Econ 1150 Blackboard HW Questions

Refer to Table 4-3. If a minimum wage of $11.50 an hour is mandated, what is the quantity of labor demanded? 40,000 570,000 610,000 1,180,000

570,000

During the recession of 2007-2009, despite falling income levels, McDonald's experienced increased sales. The increase in demand for Big Macs despite the decline in income indicates that Big Macs are considered complementary goods. substitute goods. inferior goods. normal goods.

inferior goods

Refer to Figure 4-5. What is the value of producer surplus after the imposition of the ceiling? $40,000 $100,000 $300,000 $430,000

$40,000

Refer to Figure 4-5. What is the value of the deadweight loss after the imposition of the ceiling? $50,000 $125,000 $175,000 $260,000

$50,000

Paul goes to Sportsmart to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus from the purchase is $325 $200 $125 $75

$75

Refer to Figure 3-4. At a price of $10, how many units will be sold? 200 400 600 800

200

Refer to Figure 4-6. What area represents the portion of consumer surplus that has been transferred to producer surplus as a result of the price floor? E B + C B + E B

B

Refer to Figure 4-6. With rent control, the quantity supplied is Q1. Suppose apartment owners ignore the law and rent this quantity for the highest rent they can get. What is the highest rent they can get? more than R1 R1 R* R0

R1

The popularity of digital cameras has enticed large discount stores like Wal-Mart and Costco to offer digital photo printing services. How does this affect the digital photo printing market? The demand curve for digital photo printing services shifts to the left. The supply curve for digital photo printing services shifts to the left. The demand curve for digital photo printing services shifts to the right. The supply curve for digital photo printing services shifts to the right.

The supply curve for digital photo printing services shifts to the right.

Refer to Table 4-3. What is the equilibrium hourly wage (W*) and the equilibrium quantity of labor (Q*)? W* = $10.50; Q* = 1,200,000 W* = $10.50; Q* = 590,000 W* = $9.50; Q* = 570,000 W* = $11.50; Q* = 570,000

W* = $10.50; Q* = 590,000

Economic surplus is maximized in a competitive market when demand is equal to supply. the deadweight loss equals the sum of consumer surplus and producer surplus. marginal benefit equals marginal cost. producers sell the quantity that consumers are willing to buy.

marginal benefit equals marginal cost.

Deadweight loss refers to the sum of consumer and producer surplus. the reduction in economic surplus resulting from not being in competitive equilibrium. the loss of economic surplus when the marginal benefit equals the marginal cost of the last unit produced. the opportunity cost to firms from producing the equilibrium quantity in a competitive market.

the reduction in economic surplus resulting from not being in competitive equilibrium.

Refer to Figure 4-5. What is the value of the portion of producer surplus transferred to consumers as a result of the rent ceiling? $40,000 $100,000 $125,000 $140,000

$100,000

Refer to Figure 4-5. With rent control, the quantity supplied is 200 apartments. Suppose apartment owners ignore the law and rent this quantity for the highest rent they can get. What is the highest rent they can get per month? $1,000 $1,500 $2,000 $2,300

$2,000

Refer to Figure 4-5. What is the value of consumer surplus after the imposition of the ceiling? $120,000 $230,000 $270,000 $430,000

$230,000

Refer to Table 4-3. If a minimum wage of $11.50 an hour is mandated, what is the quantity of labor supplied? 40,000 570,000 610,000 1,180,000

610,000

Refer to Figure 4-6. What area represents consumer surplus after the imposition of the price floor? A + B + E A + B A A + B + E + F

A

Refer to Figure 4-6. What is the area that represents consumer surplus after the imposition of the ceiling? A + B + D + F A + B + C A + B+ D A + B + D + F + G

A + B+ D

What is the difference between an "increase in demand" and an "increase in quantity demanded"? There is no difference between the two terms; they both refer to a shift of the demand curve. An "increase in demand" is represented by a movement along a given demand curve, while an "increase in quantity demanded" is represented by a rightward shift of the demand curve. An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve. There is no difference between the two terms; they both refer to a movement downward along a given demand curve.

An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve.

