Micro Questions for test 1

A change in which variable will change the market demand for a product? the price of the product population technology the prices of substitutes in production

population

Households ________ final goods and services in the ________ market. purchase; factor purchase; product sell; factor sell; product

purchase product

In New York City, about 1 million apartments are subject to rent control by the local government. Rent control... puts a legal limit on the rent that landlords can charge for an apartment. is a price floor which sets a minimum rent for apartments. only applies to those apartments which are owned and rented out by the local government. is a government policy which limits apartment rental to those people whose incomes are less than $50,000 per year.

puts a legal limit on the rent that landlords can charge for an apartment.

It is necessary for all economic systems to provide people with goods and services and also restrict them from getting as much of these goods and services as they wish, because failure to do this could ________ the efficiency of the system by producing some goods and services that are ________.

reduce; not as highly valued as others

Frieda is at her local florist to buy a dozen roses. She is willing to pay $75 for the roses, and buys them for $75. Frieda's consumer surplus from the purchase is

$0

Which of the following is not a factor of production? an acre of farmland a drill press in a machine shop the manager of the local tire shop $1,000 in cash

$1000 in cash

Allison's Auto Art is a company that applies pinstripes to vehicles. Allison's cost for a basic 1-color pinstriping job is $35, and she charges $95 for this service. For a total price of $175, Allison will apply a fancier 3-color pinstripe application to an automobile, a service that adds an additional $40 to the total cost of the package. What is Allison's marginal benefit if she sells a basic 1-color job?

$95

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a Russian tea cake?

2/5 of a cappuccino

An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776, was written by John Maynard Keynes. Karl Marx. Alfred Marshall. Adam Smith

Adam Smith

A production possibilities frontier with a bowed outward shape indicates A) the possibility of inefficient production. B) constant opportunity costs as more and more of one good is produced. C) increasing opportunity costs as more and more of one good is produced. D) decreasing opportunity costs as more and more of one good is produced.

C) increasing opportunity costs as more and more of one good is produced.

Which of the following statements is true? Consumer surplus measures the total benefit from participating in a market. When a market is in equilibrium consumer surplus equals producer surplus. Consumer surplus measures the net benefit from participating in a market. Producer surplus measures the total benefit received by producers from participating in a market

Consumer surplus measures the total benefit from participating in a market.

Dogs Groomed 20-Tammi 12-Horrace Cats Bathed 10-Tammi 8-Horrace 7) This table shows the output per day of two pet groomers, Tammi and Horace. They can either devote their time to grooming dogs or bathing cats.

D) Horace has a comparative advantage in bathing cats and Tammi in grooming dogs. For every 1 Tammi does, she has an opportunity cost of 2 dogs. Whereas for every cat Horace does, he misses out on 1.5 dogs. Horace has a lower opportunity cost than Tammi, therefore, the comparative advantage in cats. On the flip side, Tammi can groom 1 dog with an opportunity cost of 0.5 cats and Horace can groom 1 dog with an opportunity cost of 0.67 cats. Therefore, Tammi has a lower opportunity cost giving here the comparative advantage in dogs. Comparative advantage is defined as having a lower opportunity cost than the competitor.

3) The income effect of a price change results in a... A) shift of the demand curve when income changes. B) movement along the demand curve due to a change in relative prices. C) shift of the demand curve due to a change in purchasing power brought about by the price change. D) movement along the demand curve due to a change in purchasing power brought about by the price change.

D) movement along the demand curve due to a change in purchasing power brought about by the price change.

Which of the following describes the difference between "scarcity" and "shortage"? There is no difference; either word can be used to describe the situation that exists when there is less of a good or service available than people want. In the economic sense, almost everything is scarce. A shortage of a good or service occurs when the quantity demanded is greater than the quantity supplied at the current market price. There is a shortage of almost everything. Scarcity occurs only if the quantity demanded of a good or service is greater than the quantity supplied at the current market price. In the economic sense, almost everything is scarce. A shortage of a good or service occurs when the quantity demanded is greater than the quantity supplied at the equilibrium price.

In the economic sense, almost everything is scarce. A shortage of a good or service occurs when the quantity demanded is greater than the quantity supplied at the current market price.

9) Which of the following is not a result of imposing a rent ceiling? A) Some consumer surplus is converted to producer surplus.B) There is a reduction in the quantity supplied of apartments.C) There is an increase in the quantity demanded of apartments.D) The marginal benefit of the last apartment rented is greater than the marginal cost of supplying it.

Letter A, "some consumer surplus is converted to producer surplus," is the answer that does not belong. This does not apply to rent ceilings because when rent ceilings are implemented, the consumer surplus has the potential to increase due to there being acap as to what the landlord can charge renters. In fact, the value of the producer surplus before the rent ceiling, is the amount by which the consumer surplus is increased after the price ceiling is implemented.

Blu-ray players were introduced to the market in 2006, and new technology has allowed for the cost of manufacturing the players to decline significantly since the initial introduction. How did this change in technology affect the market for Blu-ray players? The new technology caused an increase in the supply of Blu-ray players and a decrease in price of Blu-ray players. The new technology caused an increase in the supply of Blu-ray players and an increase in price of Blu-ray players. The new technology caused an decrease in the demand for Blu-ray players. The new technology caused an increase in the quantity of Blu-ray players supplied.

The new technology caused an increase in the supply of Blu-ray players and a decrease in price of Blu-ray players.

