ECON

What will the impact be on the supply of long-haul truck transportation services if diesel fuel becomes cheaper? a. The supply of truck transportation services will increase. b. The supply of truck transportation services will decrease. c. The supply of diesel fuel will increase. d. There will be no change in the supply of truck transportation services.

a.

Which of the following is NOT a factor that can shift supply? a. The market price of a product. b. The expected future price of a product. c. The price of a substitute-in-production. d. The price of a complement-in-production.

a.

Which of the following scenarios illustrates the law of demand? a. Kathleen eats more steak when the price is low, and less when the price is high. b. A research company finds that the more expensive a particular brand of a designer handbag, the more that consumers are willing to purchase the brand. c. Francis does not care about the price of coffee at the coffee shop - he must buy two cappuccinos every day, regardless of the price. d. John likes to drink spring water. At $2 he buys four bottles of water, and at $1.50 he still buys four bottles of water.

a.

Which statement is CORRECT? a. A change in quantity demanded is a movement along the demand curve, and a change in demand is a shift of the demand curve. b. A change in demand is a movement along the demand curve, and a change in quantity demanded is a shift of the demand curve. c. A change in quantity demanded and a change in demand are shifts of the demand curve. d. A change in quantity demanded and a change in demand are movements along the demand curve.

a.

You are considering whether you should go out to dinner at a restaurant with your friend. The meal is expected to cost you $50, you typically leave a 20% tip, and a round-trip Uber ride will cost you $15. You value the restaurant meal at $30 and the time spent with your friend at $50. You should ____ to dinner with your friend because the benefit of doing so is _____ than the cost. a. go; greater b. go; less c. not go; greater d. not go; less

a.

You have paid $100 for student season tickets to the football games at your university. It is halfway through the season, and the team has not won any games. You are considering whether you will attend any future games this season. All of the following are costs or benefits you should consider when making this decision EXCEPT the a. $100 you spent on the season tickets. b. time spent to go to the game instead of studying. c. satisfaction you will get if your team wins a game. d. $5 you can make per game by selling your remaining tickets

a.

King Taco charges the same price for everything on its menu: $5 will buy a taco, a burrito, or nachos. You buy the burrito and think that if you had not purchased the burrito, you would have purchased the taco. The opportunity cost of the burrito is: a. $5. b. your forgone enjoyment of the taco. c. $5 and your forgone enjoyment of the taco. d. $5 and your forgone enjoyment of the taco and the nachos.

b.

Peanut butter and peanut oil are complements-in-production. When the price of peanut butter rises, the a. supply of peanut oil will fall. b. supply of peanut oil will rise. c. quantity supplied of peanut butter will remain unchanged. d. quantity supplied of peanut butter will fall.

b.

Sarah Sandoval is a coffee farmer trying to decide how many tons of coffee to produce. She can sell each ton of coffee for $2,500. The cost of producing the first ton of coffee is $500, for the second ton, it's $1000. For each additional ton of coffee produced, the marginal cost increases by $500. How many tons of coffee should Sarah produce, and what is the total cost of her coffee production? a. She will produce four tons at a total cost of $5,000. b. She will produce five tons at a total cost of $7,500. c. She will produce six tons at a total cost of $10,500. d. She will produce seven tons at a total cost of $14,000.

b.

Suppose Ben has a part-time business mowing lawns. He has mowed nine lawns on a given day; the price he will receive to mow the tenth lawn is $20, and the marginal cost is $12. Bob should: a. There is not enough information to decide. b. mow the tenth lawn. c. increase his marginal benefit. d. not mow the tenth lawn.

b.

Suppose you manage a convenience store. If macaroni and cheese is an inferior good, what do you suppose would happen to the price and quantity sold of macaroni and cheese as incomes fall during a recession? a. The price would increase, and the quantity would decrease. b. The price and quantity would both increase. c. The price and quantity would both decrease. d. The price would decrease, and the quantity would increase.

b.

