Macroeconomics Midterm 2

Suppose a tax on sellers has been imposed in the market shown in the graph What is the total tax paid per unit of the good ? O $ 16 O $ 6 O $ 10 O $ 15

$ 10

What is the producer surplus earned by a seller whose willingness to sell is $ 10 below the market price of a good ? $ 0 $ 10 (P- $ 10 ) None of these are correct .

$ 10

In the market shown in the graph , the equilibrium price is ____ and the equilibrium quantity is____ $ 5; 30 $ 10; 20 $ 20; 10 $ 15; 30

$ 10 ; 20

The graph shown demonstrates a tax on buyers . How much are buyers being taved on each unit seld ? O $ 4 O $ 8 O $ 12 O $ 16

$ 12

A price ceiling in the market shown in the graph would be non - binding if it were set at O $ 5 . O $ 8 . O $ 10 . O $ 13 .

$ 13 .

If consumption is $ 7 trilion , wages $ 10 trition , interest $ 1 trilion , rental income $ 1.5 million and profits $ 2 trillion , what is the value of the economy using the income approach ? O $ 14.5 trillion O $ 7.5 trillion O $ 215 trillion O $ 13 trilion

$ 14.5 trillion

The graph shown demonstrates a tax on sellers . What is the amount of tax revenue being generated ? O $ 150 O $ 80 O $ 310 O $ 135

$ 150

The graph shown portrays a subsidy to buyers What is the amount of the subsidy per unit of this good ? O $ 22 O $ 16 O $ 10 O $ 6

$ 16

If Ayana's willingness to pay for a sweater is $ 37 , which of the following prices would she have to observe in the market in order to buy a sweater ? $ 37.01 $ 38.00 $ 37.00 Ayana would not buy a sweater at any of these prices

$ 37.00

If Thelma's willingness to sell her homemade fudge is $ 4 , at which of the following prices would Thelma sell ? $ 2 $ 3.99 $ 4.01 Thelma would not sell her fudge at any of these prices .

$ 4.01

Assume the market depicted in the graph is in equilibrium. What is producer surplus ? $ 36 $ 48 $ 120 None of these are correct .

$ 48

A Chinese restaurant buys 1 pound of rice for St soy , fish and oyster sauces for $ 1 each and assorted vegetables for $ 20 They create 10 meals with these ingredients and sell each meal for $ 5 How much does this process contribute to GDP ? O $ 23 O $ 50 O $ 73 O $ 27

$ 50

If total consumption is $ 5 trillion , investments $ 2 trillion , government purchases $ 1 billion , exports St trillion , and imports $ 3 trillion , the GDP must equal O $ 6 trillion O $ 12 trillion O $ 9 trillion O $ 3 trillion

$ 6 trillion

The graph shown demonstrates a tax on buyers . What is the amount of tax revenue being generated from the tax ? O $ 72 O $ 36 O $ 48 O $ 96

$ 72

Assume the market depicted in the graph is in equilibrium What is producer surplus ? $ 180 $ 80 $ 120 $ 200

$ 80

Initially , kidneys exchanges are regulated to allow donations only . This means kidneys can only be exchanged at a price of zero . What is the deadweight loss from this restriction ? O $ 0 O $ 825,000 O $ 1,350,000 O $ 1,500,000

$ 825,000

Assume the market depicted in the graph is in equilibrium , What is consumer surplus ? $ 10 $ 15 $ 20 $ 30

$15

The graph shown portrays a subsidy to buyers . With the subsidy , buyers will purchase ___ units and the post - subsidy price paid for each one is ___ O 100 : $ 46 O 100 : $ 30 O 150 : $ 40 O 150 ; $ 24

150 ; $ 24

If price is set at S11 in the market shown in the graph consumer surplus will consist of areas: A + B + G B + G + L A + B + C + G + H + L A + B + C + G + H + 1 + J

A + B + G

Assume the market depicted in the graph is in equilibrium. Total surplus consists of areas: A + B + C B + A A + B .

A + B .

