Mid-term Econ 102

If the government were to intervene in the market by lowering the price below the equilibrium price of a good, which of these would NOT occur?

The outcome would be efficient.

Which statement ALWAYS results in an increase in price and quantity?

an increase in demand with no change in supply C) an increase in supply with no change in demand

A production possibility frontier that is a line sloping down from left to right would suggest that:

the opportunity costs of the goods are constant.

When a tenant in a rent-controlled apartment sublets the apartment to another renter at a rent higher than the price ceiling:

the transaction took place on a black market.

Scarcity

there are not sufficient resources to produce all the goods and services wanted

Free trade between counties

will allow for greater levels of consumption than without trade.

Along a given downward-sloping demand curve, a decrease in the price of a good:

will increase consumer surplus.

Assuming that the supply curve for grapefruit is upward sloping, if there is a new medical report extolling the health advantages of grapefruit, total producer surplus in the grapefruit market:

will increase.

The minimum wage, which sets a lower limit on the wages that workers can earn, is often above the equilibrium price. The minimum wage is an example of

a price floor.

Consider two competing motorcycle manufacturers: Harley-Davidson and Honda. If Harley-Davidson raises the price of its motorcycles, one would expect to see

a shift to the right in the demand curve for Hondas and higher prices for Hondas.

The models used in economics:

emphasize basic relationships by abstracting from complexities in the everyday world.

If the opportunity cost of manufacturing machinery is higher in the United States than in Britain and the opportunity cost of manufacturing sweaters is lower in the United States than in Britain, then the United States should

export sweaters to Britain and import machinery from Britain

An economy is said to have a comparative advantage in the production of one good if it

has the lowest opportunity cost for producing a particular good

Manny is attending college and majoring in economics. By doing so, Manny is primarily improving his:

human capital

A beneficial technological change enhances the production of cranberries. At the same time, scientists discover the health benefits of cranberries. This will result in a(n)

increase in the equilibrium quantity and an uncertain impact on the equilibrium price of cranberries.

The market equilibrium is found at the:

price where quantity demanded equals quantity supplied.

If Brazil gives up 3 automobiles for each ton of coffee it produces, while Peru gives up 7 automobiles for each ton of coffee it produces, then:

Brazil has a comparative advantage in coffee production and should specialize in coffee production.

In Kessy's old kitchen, he could bake 10 cookies or mix 15 glasses of lemonade in one day. Now Kessy has a larger oven and refrigerator. How does this affect his production possibility frontier?

It shifts out his production possibility frontier.

Consider the market for iPods. What happens if a popular new alternative MP3 player is developed and at the same time a boat carrying a large shipment of iPods is attacked by pirates and sunk?

The change in price is indeterminate and quantity decreases.

Which situation would most likely cause a decrease in consumer surplus in the toy market?

The cost of shipping increases because of higher oil prices.

Suppose the input costs associated with manufacturing hair replacement treatments decreases over time. This would lead to:

an increase in the supply of such treatments, lower prices, and an increase in the equilibrium quantity.

Suppose the Jamaican government sets coffee prices at $1 per pound, when the market price is $10. The government's actions will:

cause coffee shortages even in a coffee-rich country.

Ashley bought a new pair of jeans. When she walked out of the store, she thought, "I got such a great deal; I would have paid $40 more for these jeans!" This best represents the concept of:

consumer surplus.

In the market for corn, a primary input in the production of ethanol, total surplus _____ when the price of ethanol increases. Assume that the supply of corn is upward sloping.

increases

The production possibility frontier is bowed out from the origin because:

is what you give up to produce the good.

West African cotton farmers are very upset about the subsidies the U.S. government pays to American cotton farmers. One reason for this could be that subsidized cotton from the United States:

leads to cotton surpluses in the United States and lower prices for West African farmers on world markets

If an economy has NOT achieved efficiency, there must exist ways to:

make some people better off without making others worse off.

The production of 14 units of consumer goods and 1 unit of capital goods per period would:

result in some unused or inefficiently used resources

Corner offices in high-rise office buildings usually cost more to rent than other offices. This best illustrates the economic principle of:

scarce resources.

People are forced to make choices because of:

scarcity

The market price of airline flights increased recently. Some economists suggest that the price increased because several airlines went out of business. They believe that in the market for flights:

supply decreased.

Consumer surplus for an individual buyer is equal to:

the consumer's willingness to pay for the good minus the price of the good.

A consumer's willingness to pay depends on:

the cost of producing the good or service.