Economics Midterm, ECON MIDTERM 2, ECON 1201 FINAL

Gino's Pizza has a special offer: one slice for $2, two slices for $3.50, three slices for $4.50, and four slices for $5.00. The marginal cost of the third slice is

$1

Gino's Pizza has a special offer: one slice for $2, two slices for $3.50, three slices for $4.50, and four slices for $5.00. The marginal cost of the second slice is

$1.50

(Table: Marginal Benefit of Sweaters) Use Table: Marginal Benefit of Sweaters. The marginal benefit of producing the third sweater is

$14

Suppose the average total cost of producing 9 surgical masks is $6, while the average total cost of producing 10 surgical masks is $7. What is the marginal cost of producing the 10th surgical mask?

$16.00

(Table: Output and Costs at the Art Gallery) Use Table: Output and Costs at the Art Gallery. After graduation, you achieve your dream of opening an art gallery that specializes in wooden sculptures. When the number of sculptures produced is 3, the AVERAGE total cost is

$17

(Table: Output and Costs at the Art Gallery) Use Table: Output and Costs at the Art Gallery. After graduation, you achieve your dream of opening an art gallery that specializes in wooden sculptures. When the number of sculptures sold is 4, the variable cost is

$48

Suppose the average total cost of producing 9 surgical masks is $5, while the average total cost of producing 10 surgical masks is $5.20. What is the marginal cost of producing the 10th surgical mask?

$7.00

If the price of a good increases by 2%, and the quantity demanded changes by 1%, then the price elasticity of demand is equal to:

0.5

If the price of strawberries increases by 20%, and the quantity of strawberries demanded decreases by 15%, then the price elasticity of demand is equal to:

0.75

The Comfy Couch Company believes it can sell 200 couches at $200 per couch or 300 couches at $150 per couch. If so, what is the price elasticity of demand, obtained using the midpoint method?

1.4

(Table: Production of Bagels at The Bagel Factory) Use Table: Production of Bagels at The Bagel Factory. The marginal product of the eighth worker is _____ bagels

10 dozen

(Table: Output and Cost Curves for Buckwheat Farm) Use Table: Output and Cost Curves for Buckwheat Farm. What is the firm's fixed cost?

100

(Table: Output and Cost Curves for Buckwheat Farm) Use Table: Output and Cost Curves for Buckwheat Farm. At what price will the firm exit?

14

(Table: Production of Bagels at The Bagel Factory) Use Table: Production of Bagels at The Bagel Factory. The marginal product of the third worker is _____ bagels

15 dozen

The publisher of an accounting textbook finds that, when the book's price is lowered from $70 to $60, sales rise from 10,000 to 15,000. The price elasticity of demand, obtained using the midpoint method, is:

2.6

(Table: Production of Bagels at The Bagel Factory) Use Table: Production of Bagels at The Bagel Factory. The marginal product of the fifth worker is _____ bagels

9 dozen

A shift of the supply curve for rutabagas occurs if there is:

A change in the price of a hood that is substitute to rutabagas

The circular-flow diagram represents the market for _____ and the market for _____

Goods and services; factors of production

Which statement is TRUE?

It is possible to have no absolute advantage but a comparative advantage in the production of some good

A quota limit that is below the market equilibrium quantity results in

a demand price that exceeds the supply price

A price ceiling is

a maximum price sellers can charge for a good or service

(Figure: The Marginal Decision Rule for Apple Farmers) Use Figure: The Marginal Decision Rule for Apple Farmers. If P1 is the market price, and the firm is maximizing profit, the firm should produce

at quantity q2

The burden of a tax on a good is said to fall completely on the consumers if the

price paid by consumers for the good increases by the amount of the tax

A perfectly competitive firm is a

price taker

If quantity demanded does not respond significantly to a relatively large change in price, demand is:

price-inelastic

The demand for bottled water decreases at a time when people believe bottled water prices will soon fall. The change in demand is most likely attributable to a change in

Consumer expectations

The _____ for season tickets for the New York Rangers is the graphical representation of the number of season tickets consumers want to buy at any given price.

Demand curve

To be binding, a price floor must set the price

above the equilibrium price

In general, when incomes rise, individuals are more likely to travel by air than by car when they take vacations. Which statement provides one possible explanation for this phenomenon?

Air travel is a normal good and travel by car is an inferior good.

If an economy is efficient

All opportunities to make people better off without making other people worse off have been exploited

The demand curve for Adidas shoes has shifted to the right. What could have caused this?

An increase in enthusiasm among consumers for Adidas as an exercise shoe

An increase in income will be reflected in the market for passionfruit as

An increase the demand for passionfruit if passionfruit is a normal good

In one hour, the United States can produce 25 tons of platinum or 250 electric cars. In one hour, Canada can produce 30 tons of platinum or 275 electric cars. This information implies that

Canada has a comparative advantage in the production of electric cars

If at a given quantity, _____, the decision maker should do _____ of the activity

MB < MC; less

In economics, the total profit of an activity is maximized when

MB = MC

If the market for bison meat is in equilibrium, the price of bison meat will probably _____ in the near future

Not change

In the short run, a perfectly competitive firm produces output and earns an economic profit if

P> ATC

Which principle underlies the economics of individual choices?

