Econ exam 1

A rise in the price of sushi of from 98 cents to​ $1.02 a piece decreases the quantity of soy sauce demanded form 101 units to 99 units an hour and decreases the quantity of sushi demanded by 1 percent an hour. Calculate the price elasticity of demand for sushi and the cross elasticity of demand for soy sauce with respect to the price of sushi.

0.25

Which of the following statements describes cross price elasticity of demand​?

As a result of a rise in the price of spinach with all else remaining​ constant, Ralph buys more​ broccoli, a substitute for spinach.

Which of the following activity is an example of dumping​?

Dell exports PCs to India at a price 20 percent lower than the cost of producing them.

Which of the following statements describe an inelastic demand​?

Megan did not buy too many hockey tickets even though their price dropped by 10 percent.

What is the relationship between the marginal​ cost, minimum​ supply-price, and​ supply?

The marginal cost is the cost of producing an additional unit of a good. The marginal cost is the minimum​ supply-price, so the supply curve is the same as the marginal cost curve

What is the relationship between the marginal​ benefit, value, and​ demand?

The value of one more unit of a good is its marginal benefit. The demand curve is the same as the marginal benefit curve.

Which of the following is an example of price elasticity of demand​?

When the price of bananas increased by 5 percent and nothing else​ changed, the quantity of bananas demanded decreased by 2 percent.

A good with an income elasticity that is positive and less than 1 is​ ______.

a normal good that is income inelastic

A good with an income elasticity greater than one is​ _____

a normal good that is income​ elastic

A good with an income elasticity that is negative is​ _______.

an inferior good

The equilibrium quantity​ _______.

and equilibrium price are determined at the intersection of the supply curve and the demand curve

An example of an income elastic good is​ ______ and an example of an income inelastic good is​ ______.

a​ haircut; food

We need methods of allocating scarce resources​ _______.

because resources are scarce and it is not possible to fulfill​ everyone's wants

Tax incidence is the division of the burden of tax between​ ___

buyers and sellers

Offshore outsourcing is​ _____ goods,​ components, or services​ _____ that brings gains from trade identical to those of any other type of trade.

buying; from firms in other countries

economic growth comes from

capital accumulation and technological advance

The total revenue test is a method of estimating the price elasticity of demand by observing the​ ______ that results from​ ______, when all other influences on the quantity sold remain the same.

change in total​ revenue; a change in the price

​Low-fat milk and cream are​ _______.

complements in production for a dairy and substititues for consumers

Demand is elastic if a price_____ increases total revenue.

cut

Demand is unit elastic if a price _______ leaves total revenue unchanged.

cut or rise

When a country opens up to free international​ trade, the producer surplus received by domestic producers of the imported good​ _______.

decreases

An inferior good is a good for which demand:

decreases when income increases

When an effective production quota is applied in the market for​ rice, the quantity produced​ ______ and the price​ ____

decreases; rises

Market failure is a situation in which the market​ _____ .

delivers an inefficient outcome

When an effective production quota is applied in the market for​ rice, the marginal social benefit​ _______ marginal social cost.

exceeds

U.S. imports are​ _____ produced in​ _____ and sold in​ _____.

goods and​ services; any other​ country; the United States

U.S. exports are​ _____ produced in​ _____ and sold in​ _____.

goods and​ services; the United​ States; any other country

The greater the amount of time available after a price​ change, the​ ______ is the elasticity of supply.

greater

The law of supply states that other things remaining the​ same, the higher the price of a​ good, the​ _______; and the lower the price of a​ good, the​ _______.

greater is the quantity​ supplied; smaller is the quantity supplied

Utilitarianism is a principle that states that we should strive to achieve​ "the _____ for the​ _____"

greatest​ happiness; greatest number

capital accumulation is the ______, including ______ capital

growth of capital resources; human

The level of income a​ _______ big effect on income elasticities of demand because​ _______.

has; what is a necessity and what is a luxury depends on the level of income

The market supply curve is the​ ______ sum of the individual supply curves. It is formed by adding the​ ______.

horizontal; quantities supplied by all the producers at each price

The market supply curve is the​ ______ sum of the individual supply curves. It is formed by adding​ ______.

horizontal; the quantities supplied by all the producers at each price

a normal good is one for which demand:

increases as income increases

failure to specialize and reap the games from trade is _____ because _____

inefficient; production is at a point inside the economy's PPF

The smaller the proportion of income spent on a​ good, the more​ ______ is the demand for it.

inelastic

The shorter the time that has elapsed since a price​ change, the more​ _______

inelastic is demand

The demand for a necessity is income​ ______, and the demand for a luxury is income​ ______.

inelastic; elastic

What is rent seeking​? Rent seeking​ _____.

is lobbying and other political activity that aims to capture the gains from trade

The two big approaches to thinking about fairness are​ _______.

it's not fair if the result​ isn't fair and​ it's not fair if the rules​ aren't fair

Which of the following is an example of an import quota​? The United States​ _____ .

limits the quantity of auto parts the U.S. car makers may buy from China

Goods and services that use rare resources in their production have a​ ______ elasticity of supply.

low

When a country opens up to free international​ trade, domestic producers of the imported good receive a​ ______ price and sell a​ ______ quantity of it.

lower; smaller

Which of the following statements describes the big tradeoff​? Sharing the pie more equally​ _____ .

makes it smaller.

marginal benefit curve is a curve that shows the relationship between the:

marginal benefit from a good and the quantity consumed of that good

At the competitive​ equilibrium, _______.

marginal social cost equals marginal social benefit

Consumer surplus is the​ _____ from a good or​ service, in excess of the​ _____, summed over the quantity consumed.

marginal​ benefit; price paid for it

Consumer surplus is the​ _____ from a good or​ service, in excess of the​ _____, summed over the quantity consumed.

marginal​ benefit; price paid for it This is the correct answer.

