Econ Final
The initial supply curve for Logitech speakers shows that at a price of $2525, Logitech is willing to produce 3 comma 5003,500 units. At that same price, consumers demand 8 comma 0008,000 units. There is a A. surplus, which will increase the price and decrease the quantity supplied. B. surplus, which will increase the price and increase the quantity supplied. C. shortage, which will increase the price and increase the quantity supplied. D. shortage, which will increase the price and decrease the quantity supplied.
C. shortage, which will increase the price and increase the quantity supplied.
Consider the choice to attend college or work upon graduation from high school. Which of the following is NOT an opportunity cost of attending college? A. The money you would have earned over 4 years working. B. The money spent on books. C. The money spent on food and living expenses. D. The money spent on tuition.
C. The money spent on food and living expenses.
A commodity like gasoline has a greater elasticity in the long run than in the short run because A. consumers can cut recreational driving out of their routines. B. consumers have more flexibility in the short run than in the long run. C. the longer consumers have to digest price increases, the more substitutes they can come up with. D. in the long run, prices may readjust to their previous position.
C. the longer consumers have to digest price increases, the more substitutes they can come up with.
According to the principle of voluntary exchange, self-interested people won't exchange one thing for another unless it A. is among friends. B. provides them a monetary benefit. C. makes them worse off. D. makes them better off.
D. makes them better off.
According to the principle of diminishing returns, as each worker is added A. production will stay the same. B. production will fall drastically with each new worker. C. production will rise but by a greater amount with each new worker. D. production will rise but by a lesser amount with each new worker.
D. production will rise but by a lesser amount with each new worker.
Atlantic Coffee has recently decided to raise its prices by 10%. It was shocked by its customers' reaction to the price increase when sales dropped 24%. Such a sharp drop in sales occurred because A. the demand for coffee as a commodity is highly inelastic. B. Atlantic Coffee has changed to a new type of bean. C. Atlantic Coffee doesn't taste as good as Pacific Coffee. D. the demand for a specific brand of coffee is highly elastic.
D. the demand for a specific brand of coffee is highly elastic
Why does a production possibilities curve potentially bow outward? A. A production possibilities curve shows the production options for a given set of resources. B. The points on the curve show the combinations that are possible if the economy's resources are fully employed. C. A production possibilities curve separates the combinations that are attainable from those that are not. D. Resources are not perfectly adaptable for the production of both goods.
D. Resources are not perfectly adaptable for the production of both goods.
Which of the following is one of the three basic questions a society must answer? A. What products do we produce? B. Who consumes the products? C. How do we produce the products? D. All of the above.
D. All of the above
When the price of paper increases from $150 to $155 per ton, the quantity supplied increases from 300 to 330 tons per day. The price elasticity of supply is
3.00
Initial Value Percentage Change New Value 400 20% ? 200 6% ? 80 25% ?
480 212 100
People enjoy eating two types of cereal, Frosted Mini-Wheats and Rice Krispies. The price of wheat goes up, raising the price of Frosted Mini-Wheats. As a result, the demand for Rice Krispies increases. In this case, A. Rice Krispies and Frosted Mini-Wheats are complements. B. Rice Krispies is an inferior good. C. Frosted Mini-Wheats is a normal good. D. Rice Krispies and Frosted Mini-Wheats are substitutes.
D. Rice Krispies and Frosted Mini-Wheats are substitutes.
Which of the following is NOT considered a factor of production? A. Physical capital B. Entrepreneurship C. Human capital D. Scarcity
D. Scarcity
Suppose demand is inelastic and the price increases. Total revenue will A. remain the same. B. increase. C. change in an indeterminate way. D. decrease.
B. increase.
When a business asks how much its sales would increase if another employee is hired, it is considering which of the following? A. Ceteris paribus B. Making an assumption C. Using an incentive D. Thinking at the margin
D. Thinking at the margin
Which of the following is not an element of the economic way of thinking? A. Thinking at the margin. B. Rational people respond to incentives. C. Use assumptions to simplify complex behavior. D. Use normative statements.
