ECON Hw

The quantity of the good transacted is less than the equilibrium quantity transacted

A binding price floor is likely to cause deadweight loss because: A) the quantity of the good transacted is less than the equilibrium quantity transacted. B) some buyers who want to buy at the controlled price are unable to find a seller willing to sell at that price. C) a black market emerges and the good sells at prices above the price floor. D) buyers incur additional search costs looking for the scarce good.

Inefficiently high quality of the good being sold

A binding rent-control price ceiling does NOT result in: A) wasted resources of consumers caused by time spent searching for the good. B) inefficient allocation of the good to consumers. C) inefficiently low transaction costs. D) inefficiently high quality of the good being sold.

Shift of demand curve right

A decrease in the price of Google Chromecast adapters (a complement good) would result in a change in the demand for online movie rentals illustrated by the move from: A) Shift of demand curve left B) Shift of demand curve right C) Movement down the demand curve D) Movement up the demand curve

u to v in panel D. Increase along the supply curve

A decrease in the price of online movie rentals would result in a change illustrated by the move from: A) n to o in panel A. The supply curve shifts right B) p to q in panel B. The supply curve shifts left C) u to v in panel D. Increase *along* the supply curve D) s to t in panel C. Decrease *along* the supply curve

The ability to pay principle

A lump-sum tax, such as the fee for a driver's license, does not take into consideration: A) the ability-to-pay principle. B) the benefits principle. D) the tax base. D) efficiency.

Highly inelastic

A major state university in the South recently raised tuition by 12%. An economics professor at this university asked his students, "How many of you will transfer to another university because of the increase in tuition?" One student in about 300 said that he or she would transfer. Based on this information, the price elasticity of demand for education at this university is: A) highly inelastic. B) 1. C) highly elastic. D) 0.

Equal to 1

A men's tie store sold an average of 30 ties per day at $5 per tie but sold 50 of the same ties per day at $3 per tie. The price elasticity of demand, by the midpoint method, is: A) greater than zero but less than 1. B) greater than 1 but less than 3. C) greater than 3. D) equal to 1.

It is set above the equilibrium price

A price ceiling will have NO immediate effect if: A) it is set below the equilibrium price. B) the equilibrium price is above the price ceiling. C) it creates a shortage. D) it is set above the equilibrium price.

An increase in price and an unpredictable change in the quantity

A recent news story reported that the Organization of Petroleum Exporting Countries is expected to decrease the supply of oil next summer. Summer is traditionally a time of increased demand for oil because of vacation travel. What would be the combined effect of these two events on the summer market for gasoline? A) an unpredictable change in the price and a decrease in the quantity B) an increase in the price and an unpredictable change in the quantity C) an unpredictable change in both the price and the quantity D) an increase in the price and the quantity a

Is efficient

A tax system _____ when it minimizes the direct and indirect costs to the economy of tax collection. A) is efficient B) is in equilibrium C) is equitable D) has no deadweight loss

Progressive

A tax that takes a higher percentage of income as income rises is: A) progressive. B) proportional. C) regressive. D) an ability tax.

Intensive, abundant

According to the Heckscher-Ohlin model, Brazil will have a comparative advantage in oranges if the factors that are _____ in the production of oranges are _____. A) intensive; abundant B) scarce; imported C) intensive; imported D) intensive; inexpensive

Purchase more of the now less expensive good

According to the substitution effect, a decrease in the price of a product leads to an increase in the quantity of the product demanded because buyers: A) have more real income. B) purchase fewer substitute goods. C) purchase more of the now less expensive good. D) purchase more complementary goods.

2 books and 30 pencils

Adam has a monthly income of $20 that can be spent on books (B) and pencils (P). The price of a book is $5 and the price of a pencil is $0.50. Which bundle of books and pencils is NOT affordable for Adam? A) 2 books and 20 pencils B) 2 books and 30 pencils C) 1 book and 20 pencils D) 4 books and no pencils

Pierre's parents are wrong: the marginal benefit to Pierre of another year of college is less than the marginal cost of college.

After three years at an expensive college, Pierre realizes that he doesn't want to finish school but really wants to be a chef. When Pierre suggests that he leave college for culinary school, his parents insist that he stay for one more year to get his degree. Which statement is TRUE? A) Pierre's parents are wrong: the marginal benefit to Pierre of another year of college is less than the marginal cost of college. B) Pierre's parents are wrong: the marginal benefit to Pierre of another year of college is greater than the marginal cost of college. C) It is impossible to tell who is correct. D) Pierre's parents are correct: if he leaves college, it is as though he has wasted three years of tuition.

Change the slope of the budget line

An increase in a consumer's income will NOT: A) change the slope of the budget line. B) increase the horizontal intercept. C) increase the vertical intercept. D) shift the budget line away from the origin.

False

An increase in income will always shift the demand curve to the right. True False

Increase; supply

An increase in the consumer surplus in the market for milkshakes may result from a(n) _____ in the _____ of milkshakes. A) increase; supply B) decrease; supply C) increase; price D) decrease; demand

the marginal utility per dollar spent on boots is greater than the marginal utility per dollar spent on gloves.

