Econ Midterm

The figure above shows Diane's demand curve for soda. The price of a soda is $1.00. Diane's consumer surplus from her 10th soda is

$.50

the figure above shows the supply curve for soda. The market price is $1.00 per soda. The producer surplus from the 10,000th soda is

$.50

Bill and Krista sell potted plants from a roadside stand. The figure above shows Bill and Krista's marginal cost curve and the market price. If Bill and Krista sell 60 plants per week, their producer surplus from the 60th plant will equal

$0

Lauren and Katy each bought a new bike lock for $20. Both Lauren and Katy would have paid $25 for the lock. The total consumer surplus for Lauren and Katy taken together equaled

$10

In the figure above, at the market price of $15, the total consumer surplus equals

$10,000

Samantha was willing to pay $10 for a hamburger because she was hungry but she only paid $2.50. What is the marginal benefit (i.e. value Samantha gained from the hamburger?

$10.00

The figure above shows Lauren's demand curve for Barbie dolls and the market price for Barbie dolls. Using the area of the consumer surplus triangle, Lauren's total consumer surplus from purchasing 3 dolls is

$22.50

In the above figure, what is the marginal cost of the 4th pizza?

$9

The increase in the demand for widgets, shown in the figure above, is the result of a decrease in the price of McBoover devices from $11 to $9. Therefore, the cross-price elasticity for these two products is

-2.0

If the price of a movie ticket increases by 4% and the quantity of movies demanded falls by 2%, the price elasticity of demand is

.5

The table above gives four production possibilities for airplanes and cruise ships. In possibility A, how many resources are devoted to the production of cruise ships?

0

The figure shows the demand curve for popsicles. The price elasticity of demand when the price of a popsicle increases from $.30 to $.50 is

1

In the above table, for Mary the opportunity cost of producing a dress is ____ and the opportunity cost for Mark of producing a dress is ___

1 1/2 jackets; 2/3 of a jacket

A straight-line demand curve with negative slope intersects the horizontal axis at 100 tons per week. At the midpoint on the demand curve (corresponding to 50 tons per week) the price elasticity of demand is

1.0

Using average price and average quantity, calculate the price elasticity of demand if a price rise from $8 to $10 and decreases the quantity demanded from 20 units to 15 units. The price elasticity of demand equals

1.29

The table above presents the production possibilities frontier for a nation. Using the information in the table, when moving from possibility C to D, the cost of 1 unit of a capital good in terms of the consumption goods forgone is _____ consumption goods per capital good.

10

On a PPF, 500 pounds of apples and 1,200 pounds of bananas can be produced while at another point on the same frontier, 300 pounds of apples and 1,300 pounds of bananas can be produced. Between these points, what is the opportunity cost of producing a pound of bananas.

2 pounds of apples

The table above gives the demand schedule for snow peas. The price elasticity of demand between $6 and $7 per bushel is

2.6

The figure above shows the marginal benefit and marginal cost curves for pizza. In the figure, what is the efficient quantity of pizza?

20,000 pizzas

The table above shows a production possibilities frontier for an economy. Which of the following combinations is unattainable?

200 loaves of bread and 800 books

The table above shows a nation's production possibilities frontier. If the nation chooses to increase the production of robots from 2 to 3 and it is on its PPF, it will have to forgo ____ pizzas.

3

Deb and Pete have volunteered to help their favorite charity mail out fundraiser information. The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes. What is Deb's opportunity cost of assembling 1 packet?

4 envelopes

Using the data in the table above, the equilibrium quantity and the equilibrium price for a cellular telephone is

60,000 and $50

In the figure above, suppose that $20 is the market equilibrium price. Which area is the consumer surplus

A (top triangle)

In the figure above, if the market is at equilibrium, then the total consumer surplus equals the area ___ and the total producer surplus equals the area ___.

A;B

Deb and Pete have volunteered to help their favorite charity mail out fundraiser information. The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes. Which of the following statements is correct?

