quiz 1 unit 1 and 2 econ micro

Which of the following is a correct application of the law of demand?

Bluetooth speakers have come down in price, and as a result more people are buying them

All of the following increase demand (shift the demand curve to the right), EXCEPT:

A decrease in the cost of producing the product

What happens to the equilibrium price and quantity of hard copy newspapers when a substitute product (electronic news) becomes cheaper and more available?

Both the equilibrium price and quantity decrease

A person sits down at a restaurant and estimates the following:One drink costs $4.00.$4.00 is worth 100 utils. The first drink gives this person 250 utils of satisfaction.The second drink (by itself, not the total of all drinks) gives this person 150 utils.The third drink (by itself, not the total of all drinks) gives this person 50 utils.The fourth drink (by itself, not the total of all drinks) gives this person 20 utils. This person ends up ordering 3 drinks. As an economist, what can you conclude?

Buying the 3rd drink is not rational because the marginal cost of the 3rd drink is greater than the marginal benefit

Let's say that we have noticed that the price (value) of a one Bitcoin (a cryptocurrency) has increased. Using the demand and supply model, which of the following is an economically correct explanation for the increase?

Governments around the world have chosen to accept Bitcoin purchases for payment of goods

Which of the following is a typical concept discussed in Microeconomics and not Macroeconomics?

Income inequality and the amount of tax paid by the top 1% of a country

Which of the following is a correct application of the law of supply?

Oil prices have decreased, and as a result some oil refineries are shutting down and producing and selling less

Consider the following three statements: I. When tax rates go down, government tax revenue goes up II. When tax rates go up, government tax revenue goes up III. We should increase tax rates for the wealthy

Statements I and II are positive economic statements

Let's consider the market for generic soup, an inferior good. What happens to the equilibrium price and quantity of this product if the following two things happen? I. Buyers' incomes increase II. Ingredients to make this soup become cheaper, thus lowering the cost of production.

The equilibrium price decreases and the equilibrium quantity change is indeterminate

In an effort to raise more tax revenue, a city increases its tax on gasoline that its citizens purchase within its borders. The tax was 30 cents per gallon before the increase, and after the increase, the tax became 45 cents. The city is confident that its tax revenue will increase because gasoline is a necessity for many people and it figures that people will purchase about the same quantity of gasoline. As an economist, how do you evaluate this?

We have to question this city's assumptions. It is not realistic to assume that people will buy the same quantity because people can easily buy gasoline outside of the city where gas taxes are lower.

You received a 10% increase in your salary. Unfortunately, you also learn that prices of goods and services that you buy increased by 12%. An economist would conclude that:

Your nominal income increased but your real income decreased

When a government lowers taxes on businesses and lessens regulations, it reduces the cost of producing the products businesses are making. This results in:

a shift of the supply curve to the right and lower prices

For the following question, assume that the following is the only thing you know about a country (the other roles of the government are unknown). A country whose government plays a strong role in protecting its citizens' properties (military, police, fire protection), managing a legal system, and building a solid infrastructure (roads, highways, etc.):

can be a capitalist, socialist, or communist country

The price of a manufactured good (for example, a car) that is made by many competing companies is always __________________, whereas the price of a good in limited supply (for example, Superbowl tickets) ______________.

close to the cost of production; can be high if the demand is high

From an economic point of view, building a $5 billion wall at our border:

creates jobs for people building the wall, but the wall has to be paid for so the decrease in spending elsewhere in the economy cancels out any employment gains

Graphically, from left to right, a typical demand curve slopes ________. A typical supply curve slopes _______. The equilibrium (market) price of a product occurs at the _________ of the demand and the supply curve.

downward; upward; intersection

When a country is experiencing unemployment, it is not using its resources (labor in this case) to its fullest capacity. This means that if a country experiences unemployment, it is operating:

inside (to the left of) its production possibilities curve

When a country experiences full employment one year, and then an increase in unemployment:the next year:

it moves from a point on the production possibilities curve to a point inside (to the left of) the curve

A country without any government (there is no government at all):

none of the listed choices is correct

A purely free market (in which all prices are determined by supply and demand) does not adjust for externalities. Most economists agree that if there are negative externalities such as ________, producers should _______________.

pollution; pay a fine or pay higher taxes