ECON EXAM 1 key

Brett buys a new cell phone for $100. He receives consumer surplus of $80 from the purchase. How much does Brett value his cell phone?

$180

Refer to Table 7-6. Suppose Antonio has $10 to spend and the price of beer = $2 per glass and the price of pizza = $2 per slice. How many of each good will he consume when he maximizes his utility?

3 glasses of beer, 2 slices of pizza

Refer to Figure 2-5. If the economy is currently producing at point X, what is the opportunity cost of moving to point W?

3 million tons of steel

Refer to Figure 2-2. What is the opportunity cost of one pound of vegetables?

3/4 pounds of meat

Refer to Table 7-6. What is Antonio's marginal utility from consuming the fifth beer?

4 utils

If a consumer receives 20 units of total utility from consuming two candy bars, and 25 units of total utility from consuming three candy bars, the marginal utility of the third candy bar is

5 utils

Wisconsin gives up the opportunity to produce of 1 bottle of wine for every 15 pounds of cheese it produces. For each bottle of wine that California produces, it gives up the opportunity to make 10 pounds of cheese.Which of the following is true about the comparative advantage between the two states?

California has the comparative advantage in wine.

Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a concert ticket. If the price of one of the tickets is $75

Carmen will receive $3 of consumer surplus from buying one ticket

Consumers maximize total utility within their budget constraint by

buying the goods with the largest marginal utility per dollar spent

Refer to Table 2-17. Which of the following statements is true?

Lucy has an absolute advantage in making skateboards and James in making tricycles.

Firms pay famous individuals to endorse their products because

apparently demand is affected not just by the number of people who use a product but also by the type of person that uses the product.

Comparative advantage means the ability to produce a good or service

at a lower opportunity cost than any other producer

The ________ effect refers to the change in quantity demanded for a good that results from the effect of a change in the good's price on consumer's purchasing power.

income

Refer to Table 3-3. The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi) and the rest of the market. If the price of Kona coffee decreases from $5 to $4, the market quantity demanded would

increase by 35 lbs.

In economics, the term ________ means "extra" or "incremental"

marginal

To affect the market outcome, a price ceiling

must be set below the equilibrium price

Economic models do all of the following except

portray reality in all its minute details

Marginal Utility can be

positive, negative, or zero

A budget constraint

refers to the limited amount of income available to consumers to spend on goods and services.

The total amount of producer surplus in market equilibrium is equal to

the area above the market supply curve and below the market equilibrium price, up to the quantity exchanged.

By definition, economics is the study of

the choices people make to attain their goals, given their scarce resources.

Assume that you had a ticket for the Marquette Big East basketball tournament that you bought for $150, the maximum price you were willing to pay. If a friend of yours offers to buy the ticket for $350 but you decide not to sell it, how can your decision be explained?

the endowment effect

The attainable production points on a production possibilities frontier are

the points along and inside the production possibility frontier.

A change in all of the following variables will change the market demand for a product except

the price of product

The law of demand implies, holding everything else constant, that as the price of bagels increases

there will be a decrease in the quantity demanded of bagels.

Refer to Figure 3-4. If the price is $10,

there would be a shortage of 600 units.