Antonio derives more utility from spending an additional dollar on boots than on gloves. We can assume that: A) the marginal utility per dollar spent on boots is greater than the marginal utility per dollar spent on gloves. B) boots cost less than gloves. C) the marginal utility per dollar spent on boots is less than the marginal utility per dollar spent on gloves. D) the marginal utility per dollar spent on boots is equal to the marginal utility per dollar spent on gloves

Decreasing

As George ate pizza during one recent outing, he found that he enjoyed each additional slice less and less. This implies that his marginal benefit was: A) constant. B) vertical. C) increasing. D) decreasing.

Increase; decrease

Assume that the United States imposes an import quota on Columbian coffee. Relative to the equilibrium world price that would prevail in the absence of import quotas, it is likely that the equilibrium price of coffee in the United States will _____ and the equilibrium price of coffee in Columbia will _____. A) increase; increase B) increase; decrease C) decrease; remain the same D) remain the same; increase

$3

Assume that the marginal benefit is constant in intervals of production. Suppose five slices of pizza are being produced. What is the marginal benefit of producing one more slice of pizza? 5 slices : $20 cost : $40 benefit 10 slices : $30 cost : $55 benefit $2 $15 $3 $55

200

Assume that the marginal utilities for the first three units of a good consumed are 200, 150, and 125, respectively. The total utility for the first unit is: 150. 350. 200. 125.

Increases

Assume that the supply curve for corn is upward-sloping. In the market for corn, a primary input in the production of ethanol, total surplus _____ when the price of ethanol increases. A) decreases B) increases C) does not change D) The answer cannot be determined without information about the supply curve. DON'T WORRY ABOUT THIS PROBLEM IT'S MESSED UP

Increase by less than $5

Assuming a normal upward-sloping supply curve and downward-sloping demand curve, if the government imposes a $5 excise tax on leather shoes and collects the tax from the suppliers, the price of leather shoes will: A) increase, but we cannot determine by how much. B) increase by more than $5. C) increase by less than $5. D) increase by $5.

Implicit costs are greater than her accounting profits

Betty is trying to decide at what point she should stop selling cookies, and she knows she cannot change the price of a cookie. She should stop selling cookies if her: A) explicit and implicit costs are less than her revenues. B) economic profit is positive. C) economic profit is equal to her accounting profit. D) implicit costs are greater than her accounting profits.

Regressive

Brianna and Jess must pay an income tax. Both Brianna and Jess pay $1,000 in taxes each year, but Brianna earns $20,000 and Jess earns $10,000. From this information, you can infer that this tax is: A) equitable. B) progressive. C) regressive. D) proportional.

sixth

Carmen loves eating macaroni and cheese on Thanksgiving. Carmen's marginal utility from eating macaroni becomes negative at the _____ serving. A) fifth B) sixth C) second D) first

Unrealistic expectations about the future

Cindy just graduated from college and started working at a large accounting firm. Although the firm will match her contributions to a retirement account, Cindy wants to wait several years before participating since there are so many things she needs to buy right now. What type of behavior does this represent? A) mental accounting B) loss aversion C) risk aversion D) unrealistic expectations about the future

Will increase

Coffee and tea are substitutes in consumption. If there is an increase in the price of coffee, assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus in the tea market: A) will increase. B) will decrease. C) will not change. D) may change, but we cannot determine the change without more information.

Differences in climate, factor endowments, and technology

Comparative advantage arises from: A) differences in climate, factor endowments, and technology. B) an emphasis on export production. C) absolute advantage. D) countries engaging in autarkic behavior.

They base their assumptions on models that make different assumptions

Economists who are asked to choose between two government policies may disagree because: A) economists are trained ignore facts and focus on theory. B) they base their conclusions on models that make different assumptions. C) as a matter of course, economists often take opposing points of view so that all sides of a question may be discussed. D) they make the same value judgments about the desirability of the policies.

Shortage; 30

Equilibrium price is $60 and 30 books. At a price ceiling of $40 suppliers will supply 10 textbooks. At $40, consumers demand 40 textbooks. The market outcome would be a _____ of _____ textbooks. A) shortage; 30 B) surplus; 30 C) shortage; 10 D) surplus; 10

lead to agricultural surpluses and lower prices for farmers in developing countries.

Farmers in developing countries want the United States to reduce the subsidies that it gives to U.S. farmers because subsidized agricultural products from the United States: A) have led to an increase in the demand for agricultural products from the developing world. B) have led to a global shortage of agricultural products. C) lead to agricultural surpluses and lower prices for farmers in developing countries. D) raise the world price of agricultural products.

10 tacos

Faruq spends all of his income on tacos and milkshakes. His income is $100, the price of tacos is $10, and the price of milkshakes is $2. Put tacos on the horizontal axis and milkshakes on the vertical axis. The horizontal intercept for Faruq's budget line is _____ tacos. 100 10 50 5

Rise, Increase

For consumers, pizza and hamburgers are substitutes. A rise in the price of a pizza causes a _____ in the equilibrium price of a hamburger and a(n) _____ in the equilibrium quantity of hamburgers. A) fall; decrease B) rise; decrease C) fall; increase D) rise; increase

0.2

Gas prices recently increased by 25%. In response, purchases of gasoline decreased by 5%. According to this finding, the price elasticity of demand for gas is: A) 0.5. B) 5. C) 2. D) 0.2.

