ECON Final
A
A bagel shop sells fresh baked bagels from 5 a.m. until 7 p.m. every day. The shop does not sell day-old bagels, so all unsold bagels are thrown away at 7 p.m. each day. The cost of making and selling a dozen bagels is $1.00; there are no costs associated with throwing bagels away. If the manager has 8 dozen bagels left at 6:30 p.m. on a particular day, which of the following alternatives is most attractive? a. Lower the price of the remaining bagels, even if the price falls below $1.00 per dozen. b. Lower the price of the remaining bagels, but under no circumstances should the price fall below $1.00 per dozen. c. Throw the bagels away and produce 8 fewer dozen bagels tomorrow. d. Starting tomorrow, lower the price on all bagels so they will all be sold earlier in the day.
C
During the last few decades in the United States, health officials have argued that eating too much beef might be harmful to human health. As a result, there has been a significant decrease in the amount of beef produced. Which of the following best explains the decrease in production? a. Beef producers, concerned about the health of their customers, decided to produce relatively less beef. b. Government officials, concerned about consumer health, ordered beef producers to produce relatively less beef. c. Individual consumers, concerned about their own health, decreased their demand for beef, which lowered the equilibrium price of beef, making it less attractive to produce. d. Anti-beef protesters have made it difficult for both buyers and sellers of beef to meet in the marketplace.
D
Olivia bakes cakes and Andrew grows corn. Olivia and Andrew both like to eat cake and eat corn. In which of the following cases is it impossible for both Olivia and Andrew to benefit from trade? a. Olivia cannot grow corn and Andrew cannot bake cakes. b. Olivia is better than Andrew at baking cakes and Andrew is better than Olivia at growing corn. c. Olivia is better than Andrew at baking cakes and at growing corn. d. Both Olivia and Andrew can benefit from trade in all of the above cases.
C
Refer to Figure 7-15. When the price falls from P2 to P1, which of the following would not be true? a. The sellers who still sell the good are worse off because they now receive less. b. Some sellers leave the market because they are not willing to sell the good at the lower price. c. The total cost of what is now sold by sellers is actually higher than it was before the decrease in the price. d. Producer surplus would fall by area A + B.
B
Refer to Figure 7-8. At the equilibrium price, consumer surplus is a. $1,050. b. $1,225. c. $1,575. d. $2,450.
C
Refer to Figure 9-1. With trade, total surplus in the Guatemalan coffee market amounts to a. 1,250. b. 1,468. c. 1,870. d. 1,980.
B
Refer to Figure 9-15. With trade and without a tariff, the price and domestic quantity demanded are a. P1 and Q1. b. P1 and Q4. c. P2 and Q2. d. P2 and Q3.
D
The distinction between efficiency and equality can be described as follows: a. Efficiency refers to maximizing the number of trades among buyers and sellers; equality refers to maximizing the gains from trade among buyers and sellers. b. Efficiency refers to minimizing the price paid by buyers; equality refers to maximizing the gains from trade among buyers and sellers. c. Efficiency refers to maximizing the size of the pie; equality refers to producing a pie of a given size at the least possible cost. d. Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society.
C
When a surplus exists in a market, sellers a. raise price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated. b. raise price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated. c. lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated. d. lower price, which decreases quantity demanded and increases quantity supplied, until the surplus is eliminated.
C
Which of the following is likely to have the most price inelastic demand? a. white chocolate chip with macadamia nut cookies b. hardback novels c. salt d. box seats at a major league baseball game
A
A tax imposed on the sellers of a good will raise the a. price paid by buyers and lower the equilibrium quantity. b. price paid by buyers and raise the equilibrium quantity. c. effective price received by sellers and lower the equilibrium quantity. d. effective price received by sellers and raise the equilibrium quantity.
A
As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on, the a. tax revenue increases at first, but it eventually peaks and then decreases. b. deadweight loss increases at first, but it eventually peaks and then decreases. c. tax revenue always increases, and the deadweight loss always increases. d. tax revenue always decreases, and the deadweight loss always increases.
C
Corrective taxes differ from most taxes in that corrective taxes a. reduce economic efficiency. b. do not raise revenue for the government. c. do not cause deadweight losses. d. always result in a high burden on sellers of goods to which the corrective tax applies.
