AGEC 105 Quiz
You have just started the blue bus hamburger stand. Which of the following isoquants would best describe the relationships between buns and ground beef patties?
B
To play with a person's mind go to McDonald's and order a cheeseburger but hold the cheese. From an economic standpoint why would this confuse the worker? The isoquants associated with making cheese burgers are usually thought of as
B- perfect compliments
The own price elasticity for beer in the UK supermarkets is estimated by Meng et al. (2014) to be -0.98, whereas, the elasticity for beer in pubs is -0.76. You own both a supermarket and a pub and want to increase revenues in both, what should you do?
Increase in the pub but not much you can do in the supermarket.
Currently, a firm's MPP of a unit of labor is 36 and labor costs $12 / unit; whereas the MPP of a unit of capital is 40 at a cost of $20. What would you suggest this firm do to reach the least cost combination at the current output level and why?
Increase the use of labor as it more productive per cost of the marginal unit.
When a university experiences a decrease in state funding, the university often increases tuition and fees in an attempt to meet their budget shortfalls. This works only if enrollment is
Inelastic
The condition of a continually rising price level is defined as
Inflation
If the economy is at AD 1 and AS, what situation is the economy experiencing?
Inflationary Gap
On February 4, 2014, Microsoft named Satya Nadella its new CEO. Assume that under his leadership, Microsoft is expected to increase its profits year-over-year by 10 percent. What effect would this have on the above demand curve?
Demand for Microsoft stock would increase
On the graph below the increase in price level caused by the shift of the Aggregate Demand curve from AD1 to AD2 can be described as
Demand- pull inflation
The marginal utility for Aggie Basketball games is 3 and the price for today's game is $6, whereas the marginal utility of eating out at the Chicken is 10 and the price of a burger and drinks is $20. As a rational consumer you should
Do nothing because the utility per last dollar spent are the same
A positive own-price elasticity of supply reflects
law of supply
A public good is a good whose benefits are
not diminished as it is consumed (nonrival) and whose benefits cannot be withheld from anyone (nonexcludable).
If the market demand curve for a commodity has a negative slope then the market structure must be
The market structure cannot be determined from the information given.
You have estimated the cross price elasticity between two goods to be positive. Of the following sets of goods which set is the most likely set?
Mararigine and butter
The ______________ is the portion of the food expenditures associated with activities beyond the farm gate.
Marketing Bill
If we compare the changes in total variable costs (TVC) and total costs (TC) as an additional unit of output is produced
The changes in TVC and TC are equal
The U.S. rate of interest has increased. Assume the U.S. is currently pegging the Dollar to the British Pound instead of allowing an independent float. What is the effect of the increase in interest rates?
The exchange rate, ₤/$, is not affected.
A firm currently producing at point A. What would you suggest to this firm?
The firm should decrease production of crackers and increase production of chips to increase profits
The February Consumer Confidence Index increased - indicating people are more optimistic about the economy. This should impact consumption by
Rotating the consumption curve to the left
Which of the following represents an action by the Federal Reserve that is designed to decrease the money supply?`
Selling government securities in the open market.
The marginal utility to price ratio for raincoats is 1.2, whereas, the marginal utility to price for umbrellas is 2.8. As a rational consumer you should
Shift consumption from raincoats to umbrellas as the utility from the last dollar spent is higher for umbrellas
As a result of the war in Afghanistan, the population of Afghanistan, as well as its capital stock, was reduced. This can be illustrated by the aggregate supply curve
Shifting inward
What is one shopping aid mentioned in the film?
Shopping carts
Two bands, the Girl Getters and the Toe Biters, are on tour. They both decide to raise their ticket prices. After one show with higher prices, the Girl Getters discover that their revenue has decreased. The Toe Biters discover that their revenue has increased. Which band is more popular in terms of elasticity?
Toe biters
Changes in consumer equilibrium brought about by price changes were discussed. ____ effect of a price change is the change in quantity attributed solely to the change in the price ratio, Pgood A / Pgood B?
Substitution
If we compare the changes in fixed costs (FC) and total costs (TC) as an additional unit of output is produced
TC increases, whereas, FC stays the same
A typical concave production possibility curve implies
That society must choose among various attainable combinations of goods
Suppose unemployment fell from 9.2 to 7.0 percent and inflation fell from 5 to 3 percent. Which of the following provides the best explanation for these changes?
The aggregate supply curve shifted to the right.
As a policymaker, you are deciding to tax an industry. Which of the following statement is most correct?
a lump sum tax does not affect the market clearing price and quantity
To produce honey, beekeepers place hives of bees in orchards without a fee being charged by the orchard owner. As bees gather nectar that they use to produce honey, they pollinate the orchards and fields increasing their yield of fruit. This arrangement results in
a positive externality that benefit both the beekeeper and the owner of the fields of fruit and grain.
The China Yuan exchange rate per dollar changed from 1 Yuan equals 0.12 dollars to 1 Yuan equals 0.16 dollars since 2009. This means that traded goods are now relatively ___ for ___.
answer a - cheaper; Chinese answer b -more expensive; Americans \
The U.S. rate of interest has increased. Assume the Pound per Dollar exchange rate, ₤/$, has increased. This means that goods are now relatively ___ for ___.
cheaper; Americans expensive; Britons
The section of the aggregate supply curve that is nearly perfectly inelastic is the
classical range
Which of the following is not an example of money in the M2 category
coins paper money checking accounts saving accounts
The property of indifference curves that allows one to draw the curve anywhere in the right hand quadrant is
everywhere dense
Automatic stabilizers refer to
government spending and taxes that automatically increase or decrease along with the business cycle.
Obama and congress are both attempting to decrease the unemployment rate to boost the economy. The Phillip curves suggests that
in the short run decreases in unemployment will be accompanied by increases in the inflation rate
The Super Bowl is known for its commercials. These commercials are an attempt to
increase demand for product
A change from point A to point E represents a(n)
increase in quantity demand
According to the analysis of the British economist John Maynard Keynes
the capitalist system is inherently unstable and government intervention is necessary to smooth out fluctuations.
Scarcity in economics is
when a resource is of limited availability and is of productive use.
The profit maximizing point for a producer is
where marginal revenue equals marginal cost, MR = MC.