1;6

Google Images: Table: Marginal Utility per Dollar II If Manuel has $18 to spend on potatoes and clams, then the utility-maximizing combination is _____ pound(s) of clams and _____ pound(s) of potatoes. 5; 3 4; 6 1; 6 3; 9

Result in either surpluses or shortages

Government intervention in the form of binding price floors or binding price ceilings will: A) move the market toward its equilibrium quantity more quickly. B) often be seen as necessary to decrease the activity of black markets. C) result in either surpluses or shortages. D) always enhance the efficiency of the market.

Honduras has a relatively large endowment of factors of production for making clothing, while the United States has a relatively large endowment of factors of production for making bulldozers.

Honduras exports clothing to the United States, and the United States exports bulldozers to Honduras. Proponents of the Heckscher-Ohlin model would explain this pattern of trade by stating that: A) Honduras has an advantage in the technology used in clothing production, while the United States has an advantage in the technology used in bulldozer production. B) Honduras has a relatively large endowment of factors of production for making clothing, while the United States has a relatively large endowment of factors of production for making bulldozers. C) Honduras has a factor intensity in capital and the United States has a factor intensity in labor. D) Honduras's climate is more conducive to producing clothing, while the United States' climate is more conducive to producing bulldozers.

A decrease in demand. D1 moves to the left

If D1 or S1 is the original curve and D2 or S2 is the new curve, what movement will result in a decrease in the quantity of online movie rentals supplied?

Is using it's resources inefficiently

If Tealand is producing 10 million scones and 10 million cups of tea (point A), we know that the economy: A) is using its resources inefficiently. B) has found new resources. C) is using its resources efficiently. D) is fully employing its resources.

Price inelastic

If a change in price causes total revenue to change in the same direction, we can conclude that the demand is: A) price inelastic. B) price unit-elastic. C) price elastic. D) zero elastic.

$1; $1

If a government quota limit at 9 million rides is imposed, the quota rent that will accrue to the owner of a taxi medallion will be _____ per ride, but there will be a total missed opportunity (inefficiency) to consumers and producers of _____ million rides.

Producer in the importing industry may be worse off

If a market begins to engage in international trade, we can assume that: A) producers in the exporting industry may be worse off. B) producers in the importing industry may be worse off. C) consumers of the imported good may be worse off. D) consumers of the exported good may be better off.

Rise; fall

If a nation exports a good when the economy is opened to trade, relative to the autarky price, the domestic price of the good will _____ and domestic consumption will _____. A) rise; fall B) rise; rise C) fall; rise D) fall; fall

The quantity demanded will be greater than the quantity supplied

If a price ceiling of $10 is imposed in this market: A) an equilibrium quantity will result. B) the quantity demanded will be greater than the quantity supplied. C) excess supply equal to 25 units will result. D) the quantity supplied will be greater than the quantity demanded.

No immediate effect

If a quota is set above the equilibrium quantity, there will be: A) no immediate effect. B) a supply price for the quantity transacted that exceeds the demand price of the quantity transacted. C) missed opportunities in the form of mutually beneficial transactions that don't occur. D) incentives for illegal activities.

efficient in production but not necessarily in allocation.

If an economy is producing at a point on its production possibilities frontier, it is: A) not necessarily efficient in production or allocation. B) efficient in production and allocation. C) efficient in production but not necessarily in allocation. D efficient in allocation but not necessarily in production.

Demand curve will shift downward by the amount of the tax

If an excise tax is imposed on automobiles and collected from consumers, the: A) equilibrium quantity supplied will increase relative to the pretax level. B) equilibrium quantity demanded will increase relative to the pretax level. C) demand curve will shift downward by the amount of the tax. D) supply curve will shift upward by the amount of the tax.

Shift from D1 to D2

If coconuts are a normal good and consumers believe that the price of coconuts will rise significantly in the near future, it will be represented in the figure as a: A) movement from point B to point E B) shift from D1 to D2 C) shift from D1 to D3 D) movement from point B to point A

True

If consumer tastes for electric cars increase over the next 10 years and there is no change in supply, we expect to see an increase in the demand for electric cars, higher electric car prices, and an increase in the equilibrium quantity of electric cars. True False

Decrease government revenue

If demand and supply are both very inelastic, a decrease in the rate of an excise tax will likely: A) increase government revenue. B) not affect government revenue. C) make demand and supply both elastic. D) decrease government revenue.

Be minimized if supply is also inelastic

If demand is inelastic, then deadweight loss will: A) be minimized if supply is also inelastic. B) increase if supply becomes more inelastic. C) be maximized if supply is also inelastic. D)decrease if demand becomes more elastic.

50 wheat and 75 toys

If each country specializes completely in the good for which it has the comparative advantage, which combination represents a maximum possible amount of total production of the two goods, given the specialization? Country A: 50 wheat --- 100 toys Country B: 25 wheat --- 75 toys A) 50 wheat and 75 toys B) 100 toys and 25 wheat C) 50 wheat and 100 toys D) 25 wheat and 75 toys

Too much of the good is being produced

If marginal costs of production are greater than marginal benefits of production: A) more of the good should be produced. B) costs will eventually decrease. C) too much of the good is being produced. D) not all costs are being considered.

