AGEC 203
The long-run average total cost curve is __________ and is found by using the ___________.
U-shaped; minimum point across all possible ATC curves for a given quantity.
(4 points) Draw a supply and demand graph depicting the market for dairy milk in the United States and the effect of the new policy on that market. Carefully label all axes, curves, prices, and quantities. Also, carefully (but briefly) explain the effects of the policy as depicted in your graph.
(your own answer)
33-34. Farm labor is an important input in the production of dairy milk in the United States, and a large portion of the farm labor workforce is composed of immigrants from Central and South America. Farm labor is an important input in the production of dairy milk in the United States, and a large portion of the farm labor workforce is composed of immigrants from Central and South America. 33) (4 points) Suppose the U.S. government passes a policy that makes it more costly for immigrant workers to enter the U.S. Draw a supply and demand graph depicting the market for farm labor in the United States and the effect of the new policy on that market. Carefully label all axes, curves, prices, and quantities. Also, carefully (but briefly) explain the effects of the policy as depicted in your graph.
(your own answer)
You have been invited to play a 4-hour round of golf that has a value to you of $80. The total price to play the round of golf is $45. The net benefit of the round of golf is $... . (Enter your response as an integer.) Now assume that you have a job that pays you $10 per hour. Would you be optimizing to accept the invitation to play golf? To optimize, you should ...golf.
35, not play
Your total benefits from spending time with your spouse are shown in the following table. Hours per Day Total Benefit 0 0 1 18 2 34 3 48 4 60 5 70 6 78 7 84 8 88 Alternatively, you have the option of working as many hours as you want, earning $11 per hour. Assume this is the next best use of your time. Use the marginal principle to find your optimal number of hours to spend with your spouse per day. The optimal amount of time for you to spend with your spouse is .... hours per day.
4 hours
As the number of billboards for a firm's product increases from 100 to 500, its sales increase from $1,000 to $10,000. If this information is plotted on a line chart, the slope of the line equals ________. A) $22.5 B) $20 C) $0.044 D) $30.33
A
Assume that the supply curve for a commodity shifts to the left and the demand curve shifts to the right, both by the same degree. Then, in comparison to the initial equilibrium, the new equilibrium will be characterized by ________. A) a higher price and the same quantity B) a lower price and quantity C) a lower price and the same quantity D) the same price and quantity
A
Firm A and Firm B produce the same goods but with different inputs. If the inputs used by Firm A are more easily available than the inputs used by Firm B, then which of the following statements is true? A) The elasticity of supply of Firm A will be higher than the elasticity of supply of Firm B. B)The elasticity of supply of Firm A and Firm B cannot be compared without information on price change. C) The elasticity of supply of Firm A will be lower than the elasticity of supply of Firm B. D) The elasticity of supply of Firm A and Firm B will be equal.
