econ

Andreas has invested $1,000 in the bond market. At the end of one year, there is a 30% chance that his asset will be worth only $800 and a 70% chance that it will be worth $1,200. The expected value of his asset at the end of one year is:

$1,080

Eliana and Olivia are at Barnes and Noble buying new calculators for the semester. Eliana is willing to pay (or her marginal benefit is) $65, and Olivia is willing to pay (or her marginal benefit is) $75 for a graphing calculator. The price of a calculator at Barnes and Noble is $55. What is Eliana's individual consumer surplus?

$10

Beatrice wants to calculate the accounting and economic profits of her farm in Kansas. She pays $30,000 per year in overhead, $80,000 in wages, and $20,000 in insurance. She forgoes $30,000 per year that she could make as a vehicle inspector for the DMV. If her total revenue equals $140,000, her accounting profit is , and her economic profit is

$10,000; -$20,000

The graph shows marginal social cost and marginal private cost curves. What is the marginal external cost?

$2

Lek is deciding whether to enter a contest. If she wins, her rise in utility will be worth $10,000. If she loses, her change in utility would be worth -$500. She has a 5% chance of winning and a 95% chance of losing. What is Lek's expected utility if she participates in the contest?

$25

For decades, chemical giant DuPont released a hazardous chemical from their production of Teflon into a small town in West Virginia. This caused multiple members of the community to develop cancer. DuPont later settled a lawsuit by agreeing to pay damages to the plaintiffs. DuPont's marginal private cost of a Teflon product was $3, and the marginal external cost to society was $1.25. What was the marginal social cost of a Teflon product?

$4.25

Tasha tries to put herself in Hui Er's place. Tasha concludes that if she (Tasha) charges $9, then Hui Er will charge ____ to earn a profit of ____

$5; $6,000

With no cooperation, the most likely outcome is that Gizelle will charge ____ and Devin will charge ____

$7; $6

A 10% decrease in income increases the quantity demanded of online movie rentals by 3%. The income elasticity of demand for streamed movie rentals is ______, and streamed movie rentals are a(n) _____ good.

-0.3; inferior

The price of product A falls by 50%. As a result, the quantity demanded of product B rises by 50%. The cross-price elasticity of demand between product A and product B is _____ and they are ____.

-1; complements

Consider the market for environmentally friendly three-dimensional printed houses that is shown in the figure. The government wants to encourage buyers to buy such houses and places a price ceiling on the market at $200,000 per house. After implementation of the price ceiling, the market quantity sold falls by ____ houses.

100,000

The price of turkey breast rises from $3.00 per pound to $3.60 per pound. In response to this price change, the quantity demanded for turkey breast falls by 40%. Based on the midpoint method, what is the absolute value of the price elasticity of demand for turkey breast?

2.2

Production of Bagels at The Bagel Factory. The marginal product of labor for the seventh worker is ___ bagels.

3 dozen

As the general manager of Dick's Sporting Goods, you evaluate monthly cardio equipment sales of stores in your region. The graph shows your stores' demand curve and marginal revenue curve and marginal cost of selling rowing machines. Your optimal price is $_____ , and your optimal quantity sold is _____ rowing machines per month

450; 3

In the graph shown, the original equilibrium price is $50. A $6 tax is placed on sellers in this market. The economic burden of this tax on sellers is $______.

5

The figure shows how supply and demand might shift in response to specific events. Suppose that a large amount of people move away from Philadelphia such that the population decreases by 20%. Which panal best illustrates how this event will affect the market for houses in Philadelphia?

A

Three gas stations make up the market for gasoline in your town. The number of gallons of gasoline that each gas station is willing to supply per week at various prices is indicated in the accompanying table: Which curve in the following diagram represent the market supply curve?

C, the red one

Which is not a strategy that you could use to reduce risk?

Dominance

The diagram represents the demand and costs facing BJ's Smoothies for two different groups of consumers. What price and quantity should BJ choose for each group?

Group A: P = $10, Q = 100 Group B: P = $9, Q = 50

As the price of scanners with high-resolution cameras falls, Ford begins using them instead of human inspectors to check the quality of the painted surfaces of its cars. What is the relationship between capital and labor in this example?

Labor and capital are substitutes in production

Use the utility graph to answer the question Jo has income of $40,000. She is faced with an opportunity that has an equal chance of resulting in an additional $10.000 in income or a loss of $10,000 in income. Using expected utility as the deciding factor, should Jo pursue the opportunity?

No, the potential increase in utility is less than the potential decrease in utility.

Monopolizing is when a company gains market share by:

Pushing suppliers not to sell inputs to rival companies

Which term denotes a situation in which an individual's best choice may depend on what other choose, and others' best choice may depend on what the individual chooses?

Strategic interaction

Evidence suggets that exercise promotes longevity. Based on this information, what might happen in the market for exercise-related goods and services?

The demand for exercise machines and/or gym memberships will increase

How would the discount effect on marginal revenue differ for a seller increasing sales from 100 units to 101 units compared to an increase in sales from 1,000 units to 1,001 units?