What is likely to happen if a producer incorrectly sets the price of its product too high ? A shortage ( excess demand ) will result , and consumers will bid the price down to equilibrium A surplus ( excess supply ) will result , and the additional goods in inventory will prompt the producer to lower the price . A shortage ( excess demand ) will result , and consumers will bid the price up to equilibrium A surplus ( excess supply ) will result , and the additional goods in inventory will prompt the producer to restrict output until sales increase .

A surplus ( excess supply ) will result , and the additional goods in inventory will prompt the producer to lower the price .

Suppose a tax has been imposed in the market shown in the graph which kind of tax is most likely demonstrated by this graph ? O A tax on sellers OA tax on buyers OA tax on big corporations O A price ceiling

A tax on sellers

Surplus refers to the difference between: the price at which a buyer or seller would be willing to trade and the actual price the willingness to pay and the actual price paid . the willingness to sell and the actual price accepted . All of these are correct

All of these are correct

The sum of all the money people spend buying final goods and services - omitting spending on intermediate goods , so as not to double - count - equals O the market value of all output sold in the economy . O the gross domestic product of the economy . O total expenditure in the economy . O All of these are true .

All of these are true .

Assume the graph shown represents the market for button - up shirts and was originally in equilibrium where demand ( D ) and supply ( 5 ) intersect . What type of shock might cause the demand curve to shift to D₂ ? An increase in the price of buttons An increase in the price of ties An increase in the price of sweatshirts An increase in consumers ' incomes

An increase in consumers ' incomes

If a price ceiling is set at $ 8 in the market shown in the graph , which area would represent deadweight loss ? OF + G O B + D OE OB + D + F + G

B + D

Assume the market depicted in the graph is in equilibrium if its price is subsequently set at $ 12 producer surplus will be areas : B + C + D + F + G + H B + C + D + E + F + G + H A + B + F + H B + F + H

B + F + H

Which of the following describes one reason the supply of cell phones has increased ? More cell phone towers have been built Better technology allows cell phones to be produced for less money Consumer preference for cell phones has increased Consumers expect that land lines will cease to exist in the near future .

Better technology allows cell phones to be produced for less money

If a price floor is set at $ 23 in the market shown in the graph which area would represent deadweight loss ? O C + F O C + D + F O G O B + C + E + F

C + F

Assume the market depicted in the graph is in equilibrium if its price is subsequently set at $ 12 deadweight loss will consist of areast O D + E O C + G O L O None of these are correct

C + G

Which of the following is a final good ? O Chocolate chips purchased by Nabisco to make Keebler chocolate chip cookies O Chocolate chips purchased by Karen to make chocolate chip cookies for her kids O Chocolate chips purchased by Giordano's to make the skillet chocolate chip cookie on its menu O Semisweet chocolate used to make Cocoa Krispies cereal

Chocolate chips purchased by Karen to make chocolate chip cookies for her kids

Suppose a tax is imposed on buyers in the market shown in the graph What are will represent deadweight loss ? OE O D + H OK O I + M

D + H

The graph shown portrays a subsidy to buyers . What areals represent the deadweight loss that arises from this subsidy? O D + H O K O E O I + M

I + M

Consider the market for potato chips , which is currently in equilibrium Now , suppose that two events happen simultaneously : ( 1 ) a new technology is invented that allows potato chip makers to produce potato chips at a lower cost and ( 2 ) the price of pretzels ( a substitute in consumption rises . What effect might these events have on the market for potato chips ? I. Supply will increase II. Demand will increase III. The change in equilibrium price cannot be determined IV . The change in equilibrium quantity cannot be determined I , II , and III only II and I only I and IV only II and IV only

I , II , and III only

Consider the market for burritos , which is currently in equilibrium Now suppose that two events happen simultaneously : ( 1 ) the price of tortillas , used in the production of bumitos , increases and ( 2 ) a new advertising campaign increases the popularity of buntos among consumers . What effect might these events have on the market for burritos ? I. Supply will increase II. Demand will increase III. The equilibrium price will increase IV . The equilibrium quantity will decrease I , II , and Ill only I and II only l and IV only II and I only

