econ 101 final

D. If the income elasticity of demand for a good is negative, then the good must be an inferior good.

true

Which of the following is considered investment?

B. A farmer buys a new piece of equipment.

If inflation increases by 9%, you will have a lower standard of living if your nominal wage increases by ______.

B. less than 9%

A streetlight is an example of a

B. public good

Compared to private goods, the free market would ________ public goods.

A. underproduce

If U.S. per capita GDP is $50,000 and grows at 2% per year, what will U.S. per capita GDP be in 70 years?

A. $200,000

Consider a market where the consumption of a good bestows a positive benefit on a third party. Which of the following statements is false?

A. If the government imposes a per-unit subsidy that is greater than the per-unit value of the externality, then the number of transactions at the market equilibrium will be less than the socially optimal number of transactions.

If a developing country wanted to increase its level of investment in the long run, which action would lead to this goal?

A. Strengthen and enforce private property laws.

Travis can mow a lawn in two hours or he can trim a tree in one hour. Ricardo can mow a lawn in three hours or he can trim a tree in two hours. Given this, we know that

A. Travis has an absolute advantage in mowing lawns and a comparative advantage in trimming trees.

If chips and pretzels are substitutes, then a lower price for pretzels would results in a(n)

A. decrease in the demand for chips.

The Loysville Creamery needs to purchase new equipment for its store. The Creamery has limited internal funds, so the owner will likely

A. demand funds by selling bonds.

An investment tax credit will cause the interest rate to _____ and the quantity of borrowing to _____ in the long run.

A. increase; increase

According to the Solow growth model, if a country's level of investment is less than its level of depreciation in a given time period, then it is will experience ________ growth over the next time period.

A. negative

A musician's concerts are always sold out and thousands of fans are left wanting tickets at the current price. This indicates that a

A. shortage exists, and the market price of tickets is higher than the current price.

When we say that money is neutral, it means all else equal, an increase in the money supply will ONLY affect which of the following variables in the long run?

A. the amount that shows up on your paycheck after taxes.

You did some research and estimated the price elasticity of demand for good X as -1.0. This suggests that good X is _______ and that a 10% increase in the price of good X will cause the quantity demanded for good X to _______ 10%.

A. unit elastic; decrease by

Bob is looking for work after school, but everywhere he fills out an application the managers say they always have a lot more applications than open positions. Tom has a law degree. Several firms have made him offers, but he thinks he might be able to find a firm where his talents could be put to better use.

B. Bob is structurally unemployed, and Tom is frictionally unemployed.

What would happen to the equilibrium price and quantity of coffee if the wages of workers that pick the coffee-bean fell and the price of tea fell?

B. Price would fall, and the effect on quantity would be ambiguous.

Suppose an economy has 9 units of capital and a production function given by Y=2√K. If the economy's investment rate is 10% and the depreciation rate is described by the linear function D = 0.10K, what is this economy's expected growth rate over the next year?

B. between -2% and -1%

The tragedy of the commons refers to the:

B. overuse of a rival but nonexcludable good.

If a consumption tax is reduced from 10% to 5%, then __________ and the long-run level of investment within this economy will __________.

B. the supply of loanable funds will decrease; decrease

Which of the following statements is FALSE?

C. In France, the average work week is shorter than that in the United States. Therefore, GDP overstates France's living standards.

Collaboration with Congress during the Clinton Administration allowed for an aggressive deficit-cutting plan to pass. As a result, the government was able to reach a balanced budget at the end of the 1990's after running deficits for roughly 10 years. As a result,

C. Private investment should have increased because the cost of borrowing decreased.

If investors become less optimistic about the economy, which of the following best describes behavior in the loanable funds market?

D. A decrease in demand results in a decrease in the interest rate.

Last year a BMW factory in South Carolina produced $700 million worth of cars and sold $650 million of those cars to U.S. consumers and the remainder were put into inventory. What impact did this transaction have on the United States?