D. Use normative statements.
The difference between a nominal value and a real value is that a nominal value A. expresses money's actual buying power and a real value is money's face value. B. is the face value of money and a real value expresses its actual buying power. C. is the face value of money and a real value is the value of interest. D. is the face value of money and a real value is the possibility to earn it.
B. is the face value of money and a real value expresses its actual buying power.
The intersection of the supply curve and the demand curve is known as the A. minimum supply price. B. market equilibrium. C. law of demand. D. law of supply.
B. market equilibrium.
All decisions, and the trade-offs associated with them, embody an opportunity cost because of A. productivity. B. scarcity. C. responsibility. D. dependency.
B. Scarcity
The price elasticity of demand for cigarettes among teenagers is 1.3. If the price of cigarettes increases by 20%, the quantity of cigarettes demanded by teenagers will A. decrease by 32.5%. B. decrease by 26%. C. increase by 26%. D. increase by 32.5%.
B. decrease by 26%.
1974 2011 minimum wage: $2.00 $7.25 Between 1974 and 2011, the federal minimum wage increased from $2.00 to $7.25. Was the typical minimum-wage worker worse off in 2011?
Yes
Suppose that stricter emissions standards would reduce health-care costs by $70 million but increase the costs of fuel and emissions equipment by $30 million. Is it sensible to tighten the emissions standards?
Yes
Why is it that when an additional worker is hired in a facility, the principle of diminishing returns applies? A. Each worker has less hours within the facility. B. Each worker has more space within the facility. C. Each worker has less space within the facility. D. Each worker has more pressure within the facility.
C. Each worker has less space within the facility.
Goods are considered to be complements when there is a A. positive relationship between the quantity demanded of one good and the price of another. B. negative relationship between the quantity demanded of one good and the price of that good. C. negative relationship between the quantity demanded of one good and the price of another. D. positive relationship between increased income and the quantity demanded.
C. negative relationship between the quantity demanded of one good and the price of another.
If demand is elastic, the percentage change in A. price equals the percentage change in quantity demanded. B. price exceeds the percentage change in quantity demanded. C. quantity demanded exceeds the percentage change in price. D. quantity demanded is less than the percentage change in price.
C. quantity demanded exceeds the percentage change in price.
The market demand curve for a normal good will shift to the right (increase) when: the price of a substitute good ______ , the price of a complementary good ___________ , consumer income _______________ , and population ______________ .
increases decreases increases increases
An increaseAn increase in demand (given a typical upward sloping supply curve) for a product _________ the equilibrium price, and ____________ the equilibrium quantity.
increases increases
Suppose we are on the lower portion of a linear demand curve. If the price increases by 10 percent, the quantity demanded will decrease by _______ 10 percent. In this case, total revenue will ______
less than increase
Excess demand occurs when the price is ________ the equilibrium price; excess supply occurs when the price is ______ the equilibrium price.
less than greater than
Demand is relatively elastic if the product has __________ substitutes, a __________ time passes, and the consumer spends a _______________ fraction of his or her budget on the product.
many long large
The cross-price elasticity of demand is _________ for complementary goods. The cross-price elasticity of demand is _______ for substitute goods.
negative positive
Consider the effects of online distribution of movies. An increase in the price of online movies shifts the demand curve for DVD movies to the _____ . A decrease in downloading time shifts the demand curve for DVD movies to the _____ .
right left
A change in demand causes a __________ A change in quantity demanded causes a ________ the demand curve.
shift of movement along
A change in supply causes a ____________ the supply curve. A change in quantity supplied causes a ______________ the supply curve.
shift of movement along
The supply curve for flashlights from the Atlantic Company is shown to the right. Suppose that the price of materials used to make flashlights drops.
