USM ECO 201 MIDTERM PARSONS

use the table to answer this question. what is the equilibrium price in this market? (price in the middle)

$9

you're online shopping, and you place an item in your virtual cart. 2 days later, you return to the virtual cart to check out and find that the item is more expensive now. assuming that the market is competitive, what could explain the price increase?

there is a shortage of the item.

at the store, hershey's kit kat candy bars are now cheaper than usual. which of the following explains why kit kats are cheaper?

there is a surplus of kit kats

a downward-sloping demand curve implies:

there is an inverse relationship between price and quantity demand

if a store runs a sale on a product to clear out its stock, we can conclude that:

there was a surplus of the product in the store.

you are considering whether you should go out to dinner at a restaurant with your friend. the meal is expected to cost you $50, you typically leave a 20% tip, and a round-trip Uber ride will cost you $15. You value the restaurant meal at $30 and the time spent with your friend at $50. You should ___ to dinner with your friend because the benefit of doing so is ______ than the cost.

go; greater

Jonathan Mendez is deciding whether to study for his economics exam at a cafe down the street or go to a concert a few cities over. The time spent commuting to the concert is _____ in his opportunity cost calculations and represents a ______ cost.

included; non financial

a shortage in the market for economics textbooks will ____ the price of textbooks.

increase

if farmers begin using fertilizers to grown corn, we would expect a(n) ______ in the supply of corn.

increase

When you get hired for a well-paying job, you will most likely view older used cars as:

inferior goods

diminishing marginal benefit:

is when buying an additional item yields a smaller marginal benefit than the previous item.

which of the following scenarios illustrates the law of demand?

kathleen eats more steak when the price is low, and less when the price is high.

a rational buyer will:

keep buying a product until marginal benefit equals price.

dependencies over time reflect the fact that:

resources can be spread across time.

a business manages to become more efficient. as a result of this improved efficiency it will:

shift its supply curve to the right

if the price of jet fuel rises, the

supply of airline flights decreases

(Figure: Shift in Supply 1) use the figure to answer the question. which of the following events would lead to a shift of the supply curve from old supply to new supply?

technological advance in production techniques

what is quantity supplied?

the amount of an item that a seller is willing to sell at a particular price.

Paint and paintbrushes are complements. If the price of paint rises, we can expect:

the demand for paintbrushes to decrease

which of the following is NOT a factor that can shift supply?

the market price of a product

Which principle tells you that the true cost of something is the next best alternative you have to give up to get it?

the opportunity cost principle

when plotting a supply curve:

the quantity supplied goes on the horizontal axis.

you eat m&ms every day. when you go to the store to buy some, you find that m&ms are more expensive than they were last month. which of the following could explain why m&ms are more expensive?

the supply of cacao beans, used to produce chocolate, has fallen around the world.

(Figure: Market for luxury SUVs) which of the following graphs shows what will happen to the supply curve for luxury SUVs, if economists predict an increase in demand for these vehicles?

Graph D (supply line diagonal from bottom left to top right, old price up to new price, old quantity up to new quantity, arrow going from point a to b on supply line)

(Figure: Market for Printing Paper) Which of the following graphs illustrates what we expect to see in the market for printing paper if the price of printing paper rises?

Graph C (old price going up to new price, old quantity going left to new quantity, B going to A on line representing Demand)

(Figure: Market for Apple Computers) Dell and Apple are competitors in the computer market. Which graph illustrates the effect of a rise in the price of Dell computers on the demand for Apple computers?

Graph D (New demand on top, old demand on bottom, arrow pointing from old demand line to new demand line)

How is the economic surplus generate by a decision calculated?

It is the total benefits minus total costs arising from the decision

The accompanying table provides data for 5 different oatmeal cookie sellers. out of the sellers listed, who all are following the law of supply?

Len, Ren, and Jen (as price increases the quantity increases)

Marie Johnston is a manager at an electronics store and has to decide how many workers to hire. If she hires one worker, her revenue is $500 per day. If she hires another worker, she can make another $400 per day. The marginal benefit of hiring another worker decreases by $100 with each additional hire. Assuming that workers are paid $15 per hour and work 8 hours, how many employees should Marie hire, and what will be the total revenue of her store?

