ECO2013 HW PROBLEMS

Consider the accompanying supply and demand graph. What is the value of consumer surplus?

Consumer Surplus = (5 x $4.5) / 2 = $11.25

The equilibrium price for parking in the downtown area of a large city is about $35 a day, this is represented by pe in the graph above. the city council is looking at ways to resolve parking complaints in the city and one councilperson suggests that the maximum people should be forced to pay is $25 a day. would this help relieve parking congestion in the city? why or why not?

Parking congestion would actually get worse as there would be fewer spots available as quantity supplied falls and more people wanting to park downtown as quantity demanded rises.

Suppose that Ned can produce either potato chips or computer chips. If he only produces potato chips he can produce 50 bags in a day. If he only produces computer chips, he can produce 25 in a day. Drag the endpoints of the line to plot his production possibilities frontier (PPF) on the graph. What is the opportunity cost of potato chip production in terms of computer chips?

1/2

Consider the accompanying supply and demand graph. What is the value of total (also called social or economic) surplus?

Total Surplus = Consumer Surplus + Producer Surplus Total Surplus = $11.25 + $8.75 = $20

The following figures illustrate the production possibilities available to Kate and Sarah with 8 hours of labor in their bakery. Answer the following question according to these figures. If Kate and Sarah both specialize in a good in which they have a comparative advantage the:

Total production of bread will be 12 and the total production of cake will be 8.

uppose the following represents the Canadian production possibilities frontier for two of its most important exports: maple syrup (in millions) and tree logs (in millions). Please choose the best answer for each question.

Point H...is possible, but not efficient. Point M...is possible and efficient. Point Y...is not possible and is unobtainable, unless international trade occurs.

Categorize each scenario as describing a movement along a demand curve or a shift of the demand curve.

Shift of the Demand Curve: -college students purchase many more energy drinks during finals week than during the rest of the semester -students eat out more often as the federal government increases how much grant money it provides students. Movement Along the Demand Curve -College students reduce how much detergent they use for each load of laundry in response to higher detergent prices -College students rush and buy discount furniture to take advantage of a one-day sale.

Which of the choices illustrates the law of demand?

Sue wants to buy more candy bars at $1 than at $2.

T/F: When price ceilings are imposed consumers pay lower explicit prices but often face higher costs in terms of waiting in line for goods and services T/F: Price ceilings result in a reduction in mutually beneficial exchanges T/F: A problem with price ceilings is that they lead to surpluses T/F: Though they may face higher prices, consumers usually see an increase in product quality when price ceilings are imposed T/F: Price ceilings result in resources being allocated to activities with the highest possible value

True True False False False

Assume that, compared with other nations, the country of New Bispo has a higher opportunity cost in the production of automobiles and a lower opportunity cost in the production of televisions. Determine whether the statements below are true or false.

True: without trade, the oppurtunity costwithout trade, if the people, with specialization and trade, new bispo False: with specialization and trade, the combinations

The maximum amount of a product that sellers are willing and able to provide for sale over a relevant range of prices, holding all other factors constant, is called:

supply

A shift in the Supply curve is can be caused by:

the price of an input changed

Graph represents the market for breakfast cereals. Suppose that one of the industry's major suppliers of cereals has decided to exit the market to focus on its snack foods. At the same time, the average price of cereal has increased and the total amt of cereal sales has increased.

- Supply shift one left -demand shift two right

In response to problems in the global supply chain of grains, the government mandates a minimum legal price for many agricultural crops to incentivize farmers to grow more food domestically and rely less on foreign suppliers. The market price of a bushel of wheat prior to the price floor was $800. The minimum legal price is now $1,000. In the next growing season, farmers are able to sell 1 billion bushels but end up with 500 million bushels that they can't sell. Adjust the graph to illustrate this outcome.

Pe: $800 Pf: $1000 Q1: 1 million Q2: 1.5 million

Suppose that the economy of El Paso creates only cowboy boots and pecans. The production possibilities frontier (PPF) per year for El Paso is illustrated in the graph and is currently producing at the point labeled A.Move point B to show the economy efficiently producing one thousand more cowboy boots. Now, determine the opportunity cost of producing an additional 1,000 cowboy boots, i.e., shifting from point A to point B. Enter your answer specified to one decimal place. Shift point C to indicate El Paso increasing production of cowboy boots from point B by another thousand. Determine the opportunity cost of shifting from point B to point C. Enter your answer specified to one decimal place. This PPF exhibits what kind of opportunity costs?

opportunity cost: 1400 pecans C at (0, 4000) B at (3500, 3000) A at (5000, 2000) opportunity cost: 3600 pecans increasing

Please select the economic term that is best described in each of the following questions. People have limited resources to satisfy unlimited wants. Everything you do requires you to give something up (time, money, etc)

Scarcity Tradeoffs

Producer surplus is shown graphically as the area:

above the supply curve and below the market price.

