Econ Final
If the producer surplus is $1000 and the consumer surplus is $300, social surplus is
$1300
A new study shows that onions improve cognitive and heart health. This causes the demand curve to shift to the right, so that consumers demand 20 lbs more onions at any given price. What two points must the new demand curve pass through?
($3.00, 420 lbs) and ($2.10, 510 lbs)
Danielle is planning a cruise to Mexico and has a budget for new clothes of $300. The average price for a pair of shoes is $50 while the average price for a dress is $100. Danielle already has 4 pairs of shoes purchased for her cruise, what is the opportunity cost of buying two more pairs of shoes?
1 dress
The number of people employed in one country is 230 million, with a total number of unemployed people at 40 million. The total population for the country is 500 million. What is the unemployment rate?
14.8%
Suppose the European Union has a Nominal GDP of 20 trillion Euros, and their GDP deflator is 125. What is the European Union's Real GDP?
16 trillion Euros
Nico is selecting the best quantity supplied for your company's lawn mower product that has been on the market for a year. After researching and discovering the needed data Nico creates a supply and demand curve graph. Here is what he has discovered.
160
Compound growth in an economy can increase people's standard of living for country Z. If the economy for country Z starts with a GDP of 150 and a growth rate of 2% per year, what will its GDP be after 15 years?
202
The new "Hungry for Apples?" campaign has been a resounding success, so that the quantity demanded is now 100% greater than before the ad campaign. If the curve above represents demand after the campaign, what was the original quantity demanded when price was $4.40?
25
Miriam owns a small shop selling custom headbands and accessories. Last month, she sold 335 headbands for $10 each. According to the law of demand, what quantity might Miriam expect to sell if she drops the price to $6?
415
If price was $1.40 per gallon and increased to $2.00 per gallon, how does quantity of gasoline demanded change?
600 million gallons to 460 million gallons
In 2008 the price index was calculated at 165.2 with 2005 as the base year. In 2009 the price index increased to 181.6. What was the inflation from 2008-2009?
9.9%
Compare a market operating at a quantity lower than equilibrium (ie. a price floor) with the same market operating at the equilibrium quantity. Which of the following statements are true?
A market operating below equilibrium will transfer some consumer surplus to producers.
Which factors would increase the aggregate production?
A robot that fills up prescriptions faster and more accurately than pharmacists
Which of the following statements reflects marginal decision-making?
Booking this condo in a better location is worth the extra $100
Silicon is used for the manufacturing of semiconductor chips. At the end of last year a large new source of silicon has been discovered this year and the price of silicon has decreased by 15%. Semiconductor chips are used in devices, cell phones, gaming systems, and this year many new devices are now using chips. If you were drawing a supply and demand graph to illustrate the changes to the semiconductor market since last year, what would you say has happened to the supply and demand curves and the equilibrium price and quantity this year?
Both the demand and supply of semiconductor chips will increase shifting the curves to the right with equilibrium quantity increasing but it is impossible to pinpoint the equilibrium price change.
If the government saw that consumer confidence was low, what step could it take to shift the AD to the right?
Congress could pass tax cuts
Which of the following statements is normative?
Congress gives too many tax breaks to corporations
Which country has characteristics of a command economy?
Cuba
Gross national product would include
Final goods and services produced by American resources
Use the data from the following table to calculate the GDP per capita of each country
GDP per capita = GDP / Population
Which time frame had the lowest annual inflation rate?
Inflation = (price index (this year) - price index (last year)) x 100 /price index (last year)
In the last few decades the car manufacturing sector has found it difficult to compete with foreign car imports. High labor costs is one of the main reasons economists cite for the lack of competitiveness in the car manufacturing industry. How could a modest inflation help the car manufacturing industry in the United States compete with foreign car manufacturers?
It could allow real wages to downwardly adjust more easily
The additional benefit that one more unit of something will provide is known as
Marginal benefit.
Which is a true statement about marginal cost?
Marginal cost is the difference (or change) in cost of a different choice
Which is a true statement about marginal cost?
Marginal cost is the difference (or change) in cost of a different choice.
In 1985 inflation in Israel reached a record 500%. How did this period of high inflation affect market adjustments towards equilibrium price and quantity?
