final exam microecon
figure: marginal revenue- what is the marginal revenue of the fourth unit in the following example
$2
amanda goes to a local cafe and orders a sandwich. she is willing to pay $10 for it. the price of the sandwich is $4. the cost to the cafe to produce the sandwich is $1. how much economic surplus does the cafe receive when amanda purchases the sandwich
$3
using the table to answer the question at what price does this market experience a shortage of 140 units
$5
the figure shows the domestic market for pants. according to the figure if there is international trade in this market, and the world price of a pair of pats is $30, the value of the consumer surplus is;
1,800,00
jonathans income falls by 15%. he decides to cut down his purchases of restaurant meals by 20%. his income elasticity of demand for restaurant meals is;
1.33
suppose a coffee shop in des moines, iowa, hires workers to personalize coffee mugs for special occasions. the store sells the personalized mugs for $7 each. the marginal revenue product of the stores third worker is $84. the marginal product of the third worker is
12 coffee mugs
an intern at rovio entertainment is sifting through sales data for the angry birds game and discovers that when the monthly premium subscription fee was $20, the quantity of memberships demanded was 10 million. when the price rose to $25 per month, the quantity of monthly memberships demanded was 8 million. using the midpoint formula, the absolute value of the price elasticity of demand is __ which is __
1; neither elastic or inelastic
while buying refreshements for an upcoming party, you notice that a six pack of bud lite beer costs $4 and that a six pack of miller lite beer costs $8. you buy the six pack of miller lite beer, although you wonder if maybe two six packs of bud lite beer would have been a better choice. the opportunity cost of the miller lite beer is:
2 six packs of bud lite beer
the figure shows the domestic market for televisions. according to the figure, if there is international trade in this market, and the world price of television is $400, domestic consumers will purchase __ units from domestic producers and __ units from foreign producers.
20,000; 60,000
roberto and his family have grown broccoli on a small farm in california for generations. western pacific produce, by contrast, is the largest broccoli grower in north america. the marginal cost curves of these two businesses are provided in the accompanying diagram. at a market price of 1.20 per pound, the efficient total output is 14,000 pounds. if the price falls to .80 per pound, the efficient total output is
4000 pounds
use the graph for the watermelon market to answer the question. what is the economically efficient quantity of watermelons
5
samsung electronics uses its resources to produce tablet computers and cell phones. When samsung reallocates its resources to produce 3.75 million tablets instead of 2 million tablets, the opportunity cost is:
7 million phones
the demand and supply of quinoa. a price __ will result in a __
9;surplus
you are considering buying an electric powered vehicle. which graph of the ev market illustrates your most likely response if the government funds the construction of 50,000 battery charging stations across the country.
A
consider the figure gain in producer surplus from the sale of cappuccino machines. which areas represent producer surplus when the price is equal to p2
D, E and F
julio enjoys kit kat bars, hershey bars, and crunch bars about equally. the graph show julios demand for kit kat bars. which of these would result in a shift from old demand to new demand 1
a rise in the price of hershey bars
the coffee harvested in many countries is unusually good this year. This entails:
a shift to the right of the entire supply curve for coffee beans.
how do a companys accounting profit and economic profit compare in size
accounting profit is larger than economic profit, if there are implicit costs
in one hour, keshia can bake 10 million muffins or mix 15 glasses of passion fruit juice. his friend alicia can bake 10 muffins or mix 10 glasses of passionfruit juice. his other friend ewan can bake 10 muffins or mix 20 glasses of passionfruit juice. who has the lowest opportunity cost in muffin production
alicia
which event would shift the supply curve for ben and jerrys ice cream to the left
an increase in the price of cream, an ingredient in ice cream
ang can mow the lawn in two hours. bill takes three hours to mow the same lawn. what can you conclude from this information.
ang has an absolute advantage over bill in mowing the lawn
certain activities such as bee pollinitation or nature preservation generate external benefits that will likely be carried out at levels that __ those that would be efficient
are less than
a characteristic of monopolistic competition that is not present in any other market structure is that there
are many sellers, and each produces its own version of the product
youre a cashier at a local grocery store. you notice many customers buying kiwifruit, but youve never tried kiwifruit yourself. when the price of kiwifruit suddenly drops, you notice that your regular kiwi- buying customers buy more kiwifruit than usual and that other shoppers start buying kiwifruit for the first time. You also decide to try it yourself, so you too buy some kiwifruit. which statement best summarizes what is happening.
as the price of the kiwifruit falls, the market quantity demanded rises.