A
If the total cost incurred by a firm in hiring ten workers is $45 and the total cost incurred when the eleventh worker is hired is $60, the marginal cost of hiring the eleventh worker is ________. A) $15 B) $105 C) $20 D) $1.33
A
Refer to the figure above. What is the market-wide consumer surplus when the market price of wine is $9 per bottle? A) $60,000 B) $90,000 C) $180,000 D) $210,000
A
Refer to the scenario above. What is the marginal product of the third hour of labor? A) 10 cupcakes B) 8 cupcakes C) 35 cupcakes D) 25 cupcakes
A
Refer to the scenario above. Which consumer has the highest willingness to pay for Gatorade? A) Consumer A B) Consumer B C) Consumer C D) Consumers A and B
A
Refer to the table above. What is the shortage in the market when the price of a notebook is $3? A) 4 units B) 10 units C) 20 units D) 16 units
A
Scenario: A firm wants to set up a factory. It has four different options. The rent of the factory in each of the four different locations and the time taken to transport the product from each location to the market is shown in the table below. The opportunity cost of time is $10 per hour. Factory Location Monthly Commuting Time (hours) Monthly Rent ($) Very Far 30 2,060 Far 25 2,100 Close 15 2,300 Very Close 5 2,500 Refer to the scenario above. Which is the optimum location for the firm to set up its factory? A) Far B) Close C) Very Far D) Very Close
A
Which of the following examples best approximates a competitive market? A) The market for soybeans in the United States B) The market for Jackson Pollock paintings C) The market for F-35 fighter planes D) The market for Tesla electric cars
A
Suppose you are on a date with an economics major, and you want to impress them by asking good economic questions. Two characteristics of a good economic question are:
It is important to individuals or society It can be answered
Suppose a new off-campus university apartment complex could rent its rooms on the open market for $900 a month. If, instead, the university chooses to cap the price of rooms to $500 a month for students, the result would be that ____________. A. quantity demanded would exceed the quantity supplied, resulting in a shortage. quantity demanded would exceed the quantity supplied, resulting in a surplus. C. quantity supplied would exceed the quantity demanded, resulting in a shortage. D. quantity supplied would exceed the quantity demanded, resulting in a surplus. Suppose the university is trying to determine the most efficient way to allocate the rooms such that those who value the rooms the most get them. Which of the following would you suggest as the most efficient? A. Using a random lottery to allocate rooms, with each student having equal odds of receiving a room. B. Allocating rooms based on seniority. Seniors get first choice, then juniors, and so on. C. Allocating rooms based on grades, with students with the highest GPAs getting first choice. D. Auctioning the rooms to the highest bidders.
A, D
For a firm, economies of scale occur when the ______ for the firm _________ as the quantity produced increases.
ATC, decreases
During the process of optimization economists believe that people are considering _________. A. what they would do if they had no money or time constraints of any kind. B. the feasibility of a choice, given the information available at the time. C. the benefits of their choices for others more than the benefits to themselves. D. only the decisions that will result in the least cost to the individual. The goal of optimization for an individual is to maximize overall well-being .
B
Facts, measurements, or statistics that describe the world are referred to as ________. A) hypothesis B) data C) empiricism D) models
B
Maria has to choose between driving and taking a train to destination A. Traveling by train will cost her $400 and will take 4 hours. Driving to destination A takes 6 hours, and the required amount of gasoline costs $250. Her opportunity cost of time is $15 per hour. 1)Refer to the scenario above. If Maria's opportunity cost of time increases to $80 per hour, the cost of driving to destination A is ________. A) $480 B) $730 C) $970 D) $800
B
Two goods are said to be substitutes when a fall in the price of one good ________. A) leads to a rise in the price of the other good B) leads to a leftward shift in the demand for the other good C) does not affect the demand for the other good D) leads to a rightward shift in the demand for the other good
B
Which of the following best describes the long run for a firm? A) The period of time over which the amount of labor and raw materials are variable B) The period of time over which all factors of production are variable C) The period of time over which the amount of labor is variable D) The period of time over which all factors of production are fixed
B
Which of the following statements best describes a normal good? A) A normal good is a good that is readily available in the market. B) A normal good is a good whose demand increases with an increase in consumers' income. C) A normal good is a good that is rationed by the government. D) A normal good is a good whose supply increases with a decrease in its price
B
Suppose a new off-campus university apartment complex could rent its rooms on the open market for $900 a month. If, instead, the university chooses to cap the price of rooms to $500 a month for students, the result would be that ____________. A. quantity demanded would exceed the quantity supplied, resulting in a surplus. B. quantity demanded would exceed the quantity supplied, resulting in a shortage. .C. quantity supplied would exceed the quantity demanded, resulting in a shortage. D. quantity supplied would exceed the quantity demanded, resulting in a surplus. Suppose the university is trying to determine the most efficient way to allocate the rooms such that those who value the rooms the most get them. Which of the following would you suggest as the most efficient? A. Allocating rooms based on seniority. Seniors get first choice, then juniors, and so on. B. Allocating rooms based on grades, with students with the highest GPAs getting first choice. C. Auctioning the rooms to the highest bidders. .D. Using a random lottery to allocate rooms, with each student having equal odds of receiving a room.