People usually respond to incentives, exploiting opportunities to make themselves better off

If the price of quinoa rises, we generally expect the:

Quantity of qunioa to rise

For consumers, hot dogs and hamburgers are substitutes. A rise in the price of hot dogs causes a _____ in the equilibrium price of hamburgers and a _____ in the equilibrium quantity of hamburgers

Rise; Rise

If the economy booms and peoples' incomes rise, then the demand curve for a normal good like a new automobile will _____, and the equilibrium quantity of new automobiles produced will _____

Shift to the right; increase

Which question BEST describes a "how much" decision?

Should I have a fifth taco?

The basic concern of microeconomics is to

Study the choices people make, given unlimited wants

In the short run

at least one input is fixed

If yoghurt and smoothies are substitutes in consumption, then a rise in the price of yoghurt will cause

The demand for smoothies to increase

Maximum total surplus in the market for tacos occurs when:

The market is in equilibrium

A shift of the demand curve for fried chicken would NOT be caused by a change in:

The price of fried chicken

In the circular-flow diagram, the flow of money going to each sector or market is _____ the flow of money coming out of that sector or market

The same as

Opportunity cost is

The value of the best alternative forgone in making a choice between alternatives

When the minimum wage increases, which outcome is MOST likely?

Unemployment will increase

The BEST measure of the opportunity cost of a choice is

Whatever you gave up to make that choice, even if no monetary costs are involved

Which statement is TRUE regarding a normal good?

When income increases, the demand for the complementary good remains unchanged

If the price of coconuts rises along an upward-sloping supply curve, then producer surplus:

Will increase

The price of good X falls and the demand for good Y decreases. We can conclude that:

X and Y are substitutes

According to the principle of "either-or" decision making, an either-or decision entails

a choice between two activities

The most likely reason that the government would implement a price _____ is because it feels that the price is too high for _____.

ceiling; consumers

In making an "either-or" decision, it is generally recommended to

choose the activity that results in the greater economic profit

If the government levies an excise tax in a market whose supply curve is perfectly elastic, the burden of the tax will fall completely on the _____, and the deadweight loss will equal _____

consumers; zero

The Demand for Digital Movies. If the price of online movies increases from $6 to $8, total revenue _____, which means that demand is _____

decreases; elastic

An assumption of the model of perfect competition is

identical goods

In the market for fresh coffee, a normal good, which of the following will shift the demand curve to the right

incomes rise

In the market for MacBooks, if the demand curve is elastic, and the price of a MacBook decreases, total revenue will _____. If the demand curve is inelastic, and the price of a MacBook decreases, total revenue will _____

increase; decrease

The assumptions of perfect competition imply that

individuals in the market accept the market price as given

If a good is a necessity with few substitutes, demand will tend to be:

inelastic

(Figure: The Marginal Decision Rule for Apple Farmers) Use Figure: The Marginal Decision Rule for Apple Farmers. Given the market price P1, B is the _____ curve

marginal revenue

The profit-maximizing level of output for a perfectly competitive firm in the short run occurs where _____ equals _____

marginal revenue; marginal cost

An efficient tax system is one that

minimizes deadweight loss and administrative costs

A decrease in the quantity demanded of chocolate milk is represented by a:

movement upward and to the left along the demand curve

When Emily's computer factory hires two workers, the total product is 250 computers. When Emily hires three workers, the total product is 260 computers. And when she hires four workers, the total product is 265 computers. The slope of the marginal product curve between two and four workers hired is:

negative

If the income elasticity of demand for a good is ______, the good is said to be _____

negative; inferior

Suppose the government imposes a price ceiling on a good because it believes that the market-determined price is too high. A price ceiling above the equilibrium price will cause:

neither producers nor consumers change their behavior

Marginal analysis is relevant to

only "how much" decisions

The burden of a tax on a good is said to fall completely on the producers if the

price paid by consumers does not change

The income elasticity of demand for pears has been estimated as 2.46. If income grows by 12%, all other things equal, demand will:

rise

If goods A and Z are complements, a decrease in the price of good Z will cause:

the demand for good A to increase

The difference between the demand price and the supply price at the quota limit is:

the quota rent (wedge)

When price rises, quantity demanded falls. The price elasticity of demand measures

the responsiveness of a quantity change to a price change

The total surplus in a market is the:

the sum of consumer surplus and producer surplus

When economists refer to a decision made at the margin, they mean a decision that is based on

the value of one more unit of a good or activity

Market equilibrium occurs when:

there is no incentive for prices to change in the market, quantity demanded equals quantity supplied, and the market clears.

The market for oranges is in equilibrium at a price of $2.00 per pound. If the government imposes a price ceiling on oranges of $1.00 per pound:

there will be excess demand for the good

Marginal cost is the change in

total cost divided by the change in output