit principle to evaluate this decision and is calculating the costs and benefits to owning the car over the next year. She's gathered the following information to help her make her decisions:

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The city of Vaughn in Ontario, Canada, currently

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Which of the following lists only factors that would cause an increase in the demand for an item?

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The Rational Rule for Buyers

Compares the benefit of buying an additional unit of the item to the cost of that item.

Refer to the graph to answer the question. Please match the relationships between pairs of lettered points with the appropriate interpretation of demand.

From point T to point V: movement along the curve From point Q to point W: shift of the curve-increase From point S to point M: Shift of the curve- decrease From point N to point M: Movement along the curve

Which of the following scenarios illustrates the law of demand?

Kathleen eats more steak when the price is low, and less when the price is high

Joshua Murphy is planning on studying late into the night for his economics exam. How many cups of coffee should he buy tonight? Joshua should keep buying coffee throughout the evening until the marginal:

benefit of purchasing one more coffee equals the marginal cost.

When Sony released the PlayStation 4, it was reported that sony was taking a loss of $60 on every PS4. However, Sony expected to make this up with sales of PS+ subscriptions and increased royalties from video games. Use the interdependence principle to help explain this strategy.

complements and increase

When the economic surplus in a market is less than it would be if the market were efficient, the market experiencing:

deadweight loss.

The area on a market graph that lies below the price and above the supply curve is equal to:

producer surplus

Which is a source of market failure

these are all sources of market failure

Chin purchases five protein bars at a price of $3 each. The marginal benefits he receives from each bar is $5 for the first bar, $4.50 for the second bar, $4 for the third bar, $3.50 for the fourth bar, and $3 for the fifth bar. The marginal cost of producing the bars is $2.50 each (Hint: remember in competitive equilibrium price=mc). What is Chin's total consumer surplus from the five bars that he purchased?

5

Market failure occurs when market forces lead to:

an inefficient outcomes

Which of the following statements is FALSE regarding economic efficiency?

if it is efficient, it is also equitable

Stores that are expected to perform better during recessions are those that sell

inferior goods

when you arrive at a gas station there is a line of cars wrapped around the block waiting for gas, so you go to the gas station down the road only to find another line of cars! You get in line and end up waiting over an hour just to get to the pump and be told that they've run out of gas. The market is not in equilibrium because people are still willing and able to purchase gasoline, even though the quantity supplied has been exhausted.

not in equilibrium people are still willing and able to purchase gasoline, even though the quantity supplied has been exhausted.

Use the graph of marginal benefit curves for slices of cheesecake to answer the question. If Becca and Marcella are the only buyers in the market, how many slices will be sold if the market price is $3?

six

An equilibrium in a market occurs

when the quantity supplied equals the quantity demanded

Economists convert costs and benefits into money equivalents by evaluating an individual's.

willingness to pay