Econ exam 2

Micah can produce bicycles at a marginal cost of $125. Jacqueline values thisbicycle at $200. If Jacqueline buys a bicycle from Micah, what is the total economicsurplus created? A) $75 B) $125 C) $200 D) It depends on the price that Jacqueline pays

A) $75

Use the graph above to answer this question. Initially, Spartania is an autarchy and there is nointernational trade allowed. Then, the country decides to allow free trade. The world price is $2.Which of the following areas best represents the additional economic surplus created whenfree trade is permitted? A) G+H B) I C) C+E D) A+B+C E) D+F+E+G+H

A) G+H

Which of the following is an example of a shortage? A) It is illegal to sell cigarettes for more than $8 per pack. This leads to long lines outside storesthat sell cigarettes B) A tax on beer increases the price and reduces consumption C) There are not many Super Bowl tickets available, and lots of people want to go. As a result,Super Bowl tickets are very expensive. D) A subsidy on electric cars increases the demand for electric cars

A) It is illegal to sell cigarettes for more than $8 per pack. This leads to long lines outside storesthat sell cigarettes

West Virginia is located on mountains that contain large amounts of coal. Thus, West Virginiaprovides the United States with a comparative advantage in coal production due to A) Relatively abundant inputs B) Specialized skills C) Mass production

A) Relatively abundant inputs

Which of the following is the best example of a nonrival good? A) Streetlights that make it safer to walk around town at night B) A private security firm that protects a bank from robbers C) The front row seat in a roller coaster D) Fish in a lake

A) Streetlights that make it safer to walk around town at night

The graph below is for the supply and demand of oil in the United States. The U.S. allows for theinternational trade of oil. Which of the following statements is most likely to be true: A) The U.S. will export some of the oil it produces B) The U.S. will import all of the oil it consumes C) The U.S. will export all of the oil it produces D) The U.S. will neither import nor export oil

A) The U.S. will export some of the oil it produces

Bad weather in Columbia reduces the amount of coffee grown and, as a result, the price ofcoffee is higher when you are at the grocery store. Which of the following is true: A) The high price is an incentive for you to buy tea instead of coffee B) The high price is an incentive for you to buy extra coffee C) The high price is a signal that the opportunity cost of buying coffee has gone down

A) The high price is an incentive for you to buy tea instead of coffee

Among the following examples, the one that best illustrates a public good is a(n) A) The satellites used by the GPS technology in cell phones and other electronics B) A movie on Netflix C) Medical marijuana D) Fish in the ocean

A) The satellites used by the GPS technology in cell phones and other electronics

Suppose there is no international trade. What is the equilibrium price? A) $200 B) $250 C) $300 D) $350

B) $250

If the government imposed a price ceiling of $15, then buyers will be intending to buy ________,but they will be able to buy ________. A) 30 units, 24 units B) 36 units, 24 units C) 36 units, 30 units D) 24 units, more than 24 units

B) 36 units, 24 units

A country goes from being an autarchy to being an exporter of rice. Which area in the graphbelow represents the additional economic surplus created when the country allows free tradein rice? A) E+D B) F C) A+B+E+F D) E+D+F

B) F

Which of the following statements regarding globalization is not true: A) The United States is one of many countries that has had an increase in international tradeover the past few decades B) Globalization has increased the wages of workers in the United States without a collegedegree and helped to reduce income inequality C) Globalization increases the variety of goods available to consumers D) Wages are mostly determined by productivity

B) Globalization has increased the wages of workers in the United States without a collegedegree and helped to reduce income inequality

Jackson likes listening to loud rock music in his apartment. Quinton lives below Jackson anddoesn't like the noise. According to the apartment building rules, Quinton can demand thatJackson stop playing the music. Jackson gets $100 in enjoyment from listening to loud music,and Quinton gets $50 in enjoyment from not having to hear loud music. According to the Coasetheorem, which of the following is an optimal way of dealing with the situation? A) Jackson pays Quinton $150 for the right to play

B) Jackson pays Quinton $70 for the right to play loud music

Which of the following is the best example of a free-rider problem? A) People line up early in the morning to get the best seats to a MSU football game, eventhough everyone would be better off if they just came one hour later. B) One of your classes has group projects, and everyone in the group gets the same grade onthe project. You decide not to do any work on the project. C) You and your roommate use the principle of comparative advantage to divide up chores. D) You use a library card to check

B) One of your classes has group projects, and everyone in the group gets the same grade onthe project. You decide not to do any work on the project.