What is the difference between an "increase in supply" and an "increase in quantity supplied"? An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price. There is no difference between the two terms; they both refer to a movement along a given supply curve. An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" means at any given price supply has increased. There is no difference between the two terms; they both refer to a shift of the supply curve.

An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.

Which of the following statements is true? If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater. A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand. If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease. An increase in demand causes a change in equilibrium price; the change in price does not cause a further change in demand or supply.

An increase in demand causes a change in equilibrium price; the change in price does not cause a further change in demand or supply.

Which of the following is the correct way to describe equilibrium in a market? At equilibrium, scarcity is eliminated. At equilibrium, market forces no longer apply. At equilibrium, quantity demanded equals quantity supplied. At equilibrium, demand equals supply.

At equilibrium, quantity demanded equals quantity supplied.

Refer to Figure 4-6. What is the area that represents producer surplus after the imposition of the price floor? B + C + D + E A + B + E B + E B + E + F

B + E

Refer to Figure 4-6. What area represents the deadweight loss after the imposition of the price floor? C + D C + D + G C + D + F + G F + G

C + D

Refer to Figure 4-6. What area represents the deadweight loss after the imposition of the ceiling? C + E G + H J + H C + E + J + H

C + E

Refer to Figure 4-6. What is the area that represents the portion of producer surplus transferred to consumers as a result of the rent ceiling? D + E D + F D F

D

Refer to Figure 4-6. What is the area that represents the producer surplus after the imposition of the ceiling? D + F + G F + G A + B + D + F + G F

F

If the demand for a product increases and the supply of the same product increases, the equilibrium price will increase.

False

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.

False

Market equilibrium occurs where supply equals demand.

False

Scarcity is defined as the situation that exists when the quantity demanded for a good is greater than the quantity supplied.

False

Shortage means the same thing as scarcity.

False

The minimum wage is an example of a price ceiling.

False

The total amount of consumer surplus in a market is equal to the area below the demand curve.

False

Refer to Figure 3-3. The figure above shows the supply and demand curves for two markets: the market for original Picasso paintings and the market for designer jeans. Which graph most likely represents which market? Graph B represents both the market for original Picasso paintings and designer jeans. Graph A represents both the market for original Picasso paintings and designer jeans. Graph B represents the market for original Picasso paintings and Graph A represents the market for designer jeans. Graph A represents the market for original Picasso paintings and Graph B represents the market for designer jeans.

Graph B represents the market for original Picasso paintings and Graph A represents the market for designer jeans.

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for almonds. Which panel best describes what happens in this market when there is an increase in the productivity of almond harvesters? Panel (a) Panel (b) Panel (c) Panel (d)

Panel (a)

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for women's clothing. Which panel best describes what happens in this market when the wages of seamstresses rise? Panel (a) Panel (b) Panel (c) Panel (d)

Panel (b)

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for used clothing, an inferior good. Which panel describes what happens in this market as a result of a decrease in income? Panel (a) Panel (b) Panel (c) Panel (d)

Panel (c)

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for Fruitopia, a soft drink. Which panel describes what happens in the market for Fruitopia when the price of Snapple, a substitute product, decreases? Panel (a) Panel (b) Panel (c) Panel (d)

Panel (d)

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets. Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles? Panel (a) Panel (b) Panel (c) Panel (d)

Panel (d)

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements. What panel describes what happens in this market when the price of steak rises? Panel (a) Panel (b) Panel (c) Panel (d)

Panel (d)

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for rice. What happens in this market if buyers expect the price of rice to fall? Panel (a) Panel (b) Panel (c) Panel (d)

Panel (d)

Which of the following is not a result of government price controls? Some people win and some people lose. A deadweight loss will occur. Price controls benefit poor consumers but harm producers and wealthy consumers. Price controls decrease economic efficiency.

Price controls benefit poor consumers but harm producers and wealthy consumers.

Prices of California Merlot wine (assume that this is a normal good) have risen steadily in recent years. Over this same period, prices for French oak barrels used for wine storage have dropped and consumer incomes have risen. Which of the following best explains the rising prices of California Merlots? The supply curve for Merlot has shifted to the right while the demand curve for Merlot has shifted to the left. The demand curve for Merlot has shifted to the right more than the supply curve has shifted to the right. The supply curve for Merlot has shifted to the right more than the demand curve has shifted to the right. The demand curve and the supply curve for Merlot have both shifted to the left.