Markets adjusted to equilibrium more erratically and slowly
Which of the following is NOT a shortcoming of using the CPI to measure changes in the cost of living.
Monetary policy
Henry accepted a new position at a ball bearing manufacturing plant after graduation from college. With his macroeconomic education, Henry has been asked to advise the best way to measure inflation for the company to be able to accurately adjust its prices. What would Henry advise the company use?
Producer Price Index
If demand decreases and supply remains constant, what happens to the market equilibrium?
Quantity and price both fall
Which of the following is included in a measure of GDP?
Spending on public infrastructure
In 2018 the NFL football team, the Carolina Panthers, have an owner accused of sexual harassment. The fans' demand for team jerseys has dropped with the scandal this year. At about the same time the cost to manufacture the jerseys in China increased by 20%. Describe what the new equilibrium price and quantity is like compared with the prior year's Panthers' jersey market before the scandal and increased manufacturing costs?
Supply and demand curves have shifted to the left and the equilibrium quantity has decreased from 2017 but it is impossible to determine the effect on the equilibrium price
Imagine that a high school junior sold her old car at the end of the summer and now has the funds from the sale in her bank. She decides to purchase a much needed new automobile instead of saving that money to pay for her senior trip coming up next year. From an economist's perspective, which of the following statements about this decision is likely to be true?
The decision is rational in the sense that it reflects the junior's preference for a new automobile over a senior trip
During the winter of 2014/2015 oil prices dropped by a large percentage compared to the summer of 2014. How did the drop in price of an input of production impact the U.S. economy?
The decrease in oil prices caused a shift to the right in the aggregate supply curve
Advances in tax software such as TurboTax influenced the income tax preparer market in the following way
The demand for income tax preparers (the person who calculates and prepares your income tax return) fell and as a result, there are fewer tax preparer jobs
In the past 50 years the unemployment rate has only reached 10% on two occasions. When did these two unemployment spikes occur?
The early 1980s and 2007-2009
A major hurricane is headed towards Southern Florida and as a result panic buying has set in. What would you conclude about the third step of the four step process in this example?
The economic change will shift the affected curve rightwards
Identify the normative statement(s) among the following statement(s)
The federal government spends too much.
Cyclical unemployment is shown on the aggregate demand-aggregate supply (AD-AS) diagram by
The gap between the current equilibrium GDP and potential or full employment GDP.
A free market is described by which of the following statements?
The government does not set or influence market prices in any way
If the demand for home gaming system games has dramatically increased in the last month, what scenario is most likely to have happened?
The holidays and new years are around the corner
All else equal, increasing unemployment insurance will cause
The natural rate of unemployment to increase
The unemployment rate measures
The percentage of the labor force who do not have a job, but are looking for one
Which correctly describes the Aggregate Demand-Aggregate Supply model?
The price level is shown on the vertical axis
Which of the following BEST fits the definition of inflation?
The price of most goods and services increases by 5% over a 2 year period.
In the following figure, which area represents producer surplus?
The producer surplus is the area above the supply curve and below the equilibrium price
You have just started your new job in Washington D.C. at the Bureau of Economic Analysis. Your first task is to calculate economic indicators from 2017 to assess the macroeconomic state of the country. Which answer fits what you need?
The quantitative measurements of the nation's economic activity for 2017.
It is the end of the year and party supply stores have added the things needed for a fantastic New Years Eve party. According to the law of supply, what scenario would you expect to see with the party supply stores?
The supply of New Year's party supplies have increased since November
In 1973 Arab countries imposed an oil embargo on the United States and other developed countries in the aftermath of the Yom Kippur war. At the same time improved infrastructure and increased income was altering consumer preferences in favor of automobiles over public transportation. If you were drawing a supply and demand graph to illustrate the change in the gasoline market in 1973-1974, what would you say has happened to the supply and demand curves and the equilibrium price and quantity during this time period?
The supply of gasoline will decrease shifting the curve to the left while the demand curve shifts to the right. As a result the equilibrium price will increase but it is impossible to pinpoint the equilibrium quantity change
This year, nine national retail big box technology companies started and opened many retail stores across the nation. Now there are many more big box retail tech companies in the market. With many more competitors, what will likely happen to the supply of goods for customers?
