economics test
suppose that a customer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If the negotiated price is $68, how much is consumer surplus?
$11
a lawyer can argue a case in court for one hour and make $300. she could alternatively use that hour of time to type a legal brief in her office. What is the opportunity cost of her typing the legal brief?
$300, since that is the amount she could have made by arguing a case in court
suppose that a customer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If the negotiated price is $68, how much is producer surplus?
$4
Jonathan purchased coffee for $5 at Jennifer's coffee shop, however, he was willing to pay $9. Jennifer was willing to accept $3 for the coffee. The results of this transaction are consumer surplus of
$4 in a producer surplus of $2
Paolo can walk 3 dogs or mow two lawns in 2 hours. Ashanti can walk 6 dogs or mow 3 lawns in 2 hours. Ashanti's opportunity cost for each additional dog walked is what?
0.5 lawn mowed
when quantity demanded in a market equals quantity supplied then the
Market is in equilibrium
in a _____ economy, individuals and firms own most resources, and in a _______ economy, the government controls most resources.
Market, planned
in general terms which item is an example of an inferior good
a city bus, because as income increases people are less likely to use a city bus and more likely to buy a car
what are examples of situations that may require government intervention
a manufacturing firm on a river is dumping production run off into the water
when a scarce good or resource is consumed by the person who does not value it most, Economists refer to the situation as
a misallocation of resources
what is an example of a market failure
air polluted by a manufacturing firm, water polluted by a paper company located by a river, consumers must buy water from one local water utility
what would affect the supply of new automobiles
an improvement in automobile manufacturing technology, a subsidy for struggling automobile manufacturers, a labor strike in the steel industry
paying a salesperson more for increased sales is an example of
an incentive
what is not an example of market failure but of Market success
competition leading firms to provide products at the lowest possible price
a production possibilities frontier that is a straight line is the result of
constant opportunity costs
the demand for gasoline is rising which statement describes a possible cause?
consumers expect prices to rise in the near future.
rational behavior requires thinking at the margin. what are examples of thinking at the margin
deciding whether a second Burger is worth the extra $2, deciding whether to pay a fine for polluting the local Harbor or installing anti-pollution machinery, deciding whether the overtime pay is worth working on your day off
suppose a price floor set on cane sugar that is approximately three times the equilibrium price. One of the effects is a
drop in the quantity of sugar consumed
investment in human capital refers to
education, on-the-job training, and professional training activities
consumer surplus is defined as the
gap between the demand curve and the market price
producer surplus is defined as the
gap between the supply curve and the market price
exchange between two individuals
generally benefits the poor individual as well as the richer individual
which of these circumstances would not affect the supply of new automobiles
higher interest rates for new car financing, this might affect demand for automobiles but not supply
supply and demand analysis is used
in both microeconomics and macroeconomics
in the study of Economics the goals of efficiency and equity are often
in conflict with one another
which statement is a key idea in economic thinking
incentives matter
what changes could cause the production possibilities frontier to shift inward
increased government regulation on businesses overall
what are sources of economic growth
increasing research and development, increasing business investment, reducing barriers to financial aid for higher education, etc.
scarcity
is faced by all individuals and societies
people use _______ to determine how many hours to work, and businesses use ________ to determine how much of their products they are willing to supply to the market
marginal analysis
the economics of uranium mining would be studied in
microeconomics because industries are studied in microeconomics
a good example of a government-imposed price floor is
minimum wage
a theory composed of a number of assumptions and facts boiled down to their basic relevant elements is called a
model
when the government chooses to use resources to build tourist centers the selected resources are no longer available to build highways this illustrates the concept of
opportunity cost
what are examples of Market transactions
payment for purchase of shares at a stock exchange, payment for a soft drink at a vending machine, payment for a book used on eBay
which type of payment is not a market transaction
payment to a disaster victim
a market exists when
people exchange money for goods and services
economics is best defined as the study of how
people make rational decisions
price gouging laws are types of _____ and often results in ______
price ceilings, shortages of a scarce good
when goods are produced at the lowest possible cost and economy is said to have achieved
production efficiency
_____ occurs when services and goods are produced with his few resources as possible, while _____ occurs when the mix of goods and services produced is the most desired by society.
production efficiency, allocative efficiency
other factors held constant, as the price of an iPad rises, the
quantity demanded for iPads falls
a good example of a government-imposed price ceiling is
rent controls
the theory of comparative advantage says that countries
should export those goods they can produce at a lower opportunity cost than another country
when a demand curve shifts to the right
that is an increase in demand
when a supply curve shifts to the right
that is an increase in supply
the opportunity cost of attending college will NOT include
the expenditures for food, it will include required student activity fees the forgone wages that could have been earned working the cost of text books or e-books
supply is defined as
the maximum amount of a product that sellers are willing and able to provide for sale over a particular time period at various prices, holding all other relevant factors constant
at any price below the equilibrium price
the quantity demanded exceeds the quantity supplied in the market
what is an example of capital in the production process of an amusement park
the roller coaster
flu vaccination shots provide external benefits. thus
too few flu vaccination shots are given
the measure of a society's benefits due to a market transaction is called
total surplus
the limits on International trade include
trade me hurt some industries and individuals within each country, transportation and communication cost, increasing opportunity cost and diminishing returns
markets tend to provide too little of products with external benefits
true
if an economy is operating at a point that is inside of its production possibilities frontier and it can be assumed that its resources are
underutilized
macroeconomics is concerned with issues such as
unemployment
there are two sellers in the DVD Market, Wendy and Ahmed. if the market price were $5 per DVD, Wendy would be willing to sell 10 DVDs and Ahmed would want to sell 15 DVDs. if the market price were to increase to $7, then
we can confidently say that the market quantity supplied is it least 25 DVDs, if anything these producers are going to want to sell more because the price has increased
because of scarcity
we face trade-offs in nearly every choice we make
what are the basic economic questions
who will receive the goods and services, how will these goods and services be produced, what goods and services will be produced