Econ 202 Test 1

If a decrease in income leads to a decrease in the demand for mac and cheese, then mac and cheese is

a normal good

In the summer 2012 the lobster catch in Maine was especially large, but instead of celebrating the fisherman were suffering from a lower total revenue. This means the demand for lobsters is

inelastic

A perfectly elastic demand curve:

is parallel to the quantity axis.

The highest valued alternative that must be given up to engage in an activity is the definition of

opportunity cost

One year the government boosted regulated taxi fares by 15 percent with expectation that the total revenue from taxi would also increase by 15 percent. The demand for taxi service was believed to be

perfectly inelastic

So Jin has an apartment of 700 and wants to move to a one bedroom for 950 per month. what is her additional benefit in not sharing a bedroom

$250

Advantages of trade include that

1. It permits specialization 2. It can improve economic performance 3. It generally benefits both parties

The video describes the steps in simple arithmetic as proceeding from

1. Numbers 2. cardinal numbers 3. addition 4. subtraction 5.multiplication 6. division.

Taco bell economists determine the price elasticity of demand for their tacos is 2.0. So if Taco Bell rises the price of its tacos by 6.0 percent, the quantity demanded will decrease by

12

Which of the following factors is expected to cause the demand curve for coffee to shift to the right?

A higher tax on the sale of tea, a substitute for coffee

Which of the following statements best describes a normal good

A normal good is a good whose demand increases with an increase in consumers income

Which of the following is likely to cause the demand curve for cars to shift to the left?

A rise in the price of gasoline

Which of the following statements is true?

As rental prices of downtown apartments rise, only workers with the highest opportunity cost of time will be willing to rent them

Which of the following statements is true of causation and correlation?

Correlation arises when there is causation and can also arise even when there is no causation

A shortage is defined as the situation that exists when the quantity of a good supplied is greater than the quantity demanded.

False

The supply curve on which price elasticity changes at every point is shown in

Panel D. (starts at 1, not the 0)

Assembly lines are an example of:

Process Innovation

A shortage occurs when the market price is lower than the equilibrium price.

True

Maria drives or takes train what is her opp cost?

She would save 120 by driving

Assume there is a shortage in the market for digital music players. Which of the following statements correctly describes this situation?

Some consumers will be unable to obtain digital music players at the market price and will have an incentive to offer to buy the product at a higher price.

Which of the following is a normative statement?

The price of gasoline is too high (opinion)

Adam Smith's book, the wealth of Nations, investigated

The role of markets in determining economic efficiency. (not all the above)

An increase in the price of gasoline will increase the demand for hybrid vehicles." This statement is an example of a positive economic statement.

True

Elasticity increases as the market opens new substituents to the same product

True

Homer changes jobs and his new job pays him a higher income. Before he changed jobs, Homer purchased 3 pounds of tuna and 2 pounds of chicken. After he changed jobs, Homer now purchases 2 pounds of tuna and 3 pounds of chicken. For Homer

Tuna is a inferior good and chicken is a normal good

Which of the following decreases the supply of restaurant meals?

Waiters get a pay raise

Perfectly Elastic

a horizontal line (on graph)

Which of the following statements leads to a movement along the demand curve for spinach, but does not shift the demand curve for spinach?

a rise in the price of spinach

Perfectly inelastic

a vertical line (on graph)

The revenue received from the sale of ________ of a product is a marginal benefit to the firm.

an additional unit

Which of the following would cause both the equilibrium price and equilibrium quantity of cotton (assume that cotton is a normal good) to increase?

an increase in consumer income

Which of the following would cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?

an increase in supply and an increase in demand greater than the increase in supply

Trinh quits his $80,000-a-year job to become a full-time volunteer at a museum. What is the opportunity cost of his decision?

at least 80,000

A good is said to have a relatively elastic demand if the value of price elasticity is:

greater than 1

absolute advantage

can produce more than the other person

Income elasticity measures how a good's quantity demanded responds to

change in buyers' incomes.

comparative advantage

close to the same quantity produced

If the cross-price elasticity of demand for computers and software is negative, this means the two goods are

complements

Economists assume that rational behavior is useful in explaining choices people make

even though people may not behave rationally all the time.

An ommited variable is a variable that

has been left out, and if included, would explain why the variables considered in a study are

relatively inelastic demand is said to be

less than 1

hunter-gatherer society

none of the What, How, or Who work

If quantity of tea is measured on the horizontal axis and quantity of coffee is measured on the vertical axis, an increase in the price of coffee will cause the budget constraint to:

pivot leftward (pivot in) along the vertical axis.

If quantity of milk is measured on the horizontal axis and quantity of juice is measured on the vertical axis, a decrease in the price of milk will cause the budget constraint to:

pivot rightward (pivot out) along the horizontal axis.

A decrease in the price of either one or the other good will cause a consumer's budget constraint to:

pivot rightward (pivot out).

By drawing a demand curve with ________ on the vertical axis and ________ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the ________ of the good.

price; quantity; price

A change in the quantity demanded of a good is:

represented by a movement along the demand curve.

The supply curve for watches

shows the relationship between the price of watches and the quantity of watches supplied.

The supply of guns in a city is very elastic but no changes are done to the number of guns in the _____

street

The quantity demanded of a good is

the amount of a good that buyers are willing to purchase at a given market price.

At a local ice cream parlor, when the price of half a gallon ice cream of chocolate was lowered by fifty cents per half gallon, total revenue from the sale of chocolate ice cream decreased. This result indicates

the demand for chocolate ice cream is inelastic

Assume that an individual spends his income on sweaters and shirts. If the price of a sweater increases:

the opportunity cost of buying sweaters increases

A bakery can produce either cakes or cookies. If the price of cookies rises, then

the supply curve of a cake shifts leftward

The figure above represents the market for canvas tote bags. Assume that the price of tote bags is $15. At this price

there is a shortage, equal to 55 tote bags, that will be eliminated when the price rises to $25.

If the demand for a product is perfectly inelastic, a decrease in the price of the product

will decrease total revenue.