Taryn is buying shirts online and has to decide how many shirts to buy. She should buy another shirt if the a. marginal benefit of the next shirt is less than the price of the shirt. b. marginal benefit of the next shirt is at least as high as the price of the shirt. c. total benefit when purchasing one more shirt is less than the total cost of the shirts. d. total benefit when purchasing one more shirt is at least as high as the total cost of the shirts.

b.

The Mile End Deli serves traditional delicatessen food in Brooklyn, New York. Which cost is MOST likely fixed at the deli? a. the tomato sauce used to make soups b. the chairs customers sit on c. the staff d. the rye bread used to make pastrami sandwiches

b.

The price of microchips used to produce iPads rises. As a result, the equilibrium price of iPads _____, and the equilibrium quantity _____. a. rises; increases b. rises; decreases c. falls; decreases d. falls; increases

b.

Which event shifts the supply curve for mint chocolate chip ice cream to the left? a. a decrease in the price of strawberry ice cream, a substitute for mint chocolate chip ice cream b. an increase in the price of cream, an ingredient in ice cream c. an increase in income, if ice cream is a normal good d. a decrease in the price of ice cream

b.

Which factor will NOT cause an increase in the demand for shoes? a. an increase in income, assuming shoes are a normal good b. a decrease in the price of shoes c. an increase in the popularity of shoes, as adventurous new styles of shoe become fashionable d. a decrease in income, assuming shoes are an inferior good

b.

Which factor would cause a DECREASE in the supply of soy candles? a. an increase in the number of firms making soy candles b. expectations that the price of soy candles will rise c. a decrease in employee wages manufacturing soy candles d. an advance in the technology of producing soy candles

b.

Which statement BEST explains the law of demand? a. As the population rises, more electricity is consumed. b. As the price of computers rises, fewer computers are purchased. c. As income rises, more cars are purchased, assuming cars are a normal good. d. As the price of corn rises, more corn is sold.

b.

A new Subway location has offered a prize—a free meal (valued at $5) each week for a year—to its first 100 customers on opening day. Isabella camped out for 48 hours before the opening to be one of the first 100 customers and successfully obtained the prize. The cost to Isabella of obtaining the "free meal a week for a year" prize was: a. zero, since it was free. b. $260—the amount that would have to be paid if it were not free. c. whatever else she would have done with the 48 hours. d. the amount that would have to be paid if it were not free plus whatever else she would have done with the 48 hours.

c.

Antonio has a cell phone, and his service provider is AT&T. When he calls his wife, Erika, who is also an AT&T customer, he does not have to pay for those minutes. The more AT&T customers there are in the market, the greater the benefit Antonio receives. This is: a. a Pigouvian subsidy. b. a technology spillover. c. a network effect. d. the Coase theorem.

c.

Following the rational rule, the economic surplus is maximized when a. total benefits equal total costs. b. total benefits exceed total costs. c. marginal benefits equal marginal costs. d. marginal benefits exceed marginal costs.

c.

Grapes become more expensive in the market. Which of the following can explain the increase in price? a. Farmers are now able to produce larger grapevine yields using the same level of inputs. b. The government reduces fuel taxes, which lowers transportation costs. c. Grape production is the same, but wine production has gone up, which requires more grapes. d. Consumers are purchasing fewer grapes as opposed to other types of fruits.

c.

If a demand curve is downward sloping, a decrease in supply with no change in demand will lead to a(n) _____ in the equilibrium quantity and a(n) _____ in the equilibrium price. a. increase; increase b. increase; decrease c. decrease; increase d. decrease; decrease

c.

In the market for organic beef, what would cause a price increase? a. The price of chicken decreases. b. Doctors tell patients that beef is full of saturated fat that causes heart attacks. c. The prices of grass and organic corn increase. d. There is a movement in the United States toward veganism.

c.

It is certain that the equilibrium quantity will fall when: a. the supply curve and the demand curve both shift to the right. b. the supply curve shifts to the right, and the demand curve shifts to the left. c. the supply curve and the demand curve both shift to the left. d. the supply curve shifts to the left, and the demand curve does not shift.

c.

