Econ Midterm One

Felix is planning a trip to Florida for vacation. He estimates his round-trip airfare will be $275, his car rental will cost $175 and his hotel room will be $950 for his one-week trip. He always eats in restaurants, and always pays the same amount for food wherever he is; his weekly food spending is $290. Felix is paid by the hour, so he would not be able to earn his usual $1,250 per week while on vacation. How much will Felix spend while on his vacation?

1690

A plot of a consumer's marginal utility for a good unit by unit is that consumer's _______ _______ for that good.

demand curve

Specialization and trade can make both people better off if their opportunity costs are _______.

different/lower

Even at all-you-can-eat buffets, people eventually stop eating because of _______ ________ utility.

diminishing marginal

Production possibilities frontiers always slope _____ , because with scarce resources you can only produce more of something by producing _____ of something else.

down less

The _______ of demand measures the responsiveness of _______ _______ of a product to changes in its price

elasticity quantity demanded

scarcity is the result of people's unlimited ___facing society's limited___

ends means

Movement along a demand curve is caused by changes in the _______. Demand curves ______ when something else that affects how much people want to buy changes.

price shift

If all resources are equally able to produce both goods, the shape of the production possibilities frontier would be a _______ _____.

straight line

If the demand for a product is elastic, a decrease in price will cause the buyer's expenditure to go _______ and the seller's revenue to go _______.

up up

economists define efficiency as the absence of __

waste

Based on the results of the last two questions, the elasticity of demand for paperback books is _______.

3

What is something that causes the demand curve to shift when it changes

INCOME, PREFERENCE, POPULATION SHIFTS

A supply curve shows the relationship between the ______ of a good and its _______ _______.

price quantity supplied

Remember the law of diminishing marginal utility. To find the optimal amount to purchase, each consumer should buy more if their marginal utility is _____ the price and stop when their marginal utility of the next unit falls _____ the price.

above below

If there is a shortage in the market for flashdrives, the price of flashdrives will _____, the quantity demanded will ______ and the quantity supplied will ______.

increase decrease increase

The _______ utility of another cookie is the _______ to total utility you would get by increasing your cookie consumption by one.

marginal increase

when there is scarcity, choosing not to do something else. this is known as the principle of____

opportunity cost

When a market is in equilibrium, the price is at the level where _______ and _______ are equal.

quantity supplied quantity demanded

If a 10 percent increase in price leads to a more than 10 percent reduction in quantity demanded, the demand for the good is _______.

elastic

Suppose that Nadia likes sub sandwiches, and that she is willing to pay at most $6 for the first sandwich for the week, but would pay only $5 for the second, $4 for the third, $3 for the fourth and only $2 at most for the fifth. If the price of each sub sandwich is $3.50, what will Nadia's consumer surplus be?

$5

If the most you would be willing to pay for a ticket to the Hawkeye game is $100, and tickets are on sale for $35, your consumer surplus is

$65

The price of paperback books increases from $9 to $11. Based on the average of the initial and final prices, this is a _______ increase expressed as a decimal or a ______ percent increase in the price.

.2 20%

As a result of the price increase, the quantity of books demanded falls from 13 million to 7 million. Based on the average of the initial and final quantities, this is a _______ decrease expressed as a decimal or a ______ percent decrease in quantity demanded.

.6 60%

Felix is planning a trip to Florida for vacation. He estimates his round-trip airfare will be $275, his car rental will cost $175 and his hotel room will be $950 for his one-week trip. He always eats in restaurants, and always pays the same amount for food wherever he is; his weekly food spending is $290. Felix is paid by the hour, so he would not be able to earn his usual $1,250 per week while on vacation. What is the opportunity cost of his vacation?

2650

Canada can produce 12 thousand airplanes or 4 million doses of medicine per year. England can produce 1 thousand airplanes or 2 million doses of medicine per year. Both countries can be better off if _______ trades _______ to _______. A. Canada, airplanes, England B. Canada, medicine, England C. England, airplanes, Canada D. England, medicine, Canada

A. Canada airplanes to England

Because resources are scarce societies have to decide all the following except A. what mix of goods and services to produce B. which goods and services should be produced by which people C. where goods and services should be produced D. which resources should be used to produce these goods and services

C. Where goods and services should be produced

If marginal utility is decreasing, consuming an extra unit will make you less happy

FALSE

True or False In the movie, Castaway, Tom Hanks plays a person stranded on an isolated island in the middle of the ocean. Since there is no one else on the island, there is no "economy" - no one to hire or work for, no one to buy from and sell to - and therefore economic thinking wouldn't be helpful at all.

False

Trading allows people to specialize in the activities in which they have a ___ ____

comparative advantage

What is something that causes the supply curve to shift when it changes

competition, substitutes, resources, technology, expectations

The difference between the most a consumer is willing to pay for a good and the price the consumer actually pays is called _______ _______.

consumer surplus

If nothing else changes, a decrease in the price of a good leads to a _______ in the quantity supplied of that good.

decrease

If nothing else changes, an increase in the price of a good leads to a _______ in the quantity demanded of that good.

decrease

The production possibilities frontier shows the different combinations of goods that can be produced from a given set of _______.

inputs

If a buyer's MU < P for a good, they should buy _______ of it.

less

Consumers can use _______ analysis to find the optimal amount of a good to purchase.

marginal

When considering whether to buy more of a good, a buyer should compare the _______ _______ that they would get from another unit with the _______ that they would have to pay for it.

marginal utility price

Your total monetary utility of 100 cookies is the _______ amount of _____ you would voluntarily give up in exchange for the 100 cookies.

maximum money

If the opportunity cost of producing one ton of sugarcane in the U.S. is 1 ton of pineapples, the U.S. will not trade sugarcane to Brazil unless it gets _______ than 1 ton of pineapples per ton of sugarcane in return

more

If the price of gasoline rises significantly, families cut back on other buying in the short term, but over time their demand becomes _______ elastic as they buy fuel efficient cars and live closer to work.

more

Arnold would pay up to $8 for a piece of pie, up to $12 for 2 pieces, and up to $13 for three pieces. Arnold's marginal utility of the third piece of pie is ______ (in dollars

one dollar

The revenue that a seller receives is equals the _______ times the _______ sold.

price quantity

A demand curve shows the relationship between the ______ of a good and its _______ _______.

price quantity demanded

______ ______ a supply curve is caused by changes in the price. Supply curves shift when something else that affects how much people want to _______ changes.

shifts along produce