"The price of digital cameras fell because of improvements in production technology. As a result, the demand for non-digital cameras decreased. This caused the price of non-digital cameras to fall; as the price of non-digital cameras fell, the demand for non-digital cameras decreased even further." Evaluate this statement. The statement is false because the demand for non-digital cameras would increase as the price of digital cameras fell. The statement is false. A decrease in the price of digital cameras would decrease the demand for non-digital cameras, but a decrease in the price of non-digital cameras would not cause the demand for non-digital cameras to decrease. The statement is false because it confuses the law of demand with the law of supply. The statement is false because digital camera producers would not reduce their prices as a result of improvements in technology; doing so would reduce their profits.

The statement is false. A decrease in the price of digital cameras would decrease the demand for non-digital cameras, but a decrease in the price of non-digital cameras would not cause the demand for non-digital cameras to decrease.

A movement along the demand curve for toothpaste would be caused by a change in the price of toothbrushes. a change in consumer income. a change in the price of toothpaste. a change in population.

a change in the price of toothpaste

Farmers can plant either corn or soybeans in their fields. Which of the following would cause the supply of soybeans to increase? an increase in the price of soybeans a decrease in the price of corn an increase in the demand for corn an increase in the price of soybean seeds

a decrease in the price of corn

All else equal, the decrease in consumer preference predicted by Apple for its iPhone 5 would be represented by a

a shift left in the demand curve

Consider the following statements:a. Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area.b. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment.c. Firms produce more of a particular DVD when its selling price rises.Which of the above statements demonstrates that economic agents respond to incentives?

a, b, & c

If society decides it wants more of one good and ________, then it has to give up some of another good and incur some opportunity costs. technology advances resources are underutilized all resources are fully utilized new resources are discovered

all resources are fully utilized

According to a recent study, "Stricter college alcohol policies, such as raising the price of alcohol, or banning alcohol on campus, decrease the number of students who use marijuana." On the basis of this information, how would you describe alcohol and marijuana?

complementary consumption goods

Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

demand

The opportunity cost of taking a semester-long economics class is the cost of tuition and fees only. the value of the time spent in the classroom. the knowledge and enjoyment you receive from attending the class. equal to the highest value of an alternative use of the time and money spent on the class.

equal to the highest value of an alternative use of the time and money spent on the class.

To compete in the automobile market, Tesla must make many strategic decisions such as whether to introduce a new car model, how to sell and service its cars, and where to advertise. At Tesla's Fremont, California plant, managers must decide on the monthly production quantities of their S and X models. In making this decision, the managers... face no trade-off because the Fremont plant only produces these two models of the many Tesla models produced worldwide. face a trade-off, because producing more of one model means producing less of the others. will choose to only produce the quantity of S and X models where marginal cost equals zero. will always decide on production quantities in which revenues are maximized.

face a trade-off, because producing more of one model means producing less of the others.

When deciding on which new products to develop, a firm must devote people, time, and money to designing a new product. Because any firm has only limited resources, it should wait until its competitors develop a similar product before deciding on devoting resources to its own product development. is not able to develop more than one new product at a time. must be certain that the product it chooses to develop will be successful or it will not be able to stay in business. faces a trade-off because resources used to develop one product will not be available to develop another product.

faces a trade-off because resources used to develop one product will not be available to develop another product.

A supply schedule....

is a table that shows the relationship between the price of a product and the quantity of the product supplied.

Because minimum wage is a price floor... it will be set below the market equilibrium price. it will create a deadweight loss. it will increase the number of jobs available in the labor market. it will maximize consumer surplus.

it will create a deadweight loss

Scenario Suppose a cell phone manufacturer currently sells 20,000 cell phones per week and makes a profit of $5,000 per week. A manager at the plant observes, "Although the last 3,000 cell phones we produced and sold increased our revenue by $6,000 and our costs by $6,700, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of cell phones." Refer to Scenario 1-1. Using marginal analysis terminology, what is another economic term for the incremental cost of producing the last 3,000 cell phones?

marginal cost

Consumers are willing to purchase a product up to the point where

marginal cost = marginal benefit

A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?

marginal revenue

In order to be binding, a price ceiling... must lie above the free market equilibrium price. must lie below the free market equilibrium price. must coincide with the free market equilibrium price. must be high enough for firms to earn a profit.

must lie below the free market equilibrium price.

The term "property rights" refers to the physical possession of a house or any other property which the owner legally purchased. the ability to exercise control over one's own resources within the confines of the law. the government's right to appropriate land from wealthy land owners to redistribute to peasants. the right of a business not to have its assets confiscated by the government in the event that the business is accused of committing fraud.

the ability to exercise control over one's own resources within the confines of the law.

By definition, economics is the study of

the choices people make to attain their goals, given their scarce resources.

Consider the following economic agents: Who, in a centrally planned economy, decides what goods and services will be produced with the scarce resources available in that economy?

the government

Suppliers will be willing to supply a product only if... the price received is less than the additional cost of producing the product. the price received is at least equal to the additional cost of producing the product. the price is higher than the average cost of producing the product. the price received is at least double the additional cost of producing the product.

the price received is at least equal to the additional cost of producing the product.

At a product's equilibrium price, the product's demand curve is the same as the product's supply curve. the quantity of the product demanded is greater than the quantity of the product supplied. the quantity of the product demanded is less than the quantity of the product supplied. the product's demand curve crosses the product's supply curve.

the product's demand curve crosses the product's supply curve.

The points outside the production possibilities frontier are... efficient. attainable inefficient unattainable

unattainable