Deb has a comparative advantage in stuffing envelopes

Suppose that the demand for corn is price inelastic. If a technological advance makes corn farms more productive, the equilibrium price of corn will ___ and the farmers' total revenue will ___

Fall; decrease

Which figure above shows the effect if research is published claiming that eating pizza is healthy?

Figure A

Which figure above shows the effect of an increase in the cost of the tomato sauce used to produce pizza

Figure C

Which figure above shows the effect of a technological advance in the production of pizza?

Figure D

A demand curve

Has a downward slope AND is a graph of the relationship between quantity demanded of a good and its price

Moving from one point to another on a production possibilities frontier implies

Increasing the production of one good and decreasing the production of another

Consumers eat salsa with taco chips. The price of salsa rises. How does the increase in the price of salsa affect the demand for taco chips

It decreases the demand for taco chips.

In one hour John can produce 20 loaves of bread or 16 cakes. In one hour Phyllis can produce 30 loaves of bread or 15 cakes. Which of the following statements is true?

John has a comparative advantage in producing cakes.

The opportunity cost of a good increases as more of its produced because

Resources are not equally productive in all activities.

What is gained when people engage in specialization and trade?

Specialization and trade allow people to consume outside their individual production possibilities frontiers

Apple, the consumer electronics giant, on Tuesday rolled out a new versions of its popular iPhone. The CEO decided to decrease the price of iPhones in an attempt to increase total revenue from iPhone sales. One of his employees, Jess, disagrees and suggests that an iPhone price increase will increase total revenue. Who is CORRECT?

The CEO is correct if demand is price elastic

The production possibilities frontier is the

The boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology

Which of the following statements is a normative statement?

The minimum wage should be increased to $15.00 per hour

Plywood is used in the construction of houses. If the price of plywood rises, what happens to the supply of houses?

The supply decreases so that the supply curve shifts leftward

Which of the following is the best definition of economic growth?

The sustained expansion of production possibilities

Opportunity cost is best defined as

The value of the highest-valued alternative that is foregone in making a choice

If Wendy can produce more of all goods than Tommy in an hour, then

Wendy has an absolute advantage in all goods.

A change in the demand for apples could result from any of the following EXCEPT

a change in the price of an apple

To maximize its revenue

a firm facing inelastic demand should always raise its price

If the demand for digital cameras increases when consumers' income rise, then digital cameras are

a normal good

Using the data in the table above, at the price of $80 a phone,

a surplus of 25,000 cellular telephones occurs

In the above figure, the shift in the demand curve from D to D1 can be the result of

an increase in the price of a sub sandwich, a substitute for pizza

In the above figure, the shift in the supply curve from S to S2 reflects

an increase in the supply of pizza

In the above figure, if the quantity is equal to 500,000 units, the deadweight loss is equal to

area B + area F

The figure above shows the production possibilities frontier for a country. A combination of 3 million gallons of milk and 3 million gallons of ice cream is

attainable and production efficient

If income increases and the demand for bus rides decreases,

bus rides are an inferior good

Consumers' total benefit from consuming a good is equal to the

consumer surplus plus the total amount spent on the good

Consumer surplus exists when

consumers value the good more highly than what they must pay to buy it

The study of economics is best described as a study of

coping with scarcity, and choices made as a result of scarcity in a society

If goods are complements, then their

cross elasticities are negative

In the above figure, if the quantity is restricted to 500,000 and the price is allowed to rise to set the quantity demanded equal to the quantity supplied, then area C + area E is equal to

deadweight loss

What do economists call the loss society experiences when there is market failure and the production of a good is less than the efficient amount?

deadweight loss

Computer chips are a normal good. Suppose the economy slips into a recession so that income falls. As a result, the demand for computer chips ___ so that the price of a computer chips ___

decreases; falls

Along a straight-line demand curve, as the price falls the

demand becomes less elastic

According to the total revenue test, a price cut increases total revenue if demand is

elastic

Dan sells newspapers. Dan says that a 4% increase in the price of a newspaper will decrease the quantity of newspapers demanded by 8%. According to Dan, the demand for newspapers is

elastic

The figure above illustrates a linear demand curve. In the price range from $8 to $6, demand is ___ and in the price range $4 to $2, demand is ___

elastic; inelastic

If good weather conditions result in a larger than normal crop of peaches then the

equilibrium price of peaches falls and the equilibrium quantity of peaches increases.

