Econ final

Smuggling (the illegal movement of goods) is most likely a response to the imposition of

An excise tax

According to the Law of Comparative Advantage, if Argentina and Peru were to specialize and trade with each other

Peru should produce beef and Argentina should product fruit

From 9 to 10 a.m., Fred can sleep in, go to his economics lecture, or play tennis. Suppose that Fred decides to go to the lecture, but thinks that if he hadn't, he would otherwise have slept in. The opportunity cost of attending the lecture is

Sleeping in

Based on the graph of the PPF above, we know that

Some of the resources used in production are better suited for growing mangos and others are better suited for growing bananas.

Based on the graph of the PPF above, we know that

Some of the resources used in production are better suited for recycling plastic and others are better suited for recycling glass

What name did Adam Smith give to the phenomenon of supply and demand adjusting without government intervention, seemingly on their own?

The invisible hand

Joan is a sophomore at UK who has been reading the classified ads in The Kernel that advertise for young women to "donate" (sell) their eggs. Joan could use some extra money and she meets all of the qualifications described in the advertisement. If Joan chooses not to sell her eggs because she is concerned about the ethical implications, this is an example of

The invisible handshake

Consider the market for new cars in Lexington. If three of the current major dealerships were to leave Lexington, what would be the likely impact on the market for new cars in Lexington?

The market equilibrium price will increase and the market equilibrium quantity will decrease.

When considering the various resources (factors of production), human capital is

the accumulated skill and knowledge of workers.

The Law of Demand implies that demand curves are downward sloping

true

Which of the following has a supply curve that is the most likely to be completely vertical?

Concert tickets

Harry, a wheat farmer, is deciding whether or not to add fertilizer to his crops. If he adds 1 pound of fertilizer per acre, the value of the resulting crops rises from $80 to $100 per acre. According to marginal analysis, Harry should add fertilizer if it costs less than:

$20 per pound

For class, we read an article about student hunger on college campuses in the US. Of the following four statements taken from the article, which ONE is POSITIVE?

"An estimated half of all college students struggle with food insecurity.

If we were to calculate the cross-price elasticity of demand, XD, between chicken finger meals at Joella's Hot Chicken and chicken finger meals at Raising Canes, which of the following values are we most likely to find?

1.2

What is the opportunity cost for Argentina of producing ONE metric ton of fruit

1/2

If the recycling center is currently recycling at point E and want to move to point D, what is the opportunity cost of ONE plastic bottle as they make this transition?

1/4 bottle

) If Costa Rica is producing 600 tons of bananas, what is the maximum amount of mangos they can produce?

300

Consider the following equations for supply and demand in a market: Supply: QS = 4 + 4P Demand: QD = 40 - 5P The equilibrium price in this market is

4

The per unit economic burden (actual incidence) of the tax to PRODUCERS is

1

Marcus is currently working 20 hours a week at an Amazon warehouse. He is considering working an additional 15 hours per week working in the kitchen of a restaurant that has seen an increase in sales by delivering their food. If he works at the restaurant his annual earnings will increase from $15,000 to $25,000 and his tax liability will increase from $1,500 to $2,500. What is his marginal tax rate?

10%

Josie owns a small boutique clothing store near Woodland Park in Lexington. She is considering running an advertisement for her store in a local magazine that comes out monthly. She estimates that it will increase her monthly sales revenue from $30,000 to $31,000. If Jacque engages in sound economic reasoning, she will run the advertisement in the magazine next month if the cost of running the advertisement is less than

1000

If the university imposes a minimum wage on campus of $12 per hour for student workers, then

150 student workers will be unemployed on campus

How much REVENUE does the government generate from this tax?

16

If Costa Rica is currently producing at point B and they want to move to point C, what is the opportunity cost of ONE ton of MANGOS as they make this transition?

2/3

What is the total value of CONSUMER surplus AFTER the imposition of the tax?