The supply of goods will increase and cause a decreases in the price of goods
This year, nine national retail big box technology companies started and opened many retail stores across the nation. Now there are many more big box retail tech companies in the market. With many more competitors, what will likely happen to the supply of goods for customers?
The supply of goods will increase and cause a decreases in the price of goods.
The supply curve will shift to the right if which of the following occurs
There is an improvement in production technology
The largest national herbal supplement store is running a sale on its excess supply of Vitamin C supplements. With this new price change what do you think will happen to the Vitamin C supplement market?
There will be an increase only in the quantity demanded.
There is a tax rebate that everyone in the nation receives from the government of $1000. The market for laptops notices a shift because of this. What effect will this rebate have on the laptop market?
This will increase demand
Juan has a monthly budget of $100 to spend on entertainment. A concert ticket costs $20 while a movie ticket costs $10. This month Juan has attended one concert and 5 movies so far. If Juan decides to only go to movies for the rest of the month. How many movie tickets can he afford to purchase and stay within his budget
Three tickets.
Shifts in the aggregate supply curve in the short run can be caused by
a change in input prices
Two countries are trying to decide which product should have an increased production. Both Canada and Costa Rica produce coffee and corn, but it is easier for Canada to raise corn than grow coffee. Costa Rica easily grows coffee, but has a more difficult time growing corn. In comparison with Canada, Costa Rica has
a comparative advantage with coffee.
Aggregate demand represents total spending on
a nation's domestic output of goods and services
Gross Domestic Product (GDP) is designed to measure
a nation's total production of final goods and services
Using the AD/AS model, ________ could explain a rise in cyclical unemployment
a shift in AD to the left
The base year for the price index is
an arbitrary year from which to measure price changes
The demand for labor is described as a derived demand, because it is derived from the demand for the goods and services workers produce. After earthquakes hit the California coast and damaged tens of thousands of cars, there was a growing need for automotive repair, glass replacement, dent repair and repainting. In the labor market for car repair, this would translate into
an increase in demand for automotive technicians who can do that work.
In the long run, real GDP will
be close to or on the vertical part of the AS curve
Excess demand occurs when the actual price in some market is ________ the equilibrium price
below
A price ceiling when it is set ________ the equilibrium price creates ________
below; excess demand
The law of demand states that as the price of a good decreases
buyers desire to purchase more of it.
Self-interest is not necessarily selfish, some say. In fact, self-interest likely includes an individual's consideration for
close friends and family
Making an economically rational decision requires
considering the prospective benefits and costs to oneself.
When ________, business firms will collectively supply a lower quantity of output at any given price, and the supply curve will shift to the left.
costs of production increase
Bill is a construction worker who was laid off because the market for new homes was adversely affected in the recession. Bill's unemployment experience is referred to as
cyclical unemployment
Complete the following sentence: If people think that the price of televisions will decrease in the near future, that belief may cause a(n)
decrease in the demand for televisions today
Complete the following sentence: If people think that the price of televisions will decrease in the near future, that belief may cause a(n)
decrease in the demand for televisions today.
The consequences of unemployment are likely more serious in developing countries because...
developing countries are more likely to lack unemployment assistance programs
A macroeconomist would study
economic policies designed to stimulate the country's economy out of a recession
The idea that firms will get the most for their money when they pay wages higher than the equilibrium wage is called
efficiency-wage theory.
The point at which quantity demanded equals quantity supplied is called
equilibrium
The point at which quantity demanded equals quantity supplied is called
equilibrium.
Real measurements are
expressed in constant dollars.
Components of aggregate demand include all of the following EXCEPT
firms' spending on inputs of production
Tom graduated from college in June but was still looking for work in August. This is an example of
frictional unemployment
Which types of unemployment exist at all times and determine the natural rate of unemployment?
frictional unemployment and structural unemployment
George owns a custom pottery business where he makes all types of mugs and drinkware. If the price of ________ decreases, George's profit margins will also decrease
glass coffee mugs, Glass coffee mugs are substitutes for clay mugs. If the price of the glass mugs fall, consumers would buy fewer custom pottery and George 's revenue would fall
Decreased competition because of fewer producers in a market will cause
higher prices due to an decrease in the quantity supplied at every price
A price floor attempts to keep prices
higher than the equilibrium price.
