ECON QUIZ COLLECTION

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?

$4

What is the equilibrium price in this market?

$9

(Figure: Supply Curve) The graph shows the supply curve for jars of laundry detergent.If 18 units are sold at a price of $20, what is the producer surplus on the last jar sold?

0

Chin purchases five protein bars at a price of $3 each. The marginal benefit he receives from each bar is $5 for the first bar, $4.50 for the second bar, $4 for the third bar, $3.50 for the fourth bar, and $3 for the fifth bar. The marginal cost of producing the bars is $2 each. What is Chin's consumer surplus on the fifth bar?

0

Portia produces and sells headbands. Her marginal cost for one headband is $6, and her average cost is $4. She gains producer surplus only when she sells headbands at a price above:

6

(Figure: Graph) In the graph, the movement from point J to point K must have been caused by:

A fall in the price of an item

A bakery hires a baker who can make 15 cakes per day. The bakery then decides to hire a second baker who will use the kitchen at the same time as the first baker. The bakery finds that the second baker can produce only an additional nine cakes per day. What concept does this scenario illustrate?

Diminishing marginal product

(Figure: Market for Luxury SUVs) Which of the following graphs shows what will happen to the supply curve for luxury SUVs, if economists predict an increase in demand for these vehicles?

Graph d (line not moving arrow pointing up)

Which of the following is a positive economic statement?

If the government raises taxes, people will have less income available for purchases and saving.

Which of the following is NOT one of the four key reasons that the government provides in-kind benefits rather than cash benefits?

In-kind benefits give the recipient the greatest flexibility to choose what matters most.

Which of the following scenarios illustrates the law of demand?

Kathleen eats more steak when the price is low, and less when the price is high.

Which principle tells you that the true cost of something is the next best alternative you have to give up to get it?

Oppurtunity cost

Which tax is regressive? Arturo pays an 8% tax on the first $9,000 he earns plus _____ tax on any additional income.

a 5%

In a market graph, consumer surplus is the area:

above the price and below the demand curve.

People gain consumer surplus when they purchase an item:

at a price below the value of the benefit they receive from the item.

Which principle helps buyers and sellers make decisions about whether to trade?

cost benefit

(Figure: Graph) Refer to the graph to answer the question. In the graph, the movement from point W to point P represents:

decrease in demand

The marginal benefit minus the marginal cost equals:

economic surplus

According to the marginal principle, keep increasing quantity until the marginal benefit of an additional item is _____ the marginal cost of an additional item.

equal to

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:

fall due to a rise in supply

interdependence principle

implies that buyers decisions are affected by many factors other than the price of an item.

(Figure: Graph) Refer to the graph to answer the question.The movement from point M to point N represents:

increase in quantity demanded

When you get hired for a well-paying job, you will most likely view older used cars as

inferior goods

Diminishing marginal benefit:

is when buying an additional item yields a smaller marginal benefit than the previous item.

Statements about what option should be chosen are _____ statements.

normative

When you calculate marginal costs, they should include:

only variable costs.

Decisions should reflect the _____ costs, rather than just the _____ costs.

opportunity; financial

Analysis that describes what would happen if various actions were taken is _____ analysis.

pos

The opportunity costs of attending college include the:

potential income that could be earned working.

When plotting a demand curve

price is on the vertical axis.

The producer surplus on a unit sold equals:

price minus marginal cost

When plotting a demand curve

price on vertical

Graphically, the equilibrium quantity can be identified as the:

quantity corresponding to the intersection of the demand and supply curves.

A shortage occurs when:

quantity demanded exceeds quantity supplied.

an equilibrium occurs in the market when

supply=demand

Which of the following events would lead to a shift of the supply curve from Old supply to New supply?

technological advance in production techniques

An individual demand curve is a graph:

that plots the quantity of an item that someone plans to buy, at each price.

Paint and paintbrushes are complements. If the price of paint rises, we can expect:

the demand for paintbrushes to decrease.

A market's deadweight loss is calculated as:

the economic surplus at the efficient quantity minus the economic surplus at the actual quantity.

Which of the following is NOT a factor that can shift supply?

the market price of a product

When plotting a supply curve

the quantity supplied goes on the horizontal axis.

Diana is a student studying economics and currently working on her class schedule for next semester. She decides to enroll in a course on economic data analysis because she knows that data analysis is a highly sought-after skill from employers in her career field. Weighing what may affect her in the future opportunities demonstrated dependency:

through time.

