Econ Final

If Columbia would like to move from producing the bundle of goods represented by point H to point B they must

reduce unemployment and inefficiency

The demand for which of the following is likely to be the most price inelastic

transportation

Local taco increases the price of their tacos. This leads to a decrease consumer surplus.

true

In which of the following instances would the deadweight loss of the tax on airline tickets be the highest?

the tax on airline tickets increases from $10 per ticket to $50 per ticket

If the equilibrium wage exceeds the minimum wage, then

there will be no unemployment

Refer to Figure 3-3. At price $15

there would be a shortage of 300 units, leading to an upward pressure on price

All the following are examples of "command and control" solutions to externalities except

trading in pollution rights between electrical utility companies

Which price and quantity combination represents the social optimal level?

$1.80; 35 units

Pickle ball has recently become popular in Lexington, and several people in our class are considering buying equipment. For a new pickle ball set, Alex is willing to pay $155, Sarah is willing to pay $65, Mike - $50, and Emily - $30 If new pickle ball sets are currently selling for $55 per set, what is the total amount of consumer surplus that will result for these customers?

$110

On the business side, there are four stores selling pickleball sets in Lexington: Champs is willing to sell the sets for $50, Dicks Sporting Goods for $60, Academy Sports for $65, and Tusker Tennis Company for $80 If the pickleball sets prices increase from $65 to $70, how much will producer surplus increase by?

$15

The equilibrium price and quantity in the above figure 3-4 is

$20 and 600 units

How much REVENUE does the government generate from this tax?

$216

What is the total value of producer surplus lost BEFORE the imposition of the tax?

$225

What is the total consumer surplus lost due to consumers leaving the market as the equilibrium price rises to the new equalibrium after the tax?

$36

The per unit economic burden (actual incidence) of the tax to producer is

$6

*The unregulated, single-price monopoly shown in the figure has a total economic profit of

$8

*The unregulated single-price monopolist illustrated in the figure above earns an economic profit of

$8 per day

When the price of Wendy's burgers increases by 10 percent, the sale of Frosty at Wendy's declined by 18 percent, and the sale of Chicken McNuggets increased by 3 percent. These facts suggest that the cross-price elasticity between Wendy's burgers and Chicken McNuggets is _____ indicating that the two are ____

0.3; substitutes

If Columbia is producing 600 tons of blueberries, what is the maximim amount of coffee they can produce?

1,200 tons

Suppose that at a price of $30 per month, there are 30,000 subscribers to Netflix+Hulu combined service. If Netflix+Hulu Service raises its price to $40 per month, the number of subscribers will fall to 20,000. Using the midpoint method for calculating the elasticity, what is the price elasticity of demand for this Netflix + Hulu service (absolute value)?

1.4

For MARTIN, the opportunity cost of producing ONE pottery mug is

1.5 Pottery bowls

Currently, John earns $60,000 per year wprking at UK Bookstore. The income tax rate is 5% for income up to $40,000 and 20% for income greater than $40,000. What is his average tax rate?

10%

Currently, John earns $60,000 per year working at UK Bookstore. The income tax tate is 5% for income up to $40,000 and 20% for income greater than $40,000. John is offered to work weekends and can earn $10,000 additional income. What is John's marginal tax rate for the additional $10,000 in income?

20%

At the market failure quantity, by how many units does the market over/under produce or consume by?

7 units

Consider the market for Hot Dogs during UK football games at Two Keys in Lexington. The management recently decided to decrease prices of their Hot Dogs when UK Football is in action. Which arrow on the graphs to right shows the impact of a decrease in the price of Hot Dogs?

A; down arrow

Which of the following linear questions most accurately reflects DEBRA'S PPF?

B = 20 - 5/2 M

Consider the four production possibility frontiers depicted below, Which one exhibits constant opportunity costs?

B downward straight sloping line

Which graph depicts the likely impact if Apple research team discovers a new and better technology for making cell phones while at the same time, political unrest in a country where they obtain corn fertilizer has made it difficult to get fertilizer?

B they cross each other and PPF1 is on top

What area on the graph represents the total amount of DEADWEIGHT LOSS that results from the imposition of the tax?