24

Based on the graph to the right, what is the value of consumer surplus for a consumer who is willing and able to pay $8 for this product?

3

The per unit economic burden (actual incidence) of the tax to CONSUMERS is

3

If computers cost $900 and printers cost $300 then the relative price of a computer is

3 printers

Based on the information above, Susie will consume:

3 snow cones

What is the opportunity cost for BRAZIL of producing ONE metric ton of soybeans?

3/2 metric

When ticket prices to Elton John concerts increased from $200 to $300 each, the number of tickets sold fell from 500,000 to 300,000. What is the price elasticity of demand for Elton John concert tickets based on this information?

5/4

The equilibrium price of pork bellies is:

50 cents per pound

sociology professor at UK is conducting a study of how people's behavior has changed because of the pandemic. She needs tests subjects for her study and she posts an advertisement for student participants online. You ask some of your classmates if they plan to participate in the study to pick up some extra money. Madeline says she will participate if they pay at least $30, Shelby says she will participate if they pay at least $50, Austin says he will participate if they pay at least $80, and Dylan says he will participate if they pay at least $65. Suppose that the professor offers to pay $70 to anyone willing to participate in the study. What is the total amount of producer surplus that will result based on this information from your 4 friends?

65

If the Lexington Recycling Center is recycling 350 plastic bottles a day, what is the maximum number of glass bottles they can recycle per day?

75 bottles

Justice INC. is a company that produces phones and cars. Assuming that the graphs below depict their PPF for producing cell phones and cars with PPF 0 being the initial PPF, which graph shows the likely impact if their research team discovers a new and better technology for making cars while at the same time, political unrest in a country where they obtain raw materials for making phones has made it difficult to get these raw materials?

A

Suppose that you are hired by Toyota to work as a regional marketing manager. For this transaction, we would say that Toyota acts as:

A buyer in a factor market

You manage a company that has recently opened a production facility in a southern Chinese province. Suppose a new virus has appeared in China, that when caught, leaves an individual sick for several weeks. A new vaccine has been developed that will protect people in China from the virus. Assuming China's health care system and vaccine allocation is command-oriented rather than market-oriented, you can expect that...

A central planner will attempt to allocate the vaccine in such a way that everyone will get the vaccine who needs it

When considering the various resources (factors of production), which of the following is most likely to represent CAPITAL?

A guitar

which one of the following statements is true

A policy that makes it illegal to enter a building without wearing a mask would be considered a command-and-control policy rather than a market-based policy.

A student noted that the football team won by a larger margin at games when the third-string players played more minutes. Therefore, he recommended that the third-stringers become the first team and be allowed to play a much larger percentage of time during the game. His conclusion was probably in error because he has

A reverse casualty problem

If the government imposes a price CEILING OF $1.50 in this market then there will be

A shortage of 20 donuts

Which of the following is LEAST likely to produce an externality?

A well decorated interior of a house

Kazakhstan and Afghanistan are two counties that both raise sheep and goats and the graph to the right shows their PPFs. If they were to consider specializing and trading, which ONE of the following statements is TRUE?

Afghanistan should produce goats because it has the comparative advantage in the production of goats.

Which economist first developed the supply and demand model that we currently use today?

Alfred Marshall

Arial was recently hired by Fifth Third bank for their management training program. The company took the 30 new management program trainees to a new employee retreat at Red River Gorge. The retreat leader gave Arial 30 protein bars and told her to allocate them among the retreat participants using the most equitable "command-based" approach rather than a "market-based" approach. If Arial followed these instructions, then it is most likely that

Ariel gave each participant one protein bar

Suppose that the graphs to the right show the demand for bicycles. Which change shows the impact of an increase in the price of bicycles?

B

According to the Law of Comparative Advantage, if Brazil and Ukraine were to specialize and trade with each other

Brazil should produce corn and Ukraine should produce soybeans.