You have a comparative advantage if you can complete a task:
at a lower opportunity cost than anyone else.
mario is willing to sell an extra unit of his product if price is
at least as high as the marginal private cost
use figure; demand and supply of sugar. a factor that may have shifted the supply curve from s1 to s2 is;
better technology in the production of sugar
the supply of sweetened beverages is more elastic than the demand. if the government imposes a tax on sweetened beverages at a rate of .20 per 20 ounce soda, paid by sellers, the economic burden of the tax on buyers would be
between .10 and .20 per soda
to address gun violence, your city government taxes guns and ammunition. guns are a minor revenue source for the sports and outdoors shops that sell guns in your city, but they are an obsession for the small, dedicated community of gun enthusiasts who collect them. who will bear most of the economic burden of the tax?
buyers
shift in supply:
cause price and quantity to move in opposite directions
if the cross price elasticity of demand between cheese and yougurt is positive then:
cheese and yogurt are substitutes.
the cost of attending college has risen significantly in recent years, much to the dismay of prospective college students and their families. if the government were to set a maximum cost of a four college education at 20,000- a cost that is below the average cost of attending a four year college- what would most likely be the result
colleges will have more applicants but would admit fewer students
collectively, people in nations that engage in international trade are likely to
consume more than they could consume in the absence of trade
in 2018 the state of kentuky raised the tax on cigarettes by 50 cents per pack. holding other things constant the effect of this tax would be to __ in kentucky
decrease the smoking of cigarettes
if rice is an inferior good, when incomes rise, the equilbrium price will __, and the equilbrium quantity will __
decrease; decrease
the figure shows the domestic market for televisions. the world price of televisions is $500. according to the figure, international trade will lead to an __ in the domestic producer surplus and a __ in the domestic consumer surplus
decrease; increase
the market price of cruise ship vacations has increased recently. Some economists suggest that the price increased because of an increase in the number of retirees. in other words, they believe that:
demand increased
which of these businesses would likely do relatively well in a recession
discount clothing stores
suppose major streaming services like netflix, hulu, amazon prime, disney+, and others collude to charge subscribers a common, higher, minimum price per month. why might this agreement not be honored by one of the partners
each party to the collusive agreement has an incentive to lower its price and take customers away from the others
__ attracts new sellers into a market
existing sellers in the market earning economic profits
as output rises, average fixed costs
fall
the graph shows the domestic supply of and demand for grapes in california. when the government imposes a tariff on imported grapes, the price of grapes in california rises from pw to pt and domestic consumer surplus __ to __
falls A+B
demnad for a particular fast food chain inside an airport is less elastic than outside of the airport because
fewer choices mean more inelastic demand
a binding price ceiling can be seen in
figure B
a cost that does not depend on the quantity of output produced is
fixed
china is relatively labor abundant compared with european union members nations. therefore, china has a comparative advantage in __ compared with european union member nations
goods that are labor intensive in production
if a group of buyers is price sensitive, then the
group will not buy at higher prices
a person has a comparative advantage if they;
have the lowest opportunity of producing a particular good compared with another person
actress mayim bialik holds a doctorate in neuroscience from ucla. bialik, a former main character on the tv show the big bang theory earned hundreds of thousands of dollars per episode, and later became the host of the tv show jeopardy. why does bialik work in television instead of neurosciene
her opportunity cost to work as a neuroscientist is high
which of these is a positive economic statement
if the government raises taxes, people will have less income available for purchases and savings
a japanese made automoblie purchased by a us citizen is a us __ and a us made automobile purchased by a japanese citizen is a us __
import; export
when people focus on their comparative advantage and then trade for other things they
improve their standard of living or increase their leisure time
over the past few years, the technology associated with producing flat-screen televisions has improved. This has les to a ___ in the __ flat-screen televisions
increase; supply of
youre an economist for the us department of agriculture, analyzing how an influx of workers into the avocado industry leads to lower wages and a falling marginal cost, as shown by the rightward shift of the marginal cost curve in the accompanying diagram
increases from 22,500 to 40,000
suppose that, upon charging jobs, you experience an increase in income. If as a result you decide to purchase more sushi and fewer hamburgers, then hanburgers for you are a __ good.
inferior
in 2018, the unemployment rate in the us went as low as 3.7% as measured by the bureau of labor statistics. this historically low level of unemployment occurred simultaneously with a large trade deficit. this provides evidence against which of these arguments against international trade
international trade may lead to job loss
how is the economic surplus generated by a decision calculated
it is total benefits minus total costs arising from the decision.
price ceilings impose costs on society because they
lead to a smalller quantity offered in the market
under current law you pay 6.2% of your salary into your social security account, and your employer also contributes an amount equal to 6.2% of your salary to your social security account. what would happen if the law were changed so that your employer contributes an amount equal to 12.4% of your salary to your social security account, while you pay nothing.
little or nothing would change in terms of who bears the economic burden of the social security tax
a basic logic that applies to all strategic interactions is that
making a good choice requires that you anticipate what others will do
if the price in the market is such that the quantity supplied exceeds the quantity demanded, then the:
market is in equilbrium
if you live in a __ economy, you would expect prices to move __, whereas if you live in a __ economy, that is not likely.