Changes in consumer equilibrium brought about by price changes were discussed. ____ effect of a price change is the change in quantity attributed solely to the effective change in your buying power.
Income
Assume a firm is producing where the MPP is negative. At this point of production, we know the APP and TPP curves are
Both Positive
The U.S. government provides approximately $300 million dollars in aid to Mexico. This aid can best be illustrated by Mexico's aggregate supply curve
Should not affect
Inflation is
a sustained raise in the general level of prices in the economy.
The following are estimated elasticities for 4.0 and Go's classes, a tutoring service. income elasticity = 6, own price elasticity = -10, cross price elasticity = 1.5 associated with the price of classes at Texas A&M. If Texas A&M increases the price of its classes by 10%, how would this affect 4.0 and Go student number
increase 15%
Adam Smith's invisible hand principle stresses
the tendency of the competitive market process to direct self-interested individuals into activities that enhance the economic welfare of society.
Lines A, B, and C best represent
three demand curves associated with changing tastes and preferences.
If the total reserve requirement is 20% and the change in total reserves is $100,000 what is the total change in the money supply made assuming all available funds have been fully utilized? $20,000 change in money supply If the current money supply is given by the curve Ms, what would you expect the interest rate to be if the Fed engaged in contractionary monetary policy? 3
$500,000 change in money supply 3
Suppose a firm sells 9 units at a price of $10 per unit and 12 units at a price of $9 per unit. Marginal revenue is equal to
$6
What is the own price elasticity for the arc between points A and B?
((12-20)/(10-6))*(((10+6)/2))/((20+12)/2))) = (-8/4)*(8/16) = -1
What is the own-price elasticity of supply if the change in quantity supplied is 2 to 4 million units if the change in price is $10 to $20 / unit.
(2/3)/(10/15) = 1
Calculate the marginal rate of substitution of changing consumption from point B
(3-5)/(12-8)=-2/4=-1/2
The 2011 nominal price of coke is $1.50 per bottle, if the CPI is 2.00 what is the real price of coke in 1982-84 dollars? What is real price in 2011 dollars?
0.75 and 1.50
1 board foot = __ foot X __ foot X __ inch. Your answer is three numbers with a single space between numbers for computer grading
1 1 1
A journal article concerning the attendance at minor league baseball games calculated that the elasticity of attendance with respect to home runs to be +0.194. If a minor league team drafts a player who is anticipated to increase home runs hit by the team by 20%. This draftee is anticipated to increase attendance by? Last year the team's attendance was 1 million fans.
1,000,000 * 0.0388 = 38,800 fans
What is the unemployment rate for the following economy?
20/80= 25%
Using the following information, the base year is
2015- at 100
At what point does the consumer maximize his / her utility?
4 coke and 10 pepsi
What are CS, PS and deadweight loss if price is $5?
Blue, Red, and Green
Using the following information, what is the unemployment rate for this economy? 40% Joe College has just graduated from college and is looking for a job. The type of unemployment best describes Joe's situation is natural unemployment. Alexis works as a scuba diver guide from May through November, however, during November she spends much of her time looking for work. The type of unemployment best describes Alexis situation is seasonal unemployment
40% Natrual unemploy seasonal unemploy
There are ________ Farmer's Markets in the United States
4800
Isoquants represent output levels of 500 and 1000 crates of blueberries per day, whereas, the iso-cost curves represent costs of $200, $300, and $400 per day. If the firm has $400 to spend what is the profit-maximizing level of laborers per day ?
50
From 1849-51, San Francisco suffered _____ devastating fires. Single number
6
On December 14, 2017 the USDA released their cotton outlook that projected global cotton production to increase by 13% in 2018. Shepard in 2006 estimated the world own-price elasticity for cotton supply to be -0.20. What is the expected change in world price given this projected increase in production?
65% decrease in price
If the market is perfectly competitive, what is the equilibrium quantity of tomatoes?
700 pounds
At which point labeled on the graph is the demand for Microsoft stock the most own-price elastic?
A
Which of the following statements is FALSE
A consumer has only one indifference curve
Which of the following will cause a rightward shift (increase) in the demand curve?
A decrease in the price of a complementary good.
The exchange rate between the Iceland Krona and the U.S. dollar was 900 Krona / dollar in 2009. In 2010, the exchange rate was 1200 Krona / dollar. Which of the following is a current statement?
A dollar in 2009 could buy less Icelandic goods than a dollar in 2010
What area gives profits? (SAME Graph)
ABG5
What area gives the total revenue? (Same graph)
AE05
At a price of $5.00, how much of total costs are being covered? (Same graph as one above)
All
At a price of $1.50, how much total and variable costs are being covered.
All of both total and variable costs.
Which point(s) provide the largest level of utility?
B and D
Which of the isoquants best describe the relationship between fertilizer and seeds in corn production discussed in class?
C
What is the area that corresponds to the revenue lost from the price increase?
CDFG
Which area represents the gain in revenue from the change in price?
CDFG
The value of the base year in the CPI equals 1 or 100. Why?
CPI is calculated as value of basket in the current year divided by the value in the base year. For the the base, current year equals base year.
Ocean fish are an example of an open access resource. The oceans are overfished because if fisherman A leaves fish in the ocean for breeding stock fisherman B will harvest the fish left for breeding stock. This is an example of which characteristic of well defined property rights being violated.
Exclusivity
In the second quarter of 2020, real GDP decreased 31.4 percent because of the Covid-19 pandemic. Which of the following causes of the business cycle best explains this decrease?
Exogenous
Which area represents the change in consumer surplus if price decreases from 6 to 2 dollars?
FCBE
Agricultural economics deals with
Farm supply and farms Distributors such Ben E. Keith Grain elevators and processors Retailers such as Sam's Club or HEB
Select the following statement that best represents your opinion. No points as canvas does not allow survey type questions within a quiz but I think about this important issue. Also, note there is no correct answer but canvas forces me to put in a correct answer so ignore correct.
Federal debt is OK as the government has the means to continue to finance the debt
A type of monetary system in which the value of money rests on the public's belief that a piece of paper can be exchanged for goods and services.