C + E

Anticipating an impending recession, Kroger must make its shelving decisions promptly. The income elasticity of Canada Dry is -0.88, LaCroix is at 0.22 and Waterloo is at 1.45. Which sparkling water will Kroger shelf more of during a recession?

Canada Dry

Refer to the Figure. Diamond works as an attorney for a corporation and is paid a salary in exchange for the legal services she performs. Which arrow represents income (salary) earned by Diamond?

D Firms - Markets for Factors of Production - Households

Who has ABSOLUTE ADVANTAGE in producing bowls?

Debra

JUUL is one of the hottest e-cigarettes on the market. What is the direct result in the market of JUUL with the increased popularity of JUUL among the youth?

Demand for JUUL increases leading to an increase in equilibrium price.

in which of the following cases is the Coase theorem most likel to solve the externality?

Ed is allergic to his roommates cat

A government program that provides free medical care to low-income mothers with smallchildren is an example of a government intervention in the market because of efficiencyconcerns.

False

In the North Korean economy, the problem of "what to produce" is solved primarily by peopleadvertising their wants.

False

Patel's Econ 201 students each won $1000 from a local lottery. They all decided to buy a bacon-scented mustaches. For them, the bacon-scented mustache is an inferior good

False

Recall that in prerecorded lecture, Dr. Patel asked you how much you would have to be paid to be willing to shave your head. On average, women needed to be paid more and men needed to be paid less. If he collected the student answers and used the answers from the women to derive a female supply curve and used the answers from the men to crease a male supply curve, it is most likely that Sa reflects the supply for men and Sb reflects the supply for women. (Sa is on top and Sb is on the bottom)

False

Which of the following statements does not apply to a market economy?

Government mandates that Tesla hires engineers from Kentucky

Nike managers decide that their hats should be crafted individually, by hand, and not in factories by machines. What fundamental economic question are they addressing in the production of Nike hats?

How to produce hats?

According to the Law of Comparative Advantage, if Debra and Martin were to specialize and trade with each other

Martin should produce mugs and Debra should produce bowls

Mia is considering renovating a vintage bicycle and has already spent $250 on the restoration process. She foresees the potential to sell the bicycle for $500. After evaluating the situation, Mia realizes that an extra $350 worth of work is needed to increase the bicycle's value to potential buyers up to $500. Alternatively, she could choose to promptly sell the bicycle in its present condition for $200. Given these alternatives, what should Mia decide to do?

Mia should opt to sell the bicycle immediately for $200

Assume that Y represents the amount of daily snowfall in Lexington in inches and X represents the daily temperature for December in degrees Fahrenheit. The relationship between these two variables is most likely to be:

Negative and stochastic

Use the following demand and supply functions to find equilibrium price and output: Demand: Qd = 600 - 30P Supply: Qs = -300 + 120P

P = $6 and Q = 420

The following table shows Patel's marginal benefit for consuming Chai Latte popsicles from Three Moms Pops. The price of each popsicle is always $4.00 1 - $10 2 - $6.25 3 - $4.10 4 - $3.25 5 - $1.70 6 - $0.10

Patel should eat 3 Chai Latte popsicles

Asymmetric information occurs when:

one party in a transaction has more information that the other party

In the 1960s, the Coca Cola company voluntarily started a bottle return deposit program where they paid 5 cents for each glass of Coca Cola bottled returned to local stores. This reduced the negative externalities associated with littered Coca Cola bottles. When considering the classification of policies designed to address externalities, this is an example of a

Private policy solution

Hops2go in Kentucky's first direct-to-house alcohol delivery company, bringing COLD BEER, LIQUOR, WINE, and EXTRAS to Lexington and the surrounding areas. Below is an initial survey conducted to determine the possible demand for this service:

Schedule D

Based on the graph of the PPF above, we know that

Some of the resources used in production are better suited for growing blueberries and-others are better suited for growing coffee

Greece, a major producer of Olive oil, is experiencing a major drought. At the same time Income levels in Europe are rising. Olive oil is considered a normal good. What would we expect to happen in the Market for Olive oil?

The equilibrium price would increase, but the impact on the amount sold in the marketwould be indeterminate

Why did Lionel Messi (football superstar) choose to leave Europe and play for a Major League Soccer, Inter Miami team, instead of continuing to play in top European leagues?

