macro EXAM 1 review

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Suppose the market equilibrium price is $200. The government decides to implement a price floor of $100. Is this price floor binding?

not enough info

The PPF to the right shows two products produced by a society (dreamliners and small jets). Which of the points represents a combination that is feasible but not efficient?

point C

The question "Does a higher minimum wage cause higher rates of unemployment?" is an example of a ________ question, whereas the question "should there be an increase in taxes?" is an example of a ________ question.

positive, normative

Suppose the equilibrium price in a market is $10. The government sets a minimum price in the market of $8. This price of $8 is an example of a(n):

price floor

When a government mandates the maximum price for a good, misallocation of resources occurs because:

some consumers spend a lot of time and resources finding a good.

Suppose Futurebook Co.'s willingness-to-sell for an e-reader is $50 and the firm has $57 of producer surplus. What is the market price of the tablet?

$107

Suppose the price of a tablet is $200. Alaya is willing to pay $200, Brit is willing to pay $210, and Jonah is willing to pay $300. How much consumer surplus is there in this market?

$110

Suppose you decide to take a day off work to go to a concert. On average, you earn $70 per day at your job. You estimate that you will spend $20 on gas to go to the concert, $10 on food, and $50 for your ticket. What is the opportunity cost of going to the concert?

$150

Suppose the Michelle buys a cappuccino. from Paul's cafe and bakery for $4.75. Michelle was willing to pay up to $6.75 for the cappuccino, and Paul's cafe and bakery was willing to accept $0.75 for the coffee. Michelle's consumer surplus would be ______. And Paul's Cafe and bakery's producer surplus would be ______.

$2, $4

This law states that as the price increases, the quantity demanded decreases.

law of demand

Suppose Kendra sells cheesecakes for $10 each and would be willing to sell cheesecakes for $8 each. If Austin buys five and he is willing to pay $80 in total, how much is his total consumer surplus?

$30

For each of the goods, classify them according to whether they are rivalrous. non rivalrous, excludable, or non excludable. Rivalrous is also referred to as rival in consumption. 1) sports team t-shirt _______. 2) the air we breath __________. 3) atlantic bluefin tuna in the Mediterranean Sea ________. 4) A toll in normal traffic ________.

1) rivalrous and excludable 2) nonrivalrous and non excludable 3) rivalrous and non excludable 4) nonrivalrous and excludable

Flour, which can be used to make many products, is used to make waffles and muffins because of the high demand for each product. AND Herb Farmer decides to use his flour and sugar to make three cakes and three loaves of bread, which his customers have demanded. Are examples of

Allocative effiecieny

Which of the following explains the rightward shift of the PPF curve?

Both B and C are correct

Herb Farmer makes two cakes and two loaves of bread, but uses enough flour to make three cakes and four loaves of bread. AND Herb Farmer decides to use his ingredients to make cakes, but his customers prefer donuts. These examples are

Not efficient

which of the following shows a more realistic PPF for an economy?

PPF (B)

Due to the recent corona virus pandemic, many airlines have been offering generous price discounts to attract customers. Which key principle of economics are airlines using?

People respond to incentives, both good and bad.

To produce one more bagel, the output of donuts must fall. AND If Herb Farmer wants to produce one more cake, he needs to give up two loaves of bread. These are examples of

Productive efficiency

Which of the following is NOT a factor of production? Land, Labor, Profits, Entrepreneurial ability

Profits

Suppose that the local grocery store raises the price of peanut butter. Which of the following would be likely to occur as a result?

The quantity demanded of peanut butter will decrease and the demand for jelly will shift to the left.

According to the table, which country has a comparative advantage in large jets? What about small jets?

US, Brazil

which country has an absolute advantage int he production of large jets? What about small jets?

US, US

Which of the following would explain the leftward shift of the demand curve for phones, a normal good?

a decrease in consumer income

Which of the following could cause an increase in consumer surplus?

a decrease in price due to a reduction in sales tax

The quantity demanded for office chairs has decreased due to an increase in price. How would this change in quantity demanded be represented on the demand curve?

a movement from one point on the demand curve to a higher point on the curve

The quantity of gaming apps that producers will offer for sale increases as the price of gaming apps increases. How would this change in quantity supplied be represented on the supply curve?

a movement from one point on the line to a higher point on the line

The quantity supplied for sugar increased due to a change in price. How would this change in quantity supplied be represented on the supply curve?

