ECON EXAM 1

Allowing food trucks to enter the restaurant market will do what to equilibrium restaurant food price and quantity?

reduce price, increase quantity

Which of the following is a FALSE statement about assigning work based on comparative advantage?

Assign the person who is fastest or best at a task to do that task.

Barlow and Rusia own a nail salon. A manicure takes Barlow 60 minutes to complete and takes Rusia 45 minutes to complete. Completing a pedicure takes Barlow 45 minutes and takes Rusia 30 minutes. Who has a comparative advantage in pedicures?

Rusia because she has a lower opportunity cost.

Suppose Grubhub, a food delivery service, has recently expanded to your area. The accompanying table contains the number of deliveries per month that you demand at various delivery prices. able.In general, the slope of the demand curve is

negative

Non-linear (curved) supply curves are: unrealistic in practice none of these a reflection of diminishing marginal benefit on the demand side a violation of the law of supply

none of these

According to the figure, if there is international trade in this market, and the world price of a pair of pants is $40, the value of the consumer surplus is:

$1,250,000.

In the market for plastic bags shown here, the original equilibrium price is 50 cents per bag. In an effort to reduce plastics usage, a tax is then placed on the buyers of plastic bags. The economic burden of this tax on the seller is _____ cents.

10

The price of coffee at a local coffee shop is $3. Cheryl is willing to pay $6 for her first cup of coffee each day. The marginal benefit to her of each additional cup of coffee falls by $2. How many cups of coffee should Cheryl purchase?

2

Which of the following market changes would NOT lead to a shift of the supply curve from Old supply to New supply?

A rise in the price of a product that is a substitute-in-production.

The table below shows data on quantity demanded for ATV tours at an ATV excursion company in Bali. In June, many new tourists arrive in Bali and the additional demand from these tourists is indicated in the table. Which of the following is true about the market for ATV tours in June?

At a price of $149, the total market demand for ATV tours in June is 933.

What will happen to the demand for upscale restaurants, if an economy goes into recession and unemployment rises?

Graph A

Producers of hand-made leather wallets have made manufacturing changes that have improved quality but reduced efficiency. Which graph shows this change in the market?

Graph C

The fidget spinner toy fad is over, and children are not buying them with the same enthusiasm as they did earlier. Which graph depicts the situation in the market for fidget spinners?

Graph D

The accompanying table provides data for five different oatmeal cookie sellers. Out of the sellers listed, who all are following the law of supply?

Len, Ren, and Jen

Nerida scored a 55% on her first midterm exam and is trying to decide whether to drop the class. Based upon economic principles, which argument is NOT a good reason to stay in the class?

Nerida has already spent a lot of time studying for the class

There are four suppliers in the packed meals market. The quantity of packed meals that each one is willing to supply per week at various prices is provided in the accompanying table. What is the change in the market supply for packed meals when the price rises from $6.25 per meal to $6.50 per meal?

The quantity supplied in the market rises by 152,000.

To get into the coolest clubs, you have to wait in line for a long time. Which of the following is likely true?

There is a shortage of cool club space at current prices

The US is an importer of single-malt whisky (Scotch) from Scotland. Which of the following groups is not hurt by a tariff on single malt whisky?

US producers of single-malt whisky

In the graph, the movement from point H to point G represents

a decrease in quantity supplied.

If there is a technological advance in the production of the Amazon Echo smart speaker, you would expect to see _____ overtime.

a fall in its equilibrium price

At lunch time your marginal benefit from eating one taco is $4. Which of the following is not true? all of these you are willing to pay $3 for a taco Your surplus increases if you buy a taco for $3 If the price of tacos is $3, you would buy at least one taco

all of these

Refer to the graph to answer the question.The movement from point V to point W is caused by

an increase in the price of the item.

Voluntary exchange occurs when:

both the buyer and the seller will gain from the trade.

In some US states, there is a sales tax on food. If demand for food is relatively inelastic and supply for food is relatively elastic, the burden of these taxes falls mostly on

buyers

Uber advertises using Google ads and using Facebook ads. The average cost per acquisition (average cost per new user) on Google is $10 and the average cost per acquisition on Facebook is $15. The expected marginal revenue of a new user is $100. On the margin, Uber should

cannot tell from this information

According to the figure, prior to 2018, the average tariff rate imposed by the United States has generally _____. This is associated with _____ in international trade.

decreased; an increase

You just took an Uber from home to campus for the first time and were willing to pay $13 for the trip. It was so much easier than driving yourself that you are willing to pay $21 for the same trip tomorrow. Determine if you have violated the law of demand based on your choices, and why or why not that is the case.

do not violate the law of demand because your preference for the product changed after you experienced the good.

Positive analysis is based on identifying _____ and _____

facts; relationships

what will Decreasing the price of the PS4 will ( ) the demand for PS+ subscriptions. Sony expects that revenue from recurring PS+ subscriptions will be larger than the loss in revenue from PS4 sales.

increase

Refer to the graph. Suppose that a binding price floor of $35 is removed. The number of consumers who are able to purchase the product will:

increase from 25 to 50.