The opportunity cost of playing in Europe was too high

Apple can either produce iWatch (W) or iPads (P). Their production possibilities frontier isdescribed by the equation W=10-2P. The opportunity cost of 1 iPad is 2 Watches

True

In the circular-flow diagram, Lululemon selling Yoga pants to Bella is an example of anactivity in the market of goods and services.

True

More oranges are grown in Florida than North Dakota because Florida's warm climate gives ita comparative advantage in growing oranges

True

Social welfare is maximized when the market reaches its equilibrium price and quantity.

True

The market demand for Starbucks coffee in the student center is the sum of all individualdemand for the Starbucks coffee in the student center

True

The unintended consequences of tariffs implemented to protect a country's domestic sugarindustry will result in higher prices and job losses in other industries that rely on sugar as aproduction input.

True

Which of the following is a normative statement

Winters in Arkansas are too cold.

Local hospitals hire registered nurses and they hire physician's assistants. Some administrators claim that these two types of employees are substitutes for each other while other administrators claim that these two types of employees are complements. If we would like to test this theory, which of the following elasticities should we calculate?

X D Cross Price elasticity

When considering the various resources (factors of production), which of the following is most likely to represent CAPITAL?

a guitar used by a professional musician while on tour

*Which of the following would be most likely to have monopoly power?

a local electrical cooperative

UK wants you to be successful in and out of the classroom. That's why we're rewarding you with $50 deposits into your UK invests account when you complete tasks and build habits in these four categories: Financial Literacy, Involvement, Employability Skill Building, Wellness. This is an example of

a positive incentive

"Rent Controls" are an example of ________; a "Minimum Wage" is an example of ______

a price ceiling, a price floor

*The monopoly power of a business is likely to rise if

barriers to entry increase

Which of the following is not a likely statement regarding the imposition of binding price floor on the market for cigarettes?

buyers of cigarettes have pressured policymakers into imposing the price floor

Positive externalities are created when

company called goodR picks up your edible food waste and donates it to a local non profit

"Egg prices are soaring-even more than for most other foods." In the market for Eggs, which of the following does not cause higher egg prices?

decreased transportation costs for egg distribution

On a sunny day you feel thirsty and order a cold drink of cola from the local dinner. Still feeling thirsty, you continue to drink a few more glasses of cola. You soon realize that the last few cola drinks did not taste as good as the first drink of cola. This is an example of

diminishing marginal benefits

*A pure monopoly is unlikely to achieve allocative efficiency because

equilibrium price is not equal to marginal cost

Delta Airlines offers direct flights to Chicago and aims to implement a multi-tired pricing system to increase revenue. Based on this goal, Delta should charge HIGHER fares for leisure travelers and LOWER fares for business travelers based on the demand depicted in the provided graphs

false

If the state legislature in Kentucky begins a new scholarship program offering money to high school students from kentucky who attend Kentucky colleges and universities because they believe education imposes a positive externality, we would say that is a MARKET-BASED policy

false

Suppose the government places a $500 tax on luxury cars. if price rises by $200, it implies that the demand curve for luxury cars were more inelastic than supply.

false

consider a market for Subaru Cars. Buyers will lobby for price floors and sellers will lobby for price ceilings.

false

demand for gas after 2 weeks of price increase is MORE ELASTIC than demand for Gas after 2 years of price increase

false

the demand for beer is more elastic than the demand for milk. Therefore, imposing tax on the milk market will result in a greater deadweight loss compared to a tax on the beer market.

false

Which of the following is likely to have the most price elastic demand?

flowers

The rental car rates are increasing at tremendous rates in Hawaii. The hawaii government has now placed a binding price ceiling on car rental rates. Which of the following would be the least likely result of a binding ceiling as the Hawaiian government places an imposes one on the market for rental cars?

free gasoline given to people as an incentive to rent a car

*In comparison with a perfect competition, a single-price monopolist with the same costs

generates a smaller consumer surplus but a larger economic profit

The Laffer curve illustrates that, in some circumstances, the government can reduce a tax on a good and increase the

government's tax revenue

Suppose that the price elasticit of demand for Mindtap used in ECO201 is -2(ED=2). If the price of Mindtap accounts RISES by 10%, what will happen to the quantity of Mindtap accounts demanded?

