Econ Final

Bella can produce either a combination of 60 silk roses and 80 silk leaves or a combination of 70 silk roses and 55 silk leaves. If she now produces 60 silk roses and 80 silk leaves, what is the opportunity cost of producing an additional 10 silk leaves.

25 Silk Leaves

HOURS TOTAL REVENUE 1 25 2 45 3 70 4 90 5 105 6 110 Revenue depends on the number of hours worked for Thuy Anh. Cost $16 per hour. How many hours should she extend?

4 hours

One Canoe One Sailboat Guatemala 10 hours 60 hours Honduras 15 hours 75 hours What is Hondura's opp. cost of producing one sailboat?

5 Canoes

Suppose the price of gas is $3.50 per gallon, the quantity of gas demanded is 150 billion gallons per year, the price elasticity of demand for gas is -0.06, and the federal governmebnt decides to increase the excise tax on gas by $1.00 per gallon, which inreases the price of gas by $0.75 per gallon. How much revenue does the federal government receive from the tax?

$148.27 billion

Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave (BLANK), meaning they make the best decisions given their knowledge of the costs and benefits.

Rationally

Scarcity

Refers to the situation in which unlimited wants exceed limited resources.

According to (BLANK), in a market with an externality, private parties would voluntarily negotiate an efficient outcome without government intervention

Ronald Coase

Which of the following statements about an entrepreneur is false? a. Organizes the other factors of production into a working unit b. Develops the vision for the firm and funds the producing unit c. Sells his entrepreneurial services in the output market d. Risks the personal funds provided

Sells his entrepreneurial services in the output market

What is a "social cost" of production

The sum of all costs to individuals in society, regardless of whether the costs are borne by those who produce the products or consumer the product

A Federal Reserve publication proclaimed that "Trade is a win-win situation for all countries that participate." This statement is...

Ture because if refers to countries; individuals may be losers as a result of international trade.

The three fundamental questions that any economy must address are...

What goods and services to produce How these goods and services will be produced Who receives them

If in the market for peaches, the supply curve has shifted to the left...

the supply of peaches has decreased

Pies Cakes Sarita 15 25 Gabriel 12 16 Select the statement that accurately interprets the data in the table. a. Sarita has a greater opp. cost than Gabriel for cakes b. Sarita's opp. cost for baking cakes is less than Gabriel's c. Gabriel has a greater opp. cost thatn Sarita for baking pies d. Gabriel's opp. cost for baking cakes and baking pies are both greater than Sarita's

Sarita's opp. cost for baking cakes is less than Gabriel's

All of the following are critical functions of the government in facilitating the operation of a market economy except. a. Protecting private property b. Enforcing property rights c. Ensuring an equal distribution of income to all citizens d. Enforcing contracts.

Ensuring an equal distribution of income to all ictizens

If policymakers use a pollution tax to control pollution, the tax per unit of pollution should be set

Equal to the marginal external cost at the economically efficient level of pollution

(BLANK) refers to reductions in a firm's costs that result from an increase in the size of an industry.

External Economies

If a commercial dairy farm wants to raise funds to purchase feeding troughs, it does so in...

Factor Market

T or F An inferior good is a good for which the quantity demanded decreases as the price increases, holding everything else constant.

False

T or F If Sanjaya can shuck more oysters in one hour that Tatiana, then Sanjaya has a comparitive advantage in shucking oysters.

False

T or F If a country produces only two goods, it is possible to have a comparative advantage in the production of both goods.

False

T or F If additional units of a good could be produced at a constant opportunity cost, the production possibility frontier would be bowed outward (concave).

False

T or F Positive analysis is concerned with "what ought to be," while normative analysis is concerned with "what is."

False

T or F Scarcity is a problem that will eventually disappear as technology advances.

False

T or F The price elasticity of supply is calculated as the change in supply divided by the change in price.

False

T or F An increase in the number of firms in a market will cause the quantity of a good supplied to increase

False

T or F In the alcohol industry, both wine and spirits are considered to be substitutes for beer.

False

Since 1994, obesity rates in the United States

Have increased in all 50 states

Once a country has lost its comparative advantage in producing a good, its income will be (BLANK) and its economy will be (BLANK) if it switches from producing the good to importing it.