10%

If personal income up to and including $25,000 is not taxed, income of $25,001 to $50,000 is taxed at 10%, and income over $50,000 is taxed at 20%, then a family earning an income of $75,000 will pay an AVERAGE tax rate of _____%. A)5 B) 10 C) 6.67 D) 0

entails a loss of 8 cars per period.

If the economy is operating at point B, producing 16 cars and 12 computers per period, a decision to move to point E and produce 18 computers: A) entails a loss of 4 cars per period. B) entails a loss of 8 cars per period. C) makes it clear that this economy has decreasing opportunity costs. D) indicates that you can have more computers and more cars simultaneously.

Demand; downward; $60,000

If the government imposes a $60,000 tax on SUVs and collects it from the consumers, the _____ curve will shift _____ by _____. A) demand; downward; $60,000 B) demand; downward; $30,000 C) supply; upward; $60,000 D) supply; upward; $30,000

9.0

If the government imposes a price ceiling of $0.90 per pound of butter, the quantity of butter actually purchased will be _____ million pounds. A) 10.5 B) 10.0 C) 9.0 D) 1.5 WRONG TABLE

$10

If the government imposes a quota limiting sales of shrimp to 250 pounds, the quota rent per pound is: A) $17.50. B) $10. C) $0. D) $7.50.

Price elasticity of demand is low

If the government wants to minimize the deadweight loss from taxes, it should tax goods for which the: A) demand is high. B) price elasticity of demand is high. C) price elasticity of demand is low. D) price elasticity of supply is high.

Society's well-being cannot be improved by changing production

If the marginal benefit received from consuming a good is equal to the marginal cost of production: A) the market is producing too much of the good. B) society's well-being can be improved if production decreases. C) society's well-being can be improved if production increases. D) society's well-being cannot be improved by changing production.

0.75

If the price of a good increases by 20% and the quantity demanded changes by 15%, then the price elasticity of demand is equal to: A) approximately 1.33. B) approximately 0.33. C) 0.75. D) 1.

$50

If the price of burgers falls from $1.50 to $1.00, there is a loss in producer surplus. How much of the loss accrues as a direct result of the hamburgers that are no longer supplied in the market? $45 $75 $90 $50

Substitute

If the price of chocolate-covered peanuts increases and the demand for strawberry licorice twists increases, this indicates that these two goods are _____ goods. A) normal B) substitute C) complementary D) inferior

Substitution effect

If the price of coffee cups falls and the consumer decides to buy more coffee cups solely because they are less expensive, this describes the: A) consumer surplus effect. B) substitution effect. C) marginal-maximizing rule. D) income effect.

Market in equilibrium

If the price of lemonade is $1.25 per cup, we expect to see a: A) rising price to eliminate the surplus. B) rising price to eliminate the shortage. C) falling price to eliminate the shortage. D) market in equilibrium.

An increase in the supply of pizza

If the price of mozzarella cheese (an ingredient in pizza) declines, there will be: A) a decrease in the quantity of pizza supplied. B) an increase in the supply of pizza. C) no change in the supply of pizza. D) a decrease in the supply of pizza.

Will decrease

If there is a decrease in supply (parallel shift of demand to the right), assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus: A) may change, but we can't tell how. B) will remain the same. C) will decrease. D) will increase.

Laurence; both programs and sunglasses.

If they spend all night writing computer programs, Laurence can write 10 programs, and Carrie Anne can write 5. If they spend all night making sunglasses, Laurence can make 6 pairs, and Carrie Anne can make 4. Given this information and supposing Laurence and Carrie Anne have constant opportunity costs, we know that _____ has an absolute advantage in _____. A) Carrie Anne; both programs and sunglasses B) Laurence; programs but not in sunglasses C) Carrie Anne; programs but not in sunglasses D) Laurence; both programs and sunglasses

Greater than zero

If total utility is rising as more salsa is consumed, we can definitely say that marginal utility is: A) rising. B) falling. C) greater than zero. D) constant.

Relatively price-elastic

If, because of a price change, both the income and substitution effects are strong for a normal good, this segment of the demand curve must be: A) unit-elastic. B) relatively price-elastic. C) horizontal. D) vertical.

Straight lines; is constant

In a Ricardian model of international trade, the production possibility frontiers are _____, indicating that the opportunity cost of increasing the production of one item relative to another _____. A) straight lines; decreases B) straight lines; is constant C) concave; increases D) convex; is constant

An increase in consumer incomes

In much of the country, homeowners choose to heat their houses with either natural gas or heating oil, both of which are normal goods. Which factor would cause an increase in the demand for natural gas? A) a decrease in the price of heating oil B) a decrease in the price of natural gas C) an increase in consumer incomes D) an increase in the price of natural gas

The united states has a comparative advantage in the production of automobiles

In one hour, the United States can produce 25 tons of steel or 250 automobiles. In one hour, Japan can produce 30 tons of steel or 275 automobiles. This information implies that: A) Japan has a comparative advantage in the production of automobiles. B) the United States has an absolute advantage in the production of steel. C) Japan has a comparative advantage in the production of both goods. D) the United States has a comparative advantage in the production of automobiles.

