Econ exam 1

If the demand for electric cars falls when the price of electricity rises, then electric cars and electricity are:

complements

If ramen noodles are an inferior good for Kim, then, holding all other things constant, as Kim's income increases, her demand for ramen noodles will: decrease. increase. exceed supply. stay the same.

decrease

cross-price elasticity is positive for substitutes

true

price elasticity=1

unit elastic

For an economist, the cost of a good is: the dollar amount of money you paid to get it. what you gave up to get it. always equal to the true market value of the good. the quantity of resources used to produce it.

what you gave up to get it.

income elasticity of demand equation

% change in quantity demanded / % change in income

price elasticity of demand equation

% change in quantity demanded / % change in price

cross-price elasticity of demand equation

% change in quantity of A demanded / % change in price of B

midpoint formula

(Q2-Q1)/[(Q2+Q1)/2] x 100 / (P2-P1)/[(P2+P1)/2] x 100

Each month, Evelyn spends exactly $50 on Frappuccinos, regardless of the price. Evelyn's price elasticity of demand for Frappuccinos is:

0

Butter producers know that the price elasticity of demand for butter is 0.2. If they want to increase sales by 4%, they will have to lower price by:

20%

Which of the following is an example of statistical discrimination? Arturo is unaware that he avoids hiring Asians. Ingrid refuses to hire people who do not have at least five years of experience in their previous jobs. An employer relies on stereotypes in making hiring decisions. No companies will hire Marcella because they do not want to hire women.

An employer relies on stereotypes in making hiring decisions.

price elasticity >1

elastic

price elasticity<1

inelastic

The price of microchips used to produce iPads rises. As a result, the equilibrium price of iPads _____, and the equilibrium quantity _____.

rises; decreases

More competing products mean greater elasticity.

true

Kevin Williamson goes to a local coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $6. The price of the latte is $2. The cost to the coffee shop to produce the latte is $1. How much economic surplus does the coffee shop receive when Kevin purchases the latte?

1

price elasticity=0

perfectly inelastic

A university student faces the difficult decision of how to spend one hour tonight. She could babysit her professor's child at an hourly wage of $10; she could work at the college library at a wage of $12; or she could finish her economics homework assignment. If she chooses to complete her homework assignment, she has incurred an opportunity cost equal to:

12

Which statement describes a compensating differential? Tom Brady is paid more than a college professor. A window washer in the suburbs is paid less than a window washer who washes the windows of skyscrapers. A college professor is paid more than a janitor working in the same building. On average, men are paid more than women.

A window washer in the suburbs is paid less than a window washer who washes the windows of skyscrapers.

How is the economic surplus generated by a decision calculated? It is the sum of costs arising from the decision. It is the total benefits minus total costs arising from the decision. It is the sum of benefits arising from the decision. It is the total benefits plus total costs arising from the decision.

It is the total benefits minus total costs arising from the decision.

Recent evidence suggests exercise promotes longevity and reverses aging. Based on this information, what might happen in the market for exercise-related goods and services?

The demand for exercise machines and/or gyms will increase.

Victoria's Vineyard is considering hiring more sommeliers. The market wage for a sommelier is $120 per day. The average sommelier approves 40 bottles of wine per day, but Victoria expects the next sommelier to produce only 20 bottles per day. Assuming the market for wine is perfectly competitive, Victoria's Vineyard will hire another sommelier if: a bottle of wine sells for $3. the new sommelier can produce 40 bottles. a bottle of wine sells for $2. a bottle of wine sells for $6 or more.

a bottle of wine sells for $6 or more.

A firm's demand curve for labor will shift because of: an increase in the wage rate. a decrease in the wage rate. changes in cultural norms that define how much we work. a change in the demand for a firm's product.

a change in the demand for a firm's product.

All of these will cause the labor supply curve to shift EXCEPT: a change in wages of other occupations. changes in nonwage benefits. changes in expectations about future wealth. a change in the wage rate.

a change in the wage rate.

Consider the market for online video streaming services (Netflix, Apple TV, Amazon Prime, HULU, to name a few). Which statement would cause the equilibrium price of online streaming services to rise with certainty? an increase in both demand and supply a decrease in both demand and supply an increase in demand combined with a decrease in supply a decrease in demand combined with an increase in supply

an increase in demand combined with a decrease in supply

Which factor would cause a supply curve to shift to the LEFT? an increase in the number of firms selling a good a technological improvement in the production of a good an increase in the cost of an input used to produce a good an increase in the price of a good

an increase in the cost of an input used to produce a good

Which event shifts the supply curve for mint chocolate chip ice cream to the left? an increase in income, if ice cream is a normal good a decrease in the price of strawberry ice cream, a substitute for mint chocolate chip ice cream a decrease in the price of ice cream an increase in the price of cream, an ingredient in ice cream