Higher, more efficient

Price elasticity of supply is used to gauge a. how responsive suppliers are to price changes b. how responsive suppliers are to changes in future prices c. how responsive suppliers are to a change in demand d. how responsive sales are to a change in input prices

How responsive suppliers are to price changes

In economics, the accumulated skills and training that workers have is known as

Human Capital

Which of the following is a source of market failure? a. Unforeseen circumstances which leads to the bankruptcy of many firms b. A lack of government intervention in a market c. Incomplete property rights or inability to enforce property rights d. An inequitable income distribution

Incomplete property rights or inability to enforce property rights.

(BLANK) marginal opp. cost implies that the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by porgressively smaller amounts.

Increasing

It is difficult for a private market to provide the economically efficient quantity of a public good because...

Individual preferences are not revealed in the market for the good.

According to an article in the Wall Street Journal, unlike airlines, even elite hotels don't have sophisticated systems that can react quickly to changes in demand. Even if they could, many hoteliers say people don't respond that much to lower rates. "we've tested this, cutting our rates by $50 per night, and we didn't see an appreciable response in occupancy," says Jim Schultenover. Based on the information above, the demand for hotel rooms is

Inelastic

All of the following are examples of spending on factors of production in the circular flow model except. a. Bima hires two students to work at his ice cream store b. "Get Fit Together" purchases three new treadmills for its gym. c. Iris buys a dozen roses for her mother's birthday. d. The Banyan Tree rents a much larger property so that it can add a restaurant to its facilities.

Iris buys a dozen roses for her mother's birthday

Which of the following activities create a negative externality? a. Cleaning up the sidewalk on your block b. Graduating from college c. Repainting the house you live in to improve its appearance d. Keeping a junked car parked on your front lawn

Keeping a junked car parked on your front lawn

If the production possibilities frontier is (BLANK), then opportunity costs are constant as more of one good is produced.

Linear

A positive externality causes

Marginal social benefit to exceed marginal private cost of the last unit produced

The term (BLANK) in economics refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade.

Market

The demand by all the consumers of a given good or service is the (BLANK) for the good or service

Market Demand

The production possibilites frontier shows the (BLANK) combinations of two products that may be produced in a particular time period with available resources.

Maximum Attainable

(BLANK) is not counted as capital in economics

Money

The larger the share of a good in a consumer's budget, holding everything else constant, the

More price elastic is a consumer's demand

Candles Soap Bryce 150 450 Tina 200 450 Select the statement that accurately interprets the data in the table. a. Bryce has AA in making candles and soap b. Tina has an AA in making candles and soap c. Neither have an AA in making candles. d. Neither have an AA in making soap

Neither have an AA in making soap

The primary purpose of (BLANK) is to encourage the expenditure of funds on research and development to create new products.

Patents and Copyrights

Cross-price elasticity of demand is calculated as the a. percentage change in quantity demanded divided by percentage change in price of a good b. percentage change in quantity demanded of one good divided by percentage change in price of a different good. c. percentage change in quantity sold diviced by percentage change in buyers' incomes d. percentage change in quantity supplied divided by percentage change in price of a good

Percentage change in quantity demanded of one good divided by percentage change in price of a different good.

At a price of $8 per dozen, Chuy sells 40 dozen homemade tamales per week. When he raised her price to $12 per dozen, he still sold 40 dozen per week. Based on this information, the demand for his tamales is

Perfectly Inelastic

Economic models do all of the following except... a. Answer Economic Questions b. Portray reality in all its minute details c. Make economic ideas explicit and concrete for use by decision makers d. Simplify some aspect of economic life

Portray reality in all its minute details

Households (BLANK) final goods and service in the (BLANK) market.

Purchase, Product

A numerical list imposed by a government on the quantity of a good that can be imported into the country is called a

Quota

DeShawn's cost for a basic detailing package is $40, and he charges $75 for this service. For a total price of $90, DeShawn will also detail the car's engine, a service that adds an additional $20 to the total cost of the package. What is DeShawn's marginal benefit if he sells a basic detailing package?

$75

Production and Consumption w/o Trade Production with Trade Clocks Hats Clocks Hats Denmark 900 150 1200 0 Belize 150 100 0 400 Refer to Table. Prior to trade, what was the opportunity cost to produce 1 hat in Belize.

1.5 Clocks

The Coffee Nook sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a cappuccino?