Fiduciary
As an individual firm, firms in which market structure never need 1) to advertise or 2) differentiate their products?
Firm is in perfect Competition
The price of movie tickets increases. Assume going to the movies and bowling are normal goods. As a result of this change, the number of movie tickets sold decreases, which of the following best describes the situation for movie tickets?
For the consumption of movies, the substitution effect is negative and the income effect is negative.
List the three uses mentioned for plywood:
Framing, roofing, flooring
Suppose the cross price elasticity for good X and good Y is 3. What does this value tell you about the relationship between these two goods? If the price of good X increases by 15%, the quantity demanded for good Y will increase / decrease by ____
Goods are substitutes and increase by 45%
The economy of Transylvania consists of two commodities, cell phones and wheat. Why is the percentage change in nominal GDP larger than the percentage change in real GDP?
INCREASE PRICE OF WHEAT
As people's incomes increased over the past 100 years, more and more people have been visiting the national parks. This is an example of
Increase in demand
Profits at the profit-maximizing level of output are?
Negative
OPEC is often cited as being a monopoly. Assuming this is true, which of the following statement is true?
OPEC is an environmentalist best friend because OPEC has raised oil prices, therefore, less oil is used than under perfect competition
A Google search resulted in a list of six agricultural feed stores in BCS. Each store has a slightly different feed mix for cattle based on its proprietary recipes. What market structure would best describe feed stores in BCS?
Oligopoly
Which of the following forms of market competition incur social costs or deadweight costs?
Oligopoly Monopoly Monopolistic competition All except perfect competition Perfect competition
Because the price increase resulted in more revenue lost than the revenue gained, we know that demand for this good is ___.
Own price elasticity
Camino Real a highway running from northern New Mexico to New Mexico City was completed in 1598. Views from the highway have been described as postcard quality. Views from this byway are under provided in the market because the views are:
Public goods given indivisible in consumption
The National Bank of Ghana has decided to increase the supply of the Ghanaian cedi (the money used in Ghana). Which of the following actions would you suggest the Bank undertake?
Purchase government securities in the open market.
Assume the ratio of marginal utility of texting relative to the price of texting (air time) is greater than the marginal utility of going to the movies relative to movie ticket prices. What should a rational consumer do to increase their utility?
Purchase more text time and less movie tickets
Let the black line represent the original budget constraint, which line represents an increase in your budget?
Purple
A student club wants to raise just enough income to cover its costs. Its income comes from membership fees and from selling tickets to its football tailgates. Attendance at the tailgates currently leads to overcrowding of the space allowed. The demand for membership is price inelastic and the demand for tailgates is price elastic. To reduce the crowding at the tailgates without changing its total income, what should the club do?
Raise both tailgate ticket price and the membership fee
At a price of $2.50, how much of total costs are being covered?
Some but not all
On February 14, 2014, Janet Yellen, then the newly-appointed Chair of the Federal Reserve, stated that the unemployment rate "is not an adequate gauge" of the health of the labor market. Why might she believe this?
The unemployment rate does not consider those who have given up looking for employment.
To properly measure the economy one needs to include both the product and resource markets?
They are equal to each other and including both would be double counting
Forms of government intervention in market place take on many forms. One such form is a price ceiling. Which of the following is true about price ceilings?
To be binding a price ceiling must be below the market equilibrium
Keeping extra cash on hand to pay for lunch today is an example of the following reason to demand money.
Transaction
Using our simple model of the national economy, why is the Federal Government worried about the unemployment rate? Provide the most important reason
Unemployment leads to decreased income, therefore, a decrease in planned expenditures, AE leading to a recessionary gap
What is the shape of your MC curve between input levels of 125 and 150 pounds of fertilizer to your spinach field? Why?
Upward sloping, MPP is decreasing in stage 2.
What food retailer began in Austin Texas in 1980 that has since been bought by Amazon?
Whole Foods
Using concepts to this point in class, should a firm specialize in producing a single product?
Yes - only if the PPC and isorevenue lines are tangent at one of the axis
Which of the following would most likely not be included in the U.S. GDP?
Your first home purchase after graduating from Texas A&M
Chilifest is fast-approaching, and thousands of visitors will be coming to Bryan-College Station. Most of these people will complement their consumption of Chilifest music and food with adult beverages. The Bryan-College Station adult beverage market is shown in the figure below. Assume the market was originally at equilibrium with demand curve D and supply curve S. Firms in the industry are perfectly competitive. At a market price of C, the adult beverage-producing firm will produce a quantity of ___ beverages.
Z
A differentiated product has
close but not perfect substitutes
The Mexican government has recently started providing subsidies to Mexican farmers who sell their products to the U.S. As such, U.S. consumers have started consuming more Mexican agricultural products and less U.S. grown products. Assuming the economy is currently at point C, how would this change be reflected in the above diagram.
move to d
Answer the following three questions concerning GDP. President Trump's 2020 budget included spending $26 billion less on Social Security programs by more aggressively policing fraud in the program. This $26 billion decrease will decrease GDP through decrease in government spending. Sugar sold to Betty Crocker division of General Mills to make brownie mix is excluded from GDP because answers a, b, and c. Which of the following would not be directly included in 2021 GDP calculations? All would be included.
no change in GDP as social security payments are transfer payments. answers a, b, and c. All would be included.
The law of demand states
quantity demanded increases as price falls.
The economy pictured is currently experiencing a(n) ________ gap, and may want to _________ aggregate demand to address the issue.
recessionary; increase
The following are examples of ways a firm tries to differentiate their products except
selling products with slightly different physical characteristics. selling products at different locations. offering different levels of service that comes with a product. creating an image for the product by advertising.
A firm in a perfectly competitive industry:
sells at the market-determined price regardless of output
Human capital is
skill and knowledge of individuals.
Production possibilities curves (PPC) typical are negatively sloped, implying
that society must choose among various attainable combinations of goods.
Marginal benefits are
the benefits that arise from an increase in an activity.
The socially economic efficient level of pollution abatement for a given level of abatement occurs when:
the marginal cost of abatement equals the marginal cost of pollution damage
If the consumer's marginal rate of substitution equals two hats for one pair of gloves,
the ratio of the consumer's marginal utility of one pair of gloves to one hat must equal negative one half.