he quantity demanded will decrease by 20%

Keenland wants to increase the total revenue generated by the horse racing in order to most easily cover operating expenses. The CEO suggest that increasing the price of general admission ticket could increase total revenue. The student intern believes that decreasing the price of general admission ticket could increase total revenue. Based upon this information it appears as if the CEO believes that demand is _____ while the student intern believes demand is ____.

inelastic; elastic

Which of the following steps does an economist not take when studying the economy?

model the company without and assumptions

Panda cuisine orange chicken has undeclared milk and egg allergen. This information is NOT available to consumers. In this case:

more orange chicken will be produced and sold to customers than is socially optimal

The graph represents what kind of externality?

negative externality

In Singapore, you're registered as an organ donor automatically if you are over the age of 21. Opting out, results in you being at the bottom in the organ priority list if you ever need a transplant. What can explain this policy?

negative incentives

Candice is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that

people face tradeoffs

The "efficient" points on the graph above include only

points A, B, C, D, E and F

The invisible hand coordinates economic activity through

prices

*If a monopoly were to emerge in an industry due to the consolidation of several smaller firms, what would be most likely result?

prices would increase and output would fall

We would say this tax structure is $1,000 - $100 $2000 - $500 $3,000 - $1,000

progressive

Suppose that a price of $30 per month, there are 30,000 subscribers to Netflix+Hulu combined service. If Netflix+Hulu Services raised its price to $40 per month the number of subscribers will fall to 20,000. The demand for Netflix+Hulu Service is

relatively elastic

The phenomenon of scarcity stems from the fact that

resources are limited

Refer to the figure, if the price ceiling is set at $4 what would be the outcome?

shortage of 2 units

If an individual's demand for frozen dinners increases when the price of steak rises, we would infer that:

steak and frozen dinners are substitutes for this person

Lipstick and Makeup are considered complementary goods. Because of this, one would predict that, holding all else constant, if the price of Lipstick increases, we would see:

the demand curve for Make Up shift to the left.

The price of a ticket to Patel's favorite band Iron Maiden concert is set at $35. All the tickets for the concert sell out one hour before they go on sale and there are still 1,000 fans (including Patel) who wants to buy tickets. It follows that

the equilibrium price of tickets to the concert is more than $35

If the Internet helps buyers learn about the availability of products and find potential sellers more quickly,

the gains from trade will increase

Electric Vehicles (EV) are being pitched as cleaner, greener, and sustainable. Electric cars use batteries made of rare metals lithium and cobalt. These metals are mined using child labor and dangerous working conditions in mines. Chad wants to purchase a EV to help the environment but feels that doing this is morally wrong so he chooses not to participate. This is an example of

the invisible handshake

At Q=42

the market is inefficient and less Q needs to be produced

Suppose that Michael notices that minivans are typically filled with large families with more than two children. He concluded that driving minivans causes families to become larger. Which of the following is true with regard to pitfalls in economic thinking? Michael's conclusion is likely flawed due to

the reverse causality problem

Which ONE of the following economic models depicts two variables that are positively (directly) related to each other?

the supply curve

Students turning in concept checks for their absent friends is an example of negative externality. The market fails because more of the activity is produced than your professor's socially optimal level.

true

When the price of knee braces increased by 25 percent, the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent. BYC's price elasticity of supply knee braces is Elastic.

true

an example of a positive externality is organ donation. The market fails because the social optimal quantity of organ donation is greater than the market quantity.

true

supply and demand curves that are completely vertical are PERFECTLY INELASTIC

true

the government limits total carbon-dioxide emissions by all factories to 260,000 tons per ten years. Each individual factory is given the right to emit 230 tons of carbon dioxide, and factories may buy and sell these rights in a marketplace. This is an example of Tradable Permit System

true

the supply of bread is MORE ELASTIC than the supply of cars.

true

Negative externalities are created when

university of kentucky students leaving styrofoam cups, plastic utensils, plastic bottles,plastic bags on the beach during spring break

If Lil Jon had not gone to the movies, he could have played squash, surfed the Internet, or earned $50 working at the Computer Center that night, in that order of preference. It follows that the Lil Jon's opportunity cost of going to the movies.

was a squash game forgone