Suppose that the world price of engines is $1,000. According to the figure, the domestic total surplus will _____ by _____ in the free-trade equilibrium relative to the no international trade equilibrium.

increases; $120,000

for most consumers, a 10 year old used car is an

inferior good

You manage a firm that produces electric vehicles and employs 500 workers. You expect the market price of labor (wages) to increase next year. If no other prices change, which of the following production decisions next year will increase your surplus?

lay off workers

Each month, Hana buys 50 doughnuts. Hana's demand for doughnuts is

perfectly inelastic

In the market for transportation, taking the train and taking a plane are

substitutes

Suppose that currently, only 5% of US households eat kale (a green-leafy vegetable) on a monthly basis. Suppose the US federal government requires that all individuals consume kale at least once per month. What is the effect on total economic surplus?

surplus decreases

Refer to the labor market shown here. A minimum wage of $18 per hour is introduced. The implementation of the minimum wage leads to a _____ of _____ workers.

surplus; 12,000

The price of macadamia nuts falls. This conveys all of the following signals EXCEPT

that the price of almonds is rising.

Suppose the market for doughnuts efficiently allocates the production and consumption of glazed doughnuts. Prof Brewer loves doughnuts more than any living person. Which is true?

the marginal benefit of Prof Brewer's last doughnut is equal to the marginal benefit of the last doughnut you consume

Consider your current uses of tap water. Think about some of the ways that you use water that are beyond what is necessary to sustain life. a. If the price of tap water triples, what are some likely changes that you will make to your consumption of tap water?

turn water off while brushing your teeth, decrease length of shower

When the marginal cost of a good is zero, at what quantity of consumption would a person maximize their surplus?

the quantity at which marginal benefit intersects the x-axis

If Beyoncé concert tickets are sold out within five minutes of being released, we can conclude that

there is a shortage of Beyoncé concert tickets in the market.

Use the graph for pounds of grapes to answer the question.When the actual pounds produced and sold is two, economic surplus in the market is represented by the area between the demand and supply curves:

to the left of the quantity of two.

The table provides data on how long it takes Fazio and Gabriella to learn to play a particular new song on the piano and to complete a given person's tax return. Use the data to answer the question. Fazio's opportunity cost of learning the song is _____, and Gabriella's opportunity cost is _____.

two tax returns; 1.25 tax returns

In general does the consumption of tap water obey the law of demand

yes

Use the watermelon market graph to answer the question.What is the value of the total surplus at the quantity of melons with economic efficiency?

$12.50

If there is no international trade in this market, the value of the consumer surplus is:

$360,000.

Use the bath towel market graph to answer the question.The bath towel market is at equilibrium. How large is the economic surplus?

$60

For each pair of goods, identify if the goods are substitutes or complements. Next, use a graph to illustrate how a change in the price of one good impacts the other good. a. In the market for gasoline and sport utility vehicles (SUVs), the two goods are

complements

When Sony released the PlayStation 4, it was reported that Sony was taking a loss of $60 on every PS4. However, Sony expected to make this up with sales of PS+ subscriptions and increased royalties from video games. Use the interdependence principle to help explain this strategy. The PS+ subscriptions allow PS4 owners to play their games online, receive new games monthly to download at no charge, and receive additional special discounts on other items. Therefore, the PS4 and PS+ subscriptions are what

complements of each other

Your willingness to pay for a clean kitchen and for a clean bathroom is higher than your roommate's willingness to pay for each. Which of the following is necessarily true?

none of these

c. For most consumers, dental services are what type of good

normal

for most consumers, the newest iphone is what type of good

normal

The figure shows the market for movie tickets. If the movie theater changes the price per ticket from $12 to $13.50, the change in total revenue is:

-$18,000

The price of milk at the local grocery store is cut by 25%. In response to this price cut, the quantity of milk demanded increases by 10%. What is the absolute value of the price elasticity of demand for milk?

0.4

As a part of a market research project, you survey six food trucks across the city to gather data on how many meals they would plan to sale at various prices. The data you collect is in the accompanying table. What is the total supply of meals in your survey at $10 per meal?

1,485 meals

Consider the market for furniture made from sustainable, man-made forests that is shown in the figure. The government wants to encourage buyers to buy such furniture and places a price ceiling of $250 on the market. After the implementation of the price ceiling, the market quantity sold falls by _____ thousand units.

200

Uber cuts the price of a ride in Los Angeles by 15%. Thereafter, the quantity of rides demanded rises by 45%. What is the absolute value of the price elasticity of demand for Uber rides?

3

Vincent makes dining tables, and he is trying to decide how many tables to produce. He can sell each dining table for $2,000. The cost of the first table is $750, and for the second it's $1,000. For each additional table he produces, the marginal cost of each table increases by $250. How many dining tables should Vincent produce, and what is the total cost of his production?

He will produce six tables at a cost of $8,250.

Suppose the percentage change in newspapers demanded for any price change is infinite. The absolute value of the elasticity of demand for newspapers is _____, and demand is _____.

infinity; perfectly elastic

It is a rainy day, and you are considering taking an Uber one mile to meet some friends. You have decided you are willing to pay $20 to avoid getting wet from the rain. The trip would normally cost you $8, but due to the weather the surcharge is triple the regular cost. You should _____ because the benefit to you of taking the Uber is _____ than the cost.

walk; less