Suppose your friends take you out for dinner on your birthday and you have a much better time than you would have had doing anything else. There is still an opportunity cost, even though they will not let you pay for anything.
true
The Dixie Chicken produces hamburgers as given in the table. Each worker is paid $5 and a hamburger sells for $6.What is the marginal cost associated with hiring the second unit of labor?
$0.33
Jace is willing to pay $3.50 for a gallon of milk. HEB is selling a gallon of milk for $2.75. Jace buys the milk and receives a consumer surplus of
$0.75 the difference between WTP and the price.
Eric wishes to purchase gasoline and have his car washed. If he purchases 5 gallons of gasoline at $3 / gallon, the car wash costs $2. However, if Eric purchases 6 gallons of gasoline at $3 / gallon the car wash is free. The marginal cost of the 6th gallon of gasoline and car wash is
$1
Product differentiation:
- is frequently used by firms to shift the demand curves for their commodities to the right - causes the price elasticity of demand to become more inelastic. - is often used as a means by which firms can exert some influence over the prices of their outputs.
What is the slope of the line y = 5 - 0.2 x?
-0.2
What happened on April 23, 2017? Hint, correct answer is all events happened.
-2017 Tax Freedom day according to the Tax Foundation -1516 - German Beer Purity Law added to the standards for the sale of beer -1861 General Robert E. Lee named commander of Virginia Confederate forces -1950 - 1st major league day game completed under lights (Phils 6, Braves 5)
The U.S. population has increased from 154 million in 1951 to 313 million at the start of 2012, a 103% increase. To feed the nation and the world, what is your best estimate of the percentage increase in cropland in the U.S.?
-25%
The Keynesian cross model
-Depicts the national equilibrium level of aggregate expenditures and aggregate output -Is a model of aggregate expenditures and a 45 degree line to show which indicates where aggregate expenditures and aggregate output are equal -Concepts are used to develop the aggregate demand curve -For points above the equilibrium aggregate output is greater than aggregate expenditures
A student is trying to studying in their dorm, but a second is listening to loud music. The students disagree as to the volume the music. The resident adviser decides the student must listen to music using headphones unless the other student agrees to hearing the music. The resident adviser
-Has defined property rights such that the student studying in the dorm received the rights -Has used the Coase Theorem to settle the dispute
Increasing the personal savings rate can slow the economy in the short run as money shifts from consumption to savings. Assuming this statement is true, why does the U.S. government advocate increasing the saving rate?
-Increased savings decreases debt, therefore, saving consumers money by eliminating interest payments -Personal savings protects individuals against unforeseen shortfalls -Increased personal savings reduces govt. entitlements obligations like social security -Saving is put into investments to generate interest, these investment fund business growth thus leading to a growing economy - main reason from a macroeconomic standpoint
Which of the following are correct concerning isocost lines?
-Isocost lines give different combinations of inputs that can be purchased for the same total cost -Slope of the isocost line is minus the price of labor / price of capital -Parallel lines show increase in total costs -Line D shows a decrease in the price of capital with total costs held constant relative to line C
What is deadweight loss?
-Loss in total surplus because we are not at an efficient allocation -Loss in consumer surplus because we are not at an efficient allocation -Inefficiency cause by improper government intervention in a market -Loss in producer surplus because we are not at an efficient allocation
What is the marginal rate of technical substitution (MRTS) for the following isoquant?
-Slope = rise / run =(6-4)/((4-8) = 2/(-4) = -.5 -MRTS = - MPPlabor / MPPcapital -Represents the combinations of capital and labor that result in a particular level output -Amount of capital which can be substituted for labor such that output is held constant
Which of the following are potential examples of monopolies?
-Suddenlink Cable in College Station -All have some barriers to entry - may have some monopoly power -Monsanto which has 70-100% of the U.S. commercial seed market. -Army & Air Force Exchange service which is a agency of the U.S. Department of defense - sells products at foreign U.S. bases -National Football League
Which of the following would be examples of value added in agriculture? Check all that apply. 0.33 points will be deducted from your score for wrong answers
-Your McDonalds Take out meal -Strawberries turned into jam -Bison meat being sold as jerky
A referee has just called a foul on player A as player B was shooting the basketball. The referee's signal of a blocking foul is
-a lagging indicator of the player's action. -a leading indicator of upcoming free throws. -a coincidental indicator of the clock being stopped.
What is the own price elasticity of supply for Blue Baker BLT sandwiches given the following supply curve?
1.25
In January 2017, the USDA has forecasted a 3% increase in wheat supply production than the 2016 harvest. Own-price elasticity for wheat has been estimated to be -0.5. What is the expected change in price for 2017 relative to 2016?
1/-0.5 * 3 = 6 percent decrease in price
Using the following information on the exchange rates, calculate the exchange rate between the Norwegian Krone and Belize dollar. 1 Belize dollar = 0.5 US dollars 1 Norwegian Krone = 0.1 US dollars
1/0.5 * 1/(1/0.1) = 0.20 Krones / Belize
If $100 is injected into an economy with a reserve requirement of 0.1, what is the money multiplier, the change in money supply, and change in loans?
10, 1000, 900
Isoquants represent output levels of 500 and 1000 crates of blueberries per day, whereas, the iso-cost curves represent costs of $200, $300, and $400 per day. If the firm has $400 to spend, what is the profit-maximizing level of output?
1000
Consider the following scenario and table for three questions that follow. The following represents Sweaty Joe's poor record keeping for his beet farm, BPB. BPB grows beats and then pickles the beets to sell at the local farmer's market. Special pickling vinegar costs $8 per quart. Assume all other inputs are fixed. What are BPB fixed costs? What is BPB's MPP associated with six quarts of vinegar? What is BPB's MC associated with six quarts of vinegar?
14 1 9
What is the profit maximizing level of output when the market price is $7? What is the total variable costs when the market price is $10? What are short run profits when the market price is $7? Positive
140 Area 6, G, 200, 0 Zero - but produce as you are covering all variable and fixed costs
What is TPP at input level = 11? What is MPP at input level of 14? What is APP at input level of 5? Why is input level 17 irrelevant to a rational economic decision maker?