Recent evidence suggests exercise promotes longevity and reverses aging. Based on this information, what might happen in the market for exercise-related goods and services? a. The demand for exercise equipment will not be affected. b. People will reduce their purchases of exercise equipment. c. The demand for exercise machines and/or gyms will increase. d. The demand for gyms will not change.

c.

Rose Riley's parents have booked and paid for a family trip to Aspen, Colorado, during her spring break. Rose's friends recently decided to drive to Destin, Florida, for spring break. Rose needs to decide whether to join her parents in Aspen or drive to the beach with her friends. The opportunity costs of joining her friends on the trip to Destin include each of the following EXCEPT a. her parents' anger if she skips the family trip to Aspen. b. her contribution to gas money for the drive to Destin. c. the ski lift ticket her parents have already purchased for her. d. the hotel costs she will split with her friends in Destin.

c.

Shifts in market demand can result from a change in a. the cost of production for an item. b. the number of producers of an item in the market. c. the type and number of buyers. d. the price of a product.

c.

Spaghetti and salad are related goods. Holding everything else constant, if the price of spaghetti decreases and the demand for salad increases, spaghetti and salad are probably: a. substitutes. b. normal. c. complements. d. inferior.

c.

Sunk costs are costs that a. are potential costs associated with a particular decision. b. are part of the opportunity costs of a decision. c. are incurred in the past and cannot be reversed. d. should be considered in any decision.

c.

Suppose the market for gasoline is in equilibrium. You have heard that the price of crude oil is rising because of Organization of Petroleum Exporting Countries (OPEC) restrictions. You are also aware that the number of drivers is rising. Knowing this, you predict that the price of gasoline will _____ and the quantity of gasoline bought and sold will _____. a. rise; rise b. rise; fall c. rise; rise or fall d. rise or fall; fall

c.

Suppose we observe an increase in both the price of ping pong tables and the quantity of ping pong tables bought and sold. Which statement would explain this observation? a. a violation of the law of demand b. a decrease in the demand for ping pong tables c. an increase in the demand for ping pong tables d. an increase in the supply of ping pong tables

c.

The demand for bottled water decreases at a time when people believe bottled water prices will soon fall. The change in demand is most likely attributable to a change in: a. consumer preferences. b. income. c. consumer expectations. d. prices of other goods.

c.

The opportunity costs of a decision may include each of the following types of costs EXCEPT a. out-of-pocket financial costs. b. forgone financial costs. c. sunk costs. d. nonfinancial costs.

c.

The rational rule suggests you should continue with an activity until your _____ benefit _____ your marginal cost. a. total; equals b. total; exceeds c. marginal; equals d. marginal; is less than

c.

When a firm experiences diminishing marginal product, its: a. output is falling. b. marginal product is negative. c. marginal product is falling but is likely still positive. d. total product is falling because the marginal product is falling and positive.

c.

Which factor would cause a supply curve to shift to the LEFT? a. an increase in the number of firms selling a good b. an increase in the price of a good c. an increase in the cost of an input used to produce a good d. a technological improvement in the production of a good

c.

Which of the following is not a demand shifter? a. The number of buyers in the market. b. The price of a complementary good. c. The price of the product. d. The price of a substitute good.

c.

Which of the following lists only factors that would cause an increase in the demand for an item? a. A decrease in the number of consumers in the market; a rise in the price of a substitute good; a fall in the price of a complementary good b. An increased congestion effect; a decrease in the number of consumers in the market; increase in popularity of a product c. Information on possible side effects of using an item; a rise in income (if the good is a normal good); a fall in the price of a substitute good d. Information on possible side effects of using an item; a rise in income (if the good is a normal good); a fall in the price of a substitute good

c.

