Econ Unit 2 Test

Table 49.1: Consumer Surplus and Phantom Tickets. Using the information in the table, if the price of a ticket to see Phantom of the Opera is $50, then Robert's consumer surplus is: A. $60 B. $50 C. $10 D. $240 E. $110

C. $10

Figure 50.6: Market for Yachts: If the government imposes a $30,000 tax on yachts (collected from producers), the price of yachts will rise to _________ and the government will collect tax revenue equal to _____________. A. $100,000; $120 million B. $120,000; $90 million C. $140,000; $90 million D. $160,000; $120 million E. $140,000; $900 million

C. $140,000; $90 million

(Figure 6-1: Supply of Coconuts) If the prices of inputs (e.g., labor, fertilizer, and fuel) used to produce and transport coconuts are increasing, then the movement in the model could be: A. A to B B. B to A C. C to A D. E to B E. B to C

C. C to A

Figure 50.2: Tax Incidence: All other things unchanged, when a good or service is characterized by a relatively elastic demand, as shown in Panel ___________, the greater the share of the burden of an excise tax imposed on it is borne by _____________. A. D; buyers B. D; sellers C. C; sellers D. C; buyers E. A; buyers

C. C; sellers

If goods A and B are substitutes, a decrease in the price of good B will: A. Increase the demand for good A B. Increase the demand for good B C. Decrease the demand for good A D. Increase the demand for good B and decrease the demand for good A E. Increase the quantity of good B demanded and increase the demand for good A

C. Decrease the demand for good A

Assume that as the price of cauliflower falls, the income effect causes consumers to buy less cauliflower. We can conclude that cauliflower is: A. an inferior good B. a luxury good C. a normal good D. expensive E. a large component of consumer budgets

C. a normal good

A good is normal if: A. when income increases, the demand remains unchanged B. when income increases, the demand decreases C. when income increases, the demand increases D. income and demand are unrelated E. when income decreases, the demand increase

C. when income increases, the demand increases

Table 51.4: Utility from Burgers and Milkshakes. David's marginal utilities for milkshakes and burgers are given in the able. The price of milkshakes is $2, ad the price of burgers is $5. If David's income is $22, how many milkshakes and how many burgers does he buy to maximize his utility? A. 1 shake and 1 burger B. 6 shakes and 0 burgers C. 5 shakes and 1 burger D. 6 shakes and 2 burgers E. 1 shake and 4 burgers

D. 6 shakes and 2 burgers

Assume that corn is an input in the production of beef, but not in the production of pork. Further, beef and pork are substitutes. A decrease in the price of corn will: A. increase the supply of beef and increase the demand for pork B. decrease the supply of beed and increase the demand for pork C. decrease the supply of beef and decrease the demand for pork D. Increase the supply of beef and decrease the demand for pork E. decrease the supply of beef and have no impact on the demand for pork

D. Increase the supply of beef and decrease the demand for pork

If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when the price of shirts increases from $8 to $12, then, for you, shoes and shirts are considered: A. inferior goods B. luxury goods C. substitute goods D. complementary goods E. unrelated goods

D. complementary goods

A decrease in the price of eggs will result in a(n): A. increase in the demand for eggs B. increase in the supply of eggs C. decrease in the supply of eggs D. downward movement along the supply curve of eggs E. decrease in the demand for eggs

D. downward movement along the supply curve of eggs

Suppose the price elasticity of demand for fishing lures equals 1 in South Carolina and 0.63 in Alabama. To increase revenue, fishing lure manufacturers should: A. lower prices in each state B. raise prices in each state C. lower prices in South Carolina and raise prices in Alabama D. leave prices unchanged in South Carolina and raise prices in Alabama E. raise prices in South Carolina and leave prices unchanged in Alabama

D. leave prices unchanged in South Carolina and raise prices in Alabama

Figure 50.8: The Gas Market: The figure represents the market for gasoline. An excise tax has been levied on each gallon of gasoline supplied by producers. What is the tax rate? A. $1.50 per gallon B. $1 per gallon C. $22,500 D. $15,000 E. $4 per gallon

A. $1.50 per gallon

There is one gas station in a small rural town. The owner of the station claims that he will sell the same quantity of gas, no matter how high or low the price. If he is correct in this assertion, what must be true about the demand curve for gas at his station? A. It must be vertical with a price elasticity of zero B. It must be vertical with a price elasticity of infinity C. It must be horizontal with a price elasticity of zero D. It must be horizontal with a price elasticity of infinity E. It must be downward sloping with a price elasticity less than one

A. It must be vertical with a price elasticity of zero

A rancher in Oklahoma decides to raise the price of her beef by 19% over the prevailing market price. If the demand for beef is perfectly elastic, this rancher's quantity demanded will: A. fall to 0 B. not change C. fall by 1.9% D. increase by 190% E. fall by 19%

A. fall to 0

Table 8.5: Market for Butter. If the government imposes a price floor of $1.20 per pound of butter, suppliers will produce __________ pounds of butter and there will exist _______ in the market. A. 8 million; a shortage of 3 million pounds B. 12 million; a surplus of 3 million pounds C. 10 million; equilibrium D. 9 million; a shortage of 3 million pounds E. 12 million; a shortage of 9 million pounds

B. 12 million; a surplus of 3 million pounds

Table 51.1: Utility. The marginal utility for the second unit is: A. 35 B. 15 C. 10 D. 5 E. 55