Variable costs are the costs that

vary with the quantity of output produced.

Dependencies between your own choices reflect the fact that:

you have limited resources.

Which of the following would be considered in a cost-benefit analysis to decide if a person should cycle to work or ride the subway? (i) The air pollution that the cyclist has to breathe.(ii) The cost of subway tickets.(iii) The time it takes to cycle to work versus the time it takes to ride the subway to work.(iv) The cost per gallon of gasoline.

1, 2, 3

(Figure: Spice King Burgers' Supply Curve) Take a look at Spice King Burgers' supply curve for burgers. How many burgers will they supply at a market price of $1.50 per burger?

200 units

(Figure: Market for Printing Paper) Which of the following graphs illustrates what we expect to see in the market for printing paper if the price of printing paper rises?

Graph C (Arrow going from B to A)^ \ \

What is quantity supplied?

It is the amount of an item that a seller is willing to sell at a particular price.

How is the economic surplus generated by a decision calculated?

It is the total benefits minus total costs arising from the decision.

Joshua Murphy is planning on studying late into the night for his economics exam. How many cups of coffee should he buy tonight? Joshua should keep buying coffee throughout the evening until the marginal:

benefit of purchasing one more coffee equals the marginal cost.

The cost-benefit principle states that _____ are the incentives that shape decisions.

costs and benefits

The Rational Rule for Sellers says that a seller should sell one more unit of an item if the price is:

greater than or equal to the marginal cost.

When there is a shortage of highly skilled workers in a particular region:

highly skilled workers can negotiate higher salaries.

The principle that your best choice depends on your other choices, the choices others make, developments in other markets, and expectations about the future is known as the _____ principle.

interdependence

You're shopping online, and you place an item in your virtual cart. Two days later, you return to the virtual cart to check out and find that the item is now more expensive. Assuming that the market is competitive, what could explain the price increase?

item shortage

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.

less; $150

Which of the following statements is based on normative analysis?

protect the environment

downward sloping curve implies

there is an inverse relationship between price and quantity demanded.

If a store runs a sale on a product to clear out its stock, we can conclude that:

there was a surpus of product in the stroe

The table contains the monthly demand for soda cans for four students. If these four students make up the entire market, what is the total monthly market demand for soda at $1.50 per can?

148

What is the equilibrium quantity in this market?

300 units

The United Kingdom plans to end the use of gas-powered and diesel-powered cars by the year 2040. At the same time, car manufacturers, such as General Motors and Nissan, are increasing the number of electric car models they produce. Based on this information, which of the following statements is/are correct?(i) If the supply of new electric cars is greater than the demand for new electric cars, then the price of electric cars will fall in the future.(ii) The demand for gasoline will fall in the future.(iii) The demand for electricity will rise in the future.(iv) The demand for diesel will rise in the future.

i, ii, iii

CHAPTER 2 A rational buyer will:

keep buying a product until marginal benefit equals price.

Chin purchases five protein bars at a price of $3 each. The marginal benefit he receives from each bar is $5 for the first bar, $4.50 for the second bar, $4 for the third bar, $3.50 for the fourth bar, and $3 for the fifth bar. The marginal cost of producing the bars is $2.50 each. What is Chin's total consumer surplus from the five bars that he purchased?

5

Paint and paintbrushes are complements. If the price of paint rises, we can expect:

demand for paintbrushes decreases

When there is a shortage of highly skilled workers in a particular region, the:

demand for skills education increase

An equilibrium price is:

determined by the intersection of the demand and supply curves.

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.

go; greater

A market consists of ten similar suppliers that are making the same supply decisions. To find the market supply of these ten suppliers, you:

multiply the individual supply of one of the suppliers by ten.

A government leader determines that the 5% unemployment rate is too high. She asks her staff to research policy options to reduce the rate and a few weeks later is given four options. Each option would reduce the rate by a different amount and at a different cost. The leader studies the options and chooses the one she feels is best for the country. In order, what types of analysis were used in this three-stage chain of events?

normative pos normative

When the economic surplus in a market is less than it would be if the market were efficient, the market is experiencing:

deadweight loss

Which of the following lists only the factors that would cause a decrease in the supply of an item?

A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production.

Which of the following scenarios depicts a seller who is following the Rational Rule for Sellers?

American Airlines determines the marginal cost of an extra passenger to be $75 and sells a discount seat for $250.

