Economics Micro Quiz 1 (Chp. 1, 2, 3, & 4)

Suppose your expenses for this term are as follows: tuition: $5,000, room and board: $3,000, books and other educational supplies: $500. Further, during the term, you can only work part-time and earn $4,000 instead of your full-time salary of $10,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college?

$11,500

Monique buys a new television for $795. She receives consumer surplus of $355 from the purchase. How much does Monique value her television?

$1150 (795 + 355= 1150)

Brett buys a new cell phone for $100. He receives consumer surplus of $80 from the purchase. How much does Brett value his cell phone?

$180 (100 + 80= 180)

Juanita goes to the Hardware Emporium to buy a new circular saw. She is willing to pay $120 for a new saw, but buys one on sale for $85. Juanita's consumer surplus from the purchase is

$35 (120 - 85= 35)

Marco goes to the pet store to buy a dozen Koi fish for his new Koi pond. He is willing to pay $200 for the dozen fish, but buys them for the total of $140. Marco's consumer surplus from the purchase is

$60 (200 - 140= 60)

Look at "Figure 2-6" and answer question #13

12 thousand forks

Look at "Figure 4-1" in Chp. 4 notes and answer questions #12, #13, #14.

12) $3.50 13) $3.00 14) $2.50

Look at "Table 3-1" in Chp. 3 and answer questions #13, #14, #15, & #16.

13) D2 to D1 14) D1 to D2, increase 15) B to A 16) D1 to D2

Look at "Figure 4-2" and answer questions #15 & #16.

15) C + E 16) A + B

Look at "Figure 4-3" and answer questions #17 & #18.

17) B + C 18) B + D

Look at "Table 4-4" in Chp. 4 and answer questions #22 & #23.

22) W*= $9.00; Q*= 370,000 23) 360,000

Look at "Table 4-5" in Chp.4 and answer questions #24 & #25.

24) R1 25) A + B + D

Look at "Table 1-1" on Chp. 1 Notes and answer question #14.

4 hours

Look at "Table 2-1" in Chp.2 and answer question #6 & #7

6) Point C 7) Point B

Look at "Table 3-1" answer questions #7 & #8.

7) 89 lbs 8) 150 lbs

Look at "Figure 2-3" in Chp. 2 and answer questions #8 & #9

8) Graph A 9) Graph C

Look at "Table 4-1" in Chp. 4 notes and answer questions #8 and #9.

8) c 9) c

Look at the table on question #24 in Chp. 3 notes and examine the demand curve to table.

:)

Consider the following statements: a. Consumers rent more kayaks from a vendor that rents kayaks at a lower price than other rival kayak vendors along Waikiki beach b. Department stores take steps to increase security since they believe it is more costly to allow shoplifting than to install expensive security monitoring equipment. c. Farmers produce more cotton when it's selling price falls. Which of the above statements demonstrates that economic agents respond to incentives?

A & B

The term "market" in economics refers to

A group of buyers and sellers of a product and the arrangement by which they come together to trade.

Consider the following statements: a. Soda drinkers purchase more soda from a grocery store that sells soda at a lower price than other rival grocery stores in the area. b. Homeowners do not take steps to increase security even though they believe it is more costly to allow burglaries than to install security monitoring equipment. c. Manufacturing produce less of a particular cell phone when its selling rises. Which of the above statements demonstrates that economic agents respond to incentives?

A only

_______ a nation's production possibilities frontier represents economic growth.

An outward shift of.

Look at "Figure 2-4" in Chp. 2 and answer question #12

C. only

For each of the following pairs of products, state which are complements, which are complements, which are substitutes, and which are unrelated. a. Swim fins and scuba tanks b. Coca Cola and Volkswagens c. Printers and ink cartridges d. Ice and ice chests e. Heineken and Corona f. House plants and potato chips g. Eyeglasses and contact lenses h. Motorcycles and gasoline i. Smartphones and smartphone apps j. Red wine and white wine

Complements: Swim fins and scuba tanks; Printers and ink cartridges; Ice and ice chests; Motorcycles and gasoline; Smartphones and smartphone apps. Unrelated: Coca Cola and Volkswagens; House plants and potato chips. Substitutes: Heineken and Corona; Eyeglasses and contact lenses; Red wine and white wine.

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?

Consume a combination of goods that lies outside its own production possibilities frontier.

_________ is defined as a market outcome in which the marginal benefit to consumers to the last unit produced is equal to the marginal cost of production, and in which the sum of consumer surplus and producer surplus is at a maximum.

Economic efficiency

What is a microeconomic question?

How will Apple decide on a selling price for the iPad?

What is an economic model?

It is a simplified version of some aspect of economic life used to analyze an economic issue.

Which of the following are primarily macroeconomic topics and which are primarily microeconomic topics? - college tuition rates - national income - air traffic congestion - farm subsides - automobile prices - economic recession

Micro: college tuition rates, farm subsides, & automobile prices. Macro: national income, air traffic congestion, & economic recession

Your roommate, Serafina, a psychology major, said, "The problem economics that it assumes that consumers and firms always make the correct decision. But we know that everyone's human, and we all make mistakes." Do agree with her comment?

No, because economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally, meaning they make the best decisions given their knowledge of the costs and benefits.

The concept of _______ is that the economic cost of using a factor of production is the alternative use of that factor that is given up.

Opportunity cost

Economists assume that

Optimal decisions are made at the margin.

In 2017, President Trump considered imposing a tariff on automobile assembled by U.S. manufacturing in Mexico that were to be sold in the United States. If this tariff was imposed and as a result, some of these manufacturers moved their automobile assembly from Mexico back to the United States, these firms would be reacting to which of the three key economies ideas?