All of the following are considered protectionist trade policies or barriers to trade EXCEPT

Budget constraints

Which of the following statements does NOT apply to a market economy?

Businesses face "soft" budget constraints and are given government financial support if t

Extra Credit: Which ONE of the following things did NOT happen in class in the last few weeks?

Dr. Hoyt kicked a soccer ball across the classroom to Bryce, who was the highest bidder in an auction.

Select from the graphs depicted below in answering this question. The University of Kentucky has a limited number of parking spots for students, staff, and faculty. Normally, it is very difficult to find a place to park so everyone who wants a parking spot is not able to find one. Which graph below most accurately depicts this current situation in the market for UK parking spots?

C

What area on the graph represents the total amount of deadweight loss that results from the imposition of the tax?

C and e

If we write the linear equation that represents the PPF for UKRAINE and we treat corn as the Y variable and soybeans as the X variable, then the equation would be

C=8-@/2s

Which ONE of the following statements regarding a cap-and-trade program to deal with pollution is NOT TRUE?

Cap-and-trade programs are considered "private" solutions rather than "public policy" solutions because firms buy and sell with each other.

Welfare economics measures the well-being of consumers in terms of

Consumer surplus

Consider the market for CRAFT HARD CIDER produced in Lexington. Two things have happened in this market. i) Apples are a key input in cider production and a poor apple crop has made apples much more expensive. ii) Income levels in Lexington have increased and hard cider is a normal good. As a result of these two changes occurring simultaneously, what is the overall impact on the equilibrium price of hard cider in Lexington?

Equilibrium price will definitely increase

In one hour a Scottish worker can make 2 sweaters or 40 scones. In one hour an English worker can make 1 sweater or 30 scones. Scotland cannot benefit from specializing and trading with England for either of these two products.

F

Consider the following statement "the Kentucky legislature should legalize the recreation use of marijuana

False

Consider the two labor markets in Minnesota that are both currently in equilibrium at a wage of $10. Suppose that the state of Minnesota decides to increase their minimum wage to $15 per hour. Labor Market A is likely to experience more unemployment than labor market B from a $15 minimum wage.

False

Faith lives in a country with the following marginal tax rate schedule:

False

Hurricane ida caused significant damage to the golf coast

False

In class, we said that if a high school soccer team wants to increase revenue from ticket sales to the games, they should charge a low price to students and a higher price to adults who are less flexible. This is because demand curve A represents student demand and demand curve B represents adult demand.

False

Janelle and Samantha can each produce two goods, Pencils (P) and Socks (S). The equation for Samantha's PPF is P = 18 - 9 S, and the equation for Janelle's PPF is P = 12 - 6 S. If Janelle and Samantha were to specialize and trade, Janelle should produce pencils

False

Maggie's bakery she bakes cupcakes (C) and pies (P) The following equation represents her production possibility frontier:

False

Price floors are generally intended to protect consumers and price ceilings are intended to protect producers.

False

Scarcity can be eliminated through the discovery of new resources.

False

The Law of Supply states that an increase in the price of a product will lead to a decrease in the quantity of the product supplied, ceteris paribus.

False

The primary reason ecomic reason that call centers from various US businesses are outsourced to India is because Indian people speak in a more southing way

False

The three economic questions of allocation that an economy must answer involve what to produce, how to produce, and when to produce.

False

With the goal of promoting positive externalities from the vaccine, Greg Mankiw proposes a Pigouvian subsidy of $1,000 for people who get the covid-19 vaccine. We would say that this policy is a command-and-control polic

False

Ingrid lives in Norway and has a small business knitting hats and sweaters. In one month, if she only knits hats (H), she can make 24 hats. In one month, if she only knits sweaters (S), she can knit 8 sweaters. Which of the following equations represents Ingrid's PPF if we treat hats as the Y-variable and sweaters as the X-variable?

H= 24-3s

Dr.Hoyt went to Lowes to buy gardening supplies. She bought $79 worth of merchandise and the total amount she had to pay at the cash register was $83.74. Which of the following is NOT true?

