MICRO FINAL QUIZLET #2

(Figure: The Production Possibility Frontiers for Kansas and Wisconsin) Use Figure: The ProductionPossibility Frontiers for Kansas and Wisconsin. In autarky, Kansas produces and consumes 30 gallons of milkand 80 bushels of corn, while Wisconsin produces and consumes 80 gallons of milk and 60 bushels of corn.Assume that each state specializes in the good in which it has a comparative advantage and that the price of 1gallon of milk is 2 bushels of corn. If Kansas exports 120 bushels of corn to Wisconsin, then the

120;140

(Figure and Table: Variable, Fixed, and Total Costs for Buckwheat) Use Figure and Table: Variable, Fixed,and Total Costs for Buckwheat. The marginal cost of increasing production from 64 to 75 bushels of buckwheatis

18.18

(Table: The Production Possibilities for Large Tractors and Petroleum) Use Table: The ProductionPossibilities for Large Tractors and Petroleum. In the United States, the opportunity cost of producing 40tractors is _____ barrels of petroleum.

20000

(Table: Variable Costs for Garden Maintenance) Use Table: Variable Costs for Garden Maintenance. Duringthe summer, Emma runs a gardening service in a perfectly competitive industry. Assume that costs are constantin each interval; so, for example, the marginal cost of clearing weeds from each of the gardens 1 through 10 is$20. Also assume that she can only tend to the number of gardens given in the table (and not numbers inbetween). Her only fixed cost is $1,000 for a weeding machine. Her variable costs include fuel, her time, andhot coffee. If the price to clear a garden is $30, how many lots should Emma clear?

40

(Table: The Utility of California Rolls) Use Table: The Utility of California Rolls. The marginal utility ofthe fourth roll is:

5

(Table: Sydney's Tutoring Service) Use Table: Sydney's Tutoring Service. Sydney tutors five students in theintroductory business class. The second column of the table shows each student's willingness to pay for a one-hour session. Sydney's estimated costs of providing tutoring hours (with no sunk costs) appear in the finalcolumn. If she can charge all students their willingness to pay, at the optimal number of hours of tutoring,Sydney's total profit will be:

50

(Table: The Production Possibilities for Large Tractors and Petroleum) Use Table: The ProductionPossibilities for Large Tractors and Petroleum. In Venezuela, the opportunity cost of producing 150,000 barrels of petroleum is _____ tractors

50

(Scenario: Accounting and Economic Profit ) Use Scenario: Accounting and Economic Profit.Scenario: Accounting and Economic ProfitCasey recently inherited $100,000 from her grandmother. Rather than invest the money in a mutual fund thatearns 5% per year, she quit her job as a translator for the United Nations, which paid $60,000 per year, andstarted Casey's Coffee Crush, a small café in Tribeca. The location she rented cost $20,000 for the year. Theequipment, café furniture, and coffee machines cost another $60,000. Staff, sales help, and advertising cost yetanother $40,000. In her first year, her revenue was $150,000. The implicit cost of capital of Casey's Coffee

5000

(Table: Optimal Choice of Yogurt and Cheese) Use Table: Optimal Choice of Yogurt and Cheese. Theprice of yogurt is $2 per unit, and the price of cheese is $4 per pound. Hailey's income is $16. If she spends allof her income on yogurt, the most she can buy is _____ yogurt(s), and her total utility will be ____

8; 144

_____ illustrates a positive relationship between price and quantity

A supply curve

(Figure: The Market for iPads) Use Figure: The Market for iPads. Assume that PA is the autarky price, PW isthe world price, and D and S represent domestic demand and supply, respectively. The loss of producer surpluswhen the market moves from autarky to free trade equals the area:

B

(Figure: Budget Lines for Bottled Water and Biscotti) Use Figure: Budget Lines for Bottled Water and Biscotti. For months now, Angela has had $20 per month to spend on bottled water and biscotti. The price of each cup of bottled water and each biscotti is $1. Which chart shows what will happen to her budget line if theprice of a cup of bottled water falls to $0.50?

D

(Figure: The Market for Grapes in California) Use Figure: The Market for Grapes in California. In autarky,the price of Grapes in California is PA. When the economy is opened to trade, the price falls to PW, and thechange in consumer surplus will be given by the area ______.

N+O+P

(Figure: Producer Surplus in the Market for Baseballs) Consider the figure Producer Surplus in the Marketfor Baseballs. If the price rises from P1 to P2 , the producer surplus will increase by the area:

P2P1KM

For a perfectly competitive firm in the short run, if the firm produces the quantity at which _____, the firmis earning _____.

P>ATC; economic profits

When a country exchanges goods with another country in the short run

Producers in the exporting industry may be better off

Which statement is normative?

The best way to encourage growth in the economy is through education.

In one hour, the United States can produce 25 tons of platinum or 250 electric cars. In one hour, Canadacan produce 30 tons of platinum or 275 electric cars. This information implies that:

The united states has the comparitive advantage in production of electric cars

Producers have an incentive to lower the quality of a good when the government imposes:

a binding price ceiling.

Armand's accountant tells him that he made a profit of $21,300 running a pottery studio in Boston. Armand'swife, an economist, claims Armand lost $21,300 running his pottery studio. This means his wife is claiming thathe incurred _____ in _____ costs

$42,600; implicit

A 10 percent increase in income increases the quantity demanded of online movie rentals by 3 percent.The income elasticity of demand for online movie rentals is ______, and online movie rentals are a(n) ______good.