D. Consumption increased by $650 million, and GDP increased by $700 million.

Mason is refinishing an antique cabinet and has already spent $180 on the restoration. He expects to be able to sell the cabinet for $360. Mason discovers that he needs to do an additional $200 of work to make the cabinet worth $360 to potential buyers. He could also sell the cabinet now, without completing the additional work, for $100. What should he do? Assume the costs include the opportunity cost of his time.

D. He should complete the additional work and sell the cabinet for $360.

Suppose the equilibrium interest rate in the market for loanable funds is 7%. At this interest rate, Cara's Coffee decides not to borrow any money in the market for loanable funds. Given this information, which of the following statements is true?

D. If the interest rate decreases, the present value of Cara's future revenues will increase and she will be more likely to borrow money in the market for loanable funds

Mariah would be willing to pay as much as $100 to have her house cleaned. Trey's opportunity cost of cleaning Mariah's house is $70. Assume Mariah is required to pay a tax of $15 if she hires someone to clean her house. Which of the following is true?

D. Trey will continue to clean Mariah's house, but his producer surplus will decline.

Which of the following could cause a binding price floor to become non-binding?

D. a decrease in supply

Company A currently releases 15 units of pollution and Company B releases 20 units of pollution. Company A can reduce its pollution by 1 unit for a cost of $200 and Company B can reduce its pollution by 1 unit for a cost of $150. If the EPA institutes a tradable pollution program and requires both firms to reduce total emissions to 20 units, how much will the policy collectively cost Companies A and B?

D. between $1600 and $2400

Brandon lent money to Peter for one year at a nominal interest rate of 5% in anticipation of receiving a real return of 3%. However, when Peter repaid Brandon the principal plus interest, Brandon's purchasing power was lower. We can conclude that the actual inflation rate over the course of the loan was _________.

D. greater than 5%

Because of spillovers, the social benefit of research and development:

D. is greater than the private benefit, therefore the private market produces less than the socially efficient quantity.

If students do not take into consideration the benefit that they bestow upon their classmates when they get a flu shot, then the marginal social cost will be _______ the marginal social benefit at the market equilibrium. In order to correct the market failure, the government should impose a Pigouvian _________.

D. less than; subsidy

Suppose an economy produces only cheese and fish. In 2010, 20 units of cheese are sold at $5 each and 8 units of fish are sold at $50 each. In 2009, the base year, the price of cheese was $10 per unit and the price of fish was $75 per unit. For 2010,

D. nominal GDP is $500 and real GDP is $800.

Sam loves chocolate and says that he will buy 2 chocolate bars a day regardless of the price. Sam's demand for chocolate bars is

D. perfectly inelastic

When workers lose their jobs and become officially unemployed, the number of people in the labor force:

D. remains constant.

If the government continues to run deficits such that its annual spending exceeds its tax revenues, then which of the following will NOT happen in the long run?

D. supply of loanable funds will increase

Becky decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is

D. the value of the knowledge she would have received had she attended class.

Which of the following is NOT true regarding the natural rate of unemployment? A. The natural rate of unemployment equals the sum of the frictional and structural rates. B. The natural rate of unemployment correlates positively with the level of GDP growth in an economy. C. If the economy is operating at the natural rate of unemployment, cyclical unemployment is equal to zero. D. The actual rate of unemployment varies around the natural rate over time.

b

There are four homes along Belmont Circle, which surrounds a small plot of land. The land currently has no trees, and the 4 homeowners -- Adams, Benitez, Chen, and Davis -- are considering the idea of contributing to a pool of money that will be used to plant up to 4 trees. The table represents their willingness to pay, that is, the maximum amount that each homeowner is willing to contribute toward each tree. Suppose the cost to plant and maintain each tree is $300. How many trees should be planted to maximize the total surplus of the four homeowners?

look at the total for each tree if its at 300 or over then count it as tree