B. 15

Figure 50.11: Market with Tax. The deadweight loss from the consumer's perspective is equal to area: A. B B. C C. D D. F E. D, F

B. C

Figure 49.8: Producer Surplus II: At a price of P1, producer surplus equals the area: A. LMK B. P1K0 C. P2M0 D. P2P1KM E. 0P1KQ1

B. P1K0

Which of the following will result in an increased price of milk? A. a shift to the right of the supply curve for milk B. a shift to the right of the demand curve for milk C. an increase in the number of milk suppliers D. a decrease in the number of milk buyers E. an increase in the production technology of milk suppliers

B. a shift to the right of the demand curve for milk

Which of the following factors cause a movement along the demand curve for good X? A. change in the price of a related good Y B. change in the price of good X C. change in the population D. both a change in the price of good X and a change in the population E. change in the popularity of good X

B. change in the price of good X

price elasticity of demand is measured by: A. dividing the percentage change in price by the percentage change in quantity demanded B. dividing the percentage change in quantity demanded by the percentage change in price C. subtracting the percentage change in price from the percentage in price from the percentage in quantity demanded D. adding the percentage change in price to the percentage change in quantity demanded E. multiplying the percentage change in price by the percentage change in quantity demanded

B. dividing the percentage change in quantity demanded by the percentage change in price

A men's tie store sold an average of 30 ties per day at $6 per tie but sold 60 of the same ties per day at $3 per tie. In this case, the absolute value of the price of elasticity of demand, is: A. greater than zero but less than 1 B. equal to 1 C. greater than 1 but less than 3 D. greater than 3 E. equal to zero

B. equal to 1

The market for corn is currently in equilibrium. Which of the following is most likely to increase the equilibrium price of corn? A. a bountiful harvest B. increasing production of corn-based ethanol C. decreasing household incomes and corn is a normal good D. a subsidy given by the government to growers of corn E. the price of soybean, an alternative crop for many farmers, is rising

B. increasing production of corn-based ethanol

If your purchase of shoes decreases from 11 pairs per year to 9 pairs per year when you income increases from $19,000 to $21,000 a year, other things equal, then, for you, shoes are considered a(n): A. normal good B. inferior good C. complementary good D. substitute good E. factor of production

B. inferior good

Scenario 8-1: Market for Apartments. This figure represents a competitive market for apartments. If a government price ceiling at $700 is now imposed on this market (in the name of fairness), then an inefficiency will result in the form of a: A. Surplus of 0.6 million apartments B. shortage of 0.6 million apartments C. surplus of 0.2 million apartments D. shortage of 0.2 million apartments E. shortage of 2.3 million apartments

B. shortage of 0.6 million apartments

An increase in the demand for gasoline today caused by concerns that gasoline prices will be higher tomorrow is most likely attributable to which of the following? A: income B: consumer expectations C: consumer preferences D: prices of other goods E: producer expectations

B: consumer expectations

The absolute value of the price elasticity of demand for gasoline in the short run has been estimated to be 0.1. If a supply disruption causes the price of gasoline to increase, how will that affect total expenditures on gasoline in the short run, all other thing equal? A. Demand will stay the same, but total expenditures will fall B. Demand will decrease, but total expenditures will rise C. Demand will increase, but total expenditures will remain unchanged D. Demand will decrease, but total expenditures will fall E. Demand will stay the same, but total expenditures will rise

E. Demand will stay the same, but total expenditures will rise

Along the supply curve for brownies, a decrease in the price of brownies will: A. increase produced surplus B. have no impact on producer surplus C. increase consumer surplus D. increase producer surplus and consumer surplus E. decrease producer surplus

E. decrease producer surplus

Suppose an effective price ceiling is imposed in the market above. The dead weight loss created by this policy is given by the area_______. A. aeb B. efg C. behd D. ckhd E. egh

E. egh

The cross-price elasticity of electricity with respect to the price of natural gas has been estimated as being equal to 0.2. This implied that: A. Natural gas and electricity are both normal goods B. electricity and natural gas are complements C. electricity and natural gas are both luxury goods D. one of the two goods is inferior while the other is normal, but we need additional information to determine which of them is inferior E. electricity and natural gas are substitutes

E. electricity and natural gas are substitutes

Figure 7-7: Demand and Supply of Wheat. If a price of $10 temporarily exists in this market, a: A. shortage of 10,000 bushels B. shortage of 8,000 bushels C. surplus of 10,000 bushels D. surplus of 4000 bushels E. surplus of 8,000 bushels

E. surplus of 8,000 bushels

Suppose the government imposes a $10 excise tax on the sale of sweaters by charging suppliers $10 for each sweater sold. If the demand curve for sweaters is downward sloping, we would predict that: A. the price of sweaters will increase by $10 B. consumers of sweaters will bear the entire burden of the tax C. the quantity of sweaters purchases will increase D. the price of sweaters will decrease by $10 E. the price of sweaters will increase by less than $10

E. the price of sweaters will increase by less than $10

Suppose that the supply curve for cucumbers at a Saturday farmer's market is vertical. This means that A. the quantity of cucumbers supplied will increases as the price increases B. at any quantity of cucumbers supplied, the price remains the same C. the quantity of cucumbers supplied will increase as the price decreases D. the quantity of cucumbers supplied is directly related to the price E. the quantity of cucumbers supplied remains the same at any price

E. the quantity of cucumbers supplied remains the same at any price