ECO201 Exams 1-3

b) area 0PSM

(Figure: Demand for High End Cell Phones) Use Figure: The Demand for High End Cell Phones. Total revenue at point S equals the: a) distance 0P b) area 0PSM c) area 0TUM d) distance MS

b) D 4

(Figure: Estimating Price Elasticity in the Market for Garden Gnomes) Use Figure: Estimating Price Elasticity in the Market for Garden Gnomes. Between the two prices, P1 and P2, which demand curve has the lowest price elasticity? a) D 2 b) D 4 c) D 1 d) D 3

d) a decrease in supply.

(Figure: Graph) In the graph, the movement from point M to point G represents a) a decrease in quantity supplied. b) an increase in quantity supplied. c) an increase in supply. d) a decrease in supply.

5

(Figure: Leonard's Demand for Pecan Pie) Look at Leonard's weekly demand curve for slices of pie. How many slices of pie is Leonard willing to buy at $3 per slice?

a) $12,750

(Figure: Market for Avocados) The figure shows the market for avocados. If the seller changes the price per avocado from $1.50 to $1.75, the change in total revenue is: a) $12,750 b) $162,750 c) $312,750 d) $150,000

300

(Figure: Market for Electrical Components) Refer to the figure which shows the market for electrical components. What is the size of the deadweight loss caused by the tax?

d) 500; 0

(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of an engine is $800, domestic consumers will purchase _____ units from domestic producers and _____ units from foreign producers a) 500; 300 b) 600; 0 c) 600; 300 d) 500; 0

$20,000

(Figure: Market for Logs) A quota of 10,000 logs forest wood per month is placed in the market that is shown in the figure. How much are buyers willing to pay after the implementation of the quota?

Graph C

(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?

60

(Figure: Market) Use the bath towel market graph to answer the question The bath towel market is at equilibrium. How large is the economic surplus?

50

(Figure: Monthly Demand for Potato Chips) The graph Monthly Demand for Potato Chips shows one individual's linear monthly demand curve for potato chips. At $5 per bag of chips, this individual will consume 10 bags in a month. How much consumer surplus does this consumer receive?

a) $180

(Figure: Monthly Supply of Lattes) The figure Monthly Supply of Lattes represents the monthly supply of lattes at a local cafe. At $3 per latte, the cafe produces 120 lattes per month. The producer surplus received by this bakery is equal to: a) $180 b) $360 c) $120 d) $60

c) b ; surplus; f and e

(Figure: Price Controls in the Market for Strawberries) Use Figure: Price Controls in the Market for Strawberries. An effective price floor would be at price _____, and a _____ would result from the difference between quantities _____ a) d ; shortage; i and h b) c ; surplus; f and e c) b ; surplus; f and e d) b ; shortage; f and e

a) rent will remain at $1,000

(Figure: Rent Controls in the Market for Apartments in New York City) Use Figure: Rent Controls in the Market for Apartments in New York City. If a rent ceiling is set at $1,100: a) rent will remain at $1,000. b) no one will have to pay a higher actual price than $800, nor will anyone be willing to do so. c) the shortage of rental units will be the distance 2.1 million − 1.9 million or 0.2 million units. d) some renters will be willing to pay a price as high as $1,200 for available rental units.

a) $1,200 for 1.8 million units

(Figure: Rent Controls in the Market for Apartments in New York City) Use Figure: Rent Controls in the Market for Apartments in New York City. If a rent ceiling were set at $800, renters would be willing to pay a price at least as high as: a) $1,200 for 1.8 million units. b) $1,100 for 1.9 million units. c) no one would be willing to pay a higher rent than $800. d) $1,200 for 1.9 million units.

400

(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 $2.50 per burger?

2.5

(Figure: Spice King Burgers' Supply Curve) Take a look at Spice King Burgers' supply curve for burgers. What is the marginal cost to produce the 400th burger?

Product D

(Figure: Supply Curves) The figure shows four different supply curves for four products: A, B, C and D. Which one of the supply curves probably belongs to a seller who has a large stock of product available for sale?