Her tax rate was 4.74$

The immediate effect of a binding price ceiling placed on rent in the housing market would be

Higher search costs for apartments

The circular-flow diagram of a market economic illustrates that, in markets for the factors of production

Households are sellers and firms are buyers

Which one of the following statements is not true

If country A trades with country B and in the process, country A gains $1 million worth of products from the trade, country B must bear a cost (or loss) of $1 million to balance out country A's gain.

If Iowa and North Dakota face the PPFs shown on the graph to the right, which of the following statements is true?

Iowa should produce corn BECAUSE it has the comparative advantage at corn production

When a positive externality is present, from society's point a view, the actual market output level

Is lower than the socially optimal output level.

Which one of the following is NOT true with regard to taxes?

Kentucky is a tobacco producing state and has the lowest cigarette tax of all states in the U.S..

Logan loves hamburgers from Wendy's. The cost of a hamburger is $2.50. The table below shows Logan's marginal benefit from each hamburger he consumes.

Logan will eat 3 hamburgers because the first three hamburgers provide a higher marginal benefit relative to the marginal cost

The income elasticity of demand for organic ostrich eggs is 2.1 (i.e. YD = 2.1). This implies that consumers treat organic ostrich eggs as

Luxury

One thing that economists do to help them understand how the real world works is to

Make assumptions

Caroline has started a small business making tie-dyed t- shirts. Consider the graph to the right that depicts her daily supply and demand. At a price of $4,

Market is experiencing a shortage of 4 t shirts

In describing ten principles of economics, your textbook author, Greg Mankiw, says that markets are generally a good way to allocate resources and coordinate economic activity, but then he goes on to say that government intervention can sometimes improve market outcomes. He feels that the government might improve upon market outcomes in all of the following situations EXCEPT:

Market prices in the market for over-the-counter cold medications begins to rise significantly because there is a shortage of over-the-counter cold medication

If the government imposes a price FLOOR OF $1.50 in this market then there will be

No shortage or surplus

The inefficient but possible points of production on the graph above include only

Point G

At a local factory, if a worker is late for a shift they are docked $5 of that day's pay. (i.e. the worker loses $5 of earnings.) Assume that Y represents the total amount an employee's pay is docked in a month and X is the number of times the employee is late in a month. The relationship between these two variables is most likely to be:

Positive and deterministic

Which of the following is NOT a function of prices in a market system?

Prices ensure an equitable (fair) distribution of goods and services among consumers.

An efficient allocation of resources and no market failure maximizes

Producer surplus only

According to one of the ten principles of economics that we discussed, the standard of living in a country is most closely tied to its

Productivity

The income tax structure in the U.S. is considered to be

Progressive

If Costa Rica would like to move from producing the bundle of goods represented by point I to point D they must

Reduce unemployment and inefficiency

Assume that you stop in Kroger and you have $12 that you plan to spend on pizza that costs $4 per slice and soft drinks that cost $2 per bottle. If we treat pizza (P) as our X variable and soft drinks (S) as our Y variable which of the following equations represents your BUDGET CONSTRAINT?

S=6-2p

Using the graph below, which graphical change most accurately depicts the impact on the market for pure bred golden retriever dogs

SA to SB and DA to DB

Which one of the following statements is false?

Scalping stops the market price from getting closer to the true equilibrium price.

Suppose that we find the price elasticity of demand for iced coffee at Starbuck's is greater than 1, i.e. ED>1. Considering the determinants of price elasticity of demand, which of the following is NOT a likely explanation for this value of elasticity?

Starbuck's coffee can be brewed more quickly than other brands

When the U.S. government imposed a $10 tariff on large wheels of Romano cheese imported from Italy, the price of the Romano cheese sold in the U.S. increased from $100 to $108. Based on the share of the economic (actual incidence) burden of the tax borne by producers, we would say that

Supply is relatively more elastic than demand.