B, C
Now suppose the price of running shorts doubles to $20, socks remain priced at $10 per pair, and Maylin has $150 of income. What consumption bundle maximizes Maylin's total benefit at the new, higher price of running shorts? A) 2 pairs of socks and 2 running shorts B) 3 pairs of socks and 3 running shorts C) 5 pairs of socks and 5 running shorts D) 4 pairs of socks and 4 running shorts
C
On a line chart, the income of a consumer is measured along the horizontal axis, and his consumption is measured along the vertical axis. The slope of the line is equal to ________. A) change in consumption plus change in income B) change in consumption multiplied by change in income C) change in consumption divided by change in income D) change in consumption minus change in income
C
Refer to the figure above. At the equilibrium A, each firm in the market earns ________ and there will be ________. A) zero economic profit; both entry and exit of firms B) zero accounting profit; entries of new firms C) positive economic profit; entries of new firms D) negative economic profit; exit of existing firms
C
Refer to the figure above. If the slope of the supply curve is 1/2, what is the producer surplus at a price of B? A) $30 B) $50 C) $25 D) $20
C
Refer to the figure above. When the demand curve for gas is D2 and the supply curve for gas is S, the surplus in the market when price is $8 is ________ gallons. A) 55 B) 20 C) 50 D) 25
C
Scenario: Assume that there are five apartments located at different distances from an individual's place of work-very close, close, far, very far, and extremely far. The individual makes his choice by studying the change in costs as he moves farther from his place of work. He has to choose between renting one of the five apartments. The movement from apartment Very Close to Close has a marginal cost of ƺ$60, a movement from apartment Close to Far has a marginal cost of ƺ$40, a movement from apartment Far to Very Far has a marginal cost of ƺ$10, and a movement from apartment Very Far to Extremely Far has a marginal cost of $20. Refer to the scenario above. Which of the following is the optimum choice? A) Apartment Far B) Apartment Very Close C) Apartment Very Far D) Apartment Close
C
The Law of Demand explains why ________. A) the income elasticity of demand has a negative value B) the price elasticity of demand has a positive value C) the price elasticity of demand has a negative value D) the income elasticity of demand has a positive value
C
When economists test their theories using evidence-based analysis, they are most likely using __________. A. equity analysis through the use of models. B. empiricism through the use of data. C. opportunity-cost analysis. D. optimization through observation.
C
Which of the following is an example of marginal analysis? A)To determine the optimal output that a firm should sell, the manager calculates the total revenue earned by selling different levels of output. B)To determine the optimal amount of fertilizer to be used, a farmer calculates the total benefits of using a given amount of fertilizer. C)To determine the optimal number of workers, a firm calculates the net benefits of hiring an extra worker. D)To choose the optimal apartment to rent, an individual estimates the net benefits of renting an apartment close to his place of work.
C
Which of the following is not one of the three conditions that characterizes a perfectly competitive market? -Sellers in the market produce identical goods. -Buyers are price takers and cannot influence the price charged. -Firms have pricing power and can set their prices freely. -There are no barriers to entry or exit in the market.
C
Which of the following statements correctly highlights the difference between microeconomics and macroeconomics? A)Microeconomics describes what economic agents actually do, whereas macroeconomics describes what economic agents ought to do. B)Microeconomics primarily deals with positive analysis, whereas macroeconomics primarily deals with normative analysis. C)Microeconomics deals with a small part of the economy, whereas macroeconomics deals with aggregate economic performance. D) Microeconomics is descriptive, whereas macroeconomics is advisory.
C
The more elastic a supply curve is the _________responsive the quantity supplied is to changes in the price level.