Product C

(Figure: Supply Curves) The figure shows four different supply curves for four products: A, B, C, and D. Which of the products has the most elastic supply curve?

b) export 6 million

(Figure: The Domestic Supply and Demand for Recreational Vehicles (RVs) in the United States) Use Figure: The Domestic Supply and Demand for Recreational Vehicles (RVs) in the United States. Suppose the world price equals $50,000, and there is free trade. The United States would _____ Recreational Vehicles a) export 2 million b) export 6 million c) import 2 million d) import 6 million

B and C

(Figure: The Incidence of Tax and Elasticities) Use Figure: The Incidence of Tax and Elasticities. Each panel below shows the application of an excise tax that raises the price from P 1 to P 2 . Producers are likely to bear most of the burden of an excise tax in the situations illustrated by panels:

c) Y

(Figure: The Market for Apple Computers in the United States) Use Figure: The Market for Apple Computers in the United States. Assume that P A is the domestic equilibrium price without trade and P W is the world price. Producer surplus without international trade would be area: a) X + Y. b) W + X + Y. c) Y. d) X + Y + Z.

$0.50; 5

(Figure: The Market for Exercise Apps) Use Figure: The Market for Exercise Apps. If the government imposes a tax of $1 in this market, consumers will pay _____ more per app and purchase _____ fewer apps

a) P 1 ; Q 1 ; Q 3

(Figure: The Market for Milk) Use Figure: The Market for Milk. With a binding price floor, the price could be equal to _____, consumers would demand _____, and producers would supply _____ a) P 1 ; Q 1 ; Q 3 b) P 2 ; Q 2 ; Q 2 c) P 3 ; Q 3 ; Q 1 d) P 1 ; Q 3 ; Q 1

d) F + G + H ; J + K

(Figure: The Market for Tea in India) Use Figure: The Market for Tea in India. Without trade, the price is P A , consumer surplus equals _____, and producer surplus equals _____ a) F + G + H + I ; J + K b) F ; G + H + I + J + K c) F + I ; J + K d) F + G + H ; J + K

1,000

(Figure: Wireless Keyboard Market) Use the graph to calculate the deadweight loss when 100 units are sold in the market.

c) Marla because she has a lower opportunity cost than Jason

(Table: Cooking time) The table provides data on how long it takes Marla and Jason to cook lasagna or chicken curry Which statement explains who has a comparative advantage in cooking lasagna? a) Jason because he has a lower opportunity cost than Marla. b) Jason because he can cook lasagna faster than Marla. c) Marla because she has a lower opportunity cost than Jason. d) Marla because she can cook lasagna faster than Jason.

b) Jason, Jason

(Table: Cooking time) The table provides data on how long it takes Marla and Jason to cook lasagna or chicken curry _______ has the absolute advantage in cooking Lasagna, and __________ has the absolute advantage in cooking chicken curry a) Marla, Jason b) Jason, Jason c) Jason, Marla d) Marla, Marla

b) .75 of a lasagna; .33 of a lasagna

(Table: Cooking times). The table provides data on how long it takes Marla and Jason to cook lasagna and cook chicken curry Marla's opportunity cost of making chicken curry is _____, and Jason's opportunity cost is _____ a) 1.33 lasagna; three lasagna b) .75 of a lasagna; .33 of a lasagna c) 1.33 hours; three hours .d) 75 of an hour; .33 of an hour

b) 10%; fall

A Smoothie King manager has estimated that the price elasticity of demand for exotic fruit smoothies is 2. If the store increases menu prices by 5%, she can expect the quantity of exotic fruit smoothies sold to decrease by _____ and total revenue to _____. a) 5%; stay constant b) 10%; fall c) 2.5%; fall d) 10%; rise

d) the economic surplus at the efficient quantity minus the economic surplus at the actual quantity

A market's deadweight loss is calculated as: a) the economic loss that a firm has when it is not producing its profit-maximizing output. b) the price at equilibrium minus the price at actual quantity. c) the loss to consumers when a product malfunctions or fails to meet expectations. d) the economic surplus at the efficient quantity minus the economic surplus at the actual quantity.

b) it is difficult to prevent someone from using or having access to the good

A nonexcludable good is a good in which: a) the good has no cost of production and so is available to consumers at no cost. b) it is difficult to prevent someone from using or having access to the good. c) there is a regulation that the good must be provided to everyone. d) one person consuming or using the good cannot prevent others from using or consuming the same unit of the good.

d) vertical

A perfectly inelastic supply curve is: a) downward sloping b) upward sloping c) horizontal d) vertical

a) it is set above the equilibrium price

A price ceiling will have NO immediate effect if: a) it is set above the equilibrium price. b) it creates a surplus. c) it is set below the equilibrium price. d) the equilibrium price is above the price ceiling.

