ECON FINAL
In the graph shown, the original equilibrium price is 50$. A 6$ tax is placed on the seller in this market. who bears the statutory burden of this tax?
A - the seller supply increases
the main role of market is:
C - reallocating resources to better uses
the main role of markets is:
C - reallocating resources to better uses
Diminishing marginal product leads to
C - rising marginal costs for a seller
the graph shows the marginal social cost, demand, and supply curves in the cinnamon roll market. A corrective tax of --- per unit will move the cinnamon roll market to the socially optimal output of -- units
A - $4; 4
The aggregate production function Y = f(L,H,K) shows that economic growth can occur if:
A - (i) only the government provides free college education
If an efficiency wage of $14 is instituted in this market:
A - 4,000 workers who are willing to work will not find employment
Which item is NOT included in calculations of GDP
A - a monthly Social Security payment
Which of the following statements is based on normative analysis?
A - we should protect the environment
In 1971, when the consumer price index was 40.48, women earned a median income of $2,408 per year. If the consumer price index in 2012 was 229.6, how much was $2,408 in 2012 dollars?
B - $13,658 2,408 (229.6/40.48)
The number of persons in the labor force is --- million full time employed - 20 mil not working but looking - 2 mil part time - 10 mil discouraged - 1 mil
B - 32 million 20 +2 + 10
The aggregate production function Y = f(L, H, K) shows that economic growth can occur if:
C - (i) only the government provides free college education
Structural unemployment can be caused by:
C - (i), (ii), (iii), (iv) efficiency wages, union-determined wages, minimum wage laws, job protection regulations
A subsidy for buyers of a product shifts the:
D - demand curve to the right
A supply schedule shows:
D - how much of a good or service would be supplied at different prices
what is a progressive tax system?
D - it is a system where those with more income pay a higher share of their income in taxes than those with lower incomes
The menu costs of inflation are the:
D - marginal costs of adjusting prices
Both Joyce and Simeon can cook chicken gumbo and pork chops. Use the data to answer the question. Joyce: Chicken Gumbo - 3.2 Pork chops - 3 Simeon: Chicken gumbo - 3 Pork chops - 1 What will be the total output of chicken gumbo and pork chops if Joyce and Simeon each work for 24 hours on the task for which they each have a comparative advantage?
Joyce: 3.2/3 Simeon: 3/1-3 pork chops ; 1/3 comparative advantage B - 7.5 chicken gumbos and 24 pork chops
You make some new friends at a party. Which of your new friends described here is unemployed?
Melinda, who was recently laid off and looking for a full time job
the socially optimal outcome is the outcome that
is most efficient for society as a whole, including for buyers, sellers, and bystanders.
If the labor force participation rate is 70%, the unemployment rate is --.
A - 7.6% 8/105
It is mandatory for Jane to take several pills of a certain medication each day in order to remain healthy. The medication has no substitutes and is produced by only one pharmaceutical company. which of the following demand curves represents Jane's demand for the medication?
A - A straight vertical line of demand
An increase in physical capital per worker, with all other factors remaining unchanged, is BEST indicated by a move from:
A - A to B physical capital increases
based on the demand curves for four sellers, which of the following firms has the least market power?
A - Firm A straight horizontal line
Which tax is progressive? Arturo pays an 8% tax on the first $9,000 he earns plus --- tax on any additional income.
A - a 10%
an increase in the supply of coffee beans means:
A - a shift to the right of the entire supply curve for coffee beans
a negative externality is:
A - a side effect of an activity when the side effect harms bystanders
WinSun, a Chinese firm, began producing 3-D printed houses in late 2013. these houses were produced in a fraction of the time it would take to produce a house in the regular way and at a much lower cost. This is an example of:
A - an advance in technology leading to a rise in productivity
Argentina and Chile both produce copper and timber. If Chile produces copper much more efficiently than Argentina and timber slightly more efficiently than Argentina, -- can benefit from trading copper and timber with each other.
A - both countries
A --- illustrates a downward-sloping relationship between price and quantity.
A - demand curve
The graph shows the marginal social cost, demand, and supply curves in the soda market. In this market, the socially optimal output is ---, and the market-determined output is ---. Suppose the government impose a sugar tax on soda, this corrective tax should be --- dollars per unit of soda.
A - eight ; 12; 2
When the government imposes a tariff on imported grapes, the price of grapes in California rises from PW to PT, and domestic consumer surplus --- to ---.
A - falls; A + B
The construction of new housing is considered part of:
A - investment spending
When coca Cola consumption recently decreased, the Coca-Cola company hired a survey firm to determine what was going on. the firm interviewed consumers, who said that rising Coke prices were discouraging them from purchasing Coke. This implies a:
A - movement along the demand curve for coca Cola
for nuclear reactors, which have a highly inelastic supply and a downward-sloping demand curve:
A - producers will bear most of the economic burden of a tax
A seller in a perfectly competitive market cannot
A - raise the market price of a product
the price elasticity of demand measures the:
A - responsiveness of a change in quantity demanded to a change in price
which of the following is an example of a trade cost incurred when a German citizen imports a bottle of wine produced in France?