A
For which of the following goods is the price elasticity of demand most inelastic? a. pizza b. large pizza c. large pepperoni pizza d. Domino's large pepperoni pizza
A
Good natural experiments allow economists to a. identify causal relationships. b. explore correlations between variables. c. make value judgments. d. make politically correct statements.
C
Holding all other forces constant, if decreasing the price of a good leads to an increase in total revenue, then the demand for the good must be a. unit elastic. b. inelastic. c. elastic. d. None of the above is correct because a price decrease never leads to an increase in total revenue.
D
If Sharnae's individual labor supply curve is backward sloping, then Sharnae responds to an increase in her a. wage by working fewer hours per week. b. opportunity cost of leisure by taking more hours of leisure per week. c. wage by working more hours per week. d. Both a and b are correct.
D
Josiah installed a metal sculpture in his front yard. A negative externality arises if the sculpture a. increases the value of other properties in the neighborhood. b. decreases the value of Josiah's home. c. is visually appealing to Josiah's neighbors. d. creates a safety hazard for neighborhood children.
C
Refer to Figure 10-10. The graph represents a market in which a. there is no externality. b. there is a positive externality. c. there is a negative externality. d. The answer cannot be determined from inspection of the graph.
B
Refer to Figure 10-13. If 325 units of plastics are produced and consumed, then the a. social optimum has been reached. b. market equilibrium has been reached. c. government must have imposed a corrective tax to guide the market to this outcome. d. government must have offered a corrective subsidy to guide the market to this outcome
C
Refer to Figure 10-18. The line labeled "Corrective tax" could accurately be re-labeled as a. "Demand for clean air." b. "Demand for pollution rights." c. "Price of pollution." d. "Rate of subsidy."
C
Refer to Figure 10-20. The graph depicts the market for fertilizer. Without any government regulation, what is the equilibrium price of fertilizer? a. $100 b. $200 c. $250 d. $300
B
Refer to Figure 10-3. What price and quantity combination best represents the optimum price and number of concerts that should be organized? a. P1, Q1 b. P2, Q0 c. P2, Q1 d. The optimum quantity is zero concerts as long as residents in surrounding neighborhoods are adversely affected by noise and congestion.
C
Refer to Figure 18-6. The graph above illustrates the market for bakers who make homemade breads and breakfast pastries. If the wages paid to wedding cake bakers decrease, what happens in the market for bread bakers? a. Demand increases from D1 to D2. b. Demand decreases from D2 to D1. c. Supply increases from S1 to S2. d. Supply decreases from S2 to S1.
B
Refer to Figure 2-19. A policymaker observes this graph and concludes that increasing the frequency of commuter rail service is a certain way to get more commuters to choose the commuter rail instead of driving their own cars. You warn the policymaker about making a reverse causality mistake with which of the following statements? a. Higher gas prices are causing more people to choose the commuter rail over driving. b. The service frequency was increased in response to an increase in the number of passengers per hour. c. There is a positive relationship
A
Refer to Figure 2-21. According to the graph, snowstorms a. and snowblowers sold are positively correlated. b. and snowblowers sold are negatively correlated c. and snowblowers sold are uncorrelated. d. are caused by more snowblowers being sold.
A
Refer to Figure 4-22. At a price of $20, there is a a. surplus of 4 units. b. surplus of 8 units. c. shortage of 4 units. d. shortage of 8 units.
C
Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for convertible automobiles of an increase in the price of steel? a. Point A to Point B b. Point C to Point B c. Point C to Point D d. Point A to Point D
C
Refer to Figure 5-9. If the price rises from point D to point C, total revenue a. increases, and demand is price elastic. b. decreases, and demand is price elastic. c. increases, and demand is price inelastic. d. decreases, and demand is price inelastic.
C
Refer to Figure 6-17. A government-imposed price of $24 in this market is an example of a a. binding price ceiling that creates a shortage. b. non-binding price ceiling that creates a shortage. c. binding price floor that creates a surplus. d. non-binding price floor that creates a surplus.
C
Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct? a. Buyers and sellers will share the burden of the tax equally. b. Buyers will bear more of the burden of the tax than sellers will. c. Sellers will bear more of the burden of the tax than buyers will. d. Any of the above is possible.
D
Refer to Figure 8-6. When the tax is placed on this good, the quantity sold a. is 600, and buyers effectively pay $10. b. is 300, and buyers effectively pay $10. c. is 600, and buyers effectively pay $16. d. is 300, and buyers effectively pay $16.