Consumer surplus is the​ ______ of a good in excess of​ ______, summed over the quantity bought.

marginal​ benefit; the price paid for it

monday island produces only tomatoes and papayas. the marginal cost of a tomato is the number of papayas that______ to get one more_________

must be forgone; tomato

National comparative advantage arises from the differences in​ _______ across countries.

opportunity cost

the law of demand states that ______ , the _______ the price of a good, the smaller is the quantity demanded

other things remaining the same; higher

Symmetry principle is the requirement that​ _____.

people in similar situations be treated similarly

The price elasticity of demand is calculated by dividing the​ _______ by the​ _______.

percentage change in the quantity​ demanded; percentage change in the price

Rice and noodles are substitutes. The cross elasticity of demand for rice with respect to the price of noodles is​ _______.

positive

The demand curve shows the relationship between:

price and quantity demanded

When a​ _____ is applied to a labor​ market, it is called a minimum wage.

price floor

Producer surplus is the​ _____ a good or​ service, in excess of the​ _____ of producing​ it, summed over the quantity produced.

price​ of; marginal cost

A substitute in production is a good that is​ _____ another​ good, and a complement in production is a good that is​ _____ another good.

produced in place​ of; produced together with

a supply curve shows the relationship between the _______ and _______ when all other influences on selling plans remain the same.

quantity supplied of a​ good; its price

Demand is inelastic if a price ______ increases total revenue.

rise

Which of the following statements illustrates income elasticity of demand​?

salary cut and no other changes has resulted in Mary buying less fast food.

Diet coke and regular coke are​ _______.

substitutes for consumers and substitutes in production for producers

Tariff is a​ _____ imposed on a good when it is​ _____.

tax; imported

comparitive advantage

the ability to produce a good at a lower opportunity cost than another producer

absolute advantage

the ability to produce a good using fewer inputs than another producer

the marginal benefit of a good or service

the benefit received from consuming one more unit of it

technological change is _______ new goods and of _______ of producing goods and services

the development of; better ways

The net gain from international trade is positive because in the import market​ ______ and in the export market​ ______.

the increase in consumer surplus is greater than the loss in producer​ surplus; the increase in producer surplus is greater than the loss in consumer surplus

The deadweight loss is​ _______.

the loss of total surplus that results from an inefficient level of production

The marginal cost of a good or service is the

the opportunity cost of producing one more unit of it

The elasticity of supply is calculated by dividing​ ______ by​ ______.

the percentage change in the quantity​ supplied; the percentage change in the price

Elasticity of supply measures the responsiveness of the quantity supplied to a change in​ ______, when all other influences on selling plans remain the same.

the price of a good

The opportunity cost of a good is equal to​ _______.

the price of the good plus the value of the search time spent finding the good

Firms are institutions that organise​ _____ of goods and services.

the production

The price elasticity of demand is a​ units-free measure of the responsiveness of​ ______.

the quantity demanded of a good to a change in its price when all other influences on buying plans remain the same

demand is______ , when all other influences on buying plans remains the same

the relationship between the quantity demanded of a good and the price of the good

supply is______ , when all other influences on buying plans remains the same

the relationship between the quantity supplied of a good and the price of a good

economic growth is defined as the

the sustained expansion of production possibilities

A fact that argues in favor of taxes on illegal drugs and against prohibition is that​ _______.

the tax revenue can be used to make law enforcement more effective

Deadweight loss is the decrease in​ _____ that results from an inefficient​ _____ or​ _____.

total​ surplus; underproduction; overproduction

Taxes lead to​ ______ and subsidies lead to​ ______.

underproduction; overproduction

Price regulations that put a cap on the rent a landlord is permitted to charge lead to​ ______. A monopoly leads to​ ______.

underproduction; underproduction

When a minimum wage is set above the equilibrium wage​ rate, _______.

unemployment increases

Because elasticity is a​ units-free measure of the responsiveness of the quantity demanded of a good or service to a change in its​ price, _______.

we can compare the responsiveness of the same good when quantity is measured in different​ units, or we can compare across different goods

why do people specialize in trade?

with specialization and trade, people can consume at a point outside their PPF

The fewer the substitutes for a good or​ service, the more​ ______ is the demand for it.

​inelastic

In the labor​ market, the supply curve measures the marginal social cost of labor to​ _______, and the demand curve measures the​ _______.

​workers; marginal social benefit from labor