150, 0, 10, and beyond max TPP
Safeway facility produces ice cream sandwiches at a rate of ______/hour. Answer one number
1800
Assume that only two companies manufacture shock absorbers for mountain bikes: Shock! andTBITAD (To brake is to admit defeat). Both firms have the option of adopting a low key (and less expensive) or an aggressive (and more expensive) advertising approach. The payoffs (in thousands of dollars per month) associated with each approach are shown in this payoff matrix in the order Shock!, TBITAD.
Agressive
Suppose that as a result of the government expenditures on the "Binden's Infrastructure proposal" there are many new jobs created for Americans resulting in an increase in consumers' incomes. Which of the following changes in the economic will occur other things equal? I An increase in the demand for money II An increase in the interest rate III An increase in government tax revenues IV An increase in total output V An increase in disposable income
All
A brother and a sister are fighting over playing with a toy. Their mother states the toy belongs to the brother and that they must figure out a way to get along as they play with the toy. Which is the economic concept is the mother employing?
Allocating property rights to the brother and letting the parties negotiate, the Coase Theorem.
Which of the following would cause the demand curve for automobiles to shift to the left?
An increase in the interest rate paid to borrow money to pay for automobiles.
The president's plan calls for reducing personal income tax rates and increasing the standard deduction. This would increase consumption by
An outward movement along the consumption curve
The government decides to restrict the number of cell phones in the market to quantity Q1. What area represents consumer surplus at this level of consumption of cell phones?
Area G
It is often true that as the economy begins to recover from a recession the unemployment rate rises. Which of the following statements would be the best explanation for this?
As the economy begins to recover from a recession, workers who were previously discouraged about their chances of finding a job begin to look for work again.
Bailey has to make a choice this evening for the hours 8 to 11. Choices are eating out with friends, going to a movie, or attending the A&M basketball game. Bailey decides to attend the movie and feels if he was not attending the movie he would go to the basketball game. Bailey's opportunity cost of going to the movie is
Attending basketball game
The vertical distance between average variable costs (AVC) and average total costs (ATC) gives
Average fixed costs (AFC) at a given level of output
Consider the following table for four goods with different levels of excludability and rivalry. For example, good A is non-excludable but rival in consumption. Which good would best describe the lunch you just bought at Wings and More?
B
Do You Recall: Assume you have $20 to spend on hotdogs and coke. The price of a hotdog is $2 and coke is $1. Which point is the correct consumer equilibrium?
B
Given your knowledge of isoquants and isocost curves, which of the following points minimizes costs for a firm that must produce 125 units
B
When watching the TAMU football game, you heard the announcers' state that it takes exactly 1.5 yards of pig skin and 1 yard of cowhide laces to make a regulation collegiate football. This situation is best described by which one of the following isoquants?
B
Which area gives total costs?
BE0G
Which area represents the change in consumer surplus associated with the change in price? Is it a gain or a loss?
BFJ - gain
Cotton is the most common fabric in blue jeans. Suppose that because of the unusually wet spring, farmers are experiencing significantly above average yields this year. The figure shows the market for denim before the increase in yields. What effect would you expect this to have on consumer surplus in the market for blue jeans?
Because of the high yields, supply for blue jeans would increase, causing an increase in consumer surplus in the blue jeans market.
According to research, what color will tend to entice people to buy more?
Blue
Which areas give total surplus, PS, and CS? In order listed.
Blue+red, red, blue
Select the set of goods that are least likely to display a negative cross-price elasticity.
Blue-rays and blue-ray movies
On February 1, the BCS Eagle had an article on Super Bowl ads. The article states one beer manufacturer earns almost $100 million more because of its ads - far more than the ads costs. If two beverage competitors advertise, however, the effects cancel out so that neither one gets additional sales. Based on this information, the following table provides profits in millions (earnings minus cost of ads) to two beer companies and their decisions to advertise or not during the Super Bowl. If the two firms are allowed to collude and they trust each other, the outcome of the games is Both firms advertise. If the two firms are not allowed to collude, the outcome of the games is Not enough information given, neither firm has a dominant strategy (best strategy regardless of the strategy of the other firm) to advertise or not.
Both firms do not advertise. Both firms advertise
The following figure represents two variable inputs, pesticide and nitrogen, into a growing of corn, the production process. Assume the firm's current isocost line is represented line F. On which isoquant does the firm maximize production subject to this cost? Assume the firm's original isocost line is represents by line E. What would cause the isocost line shift from E to F? Of all the isoquants shown in the figure, which gives the smallest level of output? Which of the following gives the slope of the isoquant when it is exactly tangent to the isocost line? What will happen if the amount of funds the firm is willing to spend increases?
C The price of pesticides decreased. A 1, 2, and 3 give the slope of the isoquant when it is exactly tangent to the isocost line except d. The isocost line will shift parallel outward.
A change in quantity demanded is caused by
Change in price
Hebgen Lake is the only lake in Timbuk. Arno LLC in its production process heats the lake water to a temperature that kills fish, however, Arno LLC does not pay for the costs of fish kills. Two thousand (2,000) people in Timbuk enjoy fishing. A judge issues by invoking the Coase theorem, a ruling in that Arno LLC has the rights to heat the lake water. Why would such a ruling not reach society's optimal level of thermal pollution in the lake?
Coase theorem would not apply, as transaction costs would be large in trying to negotiate a solution.
The following figure shows U.S. quarterly unemployment rates. It appears unemployment rates are a good _________ indicator of recessions.
Coincident
To address climate change, the U.S. EPA is considering requiring all firms that emit CO2 to install a Carbon Capture and Storage Technology. This is an example of
Command and command control
What type of policy would you suggest to eliminate an inflationary gap?
Contractionary fiscal or monetary policies
On March 10, the Fed stated they will sell Treasury securities at a pace of $10 billion per month. This is an example of
Contractionary of Monetary Policy
President Obama's budget for Fiscal Year 2014 raised $580 billion by limiting high income tax benefits to reduce the national debt. It also provided for tax cuts to encourage hiring and wage increases for the middle-class. What type of fiscal policies are these?