market; toward equilbrium; planned
what is the role of markets
markets facilitate gains from trade
helena works in a factory that makes plastic phone cases. the four main tasks are mixing, molding, curing, and polishing. of all the workers she is the fastest mixer, has the lowest opportunity cost for molding, is the most careful in curing, and enjoys polishing the most. if her manager makes assignments in a way that maximizes output, then helena will be assigned to;
molding
over the years, state and local governments have seperated smoking and nonsmoking sections in restraunts or banned smoking in public areas completely. governments implement rules against smoking because smoking generates a __ externality, as many smokers dont consider the __ cost of their habit.
negaitve; marginal external
minglewood hall, a music venue in memphis, TN often hosts loud concerts that play late into the night. minglewood provides an annual allotment of free concert tickets to residents who live in the houses directly behind the venue to account for the __ of the disturbance
negative externality
if the income elasticity of demand for a good is __, the good is said to be __.
negative; inferior
daisy is a milk farmer in a perfectly competitive market. the market price of milk is .15 per gallon, which is also the marginal cost. if daisy charges .25 per gallon she will:
not sell any milk
the options for rideshare transportation in your city are uber and lyft. the market structure is
oligopoly
when labor is hired in a competitive market, the value of the marginal revenue product is computed by:
p x MPL
paint and paintbrushes are complements. a decrease in the price of paintbrushes will cause the demand for:
paint to increase
in a perfectly competitive labor market, employers
pay the market wage
many hotel chains offer discounts to AAA members. this is an example of __ that is __ in the united states
price discrimination; legal
price minus marginal costs equals the
producer surplus of a unit sold
the world supply curve for a product slopes upward because as the world price of the product increases
producers want to sell a larger quantity
avery goes to the local supermarket to purchase one package of collard greens. she often pays 2.50 for a package, but she finds they are on sale for 1.50 each. according to the law of demand, shoppers like avery will;
purchase more collared greens than they normally would
which statement reflects positive analysis
rent-controlled apartments create a black market in the supply of housing
scarcity occurs in everday life because
resources are limited
for consumers, hot dogs and hamburgers are substitutes. a rise in the price of hot dogs cause a __ in the equilbrium price of hamburgers and a __ in the equilbrium in the quantity of hamburgers.
rise;rise
a market is:
setting that brings together potential buyers and sellers
suppose the accompanying diagram represents the apartment rental market in manhattan. A price ceiling ( rent control) of $4000 would cause a __ of __ apartments
shortage; 6000
if the price of bananas is greater than the marginal cost of bananas, then
societys well being can be improved if production increases
at walt disney world, in orlando, florida, there are both disney-owned hotels and resorts and, in the surrounding area, independent hotels, motels, resorts, and private home rentals. The independent accomadations are:
substitutes for disney- owned accomodations but complements to disneys parks
henderson lumber is a lumber mill that produces both boards used in construction and sawdust, a byproduct of the board production used in agriculture. when the housing market collapses causing house prices along with the prices of boards used to build houses to fall, henderson lumbers __ will likely__
supply of sawdust; decrease
quantity demanded is the amount of a good:
that a person is willing to buy at a particular price
carl owns one of the 30 lawn mowing businesses in his city. what will happen to his business if there are new entrants into his citys lawn mowing market
the demand for carls services will fall
more college professors are adding online homework programs to their classes, and more commercial vendors are offering their own versions of online homework programs. how will these changes affect the market for online homework programs
the equilbrium price and quantity will fall
what is the relationship between a companys market power and the price that the company can charge for its product
the greater the market power the higher the price the company can charge without losing many customers
a reservation price is
the highest price that a customer is willing to pay for a product
the market demand for and supply of rental apartments in a mid sized city are indicated in the accompanying table. if the government enatcts a price ceiling(rent control) of 1800
the market would be in equilbrium at 21000 apartments
the opportunity cost of something is:
the next best alternative you have to give up to get it
how will a fall in the price of diesel fuel impact the supply of long haul truck transportation services
the supply of truck transportation services will increase.
why does apple design the iphone in california but assemble the iphone in china
the us has a comparative advantage in iphone design
to maximize profits when hiring employees continue to hire workers until
the wage equals the marginal revenue product
if the wage rate falls, firms will find that
they move downward and to the right along the labor demand curve
when economic efficiency increases, the __ and the benefits __ be spread across all people
total gains exceed the costs, may or may not
the price of coffee at a local coffee shop is $3. cherly is willing to pay $6 for her first cup of coffee each day. the marginal benefit to her of each additional cup of coffee falls by $2. how many cups of coffee should cheryl purchase.
two
use the graph of marginal benefit curves for cans of shaving cream to answer the question. when the price is $2, bruno will buy__ cans, and martin will buy__ cans.
two; seven
because demand curves are usually downward sloping, the price elasticity of demand is;
usually negative
you just moved into your new apartment, which has washer and dryer hookups, but your apartment comples doesnt provide washers and dryers. you dont want to go to a laundromat. you can rent a washer and dryer set from an appliance company for $30 a month. alternatively you could buy a set for $1100 which you could sell after one year for $700 or $600 after two years. you plan to stay in this apartment for two years, since its near your job. should you buy or rent the set?
you should buy the set because buying earns $220 worth of economic surplus.