The resource category land refers to:

all natural resources, including fertile land, forests, mineral deposits, solar and wind energy and water

A market will

always tend toward equilibrium

Emma wants to sell her motorcycle and Roderick is looking for a used motorcycle to buy. Roderick takes it for a test drive. Emma knows that the clutch is going out on her motorcycle, the fuel filter is leaking, and the tires will need to be replaced soon. If she does not disclose this information to Roderick and he can\'t tell from his test drive, this is an example of

asymmetric information

The scenarios each illustrate a principle of economics. Classify each scenario according to the principle that best fits it. 1. On Black Friday, there are huge sales for electronics at many retail stores. David must decide between buying a camera at one store or a flat screen TV at another store, and buying one means losing out on the ability to purchase the other. 2. An educational software company wants to expand the number of economics questions that it offers and is considering hiring another economist. The company compares how much adding another worker will improve the product to the additional cost. 3. Ava finds that there is not enough time after work to have dinner, exercise, and watch TV, and she must make choices about how to use her limited time.

1. opportunity cost 2. marginal decisions 3. resource scarcity

Use the accompanying graphs below to answer the questions about the market for Apple's current generation iPhone. 1a. Move the supply and/or demand curve to illustrate how an across-the-board cut in the price of all apps on the Apple App Store affects the market for iPhones. 2a. The shift in a is due to a change in the price of a: 1b. Move the supply and/or demand curve to illustrate how a decrease in the price of Samsung's current Galaxy smartphone impacts the market for iPhones. 2b. The shift in b is due to a change in the price of a:

1a. The demand curve shifts to the right 2a. complementary good. 1b. The demand curve shifts to the left 2b. substitute good.

Suppose that Ned can produce either potato chips or computer chips. If he only produces potato chips he can produce 25 bags in a day. If he only produces computer chips, he can produce 50 in a day. Drag the endpoints of the line to plot his production possibilities frontier (PPF) on the graph. What is the opportunity cost of potato chip production in terms of computer chips?

2

Suppose that Michelle buys a cappuccino from Paul's Cafe and Bakery for $5.25.Michelle was willing to pay up to $8.75 for the cappuccino and Paul's Cafe and Bakery was willing to accept $3.25 for the cappuccino. Based on this information, what is Michelle's Consumer Surplus? Based on this information, what is Paul's Bakery's Producer Surplus? $ 1.50

3.5 2

Suppose that Ned can produce either potato chips or computer chips. If he only produces potato chips he can produce 12 bags in a day. If he only produces computer chips, he can produce 16 in a day. Drag the endpoints of the line to plot his production possibilities frontier (PPF) on the graph. What is the opportunity cost of computer chip production in terms of potato chips?

3/4

Suppose that Ned can produce either potato chips or computer chips. If he only produces potato chips he can produce 16 bags in a day. If he only produces computer chips, he can produce 12 in a day. Drag the endpoints of the line to plot his production possibilities frontier (PPF) on the graph. What is the opportunity cost of potato chip production in terms of computer chips?

3/4

The graph shows the market for corn with a price ceiling of $7. After the price ceiling is in place, how many bushels of corn are bought or sold? This price ceiling resulted in a _____ The market isn't in equilibrium after the price ceiling is imposed. Rather, there's a (blank) of how many units?

5 Bushels Shortage 5.86 Bushels Solution:10.86 - 5 = 5.86 shortage At $7, the quantity demanded (10.86 bushels) is greater than the quantity supplied ( 5 bushels). shortage occurs when the supply isn't enough to meet the demand. The amount of a shortage is the difference between the quantity demanded and the quantity supplied.

Suppose the graph depicts a hypothetical market for concert tickets at a local college venue. Because students are paying such high prices, a price ceiling of $40 per concert is being considered. Move the price ceiling line to correctly depict the price ceiling of $40. A. By how much does consumer surplus (CS) change if the price ceiling is imposed? B. By how much does producer surplus (PS) decrease if the price ceiling is imposed? C. What is the value of the deadweight loss (DWL) associated with this price ceiling?