B
Refer to Table 3-22. Suppose Zimbabwe decides to increase its production of toothbrushes by 10. What is the opportunity cost of this decision? a. 0.3 hairbrush b. 3 hairbrushes c. 30 hairbrushes d. 100 hairbrushes
B
Refer to Table 4-11. If the price were $4, a a. surplus of 15 units would exist, and price would tend to fall. b. shortage of 25 units would exist, and price would tend to rise. c. surplus of 25 units would exist, and price would tend to fall. d. shortage of 40 units would exist, and price would tend to rise.
A
Refer to Table 4-12. If both members and non-members are allowed to purchase tickets to this year's celebrity golf tournament and the country club sets the ticket price at $20, then there will be a. a shortage of 300 tickets. b. a surplus of 300 tickets. c. 300 tickets sold. d. 600 tickets unsold.
C
Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is a. $44. b. $56. c. $72. d. $96.
A
Refer to Table 7-5. Who experiences the largest loss of consumer surplus when the price of an orange increases from $0.70 to $1.40? a. Allison b. Bob c. Charisse d. All three individuals experience the same loss of consumer surplus.
D
Refer to Table 7-7. You have four essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You offer to sell the tickets for $325. How many tickets do you sell, and what is the total consumer surplus in the market? a. one ticket; $175 b. two tickets; $225 c. three tickets; $225 d. three tickets; $275
C
Steak and chicken are substitutes. A sharp reduction in the supply of steak would a. increase consumer surplus in the market for steak and decrease producer surplus in the market for chicken. b. increase consumer surplus in the market for steak and increase producer surplus in the market for chicken. c. decrease consumer surplus in the market for steak and increase producer surplus in the market for chicken. d. decrease consumer surplus in the market for steak and decrease producer surplus in the market for chicken.
C
Suppose that someone makes the argument that because empty alcohol containers are found at many accidents, the containers cause accidents. This would be an example of a. sound logic. b. reverse causality. c. omitted variables. d. bias.
D
Suppose that the labor market for life guards is initially in equilibrium. Then a new television series debuts which glamorizes the social opportunities for life guards. What happens to the equilibrium wage and quantity of life guards? a. Both the equilibrium wage and quantity increase. b. Both the equilibrium wage and quantity decrease. c. The equilibrium wage increases, and the equilibrium quantity decreases. d. The equilibrium wage decreases, and the equilibrium quantity increases.
A
The overriding reason why households and societies face many decisions is that a. resources are scarce. b. goods and services are not scarce. c. incomes fluctuate with business cycles. d. people, by nature, tend to disagree.
A
Tom produces baseball gloves and baseball bats. Steve also produces baseball gloves and baseball bats, but Tom is better at producing both goods. In this case, trade could a. benefit both Steve and Tom. b. benefit Steve, but not Tom. c. benefit Tom, but not Steve. d. benefit neither Steve nor Tom.
C
We can say that the allocation of resources is efficient if a. producer surplus is maximized. b. consumer surplus is maximized. c. total surplus is maximized. d. sellers' costs are minimized.
D
When a tax is placed on the buyers of lemonade, the a. sellers bear the entire burden of the tax. b. buyers bear the entire burden of the tax. c. burden of the tax will be always be equally divided between the buyers and the sellers. d. burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.
B
Which of the following causes a shortage of a good? a. a binding price floor b. a binding price ceiling c. a tax on the good d. None of the above is correct.
B
Which of the following events must cause equilibrium quantity to fall? a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increases d. demand and supply both increase
C
Which of the following events would unambiguously cause an increase in the equilibrium price of cotton shirts? a. an increase in the price of wool shirts and a decrease in the price of raw cotton b. a decrease in the price of wool shirts and a decrease in the price of raw cotton c. an increase in the price of wool shirts and an increase in the price of raw cotton d. a decrease in the price of wool shirts and an increase in the price of raw cotton
D
Which of the following is a determinant of the market supply curve but not a determinant of an individual seller's supply? a. production technology b. expectations c. input prices d. the number of sellers
D
Which of the following would not shift a market labor supply curve to the left? a. an increase in the wage paid to workers in a competing market b. labor-saving technology c. a change in worker tastes so that workers want to retire earlier d. an increase in immigration