Econ Final test 1
A decrease in the demand for soft drinks due to changes in consumer tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in inputs prices, will result in
A decrease in the equilibrium price of soft drinks; the equilibrium quantity may increase or decrease.
Table 2-3 Dina faces _______ opportunity costs in the production of sliders and hot wings
Constant
Figure 2-10 If the economy is currently producing at point B, what is the opportunity cost of moving to point A?
16 thousand spoons
Figure 2-13 What is the opportunity cost of producing 1 ton of pineapples in Guatemala?
2 tons of coconuts
If a consumer receives 60 units of utility from consuming two bagels, and 100 units of utility from consuming three bagels, the marginal utility of the
40 units
which of the following goods would have the most inelastic demand?
Milk
An Economic _________ is a simplified version of some aspect of economic life used to analyze an economic issue.
Model
Last year, Joan bought 50 pounds of hamburger when her household income was $50,000. This year, her household income was only 30,000 and Joan bought 70 pounds of hamburger. Holding everything else constant, Joan's income elasticity of demand for hamburger is
Negative, so Joan considers hamburger to be an inferior good
Figure 3-7 Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets. Which panel best describes what happens in the bicycle helmet market if there is substantial increase in the price bicycles?
Panel (d)
3-7 In 2020 there were severe wildfires in California destroying most of the wine vineyards. This region produced 41% of the domestic wine. Which panel depicts this event and what will be the impact to the market price for California wine?
Panel (d) price decrease
Figure 6-5 The section of the demand curve labeled "A" represents__________, "B" represents__________, and "C" represents__________.
The elastic section of the demand curve, the unit elastic midpoint of the demand curve, the inelastic section of the demand curve.
Figure 7-2 When the price of ice cream cones increases from $2 to $3, the quantity demanded decreases from 4 ice cream cones to 3 ice cream cones. This change in quantity demanded is due to
The income and substitution effects
The satisfaction a person receives from consuming goods and services is called
Utility
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 ibs
Economic models do all of the following except
portray reality in all its minute details.
Marginal Utility can be
positive, negative, or zero
If a firm raised its price and discovered that its total revenue fell, then the demand for its product is
relatively elastic
If the demand for a life saving drug was perfectly inelastic and the price doubled, the quantity demanded would
remain constant
What is the endowment effect?
the tendency of people to be unwilling to sell something they already own even if they are offered a price that is greater than the price they would be willing to pay to buy the good if they didn't already own it
Economists assume that rational people do all of the following except
undertake activities that benefit others and hurt themselves
If the percentage increase in price is 15 percent and the value of the price elasticity of demand is 3 (absolute value of price elasticity of demand), then quantity demanded
will decrease by 45 percent
"An inquiry into the nature and causes of the wealth of nations" published in 1776 was written
Adam Smith
Trinh quits his $80,000-a-year job to become a full-time volunteer at a museum. What is the opportunity cost of his decision?
At least $80,000
For each surfboard that Australia produces, it gives up the opportunity to make 25 boomerangs. New Zealand can produce 1 surfboard for every 15 boomerangs it produces. Which of the following is true about the comparative advantage between the two countries?
Australia has the comparative advantage in producing boomerangs
Consumers maximize total utility within their budget constraint by
Buying the goods with the largest marginal utility per dollar spent.
What of the following statement is true?
Every individual, no matter how rich or poor, is faced with situation that require trade-offs
The marginals utility per dollar that Harold Stratton receives from organges is less than the marginal utility per dollar Harold receives from pears. To maximize his utility, what should Harold do?
He should buy more pears and fewer oranges
if demand is perfectly elastic, the absolute value of the price elasticity is
Infinity
If, as a person consumes more and more of a good, each additional unit adds less satisfaction than the previous unit consumed, we are seeing the workings of
The law of diminishing marginal utility
Figure 3-4 If the price is $10
There is a shortage of 600 units
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
What does the term "marginal" mean in economics?
an additional or extra
Comparative advantage means the ability to produce a good or service
at a lower opportunity cost than any other producer
A new area of economics studies situations in which people appear to making choices that do not appear to be economically rational. This area is called
behavioral economics
The_______ demonstrates the roles played by households and firms in the market system.
circular flow model
If the cross-price elasticity of demand for computers and software is negative, this means the two
complements
The limitation that a consumer's total expenditure on goods and services purchased cannot exceed the income available is referred to as
the budget constraint
By definition economics is the study of
the choices people make to attain their goals, given their scare resources