2.5 Russian Tea Cakes

Which of the following goods would have the most inelastic demand? a. Ski Vacation b. Bread c. Luxury Cars D. Big Screen TVs

Bread

Suppose the value of the price elasticity of demand is -3. What does this mean?

A 1% increase in the price of the good causes quantity demanded to decrease by 3%.

If, in response to an increase in the price of chocolate, the quantity of chocolate demended decreases, economists would describe this as a. A decrease in demand b. A decrease in quantity demanded c. A change in consumer income d. A decrease in consumer's tast for chocolate

A decrease in quantity demanded

An inward shift of a nation's production possibilities frontier can occur due to...

A natural disaster like a hurricane or bad earthquake

Which of the following best illustrates the free rider problem? a. Since no one owns elephants and elephants are valued for their hide and ivory, elephants can be hunted to extinction. b. For every purchase of a $30 fare card, you are entitled to five free bus rides. c. If your neighbors professionally landscape their front yards, it is likely that hte market value of your property will increase. d. All three homeowner in a quiet cul-de-sac have expressed the desireability of security lighting in the common parking area. One of the homeowners installs the lighting and aks you to contribute toward the cost. You choose not to contirbute.

All three homeowner in a quiet cul-de-sac have expressed the desireability of security lighting in the common parking area. One of the homeowners installs the lighting and aks you to contribute toward the cost. You choose not to contirbute.

When production reflects consumer preferences, (BLANK) occurs.

Allocative efficiency

If you burn your trash in the back yard in spite of regulations against it, then you

Are avoiding the private costs associated with dispoising your trash some other way and creating a social cost.

The law of demand implies, holding everything else constant, that... a. As the price of bagels increases, the quantity of bagels demanded will decrease b. As the price of bagels increases, the demand for bagels will decrease c. As the price of bagels increases, the quantity of bagels demanded will increase d. As the price of bagels increases, the demand for bagels will increase

As the price of bagels increases, the quantity of bagels demanded will decrease

Comparitive advantage means the ability to produce a good or service...

At a lower opportunity cost than any other producer

A situation where a country does not trade with another country

Autarky

Consider the following statements: a. Consumers buy more MP3 players from an electronics store that sells them at a lower price than other rival electronics stores in the area. b. Schools take steps to increase security since they believe it is more costly to allow vandalism than to hire additional securtiy guards. c. Citrus growers produce more organges when the selling price of oranges fall. Which statements demonstrate that economic agents respond to incentives

Both A and B

Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03. This means that

Beer and wind are complements, wine is a luxury good

Under autarky, consumer surplus is represented by the area

Below the demand curve and above the equilibrium price.

Externality

Benefit or cost experienced by someone who is not a producer or consumer of a good or service

Linesha, a college student working parttime receives a wage increase. An avid movie buff, she increased her purchases of Blu-ray discs and reduced her purchases of DVDs. Based on this information...

Blu-ray discs are normal goods and DVDs are inferior goods.

T or F The value of the price elasticity of supply depends primarily on how quickly firms can acquire inputs to increase quantity supplied when price increases.

True

One Digital Camera Wheat (per pound) China 100 hours 4 hours South Korea 60 hours 3 hours Refer to the Table Above. If the two countreis specialize and trade, who should export wheat?

China

Government imposed quantities limits on the amount of pollution firms are allowed to produce is an example of

Command and control approach to pollution reduction

Markets promote.. a. equity and competition b. voluntary exchange and equality c. equity and equality d. competition and voluntary exchange

Competition and Voluntary Exchange

(BLANK) is the ability of an individual, a firm, or a country to produce a good or a service at a lower opp. cost than competitors

Competitive Advantage

T or F When negative externalities exist, the competitive market supply curve does not include all of the costs by members of society.

True

Which of the following statements is false? a. An inverse relationship has a negative slope value. b. A direct relationship has a positive slope value. c. A curved line has slope values that change at every point. d. A straight line has a slope of zero.

D. A straight line has a slope of zero

If a demand curve shifts to the right, then...

Demand has increased

Jonah lives in a small town where there is only one Mexican restaurant. Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant?

Demand is likely to be relatively inelastic.

Assume there is a shortage in the market for digital music players. Which of the following statements correctly describes this situation. a. The demand for digital music players is greater than the supply of digital music players. b. Some consumers will be unable to obtain digital music players at the market price and will have an incentive to offer to buy the product at a higher price. c. The rpice of digital music players will rise in response to the shortage; as the price rises the quantity demanded will increase and the quantity supplied will decrease. d. The shortage will cause an increase in the equilibrium price of digital music players.

