Microeconomics 2020 F

Consider the following statements: A. consumers rent more DVDs from a video store that rents DVDs at a lower price than other rival video stores in the area B. department stores take steps to increase security since they believe it is more costly to allow shoplifting than to install expensive security monitoring equipment C. Farmers produce more cotton when its selling price falls Which of the above statements demonstrates that economic agents respond to incentives?

A and B

A restaurant sells a large soft drink at a fixed price of $1.74. A term used by economists to describe the money received from the sale of an additional large soft drink is? A. marginal revenue B. gross earnings C. pure profit D. net benefit

A. Marginal revenue

Hourly Wage Quantity of Quantity of (dollars) Labor Supplied Labor Demanded $7.50 530, 000 650, 000 8.50 550, 000 630, 000 9.50 579, 000 610, 000 10.50 590, 000 590, 000 11.50 610, 000 570, 000 12.50 630, 000 550, 000 The table shows the demand and supply schedules for labor market in the city of Pixley. What is the equilibrium hourly wage (W*) and the equilibrium quantity of labor (Q*)? A. W* = $10.50; Q* = 590,000 B. W* = $11.50; Q* = 570,000 C. W* = $9.50; Q* = 570,000 D. W* = $10.50; Q* = 1,200,000

A. W* = $10.50; Q* = 590,000

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

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

the figure above represents the market for canvas tote bags. Assume that the market price is $35. Which of the following statements is true? A. there is a surplus that will cause the price to decrease; quantity demanded will then increase the quantity supplied will decrease until the price equals $25 B. there is a surplus that will cause the price to decrease; quantity supplied will then increase and quantity demanded will decrease until the price equals $25 C. there will be a surplus that will cause the price to decrease; demand will then increase and supply will decrease until the price equals $25 D. there is a surplus that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25

A. there is a surplus that will cause the price to decrease; quantity demanded will then increase the quantity supplied will decrease until the price equals $25

Refer to the table above. If minimum wage of $11.50 an hour is mandated, what is the quantity of labor demanded? A. 40,000 B. 570,000 C. 610,000 D. 1,180,000

B. 570,000

For each pound of salami that Hungary produces, it gives up the opportunity to make 10 bottles of beer. Slovakia can produce 1 pound of salami for every 8 bottles of beer it produces. Which of the following is true about the comparative advantage between the two countries? A. Hungary has the comparative advantage in Salami B. Hungary has the comparative advantage in beer C. Slovakia has the comparative advantage in salami and beer D. Slovakia has the comparative advantage in beer

B. Hungary has the comparative advantage in beer

Suppose a t-shirt manufacturer currently sells 5,000 t-shits per week and makes a profit of $10,000 per week. A manager at the plant store observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so i think we're on the right track. We are producing the optimal number of t-shirts." Using marginal analysis terminology, what is another economic term for the incremental revenue received from the sale of the last 400 t-shirts? A. Gross earnings B. marginal revenue C. sales revenue D. gross profit

B. Marginal Revenue

Suppose the U.S. government encouraged new teachers to take jobs in underperforming schools by paying the new teachers a $20,000 bonus. These teachers would be exemplifying the economic idea that A. people are rational B. People respond to economic incentives C. optimal decisions are made at the margin D. equity is more important than efficiency

B. People respond to economic incentives

Economics does not study correct or incorrect behaviours, but rather it assumes that economic agents behave ________, meaning they make the best decisions given their knowledge of the costs and benefits A. equitably B. rationally C. emotionally D. selfishly

B. Rationally

The minimum wage is an example of? A. a subsidy of low-skilled workers B. a price floor C. a price ceiling D. a black market

B. a price floor

In cities with rent control, people have an incentive to list their apartments on sites such as Airbnb at rents _________ the controlled rates, because rent control causes a _________ if apartments A. above; surplus B. above; shortage C. below; surplus D. below; shortage

B. above; shortage

What is the difference between an "increase in demand" and an "increase in quantity demanded"? A. There is no difference between the two terms; they both refer to a shift of the demand curve B. an "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve C. there is no difference between the two terms; they both refer to a movement downward along a given demand curve D. an "increase in demand" is represented by a movement along a given demand curve, while an "increase in quantity demanded" is represented by a rightward shift of the demand cruve

B. an "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve

Comparative advantage means the ability to produce a good or service A. at a lower selling price than any other producer B. at a lower opportunity cost than any other producer C. of a higher higher quality than any other producer D. at a higher profit level than any other producer

B. at a lower opportunity cost than any other producer

The figure shows various points on three different production possibilities frontiers for a nation. A movement from X to Y: A. could be due to a change in consumers' tastes and preferences B. could occur because of an influx of immigrant labour C. is the result of advancements in food production technology only, with no change in the technology for plastic production D. is the result of advancements in plastic production technology only, with no change in food production technology

B. could occur because of an influx of immigrant labour

Tesla Motors manufacturers its cars at a plant in Fremont, California. At this plant, Tesla is able to take advantage of the high level of technical training possessed by its American workers, but it also sacrifices the ability to pay lower wages had it chosen to open its plant in a low-wage country such as Mexico, India, or China. In deciding to open the Fremont plant, Tesla A. faced no trade-offs because employing more technically-skilled workers increased efficiency B. faced a trade-off between higher cost and lower precision C. adopted a negative technological change because it chose high-skilled workers over low-paid workers D. eroded some of its competitiveness in the luxury electric car market because of its increased cost of production

B. faced a trade-off between higher cost and lower precision

If the Apple iPhone and the Samsung Galaxy are considered substitutes, than, other things equal, an increase in the price of the iPhone will A. decrease the demand for the iPhone B. increase the demand for the Galaxy C. increase the quantity demanded for the Galaxy D. increase the quantity demanded for the iPhone

