Econ 100

If Faith attends college, it will take her four years, during which time she will earn no income. She will pay $50,000 for tuition, $12,000 for room and board, and $5,000 for books. If she spends the four years working rather than attending college, she will pay $18,000 for room and board, pay no intuition, and buy no books. Based on this information, Faith's economic cost of attending college would be $67,000 if, over the four years, she could earn

$18,000 instead of attending college.

Refer to Figure 10-6. If the government imposed a corrective tax that successfully moved the market from the market equilibrium to the social optimum, then tax revenue for the government would amount to

$3,000

Refer to Figure 6-10. The amount of the tax per unit is

$6

When a country has a comparative advantage in producing a certain good,

-the country should import that good. -the country should produce just enough of that good for its own consumption. -the country's opportunity cost of that good is high relative to other countries' opportunity costs of that same good. -None of the above is correct answer

Refer to Figure 3-8. If Chile and Colombia each divides its time equally between making coffee and making soybeans, then total production is

14 pounds of coffee and 9 pounds of soybeans. Possibilities Frontier

The Occupational Safety and Health Administration (OSHA) has determined that the probability of a worker dying from exposure to a hazardous chemical used in the production of fertilizer is 0.008. The cost of imposing a regulation that would ban the chemical is $31 million. If the value of a human life is equal to $8 million, how many people must the policy affect in order for the benefits to exceed the costs?

485

Refer to Table 3-10. What is Teresa's opportunity cost of producing one bushel of wheat?

5/3 pounds of beef ​

Consider the production possibilities curve for a country that can produce sweaters, apples (in bushels), or a combination of the two Refer to Figure 2-14. The opportunity cost of moving from point U to point R is

60 bushels of apples. ​

Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1?

A is an airline ticket from Chicago to New York demanded by a vacationer and B is an airline ticket from Chicago to New York demanded by a business traveler.

Refer to Figure 3-2. The fact that the line slopes downward reflects the fact that

Brazil faces a tradeoff between producing peanuts and producing cashews.

Refer to Figure 6-14. The buyers will bear the highest share of the tax burden compared to sellers if the demand is

D1, and the supply is S2

How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

Elasticity allows us to analyze supply and demand with greater precision than would be the case in the absence of the elasticity concept.

Suppose the income of buyers in a market for an inferior good decreases and a technological advancement occurs also. What would we expect to happen in the market?

Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

A variable toll on a road in Washington reached a high during the evening rush hour of $5.75. This toll bought the drivers who paid it a 27 minute time savings. Which of the following is correct?

For some consumers, the toll was more than the opportunity cost of the time they would have spent in traffic.

Refer to Figure 5-15. Along which of these segments of the supply curve is supply least elastic?

GH

Luis, Mina, and Daniel all would like a play area while waiting at their children's bus stop. The neighborhood association is considering installing playground equipment at the bus stop. Luis values the equipment at $150, Mina at $100, and Daniel at $100. The equipment and labor for installation cost $300. If Luis, Mina, and Daniel are the only residents who value the equipment, what should the neighborhood association do?

Install the playground equipment because the benefits outweigh the costs.

If Korea is capable of producing either shoes or soccer balls or some combination of the two, then

Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.

Which of the following movements would illustrate the effect of an improved high-speed mixer that allows bakers to produce cakes in less time on the market for cakes?

Point C to Point D

Which of the following statements about the price elasticity of demand is correct?

Price elasticity of demand reflects the many economic, psychological, and social forces that shape consumer tastes.

Refer to Figure 10-2. If all external costs were internalized, then the market's output would be

Q2

Senator Fujita argues that replacing the federal income tax with a national sales tax would increase the level of output. Senator Watson objects that this policy would benefit the rich at the expense of the poor.

Senator Fujita's argument is primarily about efficiency, while Senator Watson's argument is primarily about equality.

Refer to Table 2-2. Which of the following statements is correct?

The opportunity cost of an additional 100 toys is constant at 100glasses.

Which of the following statements is not correct?

Without government intervention, the market will tend to undersupply products that produce negative externalities.

The movement from point A to point B on the graph represents

an increase in the price of the good that is being supplied and the suppliers' responses to that price change.

When the "invisible hand" guides economic activity, prices of products reflect

both the values that society places on those products and the costs to society of producing those products

An externality arises when a person engages in an activity that influences the well-being of

bystanders in the market for that activity and yet neither pays nor receives any compensation for that effect.

In a market economy, supply and demand are important because they

can be used to predict the impact on the economy of various events and policies.

Refer to Figure 6-2. The price ceiling

causes a shortage of 60 units of the good.

Two types of private solutions to the problem of externalities are

charities and the Golden Rule.

A decrease in input costs to firms in a market will result in a(n)

decrease in equilibrium price and an increase in equilibrium quantity

Suppose there is currently a tax of $80 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $80 per ticket to $64 per ticket, then the

demand curve will shift upward by $16, and the price paid by buyers will decrease by less than $16.

Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies, probably because

economists have not yet convinced the general public that the policies are undesirable.

The most common data for testing economic theories come from

historical episodes of economic change

Refer to Figure 5-7. If, holding the supply curve fixed, there were an increase in demand that caused the equilibrium price to increase from $6 to $7, then sellers' total revenue would

increase

When property rights are not well established,

markets fail to allocate resources efficiently

For private goods allocated in markets,

prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources.

The value and cost of goods are easiest to determine when the goods are

private goods

The income of a typical worker in a country is most closely linked to which of the following?

productivity

​ The mainstream view among economists is that

society faces a tradeoff between unemployment and inflation, but only in the short run.

Efficiency means that

society is getting the maximum benefits from its scarce resources

If a price ceiling is a binding constraint on a market, then

the equilibrium price must be below the price ceiling.

Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. When society moves from point A to point B,

the opportunity cost is the same as when society moves from point B to point C.

Suppose there are only two people in the world. Each person's production possibilities frontier also represents his or her consumption possibilities when

they choose not to trade with one another.

Good assumptions simplify a problem without substantially affecting the answer.

tru

If we observe that when the price of chocolate increases by 10%, quantity demanded falls by 5%, then the demand for chocolate is price inelastic.

true

Price controls are usually enacted

when policymakers believe that the market price of a good or service is unfair to buyers or sellers

In markets, the invisible hand allocates resources efficiently

when the buyers and sellers are the only interested parties.