People respond to economic incentives.

The study of economics arises due to

Scarcity

______ exists because unlimited wants exceed the limited resources available to fulfill those wants.

Scarcity

Economic growth is represented on a production possibilities frontier model by the production possibilities frontier

Shifting outward.

Which of the following is an example of a "how much" decision?

The Pleasantville movie theatre is open only in the evenings. The theatre's manager is debating whether to add daily matinee shows.

Which of the following has occurred as the millennial generation has come of age?

The demand for traditional fast food has decreased in the U.S. market.

Which of the following is a positive economic statement?

The minimum wage law causes unemployment.

________ shows that if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good.

The production possibilities frontier model.

According to a recent study, "Stricter college alcohol policies, such as raising the price of alcohol, or banning alcohol on campus, decrease the number of students who use marijuana." On the basis of this information, how would you describe alcohol and marijuana?

There is no relationship between the two goods.

According to the Centers for Disease Control and Prevention, ________ in 2015 in which less than 20 percent of the population was considered obese.

There were no states.

Scarcity refers to the situation in which

Unlimited wants exceed limited resources.

Which of the following is a macroeconomic question?

What determines the minimum wage?

Fast food restaurants produce a range of menu items such as hamburgers, chicken sandwiches, salads, and french fries. What fundamental economic question are they addressing by offering this range of items?

What to produce?

When _______ in a market, the total net benefit to society is maximized.

a competitive equilibrium is acheived

If a decrease in income leads to a decrease in the demand for ice cream, then ice cream is:

a normal good.

An example of a factor of production is

a worker hired by a auto manufacturer

What does the term "marginal" mean in economics?

an additional or extra

If, in response to a decrease in the price of coffee, the quantity of coffee demanded increases, then economists would describe this as:

an increase in quantity demanded.

Productive efficiency is achieved when firms produce goods and services

at the lowest cost.

In Venezuela, the government attempt to control rising food prices by implementing price ceilings in the market. These price ceiling were set ______ the market prices, which resulted in ______ of food.

below; shortages.

All _______ economies have been political dictatorships.

centrally planned.

The market for smart water is becoming more competitive. The increase in competition in this market is an example of how the market responds to:

changes in consumer rates.

The opportunity cost of taking an on-line history class is

equal to the highest value of an alternative use of the time and money spent on the class.

To complete int the automobile market, Tesla must make many strategic decisions such as whether to introduce a new car model, how to sell and service its cars, and where to advertise. At Tesla's Fremont, California plant, managers must decide on the monthly production quantities of their S and X models. In making this decision, the managers

face a trade-off because producing more than one model

A worker is hired in a

factor market

If a vineyard wants to raise funds to purchase a new bottling machine, it does so in the

factor market

Izzy Amador is a highly talented tattoo artist. She has chosen to specialize in tattoo art because of all of the following expect:

her opportunity cost of pursing another career is very low.

The difference between the _______ for good and the ________ is called consumer surplus.

highest price a consumer is willing to pay; price consumer actually pays.

A(n) __________ is represented by the rightward shift of the demand curve while a(n) ________ is represented by movement along given demand curve.

increase in demand; increase in quantity demanded

If the sales of carbonated sodas continue to decline as more cities impose soda taxes on these beverages, this will likely.

increase the demand for premium water, because premium water and carbonated sodas are considered substitutes.

A supply curve:

is a curve that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange.

Economic surplus is maximized in a competitive market when:

marginal benefits equals marginal cost.

The additional cost to a firm of producing one more unit of a good or service is the:

marginal cost.

A ________ demand curve for shampoo would be caused by a change in the price of shampoo.

movement along the

The income effect of a price change results in a:

movement along the demand curve due to a change in purchasing power brought about by the price change.

Suppose the U.S. government encouraged new teachers to take jobs in underperforming schools by paying the new teachers a $20,000 bonus. These teachers would be exemplifying the economic idea that

people respond to economic incentives.

Individuals who have never been the best at doing anything

perform all tasks at a higher opportunity cost than others

Look at "Table 4-3" in Chp. 4 notes ant answer question #11.

producer surplus will equal $22.

Every society faces economic trade-offs. This means

producing more of one good means less of another good can be produced .

When goods and services are produced at the lowest possible cost, ________ occurs.

productive efficiency

Comparative advantage means

the ability to produce a good or service at a lower opportunity cost than any other producer.

Which of the following generation categories has the smallest population in the United States in 2017?

the baby boomers

The substitution effect of a price change refers to:

the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes.

Consider the following economic agents: a. the government b. consumers c. producers Who, in a modern mixed economy, decides what goods and services will be produced with the scarce resources available in that economy?

the government, consumers, and producers.

Opportunity cost is defined as

the highest valued alternative that must be given up to engage in an activity.

Which of the following is a factor of production? a) a sofa produced by the furniture manufacturer. b) 20 shares of Microsoft stock. c) the janitor at the local elementary school. d) $500 in cash.

the janitor at the local elementary school.

The production possibilities frontier shows

the maximum attainable combinations of two products that may be produced in a particular time period with available resources.

A demand curve shows the relationship between:

the price of a product and the quantity of the product demanded.

How has the growing popularity of factory outlet stores affected the market for clothing at retail department stores?

the supply curve for clothing at retail department shifts to the right.

The resource income earned by those who supply labor services is called

wages and salaries

The maximum price that buyer is willing to pay for a good measures his:

willingness to pay.