Ec final
If the market price of an apple is $1.40 then consumer surplus amounts to
$0.60
Refer to table. If the sellers bid against each other for the right to sell the good to a consumer then the Good will sell for
$100 or slightly less
Refer to table. If the sellers did it again brother for the right to sell the good to consumer then the producer surplus will be
$50 or slightly less
Suppose you inherit an antique doll from your Great Aunt Sadie. The doll has a sentimental value of $100 to you. Jane is a collector who is willing to pay $800 for your doll. If you sell the doll to Jane for $600, your producer surplus is ___ and Jane's consumer surplus is _____, respectively:
$500, $200
Suppose there are only two firms in an economy cowhide Inc. produces leather and sells it to couches Inc. which produces and sells leather furniture what was the economys GDP for 2015
$57000
Suppose a tax of two dollars per unit is imposed on this market which of the following is correct
1/2 of the burden of the tax will fall on buyers and 1/2 of the burden of the tax will fall on sellers
Suppose that in a closed economy GDP is equal to $15,000 taxes are equal to $4000 consumption equals $10,000 and government expenditures equal $3000 what our private saving and public saving
1000 and 1000
If real GDP is $14 trillion and nominal GDP is $16 trillion what is the GDP deflator
100x($16 trillion/$14 trillion)
In 2013 XYZ corporation had total earnings of $500 million if the price of a share of XYZ stock is $70 and if 100 million shares of its stock is outstanding then what is the price earnings ratio
14
Use the information in the table above to calculate the consumer price index for 2016 using 2015 as the base year
162.5
Refer to figure 23-1 which of the following correctly identifies the flow of dollars
A L N B
Subsidy is a tax with negative value. Based on the general results of tax which of the following is correct
All of above
What is an indifference curve
All of the above
Hey stairwell in a certain office building is always congested at 12 PM and 1 PM which would be the most efficient way of reducing congestion
Charge everyone who uses the stairwell when it is congested the same. people who value the use of the stairs most will be the one to use the stairwell at peak times
Suppose that the city of Bloomington imposes a one dollar per tire recycling fee on buyers whenever they purchase a new tire. We can illustrate the tax on a graph by shifting the demand curve
Down by $1, the price paid by the buyers would rise by less than $1
Refer to the figure if the per-unit tax is placed on the good in the market the deadweight loss is the area
E+F
Which of the following statements is not correct
Economists typically prefer regulations to correct of taxes because regulations provide more incentives for firms to seek continued reductions in pollution
As the size of a tax increases, The size of the deadweight loss first increases then decreases
False
When the government imposes a binding price ceiling it causes a surplus
False
One bag of flour is sold for $1 to a bakery which uses the flour to bake bread that is sold for $3 to consumers a second bag of flour is sold for $1 to a grocery store who sold it to a consumer for $2 taking these for transactions into account what is the effect on GDP
GDP increases by $5
In 1991 a median home cost $122,000 and CPI is 137 in 2016 the median home cost $219,400 and CPI was 237.7 in real terms
Houses were more expensive in 2016
A person who is risk-averse has utility which
Increases with wealth but the addition to utility from an additional dollar decreases as wealth increases
Abe owns a dog the dogs barking annoys aids neighbor Jenny
Jenny pays Abe $300 to give the dog to his parents who live on an isolated farm
Refer to figure 23-1 which of the following pairs correctly identify X and z
Markets for factors of production and markets for goods and services
An American retailer purchased 100 pairs of shoes from a company in Mexico in the second quarter of 2016 but does not sell them to a customer until the third quarter of 2016
Neither the second nor the third quarter
All else equal if there are diminishing returns then what happens to productivity and both capital and labor increase
None of the above
Which of the following is a disadvantage of government provision of a public goods such as national defense
One and three only
Refer to the figure. The socially optimal level of output is
Q2
If economist want to gauge economic well-being it is appropriate to look at
Real GDP if they want to look at economic growth it is also appropriate to look at real GDP
The deadweight loss from a tax
Reflects the inefficiency in resource allocation because the tax distorts incentives
Which of the following statements is correct
Some goods such as light houses may either be private or public goods
Taxes create market inefficiencies that can be measured as deadweight loss.