The city of Vaughan in Ontario, Canada, opened a new subway line that extended the existing subway system between the greater Toronto area and the city of Vaughan. The route previously only had bus service. Which of the following graphs depicts the effect you would expect to see on the demand for bus rides on this route after the introduction of the subway?

Graph A (going down left)

(Figure: Market for Coffee) A coffee shop opens next to an existing coffee shop. Which of the following graphs shows the effect of this new coffee shop on the market supply curve for coffee in this area?

Graph A moving right

There are four suppliers in the packed meals market. The quantity of packed meals that each one is willing to supply per week at various prices is provided in the accompanying table. What is the change in the market supply for packed meals when the price falls from $6.25 per meal to $6.00 per meal?

The quantity supplied in the market falls by 149,000.

There are four suppliers in the packed meals market. The quantity of packed meals that each one is willing to supply per week at various prices is provided in the accompanying table. What is the change in the market supply for packed meals when the price rises from $6.25 per meal to $6.50 per meal?

The quantity supplied in the market rises by 152,000.

You eat M&Ms every day. When you go to the store to buy some, you find that M&Ms are more expensive than they were last month. Which of the following could explain why M&Ms are more expensive?

The supply of cacao beans, used to produce chocolate, has fallen around the world.

Suppose that you have a pumpkin stall at a farmer's market, and the Halloween season arrives. You know that your customers will want to buy many pumpkins to decorate their houses and make pumpkin pies. Which of the following is a likely result of this scenario?

You can charge a higher price per pumpkin.

(Figure: Graph) Refer to the graph to answer the question. In the graph, the movement from point W to point P represents:

a decrease in demand.

a normal good is

a good for which higher income causes an increase in demand.

A seller at a farmer's market wants $10 for a bag of 10 apples. You think his price is too high, so you counter with an offer of $6 for the bag. The seller then offers you a much smaller bag of five apples for $6. You bargain again, and the seller lets you buy the 10 apples for $8. This scenario is an example of:

a market in action

(Figure: Market 5) The graph shows the market for teddy bears.When the market produces and sells nine teddy bears, the deadweight loss is represented by the:

area between the demand and supply curves between quantities of 5 and 9.

Graphically, shortages will always occur:

at prices below the equilibrium price.

Kathleen Alvarado is binge-watching her favorite show on Netflix. She is attempting to decide how many more episodes to watch. Kathleen should continue watching episodes as long as the marginal:

benefit of watching another episode exceeds the marginal cost.

The key to using the cost-benefit principle is to think about _____ aspects of a decision.

both financial and nonfinancial

In a voluntary economic transaction between a buyer and a seller, _____ can earn economic surplus from the transaction.

both the buyer and the seller

Which of the following five scenarios illustrate markets in action?(i) You rent a book at the university bookstore.(ii) You bargain at a street stall.(iii) You mow your own lawn.(iv) You get a manicure at a nail salon.(v) You grow your own vegetables and consume them yourself.

i, ii, iv

Which of the following are correct about fixed costs?(i) They do not change with the level of production in the short run.(ii) They include variable costs.(iii) They are present even when the firm is producing zero units.(iv) They are irrelevant to marginal cost.

i, iii, iv

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.

included; nonfinancial

The accompanying table provides data for five different oatmeal cookie sellers. Out of the sellers listed, who all are following the law of supply?

len ren and jen

The __________ suggests, decisions about quantities are best made incrementally.

marginal principle

Which of the following is NOT true of the incidence of poverty in the United States?

Elderly people are more likely than other age groups to be in poverty.

(Figure: Market for Apple Computers) Dell and Apple are competitors in the computer market. Which graph illustrates the effect of a rise in the price of Dell computers on the demand for Apple computers?

Graph D (higher line to the right)

Why are supply curves typically upward-sloping?

They slope upward because higher prices lead individual businesses to supply a larger quantity and more businesses are willing to supply goods and services.

Consider the data in the table. The price of gasoline is $3.99 per gallon at the gas station. If Rexhall Fuel Supplies is a rational seller, how many gallons of gasoline should this seller be willing to sell?

20 million gallons per week

(Figure: Market for Apple Computers) Dell and Apple are competitors in the computer market. Which graph illustrates the effect of a rise in the price of Dell computers on the demand for Apple computers?

Graph D (moves up and to the right)

Quantity demanded is on the horizontal axis when you plot a demand curve and shows the:

amount of a good that a person is willing to buy at each price.