Contractionary/ Expansionary
It is Thursday night before the important AGEC 105 exam. The house next door is having a party while you are studying diligently to earn an A on the exam. The party is quite loud, and the awful music (mostly Justin Bieber) is making it difficult to study. Use the following diagram to analyze the situation. Without any correction, the partiers' optimal level of Justin Bieber music is ___ relative to society's optimal level of Justin Bieber music.
Correct amount
Assuming no collusion, what is the best strategy for Joe's Excellent Trucking Service, if the AAA trucking company decides to hold their rates / cut their rates?
Cut/ Cut rates
Consider the following table for four goods with different levels of excludability and rivalry. For example, good A is non-excludable but rival in consumption. Which good would best describe attending a Houston Astros baseball game?
D
The economy of Transylvania consists of two commodities, cell phones and wheat. Why is the percentage change in nominal GDP smaller than the percentage change in real GDP?
Decrease in the price of cell phones.
What was the effects of the 2011 earthquake and tsunami on Japan's GDP? Initially / longer term
Decrease/Increase
Currently, a firms MPP of labor per unit is 24 and labor costs $10 / unit, whereas capital MPP is 48 / unit at a cost of $20 / unit. What would you suggest this firm do to reach the least cost combination at the current output level?
Do nothing as they are least cost combination
At which point would a profit maximizing firm produce if price =$5? Why? (same graph)
E MR= MC and MC increasing
In a press release, the Fed stated they will continue purchasing longer-term Treasury securities at a pace of $45 billion per month. This is an example of
Expansion of Monetary Policy
President Trump's budget for Fiscal Year 2018 increases defense spending by $54 billion. What type of policy is this increase?
Expansionary fiscal policy
At the start of 2007, the Federal Reserve System discount rate was 6.25%. Between June 2007 and June 2009 the Fed continuously dropped the discount to a final value of 0.25%. What type of policy did the Fed follow during the 2007-2008 recession?
Expansionary policy of a low rate to provide liquidity and low interest rates to stimulate the economy
For the AGEC 105 After Test Party, you can either buy either steak at $10 / pound or liquid beverages at $5 / six-pack.Which point has the smallest utility?
F
For spring break, you are going to spend a few days in Cancun Mexico, yea. Your options are to zipline at Xplolr Park or go to the Mayan Water Park. Per day admission prices are $100 to Xplolr Park and $50 to the Mayan Water Park. What is the correct consumer equilibrium point if the consumer's budget is $600? What changed in going from line B (middle line) to line A (nearest)? What changed in going from line C (furthest out) to line A (nearest)?
F Price of Xplolr Park increased. budget decrease
Which area represents the change in consumer surplus if price increases from 2 to 6 dollars?
FCBE
Read the following excerpts from news articles and indicate the policy type, fiscal (F) or monetary (M), and whether it is a contractionary (C) or expansionary (E) policy. If the policy, for example, is fiscal and contractionary, you would mark "FC". Business investment improved markedly last year following two subpar years, and both business surveys and profit expectations point to further gains ahead," he said. The recently enacted tax cuts and spending increases are helping to lift investment, Mr. Powell said, adding that "strong global growth has boosted U.S. exports. (New York Times April 6, 2018) FE The administration is also expected to soon roll out its $1.5 trillion infrastructure package, which would include $200 billion in new federal spending, partially offset by unspecified cuts elsewhere (New York Times February 6, 2018) FC "Reagan was certainly a tax cutter legislatively, emotionally and ideologically. But for a variety of political reasons, it was hard for him to ignore the cost of his tax cuts," said tax historian Joseph Thorndike. Two bills passed in 1982 and 1984 together "constituted the biggest tax increase ever enacted during peacetime," Thorndike said. The bills didn't raise more revenue by hiking individual income tax rates though. Instead they did it largely through making it tougher to evade taxes, and through "base broadening" -- that is, reducing various federal tax breaks and closing tax loopholes. (CNN Money September 12, 2010) FC The Federal Reserve Wednesday announced a series of far-reaching steps to ... including buying up to $300 billion in U.S. long-term Treasury securities. (ABC News 2009) [ Select ] ["FC", "MC", "FE", "ME"] Fed officials raised interest rates by a quarter of a percentage point at their most recent meeting, in March, to a range of 1.5 percent to 1.75 percent. (New York Times April 6, 2018)
FE FE FC ME MC
By definition, because habitat for the manatee is a public good, public entities such as the Florida Department of Fish and Wildlife must provide habitat, the public good, for the manatee.
False
Education is often used as an example of a public good because education, kindergarten through 12th grade, is provided by the federal and state governments to all children.
False
Professor William Saupe of the University of Wisconsin has a trophy in his office certifying he won the Northwest Iowa Largest Yield Corn Contest. When he says "Look what I won for driving the marginal physical product of nitrogen to zero?" What does he mean?
He added nitrogen such that he maximized his yields by causing MPP to be zero.
The own price elasticity for Starbucks coffee has been estimated to be -5, whereas the own price elasticity for coffee has been estimated to be -0.9. How can this be?
If the price of Starbuck's coffee increases, you may switch to another coffee brand, making Starbuck's more elastic relative to coffee in general.
The own price elasticity for Mountain Dew has been estimated to be -4.4, whereas the own price elasticity for soft drinks has been estimated to be -0.9. How can this be
If you increase the price of Mountain Dew you may switch to another soft drink - making Mountain Dew more elastic relative to soft drinks in general.
The price of designer blue jeans has increased by 25%. As a rational consumer, you have decreased your purchases of blue jeans by two. This decrease in purchases is a result of
Income and Substitution Effect
Since January 2017, the U.S. stock market (S&P 500 Index) has increased over 40%. Several stock market watchers are predicting a correction (downward trend in stock prices) in the market will occur. If you believe these watchers, your speculative demand for money would
Increase
Assume the Federal Reserve has decided to decrease the reserve requirements for American banks. Other things equal, the decrease in the reserve requirements for American banks will ___ the money supply. This leads to a(n) ___ in the interest rate.
Increase, decrease
The potato originated in the Andean region, wealthier people in this area prefer wheat to potatoes. In Bangladesh, however, potatoes are viewed as a expensive source of calories and a high prestige food. What type of good are potatoes in the Andean region and in Bangladesh, respectively?