State and local levels

In the United States, taxes tend to be regressive at: A) federal and state levels. B) no levels of government. C) federal, state, and local levels. D) state and local levels

Wheat only

Jackson has an absolute advantage in producing: A) cattle only. B) both wheat and cattle. C) neither wheat nor cattle. D) wheat only.

Not enough information to determine the impact on consumer surplus

Look at the figure Consumer and Producer Surplus. An increase in supply will: A) not enough information to determine the impact on consumer surplus B) will have no impact on consumer surplus C) increase consumer surplus. D) decrease consumer surplus

$240

Luis is willing to sell his pool table for no less than $600, but if he gets $840, the producer surplus Luis receives is: $240. $840. $1,440. $600.

$45

Mark and Rasheed are at the bookstore buying new calculators for the semester. Mark is willing to pay $75 and Rasheed is willing to pay $100 for a graphing calculator. The price for a calculator at the bookstore is $65. How much is their total consumer surplus? A) $45 B) $60 C) $10 D) $35

The world price is lower than the domestic price

Mexico produces lettuce but can also import it. If Mexico imports some lettuce: A) the domestic quantity supplied will increase. B) the price in Mexico will rise to equal the world price. C) the world price is lower than the domestic price. D) Mexico has a comparative advantage in lettuce production.

Higher; higher

On a sparsely populated island, an additional minute of high-speed Internet service would have a _____ marginal utility than in New York City, while in New York City, quiet evenings would carry a _____ marginal utility than on a deserted island. A) lower; lower B) higher; higher C) higher; lower D) lower; higher

Risk aversion

People are willing to buy insurance because of: A) bounded rationality. B) risk aversion. C) the miscalculation of opportunity costs. D) the status quo.

$2

Sasha buys a cold soda and a slice of pizza. The marginal utility from a soda is 40, and the price of the soda is $1. The marginal utility from a slice of pizza is 80. Assume Sasha is successfully maximizing his utility. If this is the case, we know the price of a slice of pizza must be: $20. $0.50. $2. $1.

Implicit cost of capital

Suppose Eastland College does not have a summer program and could rent out the campus to various summer sports camps for $100,000. The potential revenue of the summer camps represents a(n): A) total cost. B) explicit cost. C) implicit cost of capital. D) sunk cost.

6.67

Suppose Governor Meridias initiates a tax of 10% on all income up to $50,000. Income above $50,000 is not taxed. An individual earning $75,000 will have an average tax rate of _____%. A) 5 B) 10 C) 6.67 D) 0

The percentage of Indiana residents with a college degree rises from 25% to 30%.

Suppose Indiana produces only steel and corn, with fixed amounts of land, labor, and capital resources. Which scenario BEST sets the stage for economic growth? A) The United States imports more and more low-cost steel from Asian countries. B) The unemployment rate in Indiana rises from 5% to 6%. C) The Midwest has a devastating drought. D) The percentage of Indiana residents with a college degree rises from 25% to 30%.

Price-inelastic

Suppose that an increase in the price of a good leads to an increase in total revenue. Ignoring other factors (like supply), at its current price the good must be: A) price-elastic. B) price-inelastic. C) inferior. D) perfectly price-elastic.

An excess demand for doctor visits

Suppose that the average cost of a doctor visit is $100. If the government imposes a price ceiling of $50 on the cost of a doctor visit, there will be: A) no change in the number of doctor visits. B) an excess supply of doctor visits. C) an excess demand for doctor visits. D) an increase in the equilibrium number of doctor visits.

the economy has unemployment and/or inefficiently allocates resources.

Suppose the economy is operating at point G. This implies that: A) people in this economy don't really like strawberries or submarines. B) the economy has unemployment and/or inefficiently allocates resources. C) the economy lacks the resources to achieve a combination such as C. D) the economy can move to a point such as C only if it improves its technology.

$10

Suppose the government imposes a $10 per month tax on cell phone service. If the demand curve for cell phone service is perfectly inelastic and the supply curve is upward-sloping, the monthly price for cell phone service will increase by: A) less than $10. B) $5. C) $10. D) $0.

Producers

Suppose the price elasticity of demand is relatively elastic and the price elasticity of supply is relatively inelastic in a specific market. If an excise tax is imposed on this good, who will bear the greater burden of the tax? A) consumers B) government C) producers D) both consumers and producers equally

0.60

Suppose the price of university sweatshirts increases from $10 to $20 and the quantity supplied increases from 20 to 30. The price elasticity of supply, using the midpoint formula, is: 1.50. 0.66. 1.66. 0.60.

Export 6 million

Suppose the world price equals $50,000 and there is free trade. The United States would _____ SUVs. A) export 6 million B) import 6 million C) export 2 million D) import 2 million

Personal Income

Taxation according to the ability-to-pay principle is best illustrated in the United States by _____ taxes. A) sales B) gasoline C) personal income D) excise

$9 surplus

The Demand and Supply of Wheat. A price of _____ will result in a _____. A) $9; surplus B) $4; surplus C) $8; shortage D) $6; shortage

The US government in some cases has destroyed the surplus production

The United States and the European Union impose price floors on many agricultural products. These price floors lead to unwanted surpluses. To deal with a surplus: A) the European Union pays farm exporters to sell products for a profit overseas. B) the U.S. government holds auctions to sell the surplus to the highest bidder. C) the U.S. government in some cases has destroyed the surplus production. D) the U.S. government typically pays farmers to produce as much as possible.

