ECON Exam Review Questions #3

better technology in the production of sugar.

(Figure: Demand and Supply of Sugar) Use Figure: Demand and Supply of Sugar. A factor that may have shifted the supply from S1 to S2 is:

an increase in the price of the item.

(Figure: Graph) In the graph, the movement from point L to point K is caused by

a change in the demand for a firm's product.

A firm's demand curve for labor will shift because of:

less; backward bending

A higher wage may at some point induce an individual to work _____. When this happens, the labor supply curve is _____.

whatever else she would have done with the 48 hours

A new Subway location has offered a prize—a free meal (valued at $5) each week for a year—to its first 100 customers on opening day. Isabella camped out for 48 hours before the opening to be one of the first 100 customers and successfully obtained the prize. The cost to Isabella of obtaining the "free meal a week for a year" prize was:

complements.

If the demand for electric cars falls when the price of electricity rises, then electric cars and electricity are:

the value of alternative expenditures forgone in making this allocation.

If the state of New York allocates additional spending on after-school programs for at-risk youths, then the opportunity cost of these expenditures is:

a surplus

If the supply and demand curves intersect at a price of $60, then any price above that would result in:

$1

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 the coffee shop receive when Kevin purchases the latte?

supply; inelastic

Suppose the price of real estate increases by 37.11% in New York City next year. If the quantity of new homes supplied does not change, the price elasticity of _____ will be perfectly _____ in New York City next year.

Leisure is usually a normal good.

Which statement is TRUE?

inelastic; elastic

You manage a restaurant, and lately revenues have been rather poor. One of your waiters suggests that raising food prices will increase revenues, but your chef suggests that decreasing food prices will increase revenues. You aren't sure who is right, but you know that your waiter believes that the demand for your food is _____, and your chef believes that the demand for your food is _____.

your forgone enjoyment of the taco.

King Taco charges the same price for everything on its menu: $5 will buy a taco, a burrito, or nachos. You buy the burrito and think that if you had not purchased the burrito, you would have purchased the taco. The opportunity cost of the burrito is:

12 coffee mugs

Suppose a coffee shop in Des Moines, Iowa, hires workers to personalize coffee mugs for special occasions. The store sells the personalized mugs for $7 each. The marginal revenue product of the store's third worker is $84. The marginal product of the third worker is:

decrease in the supply of furniture, higher prices, and a decrease in the equilibrium quantity.

Suppose the input costs associated with manufacturing office furniture increase over time. This would lead to a(n):