1, 3, 2

A tax is placed on the sellers of soft drinks. The after tax quantity of soda sold is _______. The full cost of a unit of soda to buyers after the tax is ______. The seller gets to keep ______ after the tax.

1

A tax is placed on the sellers of soft drinks. What is the size of the per unit tax? (If you answer is something like $2.25, enter 2.25.)

d) decrease

Along a given upward-sloping supply curve, a decrease in the price of a good will _____ producer surplus. a) It's impossible to tell what will happen to producer surplus. b) have no effect on c) increase d) decrease

d) buy the sandwich because the marginal benefit is greater than the marginal cost

Amanda Mendez goes to a local café and orders a sandwich. Her willingness to pay for that sandwich is $12. The price of the sandwich is $9. The cost to the cafe to produce that sandwich is $1. Amanda should... a) NOT buy the sandwich because the marginal benefit is greater than the marginal cost b) buy the sandwich because the marginal benefit is less than the marginal cost c) NOT buy the sandwich because the marginal benefit is less than the marginal cost d) buy the sandwich because the marginal benefit is greater than the marginal cost.

b) sold to a foreign buyer

An export is a good or service: a) purchased from a domestic seller. b) sold to a foreign buyer. c) sold to a domestic buyer. d) purchased from a foreign seller.

c) purchased from a foreign seller.

An import is a good or service: a) sold to a foreign buyer. b) purchased from a domestic seller. c) purchased from a foreign seller. d) sold to a domestic buyer.

e) Quantity supplied decreased

Because of the shift in demand from D1 to D2 in the figure below, did... a) Supply decreased b) Supply increased c) None of the other answers are correct d) Quantity supplied increased e) Quantity supplied decreased

4,000

Below is a supply and demand graph for the tall black coffee market in Oxford on a weekly basis. At a market price of $1, what is the size of the surplus or shortage in terms of the number of coffees?

c) a surplus

Below is a supply and demand graph for the tall black coffee market in Oxford on a weekly basis. At a market price of $4, the market will be in... a) a shortage b) equilibrium c) a surplus

2

Below is the production possibilities frontier (PPF) for Burgers and Pizzas. What is the opportunity cost of one more pizza at point B on the PPF (in number of burgers)? (For fractional answers, input as a decimal point to the hundredths place (i.e. 0.20 for 1/5))

5,000

Bill goes to buy a car at the used car lot. He finds a 2 year old Toyota Camry that he likes. He is willing to pay up to $20,000 for this car. The dealer is willing to sell the car for as low as $15,000. The agree upon price for the sale was $17,000. What is the economic surplus of the entire market (both buyer and seller)?

b) skills she may gain from her final year of economics courses.

Carolyn Bates is a junior in college studying economics. She has created a new software application that applies the four principles of economic decision making to any potential decision that a user faces. She is considering leaving school after this academic year to pursue further development of her app. Carolyn should ignore all of the following costs when calculating the opportunity costs of leaving college EXCEPT the a) 90 credit hours she has already completed for her degree. b) skills she may gain from her final year of economics courses. c) tuition costs she has already paid to her college. d) time she will spend working on the app instead of studying.

-0.33

Chipotle lowered its price for chicken burritos by 15%. The next week the quantity demanded of chicken burritos increased by 5%. What is the price elasticity of demand for chicken burritos at Chipotle? (Put in a negative number. If it is a fraction, put your answer in as a decimal to two digits)

a) consumer's willingness to pay for the good, or the marginal benefit from the good, minus the price paid for the good

Consumer surplus for an individual buyer is equal to the: a) consumer's willingness to pay for the good, or the marginal benefit from the good, minus the price paid for the good. b) marginal cost of the good minus the consumer's willingness to pay for the good or the marginal benefit from the good. c) price of the good plus the marginal cost of producing the good. d) consumer's willingness to pay for the good, or the marginal benefit from the good, plus the marginal cost of producing the good.

a) fewer choices means more inelastic demand.