A. 250 Triangle and rectangle area - deadweight loss B. 350 C. 100

The table below presents information about the productivity of digital cameras and personal computers in the United States and Japan. The data are presented in units of output per hour of work. Use this information to answer the following multiple choice question. Japan: 6 digital cameras, 3 personal computers US: 8 digital cameras, 2 personal computers Japan has (blank) advantage in producing (blank)

Absolute, personal computers

Which of the following describes the equity-efficiency trade-off?

Actions intended to make economic outcomes fairer can cause efficiency to decrease.

First, label each of the following scenarios as to whether they would create a producer or consumer surplus. Then, after you have labeled each scenario, calculate the ensuing surplus. Alice is willing to spend $30 on a pair of jeans, and has a coupon for $10 off she found online. She selects and purchases a $35 pair of jeans, pre-discount. Jeff finds some steaks for $16 for which he would have been willing to pay $20. The butcher notices the meat is near the expiration date and gives him an extra 75% off. Nicole has in her possession a hockey puck from the 2010 Winter Olympic Games and sells it on eBay. She will only sell the puck if the winning bid is greater than or equal to $500. After bidding closes, the last bid stands at $501

Consumer surplus $5 Consumer surplus $8 or $16 not sure Producer surplus $1

The figure shows the supply and demand for online music. Suppose that an economic downturn decreases household wealth and erodes consumer confidence. What effect would this have on the Equilibrium Price? What effect would this have on the Equilibrium quantity?

Decrease Decrease Demand curve would shift to the left

A blight begins to infect yellow pine trees, the cheapest and most common softwood used in making construction-grade lumber. Adjust with the graph to help you predict what will happen to the equilibrium price and quantity in the market for lumber. The equilibrium price will increase. decrease. stay the same. The equilibrium quantity will increase. decrease. stay the same.

Equilibrium price = Increase Equilibrium quantity = decrease The blight would take away the cheapest source material available to lumber mills. Even if they switched to a different wood species, their input prices would go up. This would cause the supply of construction-grade lumber to fall and cause the supply curve to shift to the left. Prices would rise and the amount of lumber bought and sold would fall.

Stone and brick are substitutes in home construction. Consider the market for bricks depicted below. Suppose the price of stone increases due to new regulations for the stone quarrying industry. Illustrate the impact this will have on the market for bricks.

Equilibrium price: -increases Equilibrium quantity: -increases Only demand curve would move to the right; since its a change in quantity supplied, the curve wouldn't move

Suppose the accompanying graph depicts a market for one pound bags of candy. Place the line labeled Excess Demand at a price that would generate an excess demand (shortage). Then, determine the size of the excess demand. Excess Demand = __________ million bags

Excess demands moves to to the bottom on the Y axis and stops at a horizontal continues 4 million bags

Suppose the accompanying graph depicts a market for one pound bags of candy. Place the line labeled Excess Demand at a price that would generate an excess demand (shortage). Then, determine the size of the excess demand. Excess Demand = __________ million bags

Excess supply moves to (9,7) 6 million bags (8-2=6)

The resource category capital refers to financial assets, such as bank accounts, bonds, certificates of deposits, and stocks.

False

T/F: Market failure can occur only in the presence of external costs. T/F: Government sometimes intervenes when market failure occurs. T/F: Market failure is when free markets provide a suboptimal amount of goods and services. T/F: Market failure occurs when either external costs or benefits are present. T/F: Market failure occurs when external costs are present but not when external benefits are present T/F: Market failure occurs when external benefits are present but not when external costs are present.

False True True True False False

Considering just the U.S, how are GDP and GNP related?

GDP=GNP-(output of U.S citizens living abroad)+(output of foreign national living the US)

the price of a gallon of gasoline greatly increases over a prolonged period. how would this impact the equilibrium price and quantity in the market for for traditional internal combustion cars?

Gasoline is a complement in the ownership of a conventional fuel burning car. If the price of gasoline rises over a prolonged period of time, then consumers will substitute away from gas powered cars to vehicles powered through alternative means such as electric vehicles. When demand decreases, the equilibrium price and quantity also decrease.

match the descriptions below with the appropriate term. it is possible that more than one description should be matched with each term or that a description should not be matched with any of the terms.

Government making it illegal to charge a price above a certain threshold. - PRICE CEILING. The difference between what a person is willing to pay for a good and what they actually pay. - CONSUMER SURPLUS. The difference between the price a firm receives for a good and the actual cost of that good. - PRODUCER SURPLUS. Measure of the reduction in social welfare associated with an inefficient outcome - DEADWEIGHT LOSS When the price of a good is forced above the quilibrium price. - PRICE FLOOR

Below is the market for toy spaceships. Draw the total consumer surplus (CS) on the graph by moving the triangle labelled CS.