II and I only

Consider the market for wheat which is currently in equilibrium Now , suppose a pest destroys most of this year's wheat crop . How will the market for wheat change as a result of the destruction ? I. Supply will shift to the right II. The equilibrium price will increase III. The equilibrium quantity will decrease IV. The equilibrium price may or may not change II only I and IV only I, III, IV only II and III only

II and III only

An increase in the price of Heinz ketchup is likely to cause an ____ in the demand for Hunt's ketchup , due to a change in ____ increase; consumer preferences increase ; the price of a substitute good decrease ; consumer preferences increase ; the price of a complementary good

Increase; price of a substitute good

Does a subsidy to sellers affect the demand curve ? OYes : the demand curve shifts up by the amount of the subsidy OYes : the demand curve shifts to the right by the amount of the subsidy O No : the demand curve does not move , as quantity demanded increases instead . O No : the demand curve does not move , as quantity demanded decreases instead

No : the demand curve does not move , as quantity demanded increases instead .

According to the graph shown , if the market goes from equilibrium to having its price set at $ 10 consumer surplus will O decrease from ( A + B + C ) to ( B + C ) only . O increase from ( A + B + C ) to ( A ) only . O transfer ( B - C ) to producers . O decrease by ( B + C )

O decrease by ( B + C )

If price is set at $ 11 in the market shown in the graph total surplus will consist of areas OA + B + G + C + G + H + 1 + J + L OA + B + G + L OA + B + C + G + H + L OA B C G H I J L M N O

OA + B + G + L

Ren loves to go to the movie theater , and he just learned that he can buy a ticket at a discounted price using his student ID . Ren now sees movies at the theater even more frequently . Which of the following factors of demand caused the change in Ren's behavior ? Income Price Consumer preferences Number of buyers

Price

Suppose the price of all has recently increased , making it more expensive to manufacture ride - on lawn mowers . This all price increase also makes it more expensive to run a ride - on mower What factors of demand and / or supply are affected by the changing price of oil ? Price of related good , expectations of future prices Price of related good , price of input Price of input , income Price of input , number of buyers

Price of related good , price of input

Which of the following is an example of a good that would not count toward U.S. GDP ? O A car made by Toyota in Tennessee O A car made by Ford in Michigan O Sneakers made by Nike in Indonesia O Sneakers made by New Balance in Ohio

Sneakers made by Nike in Indonesia

Suppose the price of gasoline has recently increased How will this affect the market for hybrid cars ? The demand for hybrid cars will increase , increasing the equilibrium price and quantity of hybrid cars The supply of hybrid cars will increase , decreasing the equilibrium price and increasing the equilibrium quantity of hybrid cars The demand for hybrid cars will increase , decreasing the equilibrium price and increasing the equilibrium quantity of hybrid cars

The demand for hybrid cars will increase , increasing the equilibrium price and quantity of hybrid cars

Suppose a tornado levels hundreds of homes . As rebuilding begins how might you analyze the effect this would have on the market for lumber ? The demand for lumber would increase , increasing both the equilibrium price and quantity The supply of lumber would increase , decreasing the equilibrium price and increasing the equilibrium quantity . The demand for lumber would increase , decreasing the equilibrium price and increasing the equilibrium quantity . The supply of lumber would decrease , increasing the equilibrium price and decreasing the equilibrium quantity .

The demand for lumber would increase , increasing both the equilibrium price and quantity

Consider the market for roses , which is currently in equilibrium However , Valentine's Day is coming up and the rose is the most popular flower to gift to a significant other on this holiday. How will the market for roses change on Valentine's Day ? The equilibrium price and quantity will increase due to an increase in supply . The equilibrium price and quantity will increase due to an increase in demand The quantity demanded will increase because the price increases . The quantity supplied will decrease because the price decreases .