125

The United States must give up the production of 500 bicycles to produce 20 additional tractors. The opportunity cost of producing 5 tractors is _____ bicycles. 20 5 125 100

marginal benefit

The amount by which an additional unit of an activity increases total benefit is: A) net benefit. B) utility. C) marginal benefit. D) marginal cost.

Consumer surplus BCD

The amount by which the total benefits to consumers exceed their total expenditure is called _____, and if the price is B, is depicted by the area _____. A) consumer surplus; 0CDE B) net benefit; 0BDE C) producer surplus; BCD D) consumer surplus; BCD

I + Y

The deadweight loss arising from the imposition of this tax is equal to the areas: K + I. L + M. K + L. I + Y.

Progressive

The evidence suggests that federal taxes in the U.S. economy are: A) progressive. B) higher than they've ever been before. C) proportional. D) regressive.

$225

The figure The Market for Hamburgers shows the weekly market for hamburgers in Tuscaloosa. If the price of a burger is $2, consumer surplus will equal: $650. $225. $450. $400

Panel B

The figure shows how supply and demand might shift in response to specific events. Suppose the birthrate decreases. Which panel BEST describes how this will affect the market for diapers? Panel A Panel B Panel D Panel C

Increase the opportunity cost of producing radishes in country A

The figure shows production possibility frontiers for two countries that produce only radishes and bicycles. The axes of the two graphs are measured in equivalent units. Country A is operating at point M, and country B is operating at point N. Suppose country A discovers a new technology that greatly increases its ability to produce bicycles but has no effect on its ability to produce radishes. This would: A) lower the opportunity cost of producing radishes in country A. B) increase the opportunity cost of producing radishes in country B. C) not affect the opportunity cost of producing radishes in country A. D) increase the opportunity cost of producing radishes in country A.

focus on the effects of only one change at a time.

The importance of an economic model is that it allows us to: A) avoid opportunity costs. B) build an accurate mathematical model of every aspect of the economy. C) focus on the effects of only one change at a time. D) build a complex and accurate model of how the economy should work.

Increase by about 2.9%

The income elasticity of demand for eggs has been estimated to be 0.57. If income grows by 5% in a period, all other things unchanged, demand will: A) increase by about 2.9%. B) decrease by more than 5.7%. C) decrease by less than 5.7%. D) increase by more than 5.7%.

That keeping out foreign imports allows the goods and services to be produced by domestic workers

The job creation argument for protection against free trade is: A) frequently put forward by economists. B) that we need full employment to prevent currency depreciation. C) that keeping out foreign imports allows the goods and services to be produced by domestic workers. D) mostly that we need full employment to defend the security of the nation.

Consumers will buy more at lower prices

The law of demand implies that: A) sellers will offer more on the market at higher prices. B) consumers will buy more at lower prices. C) consumers are not responsive to price changes. D) sellers will offer less on the market at lower prices.

A tariff generates tax revenue, while an import quota generates rents to the license holders

The main difference between a tariff and an import quota is that: A) a tariff generates tax revenue, while an import quota generates rents to the license holders. B) an import quota reduces imports more sharply than a tariff. C) a tariff will cause lower prices than an import quota. D) a tariff will cause higher prices than an import quota.

$14

The marginal benefit of producing the third sweatshirt is: Quantity: 0 Total Benefit: $0 Quantity: 1 Total Benefit: $16 Quantity: 2 Total Benefit: $31 Quantity: 3 Total Benefit: $45 Quantity: 4 Total Benefit: $58 Quantity: 5 Total Benefit: $70 A) $14. B) $16. C) $15. D) $31.

$11

The marginal cost of the second sweatshirt is: $11. $9. $20. $29

The price floor will not affect the market price or output

The market for apples is in equilibrium at a price of $0.50 per pound. If the government imposes a price floor in the market at a price of $0.40 per pound: A) there will be a shortage of apples. B) quantity demanded will decrease. C) quantity supplied will increase. D) the price floor will not affect the market price or output.

D

The market is in equilibrium at point C. Suppose most people drink orange juice only with champagne. What will be the new equilibrium point in the orange juice market if a law banning alcohol passes? A B D E

Supply decreased

The market price of airline flights increased recently. Some economists suggest that the price increased because several airlines went out of business. They believe that, in the market for flights: A) demand increased. B) supply decreased. C) demand decreased. D) supply increased.

petroleum; more

The opportunity cost of _____ is _____ in the United States as (than) in Mexico. A) petroleum; less B) petroleum; the same C) machinery; the same D) petroleum; more

15

The opportunity cost of moving from producing ONLY wheat to producing ONLY wine is _____ tons of wheat. A) 9 B) 15 C) 3 D) 6

Inefficiently low quality

The persistent unwanted surplus that results from a binding price floor causes inefficiencies that do NOT include: A) wasted resources. B) inefficient allocation of sales among sellers. C) the temptation to break the law by selling below the legal price. D) inefficiently low quality.

Decreases in absolute value as quantity demanded rises

The price elasticity of demand along a demand curve with a constant slope: A) is equal to the slope. B) is less than the slope. C) decreases in absolute value as quantity demanded rises. D) is greater than the slope.