Inferior, Normal
The perfect competition conditions that ensures the price of the output is fixed is
Large number of buyers and sellers.
Your significant other gave you a box of 10 chocolate hearts for Valentine's Day. Which law suggests that you consume received more utility from consuming the first heart than the 10th heart?
Law of diminishing marginal utility
Which law suggests that as you watch more TV per day, your marginal utility decreases?
Law of diminishing marginal utility.
Most cities require building permits to be purchased before the construction of new homes begins. The number of new building permits would be what type of indicator?
Leading
In the Keynesian representation of the Aggregate Demand (AD) and Aggregate Supply (AS) graph, a decrease in the money supply will cause a _______ shift of the _________curve.
Leftward; AD
Which of the following is an example of a monopolistically competitive industry?
Local Electricity Producer
The graph shows that, on the whole, when unemployment is high, the rate of change in the CPI is ___.
Low
Which of the following products do you most likely have an effective demand for in your consumption bundle?
Low fat milk at $3.79/ gallon
It is advocated that increasing the personal savings rate, will decrease interest rates. Lower interest rates are good for the U.S. economy because
Lower interest rates increase investment expenditures thus increasing GDP
The U.S. currently operates using a fiduciary monetary system with fiat money. What is fiat money?
Money that has value only because of government law or regulation
A large number of restaurants sell hamburgers; examples include Chili's, McDonald's, Burger King, Wendy's, Whataburger, etc. No two burgers, however, are exactly the same. The burger market is an example of
Monopolistic competition
At least 18 hair salons are operating in Bryan / College Station. What type of market structure would best characterize the hair salon market?
Monopolistic competition
Which of the following forms of market competition incur social costs or deadweight loss?
Monopoly Monopolistic competition Oligopoly
Assuming the economy is currently at point D, how would a successful supply side policy be reflected on the above diagram?
Move to A
Recently, Canvas pushed an update regarding the display nature of Files that affected the way your content is delivered to students for existing links, which is causing the behavior you are experiencing. Links are not working properly. Because of this change, students are frustrated because they have to spend additional time on canvas to download files. Faculty and TAs are frustrated because they have to spend the time to check every link and come up with a solution to make the link work properly. Using economic concepts from this class, this update is an example of a (an) ___________ One word is enough, but the answer could contain up to 2 words. Computer graded so spelling etc. is important.
Negative externality
The City of College Station is considering raising its occupancy tax on local hotel rooms. Hotels are primarily utilized by football weekend visitors in the fall. What would you expect the sign of the cross-price elasticity of football game attendance with respect to hotel price? What types of goods are these?
Negative, complements
Kauri wood is found in which country?
New Zealand
OSB stands for ______________________ (three words with a space between) and is ___________ [cheaper/more-expensive] (pick one space before) than veneer plywood.
Oriented strand board cheaper
According the video on the class Canvas website, which of the following is often referred to as the basic postulate of economics?
People respond to incentives.
Why might an economist prefer a per unit tax over a lump sum tax?
Per unit tax increases the MC curve changing the level of output
In terms of the economic efficient output, why would an economist prefer a lump sum tax over a per unit tax?
Per unit tax increases the MC curve changing the level of output and lump sum does not change level of output.
In terms of the economic efficient output, why would an economist prefer a lump sum tax over a per unit tax?
Per unit tax increases the MC curve changing the level of output but lump sum does not cahnge MC.
Firms in which market structure never need to differentiate their products?
Perfect competition.
Those responsible for order fulfillment are called ___________.
Pickers
California has imposed "The Electronic Waste Recycling Fee" which is a fee imposed by the state on new purchases of electronic products with viewable screens to help pay for the disposal and recycling of e-waste. This fee is an example of
Pigovian tax
A prisoners' dilemma is a game with all of the following characteristics except one. Which one is not present in a the classic prisoners' dilemma?
Players cooperate in arriving at their strategies.
What is the equilibrium price and quantity in a perfectly competitive market?
Price = 4 and quantity = 10.
The film stated that the idea behind the first supermarket, King Kullen, was to offset lower prices by a higher volume of sales. For this strategy to be successful in increasing store revenues, demand for supermarket goods overall must be (price elastic / price inelastic).
Price Elastic
The City of College Station recently announced that they were concerned with the increasing number of apartment complexes and the raising price of apartments' leases. As such, the City is proposing a law that caps apartment lease rates at $200 / month / bedroom. This is most likely
Price ceiling
Let the black line represent the original budget constraint, which line represents an increase in the price of good A?
Red
The number of hunters and their real incomes in Texas have remained constant over the past 10 years. The price of hunting a large trophy white tail deer has decrease by about 40% from $15,000 to $5,000. What is the best possible explanation for this decrease in price?
The number of whitetail hunting operations has increased as they saw high profits in raising trophy deer increasing the supply of trophy deer.
For hard cider in the supermarket, the estimated elasticity is -1.3. Increasing the price of hard cider will lead to a decrease in total revenues. This occurs because
The percentage change in price is less than the percentage change in quantity.
Which of the following statements "best" explains why / how coffee beans imported by Starbucks for your cup of coffee this morning would be included in GDP?
The price of final goods include the price of all intermediate goods, however, the value of intermediate goods such as coffee beans produced elsewhere need to be subtracted from GDP.
The map illustrates the location of major broiler (chickens raised for meat) operations in the U.S. Based only on this map, the southeast appears to have a comparative advantage for producing broilers, why?
Trade and production are based on comparative advantage and the southeast is producing broilers.
Exotic (nonnative) animals are considered private property. The selling of such game animals, however, is restricted by law to only a few select individuals. This is an example of which characteristic of well-defined property rights being violated.
Transferability
In some areas exotic (nonnative) animals are considered private property. However, the selling of such game animals is restricted by law to only a few select individuals. This is an example of which characteristic of well-defined property rights being violated.