shift supply curve to the right
Willie's widgets currently sell for $19 each. At that price, Willie has sold 30,000 widgets. Willie would like to maximize his revenue, so he raises the price of a widget to $22 each. Willie has seen the sales of his widgets drop only slightly to 29,000. Using the initial-value method, the price elasticity of demand for Willie's widgets is
.21 inelastic
If a 12 percent increase in the price of natural gas increases the quantity of residential electricity demanded by 10 percent, the cross-price elasticity is _____ In this case, natural gas and residential electricity are considered __________
.83 substitutes
David has $144 to spend on entertainment each month. David likes to buy CDs and go to the movies. Each CD David buys costs $12. Each movie ticket David buys costs $8. Each month, David spends as much of his entertainment budget as possible. If David buys 18 movie tickets this month, he can purchase ______ CDs this month. If David buys 8 CDs this month, he can purchase _______ movie tickets this month.
0 6
From the following list, choose the variables that "change" as we draw a market demand curve. If the variable does not change, indicate that it "is held fixed." 1. The price of the product _________ as we draw the market demand curve. 2. Consumer income __________ as we draw the market demand curve. 3. The price of other related goods ________________ as we draw the market demand curve. ' 4. Consumer expectations about future prices ___________ as we draw the market demand curve. 5. The quantity of the product purchased __________ as we draw the market demand curve.
1. changes 2. is held fixed 3. is held fixed 4. is held fixed 5. changes
From the following list, use the drop-down menu to choose the variables that are "held fixed" in drawing a market demand curve. 1. The price of the product __________ in drawing a market demand curve. 2. Consumer income ____________ in drawing a market demand curve. 3. The price of other related goods _____________ in drawing a market demand curve. 4. Consumer expectations about future prices __________________ in drawing a market demand curve. 5. The quantity of the product purchased ___________________ in drawing a market demand curve.
1. is not held fixed 2. is held fixed 3. is held fixed 4. is held fixed 5. is not held fixed
A 13% increase in income produces a 19% increase in demand for satellite television. The income elasticity of demand for satellite television is _____ This indicates that satellite television service is _________ good.
1.46 normal
When the price of CDs increased from $20.00 to $22.00, the quantity demanded decreased from 240 to 200 units. Using the initial-value approach, the (absolute value) price elasticity of demand is Therefore, demand for CDs is considered to be
1.67 elastic
Consider the figure on the right. Between points b and c, the opportunity cost of ____ tons of wheat is ____ tons of steel
10; 90
Compute the percentage changes for the following: Initial Value New Value Percentage Change 1000 1020 ? 500 580 ? 100 125 ?
2% 16% 25%
If a 30-percent decrease in price increases the quantity demanded by 78 percent, the price elasticity of demand is
2.6
The following is a demand schedule for International House of Falafel. The following are the number of falafel dishes customers are willing to purchase at the following prices. Price Quantity $7.50 12 $7.00 15 $6.50 18 $6.00 21 $5.50 24 International House of Falafel has decided to lower its pricing to $6.00 for a special sale. At this price, the quantity demanded is _______
21
Suppose the price elasticity of a supply of cheese is 0.80. If the price of cheese increases by 30 percent, the quantity of cheese supplied will increase by ____________ percent.
24
In an attempt to encourage a healthy society, the government is making soft drink manufacturers pay a tax for every bottle or can of soda they produce. What will be the effect on the market for soft drinks? A. Supply falls and equilibrium price increases. B. Supply increases and equilibrium price increases. C. Supply increases and equilibrium price decreases. D. Supply falls and equilibrium price decreases.
A. Supply falls and equilibrium price increases.
There is ___________ relationship between the price and the quantity demanded. A. a negative B. no C. a flat D. a positive
A. a negative
The manager of a pizza shop must decide how much pizza he will produce at a given price. Which of the following would NOT be a consideration for the manager? A. Consumer income. B. The wage paid to the pizza shop's employees. C. The cost of the pizza oven. D. The cost of dough, cheese, and toppings.
A. Consumer income.
Which of the following is not a factor of production? A. Money. B. Human capital. C. Land. D. Entrepreneurship.
A. Money
What does the Latin expression ceteris paribus mean? A. Other things being held fixed. B. Resources are limited. C. A measure of something that can take on different values. D. Seize the day.