a movement from one point on the line to a higher point on the line

The increased demand for corn for ethanol production has resulted in record-high corn prices. As a result, more farmers have planted acreage in corn. The effect on the supply of corn would be shown as:

a new curve to the right of the original supply curve

A shortage exists when _____ is set below the equilibrium price for a good.

a price ceiling

public television is an example of

a public good

Suppose the government enacts a price ceiling below the equilibrium price. We can conclude the this will cause:

a shortage

The max amount of a product that buyers are willing and able to purchase over some time period at various prices, ceteris paribus, is:

demand

producer surplus is shown graphically as the area

above the supply curve and below the market price

Which of the following would explain the rightward shift of the supply curve?

advancement in production technology

If she is a morning person and loves the smell of donuts, she will view the donut shop as

an external benefit

Which of the following would explain the leftward shift of the supply curve?

an increase in resource prices

Which of the following would explain the rightward shift of the demand curve for phones, a normal good?

an increase int he number of buyers

Jodi wants to sell her motorcycle, and Greg is looking for a used motorcycle to buy. Greg takes it for a test drive. Jodi knows that the clutch is going out on her motorcycle, the filter is leaking, and the tires will need to be replaces soon. If she does not disclose this information to greg and he cannot tell from his test drive, this is an example of

asymmetric information

Teri takes her puppy to the vet. After he examines the puppy, the vet tells Teri that her puppy needs a series of shots. Teri agrees to the shots since the vet knows way more about animal health than she does. This is an example of

asymmetric information

A _____ is set below the equilibrium price for a good.

binding price ceiling

When the price of one good rises, the demand for another good falls. The two goods are ______ goods.

complementary

Generally, as the price of movies increases, the demand for popcorn decreases. Movies and popcorn are an example of:

complimentary goods

What does the blue area, above the equilibrium price, and below the demand curve represent?

consumer surplus

when price increases what happens to consumer surplus?

consumer surplus will decrease because some buyers will stop buying the good

If she likes to stay up late and loves listening to all kinds of music, she will view the bands practicing as an

external benefit

If her roommate hates loud music and the smell of donuts makes her sick, she will reject both apartments due to what she sees as an

external cost

if the supply of a good increases and the demand stays the same, price will

fall

Markets can reach the socially desirable outcome under which of these conditions?

information is widely available

the supply and demand for a particular good both increase. What will happen to the price if the increase in demand exceeds the increase in supply?

it will rise

This law states that as price increases, the quantity supplied increases.

law of supply

Inflation, unemployment, and national output of goods and services are three principle components of this category of economics.

macroeconomics

Lack of competition is one of the four reasons for:

market failure

Producer surplus is the difference between willingness-to-sell and:

market price

A change in price that decreases the quantity demanded of a good will cause a

movement upward along the demand curve

Suppose a firm decides to move its production overseas to take advantage of lower labor costs. This is an example of:

production efficiency

which of the following is a nonexclusive good?

public television

market equilibrium quantity exists where:

quantity supplied and quantity demanded are equal.

Which of the following is an example of a price ceiling?

rent-controlled apartments in New York City during World War II

economics attempt to address the problem of having too many wants but too few resources to achieve them all. This important concept is called.

scarcity

John likes going to concerts, however, ticket prices have been rising lately. As a result, John starts going to more movies and less concerts. Concerts and movies are:

substitute goods

If the price is $8, is there a surplus or a shortage? of how many units?

surplus of 20 units

consumer surplus is shown graphically as

the area under the demand curve and above the market price

producer surplus is the difference between

the market price and the minimum price a seller is willing to accept

consumer surplus is equal to the difference between

the max price a buyer is willing to pay and the market price

In 2010, frost badly damaged the tomato crop in Florida. The crop loss caused tomato prices to increase. According to the law of demand, what will happen to the quantity demanded for tomatoes based on this price change?

the quantity demanded will decrease

More sellers of a product would cause the supply curve for the product to shift:

the to right

markets work most efficiently when:

there are many buyers and sellers

When firms have to pay higher taxes for the production of a good, the supply curve for that good shifts:

to the left

Suppose the equilibrium price for bicycle tires is $42 but the market price rises to $67. Jerry is a seller in this market. All of Jerry's customers are not willing to pay this higher price. What has happened to total surplus in this market?

total surplus decreases

Julie decides to buy a sandwich from publix for lunch. Julie ends up paying $5 for the sandwich however, given how hungry she is, she would pay $10. In this case, the $10 is Julie's _______.

willingness-to-pay

which of the following would be considered to be the cut-off between a consumer buying a car and doing without the car?

willingness-to-pay


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