EC-201 Final

American airlines base their fleet of Boeing 737 max airplanes at Miami international airport. In March 2019, the United States government banned the use of these airplanes due to safety concerns. How would we expect this to affect the price and quantity of airline travel out of Miami international airport?

Price increases and quantity decreases

Other things remaining the same, an increase in the price of beachfront condos:

Increases the quantity of beachfront condos supplied

When the price of a product is increased 15%, the quantity demanded decreases 10%. We can therefore conclude that the demand for this product is

Inelastic

It cost $12 to buy 4 tacos and $14 to buy 5 tacos. What is the marginal cost of the fifth taco?

$2

The demand for hamburgers is given below. As shown in the graph, the Y intercept of the demand curve is $10. Suppose equilibrium price is $6 and equilibrium quantity is 30 what is consumer surplus?

$60

When the price of paper towels increases 20%, the quantity demanded decreases 10%. The price elasticity of demand for paper towels is

-0.5

You own a landscaping company. You currently have three employees and are considering hiring a fourth. Hiring a fourth employee will increase the number of lawns your company can mow from 18 to 20. What is the marginal product of labor of the fourth employee?

2 lawns

Which of the following is an example of positive economics

350,000 jobs were created last month

Which of the following statements is false

A low price is a signal that it is expensive to produce the good

You have a coupon for a free item at Chick-fil-A. You can have either a salad, a fruit cup, or an ice cream. You choose the ice cream because that is your favorite item. Your second choice would have been the salad. What is the opportunity cost of the ice cream you chose?

A salad

Which of the following goods is most likely to be exported from the United States

Airplane engines

Graphically, surpluses will occur

At prices above the equilibrium price

In class, we learned that income redistribution can be a form of social insurance. Specifically, income redistribution is insurance against

Being poor

Diminishing marginal benefit

Can be observed in the downward slope of the demand curve

Which of the following would not make the supply of automobiles more elastic?

Computer chips used in cars become very difficult to find

Jaylin likes to drive to work instead of taking the subway. However, he hates getting stuck in traffic. This means that for Jaden, driving to work is a

Congestion good

Initially spartania is an autarchy and there is no international trade, in the world price of cheddar cheese is below the autarchy price.

Consumer surplus goes up and producer surplus goes down

In agreement was reached to end China's ban on the US exporting poultry to China. Which of the following is true

Consumer surplus in China will go up

Coca-Cola raises prices on its drinks to offset higher commodity costs. As a result, fewer people buy Coke products. What happened?

Movement up and to the left on the demand curve

Buyers bear a smaller incidence of the tax when

Demand is more elastic than supply

Which of the following is not an example of price discrimination?

Dinner at a fancy steakhouse is more expensive than dinner at McDonald's

Which of the following statements regarding globalization is not true

Due to globalization, the US is negatively affected when there is economic growth in other countries

Suppose Florida increases its minimum wage slightly and then sees a large increase in the number of people unemployed. This suggests that labor demand is

Elastic

Which of the following is consistent with the view that fairness means equality of outcomes

Equal incomes

For this question, you can assume that labor supply slopes up and labor demand slopes down. It is found working in a farm exposes workers to many dangerous chemicals that can cause cancer. What happens to the equilibrium wage?

Increases

Which of the following is consistent with a model of perfect competition?

Firms are price takers

Which of the following is an example of a nonexcludable good

Fish in the ocean

Which of the following statements has widespread agreement among economists?

Free trade is beneficial to most Americans

You have paid $100 for student season tickets to the football games at your university. It is halfway through the season, and the team has not won any games. You are considering whether you will attend any future games this season. All the following are costs or benefits you should consider when making this decision EXCEPT the

Frustration experienced from watching the team lose in previous games

Which of these industries would be the closest to monopolistic competition

Ice cream

The emergence of ride sharing apps like Lyft and Uber have created gains from trade by:

Introducing new sellers into the market for taxi services and decreasing the price of rides

Jackie likes to listen to loud heavy-metal music outside of her house. She values this at $20 per week. Marcus her neighbor, can hear this music and hates it. Marcus values getting to sit outside his house and not have to listen to Jackie's music at $10 per week. If Marcus chooses to, he can call the police and they will make Jackie turn off the music. According to the Coase theorem, which of the following is an optimal solution that could be achieved through private bargaining?

Jackie pays Marcus $15 and plays loud music

Kenan and Kel are roommates. They need to pressure wash the deck and rake leaves. Initially Keenan's opportunity cost of raking leaves once is pressure washing the deck once, and he has a comparative advantage at raking leaves. Then, Keenan sprains hisankle. As a result it takes him three times as long as before to pressure wash the deck and three times as long as before to rake leaves. Which of the following statements is definitely true?

Keenan still has a comparative advantage at raking leaves

In one hour Vicky can make two cakes or five pizzas. What is her opportunity cost of making a pizza

Making 0.4 cakes

The rational rule says that, if something is worth doing, keep doing it until

Marginal benefits are equal to marginal costs

The ...... suggests that decisions about quantities are best made incrementally (a little bit at a time)

Marginal principle

Which of the following is a good example of a negative externality

Marianne doesn't shovel her sidewalk, and someone slips on the ice and breaks their leg

According to what we learned in class, what is the marginal cost of working for one hour if your hourly wage is $15 per hour

One hour of leisure

In class, we said that to find the opportunity cost of an action, ask yourself

Or what?