More
Gabriel's demand for chocolate bars is inelastic. If the price of chocolate bars increases, he will ________. A) spend the same amount of money on chocolate as before B) buy the same number of chocolate bars as before C) spend less amount of money on chocolate than before D) spend more amount of money on chocolate than before
D
In which of the following areas will taking an economics course help benefit you throughout your life? A. It will help you analyze and predict human behavior in a variety of situations. B. It will give you the logic behind using cost-benefit analysis when evaluating decisions. C. It will instill the concept that what activity is given up by a decision plays an important role when making choices. D. All of the above.
D
John is a tomato farmer and sells his crops in a perfectly competitive market at the price of $1 per pound. John wants to increase his farm revenue, ________. A) but there is no way he can do so. B) so he would need to produce fewer tomatoes to do so C) so he would need to charge a higher price for his tomatoes to do so D) so he would need to produce more tomatoes to do so
D
Refer to the figure above. What is the absolute value of the arc elasticity of demand for solar-powered lights when their price increases from $6 to $8? A) 1.25 B) 4.00 C) 2.75 D) 3.50
D
The analysis of economic outcomes before and after some economic variable is changed is referred to as ________. A) empiricism B) normative economics C) marginal study D) before and after comparisons
D
Which of the following graphical representations can be used most appropriately to show the distribution of a household's income, in terms of percentages, among the various categories of expenses? A) A time-series graph B) A histogram chart C) A bar chart D) A pie chart
D
Which of the following is most likely to be represented by a time series graph? A) The relationship between hourly wages and a worker's productivity B) The contribution of each sector to the total output of an economy C) The different sources of tax revenue for the government D) The growth in consumer income over 5 years
D
Which of the following statements correctly differentiates between positive and normative economics? A)Positive economics can only be applied to microeconomics, whereas normative economics can be applied to both microeconomics and macroeconomics. B) Positive economics is based on judgments, whereas normative economics is not. C)Positive economics describes what people ought to do, whereas normative economics describes what people actually do. D) Positive economics is descriptive, whereas normative economics is advisory.
D
Which of the following statements is true? A) A street gang is not an economic agent. B) A worker who shirks work is not an economic agent. C) All economic agents are necessarily individuals. D) A government is an example of an economic agent.
D
Causation implies ____________. A.if a and b occurred at the same time, then a was the cause of b. B.a and b are independent events. C.there is always correlation between two variables. D a causes b if, because of a, b has occurred. An example of causation is ____________. A. when families eat dinner together, it decreases the risk of drug addiction for teens. B. eating more ice cream cones increases the number of drownings. C. if you work fewer hours, you will earn less money. D. when an NFL team wins the Super Bowl, stock markets close higher the following year.
D D
Everything else the same, as the price of the good increases, quantity demanded _________.
Decreases
The amount produced by sellers must be....The amount purchased by buyers. The costs of making a product must be .... the final price at which the product sells. Buyers must place a value on the uses of the product that is ... the cost of buying the product.
Equal to Less than greater than
Which of the following statements regarding the principle of optimization is true? (Check all that apply.) A. It means always choosing the best feasible option. B. It applies only in the case of monetary and financial matters. C. It is the unifying principle that connects various seemingly unrelated decisions. .D. It takes into account and evaluates multiple trade-offs. In which of the following situations is optimization a good description of behavior? A. John is careless and irresponsible causing him to make a lot of mistakes in his work. B. Tia is a very fun loving person. She chooses to go on a vacation with friends instead of volunteering at NGO as a vacation is more enjoyable. .C. Kat, the MIT business management graduate, starts his first business and incurs huge financial losses despite graduating from MIT. D. Rita watches movies late at night. The next day, she wakes up late causing her to be late to her exam.
It is the unifying principle that connects various seemingly unrelated decisions. It takes into account and evaluates multiple trade-offs. In which of the following situations is optimization a good description of behavior? Tia is a very fun loving person. She chooses to go on a vacation with friends instead of volunteering at NGO as a vacation is more enjoyable.
The more inelastic a supply curve is the responsive the quantity supplied is to changes in the price level.