Price-inelastic; less than 1

The price elasticity of demand between $20 and $21 is _____ since the price elasticity is _____. A) price unit-elastic; equal to 1. B) price-inelastic; less than 1. C) price-elastic; less than 1. D) price-inelastic; a negative number. (Figure: The Demand Curve for Oil)

Comparing the percentage change in quantity demanded to the percentage change in price

The price elasticity of demand can be found by: A) comparing the percentage change in quantity demanded to the percentage change in price. B) examining only the slope of the demand curve. C) measuring absolute changes in price and quantity demanded. D) knowing that when price changes, quantity demanded goes in the opposite direction.

Total revenue will rise

The price elasticity of demand for fresh tomatoes has been estimated to be 2.22. If a new insecticide and fertilizer treatment yields a 20% increase in the nation's fresh tomato crop, how will that affect total revenue from fresh tomatoes, all other things unchanged? A) The information is insufficient to answer the question. B) Total revenue will fall. C) Total revenue will remain unchanged. D) Total revenue will rise.

4; 152

The price of milk is $2 per gallon, and the price of honey is $4 per jar. Hal's income is $16. If he spends all of his income on honey, the most he can buy is _____ jars, and his total utility will be the ____. 6; 204 8; 240 4; 22 4; 152 *You can't solve for utility without the graph

3

The price of notebooks is $5, and at that price consumers demand 12 notebooks. If the price rises to $7, consumers will decrease quantity demanded to 4 notebooks. Using the midpoint formula, what is the price elasticity of demand for notebooks? A) 0.17 B) 0.33 C) 3 D) 6

40

The price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag. You have $10 to spend on both goods. The maximum number of bags of peanuts that you can purchase is: 20. 5. 10. 40.

Complementary

The price of pretzels increases and the demand for tortilla chips decreases, so we can assume that these two goods are: A) unrelated. B) complementary. C) inferior. D) substitutes.

$16 ($12 with this table bc it's the wrong table)

The profit at the optimal quantity of sweatshirts is: $80. $15. $12 $48. $16.

$379.

The table Producer Surplus and Phantom Tickets shows the minimum price at which each of the students is willing to sell a ticket to Phantom of the Opera. Assume that each student has only one ticket to sell. If the price for Phantom tickets is $140 and there is no other market for tickets, total producer surplus for these five students is: $379. $40. $110. $139.

None

The table Willingness to Pay for Basketball Sneakers shows each player's willingness to pay for basketball sneakers. Assume that each player wants to buy at most, one pair of sneakers. If the price of basketball sneakers is $180, how many pairs will be purchased? A) two B) three C) none D) one

The sum of the consumer surplus and producer surplus

The total surplus in a market is the: A) excess supply due to a price above the equilibrium price. B) surplus that accrues when a good is not scarce, defined as the total amount (if any) by which quantity supplied exceeds quantity demanded at a zero price. C) net benefit to consumers, defined as the excess of consumer surplus over producer surplus. D) sum of consumer surplus and producer surplus.

Bayer aspirin to be more price-elastic than is the demand for medical examinations

There are several close substitutes for Bayer aspirin but fewer substitutes for a complete medical examination. Therefore, all other things equal, you would expect the demand for: A) Bayer aspirin to be more price-elastic than is the demand for medical examinations. B) Bayer aspirin to be more perfectly price-inelastic. C) medical examinations to be more price-elastic than is the demand for Bayer aspirin. D) the two to be equally price-elastic.

$10

There are two consumers, Andy and Ben, in the market for pumpkins. Their willingness to pay for each pumpkin is shown in the table Pumpkin Market. There are two producers of pumpkins, Cindy and Diane, and their costs are also shown. The equilibrium price for pumpkins is $8 and the equilibrium quantity is 5. At the equilibrium price and quantity, total consumer surplus is: $6. $0. $8. $10.

Coffee only

This table shows the maximum amounts of coffee and salmon, both measured in pounds, that Brazil and Alaska can produce if they just produce one good. Brazil has a comparative advantage in producing: A) coffee only. B) neither coffee nor salmon C) both coffee and salmon. D) salmon only.

The country that can make that good or service while forgoing the production of fewer alternative products than any other country

To achieve gains from trade, each nation should specialize in the production of a good or service if: A) the country can make that good or service using fewer resources than any other country. B) its production possibility frontier is closer to the origin than that of any other country. C) the country can make that good or service while forgoing the production of fewer alternative products than any other country. D) its production possibility frontier is farther from the origin than that of any other country.

Higher consumption will always lead to higher utility

To say that you can't have too much of a good thing means that, for any good that you enjoy (for example, pizza): A) higher consumption will increase utility, but only up to a point; after that, utility will start to decrease. B) higher consumption will always lead to higher utility. C) it is valid to measure utility in utils. D) higher consumption will cause utility to decrease at an increasing rate.

Positive economic statement

Unemployment decreased to its lowest level in 10 years last month. This statement is a(n): A) example of an opportunity cost. B) normative economic statement. C) value judgment. D) positive economic statement.