Why does the demand curve slope downwards? a. It slopes downward due to the positive relationship between price and quantity demanded. b. It slopes downward due to buyers perceiving fall in price as a fall in quality. c. It slopes downward due to the law of demand. d. It slopes downward due to stores lowering the prices on their products.

c.

You notice that the price of notebooks falls and that the quantity of notebooks sold increases. You suspect that the _____ notebooks shifts to the _____. a. demand for; right b. demand for; left c. supply of; right d. supply of; left

c.

_____ is a measure of how much your decision has _____ your well-being. a. Willingness to pay; improved b. Willingness to pay; reduced c. Economic surplus; increased d. Economic surplus; decreased

c.

Amul Food Factory in India makes ice cream and produces processed and condensed milk. In the factory, the firm's employees use milk and sugar. The firm runs on electricity and purchases raw milk every day. Large robotic assembly lines fill and package the ice cream containers. Large industrial freezers store the ice cream. Which of the following are variable costs for Amul Food Factory? (i) The cost of the raw milk purchased from farmers. (ii) The cost of buying the robotic assembly lines.(iii) The cost of buying electricity. (iv) The cost of buying industrial freezers. (v) The cost of sugar. a. (iii) and (v) b. (i), (ii), (iii), and (iv) c. (ii) and (iv) d. (i), (iii), and (v)

d.

An increase in price and an ambiguous change in quantity are MOST likely caused by: a. a shift to the left of the demand curve and no shift of the supply curve. b. a shift to the left of the supply curve and no shift of the demand curve. c. a shift to the right of the supply curve and a shift to the left in demand. d. a shift to the left of the supply curve and a shift to the right of the demand curve.

d.

As a result of technological innovation, automated water pumps are being installed on the farms of Kenyan tomato farmers. As a result of the increased use of automated water pumps, the equilibrium price of tomatoes will: a. rise, due to a rise in demand. b. fall, due to a fall in demand. c. rise, due to a fall in supply. d. fall, due to a rise in supply.

d.

It is certain that the equilibrium price will fall when: a. supply is greater than demand. b. the supply curve shifts to the left, and the demand curve shifts to the left. c. supply and demand both increase. d. the quantity supplied is greater than the quantity demanded.

d.

Jane goes to an all-you-can-eat restaurant and makes three trips to the buffet. After finishing food from her third trip, she felt sick and throws up. Which of the following economic explanations best matches Jane's situation? a. Jane's marginal benefit from eating the third place was positive but less than that of the second plate. b. Jane was charged extra for the third plate at the buffet. c. Jane's marginal benefit from her third trip to the buffet was larger than her marginal benefit from her second trip. d. Jane's marginal benefit from eating the third plate was negative.

d.

Juan McDonald is willing to pay $600 for a new iPad. Apple (the producer of iPads) is selling a new iPad for $700. It costs Apple $400 to produce this iPad. A voluntary economic transaction between Juan and Apple _____ occur because ____ would be better off due to the transaction. a. will; neither Juan nor Apple b. will; both Juan and Apple c. will not; only Juan d. will not; only Apple

d.

What happens to the equilibrium price and equilibrium quantity when demand and supply decrease simultaneously, but the relative size of the shifts are not known? The equilibrium price rises, and the change in equilibrium quantity is ambiguous. The equilibrium price falls, and the change in equilibrium quantity is ambiguous. The equilibrium quantity rises, and the change in equilibrium price is ambiguous. d. The equilibrium quantity falls, and the change in equilibrium price is ambiguous.

d.

When making a profit-maximizing "how much" decision, if the price of a good or service is less than its marginal cost, the individual can make herself better off by: a. changing in the way marginal values are computed. b. increasing the amount of money spent on the good or activity until the price of one more unit is greater than the marginal cost. c. increasing the amount of the good or activity as long as the price of one more unit is less than the marginal cost. d. decreasing the amount of the good or activity as long as the price of one more unit is less than the marginal cost.

d.