The demand curve for Merlot has shifted to the right more than the supply curve has shifted to the right.

Technological advances have resulted in lower prices for digital cameras. What is the impact of this on the market for traditional (non-digital) cameras? The supply curve for traditional cameras shifts to the right. The demand curve for traditional cameras shifts to the left. The demand curve for traditional cameras shifts to the right. The supply curve for traditional cameras shifts to the left.

The demand curve for traditional cameras shifts to the left.

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall. Holding everything else constant, how would this affect the market for blu-ray players (a complement to LCD televisions)? The demand for blu-ray players would increase and the equilibrium price of blu-ray players would decrease. The demand for blu-ray players would increase and the equilibrium price of blu-ray players would increase. The supply of blu-ray players would increase and the equilibrium price of blu-ray players would decrease. The demand for blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and blu-ray players.

The demand for blu-ray players would increase and the equilibrium price of blu-ray players would increase.

The following appeared in a Florida newspaper a week after a hurricane hit the state. "Floridians are relieved that the storm produced no fatalities but homeowners face weeks, if not months, of rebuilding. Matters are made worse by the soaring prices of plywood and other building materials that always follow in a hurricane's path. Complaints of profiteering and price gouging have not deterred firms from raising their prices by over 100 percent." Which of the following offers the best explanation for the price increases referred to in the article? The hurricane caused an increase in the demand for building materials. The hurricane created an artificial shortage of building materials. There was a reduction in supply as firms shipped plywood and other materials to locations not affected by the storm. The hurricane reduced the number of suppliers of building materials.

The hurricane caused an increase in the demand for building materials.

In October 2005, the U.S. Fish and Wildlife Service banned the importation of beluga caviar, the most prized of caviars, from the Caspian Sea. What happened in the market for caviar in the U. S.? The demand curve shifted to the right. The supply curve shifted to the right. The supply curve shifted to the left. The demand curve shifted to the left.

The supply curve shifted to the left.

Refer to Figure 3-6. The figure above represents the market for canvas tote bags. Assume that the market price is $35. Which of the following statement is true? There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25. There is a surplus that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25. There will be a surplus that will cause the price to decrease; demand will then increase and supply will decrease until the price equals $25. There is a surplus that will cause the price to decrease; quantity supplied will then increase and quantity demanded will decrease until the price equals $25.

There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25.

As the number of firms in a market decreases, the supply curve will shift to the left and the equilibrium price will rise.

True

Consumer surplus is the difference between the highest price someone is willing to pay for a product and the price he actually pays for the product.

True

Deadweight loss refers to the reduction in economic surplus resulting from a market not being in competitive equilibrium.

True

Economic efficiency is a market outcome in which the marginal benefit of consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized.

True

If the demand curve for a product shifts to the left and the supply curve for the product shifts to the left, the equilibrium quantity will decrease.

True

Marginal cost is the additional cost to a firm of producing one more unit of a good or service.

True

Rent control is an example of a price ceiling.

True

The sum of consumer surplus and producer surplus is called economic surplus.

True

Economists refer a to a market where buying and selling take place at prices that violate government price regulations as an outlaw market. a black market. a noncompetitive market. a restricted market.

a black market.

Last year, the Pottery Palace supplied 8,000 ceramic pots at $40 each. This year, the company supplied the same quantity of ceramic pots at $55 each. Based on this evidence, The Pottery Palace has experienced a decrease in the quantity supplied. an increase in the quantity supplied. a decrease in supply. an increase in supply.

a decrease in supply.

Which of the following will shift the demand curve for a good? a decrease in the price of the good an increase in the price of the good a decrease in the price of a complementary good a change in the technology used to produce the good

a decrease in the price of a complementary good

If an increase in income leads to in an increase in the demand for peanut butter, then peanut butter is a complement. a normal good. a necessity. a neutral good.

a normal good.

Which term refers to a legally established minimum price that firms may charge? a subsidy a tariff a price floor a price ceiling

a price floor

Refer to Figure 3-4. If the current market price is $10, the market will achieve equilibrium by a price decrease, decreasing the supply and increasing the demand. a price increase, increasing the supply and decreasing the demand. a price decrease, decreasing the quantity supplied and increasing the quantity demanded. a price increase, increasing the quantity supplied and decreasing the quantity demanded.

a price increase, increasing the quantity supplied and decreasing the quantity demanded.

