SAULEY micro midterm

Refer to the accompanying figure. Moving from point C to point B, the opportunity cost of 25 more salads is:

5 pizzas

Suppose Colin brews beer and makes cheese. If Colin can increase his production of beer without decreasing his production of cheese, then he is producing at an:

inefficient point.

Refer to the accompanying table. Based on their comparative advantage, Martha should specialize in making _______ while Julia should specialize in making _______.

pies; cakes

Which is the most likely substitute good for ice cream

popsicles

If a price ceiling of $8 were placed in the market in the graph shown:

some surplus is transferred from producer to consumer

Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry maximizes his economic surplus by attending:

state college

Dean should play golf instead of preparing for tomorrow's exam in economics if:

the economic surplus from playing golf is greater than the economic surplus from studying

the minimum amount a person would take in order to give a good or service to another individual is also known as

willingness to sell

Refer to the accompanying table below. The marginal cost of going on a fourth ride at the carnival is:

$1

Refer to the accompanying table below. The marginal benefit of the 5th unit of activity is:

$10

Suppose a tax on sellers has been imposed in the graph shown. What is the total tax paid per unit of the good?

$10

What is the value of deadweight loss given a price ceiling of $3?

$100

Suppose a $2 tax was implemented on consumers in the market below. What would the resulting tax revenue be in the market?

$1750

Suppose a tax on buyers has been imposed in the graph shown. The amount of deadweight loss generated by this tax is:

$18

Suppose the most you would be willing to pay to have a freshly washed car before going out on a date is $6. The smallest amount for which you would be willing to wash someone else's car is $3.50. You are going out this evening and your car is dirty. How much economic surplus would you receive from washing it?

$2.50

Suppose a $8 per unit tax was implemented on producers in the market below. What would be the value of the deadweight loss in the market after the tax was imposed?

$2000

Refer to the accompanying table. Given the supply and demand schedules of milkshakes below, the equilibrium price in this market is _______ and the equilibrium quantity is ___________.

$3; 60

Your friends from the University of Cincinnati are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfare is $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1,400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Cincinnati-Atlanta round-trip airfare is $450. What is the opportunity cost of using the coupon for the Miami trip?

$450

Suppose a tax on buyers has been imposed in the graph show. How much of the tax revenue in this market is being paid by producers?

$48

What is the value of producer surplus given a price floor of $3?

$800

Refer to the accompanying figure. The equilibrium price is ______, and the equilibrium quantity is ______.

%6;4

Suppose when the price of calculators is $10, the quantity demanded is 100, and when the price is $12, the quantity demanded drops to 80. Using the mid-point method, the price elasticity of demand is:

-1.22

If the price of jelly goes up by 10 percent, we observe a decrease in the quantity demanded of peanut butter of 20 percent. The cross-price elasticity of these goods is:

-2.

A 5% increase in the price of Good C leads to a 20% decrease in the quantity demanded of Good D. The cross-price elasticity of these goods is:

-4

If the price of a good increases by 10 percent, its quantity demanded drops by 50 percent. The price elasticity of demand is:

-5.

Why is the market for used cars not considered perfectly competitive

-the buyers are not price takers. -there is no standardized good. -there is incomplete information.

Suppose that when the average family income rises from $30,000 per year to $40,000 per year, the average family's purchases of toilet paper rise from 100 rolls to 105 rolls per year. The income-elasticity of demand for toilet paper is _______, suggesting toilet paper is ________________.

0.17; a normal good.

Refer to the accompanying figure. Moving from point B to point A, the opportunity cost of 25 more salads is:

10 pizzas

Below is the demand and supply schedule for widgets. What is the value of producer surplus in this market?

225

Refer to the accompanying figure. If this restaurant makes 75 salads in one hour, then what's the maximum number of pizzas it can make in that same hour?

30

Below is a graph of the market for widgets. What is the value of consumer surplus while the market is in equilibrium?

337500

Refer to the accompanying table below. How many rides should you ride at the carnival:

5

Suppose the price elasticity for a good is 5. This means a 1% increase in the price of the product will lead to a ____ % change in the quantity supplied.

5

Suppose the total benefit of watching 1 baseball game is 100, the total benefit of watching 2 games is 120, and the total benefit of watching 3 games is 125. In this case, the marginal benefit of watching the 3rd game is:

5

Suppose a price gauging firm lowers the price of widgets in the market, below the equilibrium price. The new market is shown in the graph below. What is the value of the Total Surplus in the market following the change in price for widgets?

500000

Refer to the accompanying table. Julia's opportunity cost of making a cake is:

6/5 of a pie

Suppose a price gauging firm lowers the price of widgets in the market, below the equilibrium price. The new market is shown in the graph below. What is the value of the deadweight loss created by the change in market price for widgets?

62500

Suppose a $2 per unit tax was implemented on producers in the market below. What would the new quantity demanded in this market be?