Half of the triangle on the left triangular area

Thom, Johnny, Les, and Neil are trying to form a band. They each have some basic skills on most instruments, so their current plan is for each of them to rotate among vocals, guitar, bass, and drums.After a year of practice and rehearsals the band still sounds awful. Thom cannot keep a steady beat when on bass or drums, Les sounds terrible on everything except the bass, nobody except johnny can remember all the chords on guitar, and even Neil's own mother thinks his singing sounds like a dying cow. At their current rate, they expect it will be several years before they're good enough to land their first paid performance. None of them have enough money saved up to last that long.a) Change the rotation to be random rather than equal to take advantage of heteroskedasticity.

Have each member specialize in the role that they are best in to take advantage of benefits from specialization

During the summer, the largest computer game retailer has a massive sale. As prices for computer games fall, consumers purchase more games, ceteris paribus. What does the term ceteris paribus mean in this context? why, if at all, is the ceteris paribus condition important in economic analysis?

Holding all else equal (unchanged) It enables the analyst to isolate the role of one variable in producing a given outcome

Which scenario would least likely change an individual's behavior?

In an effort to make people eat healthier, the city of Bakersville tells its residents to eat wheat bread instead of white bread.

In a market economy, there is a(n) _______________ relationship between the price of a good and the amount of that good buyers want to buy. Demand is best described as The law of demand states that

Inverse the quantity of a good or service that people are willing and able to purchase at different possible prices as the price of a good increases, buyers are willing and able to purchase less

The accompanying graph represents a hypothetical market for luxury automobiles.Suppose that a major luxury car producer exits the market in order to produce more economy cars. At the same time, a market research group reports that the average price of a luxury car is increasing and the number of luxury cars sold is increasing. Manipulate the graph to demonstrate what must be happening to supply and demand.

Line D moves to the farthest to the right at the very end, Line S moves one over to the left. A firm leaving the market will cause the supply curve to shift to the left as the number of cars supplied at every price decreases. A decrease in supply, holding all else constant, will lead to an increase in equilibrium price and a decrease in equilibrium quantity. An increase in disposable income would mean an increase in demand for a normal good such as a luxury vehicle. Given that supply must decrease due the major firm leaving the market and that the new equilibrium quantity is greater than the initial equilibrium quantity, demand must be increasing by a larger magnitude.

Suppose that there has been a sudden influx of refugees in the small town of Dallon, leading to a doubling of the local population. The accompanying graph depicts Dallon's market for food. Adjust the graph to show the immediate impact that this rise in population has on the food market. Then determine what happens to equilibrium price and quantity. Equilibrium price Equilibrium quantity

Line D shifts outward increases increases. One factor that can cause a demand shift is a change in the number of consumers. In this case, the doubling of a local population due to an influx of refugees will increase the demand for food. This increase in demand is represented by a rightward shift of the demand curve. This leads to an increase in the equilibrium price and quantity of food. It is possible that some of the new arrivals will eventually become farmers, impacting supply, but the immediate impact in the short run would just be on demand.

Rank each of the following four statements with regards to whether the economic organizations in each statement are more market-oriented, (laissez-faire) or command-oriented (centrally planned). 1. The government makes all production/consumption decisions. 2. The government attempts to induce production/consumption decisions using monetary incentives. 3. Buyers and sellers make all production/consumption decisions. 4. The government regulates some production/consumption decisions.

Market Oriented: 3. Buyers and sellers make allI production/consumption decisions. 2. The government attempts toI induce production/consumptionI decisions using monetary incentives. 4. The government regulates someI production/consumption decisions. 1. The government makes all∨ production/consumption decisions. Command Oriented

Classify each statement based on whether or not it is a primary goal of macroeconomic policy.

Primary- low unemployment, low inflation, growth in standard of living Not primary- political conflict, optimal price for pound, calculate how much urban residents

Consider the accompanying supply and demand graph. What is the value of producer surplus?

Producer Surplus = (5 x $3.5) / 2 = $8.75

Classify each statement as describing productive efficiency, allocative efficiency, or a situation that is inefficient

Productive Efficiency To produce one more bagel, the output of donuts must fall. If Herb Farmer wants to produce one more cake, he needs to give up two loaves of bread. Allocative Efficiency Flour, which can be used to make many products, is used to make waffles and muffins because of the high demand for each product. Herb Farmer decides to use his flour and sugar to make three cakes and three loaves of bread, which his customers have demanded. Not Efficient Herb Farmer makes two cakes and two loaves of bread, but uses enough flour to make three cakes and four loaves of bread.- Not efficient as there was wastage with the flour. Herb Farmer decides to use his ingredients to make cakes, but his customers prefer donuts. - Goes against Allocative efficiency.