The area ________ the market supply curve and ________ the market price is equal to the total amount of producer surplus in a market. below; below below; above above; above above; below

above; below

Marginal benefit is equal to the ________ benefit to a consumer receives from consuming one more unit of a good or service unintended total surplus additional

additional

Which of the following would cause both the equilibrium price and equilibrium quantity of cotton (assume that cotton is a normal good) to increase? unusually good weather that results in a bumper crop of cotton an increase in consumer income a decrease in consumer income a drought that sharply reduces cotton output

an increase in consumer income

If an increase in income leads to a decrease in the demand for popcorn, then popcorn is a normal good. a necessity. an inferior good. a neutral good.

an inferior good.

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. the substitution effect. the income effect. producer surplus.

consumer surplus.

A successful marketing campaign will increase the demand for Red Bull. This will ________ the equilibrium price and ________ the equilibrium quantity of Red Bull. increase; increase increase; decrease decrease; decrease decrease; increase

increase; increase

Economic surplus does not exist when a competitive market is in equilibrium. is equal to the sum of consumer surplus and producer surplus. is equal to the difference between consumer surplus and producer surplus. is the difference between quantity demanded and quantity supplied when the market price for a product is greater than the equilibrium price.

is equal to the sum of consumer surplus and producer surplus.

In order to be binding, a price ceiling must be high enough for firms to earn a profit. must coincide with the free market equilibrium price. must lie below the free market equilibrium price. must lie above the free market equilibrium price.

must lie below the free market equilibrium price.

Olive oil producers want to sell more olive oil at a higher price. Which of the following events would have this effect? research finds that consumption of olive oil reduces the risk of heart disease a decrease in the cost of transporting olive oil to markets an increase in the price of olive oil presses an increase in the price of land used to plant olives

research finds that consumption of olive oil reduces the risk of heart disease

Refer to Table 4-3. If a minimum wage of $11.50 is mandated there will be a shortage of 40,000 units of labor. surplus of 20,000 units of labor. surplus of 40,000 units of labor. shortage of 20,000 units of labor.

surplus of 40,000 units of labor.

Marginal cost is the difference between the lowest price a firm would have been willing to accept and the price it actually receives. the total cost of producing one unit of a good or service. the additional cost to a firm of producing one more unit of a good or service. the average cost of producing a good or service.

the additional cost to a firm of producing one more unit of a good or service.

The Internet has created a new category in the book selling market, namely, the "barely used" book. How does the availability of barely used books affect the market for new books? the demand curve for new books shifts to the left. the supply curve for new books shifts to the right. the demand curve for new books shifts to the right. the supply curve for new books shifts to the left.

the demand curve for new books shifts to the left.

If the price of automobiles was to increase, then the supply of gasoline would increase. the quantity demanded of gasoline would decrease. the demand for gasoline would decrease. the demand for gasoline would increase.

the demand for gasoline would decrease.

Select the phrase that correctly completes the following statement. "A positive change in technology caused an increase in the supply of flat-screen televisions. As a result ________." the price of flat-screen televisions decreased. The lower price caused the supply of flat-screen televisions to decrease the price of flat-screen televisions decreased and the quantity demanded of flat-screen televisions increased the equilibrium quantity of flat-screen televisions decreased the price of flat-screen televisions decreased and the demand for flat-screen televisions increased

the price of flat-screen televisions decreased and the quantity demanded of flat-screen televisions increased

A change in all of the following variables will change the market demand for a product except: the price of the product. population and demographics. tastes. income.

the price of the product

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which the sum of consumer surplus and producer surplus is minimized. the sum of the benefits to firms is equal to the sum of the benefits to consumers. the sum of consumer surplus and producer surplus is at a maximum. economic surplus is minimized.

the sum of consumer surplus and producer surplus is at a maximum.

Refer to Figure 3-4. If the price is $10, there would be a surplus of 200 units. there would be a shortage of 200 units. there would be a surplus of 600 units. there would be a shortage of 600 units.

there would be a shortage of 600 units