Some consumers will be unable to obtain digital music players at the market price and will have an incentive to offer to buy the product at a higher price.

Economists generally favor the use of tradeable emissions allowances to reduce pollution. However, the use of these allowances has been criticized by some environmentalists. Which of the following describes this criticism?

Some environmentalists believe the allowances give firms a license to pollute.

One Digital Camera Wheat (per pound) China 100 hours 4 hours South Korea 60 hours 3 hours Table above shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. Refer to Table Above. Does either Chine or South Korea have an absolute advantage and if so, in what products?

South Korea - Absolute Advantage in both products

The market for smart phones has grown rapidly over the past few years, due in part to the overwhelming success of the iPhone. Following the successful launch of the iPhone in 2007, companies such as Samsung, HTC, and LG have all introduced products to compete with the iPhone. The smart phones introduced to compete with the iPhone would be considered

Substitutes for the iPhone

If the price of music downloads was to decrease, then...

The demand for MP3 players would increase

Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen. Once can conclude that...

The demand for tarot card readers has increased

If a firm expects that the price of its product will be higher in the future than it is today... a. The firm will go out of business b. The firm has incentive to increase supply now and decrease supply in the future c. The firm has an incentive to decrease quantity supplied now and increase quantity supplied in the future. d. The firm has an incentive to decrease supply now and increase supply in the future.

The firm has an incentive to decrease supply now and increase supply in the future.

The attainable production points on a production possibility curve are..

The points along and inside the prodcution possibility frontier

If the percentage change in the quantity of teapots demanded is greater than the percentage change in the price of teapots, then

The price elasticity of demand for teapots is greater than 1 in absolute value

The income effect of a price change refers to the impact of a change in...

The price of a good on a consumer's purchasing power

At a product's equilibrium price

The product's demand curve crosses the product's supply curve

Assume that the demand curve for sunblock is linear and downward sloping. Which of the following statements about the slope of the demand curve for sunblock and the price elasticity of demand for sunblock are true?

The slope is constant, but the price elasticity of demand is not constant at all points along the demand curve for sunblock.

Price Q Demanded Q Supplied 6 5000 2000 7 4000 2000 8 3000 2000 9 2000 2000 10 1000 2000 The town of Bloomfield is well knows for its basketball team. The price of basketball game tickets is determined by market forces. Table 6-7 above shows the demand and supply schedule for basketbal games tickets. Refer to Table. What is the most distinctive feature of the supply curve.

The supply curve is perfectly inelastic.

In 2004, hurricanes destroyed a large portion of Florida's orange and grapefruit crops. In the market for citrus fruit...

The supply curve shifted to the left resulting in an icnrease in the equilibrium price.

Which of the following must be present to reach a private solution to an externality problem?

The transaction costs to negotiate a solution must be relatively low.

Danielle Ocean pays for monthly pool maintenance for her home swimming pool. Last week the owner of the pool service informed Danielle that he will have to raise his monthly service fee because of increases in the price of pool chemicals. How is the market for pool maintenance services affected by this?

There is a decrease in the supply of pool maintenance services.

In the past the federal government often employed what is called a "command and control" approach to the reduction of pollution emissions. Many economists are critical of theis approach because a. It does not lead to significant reductions in pollution b. They believe a market-based aproach will reduce pollution more efficiently. c. The "command and control" approach is designed to help firms at the expense of consumers. d. The "command and control" approach leads to negative externalities.

They believe a market-based approach will reduce pollution more efficiently.

Workers in industries protected by tariffs and quotas are likely to support these trade restirctions because

They believe the restrictions will protect their jobs

T or F A quasi-public good differs from a public good in that unlike a public good, it is possible to keep out those who do nto pay for the quasi-public good from enjoying the benefits of the good.

True

T or F If consumers believe the price of iPads will decrease in the future, this will cause the demand for iPads to decrease now.

True

T or F One example of human capital is the amount of skills that you have.

True

T or F The decisions Apple makes in determining production levels for its iPhone is an example of a microeconomics topic.

True

If there is pollution in producing a product, then the market equilibrium price...

is too low and equilibrium quantity is too high