A - the cost of the trucking services used in transportation
The catch-up effect would be largest in an economy where:
A - the initial level of capital is low
In the graph shown, the original equilibrium price is 50$. A 6$ tax is placed on the seller in this market. Who bears the statutory burden of this tax?
A - the seller supply curve shifts left
If a rent ceiling is set at 900$:
A - the shortage of rental units will be the distance 2.1-1.9 million, or 0.2 million units
In 1995 , when the consumer price index was 152/38, women earned a median income of $12,130 per year. If the consumer price index in 2023 was 236.99, how much was $12,130 in 2023 dollars?
B - $18,865 12,130 (236.99/152.38)
Amanda Mendez goes to a local cafe and orders a sandwich. Her willingness to pay for that sandwich is $10. The price of the sandwich is $4. The cost to the cafe to produce that sandwich is $1. How much economic surplus does Amanda receive when she purchases the sandwich?
B - $6
The price of product C is cut by 10%. As a result, the quantity demanded of product D rises by 20%. The cross-price elasticity of demand between product C and product D is ---, and they are ---.
B - -2; complements
You open an investment account that earns a nominal interest rate of 3.1% per year. The current customer price index is 205. In one year, the consumer price index is expected to go to 203. What is your expected real rate of return?
B - 4.08% 203-205/205 = -0.97 3.1 + 0.97
Assume that there are no fixed costs and that AC = MC = $200. The profit-maximizing output for a monopolist is --- and the profit-maximizing price is ---
B - 8 ; 600
Assume that there are no fixed costs and that AC = MC = $200. The profit-maximizing output for a monopolist is ---, and the profit-maximizing price is --.
B - 8 ; 600
The Incidence of Tax and Elasticities. Each panel below shows the application of a tax that raises the price from P1 to P2. consumers are likely to bear most of the burden of a tax in the situations illustrated by panels:
B - A and D shifts on the supply curve upward
You have four friends. Which of your friends can be described as "frictionally unemployed?"
B - Davis, who wants to work as an automation engineer but fins that he is required to get additional certification to qualify for available automation engineer jobs
Which graph illustrates what will happen in the market for roses if the price of roses falls?
B - Graph B
Rapid growth in poorer countries leads to:
B - a reduction in inequality between poorer countries and richer countries
A binding price floor leads to:
B - a surplus
If the supply and demand curves intersect at a price of 60$, then any price above that would result in:
B - a surplus
Deflation is a :
B - decrease in the overall level of prices
Deflation is a:
B - decrease in the overall level of prices
If France levies tariffs on American goods entering France, in the short run, this will tend to --- American producers and --- French producers
B - harm; benefit
When a firm buys a new machine for its business, it is considered to be:
B - investment spending
the US government provides a research and development tax credit. How can this policy encourage economic growth?
B - it encourages firms to engage in innovation and creative practices, which lead to technological advances that spur economic growth
The producer surplus on a unit sold equals:
B - price minus marginal cost
If a tax is imposed on new electric cars and is collected from producers, the:
B - supply curve will shift upward by the amount of the tax
If the frictional rate of unemployment is 1%, the structural rate of unemployment is 2.1%, and the total unemployment rate is 7%, then we can conclude that:
B - the equilibrium rate of unemployment (natural rate of unemployment) is 3.1%
Shoe leather costs are the costs of
B - the increased number of transactions when inflation is high
Suppose congress imposes a price ceiling of $5 per ATM transaction. If the average market-clearing price for an ATM transaction is $2, then:
B - the price ceiling will not be binding
If the government imposes a tax of $3 in this market, consumers will pay --- more per app and purchase --- fewer apps.
C - $1.50; 15
If the government imposes a tax of 3$ in this market, consumers will pay --- more per app and purchase --- fewer apps.
C - $1.50; 15 4 - 2.50 = 1.50 25-10=15
An improvement in technology, with everything else remaining unchanged, is shown in the diagram as a movement from:
C - B to C physical capital per worker doesnt increase but GDP does
Which of the following is NOT used in identifying who has a comparative advantage in a particular task when multiple people can perform that task and another one? (Note: the tasks are not necessarily listen in chronological order)
C - For each person, calculate the total time it takes to perform both tasks consecutively
Lenovo produces laptops and desktop computers. Which graph shows what will happen in the market for Lenovo desktops if the demand for laptops increases? Suppose Lenovo learns the changes in market demand and update its expectation of markets constantly.