The slope of a budget constraint line is influenced by
how much one product costs compared to the other.
In calculating GDP, which component of spending must be subtracted from total spending?
imports
An Uber driver estimates that he will make $300 on Fridays if he works all evening. He decides to stay home because $300 will not be enough to pay his car loan. His reasoning is ________ because ________
incorrect; he should work and pay down his debt even if he cannot earn the entire car payment in one night.
If workers have devices with better technologies available to them
it would increase capital deepening
Which group of people is harmed by the redistribution of purchasing power due to unexpected inflation?
lenders
Rapid technological change is likely to increase which problem MOST for CPI as an accurate measure of cost of living changes?
new goods bias
If Ali grows hot peppers in his garden for his own consumption, the value of his production will
not be included in Gross Domestic Product and understate the value of the production in his country
Consumer surplus is best described as the extra benefit consumers receive when they
pay less than they would have been willing to pay
The point at which an economy transitions from an expansion to a recession is called a ________
peak
A supply curve is a graphical illustration of the relationship between quantity supplied and
price
The downward slope of a demand curve illustrates the pattern that as ________ decreases, ________ increases
price; quantity demanded
Considering the graph for microchips, if prices decrease from $200 to $150, suppliers will want to
produce nearly 70 fewer microchips
The difference between nominal GDP and real GDP is
real GDP adjusts for the effects of inflation
According to growth accounting studies, a country would achieve better results by promoting
research and education
Inflationary pressure in the AS-AD model can be shown as a
rightward shift of the AD curve when the economy is already producing at its potential GDP
Khloe is the owner of a wellness center in Los Angeles. Her business has been growing over three years and she is now considering expanding her business by adding a 'health cafe' in her center. Khloe is analyzing the estimated costs, projected potential revenue and costs and benefits of a cafe. Khloe is behaving rationally because
she is considering cost and benefits and her decision will be based on her self interest
In order to satisfy as many wants as possible, it is necessary to achieve allocative efficiency
since otherwise output may go to where it is less valued
After the success of the Apollo space program, in the mid-1970s NASA budget cuts resulted in a decrease in the number of jobs for aerospace engineers. This was an example of
structural unemployment
If the AS-AD curves are in equilibrium in the vertical range of the AS curve, then
the economy is producing at or near its potential GDP
Suppose that there are only two types of output in a country: nuclear missiles and consumer goods. All else being constant, as the nation produces more missiles
the greater the opportunity cost will be of satisfying consumer wants.
Market economies are based on both private enterprise and the idea that allocation decisions of what and how much to produce are decided by
the interaction of supply and demand
Market economies are based on both private enterprise and the idea that allocation decisions of what and how much to produce are decided by
the interaction of supply and demand.
Because of ________ if a city government decides to spend money on beautifying its downtown and attracting tourism to its city when no money has been devoted to those efforts before, then gains in tourism may be significant.
the law of diminishing returns
When higher prices result in higher quantity supplied, economists call this relationship
the law of supply
When higher prices result in higher quantity supplied, economists call this relationship
the law of supply.
If you are focusing on the value of output per hour worked you are considering
the most important determinant of the average wage level in the economy
Labor productivity is
the production or output per worker per hour
Suppose Congress passes legislation that offers subsidies to orange farmers. The impact on the market for orange juice will be a rightward shift of
the supply curve
Isabel experiences diminishing marginal utility when
the value to her of each additional hat she purchases start falling
When quantity demanded decreases in response to a change in price
there is a movement from one point to another along the demand curve
In a planned economy, government determines the prices for goods and services, and
what goods will be produced
In a planned economy, government determines the prices for goods and services, and
what goods will be produced.
The main reason price ceilings are set is so that consumer prices
will be lower
The house that Jamalla inherited from her mother can rent for $2000/month, but Jamalla decides to allow her brother to stay there for $800. This decision carried with it a
zero monetary cost but a $1200 per month opportunity cost.
