Econ 2305 Final
The extra benefit that results from carrying out one additional unit of an activity is the ______ of the activity.
Marginal benefit is the additional benefit of carrying out one additional unit of an activity.
uppose the total benefit of watching 1 baseball game is 100, the total benefit of watching 2 games is 120, and the total benefit of watching 3 games is 125. In this case, the marginal benefit of watching the 3 rd game is:
Marginal benefit is the increase in total benefit that results from a carrying out one additional unit of an activity. By watching the 3 rd game, total benefit increases from 120 to 125, so the marginal benefit is 5.
Economics is best defined as the study of:
how people make choices in the face of scarcity and the implications of those choices for society as a whole.
Refer to the figure below. If the current market price were $20:
At a price of $20, buyers would want to purchase 35 units and sellers would want to sell 10 units, so quantity demanded would exceed quantity supplied by 25 units.
When a slice of pizza at the student union sold for $2, Moe did not purchase any. When the price fell to $1.75, Moe purchased a slice each day for lunch. Thus, we can infer that Moe's reservation price for a slice of pizza is:
A buyer will purchase an item if, and only if, its price is less than or equal to the buyer???s reservation price. Since Moe buys a slice of pizza for $1.75, his reservation price must be at least $1.75, and since he does not buy a slice of pizza for $2.00, his reservation price must be less than $2.00.
As the price of personal computers continues to fall, demand increases." This headline is inaccurate because:
A change in price leads to a change in quantity demanded, which is represented by movement
Suppose the equilibrium price and quantity of ketchup fall. The most likely explanation for these changes is:
A decrease in demand will cause both equilibrium price and equilibrium quantity to fall.
An increase in the quantity of tea demanded occurs if:
A fall in price of tea will lead to an increase in the quantity demanded; the other factors mentioned would change the demand for tea.
All else constant, consumers will purchase more of a good as the price falls." This statement reflects the behavior underlying:
A fundamental property of the demand curve is that it is downward sloping with respect to price. That is, as price falls, quantity demanded rises.
As the price of flour (an input in the production of cookies) increases, firms that produce cookies will:
An increase in the price of an input in production causes the supply curve to shift to the left because production costs are higher.
If the demand curve for bologna shifts to the right as income falls then bologna is a(n):
An inferior good is a good for which an increase in income leads to a decrease in demand and a decrease in income leads to an increase in demand.
Suppose Bianca buys a used a textbook from Sebastian for $55. If Bianca's surplus from this transaction was $10, we can infer that:
Buyer???s surplus is the difference between the buyer???s reservation price and the price he or she actually pays. Bianca bought the textbook for $55, so if her surplus was $10, her reservation price must have been $65.
Chris has a one-hour break between classes every Wednesday. Chris can either stay at the library and study or go to the gym and work out. The decision Chris must make is:
Chris has to make a trade-off: if Chris goes to the gym, Chris cannot also study and vice versa.
Forest lives in complete isolation in Montana. He is self-sufficient and feeds himself through hunting, fishing, and farming. Which of the following statements about Forest is true?
Column A represents demand because quantity falls as price increases, and Column B represents supply because quantity rises as price increases. At a price of $50, the quantity demanded is 65 units, and the quantity supplied is 70 units.
Refer to the table below. Suppose the columns in this table reflect demand and supply. At a price of $50:
Column A represents demand because quantity falls as price increases, and Column B represents supply because quantity rises as price increases. At a price of $50, the quantity demanded is 65 units, and the quantity supplied is 70 units.
Moe has a big exam tomorrow. He considered studying this evening, but decided to hang out with Curly instead. If neither activity involves any explicit costs, and Moe always chooses rationally, then it must be true that:
If Moe rationally chooses to spend time with Curly, then his benefit of spending time with Curly must outweigh his cost. Given that neither activity involves any explicit costs, the opportunity cost of spending time with Curly equals the benefit of studying. Thus, if Moe rationally chooses to spend time with Curly, it must be the case that his benefit from spending time with Curly is greater than his benefit from studying.
Suppose the solid line shows the current demand curve for coffee. In response to an announcement that much of next year's coffee crop has been destroyed
If people expect the future price of a good to increase, then current demand for the good will increase.
If price is above the equilibrium price, then there will be:
If price is above the equilibrium price, the quantity supplied will be greater than the quantity demanded.