Demand for a particular fast-food chain inside an airport is less elastic than outside of the airport because: a) fewer choices means more inelastic demand. b) specific brands tend to have more elastic demand than categories of goods. c) consumer search makes demand more elastic. d) necessities have less elastic demand.

b) more competing products means greater elasticity.

Demand is more elastic when you are shopping in Walmart than when you shop at a small convenience store because: a) necessities have less elastic demand. b) more competing products means greater elasticity. c) consumer search makes demand more elastic. d) specific brands tend to have more elastic demand than categories of goods.

a) the difference between the marginal benefit to the buyer and the marginal cost to the seller for all units sold

Economic surplus is: a) the difference between the marginal benefit to the buyer and the marginal cost to the seller for all units sold. b) always less for consumers than producers. c) equal to the area above the supply curve. d) none of the other answers is correct

a) $10

Eliana and Olivia are at Barnes and Noble buying new calculators for the semester. Eliana is willing to pay (or her marginal benefit is) $65, and Olivia is willing to pay (or her marginal benefit is) $75 for a graphing calculator. The price of a calculator at Barnes and Noble is $55. How much is Eliana's individual consumer surplus? a) $10 b) $20 c) $65 d) none of the above

a) the demand will shift to the left

How will the demand for boats this year change, if the market expects the price of boats next year to increase? a) the demand will shift to the left b) the quantity demanded will move down along the demand curve c) the quantity demanded will move up along the demand curve d) the demand will shift to the right

d) is a poverty program that helps people who have low incomes

If a government program is means-tested, it: a) provides benefits only to households that earn less than the mean household income in a given year. b) provides only in-kind benefits. c) provides benefits for everyone. d) is a poverty program that helps people who have low incomes.

a) larger

If an increase in the price of coconut oil brings about an increase in total revenue, then the percent rise in price is _____ in magnitude than the percent decline in quantity demanded a) larger b) not comparable c) equal d) smaller

d) increases; increases

If canned soup is an inferior good and income decreases, then the equilibrium price of canned soup __________, and the equilibrium quantity of canned soup produced _________. a) decreases; increases b) decreases; decreases c) increases; decreases d) increases; increases

a) Policy A is more efficient than Policy B but may not be more equitable than Policy B.

If raising taxes through Policy A yields more economic surplus than raising taxes through Policy B, then: a) Policy A is more efficient than Policy B but may not be more equitable than Policy B. b) Policy A is less efficient and equitable than Policy B. c) Policy A is more equitable than Policy B but may not be more efficient than Policy B. d) Policy A is more efficient and equitable than Policy B.

c) ratatouille to decrease.

If ratatouille and Hungarian goulash are substitutes in consumption, a decrease in the price of Hungarian goulash will cause the demand for: a) Hungarian goulash to increase. b) Hungarian goulash to increase and the demand for ratatouille to decrease. c) ratatouille to decrease. d) ratatouille to increase.

c) consumer and producer surplus are maximized.

If resources are allocated efficiently, a) producer surplus exceeds consumer surplus. b) consumer surplus exceeds producer surplus. c) consumer and producer surplus are maximized. d) the marginal social cost is at a minimum.

b) negative; inferior

If the income elasticity of demand for a good is _____, the good is said to be _____. a) positive; inferior b) negative; inferior c) positive; a substitute d) negative; a complement

c) firms produce more than the efficient quantity

If the price of a good exceeds the competitive equilibrium price, then: a) producers sell more than the competitive quantity. b) firms produce less than the efficient quantity. c) firms produce more than the efficient quantity. d) consumers purchase more than the competitive quantity.