She will hire 4 workers and the revenue of the store will be $1,400

the key to using the cost-benefit principle is to think about ______ aspects of a decision.

both financial and nonfinancial

graphically, shortages will always occur:

at prices below the equilibrium price.

Which of the following would be considered in a cost-benefit analysis to decide if a person should cycle to work or ride the subway? (i) the air pollution that the cyclist has to breathe (ii) the cost of subway tickets (iii) the time it takes to cycle to work vs. the time it takes to ride the subway to work (iv) the cost per gallon of gasoline

(i), (ii), and (iii)

which of the following 5 scenarios illustrate markets in action? (i) you rent a book at the university book store (ii) you bargain at a street stall (iii) you mow your own lawn (iv) you get a manicure at a nail salon (v) you grow your own vegetable and consume them yourself

(i), (ii), and (iv)

which of then following are correct about fixed costs? (i) they do not change with the level of production in the short run (ii) they include variable costs (iii) they are present even when the firm is producing zero units. (iv) they are irrelevant to marginal cost.

(i), (iii), and (iv)

Marie Johnston is a manager at an electronics store and has to decide how many workers to hire. If she hires one worker, her revenue is $800 per day. If she hires another worker, she can make another $600 per day. The marginal benefit of hiring another worker decreases by $200 with each additional hire. Assuming that workers are paid $20 per hour and work 8 hours, how many employees should Marie hire, and what will be her total cost for labor?

She will hire 4 workers at a total cost of $640

Tyrone has 3 options on how to spend his Saturday afternoon: to go out with his friends, watch a movie, or wash his car. Tyrone's opportunity cost of washing his car would be:

The value of going out with his friends or watching a movieSuppose

(Figure: Graph) in the graph, the movement from point H to G (one point down on new supply line) represents

a decrease in quantity supplied

The cost-benefit principle will lead you to make unselfish decisions if you:

account for unselfish motivations

Joshua Murphy is planning on studying late into the night for his economics exam. How many cups of coffee should be buy tonight?---- Joshua should keep buying coffee throughout the evening until the marginal:

benefit of purchasing one more coffee equals the marginal cost.

If cream cheese and bagels are complements, then an increase in the price of cream cheese will ________ the demand for bagels.

decrease

Assuming everything else stays the same, an increase in the price of laptop computers will ____________ of laptop computers.

decrease the quantity demand

assume the market for dvd movies is initially at equilibrium. a decrease in the price of streamed movies, a substitute for dvd movies, will ________________ the equilibrium price and ___________ the equilibrium quantity of dvd movies.

decrease; decrease

when there is a shortage of highly skilled workers in a particular region:

demand for skills education increases.

an equilibrium price is:

determined by the intersection of the demand and supply curves

an equilibrium price is:

determines by the intersection of the demand and supply curves

a bakery hires a baker who can make 15 cakes per day. the bakery then decides to hire a second baker who will use the kitchen at the same time as the first baker. the bakery finds that the second baker can produce only an additional 9 cakes per day. what concept does this scenario illustrate?

diminishing marginal product

when faces with a quantity decision, the economic surplus stops increasing when:

marginal benefits equal marginal costs.

The _____ suggests, decisions about quantities are best made incrementally.

marginal principle

The order in which you should apply the 4 core principles of economics is:

marginal principle, cost-benefit principle, opportunity cost principle, interdependence principle

a market consists 10 similar suppliers that are making the same supply decisions. to find the market supply of these 10 suppliers, you:

multiply the individual supply of one of the suppliers by 10.