Jonathan Mendez is deciding whether to study for his economics exam at a café or go to a concert with friends tonight. The cost of dinner at the fancy restaurant on the way to the concert is ____ in the calculation of his opportunity cost and represents a _____ cost. a. included; financial b. included; nonfinancial c. not included; financial d. not included; sunk

a.

A surplus occurs when the: a. equilibrium price is below the current price. b. quantity demanded exceeds the quantity supplied. c. current price is below the equilibrium price. d. quantity demanded exceeds the quantity supplied, and the current price is below the equilibrium price.

a.

Assuming that iPhones are normal goods, which factor will NOT increase the demand for iPhones? a. lower prices for Samsung smartphones b. cool new computer games that can only be played on iPhones c. an increase in the incomes of iPhone users d. the price of laptop computers increasing

a.

For consumers, hot dogs and hamburgers are substitutes. A rise in the price of hot dogs causes a _____ in the equilibrium price of hamburgers and a _____ in the equilibrium quantity of hamburgers. a. rise; rise b. rise; fall c. fall; rise d. fall; fall

a.

Nerida Kyle can either commute to work using a bus or purchase a new car. The bus fare each way is $2. Nerida works five days a week for 50 weeks a year. Based solely on the benefit of avoiding the cost of her bus tickets, Nerida should purchase a car if the cost of the car is _____ than _____ per week. a. less $20 b. less$10 c. greater; $20 d. greater; $10

a.

A shortage occurs when: a. quantity supplied exceeds quantity demanded. b. quantity demanded exceeds quantity supplied. c. there is excess production. d. when there is insufficient demand.

b.

According to the marginal principle, keep increasing quantity until the marginal benefit of an additional item is _____ the marginal cost of an additional item. a. greater than b. equal to c. less than d. greater than or less than

b.

Amanda Mendez goes to a local café 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? a. $10 b. $6 c. $4 d. $3

b.

A decrease in demand and an increase in supply will lead to a(n) _____ in the equilibrium quantity and a(n) _____ in the equilibrium price. a. decrease; decrease b. indeterminate change; increase c. indeterminate change; decrease d. increase; indeterminate change

c.

A cost that does NOT depend on the quantity of output produced is: a. marginal. b. variable. c. average. d. fixed

d.

To maximize economic surplus, keep increasing output as long as a. total benefits equal total costs. b. total benefits exceed total costs. c. marginal benefits equal marginal costs. d. marginal benefits exceed marginal costs.

d.

Variable costs are the costs that a. are independent of the amount of output produced. b. are incurred to build factories and assembly plants. c. stay fixed with the quantity of output produced. d. vary with the quantity of output produced.

d.

Which factor would cause an INCREASE in the supply of footballs? a. expectations that the price of footballs will rise b. an increase in the price of footballs c. an increase in input prices d. a decrease in the cost of materials used to produce footballs

d.

A shift of the demand curve for fried chicken would NOT be caused by a change in: a. income. b. the price of hot dogs. c. the price of fried chicken. d. the popularity of fried chicken.

c.

Over the past few years, the technology associated with producing flat-screen televisions has improved. This has led to a(n) _____ in the _____ flat-screen televisions. a. decrease; demand for b. decrease; quantity supplied of c. decrease; supply of d. increase; supply of

d.

How is the economic surplus generated by a decision calculated? a. It is the total benefits minus total costs arising from the decision. b. It is the total benefits plus total costs arising from the decision. c. It is the sum of benefits arising from the decision. d. It is the sum of costs arising from the decision.

a.

If baseball bats and furniture are substitutes in production, then a rise in the price of baseball bats: a. decreases the supply of furniture. b. increases the demand for furniture. c. increases the supply of furniture. d. decreases the demand for furniture.

a.

If expected future profits in an industry fall, a. supply will shift left. b. supply will shift right. c. supply is not affected. d. the number of sellers in the market does not change.

a.

Macaroni and cheese is an inferior good. If students' incomes at your college increase, the effect on macaroni and cheese consumption will be: a. a decrease in demand. b. no change in demand. c. an increase in the quantity demanded. d. an increase in demand.

a.