The equilibrium price and quantity will increase due to an increase in demand

Consider the market for cupcakes , which is currently in equilibrium Now suppose that two events happen simultaneously: ( 1) the price of sugar , used in the production of cupcakes , decreases and ( 2 ) the American Heart Association announces that consumption of excess sugar is extremely dangerous to one's health , reducing the popularity of cupcakes . What effect might these events have on the market for cupcakes ? The equilibrium price will fall and the equilibrium quantity will rise The equilibrium quantity will fall , but the change in the equilibrium price cannot be determined . The equilibrium price will rise and the equilibrium quantity will fall The equilibrium price will fall , but the change in the equilibrium quantity cannot be determined .

The equilibrium price will fall , but the change in the equilibrium quantity cannot be determined

Consider the market for pecans , which is currently in equilibrium Now suppose a humicane destroys a large number of pecan trees . How will the market for pecans change as a result of the hurricane ? The equilibrium price will decrease and the equilibrium quantity will increase due to an increase in supply The equilibrium price will increase and the equilibrium quantity will decrease due to a decrease in supply The equilibrium price and quantity will fall due to a decrease in supply and demand The equilibrium price will increase and the equilibrium quantity will decrease due to a decrease in supply and an increase in demand

The equilibrium price will increase and the equilibrium quantity will decrease due to a decrease in supply

The graph shown depicts the market for a good . Assume the market was originally in equilibrium where the demand curve ( D ) and supply curve ( S ) intersect Something changes in the market and the demand curve for the good shifts to D₂ Which of the following is true ? The equilibrium price will increase by $ 5 . The equilibrium quantity will increase by 20 units The equilibrium price will increase by $ 15 . The equilibrium quantity will increase by 30 units .

The equilibrium price will increase by $ 5 .

The graph shown depicts the market for a good . Assume the market was originally in equilibrium where the demand curve ( D ) and supply curve ( S ) intersect . Something changes in the market , and the demand curve for the good shifts to D₂ . Which of the following is true ? The equilibrium price will increase by $5 . The equilibrium quantity will increase by 20 units . The equilibrium price will increase by $15 . The equilibrium quantity will increase by 30 units .

The equilibrium price will increase by $5

Assume the market in the graph shown was originally at equilibrium where demand ( D ) and supply ( S ) Intersect . However something causes the demand to shift to D2. What could have caused such a shift ? The good became more popular with consumers . Consumers expected the price of the good to drop in the near future . The good became cheaper to produce . Substitutes for this good became less expensive .

The good became more popular with consumers

Suppose S1 represents the initial market supply in the graph shown . A price ceiling is then set at $ 8. If supply shifts from S1 to S2 , what will occur ? O The price ceiling will no longer be binding O The price ceiling will prevent output from changing O The size of the shortage will increase O The market will not reach equilibrium

The price ceiling will no longer be binding

Which of the following is an intermediate good ? O The rice used to make Chex cereal O A bag of Uncle Ben's rice sold to consumers O A bag of Quaker's rice cakes sold to consumers O All of these are intermediate goods .

The rice used to make Chex cereal

Suppose a recent epidemic of mad cow disease causes the government to mandate that thousands of cows be put down . What effect will this have on the market for leather shoes ? The demand for leather shoes will increase The supply of leather shoes will decrease The demand and supply of leather shoes will increase . This scenario will not affect the market for leather shoes .

The supply of leather shoes will decrease

A paper mill discovers a cheaper way to get power , and they adopt the new technology . Which of the following will likely happen in the market for paper ? The demand for paper will increase The supply of paper will increase The supply of paper will remain constant The supply of paper will decrease

The supply of paper will increase

Suppose there is an unusually large crop of apples this year How might this affect the market for apples ? The demand would increase , increasing both equilibrium price and quantity The supply would increase , decreasing equilibrium price and increasing equilibrium quantity The demand would decrease , decreasing both equilibrium price and quantity The supply would decrease , increasing equilibrium price and decreasing equilibrium quantity .

The supply would increase , decreasing equilibrium price and increasing equilibrium quantity

Does a subsidy to buyers affect the demand curve ? O Yes : the demand curve shifts up by the amount of the subsidy OYes : the demand curve shifts to the right by the amount of the subsidy O No : the demand curve does not move , as quantity demanded increases instead . O No : the demand curve does not move , as quantity demanded decreases instead .