Falls; F + L (triangle above price of tariff)

Use Figure: A Tariff on Oranges in South Africa. When the government imposes a tariff on imported oranges, the price of oranges in South Africa rises from PW to PT and domestic consumer surplus _____ to _____. A) rises; F + G + I + J + K + L (triangle above world price B) rises; F + L (triangle above price of tariff) C) falls; F + G + I + J + K + L (triangle above world price) D) falls; F + L (triangle above price of tariff)

Some renters will be willing to pay a price as high as Rent4 for Q0 units

Use Figure: Rent Controls. If rent controls are set at Rent0: A) there will be a surplus of rental units. B) some renters will be willing to pay a price as high as Rent4 for Q0 units. C) no one will have to pay a higher actual price than Rent0, nor will anyone be willing to do so. D) the shortage of rental units is the distance Q1 - Q3.

The sum of the individual producer surpluses for all buyers of X

We can measure total producer surplus for good X as the: A) area between the demand curve for X and the supply curve for X. B) sum of the individual producer surpluses for all buyers of X. C) area below the supply curve for X and above the price of X. D) area bounded by the supply curve for X and the two axes.

0.82

What is the price elasticity of demand (using the midpoint formula) between $1.25 and $1.00? A) 1.60 B) 0.60 C) 0.82 D) 1.00

No mutually beneficial trades are missed

When a market is in equilibrium and there is no outside intervention to change the equilibrium price: A) no mutually beneficial trades are missed. B) inefficiency is maximized. C) some mutually beneficial trades may be missed. D) total surplus is minimized.

It's production possibility frontier shifts outward

When a nation's economy grows: A) its production possibility frontier shifts inward. B) its production possibility frontier shifts outward. C) it has moved to a more consumer-oriented position on its production possibility frontier. D it has been able to reach full employment.

Limits on the number of red snappers that can be caught in the Gulf of Mexico

Which example is a quantity control? A) the minimum wage B) the Medicare reimbursement schedule for physicians C) limits on the number of red snappers that can be caught in the Gulf of Mexico D) unemployment insurance

Your right to use and dispose of your private property as you see fit

Which factor is key in the effectiveness of well-functioning markets? A) outcomes that are equitable for consumers and producers B) your right to use and dispose of your private property as you see fit C) a significant degree of government intervention to maximize efficiency D) the role of the government to deliver economic signals to consumers and producers

Tim is trying to decide the amount of money to save each month to buy a new care next year

Which statement describes a "how much" decision? A) Tim is trying to decide the amount of money to save each month to buy a new car next year. B) Andrea is trying to decide whether to go to graduate school in economics or go to law school. C) Andy is trying to decide whether to take a prep course for the Law School Admissions Test. D) Mary is trying to decide whether to go to work or go to college after she graduates from high school next month.

Money flows from households to firms as households offer factors of production for sale.

Which statement is FALSE about the circular-flow diagram? A) Households are the primary demanders of goods and services. B) Firms are the primary suppliers of goods and services. C) Money flows from households to firms as households offer factors of production for sale. D) Money flows in the direction opposite to goods and services and factors of production.

The best way to encourage growth in the economy is through government spending.

Which statement is normative? A) Women's labor force participation rate has increased during the past 100 years. B) The federal minimum wage is higher today than it was in 1990. C) Children in the United States are required to go to school until they reach a certain age. D) The best way to encourage growth in the economy is through government spending.

Loaves of bread and hamburger buns

Which two goods are most likely substitutes in consumption? A) loaves of bread and hamburger buns B) loaves of bread and sticks of butter C) loaves of bread and gasoline D) loaves of bread and toasters

the marginal utility of one tub of yogurt divided by the price of the yogurt tub

Which value BEST describes the amount of utility that is gained by spending an additional dollar on yogurt? A) the total utility of a tub of yogurt divided by the price of the yogurt tub B) the marginal utility of one tub of yogurt divided by the price of the yogurt tub C) the value equal to the price of a related good D) the average utility of yogurt divided by the price of the yogurt tub

Supply of; right

You notice that the price of Blu-ray players falls and the quantity of Blu-ray players sold increases. You suspect that _____ Blu-ray players shifts to the _____. A) supply of; right. B) demand for; right. C) supply of; left. D) demand for; left.

The job offer you did not accept at a local catering service

You own a small deli that sells sandwiches, salads, and soup. Which factor is an implicit cost of the business? A) your monthly utility bill B) wages paid to part-time employees C) bread, meat, and vegetables used to produce the items on your menu D) the job offer you did not accept at a local catering service

Buy another ticket and attend the movie only if your marginal benefit of seeing the movie is more than $14 *I don't understand this one. I thought the first $7 was a sunk cost

You plan to attend a movie on Saturday night. You buy a ticket for $7 and then lose it. According to marginal analysis, you should: A) go home. B) look for the lost ticket. C) buy another ticket and attend the movie. D) buy another ticket and attend the movie only if your marginal benefit of seeing the movie is more than $14.

Columbia; roses; roses

_____ has an absolute advantage in the production of _____ and a comparative advantage in the production of _____. A)The United States; computers; roses B) Colombia; roses; roses C) The United States; roses; computers D) Colombia; computers; roses

The united states

_____ has/have an absolute advantage in producing tractors. A) The United States B) Neither the United States nor Mexico C) Mexico D) Both the United States and Mexico