Less
Suppose apartments are in four locations: Location A, Location B, Location C, and Location D. Location A is in the city, where your job is. Location B is 10 minutes farther from your job than Location A. Location C is 10 minutes farther from your job than Location B, and Location D is 10 minutes farther than Location C. In turn, similar apartments in Location B rent for $195 less per month than apartments in Location A, apartments in Location C rent for $195 less than in Location B, and apartments in Location D rent for $195 less than in Location C. Suppose the value of your time is $20 per hour and you work 21 days per month, with each day requiring a round-trip commute from your apartment to work. For simplicity, assume rent and the opportunity cost of your time commuting to work are the only factors influencing the location in which to rent an apartment. You should rent an apartment in .... . Suppose you currently rent an apartment in Location Upper C. By moving to optimize, you change your net benefit by ....
Location D, 55
Which of the following is not a characteristic of a market? A. Markets are physical locations where trading occurs B. Voluntary exchanges between economic agents C. Flexible prices D. There are rules and arrangements for trading
Markets are physical locations where trading occurs
Charley spends all of his income on soft drinks and pizza. Suppose he is currently buying these products in amounts such that his marginal benefit from an additional soft drink is $ 110 and his marginal benefit from an additional slice of pizza is $ 100. If the price of a soft drink is $ 3 and the price of a slice of pizza is $ 2, is Charley maximizing his total benefits?
No, he should shift consumption toward pizza and away from soft drinks to maximize total benefits.
In the long run, which of the following factors of production is fixed for a firm? Labor Capital Technology None of the above
None of the Above
Suppose you have just been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. In your first presentation to management, how would you describe your planned methodology to perform the analysis? A. Scientific method. B. Economic method. C. Price discrimination method. D. Management consulting method. What tool would you employ to analyze the relationship between gasoline prices and consumer behavior? A. Accounting models. B. Fashion models. C. Refining models. D. Economic models. You should collect...amount of data to create....to test the....indicated by the economic model.
Scientific method Economic models a large, empircial evidence, hypotheses
Which of the following equations measures price elasticity of supply?
Percentage change in quantity supplied/percentage change in price
In terms of economic profits, early market entrants earn ________, economic profits and the last entrant earns _________ economic profits
Positive, zero
The three principles of economics include optimization, equilibrium, and empiricism. Empiricism describes Optimization describes Equilibrium describes a situation where no one would benefit from changing his or her behavior
a situation where economists use data to analyze what is happening in the world a situation where people weigh costs and benefits when making a decision a situation where no one would benefit from changing his or her behavior
Economists study... Therefore, the unifying feature of economics is a focus on...
all human behavior choice
For economists, the "buyer's problem" refers to __________.
how consumers arrive at a choice as to what to purchase.
The demand curve shows ___________.
how the quantity demanded responds to changes in the price of the good.
To construct the supply curve in a market with many firms with different cost structures, the ___________.
individual supply curves for each firm are added together.
Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. Your client has requested that your consulting team expatiate on the factors that impact gasoline prices. One of the members of your team, Debbie, states that she has noticed that gasoline prices seem to rise in years when a National League baseball team wins the World Series. You should.... . In this case, correlation ... equal causation most likely due to omitted variables
not include this observation in your report because it is correlation, not causation does not
The Law of Demand states that as the price of a good increases, ceteris paribus, the....decreases. This can be shown graphically with a .....demand curve or numerically in a table using a demand schedule . The relationship that exists between these two variables can be described as..... .
quantity demanded, downward sloping, negatively related
The Law of Supply states that as the price of a good increases, ceteris paribus, the....of that good increases. This can be shown graphically with an .... supply curve or numerically in a table using a supply schedule . The relationship that exists between these two variables can be described as .... positively related .
quantity supplied, upward-sloping, positively related
Utility measures ____________.
the happiness or satisfaction that comes from consuming a good.
The equilibrium price is the ___________.
long-run average total cost of the last entrant into the market.