Nerida Kyle could either commute to work via Uber or purchase a new car. The average cost of her one-way Uber trip is $15. Nerida works five days a week for 50 weeks a year. Based solely on avoiding the cost of an Uber, Nerida should purchase a car if the cost of the car is _____ than _____ per week. a. less; $150 b. less; $75 c. greater; $150 d. greater; $75

a.

When evaluating how much to produce, increase the quantity produced if the marginal benefit of an additional item is _____ the marginal cost of the additional item. a. greater than or equal to b. equal to c. less than or equal to d. less than

a.

How will the demand for Gucci shoes change today, if the government decides to tax designer shoes next year? a. People will stop buying Gucci shoes today. b. The demand for Gucci shoes will shift to the right today. c. There will be no impact on the demand for Gucci shoes today. d. The demand for Gucci shoes will shift to the left today.

b.

If a firm expects lower prices in the future a. it will decrease supply today. b. it will increase supply today. c. the quantity supplied will decrease today. d. there will be a movement along the same supply curve for the firm.

b.

Paper producers can manufacture both printing and drawing paper. What effect would rising prices for printing paper have on the market for drawing paper? a. The supply of drawing paper will double as compared to before. b. The supply of drawing paper will decrease. c. The supply of drawing paper will increase. d. The quantity supplied of drawing paper will increase.

b.

Sunk costs should ____ be considered as part of the opportunity costs of a decision. a. always b. never c. sometimes d. rarely

b.

A downward-sloping demand curve implies: a. buyers are willing to buy less when prices are lower. b. there is a positive relationship between price and quantity demanded. c. there is an inverse relationship between price and quantity demanded. d. there is no relationship between price and quantity demanded.

c.

An increase in the price of shoes would probably result in _____ in the demand for shoelaces. a. random fluctuations b. an increase c. a decrease d. no change

c.

An increase in demand and an increase in supply will lead to a(n) _____ in the equilibrium quantity and a(n) _____ in the equilibrium price. a. decrease; indeterminate change b. indeterminate change; increase c. indeterminate change; decrease d. increase; indeterminate change

d.

If a seller expects prices to rise in the future a. the supply will increase today. b. the quantity supplied will increase today. c. there will no change in the seller's actions today. d. it will stock up today and sell the goods when the price rises

d.

Researchers have found a new strain of canola (a grain used to produce canola oil) that is resistant to pesticides and drought while yielding more canola oil. Holding all else constant, this research will: a. decrease the quantity supplied of canola oil. b. shift the supply curve for canola oil leftward. c. increase the quantity supplied of canola oil. d. shift the supply curve for canola oil rightward.

d.

Steak is a normal good. If students' incomes at your college decrease, the effect on steak consumption will be: a. an increase in demand. b. an increase in the quantity demanded. c. no change in demand. d. a decrease in demand.

d.

The Rational Rule for Sellers says that a seller should sell one more unit of an item if the price is: a. less than the marginal cost. b. less than the marginal benefit. c. greater than or equal to the marginal benefit. d. greater than or equal to the marginal cost.

d.

Which factor would cause an INCREASE in the supply of light bulbs? a. an increase in the price of light bulbs b. expectations that the price of light bulbs will rise c. a decrease in the number of firms manufacturing light bulbs d. an advance in the technology of producing light bulbs

d.

Suppose that supply decreases and demand increases. What is the MOST likely effect on price and quantity? a. Price will increase, but quantity may increase, decrease, or stay the same. b. Price will decrease, but quantity may increase, decrease, or stay the same. c. Price will decrease, and quantity will decrease. d. Price will increase, and quantity will increase.

a.

What happens to the equilibrium price and quantity when demand increases and simultaneously supply decreases, and the relative size of the shifts is not known? a. The equilibrium price rises, and the change in the equilibrium quantity is ambiguous. b. The equilibrium price falls, and the change in the equilibrium quantity is ambiguous. c. The equilibrium quantity rises, and the change in the equilibrium price is ambiguous. d. The equilibrium quantity falls, and the change in the equilibrium price is ambiguous.

a.

