econ final

larry's lunchcqrt is a small street vendor business. if larry makes 15 pretzels in his first hour of business and incurs a total cost of $16.50, his average total cost per pretzel is

$1.10

a firm has a fixed cost of $500 in its first year of operation. when the firm produces 100 units of output, its total costs are $4,500. the marginal cost of producing the 101st unit of output is $300. what is the total cost of producing 101 units

$4,800

Billie Jo values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $425. Billie Jo's willingness to pay for the dishwasher is

$500

Suppose Spencer and Kate are the only two demanders of lemonade. Each month, Spencer buys six glasses of lemonade when the price is $1.00 per glass, and he buys four glasses when the price is $1.50 per glass. Each month, Kate buys four glasses of lemonade when the price is $1.00 per glass, and she buys two glasses when the price is $1.50 per glass. Which of the following points is on the market demand curve?

(quantity demanded = 10, price = $1.00)

Sandra purchases 5 pounds of coffee and 10 gallons of milk per month when the price of coffee is $10 per pound. She purchases 6 pounds of coffee and 12 gallons of milk per month when the price of coffee is $8 per pound. Sandra's cross-price elasticity of demand for coffee and milk is

-0.82, and they are complements

Last year, Carolyn bought 6 pairs of earrings when her income was $40,000. This year, her income is $52,000, and she purchased 7 pairs of earrings. Holding other factors constant, it follows that Carolyn's income elasticity of demand is about

0.59, and Carolyn regards earrings as a normal good

One way to characterize the difference between positive statements and normative statements is as follows:

Positive statements offer descriptions of the way things are, whereas normative statements offer opinions on how things ought to be.

New oak tables are normal goods. What would happen to the equilibrium price and quantity in the market for oak tables if the price of maple tables rises, the price of oak wood rises, more buyers enter the market for oak tables, and the price of the glue used in the production of the new oak tables increased?

Price will rise, and the effect on quantity is ambiguous.

which of the following is correct

Rent control is an example of a price ceiling and the minimum wage is an example of a price floor.

which of the following changes would not shift the supply curve for a good or service?

a change in the price of the good or service

After a binding price floor becomes effective, a

a smaller quantity of the good is bought and sold

a firm produces 400 units of output at a total cost of $1,200. if total variable costs are $1000

average fixed cost is 50 cents

You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. You still enjoy Ramen noodles very much and buy even more, but your roommate plans to buy fewer Ramen noodles in favor of foods she prefers more. When looking at income elasticity of demand for Ramen noodles, yours would

be negative and your roommate's would be positive

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

buyers will bear a greater burden of the tax than the sellers

There are very few, if any, good substitutes for motor oil. Therefore, the

demand for motor oil would tend to be inelastic

Suppose the US and Mexico both produce semiconductors and auto parts and the US has a comparative advantage in semiconductors while Mexico has a comparative advantage in auto parts. Also suppose the US has an absolute advantage in the production of both semiconductors and auto parts. the US should

export semiconductors to Mexico and import auto parts from Mexico.

a price ceiling set above the equilibrium price causes a surplus in the market

false

efficiency means everyone in the economy should receive an equal share of the goods and services produced

false

the average fixed cost curve is constant

false

variable costs equal fixed costs when nothing is produced

false

which of the following events would cause both equilibrium price and equilibrium quantity of potatoes to decrease if potatoes are an inferior good

greater government restrictions on agricultural chemicals

If he devotes all of his available resources to cantaloupe production, a farmer can produce 120 cantaloupes. If he sacrifices 1.5 watermelons for each cantaloupe that he produces, it follows that

his opportunity cost of one watermelon is 2/3 of a cantaloupe.

in the circular flow diagram

households are sellers in the markets for the factors of production

suppose the supply of televisions shifts to the right. as a result, consumer surplus in the television market

increases

the table below refers to five possible buyers' willingness to pay for a case of vanilla come. if the market price is $3.80

megans consumer surplus is $1.70 and total consumer surplus for the five individuals is $9.80

when average total cost is lower than marginal cost, marginal cost must be

rising

If, at the current price, there is a surplus of a good, then

sellers are producing more than buyers wish to buy

when quantity demanded increases at every possible price, we know that the demand curve has

shifted to the right

suppose that a decrease in the price of good X results in fewer units of good Y being sold. this implies that x and y are

substitute goods

If a price floor is not binding, then

the equilibrium price is above the price floor

Ellie and Brendan both produce apple pies and vanilla ice cream. If Ellie's opportunity cost of one apple pie is 1/2 gallon of ice cream and Brendan's opportunity cost of one apple pie is 1/4 gallon of ice cream, Ellie has a comparative advantage in the production of ice cream.

true

Production possibilities frontiers can be used to illustrate scarcity, trade-offs, opportunity cost, efficiency, unemployment, technological advances, and economic growth

true

a decrease in the price of sugar will shift the supply curve for cookies to the right

true

demand tends to be more elastic in the long run than in the short run

true

if a supply curve is horizontal, then supply is said to be perfectly elastic, and the price elasticity of supply approaches infinity

true

trade allows a country to consume outside its production possibilities frontier

true