875

Below is the market for sodas in France. France has a nationalized healthcare system. Because drinking soda is associated with poorer health outcomes, and the government provides healthcare to all individuals within the country, the government of France would like to discourage people from drinking soda. Based on the negative externality shown in the graph below, what would the tax rate be in this market to create a Pigovian tax?

A per unit tax of $0.5

If Ana devotes all her time to making fudge, she can make 3 pounds of fudge an hour, and if she devotes all her time to making toffee, she can make 2 pounds of toffee an hour. If Leo devotes all his time to making fudge, he can make 4 pounds of fudge an hour, and if he devotes all his time to making toffee, he can make 5 pounds of toffee an hour. Which of the following statements is correct?

Ana has the comparative advantage in fudge but Leo has the absolute advantage in fudge

In which of the following markets could the government improve social welfare by implementing a tax to offset a negative externality?

Cigarette smoke, which leads to second hand smoke and can cause lung cancer to non smokers

If a price ceiling of $8 were placed in the market in the graph shown: (Assume when P = 13, Qd = 7)

Consumer surplus would increase by $12

Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie. Which of the following statements is correct?

Dan should specialize in sandwiches, and Tracy should specialize in smoothies.

There are many reasons a government should get involved in an economic market. Which of the following is not one of the reasons we discussed in class?

Government officials disliking certain individuals in a marketplace

Which of the following is not an example of unintended consequences?

Increasing the price of a good and seeing the quantity demanded decrease

Government intervention can come in many forms. Which of the following would not be considered a government intervention into an economic market?

Individuals buying goods from a company because they believe in what the company stands for

Which of the following is an example of a positive externality?

The delicious scent of fresh donuts from walking by Murray Donuts in the morning

Suppose a market goes from being in equilibrium without any government regulations, to having a binding price ceiling enacted. What will happen to consumer and producer surplus in this market?

We cannot know what will happen to CS without more information, but PS will decrease

A historic drought causes most carrot crops to fail, decreasing the amount of available carrots. The carrot cake market would see:

a decrease in the supply of carrot cake

The price of chew toys has gone down, and all other variables have remained constant. This makes Blanton very happy because he gets a new toy since he's such a good boy! If I wanted to show this change graphically it would be:

a movement along the demand curve to the right.

The most likely complementary good for burgers would be:

buns

A 5% increase in the price of Good C leads to a 20% decrease in the quantity demanded of Good D. Theses goods are:

compliments

all externalities

create either a cost or benefit to a person other than the person who caused it.

the total surplus in a market lost to market inefficiencies is also known as

deadweight loss

Which of the following markets would benefit the most from a government subsidy?

elastic market with positive externalities

When price decreases from $70 to $60, demand is ___________ and total revenue ______________.

elastic; increases

if the price of milk is above the equilibrium price, then there will be

excess supply of dairy products

Refer to the accompanying figure. If the price is $4 today and there is no change in either supply or demand, one would expect the price in the future to be:

greater than $4

Jamie purchases a new watch for $300. One can infer that:

her willingness to pay was at least $300

After getting a raise at work, Marcus now regularly buys steak in lieu of ground beef. Which factor of demand has influenced Marcus's demand for steak?

income

If the price of a cup of Dunkin' Donuts coffee rises, while the price of a Starbucks latte doesn't, we expect the quantity of lattes demanded to:

increase as some people switch from coffee to the relatively less expensive latte.

Below is the market for gobbledy-gooks. Suppose these gobbledy-gooks provide a positive externality to other consumers of $50 per unit, and the government has decided to subsidize consumers of gobbledy-gooks by giving them a $125 tax break per unit they purchase. How will this change effect total surplus in the market?

increase by $140,625

Suppose Karl divides his time between making birdhouses and growing artichokes. Karl's friend recently gave Karl some new woodworking tools that greatly reduced the amount of time it takes Karl to make each birdhouse, but the new tools had no impact on the amount of time it takes Karl to grow artichokes. Thus, the new tools _____ Karl's opportunity cost of growing artichokes.

increased

A baker of chocolate chip cookies is likely to have a ______________ price elasticity of supply than the seller of rare baseball cards due to ______________.

more elastic; the availability of inputs

Alex received a four-year scholarship to State U. that covered tuition and fees, room and board, and books and supplies. If Alex becomes a full-time student, then:

the opportunity cost of attending State U. includes the money Alex could have earned working for four years.

Jen spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for food and drinks rather than spending an equal amount of money to go to a movie. Her opportunity cost of going to the beach is:

the value she places on seeing the movie

You want to buy a TV that regularly costs $250. You can either buy the TV from a nearby store or from a store that's downtown. Relative to going to the nearby store, driving downtown involves additional time and gas. The downtown store, however, has a 10 percent off sale this week. Last week you drove downtown to save $20 on some concert tickets, a 15 percent savings. Should you drive downtown to buy the TV?

yes, because you will save more than $20