Econ 202 test 1-5

If these are the only two consumers in the market, then the market quantity demanded at a price of $15 is

0 units

A manufacturer produces 400 units when the market price is $10 per unit and produces 600 units when the market price is $12 per unit. Using the midpoint method, for this range of prices, the price elasticity of supply is about

2.2

Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the government policy should have reduced smoking by

40 %

Suppose there is a flood in St. Louis, Missouri, that destroys several beer bottling facilities. Which of the following would not be a direct result of this event?

Buyers would not be willing to buy as much as before at each relevant price

An increase in the price of a product and an increase in the number of sellers in the market affect the supply curve in the same general way.

False

An increase in the price of pizza will shift the demand curve for pizza to the left.

False

When Mario's income decreases, he buys more pasta. For Mario, pasta is a normal good.

False

Goods produced abroad and sold domestically are called

Imports

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn, then

Iowa has a comparative advantage in the production of corn.

If Korea is capable of producing either shoes or soccer balls or some combination of the two, then

Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls

Trade between countries

allows each country to consume at a point outside its production possibilities frontier

The art in scientific thinking—whether in chemistry, economics, or biology—is

deciding which assumptions to make

The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10 percent.

decrease in both the aged cheddar cheese and bread markets

Economists sometimes give conflicting advice because

economists have different values and scientific judgments

If a company making frozen orange juice expects the price of its product to be higher next month, it will supply more to the market this month.

false

Economists at the Department of Justice

help enforce the nation's antitrust laws

A circular-flow diagram is a model that

helps to explain how the economy is organized

Warrensburg is a small college town in Missouri. At the end of August each year, the market demand for fast food in Warrensburg

increases

An economy's production of two goods is efficient if

it is impossible to produce more of one good without producing less of the other

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that

the mayor thinks demand is inelastic, and the city manager thinks demand is elastic.

When a country has a comparative advantage in producing a certain good,

then specializing in the production of that good and trading for other goods could allow that country to consume at a point beyond its production possibilities frontier

When the market price is above the equilibrium price, suppliers are unable to sell all they want to sell.

true