Suppose you and you roommate have an agreement when it comes to cleaning that each person washes their own dishes after each meal. The principle of trade you just learned tells you that it would be more efficient if:

one of you washes all the dishes while the other does a different chore

when you calculate marginal costs, they should include:

only variable costs

Consider your decision to attend class each day or skip it. Which of the 4 core principles of economics applies to the notion that by attending class you are not doing the next best activity you would prefer to do, such as napping or going to the gym?

opportunity cost principle

Decisions should reflect the _____ costs, rather than just the _____ costs.

opportunity; financial

an individual demand curve is a graph that:

plots the quantity of an item that someone plans to buy, at each price.

the opportunity costs of attending college include the:

potential income that could be earned working

variable costs are the costs that

vary with the quantity of output produced.

as a part of a market research project, you survey 6 food trucks across the city to gather data on how many meals they would plan to sale at various prices. the data you collected is in the accompanying table. what is the total supply of meals in your survey at $10 per meal?

1,485 meals

consider the data in the table. the price of gasoline is $3.99 per gallon at the gas station. if rexhall fuel supplies is a rational seller, how many gallons of gasoline should this seller be willing to sell?

20 million gallons per week

(Figure: Spice King Burgers' Supply Curve) Take a look at Spice King Burgers' supply curve for burgers. how many burgers will they supply at a market price of $1.50 per burger?

200 units

use the table to answer this question. what is the equilibrium quantity in this market?

300 units

Suppose you have a choice between studying one more hour for your history exam or studying one more hour for your psychology exam. your decision on what to study should be based on:

The additional benefits of studying for each class

(Figure: Graph) in the graph, the movement from point J to point K (from top of new supply line to next dot below on the same line) must have been caused by:

a fall in the price of the item

A normal good is:

a good for which higher income causes an increase in demand

a seller at a farmer's market wants $10 for a bag of $10 apples. you think his price his too high, so you counter with an offer of $6 for the bag. The seller then offers you a much smaller bag of 5 apples for $6. you bargain again and the seller lets you buy the 10 apples for $8. this scenario is an example of:

a market in action

which of the following lists only the factors that would cause a decrease in the supply of an item?

a rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-productions.

which of the following scenarios depicts a seller who is following the rational rule for sellers?

american airlines determines the marginal cost of an extra passenger to be $75 and sells a discount seat for $250.

quantity demand is on the horizontal axis when you plot a demand curve and shows the:

amount of a good that a person is willing to buy at each price.

(Figure: Graph) refer to the graph to answer the question. The movement from point M or point N (first line on the left going left to right and up to down) represents:

an increase in quantity demanded

Kathleen Alvarado is binge-watching her favorite show on Netflix. She is attempting to decide how many more episodes to watch. Kathleen should continue watching episodes as long as the marginal:

benefit of watching another episode exceeds the marginal cost.

Diane Jacobs is a student studying economics and currently working on her class schedule for next semester. She considers the fact that more and more data is available every day and that data interpretation skills are learned by taking additional economics courses in her course selection. This acknowledgement highlights the dependencies that exist:

between markets

in a voluntary economic transaction between a buyer and a seller, ______ can earn economic surplus from the transaction.

both the buyer and the seller

The cost-benefit principle states that ______ are the incentives that shape decisions.

costs and benefits

according to the marginal principle, keep increasing quantity until the marginal benefit of an additional item is ______ the marginal cost of an additional item.

equal to

as a result of technological innovation, automated water pumps are being installed on the farms of Kenyan tomato farmers. As a result of the increased use of automated water pumps, the equilibrium price of tomatoes will:

fall, due to a rise in supply.

(Figure: Market for Coffee) a coffee shop opens next to an existing coffee shop. which of the following graphs shows the effect of this new coffee shop on the market supply curve for coffee in this area?

graph A ( 2 lines going diagonal from top right to bottom left, old supply line on left, new supply line of right, arrow pointing from old supply line to new supply line)

(Figure: Demand for Bus Rides) The city of Vaughan in Ontario, Canada opened a new subway line that extended the existing subway system between greater Toronto area and the city of Vaughan. The route previously only had bus service. Which of the following graphs depicts the effect you would expect to see on the demand for bus rides on this route after the introduction of the subway?

graph A (price- vertical axis, quantity- horizontal axis, old demand top line, new demand bottom line, arrow pointing from top line to bottom line)

(Figure: Market for Shrimp) use the figure to answer the question. in 2018, hurricane michael hit florida and destroyed some shrimp wholesale facilities. which graph correctly depicts the effect of the hurricane on the equilibrium price and quantity in the shrimp market?

graph C

the rational rule for sellers says that a seller should sell one more unit of an item if the price is:

greater than or equal to the marginal cost.

when there is a shortage of highly skilled workers in a particular region:

highly skilled workers can negotiate higher salaries.