2

If the price of coffee increases by 20%, then Starbucks increases their quantity supplied of coffee by 40%. What is the Price Elasticity of Supply?

a) Leticia; poems

If they spend all night writing poems, Leticia can write 10 poems, and Isabella can write five. If they spend all night making necklaces, Leticia can make six, and Isabella can make four. We know that _____ has a comparative advantage in _____ a) Leticia; poems b) Isabella; both poems and sunglasses c) Leticia; both poems and sunglasses d) Isabella; poems

d) negative

If two goods are complements, their cross-price elasticity of demand is: a) equal to 0 b) positive c) positive but almost equal to 0 d) negative

50, 50

In an effort to reduce plastics usage, a tax is then placed on plastic bags. The % tax incidence on buyers is _________, and the % tax incidence on sellers is __________.

D, B

In the graph below, P2 is a price ceiling. Select all letters corresponding to areas on the graph that are part of the deadweight loss from the price ceiling

e) a shortage; and price will increase to clear the market

In the graph below, if the price stayed at the initial equilibrium price after the shift in the demand curve from D1 to D2, will there be ...? a) a shortage; and price will decrease to clear the market b) a surplus; and price will increase to clear the market c) neither a shortage nor a surplus, the market always clears d) a surplus; and price will decrease to clear the market e) a shortage; and price will increase to clear the market

a) demand; normal

In the market for canned soup, _____ will decrease if income decreases and soup is a(n) _____ good. a) demand; normal b) supply; inferior c) demand; inferior d) supply; normal

a) $12

It is a beautiful afternoon, and you are considering taking a leisurely stroll through the park. Your alternatives to walking are streaming a movie that you value at $5, taking a nap that you value at $7, or reading a new book that you value at $12. What is the opportunity cost to you of taking the stroll through the park? a) $12 b) $7 c) $5 d) $0

b) elastic

It is very easy for Evelyn to find inexpensive inputs for her business. Evelyn's supply is therefore likely to be: a) unit-elastic b) elastic c) inelastic d) perfectly elastic

d) $45

Jorge sells a hammock for $85. His marginal cost for one hammock is $40. What is Jorge's producer surplus on the sale of one hammock? a) $40 b) $35 c) $80 d) $45 e) -$5

b) will not; only Juan

Juan McDonald is willing to pay $650 for a new iPad. He offers to pay $600 for an iPad at the Apple store. It costs Apple $700 to produce this iPad. A voluntary economic transaction between Juan and Apple _____ occur because ____ would be better off due to the transaction. a) will; neither Juan nor Apple b) will not; only Juan c) will not; only Apple d) will; both Juan and Apple

5

Kevin Williamson goes to a local coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $8. The price of the latte is $3. The cost to the coffee shop to produce the latte is $1. How much economic surplus does the coffee shop receive when Kevin purchases the latte (in dollars)?

-0.5

Mark's income fell by 10% and it lead him to increase his quantity demanded of hot dogs by 5%. What is Mark's income elasticity of demand? (If negative include negative sign in your answer. If a fraction, put your answer as a decimal with two digits. Don't include a % symbol).

a) 50%

Milk producers know that the price elasticity of demand for whole milk is 0.1. If they want to increase sales by 5%, they will have to lower price by: a) 50% b) 1% c) 5% d) 0.1%

a) Quantity increases, and the Price change is unknown

Suppose demand decreases and supply increases, then what happens to the equilibrium price and quantity when comparing the new equilibrium to the old equilibrium? a) Quantity increases, and the Price change is unknown b) Quantity increases, and the Price increases c) The Quantity change is unknown, and the Price decreases d) Quantity decreases, and the Price change is unknown e) Quantity increases, and Price decreases f) The Quantity change is unknown, and the Price increases g) Quantity decreases, and the Price increases h) The Quantity change is unknown, and the Price change is unknown i) Quantity decreases, and the Price decreases

d) the quality of the good supplied will likely decrease

Suppose that a binding price floor is in place in a particular market. If the market is deregulated, and the price floor is removed: a) the quantity supplied will increase. b) shortages will occur. c) there will be an inefficient allocation of resources. d) the quality of the good supplied will likely decrease.