True
Other things constant if the government increases its expenditures but not taxes
public saving will fall and the interest rate will rise
The deadweight loss from a tax
reflects the inefficiency in resource allocation because the tax distorts incentives
Rent controls cause
shortages of apartments which are larger in the long run than in the short run
The deadweight loss from a tax is likely to be smallest when
supply is inelastic and demand is inelastic
Recall the definition of elasticity of supply and elasticity of demand. Suppose we know that E equals one dollar and E equals -3 dollars and we know that the amount of unit tax is four dollars out of four dollars how much tax burden is paid by the buyer
$1
For an economy with $3 billion government purchases $1 billion exports $11 billion consumption and $1 billion imports $2 billion investment the GDP is
$16 billion
Your grandmother tells you that she earned $3.15 an hour at her summer job as a freight handler in 1964. Since then prices have risen 490% in order to keep her purchasing power constant what would her wage be today
$18.59
Tyler and Camille both live in Oklahoma a new car dealer in Oklahoma bought a new car from the manufacture for $18,000 by how much did these Transactions contribute to US GDP for the year
$22000
At Nick's bakery the cost to make a cheese Danish is $1.50 per danish. As a result of selling 10 danishes Nick experiences a producer surplus in the amount of $20 Nick must be selling danishes for
$3.50 each
Refer to table. If Evan Selena and Angie sell the good and the resulting producer surplus is $300 then the price must've been
$300
Referred to figure 1019 noted the lines labeled demand and social value are parallel also the slopes of the lines on the graph reflect the following facts. Win the 59th unit of the good is produced and consumed social well-being increases by
$33.60
The market for gluten-free bread is represented in the graph. When the market is in equilibrium, consumer surplus is
$80
AA Appliances sells refrigerators. In 2015 it added $100,000 to its inventory. $10,000 of this addition was from used refrigerators, and the remaining $90,000 was from their purchases of newly manufactured refrigerators. How much of AA's inventory is included in 2015 GDP?
$90,000
The fixed basket of goods contains 200 cans of soda and 100 pizzas the base year is 2014 and the prices for soda and pizza are given below the values for the CPA in 2015 and 2016 are respectively
17.6%
A farmer sells 5 pounds of pecans to Smith's fresh pecans for $10 Smith's first pecans resells 3 pounds for $4.50 per pound the remaining are sold for a total of $8 taking his transactions into account how much is added to
21.50
Refer to table 7-6, if the market price of an apple is 1.40 in the market quality of apples demanded per day is
3
Quality motors is a Japanese owned company that produces automobiles all of its automobiles are produced in American plants the transactions just discard contribute how much to US GDP
30 million
Consider two cars manufactured by Chevrolet in 2014 the transactions just describe contribute how much the GDP for 2014
39000
Revive beverage company is considering buying new bottling equipment for its factories at which of the following prices and interest rates with RBC find the equipment profitable
4.35 million and 8%
Andrew got his first job at the age of 23 earning $30,000 a year how old will Andrew be on his income will double
46 years
Kristi and Rebecca sell lemonade on the corner for $.50 per cup. It costs them $.10 to make each cup. On a certain day there producer surplus is $20. How many cups did Kristi and Rebecca cell
50
Suppose you buy a house in 2016 and finance it with a 30 year mortgage that has a 6% annual rate of interest inflation during 2017 is 4% what is the real rate of interest you paid on your mortgage and 2017
6 percent - 4 percent
In July 1988 the price of postage stamps was $.32 and CPI was 118.5 in July 2015 the price of postage stamps was $.44 and the CPI was 237.7 what was the real value in 2015 prices of postage stamps in 1998
64.2 cents
In 2014 a farmer grows and souls $3 million worth of corn to big flakes cereal company the transactions just describe contribute how much to GDP in 2014
8 million
Michigan cranberry company sold $10 million worth of cranberries it produced how much did these transactions add to US GDP
9 million
Which of the following would shift supply curve iPhones to the right
A decrease in wages paid to workers making iPhones
The cpi over states the increase in the cost of living because
All of the above
Which of the following fits the definition of a Giffin good
As price of corn increase you purchase more corn
Rhinoceroses are among the most endangered species which of the following policies would result in an official quantity of rhinoceroses
Assigned property rights to individuals with rhinos on their land allowing them to use rhinos for whatever purposes they choose
The purchase of rice produced this period Is indicated in GDP if the rice is
B and C are correct
Rocket energy drink company buys sugar to produce energy drinks at the end of the quarter both it's inventory of sugar and it's inventory of energy drinks has increased investment for the quarter will include
Both the increased inventory of sugar and the increased inventory of energy drinks
Which of the following is an example of the free rider problem
Bruce owns Buster a large dog who barks whenever anyone walks near his house that he lives next to Bruce and busters barking can be heard whenever anyone walks near her house too, thus betty receives free protection from burglars because of Buster's barking
The market for gluten free breakfast cereal is shown in the graph above. Suppose the government enacts a two dollar tax per unit imposed on the sellers. the policy will cause
Buyers and sellers to each bear a 1 dollar burden of the tax
Which of the following illustrates the tragedy of the commons problem
Commercial fishing companies over-fish Chilean sea bass.
