econ final exam

Which question would be considered a normative question?

Should obstacle races be regulated to ensure the safety of its participants?

Jack owns a pumpkin patch and has been selling pumpkins for $10. As Halloween approaches, he worries about having too many unsold pumpkins, so he lowers the price by 20%. If the price elasticity for pumpkins is 1.5, how many more pumpkins will Jack sell?

30% more

Which of the following price floors for milk would not cause a surplus in the market if the equilibrium price for milk is $3.60?

$3.50

The Fish Shack is the only seafood restaurant in a remote village. It charges $15 for a bowl of fish soup and sells 10 bowls of it a day. In order to increase sales to 11 bowls a day, it must reduce the price to $14. What is the marginal revenue of the eleventh bowl?

$4

In the figure, the opportunity cost of one ton of steel in terms of aluminum is:

0.5 tons

Which Gini coefficient corresponds to a Lorenz curve that is bowed furthest away from the 45-degree line?

0.71

In the market for surfboards seen in the graph, in autarky this country imports _____ units, while with free trade the country imports _____ units.

0; 60

Suppose that the price of African safaris fell from $4,000 to $3,200 per person, and, as a result, tour operators reduced the number of trips offered by 25%. Using the midpoint method, the price elasticity of supply for African safaris is _____.

1.13

Students who never miss class and study hard generally earn higher grades than those who do not. This is an example of:

Incentives.

Which statement describes a public good?

It is nonrival in consumption and nonexcludable

In this game table, is the Nash equilibrium a Prisoner's Dilemma?

No, it is not because at least one firm has achieved its highest possible payoff.

Tracey sells 100 gourmet cupcakes per day at $2 each. She is considering raising her price to $2.50 per cupcake in order to increase her revenues. If the price elasticity of demand for Tracey's cupcakes is 2, would she increase her revenues?

No; revenues would fall because she would sell far fewer cupcakes

At a price of $8, the marginal revenue of a monopolistically competitive firm is $5. If the marginal cost is $7 and average total cost is $4, what should the firm do to maximize profits?

The first should reduce output and increase price.

Which statement is most likely to be a true one?

Wages are the most common form of income in the U.S. economy

Which statement would describe a network effect?

Your workout partner cancels her gym membership, so you end up doing so as well.

Which factor would NOT cause the demand curve for green tea to shift to the right?

a decrease in the price of green tea

A company specializing in foreign language lessons sells one set of lessons for $199, but all five sets of lessons purchased upfront sell for $499, a discount of nearly 50%. The company is offering this large discount in hopes that its consumers experience:

a framing bias.

In the graph, if a price ceiling is set at $4, which of the following would result?

a shortage of 20 units

Which strategy makes price discrimination more difficult for a firm?

allowing unwanted concert tickets to be sold on StubHub

Which of these does not describe the trend of labor markets over the past 50 years?

an increase in trade protectionism policies to restrict outsourcing of jobs

Which factor would shift the market labor supply curve to the right?

an increase in wages in alternative jobs using the same skills

Getting a flu shot reduces the chances of spreading the illness to one's classmates and friends. Why, then, is this considered a market failure due to external benefits?

because the number of people who obtain flu shots is less than the socially optimal quantity

Most new smartphones come pre-installed with a selection of free apps, including a weather app, health app, and news app. Which marketing strategy is the phone provider using?

bundling

In the graph, an increase in quantity demanded would be represented by a change from point a to point _____, while a decrease in demand would be represented by a change from point d to point _____.

c; b

The largest form of greenhouse gases caused by human activity is:

carbon dioxide from the use of fossil fuel.

An increase in the price of one product but not the other:

changes the slope of the budget line.

In a perfectly competitive industry, short-run economic profits will lead firms to _____ the market, causing market price to _____.

enter; decrease

The speed by which a network good can enter into a virtuous or vicious cycle is generally _____ that of a non-network good.

faster than

The poverty thresholds in the United States are largely based on an adjusted measure of prices of which category or categories of goods?

food and health care

If an unregulated industry generates pollution, the market price is _____ than the socially optimal price, and the market quantity is _____ than the socially optimal quantity.

less; greater

The main advantage of issuing stock to raise financial capital is:

limited liability of risk

Which of these is an example of a decreasing cost industry?

memory chips for tablets

Which of these describes a labor market in which most of a small town's workers are employed by one large company?

monopsony

When an economy uses the most efficient means of farming to grow as much corn as possible, this economy has achieved:

production efficiency but not necessarily allocative efficiency.