d) increases; increases

Suppose that cheese and crackers are complements-in-consumption, and that the price of cheese decreased. The equilibrium price of crackers __________, and the equilibrium quantity of crackers produced _________. a) decreases; increases b) decreases; decreases c) increases; decreases d) increases; increases

d) Price decreases and quantity decreases

Suppose that demand decreased. What happens to the equilibrium price and equilibrium quantity? (only one curve changes) a) Price increases and quantity increases b) Price decreases and quantity increases c) None of the other answers is correct, because we only know for certain the direction of either price or quantity but not both. One direction of the change will be unknown. d) Price decreases and quantity decreases e) Price increases and quantity decreases

a) demand decreased

Suppose that either supply or demand shifted (only one curve changed), and that the equilibrium price decreased and equilibrium quantity decreased. It must be the case that... a) demand decreased b) none of the other answers are correct c) supply increased d) supply decreased e) demand increased

e) demand increased

Suppose that either supply or demand shifted (only one curve changed), and that the equilibrium price increased and equilibrium quantity increased. It must be the case that... a) demand decreased b) none of the other answers are correct c) supply increased d) supply decreased e) demand increased

c) increases; decreases

Suppose that plywood and wood pulp are complements-in-production, and that the price of wood pulp decreased. The equilibrium price of plywood __________, and the equilibrium quantity of plywood produced _________. a) decreases; increases b) decreases; decreases c) increases; decreases d) increases; increases

e) Price decreases and quantity increases

Suppose that supply increased. What happens to the equilibrium price and equilibrium quantity? (only one curve changes) a) Price increases and quantity increases b) None of the other answers is correct, because we only know for certain the direction of either price or quantity but not both. One direction of the change will be unknown. c) Price increases and quantity decreases d) Price decreases and quantity decreases e) Price decreases and quantity increases

b) rise; fall; rise

Suppose the United States places a tariff on imported Brazilian ipe (a type of wood). As a result of the tariff, the domestic price of lumber will _____, consumer surplus will _____, and producer surplus will _____ a) fall; fall; rise b) rise; fall; rise c) rise; rise; fall d) rise; fall; fall

-20

Suppose the price elasticity of supply for textbooks is 5%. What would be the change in quantity supplied (in percent) if price decreased by 4%? (If you answer is 45%, put in 45 without the % symbol. Direction matters here. i.e. negative or positive change)

c) the demand for vaping products is more price elastic

The Public Health Department of the State of Ohio wants to decrease the harm to the public from low-quality unsafe producers of vaping products (e-cigarettes). The Health Department proposes a policy that all producers will be required to have their products inspected for the safety of the ingredients, and that producers will be required to pay for the cost of inspections. The policy will work through increasing the marginal cost of producing vaping products. For a given fixed increase in marginal costs, the policy will be more effective (i.e. larger reductions in the quantity of vaping product use) if a) efficacy doesn't depend on the price elasticity of demand of vaping products b) not enough information provided to determine the answer to the question c) the demand for vaping products is more price elastic d) the demand for vaping products is more price inelastic

a) the inability to prevent individuals who do not pay for a good from

The free-rider problem results from: a) the inability to prevent individuals who do not pay for a good from consuming it. b) monopoly pricing. c) average cost pricing. d) the horizontal summing of supply curves.

4

The graph below depicts the market demand curve for tall black coffee in Oxford over the period of a week. What is the marginal benefit (willingness-to-pay) of the 2000th cup of coffee?

b) overproduction

The market outcome will lead to _________ in the presence of negative externalities a) underproduction b) overproduction c) none of these d) the efficient level of output

a) comparative advantage.

The person with the LOWEST opportunity cost of producing a particular good is said to have a(n): a) comparative advantage. b) technological advantage. c) advantage in production. d) increasing opportunity cost.

H, C

The planting of trees create a positive benefit on bystanders, a positive externality. If the market provides this good without any correction, there is a deadweight loss (DWL). What is the size of this deadweight loss? Select all areas that are part of the DWL

50

The planting of trees create a positive benefit on bystanders, a positive externality? Suppose the government wants to solve the externality problem by using a corrective subsidy. What should be the amount of the per unit subsidy to get the market to provide the socially optimal quantity? (in dollars)

1,200

The planting of trees create a positive benefit on bystanders, a positive externality? What would the social planner pick as the socially optimal quantity?

a) percent of people whose family income is below the poverty line

The poverty rate is the: a) percent of people whose family income is below the poverty line. b) income level below which a household cannot provide itself with necessities. c) portion of the population who cannot afford to pay rent. d) income level based on three times the cost of basic food.