A. Other things being held fixed
Assume that the demand curve you have just drawn is linear. If your state set a price of $50.00 per vanity plate, you could expect to sell how many vanity plates?
Approximately 11,000.
True or False: Adam Smith suggested that people are motivated exclusively by self−interest
False
A man has been laid off from his job. He has a wife and two children. To cut back on expenses, the family has begun purchasing mega-packs of generic brand macaroni and cheese to use for meals. In this case, macaroni and cheese is an example of ________ good.
Inferior
According to the law of supply, an increase in a good's price _________ the quantity supplied of that good.
increases
A decrease in the supply of a product __________ the equilibrium price and ___________ the equilibrium quantity.
increases decreases
Between 1970 and 1988, the average monthly welfare payment to single mothers increased from $160 to $360. Over the same period, the cost of a standard basket of consumer goods (a standard bundle of food, housing, and other goods and services) increased from $39 to $118. Fill in the blanks in the following table.
Number of baskets per month: 1970 : 4.1 1988: 3.1 The real value of welfare payments decreased over this period.
If both demand and supply decrease simultaneously, the equilibrium price will increase if the change in __________ is relatively large.
SUPPLY
If we are on the lower portion of a linear demand curve, a decrease in price will _________ total revenue.
decrease
Suppose at the current price, the price elasticity of demand for a campus film series is 0.85. If administrators cut the price, total revenue will
decrease
If the price elasticity of demand is 0.75, a 10 percent increase in price will _____quantity demanded by ______ percent
decrease 7.5%
Assume that the elasticity of demand for chewing tobacco is 0.80 and the elasticity of supply is 2.40. Suppose an anti-chewing tobacco campaign decreases the demand for chewing tobacco by 28%. The equilibrium price of chewing tobacco will __________ by _________ percent
decrease 8.75%
Excess supply of a product will cause the price to __________ As a consequence of the price change, the quantity demanded will __________, and the quantity supplied will _______
decrease increase decrease
According to the law of demand, an increase in price _______ the quantity demanded.
decreases
As the number of substitutes for a particular product decreases, the price elasticity of demand for the product
decreases
If demand is elastic, an increase in price ________ total revenue; if demand is inelastic, a decrease in price _______ total revenue.
decreases decreases
When ______changes, the equilibrium price and equilibrium quantity move in the same direction. When ________ changes, the equilibrium price and equilibrium quantity move in opposite directions.
demand supply
If supply increases while demand decreases, the equilibrium quantity will decrease if the change in _________________
demand is relatively large
Demand is ________ along the upper portion of the linear demand curve. Demand is ___________ along the lower portion of the linear demand curve.
elastic inelastic
The market demand curve is the __________ sum of the individual demand curves.
horizontal
The market supply curve is the _________ sum of the individual supply curves.
horizontal
If supply decreases while demand increases, the equilibrium price will ____________
increase
Suppose the elasticity of demand for motel rooms is 1.00 and the elasticity of supply is 0.50. If the demand for motel rooms increases by 10 percent, the equilibrium price of motel rooms will _______ by ________ percent
increase 6.7
An excess demand for a product will cause the price to __________ As a consequence of the price change, the quantity demanded will __________ and the quantity supplied will____________
increase decrease increase
The income elasticity of demand is _____ for normal goods. The income elasticity of demand is ______ for inferior goods.
positive negative
To compute the price elasticity of demand, we divide the percentage change in ____________ by the percentage change in _____________ and then take the _______________ of the ratio.
quantity demanded price absolute value
A change in price causes movement along a demand curve and a change in _________
the quantity demanded
A change in price causes movement along a supply curve and a change in ________
the quantity supplied
At the midpoint of a linear demand curve, the price elasticity of demand is
unit elastic
If a 1 percent increase in the price of tennis rackets decreases the quantity demanded of tennis balls 20 percent, the cross-price elasticity of demand is In this case, tennis rackets and tennis balls are considered to be
−20. complements