Diminishing marginal product occurs when: a. each additional unit of an input adds more to total output than the previous unit. b. the total product decreases. c. each additional unit of an input adds less to total output than the previous unit. d. the marginal product of an input is increasing at a decreasing rate.

b.

Vincent Pearson makes dining tables, and he is trying to decide how many tables to produce. He can sell each dining table for $3,000. The cost of the first table is $1,000, for the second it's $1,500. For each additional table he produces, the marginal cost of each table increases by $500. How many dining tables should Vincent produce, and what is the total cost of his production? a. He will produce four tables at a cost of $12,000. b. He will produce five tables at a cost of $10,000. c. He will produce six tables at a cost of $13,500. d. He will produce seven tables at a cost of $17,500.

b.

Suppose a technological improvement lowers the cost of producing guava candy. At the same time, preferences for guava candy decrease. The equilibrium quantity of guava candy will: a. increase. b. decrease. c. increase, decrease, or remain the same, depending on the relative magnitudes of the shifts of the demand and supply curves. d. increase or decrease, depending on whether the price of guava candy falls or rises

c.

If ramen noodles are an inferior good, then an increase in income will lead to a: a. movement down along the demand curve for ramen noodles. b. movement up along the demand curve for ramen noodles. c. rightward shift of the demand curve for ramen noodles. d. leftward shift of the demand curve for ramen noodles.

d.

If supply is upward sloping, a decrease in demand with no change in supply will lead to a(n) _____ in equilibrium quantity and a(n) _____ in equilibrium price. a. increase; increase b. increase; decrease c. decrease; increase d. decrease; decrease

d.

In much of the country, car owners choose to operate their vehicles using gasoline or electricity, both of which are normal goods. Which factor would cause an increase in the demand for gasoline? a. a decrease in the price of electricity b. a decrease in consumer incomes c. an increase in the price of gasoline d. an increase in consumer incomes

d.

In the market for chimichangas, a normal good, you observe that the equilibrium price and quantity have decreased. This can be caused only by: a. a decrease in the price of hamburger meat. b. a decrease in the salaries of chimichanga shop workers. c. more chimichanga shops opening up. d. a decrease in the incomes of people who love to eat chimichangas.

d.

Facebook is subject to network effects because: a. its value to an individual declines when the number of other people using it increases. b. its value to an individual increases when the number of other people using it increases. c. its value is determined only by its marginal private benefit. d. it yields negative externalities.

b.

If the price of pepperoni (an ingredient in pizza) increases: a. the supply of pizza will rise. b. the supply of pizza will fall. c. the supply of pizza will not change. d. the quantity of pizza supplied will fall.

b.

If yoghurt and smoothies are substitutes in consumption, then a rise in the price of yoghurt will cause the: a. demand for smoothies to decrease. b. demand for smoothies to increase. c. supply of smoothies to increase. d. supply of smoothies to decrease.

b.

Jonathan Mendez is deciding whether to study for his economics exam at a café down the street or go to a concert a few cities over. The time spent commuting to the concert is ____ in his opportunity cost calculations and represents a _____ cost. a. included; financial b. included; nonfinancial c. not included; financial d. not included; sunk

b.

Juan McDonald is willing to pay $900 for a new iPad. He offers to pay $800 for an iPad at the Apple store. It costs Apple $700 to produce this iPad. A voluntary economic transaction between Juan and Apple _____ occur because ____ would be better off due to the transaction. a. will; neither Juan nor Apple b. will; both Juan and Apple c. will not; only Juan d. will not; only Apple

b.

Kevin Williamson goes to a local coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $6. The price of the latte is $2. The cost to the coffee shop to produce the latte is $1. How much economic surplus does Kevin gain when he purchases the latte? a. $6 b. $4 c. $2 d. $1

b.