mid term

Olive oil producers want to sell more olive oil at a higher price. Which of the following events would have this effect?

research finds that consumption of olive oil reduces the risk of heart disease

Figure 4-9 Figure 4-9 shows the market for cigarettes. The government plans to impose a unit tax in this market. Refer to Figure 4-9. How much of the (per unit) tax is paid by consumers?

$3

igure 4-1Figure 4-1 shows Kendra's demand for ice-cream cones curve.Refer to Figure 4-1. If the market price is $3.00, what is Kendra's consumer surplus?

$0.50

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

In a competitive market the ________ curve shows the marginal benefit received by consumers and the ________ curve shows the marginal cost to producers.

.demand, supply

able 2-3 ​SerenaHaley Table 2-3 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces.Refer to Table 2-3. What is Haley's opportunity cost of making a bracelet?

1 1/3 necklaces

Figure 2-7Figure 2-7 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews.Refer to Figure 2-7. What is the opportunity cost of producing 1 pound of cashews in Indonesia?

2 2/3 bolts of cotton

igure 2-2Figure 2-2 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids.Refer to Figure 2-2. What is the opportunity cost of one dozen orchids?

2.5 dozen roses

Table 2-4 ​One Digital CameraWheat (per pound)China100 hours4 hoursSouth Korea60 hours3 hours Table 2-4 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea.Refer to Table 2-4. What is China's opportunity cost of producing one digital camera?

25 pounds of wheat

Figure 2-7Figure 2-7 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews.Refer to Figure 2-7. What is the opportunity cost of producing 1 bolt of cotton in Indonesia?

3/8 of a pound of cashews

Table 1-1 HoursOpenTotalRevenue(dollars)1$50275395411051216125 Lydia runs a small nail salon in the town of New Hope. She is debating whether she should extend her hours of operation. Lydia figures that her sales revenue will depend on the number of hours the nail salon is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $10 per hour.Refer to Table 1-1. Using marginal analysis, determine how many hours should Lydia extend her nail salon's hours of operations?

5 hours

In recent years the cost of producing organic produce in the U.S. has decreased largely due technological advancement. At the same time, more and more Americans prefer organic produce over conventional produce. Which of the following best explains the effect of these events in the organic produce market?

Both the supply and demand curves have shifted to the right. As a result, there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price.

Table 2-4 ​One Digital CameraWheat (per pound)China100 hours4 hoursSouth Korea60 hours3 hours Table 2-4 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea.Refer to Table 2-4. If the two countries specialize and trade, who should export wheat?

China

Table 4-1 ConsumerWillingness to PayCurly$50Moe30Larry15 Refer to Table 4-1. The table above lists the highest prices three consumers, Curly, Moe, and Larry, are willing to pay for one bottle of champagne. If the price of one of the bottles is $24 dollars

Curly will receive $26 of consumer surplus from buying one bottle.

"The distribution of income should be left to the market" is an example of a positive economic statement.

False

Scenario 1-1Suppose a cell phone manufacturer currently sells 20,000 cell phones per week and makes a profit of $5,000 per week. A manager at the plant observes, "Although the last 3,000 cell phones we produced and sold increased our revenue by $6,000 and our costs by $6,700, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of cell phones."Refer to Scenario 1-1. Had the firm not produced and sold the last 3,000 cell phones, would its profit be higher or lower, and if so by how much?

Its profit will be $700 higher.

Figure 3-7 Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for used clothing, an inferior good. Which panel describes what happens in this market as a result of a decrease in income?

Panel (c)

Figure 3-7 Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets. Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?

Panel (d)

Which of the following is a normative economic statement?

Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.

Which of the following statements is true about scarcity?

Scarcity refers to the situation in which unlimited wants exceed limited resources.

Figure 3-8 Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (point A). If the price of oranges, a substitute for apples, decreases and the wages of apple workers increase, how will the equilibrium point change?

The equilibrium point will move from A to E.

Which of the following will shift the demand curve for a good?

a decrease in the price of a complementary good

If an increase in income leads to in an increase in the demand for peanut butter, then peanut butter is

a normal good

Which of the following would cause a decrease in the supply of milk?

an increase the price of a product that producers sell instead of milk

Economists assume that individuals

are rational and respond to incentives.

Comparative advantage means the ability to produce a good or service

at a lower opportunity cost than any other producer.

Elvira decreased her consumption of bananas when the price of peanut butter increased. For Elvira, peanut butter and bananas are

complements in consumption

In a competitive market when there is no deadweight loss,

consumer surplus plus producer surplus is maximized.

The decision about what goods and services will be produced made in a market economy is made by

consumers and firms choosing which goods and services to buy or produce.

Figure 2-4 shows various points on three different production possibilities frontiers for a nation.Refer to Figure 2-4. A movement from X to Y

could occur because of an influx of immigrant labor.

In economics, the term "equity" means

economic benefits are distributed fairly.

Productive efficiency is achieved when

firms produce goods and services at the lowest cost.

The production possibilities frontier model shows that

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

Figure 3-5 Refer to Figure 3-5. At a price of $5, the quantity sold

is 2 units

In economics, the term ________ means "additional" or "extra."

marginal

Economists reason that the optimal decision is to continue any activity as long as the

marginal benefit is at least as large as the marginal cost.

To affect the market outcome, a price floor

must be set above the equilibrium price.

Table 4-2 Marko's PolosMarginal Cost(dollars)1st shirt$72nd shirt103rd shirt154th shirt20 Refer to Table 4-2. The table above lists the marginal cost of polo shirts by Marko's, a firm that specializes in producing men's clothing. If the price of polo shirts increases from $15 to $20

producer surplus will rise from $13 to $28.

Table 4-3 Hourly Wage(dollars)Quantity of Labor SuppliedQuantity of Labor Demanded$8.00350,000390,0008.50360,000380,0009.00370,000370,0009.50380,000360,00010.00390,000350,00010.50400,000340,000 Table 4-3 shows the demand and supply schedules for the low-skilled labor market in the city of Westover.Refer to Table 4-3. If a minimum wage of $10.50 is mandated there will be a

surplus of 60,000 units of labor.

Figure 4-4Refer to Figure 4-4. The figure above represents the market for iced tea. For the quantity sold at a price of $1,

the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently low.

A supply curve shows

the marginal cost of producing one more unit of a good or service.

The attainable production points on a production possibility curve are

the points along and inside the production possibility frontier.

Deadweight loss refers to

the reduction in economic surplus resulting from not being in competitive equilibrium.

Figure 3-5Refer to Figure 3-5. At a price of $15,

there would be a surplus of 4 units.

The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of

trade-off