Yes : the demand curve shifts up by the amount of the subsidy

The graph shown best represents O a binding price ceiling O a binding price floor O a missing market . O the market for an inferior good .

a binding price floor

The table shown depicts the demand and supply schedules of a good Equilibrium in this market will occur at a price of $ 1.50 and a quantity of 62 . a price of $ 1.50 and a quantity of 31 a price of $ 0.00 and a quantity of 75 . an indeterminate price and quantity

a price of $ 1.50 and a quantity of 31

The table shown depicts the demand and supply schedules of a good . At a price of $ 1.00 a shortage ( excess demand ) will exist a surplus ( excess supply ) will exist more is being supplied than demanded . the market is in equilibrium

a shortage ( excess demand ) will exist

The table shown depicts the demand and supply schedules of a good . At a price of $ 1.50 the market is in equilibrium a surplus ( excess supply ) will exist more is being supplied than demanded a shortage ( excess demand ) will exist

a shortage ( excess demand ) will exist

If a price celling is set at $ 8 in the market shown in the graph O a shortage of 7 units will occur . O a shortage of 15 units will occur O a shortage of 23 units will occur O a shortage of 8 units will occur .

a shortage of 23 units will occur

The graph shown depicts the market for a good . Suppose the government sets the price of this good at $ 36 . At this price , there is a surplus ( excess supply ) of 9,000 units a shortage ( excess demand ) of 2.000 units a shortage ( excess demand ) of 7,000 units a surplus ( excess supply ) of 7,000 units .

a surplus ( excess supply ) of 7,000 units .

In order for a price floor to be binding , it must be set ___ the equilibrium price , and it will likely cause ___ O above , a shortage O below ; a shortage O above ; excess supply O below , excess supply

above ; excess supply

Assume the market depicted in the graph is in equilibrium Producer surplus is the area: under the demand curve and above the market price . under the supply curve and above the market price . above the supply curve and below the market price above the demand curve and below the market price .

above the supply curve and below the market price

For a price ceiling to have an impact on a market it must be set: O above equilibrium price . O below the equilibrium price . O equal to the equilibrium price . O anywhere along the demand curve .

below the equilibrium price .

A price floor that is set at $ 23 in the market shown in the graph is: Obinding and would cause a shortage O non - binding and would not affect the market . O binding and would cause excess supply O non - binding and would not prevent the market from reaching equilibrium

binding and would cause excess supply

The GDP deflator measures the overall change in prices in an economy O by calculating the ratio of nominal to real GDP . O based on goods and services valued at constant prices O based on price - changes determined when output is held constant O by calculating the ratio of real to nominal GDP

by calculating the ratio of nominal to real GDP .

When the quantity of a good bought and sold is below the equilibrium quantity , the loss of total surplus that results is called O deadweight loss O producer surplus O consumer surplus . O total surplus .

deadweight loss

According to the graph shown , if the market goes from equilibrium to having its price set at $ 10 producer surplus will change Ofrom ( FGH ) to ( B C D E F G HL Ofrom ( FGH ) to ( B + C + F G H from ( F + G + H ) to ( B + F + H ) Ofrom ( CG ) to ( B C F G H

from ( F + G + H ) to ( B + F + H ) F G H

A news report states that the housing market is making a comeback and that house prices are on the rise . This information is likely to: -increase the demand for houses due to a change in expectations of future prices . -decrease the demand for houses due to a change in expectations of future prices -have no effect on the current housing market , but will increase the demand for houses in the future . -have no effect on the demand for houses , but it will decrease the supply

increase the demand for houses due to a change in expectations of future prices

The GDP deflator can be used to track O the interest rate . O the GDP growth rate . O consumer confidence O inflation .

inflation .