Consider three different close the economy is with the following national income statistics from this information we know that
Country B has the largest government budget deficit
During the last 12 months country A had a population of 20,000 country B had a population of 16,000 which of the following is correct
Country be had the highest productivity and highest real GDP per person
Karen's cat cause it's Danny to sneeze based on the coast theorem
Danny should pay Karen $325 to give away her cat
The market for gluten-free bread is characterized by an inelastic demand and an elastic supply. What would happen to the deadweight loss of a tax, if the supply would also be inelastic
Decrease
A newspaper article informs you that most businesses reduce production in the last quarter but also sold from their inventories during the last quarter based on this information GDP likely
Decreased
Suppose that all economies have the same ratio of investment in GDP the conventional view of production processes as that capital is characterized by
Diminishing returns so that real GDP in rich countries would grow slower than in poor countries
Suppose a local city council hires a team of economists from a nearby university to conduct a cost-benefit analysis of building a new public school. The economists should consider which of the following: i) the benefits to the children who will use the school ii) the costs to the tax payers who will pay for the school iii) the increased productivities of the teachers iv) the benefits to the community of having better-educated children
I, II, III, and IV
In some African countries, elephants are killed for the ivory in their tusks. In Kenya it is illegal to kill elephants and sell their ivory. In Namibia, a landowner is allowed to kill elephants, but only those on his own land. In which country is the population of elephants on the rise, and why?
In Namibia, where elephants are private property and the landowners have an incentive to protect the elephants
In the 1960s the lobster and community of Port Lincoln on Australia southern coast to set a limit on the number of traps that could be said and then sold licenses for those traps
Increase in economic efficiency because the existence of a common resource problem
Which of the following would not be a result of a binding price ceiling on childcare
Increase in quantity of childcare supplied
Assume that your roommate is very messy the coast there and would suggest an official solution would be for your roommate to
Pay you at least $60 but less than $80 to live with the clutter
This graph illustrates the market for gluten-free chocolate cake if the current price is $30 per cake we expect the
Price to increase due to the shortage of cake
Pens are normal good what will happen to the equilibrium price of pens if the price of pencils rises
Price will rise
Timber companies are most likely to engage in over logging of forest on
Publicly owned land because it is a common resource
Currently a country has real GDP per person of 500 raising capital per worker by one would increase output per worker by for other things the same which of the following long run combinations are consistent with the effects of this country increasing it's saving rate
Real GDP per person is 520 and raising capital per worker by one would increase output per worker by three
Assuming the graph is drawn to scale which of the following is true regarding the burden of tax in the market above
Sellers pay a larger share of the tax because supply is more inelastic than demand
What causes the tragedy of the commons
Social and private incentives differ and common resources are not excludable but our rival in consumption one and three only
In the last few years the US government budget deficit has increased other things the same and this means
Supply of loanable funds shifted left interest rate increased and quantity of loanable funds declined
Other price is the same an increase in the price of French wine would increase
The CPI but not the GDP deflator
Sally purchased the log splitter five years ago which of the following is included in this year's GDP
The amount she paid to buy new parts gasoline and oil
Wally owns a dog who's barking annoys Wally's neighbor Corinne
The current situation is efficient
The dentist shares an office with the radio station causing the radio station to lose $10,000 in profits
The dentist gets a new drill it does not matter who pays for it
Suppose that an MBA degree creates no externality because the benefits of an MBA are internalized by the student
The equilibrium quantity of MBAs will be equal to the socially optimum quantity of MBAs
The students living in the party house are prone to host a little party is on Saturday night. They value the celebrations at $100 their studios neighbors value peace and quiet at $90. Efficient solution would be.