a) $70

The price of a carton of eggs is $2, and 100 cartons are sold. The consumer surplus is $80, and total surplus equals $150. What is the producer surplus? a) $70 b) $200 c) $50 d) $120

d) 2; substitutes

The price of product C rises by 10%. As a result, the quantity demanded of product D rises by 20%. The cross-price elasticity of demand between product C and product D is _____, and they are _____. a) -2; substitutes b) 1.5; complements c) 0.5; substitutes d) 2; substitutes

G

The production of denim (blue jeans) uses toxic chemicals which are often released into watersheds, creating a negative externality. What is the size of the deadweight loss (DWL) caused by the externality? Select ALL letters that are part of the DWL

a) 80

The production of denim (blue jeans) uses toxic chemicals which are often released into watersheds, creating a negative externality. What would the quantity of denim be in equilibrium in the market? (Leave answer in units of millions - If you want to answer 50 million, put in 50) a) 80 b) 60 c) none of these

c) 700

The use of gasoline creates a negative externality through air pollution. What would a Social Planner choose to be the quantity of gasoline for the socially optimal quantity? a) overproduction b) 900 c) 700 d) none of these

150

The use of vaccines create a positive benefit on bystanders. What would the quantity be in the market equilibrium, in the presence of the positive externality?

a) decreases; increases

The wages that firms must pay autoworkers decreases. The equilibrium price of cars __________, and the equilibrium quantity of cars produced _________. a) decreases; increases b) decreases; decreases c) increases; decreases d) increases; increases

100

Trans-Atlantic flights create air pollution, and thus impose a negative externality. Suppose the government wants to solve the externality problem using a corrective tax. What should the amount of the per unit tax be (in cents)?

D, A, G

Use the graph below for the Production Possibilities Frontier (PPF) for the production of Cars and Boats. Point ____ is efficient in production, but point _____ is not efficient in production. The economy cannot produce point _____ with the resources and technology currently available. (Pick one letter that satisfies the statement)

3

Using the graph below, what is the equilibrium market clearing price?

3,000

Using the graph below, what is the equilibrium market clearing quantity?

c) He will produce six tables

Vincent makes dining tables, and he is trying to decide how many tables to produce. He can sell each dining table for $2,000. The cost of the first table is $750, and for the second it's $1,000. For each additional table he produces, the marginal cost of each table increases by $250. How many dining tables should Vincent produce? a) He will produce five tables b) He will produce seven tables c) He will produce six tables d) He will produce four tables

a) It is a system where those with more income pay a higher share of their income in taxes than those with lower incomes

What is a progressive tax system? a) It is a system where those with more income pay a higher share of their income in taxes than those with lower incomes. b) It is the cash assistance, goods, and services provided by the government to better the lives of those at the bottom of the income distribution. c) It is the government assignment of jobs to individuals based on household need and employee education and skills. d) It is government-provided financial funding to people to compensate for bad outcomes such as unemployment, illness, disability, or outliving their savings.

a) falls; rises; gains

When an economy moves from a scenario without trade to free international trade, for industries in the export sector, consumer surplus _____, producer surplus _____, and the economy as a whole _____ a) falls; rises; gains b) falls; rises; loses c) rises; falls; gains d) rises; rises; gains

a) encourages buyers and sellers to change the quantity they will buy and sell.

When price functions as an incentive, it a) encourages buyers and sellers to change the quantity they will buy and sell. b) encourages companies to develop new types of products. c) collects information about the market. d) communicates with buyers and sellers about the market.

c) in the bottom 10% of household incomes in the nation

When the definition of poverty focuses on relative poverty, a person is in poverty if the household income is: a) is less than three times the cost of a basic food plan. b) below $3.10 per day. c) in the bottom 10% of household incomes in the nation. d) insufficient to provide basic food, shelter, medical care, and transportation.

a) Your neighbor installs a bat house, and the bats eat mosquitoes.

Which activity generates a positive externality? a) Your neighbor installs a bat house, and the bats eat mosquitoes. b) Dave buys dental insurance but decides not to take the time to get his teeth cleaned at the dentist. c) Your neighbor begins building an addition onto his home at 6 a.m. d) You buy a new jet-ski and find $5,000 under the seat.