China produces many products at the lowest cost possible, even though Chinese consumers do not desire many of these products (e.g., football helmets). China is achieving:

production efficiency only

An important tradeoff that entrepreneurs face in their decision making is _____ versus _____.

profit; risk

The development of solar panels for home installation has improved due to technological advances and subsidies. These factors shift the supply curve to the _____ and result in the equilibrium price of solar panel installations to _____.

right; fall

In which market is government most likely to intervene to prevent a market failure?

the market for college education

When choosing to pursue college full-time, the costs that must be taken into account in a benefit-cost analysis include:

tuition and forgone earnings during the time in college

Brett won a scholarship competition that will award him with $1,000 today and another $1,000 next year. What is the present value of the scholarship money if the interest rate is 10%?

$1,909

If the total cost of 3 units is $40 and the total cost of 4 units is $50, the marginal cost of the fourth unit is:

$10

While Steve is cleaning out his garage, he finds an old surfboard that he no longer needs. As he walks to the dumpster to throw it out, his neighbor John asks if he could have it. John offers Steve a 6-pack of beer (worth $10) in exchange, which Steve happily accepts. Steve has achieved a producer surplus of:

$10, the value of the beer he received.

Using the utility maximization rule, if Vicky's marginal utility of the last orange consumed is 20 and her marginal utility of the last pineapple consumed is 80, what is the price of pineapples if the price of oranges is $1 and Vicky has maximized her utility?

$4

Which tax structure would be an example of a progressive tax?

$4,000 in taxes collected on $20,000 in income, and $10,000 in taxes collected on $40,000

AJ plans to attend a retreat on mindfulness. He paid a $500 nonrefundable registration fee, made a reservation at a hotel that costs $200, and budgeted $150 for gas and food. Two days before the retreat, he becomes ill. Assuming he is able to cancel the hotel without penalty, AJ's sunk cost equals:

$500

In the graph, which shows a firm in a perfectly competitive market, calculate the total profit.

$80

If a farmer can grow 100 tubs of grapefruit or 250 tubs of oranges per acre of land, what is the opportunity cost of growing one orange?

0.4 of a grapefruit

Which of these typically occurs when a new tariff is imposed on the import of foreign made steel as a result of a national defense argument?

Consumers will pay higher prices while deadweight loss is created.

Suppose that Costa Rica is able to produce 50,000 pounds of coffee or 10,000 medical devices per day; Vietnam is able to produce 40,000 pounds of coffee or 5,000 medical devices per day. Which statement is TRUE?

Costa Rica has a comparative advantage in the production of medical devices, while Vietnam has a comparative advantage in coffee production.

If Costa Rica is able to produce 50,000 pounds of bananas a day, while Nicaragua can produce 30,000 pounds of bananas a day, which statement must be true?

Costa Rica has an absolute advantage over Nicaragua in banana production.

Compared with a competitive market, a cartel as a whole will produce:

less output in order to increase prices

The following shows the costs associated with the number of pets groomed by Janee's Mobile Pet Grooming Service. What is the value of X?

66

Which factor would shift the supply of skateboards to the right?

a large reduction in the price of wheels used to produce skateboards

The difference between a natural monopoly and a monopoly is that:

a natural monopoly maximizes profit at a quantity where marginal cost is falling

The area between which two points on the PPF could represent an improvement in allocative efficiency?

from B to C

Unions tend to _____ wage differentials between a union and non-union sector by _____ entry into union-sector jobs.

increase; restricting

The argument that industries should be temporarily protected by tariffs or quotas to allow firms to develop a competitive product is called the:

infant industry argument.

Compared to a competitive industry, a monopolist is likely to achieve _____ producer surplus while generating _____ deadweight loss.

more; more

In the following game table, a dominant strategy exists for which player(s)?

only Corbin

Which market structure does not exhibit a downward-sloping demand curve for the firm?

perfect competition

Which of these is an example of interconnection?

sending a package to another country using the U.S. Postal Service

What type of government policy is generally used when a positive externality is present?

subsidies

According to the figure, how many units of pizza should be purchased to maximize utility?

2

A wedding planner determines that one waiter can serve 30 guests, two waiters can serve 70 guests, three waiters can serve 120 guests, four waiters can serve 160 guests, and five waiters can serve 180 guests. The marginal product of the third waiter is _____ guests.

50