The party house to pay the neighbors $91 not to call the police
What will happen to the equilibrium price of new textbooks is more students attend college paper becomes cheaper text book authors except a lower royalties and fewer used textbooks are sold
The price change will be ambiguous
Referred to figure 1019 which of the following decreases as the quantity of the good is increased
The private value of the good
Suppose the company is railroad cars passed through Farmer bees corn fields which of the following characterizes the efficient outcome
The railroad will purchase the grease for $1200 and pay the farmer nothing because no crop damage will occur
In most undergraduate level textbook there is an obvious mistake we know that in a perfectly competitive market the economic profit is zero.
The supply curve in a perfectly competitive market should be horizontal
A stove is produced by a firm in 2014 added to the firms inventory in 2014 and sold to households in 2015 it follows that
The value of the good is added to the investment category of 2014 GDP added to the consumption category of 2015 GDP and subtracted from the investment category of 2015 GDP
An American company operates a fast food restaurant in Paris which of the following statements is accurate
The value of the goods and services produced by the restaurant is included in France GDP but not US GDP
. A $2 tax levied on the producers of a good has the same effect on buyers and sellers as a $2 tax levied on the consumers of the good.
True
When an American household purchases a bottle of Italian wine for $100
U.S. consumption increases by $100, U.S. net exports decrease by $100, and U.S. GDP does not change.
GA wind farm in Iowa buys a large turbine generator from a Swedish owned factory located in Connecticut that uses workers who live in Connecticut as a result
US investment and GDP increases by the same amount but US GNP increases by a smaller amount
A German citizen buys an automobile produced in the United States by Japanese company
US net exports and GDP increase Japanese GNP increases German net exports decrease and German GNP and GDP are unaffected
Refer to the labor market graph. the imposition of an eight dollar minimum wage would cause
Unemployment of 35 labor hours
Which of the following is an example of the law of demand
When tuition at state U rises fewer students enrolled in courses at state U
In which of the following instances is the present value of the future payment the largest
You will receive $1,000 in 5 years and the annual interest rate is 5 percent.
In the case of public goods, free markets
fail to allocate resources efficiently because property rights are not well established
Refer to figure 23-1 which of the following pairs correctly identify W and Y
firms and households
If the positive externality exists in the market for flu shots the private market equilibrium occurs at a price that is
too low and a quantity that is too low in comparison to the socially optimal equilibrium
If real GDP is $2200 billion the GDP deflator is 110 nominal net exports are 100 billion nominal investment is 200 billion and nominal government expenditures are 400 billion what is the nominal consumption
$1720
The following table contains information about an economy that only produces rice and beans the base year is 2014 using the table above what is the value of the real GDP for 2016
$590
The market for gluten free breakfast cereal is shown in the graph. The after-tax price paid by buyers and price received by sellers are respectively
$6.00 $4.00
Ronny operates a lawn care service. On each day the cost of mowing the first lawn is $15 the cost of moving the second one is $25 and the cost to mow the third lawn is $40. his producer surplus on the first three lawns of the day is $100. if Ronnie charges all customers the same price for lawnmowing the price is
$60
Refer to the graph if the government imposes a price floor of $55 in this market then total surplus will be
$62.50 lower than it would be without the price floor
The table contains information about an economy that produces only rice and beans. The base year is 2014. Using the table, what is the value of nominal GDP for 2015?