Which of the following is NOT an example of a behavior exhibited in a market economy?

The president of the European country of Semolina decrees that pasta must be consumed at all meals in an effort to help domestic pasta makers.

All of the goods below are either sold in perfectly competitive markets or in secondary markets that are also competitive. Suppose that the market (or the secondary market) starts in equilibrium. For each of the following scenarios, determine whether there would be upward or downward pressure on the price immediately after the event.

Upward pressure on price: -an impeding nuclear war causes people to stock up on twonkies, a popular snack cake provided by many companies. Downward pressure on price: -Sub-zero weather in New York, where the Super Bowl is being played, causes people to become disinterested in watching the Super Bowl live. What happens to ticket price in the scalping market? -The Nile River floods this year add an exceptional amount of silt to the soil, resulting in increased crops of cotton. -An outbreak of mad cow disease causes Americans to abstain from eating beef. Prices adjust to changes in the market. Shifts in both supply and demand for a product affect prices. For example, the extra silt in Egypt leads to an abundance of cotton. This increased supply puts downward pressure on the price of cotton. Fears concerning a nuclear holocaust lead to an increased demand for twonkies, putting upward pressure on the price of twonkies. Bad weather in the case of the Super Bowl and fears about mad cow disease reduce demand and put downward pressure on the prices of tickets and beef, respectively.

A shift in the demand curve can be caused by

a change in one of the determinants of demand

an economic institution that facilitates interaction between buyers and sellers is called

a market

Suppose the University Health Center receives flu vaccinations at the beginning of each flu season, and that they offer these vaccines for the market price of $20.00 each. Assume that college students have varying budgets. Some have some money to spare, some are on a very tight budget. Keep in mind that some students have pre-existing conditions, such as asthma and diabetes, that place them at high risk for the flu. a. Who will receive the vaccines if the University Health Center sells them for the $20.00 market price? b. Suppose the school sells all of its vaccines at the market price of $20.00. What hast managed to maximize?

a. The students who will pay $20.00 for them b. Efficiency

Suppose that policy makers are concerned that the price of wheat may get too high. The market for wheat is depicted in the accompanying diagram.a. a. What type of price control would policy makers use to keep the price of wheat from getting too high? b. Suppose that the government implements the price control that you have selected. Which of these prices would be binding? a. a price ceiling b. $5

a. a price ceiling b. $5

Penguin Island produces two goods: ice and genetically engineered fish. Due to recent technological advances, its economy has experienced growth in both ice and fish production. Show this growth in relation to the production possibilities frontier (PPF) by moving each of the individual points accordingly, then answer the question. Which of the following economic activities have led to an increase in the standard of living worldwide over the last century? Only the most complete answer will be correct.

graph: one to the right one up all the above

Suppose that the graph illustrates the market demand for burgers per month with an equilibrium price of $3.00 and equilibrium quantity of 4 thousand burgers. a. Indicate on the graph the effects of excess inventories that lowers the price by $2, place point A at the new equilibrium. b. What is the new quantity of burgers demanded?

a. point a would move along the line to $2 b. 5.3 thousand

The resource category entrepreneurial ability refers to:

business skills such as the management of resources, the drive to innovate and the willingness to bear risk.

Suppose now that the school wishes to make sure no students with diabetes or asthma go without the drug because they cannot afford it. Because it does not know the budget of each student, the Health Center decides to offer vaccines free to students who can provide a doctor's note stating they have a pre-existing condition. c. The school is now seeking a greater degree of:

c. Fairness

Determine which economic principle is illustrated by each scenario. 1. the owner of a snow cone trailer realizes that the demand for snow cones is low during the winter, and thus, closes shop until the temperature warms back up near summertime 2. the local river has so much pollution that three-eyed fish are forming. the government responds by regulating the amount of chemicals that can be dumped into the river 3. at a high end restaurant, the restaurant owner has one chef at a meat station, one chef at a vegetable station and one chef, who has an artistic eye, plate the food they are given. The result is increased speed, as more custoers get services during an evening 4. during the summer, a bumper crop of oranges in Florida causes a surplus in the supply of oranges nationwide. As a result, prices fall to copensate for the surplus and civilians enjoy the fruits of the farmers labor.