The discount effect would be smaller for a change from 100 to 101 units than 1,000 to 1,001 units.

What happens to the equilibrium price and equilibrium quantity when demand and supply decrease simultaneously, but the relative size of the shifts are not known?

The equilibrium quantity falls, and the change in equilibrium price is ambiguous

A nash equilibrium can be identified on a payoff table when:

a check mark is put next to each player's best responses, and there is a cell with a check mark for each player

Use Table: Nike and Reebok Advertising Game. The sneaker industry is dominated by Nike and Reebok, and each firm spends a lot of money on advertising. Suppose each firm is considering a costly television commercial during the World Series. The table shows the payoff matrix of profits that each firm would receive from its advertising decision, with Nike first followed by Reebok in each cell, given the advertising decision of its rival. The BEST response for Nike would be:

advertise

The marginal revenue product is the

change in total revenue resulting from hiring an additional unit of a factor

If a player has a Grim Trigger strategy, that player

cooperates if other players have cooperated in all previous round but defects if any player ever defects

If an individual is risk averse, we would expect their marginal utility to ____ as income ____

fall; increases

If firms are making economic losses, then in the long run:

firms will leave the industry

When Ratana notices that the price of frozen yogurt has fallen, she buys less ice cream and more blueberries. This happens because:

for Ratana, frozen yogurt and ice cream are substitutes, and frozen yogurt and blueberries are complements.

Perfectly competitive markets are rare because most

goods are not identical, and most markets have some dominant firms

An appliance store hold a week-long sale on refrigerators every summer and on stoves every fall. This is an example of a seller using ____ to achieve price discrimination through ____.

group pricing; marginal benefit fluctuations

Benny and Nicole's Risk Aversion. Benny and Nicole have the same income and total utility. Nicole will be willing to pay ____ a insurance premium than Benny because she is ______ risk averse.

higher; more

Why do people make decisions with incomplete information

information is costly to obtain

The principle that your best choice depends on your other choices, the choices other make, developments in other markets, and expectations about the future is known as the ____ principle

interdependence

If a seller can create switching costs for its product then

it is difficult or costly for customers to switch to another seller of the product.

Your government wants to discourage sugar consumption. Which of these is not a possible way of achieving this goal?

legislating sugar subsidies

The socially optimal quantity of pollution emissions occurs where the

marginal social benefit of pollution is equal to the marginal social cost of pollution

Congress is considering a sale tax on gas-powered vehicles to fight climate change. If demand is more elastic than supply, the price received by sellers will fall by _____ the price paid by buyers will rise.

more than

Cell phone carriers use cell towers to provide you the service of placing calls and sending messages. During normal usage periods, you can place calls at your leisure, but during a widespread emergency situation, you may not be able to place a call as everyone tries to use the same cell tower at the same time. During normal periods, cell phone usage is _____ but during an emergency, it's _____.

nonrival; rival

Moral Hazard

occurs when incentives are distored because an individual knows more about their own actions than other people do

By contrast with a market that produces the socially optimal output, a market with negative externalities will:

overproduce

If the price in the market is such that the quantity supplied exceeds the quantity demanded, then the

price is above the equilibrium price

Insurance companies attempt to minimize adverse selection by:

screening prospective clients and relying on employment-based health insurance

used car dealers will often advertise how long they have been in business as a means of _____ their long-term ____

signaling; reputation

How does a gain of $1,000 versus a loss of $1,000 impact a person's utility?

the loss would have greater impact on utility than the gain

a price floor is

the minimum price that a seller can charge in a market

Suppose Congress imposes a price ceiling of $S per ATM transaction. If the average market-clearing price for an ATM transaction is $2, then:

the price ceiling will not be binding

The selling of _____ products at different prices to different consumers is the practice of _____.

the same; price discrimination

Oligopoly Pricing Strategy for TV Service Providers. If both Spectrum and Sling advertise, then without any collusion:

there will be no incentive for either Philo or Sling to stop advertising

The market demand for and supply of rental apartments in a mid-sized city are indicated in the accompanying table. If the government enacts a price ceiling (rent control) of $1,800:

there would be a surplus of 5,000 apartments

The tendency to begin with a starting point and insufficiently adjust from there is known as

anchoring bias

The rational rule for workers is to work

as long as there is a desire for more income that excreds the loss of income from not working.

Obstacles that keep new firms out of a monopoly market are

barriers to entry

When a seller has a high level of market power, the seller

can raise its price without losing many customers

To treat a sore back, Kyoko undertakes a course of physical therapy. Kyoko's marginal benefit from her first physical therapy session is $250, from her second, it's $225, from her third, it's $175, and from her fourth, it's $100. Physical therapy sessions cost $175 each. Assuming Kyoko's final physical therapy session will earn her zero consumer surplus, Kyoko will have ____ physical therapy sessions, and her total consumer surplus will be ____.

three; $125

Amadeus owns a flower shop. Amadeu's business is booming, and his income is rising. Amadeus's labor supply curve will be ____ if the substitution effect is ____ the income effect

upward-sloping; smaller than