$660
Which of the following is not an example of the free rider problem
A park ranger takes a nap in his car because his boss is working hundreds of miles away and will never know about the nap
Referred to figure 1019 the social optimum can be reached if
A subsidy of $36 is applied to each unit of the good
Refer to the figure. Which of the following would improve economic efficiency in the market
A tax equal to P1-P3, the size of the marginal external cost
The citizens of Knoxville are complaining that the two pickle-makers in town, 'Crunchy Ponds pickles' and 'Sweet Rose pickles', are polluting the environment. Currently, each pickle-maker emits 20 tons of pollution per year. 'Crunchy Ponds pickles' could clean the pollution at a cost of $500 per ton. 'Sweet Rose pickles' could also clean the pollution, but a cost of $1,100 per ton. In an effort to reduce pollution, the government of Knoxville gives each pickle factory 10 tradable pollution permits. Each tradable pollution permit allows the owner to emit one ton of pollution, and its market value is $800. What is the cost of reducing pollution to the desired levels? How is this possible?
A total cost of cleaning 20 tons of pollution is $10,000 per year. Crunchy ponds pickles cleans 20 tons of pollution after selling 10 pollution permits to sweet rose pickles
Refer to the figure if the per-unit tax is placed on the good in the market the consumer surplus is the area _____ and the producer surplus is the area ______ respectively
A+D
Refer to the figure if there is no tax placed on the good in the market total surplus is the area
A+b+c+d+e+f
In 2015, the minimum wage according to federal law was $7.25 per hour. Increasing minimum wage to $8 per hour (approximately a 10% increase) will probably lead to:
All of the above
Suppose buyers of vodka are required to send $5.00 to the government for every bottle of vodka they buy. Further suppose this tax causes the effective price received by sellers of vodka to fall by $3.00 per bottle. Which of the following statements is correct?
All of the above
The equilibrium price in the market for gluten-free muffins is five dollars and at this price 300 gluten-free muffins are bought and sold. At a quantity of 200 gluten-free muffins the market is not efficient because
All of the above
By driving onto a congested road for which no toll is charged, a driver
All of the above are correct
Which of the following is not a characteristic of pollution permits
Allowing firms to trade their permits reduces the total quantity of pollution beyond the initial allocation
Refer to the graph, which of the following is correct
At P3, producer surplus is smaller than at P1.
Referred to the figure if the per-unit tax is placed on the good in the market the tax revenue is the area
B+C
Refer to figure 1019 each additional unit of the good that is produced yields an external
Benefit of $36
Suppose cold temperatures cause decrease in supply of tea. What will happen to coffee assuming tea and coffee are substitutes
Both equilibrium price and quantity will increase
Which of the following statements is not correct
Correct of taxes set the maximum quantity of pollution where as tradable pollution permits fix the price of pollution
If the market price of an apple increases from $1.40 to $1.60 then consumer surplus
Decreases by $0.45
Referred to figure 1019 with each additional unit of the good that is produced thus want to 74th unit of the good is produced and consumed social well-being
Decreases by $2.40
We know that for each person they have different preference which means each person have different utility function.
For everyone they can't because otherwise. He has the same utilities. He has the same utilities. See this violates the more the better assumption since he has more of each good
An advance in technology would shift the
Supply curve to the right
Tom is a consumer in the imaginary economy with only two consumption goods pizza and Coke. For Tom what is the relationship between pizza and Coke. Tom always spend 50% of the budget on each good
They are neither substitutes nor complements
According to the Coase theorem, private parties can solve the problem of externalities
Through private bargaining
The citizens of Knoxville are complaining that the two pickle makers in town what is the cost of reducing pollution to the desired levels
Total cost of cleaning 20 tons of pollution is $16,000 per year it cost country Pines pickles $5000 to clean 10 tons of pollution it cost sweet rose pickles $11,000 to clean 10 tons of pollution
A policymaker that wants to raise tax revenue while minimizing the deadweight loss should tax goods with inelastic supply and demand rather than goods with elastic supply and demand
True
Other things constant if Dunkin' Donuts increases the price of coffee then both the CPI and gdp deflators increase
True
The CPI gives greater weights to goods that consumers purchase more of
True
The group of goods and services used to compute the GDP deflator changes automatically overtime
True
Refer to the graph. If the price falls from P2 to P1, area B represents the
additional consumer surplus to initial consumers
The market of chocolate cupcakes is in equilibrium at a price of $4 and a quantity of 300 chocolate cupcakes. The government levies a $1 per unit tax, which decreases the quantity bought and sold to 250. Which of the following statements is incorrect?
the tax revenue collected as a result of the new tax is $300