Deadweight loss: O creates efficiency in markets when producers and consumers both agree to it O is the difference between the total surplus occurring in a market and the maximum total surplus achievable . O is the loss in producer surplus from a price increase . O is the difference between the efficient quantity and the market quantity

is the difference between the total surplus occurring in a market and the maximum total surplus achievable

A price ceiling is non - binding when O it is set above the equilibrium price . O it is set below the equilibrium price . O it reduces the output in a market O it increases the output in a market .

it is set above the equilibrium price .

Suppose the price of chocolate chips increases . The producers of chocolate chip cookies will now supply ____ at each price because _____ more ; some of their competitors will drop out of the market less ; the price of a main input has gone up more ; the price of a main input has gone up more , more competitors will enter the market

less ; the price of a main input has gone up

Assume the market depicted in the graph is in equilibrium at demand (D) and supply ( S1 ) Consumer surplus is: greater than it is when market is in equilibrium at D and S₂ less than it is when market is in equilibrium at D and S ₂ the same as it is when market is in equilibrium at D and S2 zero

less than it is when market is in equilibrium at D and S ₂

A buyer always wants to pay a price that is as ____ as possible , but never _____ than the buyer's willingness to pay high; higher low ; lower low ; higher high ; lower

low , higher

If the price of a good is less than a buyer's willingness to pay the buyer will the good because the opportunity cost of buying the good is than the benefit received from consuming the good purchase ; less purchase , more not purchase ; less not purchase ; more

purchase ; less

If a binding price ceiling is set in the market shown in the graph O quantity demanded will exceed quantity supplied . O quantity supplied will exceed quantity demanded O the demand curve will have to shift O the supply curve will have to shift

quantity demanded will exceed quantity supplied .

If a binding price floor were placed in the market shown in the graph O quantity demanded would exceed quantity supplied . O quantity supplied would exceed quantity demanded O the demand curve would have to shift . O the supply curve would have to shift .

quantity supplied would exceed quantity demanded

A tax on sellers O causes equilibrium price and quantity to decrease . O shifts the demand curve vertically downwards by the amount of the tax , but does not shift the supply curve . O shifts the supply curve vertically upwards by the amount of the tax , but does not shift the demand curve . O All of these are correct .

shifts the supply curve vertically upwards by the amount of the tax , but does not shift the demand curve .

The graph shown depicts the market for a good . At a price of $ 12 , there is: a surplus ( excess supply ) of 10,000 units . a shortage ( excess demand ) of 10,000 units . a shortage ( excess demand ) of 7,000 units a surplus fexcess supply ) of 3,000 units

shortage ( excess demand ) of 7,000 units

A tax on sellers shifts the ___ by the amount of the tax O supply curve left O demand curve left O supply curve up O demand curve down

supply curve up

When someone's willingness to pay is the same as the actual price paid for an item: the individual will not purchase the item the individual's surplus is zero surplus cannot be maximized . All of these are correct

the individual's surplus is zero

Gross domestic product is the sum of O the market values of all final goods and services produced within a country in a given period of time . O the market values of all intermediate goods and services produced within a country in a given period of time . O all final goods and services produced by a country's citizens in a given period of time . O the market values of all final goods and services produced by a country's citizens in a given period of time .

the market values of all final goods and services produced within a country in a given period of time .

A GDP deflator of 112 means O the overall price level is 12 percent higher than in the base year O overall output increased by 12 percent since the base year O the overall price level is 12 percent lower than in the base year O both production and the overall price level have increased by 12 percent compared to the base year .

the overall price level is 12 percent higher than in the base year

Due to above average rainfall last year there was a plentiful supply of blueberries , which caused the price of blueberries to drop . Bakeries regularly produce and sell blueberry pie . Considering the market for blueberry pies ____ was affected and the supply of blueberry pies will ____ the price of an input; increase the price of an input; decrease consumer preference ; increase the number of sellers , increase

the price of an input increase

Using the income approach to calculating GDP in a simple closed economy , the national income equals O wages interest rental income profits . O wages + interest government income - profits O wages + government spending + earned interest investment profits O wages + interest + rental income - profits .

wages interest rental income profits