Graph C

Which graph shows what will happen in the market for cars if wages that firms pay employees go up?

Graph A

Which graph shows what will happen in the market for cars this year if car producers believe that prices for cars will decrease next year?

Graph A

Which graph shows what will happen in the market for chicken sandwiches if the price of hamburgers (a substitute in production) decreases?

a) a gift card branded through one of the main credit card companies

Which of the following gifts is most like an income transfer rather than an in-kind transfer? a) a gift card branded through one of the main credit card companies b) membership in a gym for a year c) an antique book d) a custom-tailored suit with the recipient choosing fabric and style

b) The value of Maria's house rises when the city builds a park nearby, enhancing her view

Which of the following illustrates a positive externality? a) Ella can buy a shirt at half price because someone else returned it. b) The value of Maria's house rises when the city builds a park nearby, enhancing her view. c) Artem loses sleep when an airport is built near his home, and planes fly overhead. d) Martin's company experiences an increase in profits due to his cost-cutting initiatives.

b) When Fazio parks his big truck at the grocery store, people in the cars on each side of his parking space have a hard time opening their car doors

Which of the following is an example of a negative externality? a) Raul loses weight because he wants to feel better, but the weight loss means that he needs new clothes. b) When Fazio parks his big truck at the grocery store, people in the cars on each side of his parking space have a hard time opening their car doors. c) Bae's company has a decrease in profits when the demand for its product falls. d) Rita gains weight while she is on vacation because she eats more than normal.

-Future prices are expected to increase -Tastes change such that the marginal benefit of each unit increases -Increase in the price of a substitute -Decrease in the price of a complement -Income decreases for an inferior good

Which of the following lead to an increase in demand? (Check all that apply) -Future prices are expected to increase -Increase in the price of a complement -Income decreases for a normal good -Tastes change such that the marginal benefit of each unit increases -Increase in the price of a substitute -Decrease in the price of a substitute -Decrease in the price of a complement -Income decreases for an inferior good -Tastes change such that the marginal benefit of each unit decreases -Future prices are expected to decrease

d) a 5%

Which tax is regressive? Arturo pays an 8% tax on the first $9,000 he earns plus _____ tax on any additional income. a) a 25% b) an 8% c) a 10% d) a 5%

H, I

Without trade, the price is P No Trade . When the economy is opened to trade, the price falls to P World , and the change in total surplus is: Select all letters that correspond to areas that are part of the change in total surplus

a) there would be a shortage of 400 units.

at a price of $15, a) there would be a shortage of 400 units. b) there would be a surplus of 400 units. c) there would be a shortage of 200 units. d) there would be a shortage of 600 units.

b) an excess supply would exist and the price would tend to fall from $35 to a lower price.

at a price of $35, a) shortage would exist and the price would tend to rise from $35 to a higher price. b) an excess supply would exist and the price would tend to fall from $35 to a lower price. c) a surplus would exist and the price would tend to rise from $35 to a higher price. d) an excess demand would exist and the price would tend to fall from $35 to a lower price.

3,000

bill goes to buy a car at the used car lot. He finds a 2 year old Toyota Camry that he likes. He is willing to pay up to $10,000 for this car. The dealer is willing to sell the car for as low as $6000. The agreed upon price for the sale was $7,000. What is the economic surplus of Bill?

c) $25 and 400 units

equilibrium price and quantity in this market are, respectively: a) $35 and 200 units. b) $25 and 600 units. c) $25 and 400 units. d) $15 and 200 units.

b) walk; less

it is a rainy day, and you are considering taking an Uber one mile to meet some friends. You have decided you are willing to pay $20 to avoid getting wet from the rain. The trip would normally cost you $8, but due to the weather the surcharge is triple the regular cost. You should _____ because the benefit to you of taking the Uber is _____ than the cost. a) walk; more b) walk; less c) take an Uber; more d) take an Uber; less

d) equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.

suppose that, next period, demand for this good decreases and, at the same time, supply of the good decreases. What would happen in the market for the good? a) equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. b) equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. c) equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. d) equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.