(1) market efficiency (2)government intervention (3)specialization (4)equilibrium

The day-to-day living conditions of modern Americans are very different from what they were in the 20th century. While doing research for an economics project, Charlie discovers that more households today, as compared to households 100 years ago, have electricity, air conditioning, and a car.Which of the following explains why modern Americans enjoy a higher standard of living than Americans 100 years ago? (1)Which of the following explains why modern Americans enjoy a higher standard of living than Americans 100 years ago? (2)In which field do researchers focus on investigating the phenomena described?

(1)There has been economic growth in our society. (2) Economics

The accompanying graph contains individual supply curves for the only two firms in a hypothetical market for stuffed animals. Place the market supply curve at the correct location on the graph. What happens to the market if a third supplier enters the market, holding all else constant?

(5,000 , 1) (9000, 8) Market supply increases.

Graph represents the market for soft drinks. Suppose that one of the industry's major suppliers of soft drinks has decided to exit the market to focus on its snack foods. At the same time, the average price of soft drinks has increased and the total amt of soft drink sales has increased.

- Supply shift one left -demand shift two right

Examples of macroeconomics Examples of microeconomics

-As a result of severe recession, the total output, or gross domestic product, of a nation falls by 4% -Increased consumer spending causes the national unemployment rate to fall -increased consumer spending causes the rate of inflation to rise -A tax on tires increases the price of tires paid by car owners -optimism about future car sales leads General Motors to hire more auto workers -Robotic technology reduces the demand for auto workers

In an attempt to increase the consumption of healthy foods, the government offers subsidies to the producers of kale.

-Supply increase

The lease on Allison's apartment will expire next month and she wants to move closer to campus. There are two apartments that she likes. Both are close to campus and in her price range. The first one is next door to a garage where local bands often practice late at night. The second one is next door to a donut shop that opens at 5 a.m. If she likes to stay up late and loves listening to all kinds of music, she will view the bands practicing as a(n): If she is a morning person and loves the smell of donuts, she will view the donut shop as a(n): If her roommate hates loud music and the smell of donuts makes her sick, she will reject both apartments due to what she sees as

-external benefit -external benefit -external cost

The Ministry of Misallocation has decreed that the production of widgets must be 4000 each month and the production of gizmos must be 10000 each month. Calculate the deadweight loss in each market caused by these restrictions. Please note the scale of the quantity axis is in thousands. What is the deadweight loss in the widgets market? What is the deadweight loss in the gizmos market?

0 (still at equilibrium) 20000 (area of small triangle in inner corner between supply and demand) deadweight loss = 1/2 * (P₂ - P₁) * (Q₂ - Q₁)

1. Which point is likely to result in the most economic growth for Mauistan? 2. Which statement the tradeoff between today's consumption and future consumption?

1. A 2. A. The production of more capital goods and fewer consumer goods today increases economic growth and future consumption

Which demonstrates a scenario with no opportunity cost?

All of these scenarios have an opportunity cost.

Recently, a series of studies have demonstrated the considerable beneficial health effects of food and drink derived from the amaranth plant. This has affected consumer tastes for amaranth flour, pods, root, etc. At the same time, particularly favorable weather has resulted in a bumper crop of amaranth plants. Shift supply and demand curves appropriately: What happens to the equilibrium price and equilibrium quantity?

Both shift right Equilibrium price would increase, decrease, or stay the same Equilibrium quantity would increase

Assume Spain and Chad can both produce grain and dates and that the limited resource is the farming labor force, with land, water, and all other resources plentiful in both countries. Each farmer in Spain can produce 10 tons of grain or 5 tons of dates in a season. Each farmer in Chad can produce 10 tons of grain or tons of dates. Which country has the absolute advantage in producing dates. Which country has the absolute advantage in producing grain. Which country has the comparative advantage in producing dates? Which country has the comparative advantage in producing grain.

Chad Neither Chad spain

Jean Vincent and Jean are two cooks who work in a village. Each of them can bake cakes or make pizzas. Every ingredient is readily available to them, and the only scarce resource is the cooks' time. Vincent can bake 10 cakes or make 5 pizzas in an hour. Jean can bake 12 cakes or make 8 pizzas in an hour. Which cook has the absolute advantage in baking cakes? Which cook has the absolute advantage in making pizzas? Which cook has the comparative advantage in baking cakes? Which cook has the comparative advantage in making pizzas?

Jean Jean Vincent Jean

The following figures illustrate the production possibilities available to Kate and Sarah with 8 hours of labor in their bakery. Answer the following question according to these figures.