C - Graph C Supply curve shifts to the left and decreases
which of the following is NOT an example of a corrective tax or subsidy used to address an externality problem?
C - Marlo's customers have been bothered by the noisy, midday deliveries at the business next door. She arranges to cover part of the delivery costs in order to have the neighbor's deliveries arrive early in the morning rather than at midday.
According to diminishing marginal utility, which of the following people would gain the highest marginal benefit from an extra 100$ of income?
C - Seru, a single father of three young children with an annual household income of $19,000
a characteristic of oligopoly that is not present in any other market structure is that there
C - are a small number of sellers with considerable market power
The amount by which total benefits of oranges to consumers exceed consumers' total expenditures on oranges is called --- . if the price of oranges is B, this quantity is depicted by the area --.
C - consumer surplus; BCD
If rice is an inferior good, when incomes rise, the equilibrium price will ---, and the equilibrium quantity will ---.
C - decrease; decrease
Ivan has inherited his grandmother's 1963 Chevrolet Corvette, which he values at $60,000. Samantha is interested in buying such a car and is willing to pay up to $55,000. Ivan hears Samantha is looking for this particular car and offers to sell it to her for $70,000. A voluntary economic exchange --- between Ivan and Samantha because --- positive economic surplus from the transaction.
C - does not occur, only Ivan receives
Pedro attends a university that provides antivirus software to all students, faculty, and staff for their personal computers as well as all university owned computers. why would the university pay for the protection of the personal computers of students, faculty and staff?
C - it reduces the number of viruses on university owned computers by reducing the probability that viruses will spread through files transferred from personal computers to university-owned computers and systems
Decisions should reflect the -- costs, rather than just the --- costs
C - opportunity; financial
The nominal interest rate equals the real interest rat:
C - plus the rate of inflation real interest rate = nominal - inflation
diminishing marginal product leads to
C - rising marginal costs for a seller
Suppose that a CPI basket includes avocados, pineapples, and oranges. Avocados become very expensive, and consumers substitute away from avocados and buy hummus instead. If the CPI basket does not change to reflect the move away from avocados, the result is:
C - substitution bias
In the circular flow diagram, households:
C - supply resources, for example, labor
Perfect competition is characterized by
C - the inability of any one firm to influence price
which of the following can a government use to change the quantity traded in a market? (i) quotas (ii) binding price floors (iii) binding price ceilings (iv) taxes
D - (i), (ii), (iii), (iv)
the table contains the monthly demand for soda cans for four students. If these four students make up the entire market, what is the total monthly market demand for soda at $1.50 per can?
D - 148 cans 50 + 15 + 8 + 75
Refer to the labor market shown here. suppose a minimum wage of $18 per hour is introduced. after the implementation of the minimum wage, -- workers are hired.
D - 24,000
Use the table to answer the question. What is the equilibrium price in this market?
D - 50$ because quantity demanded and quantity supplied is 300 units
Orlando, FL is experiencing net immigration of people into the area. Which of the following graphs illustrates the impact of this net immigration on the demand for rental housing?
D - Graph D
A subsidy is a
D - a government payment designed to encourage particular purchases or productive activities
Most US grocery stores sell a variety of boxed breakfast cereals. This observation indicates that the boxed breakfast cereal market is
D - a monopolistically competitive market - differentiated products and many sellers
Total revenue at point S equals the:
D - area 0PSM
when trade is based on comparative advantage
D - both trading partners end up better off than when there is no trade
When price functions as a signal, it
D - creates a line of communication between buyers and sellers
External benefits are generated by garden supplies that are used to beautify gardens and yards in neighborhoods. In equilibrium, the market will:
D - price garden supplies at less than the marginal social benefit
A farmer agrees to give a company access to a private road on his property of the company reduce pollution of the farm's water source. this is an example of reducing an externality through:
D - private bargaining
suppose that more security guards become aware that wearing Kevlar (bulletproof) vests can protect them from injury and decide to start wearing Kevlar. At the same time, the price of materials used to produce the vests falls. The equilibrium price of Kevlar vests, -------, and the equilibrium quantity produced ------.
D - probably changes, but in an ambiguous direction; increases
In which of the following situations would Max's doughnut Shop have the greatest market power?
D - the closest doughnut shop or bakery is 25 miles away from Max's shop
Which price measure indicates changes in the cost of a market basket containing raw commodities such as steel, electricity, and coal?
D - the producer price index
which price measure indicates changes in the cost of a market basket containing raw commodities such as steel, electricity, and coal?
D - the producer price index
A perfectly inelastic supply curve is:
D - vertical
If an efficiency wage of $45 is instituted, the number of workers who are:
D - willing to work will rise by 10,000
economists observe that the official unemployment rate can understate the true level of unemployment because it only includes:
D - workers without jobs who have looked for work in the past four weeks