Currently Coca-Cola sells 1 million cans of coke per year. Coca-Cola raises its price by one cent. If the market for color is perfectly competitive, what happens to the number of cokes sold?

Quantity goes to zero

Jen has determined that her serenity by Jan candles having an elasticity of demand of -0.35. Which of the following is true:

Raising the price would increase revenues

West Virginia is located on mountains that contain large amount of Cole. Thus, West Virginia provides the United States with a comparative advantage in coal production due to

Relatively abundant inputs

According to what we learned in class is an example of how a university can use intuition from game theory and coordination games to solve the issue of students binge drinking due to perceived peer pressure

Send an email telling students that most of their classmates do not binge drink

The effect of labor unions is to

Shift labor supply left

Gains from trade come from

Shifting tasks to people with low opportunity costs

This problem concerns the market for tickets to the Duke-Michigan State basketball game. At a price of $200 per ticket, there are 15,000 people wanting to buy tickets to the game and 18,000 people wanting to sell tickets to the game. According to what we learned in class what do we expect to happen?

Some sellers will offer to sell for less than $200 per ticket

When you search for a job you are a

Supplier in the labor market

According to what we learned in class, what is the process a manager can follow to estimate the total market demand for the United States?

Survey some representative customers, find the total quantity demanded for those customers, scale up the quantities demanded to represent the entire market, and then plot the market demand curve

Which of the following is the best definition of comparative advantage

The ability to carry out a task at a lower opportunity cost

According to what we learned in class, one economic argument for redistribution is that

The amount of enjoyment a poor person gets from an extra dollar is greater than the amount of enjoyment a rich person would get from that dollar

Professional chess has become more lucrative because the Internet makes it easy for people to watch professional chess matches. As a result the worlds best chess players can become world famous and very wealthy. This is an example of

The economics of superstars

Initially, the market for restaurant food delivery services such as DoorDash is an equilibrium. Then, two changes occur. First, DoorDash pays delivery drivers higher wages, which increases the cost of delivering meals. Second, students learn that the restaurants that use these delivery services sell food that is very unhealthy. Which of the following is true:

The effect and price is uncertain. Quantity decreases

Wheat The Best is a small farm that grows wheat. When the price of wheat is $20, wheat the best will supply 200 bushels of wheat. According to what we've learned in class, what is true?

The marginal cost of producing the 200th bushel of wheat is $20

According to what we learned in class, which of the following statements about inequality is true?

The poorest people in the US are roughly as poor as the poorest people in other advanced democracies

Your willingness to pay for a hotdog is four dollars. You should buy a hotdog if:

The price is at most $4

The cross price elasticities of shoes and handbags 0.6. If the price of shoes increases 20%, which of the following is true:

The quantity of handbags increases by 12%, which means that shoes and handbags are substitutes

Suppose golden retrievers create positive externalities because they are cute and people like seeing them at the park. Which of the following is true?

The social demand curve is to the right of the private demand curve

You get a raise that increases your hourly wage from 15 per hour to 19 per hour. After getting the raise, you choose to work more hours than before. This suggests that for you

The substitution effect is larger than the income effect

How old a supply of clothing change the forecast is the closing process will rise in the next few months?

The supply of clothing today will decrease.

A meat processing plant produces both steak and ground beef. What effect would Rising market prices for steak have on the market for ground beef?

The supply of ground beef will decrease.

$5 in a competitive labor market, employers will not pay less than the market wage because at a wage below the equilibrium

They would not be able to hire anyone

A politician argues that the United States should temporary ban the import of battery powered electric scooters because this is an infant industry. According to what we learned in class, which of the following counter arguments would we expect an economist to raise

This temporary ban might become permanent because the electric scooter manufacturers will never become globally competitive

Which of the following is an example of a cartel

Two beer distributors agree that each of them will serve half of the city of Lansing

Which of the following is an example of a reason why the supply curve for an oil company slopes up?

When the company produces a lot of oil, it had to pay its employees overtime, which increases the marginal cost of making oil

Cara owns a company that makes jackets. Her company is doing well and she's considering expanding by hiring more employees. However, she knows that if she hires more employees and increases her production, she will have to cut prices in order to sell more jackets. This is a good example of

Why labor demand slopes down

According to what we learned in class, which of the following is a negative consequence of redistributing income from rich people to poor people

Work incentives are reduced

When American airlines and US airlines announced a potential merger the stock prices of Delta Airlines and United Airlines went up when they announced a potential cancellation of the merger the stock prices of Delta Airlines and United Airlines went down this suggest that the merger

Would be bad for consumers

For which of the following instances would private bargaining be most likely to solve an externality

Your neighbor really wants to go deer hunting in your property, but you don't like the noise it would cause

If a firm is able to perfectly price discriminate, then consumer surplus is.....and deadweight loss is.....

Zero;Zero

The producer surplus on a unit sold equals

price minus marginal cost