Kate has a comparative advantage in cake.Sarah has a comparative advantage in bread

The following figures illustrate the production possibilities available to Kate and Sarah with 8 hours of labor in their bakery. Answer the following question according to these figures.

Kate has an absolute advantage in neither good.Sarah has an absolute advantage in both goods.

Suppose that the video game company, Ultravision, releases a new game called "Call of Obligation: Modern Combat 3." This can be analyzed using tools from both microeconomics and macroeconomics. Classify the items below according to whether they are an application in microeconomics or macroeconomics.

Microeconomics: - How does Ultravision choose to market "Call ofObligation?" - How much will Ultravision charge for "Call of Obligation?" - How much will Ultravision pay the developers of thegame? - Is Ultravision able to sell all of the "Call of Obligation"games it produces or do they need to produce more? Macroeconomics: - Have the millions of dollars that people have spent onvideo games worldwide affected the Gross DomesticProduct (GDP) in their respective countries? - Has the country's unemployment rate changed asUltravision hired a huge team of workers to develop thegame? - How much less economic output occurs countrywidebecause workers call in sick to stay home and play either"Call of Obligation" or another video game?

Which production possibilities frontier (PPF) reflects increasing opportunity costs? What would cause the PPF to take that shape?

PPF 4 Factors of production can be used in either widget or gizmo production but some are more productive producing widgets, and some at producing gizmos

The accompanying table contains the individual demand schedules of dark chocolate for Vanessa and Angela. Assuming they are the only people in the market for dark chocolate, place each of their individual demand curves and the market demand curve at the correct locations on the accompanying graph. Price of dark chocolate(per pound) Pounds of dark chocolate demanded by Vanessa Pounds of dark chocolate demanded by Angela $8 1 3$1 3 5 After a while, Angela gets sick of eating the bitter chocolate and decides to cut back on dark chocolate and enjoy white chocolate more. What happens as a result of Angela's decision? Select all of the correct answers.

Vanessa (1, 8) ( 3, 8) Angela (3, 8) (5, 1) Market (4, 8) (8, 1) Angela's individual demand for dark chocolate decreases. The market demand for dark chocolate will decrease. Angela's individual demand for white chocolate increases.

For each example listed, decide if the good is a normal good or an inferior good. Make sure you answer from the perspective of the individual or individuals doing the buying or consuming. Billy's mom increases his weekly allowance by $ 5 . As a result, Billy increases the number of apps he downloads on his smartphone. Smartphone apps are Susan gets a 15 percent performance bonus at work. She can finally stop eating so many frozen pizzas and eat something more tasty. Frozen pizzas are Mike is an appliance salesman. Refrigerator sales in his store have fallen and so has his commission. Mike decides to switch from name brand cereal to generic cereal. Generic cereal is Hair stylist Molly loses a few of her clients. Molly cuts back on the number of smoothies she buys during the week. Smoothies are

a normal good an inferior good an inferior good a normal good

Teri takes her puppy to the vet. After he examines the puppy, the vet tells Teri that her puppy needs a series of shots. Teri agrees to the shots since the vet knows way more about animal health than she does. This is an example of

asymmetric information

A market exists when...

people exchange money for goods and services

Ore mercy, a server at Sonic land farmer marshalls tractor rio Grande aunt sandy's jamming' jellies (the business) your coworkers mark taco truck (the idea) marks taco truck (the truck itself) lake anza

land labor capital land entrepreneur labor entrepreneur Capital land

When the market price of a good increases, the amount that sellers are willing to offer for sale increases. This statement is best described as:

law of supply

Megan has a 11 hr gap in her course load for the fall semester. There are two courses available for her to take at that time: reading piano sheet music and beginning rock climbing. She does not have any experience with piano or rock climbing. In the end, she decides to enroll in the rock climbing course, despite her fear of heights.Identify which activity exhibits a potential trade-off with enrolling in rock climbing.