Transferability
People were paid to use shopping carts in order to win people over to the new invention
True
You are Vice President Apple, Inc. The following graph of your PPC and iso-revenue lines. Prices of iPhone are $1000 / phone and $500 / watch. Ignore the dotted line. The levels of iphones and watches that maximizes Apple's profits are a - as it the tangency between the production possibility curve and iso-revenue line. Assume you hire a new production manager at the same wage rate as the original manager. The new manager increases efficiency of producing iPhones, but the efficiency of producing watches does not change. This change is illustrated with the dotted line. Hiring the new manager will increases only the level of iPhones sold. Movement from point a to point d requires investing in technological change and / or buying more resources.
a - as it the tangency between the production possibility curve and iso-revenue line. increases both the level of iPhones and watches sold. investing in technological change and / or buying more resources.
The Keynesian Cross describes a model where equilibrium occurs at the point where
aggregate expenditures equal aggregate output.
The CPI-urban includes
all goods and services that typical consumers buy.
Monetary policy may not be an effective means of mitigating short-run fluctuations in the economy arising from events such as Katrina. Fiscal policy may be better for responding to such short-run fluctuations. The reason for such comments is
answer b - because fiscal policy such as changes in spending occur quickly after passing a spending bill. answer d - because of lags associated with monetary policy can take up to 12 or more months for the economy to feel the effects of a change in monetary policy.
The law of diminishing marginal physical product
applies to the short run because in the short run at least one input is fixed.
Which areas represent producer surplus for a market under a monopoly structure? areas c + d + m + n + e Which area represents deadweight loss? area j + h
areas c + d + m + n + e area j + h
The rightward shift in the investment function form I0 to I1 may be attributed to
both a decrease in corporate tax rates and a optimistic view of profit expectations.
Consider the following figure for GDP. The distance between D and E would best be considered
business cycle
In the financial markets ____ are net borrowers while ____ are net savers.
businesses, households
Many restaurants feature all you can eat buffets. To remain profitable, an all you can eat business plan is based on the economic idea of
consumers will experience diminishing marginal utility
In April 2020 the unemployment increased to over 14% from around 4% earlier in the year. Which of the following forms of unemployment best describes this increase in unemployment?
cyclical
Given the following figure, this economy is
experiencing an inflationary gap of $5 trillion.
Short run is best characterized by
having at least one input fixed.
Monopolistic competition differs from perfect competition primarily because:
in monopolistic competition, firms can differentiate their products
U.S. trends in agricultural discussed in class include all of the following except
increasing number of farms to feed the increasing world population.
Opportunity costs are important because
individuals should consider the true costs of each alternative when making decisions.
If the income elasticity of demand for a good is -0.5, then the good is
inferior good
The optimal level of CO2 pollution
is determined by the intersection of the marginal cost of damages and the marginal costs of control.
Total business inventories in 2012 increased by approximately $77 billion dollars. How does this inventory change appear in the GDP calculation when adding up all expenditures?
it is added when measuring GDP, as it is an increase in goods produced during 2012 but not sold
Sugar sold to Betty Crocker division of General Mills is excluded from GDP because
it is an intermediate good double counting would occur if it were included it is an input used to produce a final product
In perfect competition, a profit-maximizing firm would produce at the point where marginal revenue equals marginal costs. Monopolies have market power; as such a profit-maximizing monopolist should produce at the point.
marginal revenue equals marginal costs
The consumer price index is used to
monitor changes in the cost of living over time
The market structure that involves the largest price and smallest quantity traded in the market is
monoply
President Biden puts a price ceiling of $45 on Lifestraws; a product which allows you on your next hike to drink from any water source because the straw filters out all the bad stuff. Given the following market situation, implementation of this price ceiling will
no shortage or surplus as the price ceiling is above the equilibrium price and therefore not relevant to the market.
The main differences between public and private goods is a public good is one that is ______________, whereas, a private good is a good that is _________.
nonexcludable and nonrival in consumption; excludable and rival in consumption
To maximize profits, all firms produce at the point where
point where marginal costs equal marginal revenue.
Suppose a 19 year person withdraws funds from their checking account the day before ChiliFest to pay for a potential underage drinking citation. This is an example of
precautionary demand for money.
When a price floor is imposed in a market and the floor is binding
price no longer serves as a rationing device.
Graphically, a change in the price of Pepsi causes the following change,
simply move along the demand curve.
Kroger is having a sale on pork tenderloin. As a result, you decide to buy fewer chickens this week. Assuming that pork and chickens are normal goods, we can conclude ________.
the cross price elasticity is positive - the goods are substitutes.
The curve with points B and C illustrates a negative marginal rate of substitution between crackers and soup because
the curve shows that if you increase the consumption of soup, you must decrease the consumption of crackers to maintain the same utility level.
Suppose that a perfectly competitive market is in equilibrium. Then
the equilibrium quantity provides the maximum possible combined benefits to buyers and sellers.
A firm's supply curve is given by______.
the firm's marginal cost curve above average variable costs.
Taxing a negative externality is an example of
the government internalizing costs.
Economists generally argue that countries should participate in free trade because
the welfare of each country participating in trade increases
If a good with a positive consumption externality is produced in a competitive market, then:
too little of it will be produced
Value of a good depends on
utility of good provided
A welfare loss (deadweight loss) in a market is
value of potential net benefits not achieved because of inefficiency in the market.
In response to the increase in the price of medical masks, several countries passed regulations that set the price of masks. Assuming the market was competitive before the imposition of the price regulation, this situation is depicted in the following figure with Pc being the imposed price and P* the competitive price equilibrium. Which statement best describes the economic outcome of setting the price below the market clearing price? will create a shortage forcing some mechanism other than price to allocate masks to their citizens. Relative to the competitive market, this price ceiling will result in a change in consumer surplus of a loss of areas H+Q. Total costs in the competitive market, is given by areas I+H+F+K+R+Q.
will create a shortage forcing some mechanism other than price to allocate masks to their citizens. a loss of area R and a gain of area H. areas L+G+M.
The national debt is
the total amount owed by the federal government.
President Trump and Congress decreased the marginal tax rate. How would such a change influence the planned consumption function? will not change the curve but will increase disposable income - increase in consumption. Autonomous consumption is the consumption level associated with ______ and is funded by _________. the level of DPI associated with the equilibrium level of output, Y*; wages and investment income. Given the consumption function, how much of every dollar would you expect to be spent? $0.25
will not change the curve but will increase disposable income - increase in consumption. a disposable personal income (DPI) level of $0; savings and investment income. 0.30
