midterm (1-8)

Suppose the price of cupcakes decreases by 5%, and the quantity of cupcakes demanded increases by 15%. Demand for cupcakes is:

price elastic

Suppose the government sets a price floor that is above the equilibrium price of a good. The price floor will:

result in a surplus of the good

(Table: Market for Apartments in San Francisco) Use Table: Market for Apartments in San Francisco. If a price ceiling of $1,700 is imposed in this market, the result will be inefficiency in the form of an _____ million apartments.

shortage of 0.6

In the market for barley, if the price of ethanol (which is made from corn, a crop that competes with barley for farmland) increases dramatically, the _____ barley would _____.

supply of; decrease

The likely result of a binding price floor is a _____ of the good at a price _____ the equilibrium price.

surplus; above

The Mile End Deli serves traditional delicatessen food in Brooklyn, New York. Which cost is MOST likely fixed at the deli?

the chairs customers sit on

A shift of the demand curve for fried chicken would NOT be caused by a change in:

the price of fried chicken

(Figure and Table: The Market for Lyft Rides) Use Figure and Table: The Market for Lyft Rides. If the government imposes an excise tax of $1 per ride on producers, then people who ride Lyft will pay _____ of each $1 tax.

$0.50

(Table: The Market for Salt and Vinegar Chips) Use Table: The Market for Salt and Vinegar Chips. There is a surplus of 70 bags of salt and vinegar chips per month if the price is _____ per bag.

$0.70

(Table: Quantity Supplied and Quantity Demanded in the Market for Magazine Subscriptions) Use Table: Quantity Supplied and Quantity Demanded in the Market for Magazine Subscriptions. The government institutes a price floor, and as a result, too many resources are allocated to the production of the good. Given this, which dollar amount is a possible value of the price floor in this market?

$20

The price of a carton of eggs is $2, and 100 cartons are sold. The consumer surplus is $80, and total surplus equals $150. What is the producer surplus?

$70

If income rises by 20% and the quantity demanded of an item falls by 20%, the income elasticity of demand for this item is:

-1

If income rises by 10% and the quantity demanded of an item falls by 30%, the income elasticity of demand for this item is:

-3

(Table: Market for Milk) Use Figure: Market for Milk. If the government imposes a price floor of $1.20 per gallon of milk, the quantity of milk actually purchased will be _____ gallons per week.

9.0

(Figure: Market for Apple Computers) Dell and Apple are competitors in the computer market. Which graph illustrates the effect of a rise in the price of Dell computers on the demand for Apple computers?

Graph D

Which statement makes use of normative analysis?

Health care is a right of all citizens.

Which of the following statements is correct?

Regardless of the statutory burden of a tax, the actual economic burden will depend on the relative elasticities of demand and supply.

Amul Food Factory in India makes ice cream and produces processed and condensed milk. In the factory, the firm's employees use raw milk and sugar. The firm runs on electricity and purchases raw milk every day. Large robotic assembly lines fill and package the ice cream containers. Large industrial freezers store the ice cream. Based on this scenario, can you identify the fixed costs for Amul Food Factory?

The cost of building the factory, purchasing the robotic assembly lines and industrial freezers.

As a part of a market research project, you survey six random people to see how much gas per week they would buy at various prices. The data you collect is in the accompanying table. What is the change in the total demand for gasoline in your survey when the price changes from $2 per gallon to $2.50 per gallon?

The total quantity demanded in the market falls by 14 gallons.

The Bangtan Boys (BTS) sold out their first US concert, almost as soon as the tickets became available. Moreover, tickets for the BTS tour were, on average, twice as expensive as tickets for Taylor Swift's 2018 Reputation tour. How can you explain this difference in ticket prices?

There is a shortage of BTS tickets compared to Taylor Swift tickets.

Why would a company set up internal markets?

To solve the knowledge problem.

An announcement of a finding that vaping diminishes people's ability to think clearly will MOST likely result in:

a decrease in the demand for vapes.

To be binding, a price floor must set the price:

above the equilibrium price

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

an increase in the price of the item.

Abigail rents 10% more online movies when her income increases by 20%. Based on this information, we know that online movie rentals for Abigail:

are a normal good

Suppose oranges and clementines are substitutes. Holding everything else constant, if the price of oranges decreases, then the demand for _____ will _____.

clementines; decrease

A farmer finds that when he produces more pumpkins, he also has more pumpkins he can sell as decorations. To the farmer, pumpkins and decorative pumpkins are:

complements in production.

(Figure: The Market for Accounting Textbooks) Use Figure: The Market for Accounting Textbooks. Suppose the government believes the producers of accounting textbooks are not profitable, and it wants to make sure textbook producers are profitable. It could impose a control called a price _____, and for it to be binding, one possible price would be _____.

floor; $180

(Figure: Marginal Benefit Curves) Use the graph of marginal benefit curves for slices of cheesecake to answer the question.

four; two

A supply schedule shows:

how much of a good or service would be supplied at different prices.

The aim of a marketing campaign is to

increase the demand for the product

If a seller expects prices to rise in the future

it will stock up today and sell the goods when the price rises.

Assuming that iPhones are normal goods, which factor will NOT increase the demand for iPhones?

lower prices for Samsung smartphones

(Figure: Market for Reusable Jute Shopping Bags) Refer to the market for reusable jute shopping bags that is shown in the figure. The original equilibrium price is $7 per bag. A subsidy is now introduced for buyers of the bags. The amount of the subsidy is:

not $1

(Figure: Market for Logs) A quota of 10,000 logs forest wood per month is placed in the market that is shown in the figure. Sellers are willing to sell the quantity limited by the quota as long as the price is at least:

not 19

(Figure: Supply Curves) The figure shows four different supply curves for four products: A, B, C and D. Which of the supply curves most likely shows a product that uses variable inputs that are the most readily available?

not B

Which of the following scenarios depicts a seller who is following the Rational Rule for Sellers?

not andy's diner

Suppose the government believes that the market equilibrium price of childcare services is too high and therefore imposes a price ceiling in the market. If the government imposes a price ceiling below the equilibrium price:

not consumers will be able to purchase more childcare services at the lower price.

"The current trade deficit of $350 billion is too high" is _____ analysis.

not postivie

(Figure: Supply and Demand in the Market for Cappuccinos) Use Figure: Supply and Demand in the Market for Cappuccinos. A price ceiling of $6 causes:

not shortage AB

(Figure: The Demand and Supply of Quinoa) Use Figure: The Demand and Supply of Quinoa. A price of $4 in this market would result in a _____ of _____ bushels per period.

not shortage; 2,000

Juan McDonald is willing to pay $800 for a new iPad. Apple (the producer of iPads) is selling a new iPad for $700. It costs Apple $400 to produce this iPad. A voluntary economic transaction between Juan and Apple _____ occur because ____ would be better off due to the transaction.

will; both Juan and Apple