The figure above shows the production possibilities frontier for the UK and France. If the UK and France specialize and engage in trade, the UK will produce ___ and France will produce ___

fish; wheat

When Sam's annual income was only $15,000, he purchased 50 pounds of bananas a year. When his income rose to $18,000, he purchased 55 pounds a year. Therefore

for Sam, bananas are a normal good

The law of supply states that, other things remaining the same,

if the price of a good increases, the quantity supplied increases

Peters monthly income increases from $1,500 to $1,600. As a result, he increases the number of DVDs he buys per month from 2 to 3. Peter's demand for DVDs is

income elastic

Bus rides and canned soup are inferior goods, so the ___ elasticity of demand is ___

income; negative

Researchers have found a hybrid of corn that is cheaper to grow. This technological breakthrough

increases the supply of corn

To say that turnips are inferior goods means that the income elasticity

is negative

As an economy grows

its PPF shifts outward

The cross elasticity of demand measures the responsiveness of the quantity demanded of a particular good to changes in the prices of

its substitutes and its complements

Demand is price inelastic if a relatively ___ price increase leads to a relatively ___ in the quantity demanded

large; small decrease

Which of the following increases the supply of a product

lower prices for the resources used to produce the product

When efficiency is attained, the sum of the total amount of consumer surplus and producer surplus is

maximized

The figure above shows the competitive market for slices of key lime pie. If the production is 40 slices per day, someone is willing to buy another slice of pie for

more than it costs to produce the slice

An increase in the quantity demanded is shown as a

movement along the demand curve

The cross elasticity of demand for pizza with respect to the price of a soda is

negative because the goods are complements

Producer surplus definitely exists when the

price exceeds marginal cost

Value and price can be compared by noting that

price is what we must pay and value is what we are willing to pay.

The price elasticity of demand for furniture is estimated at 1.3. This value means a one percent increase in the

price of furniture will decrease the quantity of furniture demanded by 1.3 percent

Producer surplus is the ___ summed over the quantity produced

price of the good minus the marginal cost of producing it

A country has a comparative advantage in the production of a good if it can

produce the good at the lowest opportunity cost

In the figure above, the equilibrium market price is $20. Area A is the

producer surplus

The graph illustrates the market for bottled water. If the producers of bottled water switch to using improved technology, then the

quantity demanded of bottled water increases

When the demand curve shifts rightward and the market moves to a new equilibrium, then the

quantity supplied increases

gains from trade

result in being able to consume beyond the trading individuals' production possibilities frontiers.

Demand is inelastic when a price ___ results in total revenue ___

rise, increasing

Suppose the equilibrium price of oranges is $2.00 per pound. If the actual price is above the equilibrium price a

surplus exists and the price falls to restore equilibrium

A quantity less than the equilibrium quantity in a competitive market is inefficient because

the marginal benefit of another unit is greater than its marginal cost

market equilibrium occurs when

the quantity demanded equals the quantity supplied

The price of cotton clothing falls. As a result,

the quantity demanded of cotton clothing increases

The price elasticity of demand measures

the responsiveness of the quantity demanded to changes in price

when underproduction occurs,

there is a deadweight loss that is borne by the entire society.

If the price is below the equilibrium price,

there is a shortage

The primary focus of microeconomics is

to examine the behavior and operation of the individual units or sectors that make up the economy

The figure above illustrates a linear demand curve. If the price falls from $8 to $6

total revenue increases

The figure above shows the production possibilities frontier for a country. A combination of 4 million gallons of milk and 4 million gallons of ice cream is

unattainable

To a seller, the cost of a good or service is ___ and the price is ___

what must be given up to produce the good or service; what is received for the good or service