At a price of $24, the market for Backyard Honey is experiencing

Surplus of 24

which of the following is NOT TRUE with regard to the minimum wage?

The Kentucky state minimum wage is higher than the federally mandated minimum wage of $7.25.

You are deciding which class to take for your final available time slot next semester. You can take economics, statistics, or history. If you choose to take economics instead of history or statistics, what is the opportunity cost of taking economics?

The benefit you would have gotten from whichever class was your next best option

The graph that depicts the possible bundles of two goods that a consumer can consume, based on the consumer's income and the prices of the two goods is called

The budget constraint

Your roommate continues to play music or watch Netflix long after you want to go to sleep at night. Your roommate doesn't like to wear earbuds, so you hear the music and movies. If you pay your roommate $20 per month to stop playing music and watching movies at 10:00 each night and your roommate accepts your offer this is an example of

The coase theorem

In the market for Backyard Honey, allergists in the area begin recommending all their patients consume local honey on a regular basis. Which one of the following should result?

The demand would increase

Which of the following is TRUE about a market-based economy:

The economy produces what people are willing and able to buy

Which one of the following government agencies is LEAST likely to deal with issues related to market failure from asymmetric information?

The epa

When a country is trying to make a successful transition from command economy to market economy, all of the following are necessary except

The government must subsidize businesses that are failing

Which one of the following is TRUE with regard to market failure?

The presence of a market failure typically implies that the actual market production levels differ from the socially optimal production levels.

Which ONE of the following would cause a shift in the demand for Mad Mushroom Pizza from D1 to D2?

The prices of beer and soft drinks (complements to pizza) are reduced by 30% at Mad Mushroom Pizza.

The government frequently intervenes when there is a market failure related to a lack of information about a product that might cause harm. Which one of the following is NOT true with regard to this type of intervention?

The private market is typically more efficient than the government at protecting consumers from unknown danger.

In Europe during the 14th century, the Black Plague killed 24 million people or close to 37 percent of the population. How would this affect the production possibilities curves for the countries of Europe at that time?

The production possibilities curves for these countries would have shifted inward

In the market for Backyard Honey, if the price decreased from $24 to $8 which ONE of the following would result?

The quantity demanded would increase by 16 jars

Which one of the following relationships is most likely to be deterministic rather than stochastic?

The relationship between ticket sales revenue and the number of tickets sold for a basketball game.

Consider investments in infrastructure like new or improved roads, bridges, gas lines, and sewage systems. Which of the following is NOT true regarding such investments?

There is no opportunity cost to making such investments because they are paid for with revenue from taxes.

Which of the following is NOT one of the goals of taxation?

To finance political campaigns

Ceteris Paribus" is a Latin expression for "holding all else constant."

True

Cheese must "age" properly to achieve the desired taste and texture before it is taken to market to be sold. Cottage cheese takes one month to age properly and sharp cheddar cheese takes 5 years to age. Supply curve A is the supply of sharp cheddar cheese and supply curve B is the supply of cottage cheese.

True

Consider the following equations for supply and demand in a market: Supply: QS = 6 + 3P Demand: QD = 27 - 4P We know that the equilibrium price in this market is $3.

True

Consider the following supply and demand schedules

True

Georgia is curently enrolled in a physics course

True

If a cost has been incurred and you cannot get your money back, that cost is a sunk cost.

True

In thinking about the economic role of government we break activity down into two primary functions: protective and productive

True

Over the past few decades, income inequality in the u.s. has been increasing

True

The demand for regular milk, which many consumers view as a necessity, will be LESS elastic than the demand for chocolate milk, which many consumers view as a luxury.

True

The equation QD = 20 - .5P represents a demand curve consistent with the law of demand.

True

Typically, while a country is investing in its future productivity, by doing things such as improving education and building better roads, they give up some current consumption. This is reflected by a leftward shift of the PPF in toward the origin.