The interdependence principle:

implies that buyers decisions are affected by many factors other than the price of an item.

when plotting a demand curve:

price is on the vertical axis

graphically, the equilibrium quantity can be identified as the:

quantity corresponding to the intersection of the demand and supply curves.

a shortage occurs when:

quantity demanded exceeds quantity supplied.

there are 4 suppliers in the packed meals market. the quantity of packed meals that each one is willing to supply per week at various prices is provided in the accompanying table. What is the change in the market supply for packed meals when the price falls from $6.25 per meal to $6.00 per meal?

the quantity supplied in the market falls by 149,000

there are 4 suppliers in the packed meals market. the quantity of packed meals that each one is willing to supply per week at various prices is provided in the accompanying table. What is the change in the market supply for packed meals when the price rises from $6.25 per meal to $6.50 per meal?

the quantity supplied in the market rises by 152,000

an upward-sloping supply curve shows that

there is a positive relationship between price and quantity supplied

there are empty candy shelves at walmart on the day before halloween. which of the following explains this event?

there is a shortage in the candy market

why are supply curves typically upward-sloping?

they slope upward because higher prices lead individual business to supply a larger quantity and more businesses are willing to supply goods and services.

an equilibrium in a market occurs:

when the quantity supplies equals the quantity demanded

suppose that you have a pumpkin stall at a farmer's market, and the halloween season arrives. you know that your customers will want to buy many pumpkins to decorate their houses and make pumpkin pies. which of the following is a likely result of this scenario?

you can charge a higher price per pumpkin

dependencies between your own choices reflect the fact that:

you have limited resources.

Kevin Williamson goes to a local coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $6. The price of the latte is $2. The cost to the coffee shop to produce the latte is $1. How much economic surplus does Kevin gain when he purchases the latte?

$4

the UK plans to end the use of gas-powered and diesel-powered cars by the year 2040. at the same car manufacturers , such as general motors and nissan, are increasing the number of electric car models they produce. based on this info, which of the following statements is/are correct? (i) if the supply of new electric cars is greater than the demand for new electric cars, then the price of electric cars will fall in the future. (ii) the demand for gasoline will fall in the future. (iii) the demand for electricity will rise in the future (iv) the demand for diesel will rise in the future.

(i), (ii), and (iii)

The table contains the monthly demand for soda cans for 4 students. If these 4 students make up the entire market, what is the total monthly demand for soda at $1.50 per can? (add up all quantities of soda cans demanded per month for each student in the $1.50 price per can row)

148 cans

use the table to answer the question. what is the equilibrium quantity in this market?

160 units

(Figure: Graph) refer to the graph to answer the question. In the graph, the movement from point W to point P (from top line to middle line) represents:

a decrease in demand

(Figure: Market for Used books) use the figure to answer the question. a campus bookstore sells both new and used books and rents them as well. in a particular semester the percentage of students who opt for used books and rental increases, and the percentage of students who opt for new books decrease. which graph shows the new equilibrium that would result in the market for used books?

graph A

(Figure: Market for cars) use the figure to answer the question. in 2011, japan suffered a major earthquake and tsunami. honda parts that were sourced from japan could no longer be produced, which caused honda to cut its production of cars. which graph shows the effect of this shortfall?

graph C

assuming everything else stays the same, an increase in the price of smartphones will _______ of smartphones

increase the quantity supplied

The principle that your best choice depends on your other choices, the choices others make, developments in other markets, and expectations about the future is known as the __________ principle.

interdependence

Nerida Kyle could either commute to work via Uber or purchase a new car. The average cost of her one-way Uber trip is $15. Nerida works 5 days a week for 50 weeks a year. Based solely on avoiding the cost of an Uber, Nerida should purchase a car if the cost of the car is _____ than _____ per week.

less than $150