t has been determined that producing one ton of coal creates health costs in the surroundingarea that are equal to $3. This can be graphed using some of the lines shown below. Which ofthe following is true: A) 𝑆1 is social supply and 𝑆2 is private supply B) 𝑆2 is social supply and 𝑆1 is private supply C) 𝐷1 is social demand and 𝐷2 is private demand D) 𝐷2 is social demand and 𝐷1 is private demand

B) 𝑆2 is social supply and 𝑆1 is private supply

In the graph shown here, the upward-sloping lightgray line is the initial supply curve. The upward-sloping dark red line is the new supply curve. This graph shows the effect of a: (corn/buschels) A) $2 per unit tax on sellers B) $2 per unit tax on buyers C) $2 per unit subsidy to sellers D) $8 per unit tax on sellers

C) $2 per unit subsidy to sellers

In the market for a particular pair of shoes, Jena is willing to pay 75 for a pair while Jane iswilling to pay 85 for a pair. The actual price that each has to pay for a pair of shoes is 65. Whatis the combined amount of consumer surplus for Jena and Jane? A) 130. B) 10. C) 30. D) 215.

C) 30.

What is the amount of deadweight loss after the government imposes the excise tax on themarket? A) 44 B) 36 C) 8 D) 4

C) 8

Jason and Gary are roommates trying to divide chores. Jason has a comparative advantage at achore if he can complete the chore A) Using fewer inputs than Gary B) In less time than Gary C) At a lower opportunity cost than Gary D) At a higher opportunity cost than Gary

C) At a lower opportunity cost than Gary

Spain goes from being an autarchy to allowing world trade. As a result, Spain begins exportingolives. How does world trade affect consumer and producer surplus for olives? A) Consumer surplus increases and producer surplus increases B) Consumer surplus increases and producer surplus decreases C) Consumer surplus decreases and producer surplus increases D) Consumer surplus is unaffected and producer surplus decreases

C) Consumer surplus decreases and producer surplus increases

Buyers bear a smaller incidence of the tax when: A) The tax is higher B) Supply is more elastic than demand C) Demand is more elastic than supply D) Demand is perfectly inelastic

C) Demand is more elastic than supply

The main role of markets is: A) Facilitating consumption B) Preventing waste C) Reallocating resources to better uses D) Providing Jobs

C) Reallocating resources to better uses

If a good that generates negative externalities were priced to take these negative externalities intoaccount, its A) price would decrease, and its output would increase. B) price would remain constant and output would increase. C) price would increase, and its output would decrease. D) price would increase but its output would remain constant.

C) price would increase, and its output would decrease.

If a price ceiling is set below the equilibrium price in a market A) Quantity supplied will equal quantity demanded B) surpluses of the commodity will develop. C) the quantity demanded will exceed the quantity supplied. D) the quantity supplied will exceed the quantity demanded

C) the quantity demanded will exceed the quantity supplied.

Assume the government imposes a $3 tax on buyers, which results in a shift of the demandcurve from D1 to D2. The amount of the tax (per unit) paid by the consumer is A) $8. B) $3. C) $2. D) $1.

D) $1.

Which of the following statements regarding globalization is not true: A) Globalization has been driven by falling trade costs B) Globalization has increased the wages of college-educated workers C) The U.S. tends to import low-skill-intensive goods D) Due to globalization, the U.S. is negatively affected when there is economic growth in othercountries

D) Due to globalization, the U.S. is negatively affected when there is economic growth in othercountries

Which is most likely to be observed in a community where price ceilings are imposed onresidential rents? A) Poor people will be able to find adequate housing. B) Homeowners will reduce their own use of housing space, making more available to others. C) Those whose needs for housing are most urgent will be able to obtain the space they want. D) People moving into the community will have difficulty locating residential space to rent

D) People moving into the community will have difficulty locating residential space to rent

The above graph shows the supply and demand for cotton in the country of Spartania. Theworld price of cotton is $15. Spartania is able to import and export cotton, if it chooses to.Which of the following is true? A) Spartania will import 2 units of cotton. B) Spartania will import 4 units of cotton. C) Spartania will export 2 units of cotton D) Spartania will export 4 units of cotton.

D) Spartania will export 4 units of cotton.

S1 and D1 represent the current market supply and demand, respectively. S2 and D2 represent thesocially optimal supply and demand. One way that the government could shift demand to its sociallyoptimal level is to A) tax the sellers. B) tax the buyers. C) subsidize the sellers. D) subsidize the buyers

D) subsidize the buyers