True

When a state legalizes the use of marijuana, the demand for marijuana in that state typically becomes MORE ELASTIC.

True

When full information about the harmful health consequences of fast food is NOT available to consumers (i.e. asymmetric information is present) MORE fast food will be produced and consumed than is socially optimal

True

the price of a good increases by 10% and as a result the quantity of the good demand falls by 15%, we would say that this response is elastic.

True

Which of the following graphs most accurately depicts the supply of seats at Rupp Arena?

Vertical line

Even though winter will soon be over, you lost your winter coat and decide to go to the mall to buy a new one. While shopping at Macy's you overhear three sales clerks talking. Which one of the following statements made by the clerks refers to a movement along the demand curve. (i.e. the law of demand)

We decided to lower our prices on all our winter items and the increase in total sales has been remarkable."

Which of the following questions cannot be answered using a production possibility frontier?

What combination of outputs is best

Three basic decisions must be made by all economies. What are they?

What goods will be produced; how will goods be produced; for whom will goods be produced?

Economic efficiency requires that

all economic activity generating more benefits than costs be undertaken.

If bologna sandwich meat is an INFERIOR good, then a decline in consumer income will lead to

an increase in the demand for bologna

Which of the following is most likely to result in higher prices of tickets at movie theatres near your college campus?

an unexpected increase in enrollment at your college

The Laffer curve shows that

as the size of the tax increases, tax revenue increase but then eventually starts to decrease.

Suppose a new law requires all piercing studios to pass tougher licensing tests and to begin using more costly sterilization methods. Other things constant, this law would cause

decrease in the supply of piercings and a higher price for piercings.

A liberal arts college in New Hampshire recently determined that the price elasticity of demand for attending their school is │ED│= 1.33. The administration is considering a tuition change to help balance their budget. The best revenue-maximizing strategy is to

decrease tuition, which should boost enrollment and increase revenue.

Mike likes to shop at Costco because he feels that when he buys things in bigger quantities the price is discounted. On his most recent trip to Costco he noticed that many large families with three or more children were shopping at Costco. Based on this observation, Mike concluded that shopping at Costco must somehow improve fertility leading to families having more children. His friend Mark and his wife are trying to conceive a child and Mike suggests that a trip to Costco might help. Mike's conclusion is likely in error because

he has reversed causality in drawing his conclusion.

Economics is best defined as the study of

how society manages its scarce resources

Consider the market for coffee. A technological improvement lowers the cost of producing coffee. At the same time preferences for coffee decrease. The equilibrium quantity of coffee will

increase, decrease, or stay the same, depending on the relative shifts of the supply and curves.

When a negative externality is present in a market and it is caused by producers while making the product, then from society's point of view,

marginal private cost (MPC) will be LESS THAN marginal social cost (MSC).

According to Adam Smith, government intervention should:

only occur to ensure private property right protection.

American Airlines will generally show higher ticket prices online to people who are browsing on an Apple computer compared to people browsing on a Windows machine. This is a form of

price discrimination

The price elasticity of demand, (ED), for seafood measures the

responsiveness of consumers to changes in the price of seafood

The law of comparative advantage explains why

specialization and exchange will make it possible for trading partners to expand their joint output.

If a college education in Kentucky produces positive externalities, we would expect

the government to subsidize education.

A statement that "the market for corn is in equilibrium" means that

the price of corn is such that the market "clears", which means that the quantity that is supplied by producers is bought by consumers.

A statement that "the market for milk is in equilibrium" means that:

the price of milk is such that the market "clears" which means that the quantity that is supplied by producers is bought by consumers

The above is a supply and demand framework for the daily market for 8-oz jars of Backyard Honey, a local honey provider in Lexington. What is the current market equilibrium price and equilibrium quantity

𝑃𝐸𝐸 = $12 and 𝑄𝑄𝐸𝐸 = 16 𝑗are of honey