Prelim 1: ECO 120

Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If 6 units are bought and sold, then total surplus is

$18 lower than it would be if the equilibrium number of units were bought and sold.

Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, total surplus will be

$54.

Refer to Figure 7-1. If the price of the good is $50, then consumer surplus amounts to

$600.

If the law of demand applies to this good, then Q1 could be

0.

Refer to Scenario 5-3. The price elasticity of supply for aged cheddar cheese could be

0.5.

Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points D and G?

0.53

Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?

50.

Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for doctor's visits of an increase in the number of medical students graduating from medical school and successfully completing their residency programs?

Point A to Point B

Refer to Figure 2-4. This economy has the ability to produce at which point(s)?

R, T, U

Refer to Figure 2-14. Which combination of points show production possibilities only achievable with improvements in technology or increases in resources?

S and X

Which of the following is not true when the price of a good or service falls?

The total value of purchases before and after the price change is the same.

Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand A to Demand B in the market for oranges in the United States?

an announcement by the FDA that oranges prevent heart disease

Suppose good X has a negative income elasticity of demand. This implies that good X is

an inferior good.

A market includes

both buyers and sellers.

Once the supply curve for a product or service is drawn, it

can shift either rightward or leftward.

You have just been hired as a business consultant to determine what pricing policy would be appropriate to increase the total revenue of a bakery. The first step you would take would be to

determine the price elasticity of demand for the bakery's products.

The study of how society manages its scarce resources is most closely associated with which field of study?

economics

The demand for grape-flavored Hubba Bubba bubble gum is likely

elastic because there are many close substitutes for grape-flavored Hubba Bubba.

Causes of market failure include

externalities and market power.

In the circular-flow diagram, firms produce

goods and services using factors of production. output using inputs.

Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then when the price increases from $4 to $6, the market quantity supplied

increases by 10 gallons.

A statement describing how the world should be

is a normative statement.

Which of the following phrases best captures the notion of efficiency?

minimum waste

Suppose that when the price of wheat is $2 per bushel, farmers can sell 10 million bushels. When the price of wheat is $3 per bushel, farmers can sell 8 million bushels. Which of the following statements is true? The demand for wheat is

price inelastic, so an increase in the price of wheat will increase the total revenue of wheat farmers.

An increase in demand is represented by a

rightward shift of a demand curve.

Which of the following options best captures the notion of equality?

sameness

Economics deals primarily with the concept of

scarcity.

Consumer surplus is

the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.

A surplus exists in a market if

the current price is above its equilibrium price.

Which of the following will cause an increase in producer surplus?

the price of a substitute increases

When computing the opportunity cost of attending a basketball game you should include

the price you pay for the ticket and the value of your time.

When quantity moves proportionately the same amount as price, demand is

unit elastic, and the price elasticity of demand is 1.

Refer to Figure 4-24. All else equal, a decrease in the price of the grain fed to turkeys would cause a move from

y to x.