an increase in the price of cream, an ingredient in ice cream

A recent news story reported that the Organization of Petroleum Exporting Countries is expected to increase the supply of oil next summer. Summer is traditionally a time of increased demand for oil because of vacation travel. What would be the combined effect of these two events on the market for gasoline? an increase in the quantity and the price an increase in the quantity and an unpredictable change in the price an unpredictable change in both the price and the quantity an unpredictable change in the price and a decrease in the quantity

an increase in the quantity and an unpredictable change in the price

Kathleen Alvarado is binge-watching her favorite show on Netflix. She is trying to decide how many more episodes to watch. Kathleen should continue watching episodes unless the marginal cost of watching another episode is positive. benefit of watching another episode is equal to the marginal cost. benefit of watching another episode exceeds the marginal cost. benefit of watching another episode is positive.

benefit of watching another episode is equal to the marginal cost.

when cross-price elasticity is negative

buy less of a good when the price of another good goes up

when cross-price elasticity is positive

buy more of a good when the price of another good goes up

Suppose oranges and clementines are substitutes. Holding everything else constant, if the price of oranges decreases, then the demand for _____ will _____.

clementines; decrease

A police officer on the evening shift may earn more than one who works the day shift because of: discrimination. market power. compensating differentials. efficiency wages.

compensating differentials

Wage differences that reflect the fact that some jobs are less pleasant than others are called:

compensating differentials

Through the income effect, a higher wage causes a: decrease in leisure time. decrease in the quantity of labor supplied. substitution of work for leisure. reduction of work time to zero.

decrease in the quantity of labor supplied.

If a demand curve is downward sloping, a decrease in supply with no change in demand will lead to a(n) _____ in the equilibrium quantity and a(n) _____ in the equilibrium price.

decrease; increase

Dell and Apple are competitors in the computer market. Which graph illustrates the effect of a rise in the price of Dell computers on the demand for Apple computers?

demand for apple will increase

Which is NOT an explanation for the gender wage gap? occupational choices differences in willingness to take part-time work differences in overall capabilities human capital

differences in overall capabilities

Ivan has inherited his grandmother's 1963 Chevrolet Corvette, which he values at $60,000. Samantha is interested in buying the car and offers Ivan $55,000 for the car. Samantha is willing to pay up to $60,000 for such a car. A voluntary economic exchange _____ between Ivan and Samantha because _____ positive economic surplus from the transaction. does not occur; only Samantha receives occurs; both Ivan and Samantha receive does not occur; neither Ivan nor Samantha receives occurs; only Ivan receives

does not occur; only Samantha receives

Sasha's labor supply curve is downward sloping for wage rates greater than $60 per hour and upward sloping for wage rates less than $60 per hour. If leisure is a normal good for Sasha, and if the wage is _____, the substitution effect of a wage increase is _____ than the income effect. greater than $60; greater equal to $18; smaller greater than $60; smaller greater than $20; smaller

greater than $60; smaller

North Carolina State University recently raised its tuition by 12%. A survey was then conducted to determine how many students would transfer to another university as a result. It was found that only about 1 in 300 responses indicated they would transfer. Based on this information, the price elasticity of demand for education at this university is:

highly inelastic

Louise works 46 hours a week at $12 an hour. If her wage increases to $18.50: the substitution effect implies that she will work less. if leisure is a normal good, the income effect implies that she will work less. if leisure is a normal good, the income effect will reinforce the substitution effect, and she will work less. her marginal product of labor has decreased.

if leisure is a normal good, the income effect implies that she will work less.

Competitive Equilibrium in the Labor Market. In the figure, an increase in population that increases the size of the labor force will, all else equal, lead to a(n) _____ in the equilibrium quantity of labor and a(n) _____ in the equilibrium price of labor.

increase, decrease

In the market for MacBooks, if the demand curve is elastic, and the price of a MacBook decreases, total revenue will _____. If the demand curve is inelastic, and the price of a MacBook decreases, total revenue will _____.

increase, decrease

A decrease in demand and an increase in supply will lead to a(n) _____ in the equilibrium quantity and a(n) _____ in the equilibrium price. decrease; decrease indeterminate change; increase indeterminate change; decrease increase; indeterminate change

indeterminate change; decrease

A choice made using the marginal principle: involves distinguishing between microeconomics and macroeconomics. is an analysis of costs, benefits, and trade-offs. is a choice regarding whether to do a little more or a little less of an activity. involves comparing the costs and benefits of an activity.

is a choice regarding whether to do a little more or a little less of an activity.