0.3; normal

(Table: Labor and Output for Cappuccinos) Use Table: Labor and Output for Cappuccinos. The marginal product of the second worker is:

10

Nardelli owns Nardelli's Grinder Shoppe in Connecticut and can produce 300 sandwiches per day with twoworkers and 400 sandwiches per day with three workers. The marginal product of the third worker is _____

100

Expenses associated with factors of production may be _____ costs

all of these are expenses associated with factors of production

(Figure: The Cost Curves for Charlie's Cookie Confections) Use Figure: The Cost Curves for Charlie'sCookie Confections. The curve labeled Y represents the firm's _____ cost curve

average fixed

(Figure: Price Controls in the Market for Strawberries) Use Figure: Price Controls in the Market forStrawberries. The consumer surplus lost to a price floor at point b is equal to the area:

bcge

Josephine's budget line reflects the _____ available to Josephine if she spends _____ of her income.

consumption bundles; all

In the short run, variable costs will ______ at any given level of output when a firm adds capital.

decrease

The cross-price elasticity of demand between Fanta and Dr. Pepper has been estimated at 0.61. If the price of Dr. Pepper falls by 10%, the quantity demanded of Fanta will:

decrease by 6.1%

Gabriella's company produces wet suits for scuba divers. The long-run average total cost of producing 250wet suits is $56, while the long-run average total cost of producing 270 wet suits is $36. These numbers suggestthat between output levels of 250 and 270 wet suits, Gabriella is experiencing

economies of scale.

If an economy is in equilibrium, and no individual can improve her or his well-being by taking a differentaction, then the economy is:

efficient

Prices are important economic signals because they convey information about:

how much consumers are willing to pay for a good and how much it costs sellers to produce a good.

If the price of peanut butter were to decrease, the demand for jam, a complementary good, would probably_____.

increase

(Figure: The Market for Apple AirPods) Use Figure: The Market for Apple AirPods. Assume that Sdrepresents the domestic supply curve, and D d represents the domestic demand curve. If the world price equals$100, and there is free trade, domestic consumer surplus _____ and domestic producer surplus _____ comparedwith autarky.

increases; decreases

The price elasticity of demand for canned fruit is calculated as 0.75. Given this, demand is:

inelastic

Jacob owns a bed and breakfast in Napa Valley. He pays $32,000 per year for insurance, $408,000 in wages,MLATLAvlAFL00 Capital = fixed costshift toward more capitalwill decrease need forLabor & decreasevariable cost① 3rd drink gives more benefit then 4ᵗʰ and $23,000 for supplies. He forgoes $32,000 per year he could make as a police officer. His total revenue lastyear equaled $460,000. That means his economic _____ equaled _____

losses; 35000

The percentage of an increase in a taxpayer's income that is taxed away is the _____ rate.

marginal tax

When a market begins to engage in international trade:

producers in the exporting industry may be better off

With perfectly elastic supply and a downward-sloping demand curve:

producers will not bear any of the burden of a tax.

Eliza has annual earnings of $100,000, and Isabella has annual earnings of $50,000. Each consumer goes tothe mall and purchases a sculpture for $100, and each pays an additional 12%, or $12, in sales tax. This tax is:

regressive

If marginal cost is GREATER than average total cost, then average total cost is:

rising

(Figure: The Market for Microeconomics Textbooks) Use Figure: The Market for Microeconomics Textbooks.Suppose the government believes that microeconomics textbooks are too expensive and wants to make themmore affordable, ensuring that they are available to students. Given a price ceiling of $80, the marketoutcome would be a _____ of _____ textbooks.

shortage: 30

Sri Lanka, which is labor-abundant, has a comparative advantage in t-shirt production, which is labor-intensive. Which model explains this pattern of comparative advantage?

the Heckscher-Ohlin model

Which statement BEST describes the principle of diminishing marginal utility? As an individualconsumes more of a good:

the addition to total utility obtained from the nth unit of the good will be less than that obtained

Suppose the equilibrium price of yoghurt is $10, and the equilibrium quantity is 12 units. If the price ofyoghurt is $12:

there will be an excess supply of yoghurt.

(Figure: The Lobster Market) Use Figure: The Lobster Market. If the government wants to limit lobstersales to 250 pounds, it can impose a _____ excise tax on consumers, and the total tax revenue generated willbe _____.

$10; $2,500

(Table: Movie Downloads) Two consumers, Ariel and Abbie, like to download movies to their iPhones. Thetable Movie Downloads shows their willingness to pay for each downloaded movie. If an individual movie canbe downloaded for $1, what is the total consumer surplus received by these consumers?

$11

Suppose the government imposes a $15 per month tax on Internet service. If the demand curve for Internet service is perfectly inelastic, and the supply curve is upward-sloping, the monthly price for Internet service will increase by:

$15

(Table: Total Cost and Output for All-Natural Frozen Yogurt) Use Table: Total Cost and Output for All-Natural Frozen Yogurt, which describes Sasha's total costs for his perfectly competitive all-natural frozenyogurt firm. If the market price of a tub of frozen yogurt is $67.50, how much is Sasha's total cost at the profit-maximizing output?

$170