learning to read piano sheet music

After the release of the iPhone, consumers began to prefer smartphones over traditional cell phones. Google also released its Android operating system as an open source (meaning free of licensing fees) platform for smartphone manufacturers to use in their devices. Determine what happens to equilibrium price and quantity in the market for smartphones. The equilibrium price will _____ and the equilibrium quantity will ______

may increase, decrease or stay the same; increase

A relatively unexpected war in eastern europe leads to the disruption of the distribution of wheat onto the world market. at about the same time, a very popular new trend on social media is all about gluten-free wheat alternatives in baking which leads many bakeries to offer gluten-free alternatives instead of their traditional wheat based goods. determine what happens to equilibrium price and quantity in the global market for wheat. the equilibrium price will: the equilibrium quantity will:

may increase, decrease, or stay the same decrease The disruption in wheat production due to the war will decrease the supply of wheat in the market as the wheat can't get from producers to the market. The new social media trend has implications for the wheat market as well. First, consumer preferences are changing away from wheat and toward gluten-free alternatives which cause the demand for wheat to fall. Second, bakers, who use wheat as an input in their baking, are also shifting some of their demand for wheat flour to other flours. Both of these effects combine into a decrease in the demand for wheat flour. When supply and demand both decrease, then the equilibrium quantity falls and the price can rise, fall, or stay the same depending on the size of the shifts.

The resource category labor refers to:

mental and physical productivity of workers

Determine if the items represent an example of positive economics or normative economics. The richest 1% of Americans should pay more taxes than the rest of the 99% A decrease in the supply of coconut will increase the price of German chocolate cake, a good which requires coconut shavings as a key ingredient As minimum wage increases, the prices of all goods and services also tends to increase Social welfare spending in Sweden occupies too large a portion of the national budget

normative positive positive normative

Identify statements describing market transactions as market or not market Frank takes care of his elderly aunt while she recovers from knee replacement surgery Jack and Diane buy tix to the sold out Pirates game from a tix scalper Jess gets a soda from the vending machine on her afternoon break The citizens of Marble Cliff, VT get financial relief from the govt after a flood destroyed all of their homes Suzannes gets a used textbook on eBay for much less than its list P at her university's bookstore Norm paints the fence in his front yard on his day off work Mitchell buys 50 shares of GM stock at the going P per share

not market market market not market market not market market

Which of the following situations could be considered examples of price gouging? a. A deadly tornado strikes Oklahoma City, destroying the homes of 50% of its population. Immediately afterward the price of sleeping bags increases by 150% b. The exchange rate between U.S. dollars and the Papua New Guinea Kina increases sharply as the Summer Olympics in Paris, France, approach. not ptice gougning c. A new model of sunglasses become the hottest overnight fashion trend after several movie stars wear them to the Academy Awards. As a result, producers increase their price by 300%. not price gouging At what level would you expect prices to settle during a period of price gouging? The price would settle____the pre-gouging market price. above

price gouging not price gouging not price gouging above

Classify each scenario according to whether it represents a change in quantity supplied or a change in supply: If the price of apples decreases to $5 per bushel, Farmer Jack will supply 5 bushels of apples instead of 10 bushels of apples. As the price of apples increases, Farmer Jack increases the number of apples he offers for sale Johnny, the jeweler, increases his inventory because he expects the price of jewelry to increase at the end of the year Since Johnny is a successful jeweler, Jimmy also becomes a jeweler.

quantity supplied quantity supplied supply supply

Classify each of the foods goods according to whether it is rivalrous, nonrivalrous, excludable, or nonexcludable. Rivalrous is also referred to as rival in consumption. a. A sports team t-shirt b. The air we breathe c. Atlantic bluefin tuna in the Mediterranean sea d. A toll road in normal traffic

rivalrous and excludeable nonrivalrous and nonexcludable rivalrous and nonexcludable nonrivalrous and excludable

Sort the following scenarios into whether the change in quantity described is caused by a shift in the supply curve or movement along a supply curve: After discovering that flash steaming tuna first before using a mechanical processes to extract me remove Fortuna more cans of tuna hit the shows that all major Grocers Amplitude decides to join the smartphone market Americans put up their gold and silver jewelry for sale as a result of rising prices A local Fight Club supplies less of its premium quality soap as a result of lower prices

shift of supply curve Shift of the supply curve Movement along the supply curve Movement along the supply curve

select the correct definition of the term comparative advantage... When trading with more developed countries....

the ability to produce a good or service at a lower opportunity cost than another less developed countries have a comparative advantage in the production of some goods or services

Producer surplus is the difference between:

the market price and the minimum price a seller is willing to accept.

Consumer surplus is equal to the difference between: Consumer surplus is shown graphically as the area:

the maximum price a buyer is willing to pay and the market price. under the demand curve and above the market price.

If the price of a kayak increases:

the quantity supplied would increase

Use the first production possibilities frontier (PPF) to illustrate the impact of an advance in technology that only benefits the production of consumer goods. Use the second PPF to illustrate economic growth as a result of an increase in the capital stock.

y axis: 8 x axis: 8 y axis: 9 x axis: 7