A higher wage may at some point induce an individual to work _____. When this happens, the labor supply curve is _____. more; backward bending less; backward bending more; horizontal harder; vertical

less; backward bending

Assuming that iPhones are normal goods, which factor will NOT increase the demand for iPhones? an increase in the incomes of iPhone users cool new computer games that can only be played on iPhones lower prices for Samsung smartphones the price of laptop computers increasing

lower prices for Samsung smartphones

When you love your job, the opportunity cost of working is _____ the opportunity cost if you dislike your job. not related to higher than the same as lower than

lower than

cross-price elasticity of demand

measures how responsive the quantity demanded of one good is to price changes of another.

income elasticity of demand

measures how responsive your demand for a good is to changes in your income.

A rancher in Texas decides to raise the price of her cattle by 19% over the prevailing market price. If the demand for beef is perfectly inelastic, this rancher's quantity demanded will:

not change

Victoria's Vineyard is considering hiring more sommeliers. A bottle of wine sells for $3, and the market wage for a sommelier is $150 per day. Assuming the market for wine is perfectly competitive, Victoria's Vineyard will hire another sommelier only if the new sommelier will: produce the same number of bottles per day as the last sommelier hired. produce 50 or more bottles per day. raise the average product to 50 or more bottles per day. increase the marginal product by $150 per day.

produce 50 or more bottles per day.

When the price of big screen televisions decreases, the: supply increases. quantity supplied increases. supply decreases. quantity supplied decreases.

quantity supplied decreases.

what might cause the supply curve to shift to the right? restrictions on sugar cane exports by Brazil increased sugar cane production in China a desire by U.S. consumers to buy more ethanol-based gasoline (refined sugar is used to produce that product) improved technology in the refinement of sugar

restrictions on sugar cane exports by Brazil

The income elasticity of demand for pears has been estimated as 2.46. If income grows by 12%, all other things equal, demand will: rise. fall. remain unchanged. The information is insufficient to answer the question.

rise

Specific brands tend to have more elastic demand than categories of goods.

true

Juan McDonald is willing to pay $800 for a new iPad. Apple (the producer of iPads) is selling a new iPad for $700. It costs Apple $400 to produce this iPad. A voluntary economic transaction between Juan and Apple _____ occur because ____ would be better off due to the transaction.

will; both Juan and Apple

Juan McDonald is willing to pay $900 for a new iPad. He offers to pay $800 for an iPad at the Apple store. It costs Apple $700 to produce this iPad. A voluntary economic transaction between Juan and Apple _____ occur because ____ would be better off due to the transaction. will; both Juan and Apple will not; only Juan will not; only Apple will; neither Juan nor Apple

will; both Juan and Apple

Dependencies between various people's choices reflect the fact that

society has limited resources.

Economists use money equivalents to compare costs and benefits because money is

a common measuring stick.

If people demand fewer Netflix subscriptions when the price of Hulu subscriptions falls, then Netflix and Hulu are:

substitutes

In the market for barley, if the price of ethanol (which is made from corn, a crop that competes with barley for farmland) increases dramatically, the _____ barley would _____. supply of; increase supply of; decrease demand for; increase demand for; decrease

supply of; decrease

You notice that the price of notebooks falls and that the quantity of notebooks sold increases. You suspect that the _____ notebooks shifts to the _____. demand for; right demand for; left supply of; right supply of; left

supply of; right

Recent research suggests that certain refillable plastic water bottles may leech cancer-causing particles into the containers with repeated usage. As a result of this research being made public, one would expect:

the demand for such containers to decrease.

The university hopes to raise more revenue by increasing student housing fees. This plan will work only if: the percent rise in price is larger in magnitude than the percent decline in quantity demanded. the percent rise in price is smaller in magnitude than the percent decline in quantity demanded. the percent decrease in price is smaller in magnitude than the percent decline in quantity demanded. the percent decrease in price is larger in magnitude than the percent increase in quantity demanded.

the percent rise in price is larger in magnitude than the percent decline in quantity demanded.

If the price in the market is such that the quantity supplied exceeds the quantity demanded, then: the price is below the equilibrium price. the price is above the equilibrium price. the market is in equilibrium. the market will not adjust to equilibrium.

the price is above the equilibrium price.

Suppose there is a surplus of qualified architects in the United States. Over time, we would expect: the demand for qualified architects to fall. the salaries of qualified architects to rise. the supply of qualified architects to fall. the salaries of qualified architects to fall.

the salaries of qualified architects to fall.

If the state of New York allocates additional spending on after-school programs for at-risk youths, then the opportunity cost of these expenditures is: zero, if the state is running a budget surplus. the dollar amount of the additional spending. relevant only if taxes must be raised to fund the spending. the value of alternative expenditures forgone in making this allocation.

the value of alternative expenditures forgone in making this allocation.

cross price elasticity is negative for complements

true