B. increase the demand for the Galaxy

The production possibilities frontier shows the _______ combinations of two products that may be produced in a particular time period with available resources A. minimum attainable B. maximum attainable C. only D. equitable

B. maximum attainable

If the price is $10, A. there would be a surplus of 600 units B. there would be a shortage of 600 units C. there would be a surplus of 200 units D. there would be a shortage of 200 units

B. there would be a shortage of 600 units

The figure shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. With rent control, the quantity supplied is 200 apartments. Suppose apartment owners ignore the law and rent this quantity for the highest rent they can get. What is the highest rent they can get per month? A. $1,000 B. $1,500 C. $2,000 D. $2,300

C. $2,000

Bella can produce either a combination of 60 sill roses and 80 silk leaves or a combination of 70 silk roses and 55 silk leaves. If she now produced 60 silk roses and 80 silk leaves, what is the opportunity cost of producing an additional 10 silk roses? A. 2.5 silk leaves B. 10 silk leaves C. 25 silk leaves D. 55 silk leaves

C. 25 silk leaves

An increase in population would be represented by a movement from A. A to B B. B to A C. D1 to D2 D. D2 to D1

C. D1 to D2

Serena: Bracelets =8 ; Necklaces =16 Haley: Bracelets =9 ; Necklaces =12 The table shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces A. Haley has an absolute advantage in making both products B. Serena has an absolute advantage in making both products C. Haley has an absolute advantage in making bracelets and Serena in making necklaces D. Haley has an absolute advantage in making necklaces and Serena in making bracelets

C. Haley has an absolute advantage in making bracelets and Serena in making necklaces

_________ involves undertaking an activity until its marginal benefits equal marginal costs A. scarcity reduction B. central planning C. marginal analysis D. market intervention

C. Marginal Analysis

The term _________ in economics refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade A. collective B. cooperative C. market D. trade-off

C. Market

Making optimal decisions "at the margin" requires A. making decisions according to one's whims and fancies B. making consistently irrational decisions C. weighing the costs and benefits of a decision before deciding if it should be pursued D. making borderline decisions

C. Weighing the costs and benefits of a decision before deciding if it should be pursued

Rent control is an example of A. a subsidy for low-skilled workers B. a price floor C. a price ceiling D. a black market

C. a price ceiling

Hurricane Katrina damaged a large portion of refining and pipeline capacity when it swept through the Gulf coast states in August 2005. As a result of this, many gasoline distributers were not able to maintain normal deliveries. At the pre-hurricane equilibrium price (i.e., at the the initial equilibrium price), we would expect to see A. a surplus of gasoline B. the quantity demanded equal to the quantity supplied C. a shortage of gasoline D. an increase in the demand for gasoline

C. a shortage of gasoline

Marginal benefits is equal to the _________ benefit to a consumer receives from consuming one more unit of a good or service A. total B. unintended C. additional D. surplus

C. additional

is (are) unattainable with current resources A. point A B. point B C. point C D. Points A and C

C. point C

By drawing a demand curve with _______ on the vertical axis and ______ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the _______ of the good. A. quantity, price, quantity B. price, quantity, quantity C. price, quantity, price D. quantity, price, price

C. price, quantity, price

Increasing opportunity cost along a bowed out production possibilities frontier occurs because A. of inefficient production B. of ineffective management by entrepreneurs C. some factors of production are not equally suited go producing both goods and services D. of the scarcity of factors of production

C. some factors of production are not equally suited go producing both goods and services

The figure about represents the market for pecans. Assume that this is a competitive market. At a price of $9, A. the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently low B. producers should lower the price to $3 in order to sell the quantity demanded of 4,000 C. the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high D. the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low

C. the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high

Economists assume that individuals A. behave in unpredictable ways B. will never take actions to help others C. prefer to live in a society that values fairness above all else D. are rational and respond to incentives

D. Are rational and respond to incentives

To affect the market outcome, a price ceiling A. must be set below the black market price B. must be set below the legal price C. must be set below the price floor D. must be set below the equilibrium price

D. must be set below the equilibrium price

Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets. Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles? A. pannel (a) B. pannel (b) C. pannel (c) D. pannel (d)

D. pannel (d)

The attainable production points on a production possibility curve are A. horizontal and vertical intercepts B. the points along the production possibilities frontier C. the points outside the area enclosed by the production possibilities frontier D. the points along and inside the production possibility frontier

D. the points along and inside the production possibility frontier

The income effect of a price change refers to the impact of a change in A. income of the price of a good B. demand when income changes C. the quantity demanded when income changes D. the price of a good on a consumer's purchasing power

D. the price of a good on a consumer's purchasing power

Danielle Ocean pays for monthly pool maintenance for her home swimming pool. Last week the owner of the pool service informed Danielle that he will have to raise his monthly service fee because of the increases in the price of pool chemicals. How is the market for pool maintenance services affected by this? A. there is an increase in the supply of pool maintenance services B. there is a decrease in the demand for pool maintenance services C. there is a decrease in the quantity of pool maintenance services supplied D. there is a decrease in the supply of pool maintenance services

D. there is a decrease in the supply of pool maintenance services

Your roommate Alexandria, a psychology major, said, "The problem with economics is that it assumes that consumers and firms always make the correct decision. But we know that everyone's human, and we all make mistakes." Do you agree with her comment?

I disagree with her. Economics does not study correct or incorrect behaviours but rather assumes that economic agents behave rationally, meaning they make the best decisions given their knowledge of the costs and benefits