Suppose that when the price of broccoli is $4 per pound, buyers wish to buy 500 pounds per day and sellers wish to sell 800 pounds per day. In this case:Refer to the figure below. If the current
If the quantity that sellers wish to sell is 800 pounds per day, and the quantity that buyers wish to buy is 500 pounds per day, then there is excess supply, which will lead the price of broccoli to fall.
Refer to the figure below. If demand shifts from D1 to D2, and at the same time, supply shifts from S1 to S2, then according to the figure:
In the figure, the increase in demand is greater than the increase in supply. Thus, the new equilibrium price and quantity will both be higher.
The study of individual choice and its implications for the behavior of prices and quantities in individual markets is:
Microeconomics is the study of individual choice under scarcity and its implications for the behavior of prices and quantities in individual markets.
Jen spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for food and drinks rather than spending an equal amount of money to go to a movie. Her opportunity cost of going to the beach is:
Opportunity cost is the value that must be foregone to undertake an activity. By going to the beach, Jen gives up the value she places on seeing the movie. We don???t include the $12 she spends at the beach because she also would have spent that money at the movies.
Dean should play golf instead of preparing for tomorrow's exam in economics if:
People should choose actions that generate the largest possible economic surplus.
According to the Cost-Benefit Principle, you should spend an additional hour studying for an exam if, and only if,:
The Cost-Benefit Principle states that an action should be taken if, and only if, its benefits exceed its costs.
You paid $35 for a ticket (which is non-refundable) to see SPAM, a local rock band, in concert on Saturday. Assume that $35 is the most you would have been willing to pay for a ticket. Your boss called, and she is looking for someone to cover a shift on Saturday at the same time as the concert. You would have to work 4 hours and she would pay you $11/hr. The psychic cost to you of working is $2/hr. Your economic surplus from going to work instead of seeing SPAM on Saturday is:
The benefit of working is 4 ?? ($11 - $2) or $36. The cost of working is the value you place on going to the concert or $35 (since this is the most you would have been willing to pay for a ticket). Note that we do not factor in the cost of the ticket since it???s a sunk cost. Subtracting the cost of working from the benefit of working, we see that the economic surplus of working is $1.
You are trying to decide whether to purchase the latest Harry Potter book online or borrow it from the library. There is no charge for borrowing a book from the library, but going to the library takes more time than ordering a book online. Regardless of how you get the book, its benefit to you is the same. If the cost of buying the book online is $13, then you should:
The benefit to you of borrowing the book from the library is the $13 you save. Thus, you should borrow the book from the library if your cost of doing so is less than $13.
At the original market equilibrium:
The equilibrium price and quantity occur at the intersection of the original supply and original demand curves.
As coffee becomes more expensive, Joe starts drinking tea instead of coffee. This is called:
The substitution effect is the change in the quantity demand of a good that results from buyers switching to or from substitutes when the price of a good changes.
When a market is in equilibrium:
There is neither excess demand nor excess supply when the market is in equilibrium.
he marginal benefit of the 5th unit of activity is: Units of Activity Total Cost Total Benefit 0 $0 $0 1 $30 $100 2 $40 $160 3 $60 $190 4 $100 $210 5 $150 $220 6 $210 $225
Total benefit increases from $210 to $220 when you go from 4 to 5 units, so the marginal benefit of the 5 th unit is $10.
If an increase in the price of good X leads to a decrease in the demand for good Y, then:
Two goods are complements if an increase in the price of one good leads to a decrease in the demand for the other (or a decrease in the price of one good leads to an increase in the demand for the other).
If the demand for cucumbers falls when the price of tomatoes rises, then we know that tomatoes and cucumbers are:
Two goods are complements if an increase in the price of one good leads to a decrease in the demand for the other.
What might cause a demand curve to shift to the right?
Two goods are substitutes if an increase in the price of one good leads to a rightward shift in the demand for the other.
If the supply curve and the demand curve both shift to the left, then the new equilibrium:
When both supply and demand decrease, the equilibrium quantity will be lower, but the price may be higher, lower, or the same because the decrease in supply will tend to increase the price while the decrease in demand will tend to decrease the price, so without knowing which is larger, the direction of the price change cannot be determined.
A decrease in both the equilibrium price and the equilibrium quantity of rice is best explained by a(n):
When demand decreases, both the equilibrium price and the equilibrium quantity will fall.
