ARE 220 Quiz 1

Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be $15. $25. $35. $45.

$45

Profit is maximized when which of the following conditions hold AR = MC TR = TC MR = MC MR = AC

MR=MC

The price elasticity of demand measures a buyer's responsiveness to a change in the price of a good. the increase in demand as additional buyers enter the market. how much more of a good consumers will demand when incomes rise. the increase in demand that will occur from a change in one of the nonprice determinants of demand.

a buyer's responsiveness to a change in the price of a good

An increase in the price of oranges would lead to an increased supply of oranges. a reduction in the prices of inputs used in orange production. an increased demand for oranges. a movement up the supply curve for oranges.

a movement up the supply curve for oranges

Global extraction of water is dominated by use by domestic users (households) industry agriculture electricity production

agriculture

When we move up or down a given demand curve, only price is held constant. income and the price of the good are held constant. all nonprice determinants of demand are assumed to be constant. all determinants of quantity demanded are held constant.

all nonprice determinants of demand are assumed to be constant

Nearly 200 cities within the Roman Empire at its peak received water from aqueducts aquaculture rainfall the ocean

aqueducts

Which of the following is true? Buyers determine supply and sellers determine demand. Buyers determine demand and sellers determine supply. Buyers and sellers as one group determine supply. Buyers and sellers as one group determine demand.

buyers determine demand and sellers determine supply

A decrease in resource costs to firms in a market will result in a decrease in equilibrium price and an increase in equilibrium quantity. a decrease in equilibrium price and a decrease in equilibrium quantity. an increase in equilibrium price and no change in equilibrium quantity. an increase in equilibrium price and an increase in equilibrium quantity.

decrease in equilibrium price and an increase in equilibrium quantity

ou produce jewelry boxes. If the demand for jewelry boxes is elastic and you want to increase your total revenue, you should increase the price of your jewelry boxes. decrease the price of your jewelry boxes. not change the price of your jewelry boxes. None of the above answers are correct.

decrease the price of your jewelry box

Suppose the government increases the tax on gasoline in order to raise revenue. Since raising the gasoline tax would increase the price of gasoline, the government must be assuming that the demand for gasoline is price elastic. demand for gasoline is price inelastic. demand for gasoline is price unit-elastic. tax on gasoline will not affect the consumption of gasoline.

demand for the gasoline is price inelastic

If the number of buyers in the market decreases, the demand in the market will increase. demand in the market will decrease. supply in the market will increase. supply in the market will decrease

demand in the market will decrease

According to the law of demand price and quantity supplied are inversely related. demanded are inversely related. demanded are positively related. supplied are positively related.

demanded are inversely related

The unique point at which the supply and demand curves intersect is called market unity. an agreement. cohesion. equilibrium.

equilibrium

A surplus may exist when the market price is above the equilibrium price because more consumers want to buy the good than the number of goods available more firms want to exit the market to capture higher prices elsewhere more consumers want to buy the good before the price increases even more firms produce too much because the price is artificially too high.

firms produce too much because the price is artificially too high

After chlorofluorocarbons were banned in the 1980s, between 1990 and 2010 global production drastically increased global production remained the same as before global production decreased significantly scientists do not know how or if production changed

global production decreased significantly

Between 1961 and 2014, gross domestic product (GDP) has increased most rapidly in high income countries middle income countries low income countries about the same everywhere.

high income countries

The market demand for a private good is determined by Vertical summation of individual demand curves. Horizontal summation of individual demand curves. The willingness to pay of one individual. Whatever the market will bear.

horizontal summation of the individual demand curves

To find the market demand for a product, individual demand curves are summed vertically. diagonally. horizontally. and then averaged.

horizontally

A market supply curve is determined by vertically summing individual supply curves. horizontally summing individual supply curves. finding the average quantity supplied of the market's individual supply curves. Unlike market demand, there is no such thing as a market supply curve.

horizontally summing individual supply curves

A market demand curve reflects how much all buyers are willing and able to buy at each possible price. how quantity demanded changes when the number of buyers changes. the fact that the level of income is inversely related to quantity demanded. when the buyers are willing to buy the most

how much all buyers are willing and able to buy at each possible price

For a competitive market, which of the following is true? A seller who charges more than the going price can increase her profit. If a seller charges more than the going price, buyers will go elsewhere. A seller often charges less than the going price to increase sales and profit. A buyer can influence the price of the product, but only when purchasing from several sellers.

if a seller charges more than the going price, buyers will go elsewhere

The profit maximizing level of output for a firm is determined by which condition? Total Cost = Total Revenue (TC = TR). When all resources have been used. Marginal Revenue = Marginal Cost (MR = MC). Total Social Cost = Total Social Benefit (TSC = TSB)

marginal revenue = marginal cost (MR=MC)

A change in the price of bicycles will result in A shift in the bicycle supply curve. A shift in the bicycle demand curve. A change in the slope of the bicycle demand curve. Movement along the bicycle demand curve.

movement along the bicycle demand curve

The supply of a good is negatively related to the price of inputs used to make the good. demand for the good by consumers. price of the good itself. amount of profit a firm can expect to receive from sale of the good. Either a or b are correct, depending on the product.

price of inputs used to make the good

An economy's scarce resources are allocated by economic planners. producers who use resources. prices for resources. government regulation of scarce resources

prices for the resources

The amount of the good buyers are willing and able to purchase is the demand. quantity supplied. quantity demanded. supply.

quantity demanded

Demand is said to be inelastic if the quantity demanded changes proportionately more than price. price changes proportionately more than income. quantity demanded changes proportionately less than price. quantity demanded changes proportionately the same as price.

quantity demanded changes proportionally less than price

In a market economy, demand is determined by supply. supply is determined by demand. price is determined by quantity. quantity is determined by price. Either a or b are correct, depending on the product.

quantity is determined by price

Allocative efficiency requires that All resources are used. Resources are used so society's additional benefits are equal to the costs. No resources are used. Resources are used so the cost to society is greater than the benefits

resources are used so society's additional benefits are equal to the costs

According to the law of supply, price and quantity supplied are inversely related. demanded are inversely related. demanded are positively related. supplied are positively related

supplied are positively related

In a free market, who determines how much of a good will be sold and the price at which it is sold? suppliers demanders the government suppliers and demanders together

suppliers and demanders together

If the number of sellers in a market increases, the demand in that market will increase. supply in that market will increase. supply in that market will decrease. demand in that market will decrease.

supply in that market will increase

A demand curve is the downward-sloping line relating the price of the good to the quantity demanded. the upward-sloping line relating price to quantity supplied. the curve that relates income to quantity demanded. showing the same relationship between two goods as a production possibilities frontier

the downward-sloping line relating the price of the good to the quantity demanded

When evaluating differences or similarities between an increase in supply and an increase in quantity supplied we know that the former is a shift of the curve and the latter is a movement along the curve. the former is a movement along the curve and the latter is a shift of the curve. both are shifts of the supply curve. both are movements along the curve.

the former is a movement along the curve and the latter is a shift of the curve

Allocative efficiency occurs where the marginal benefits = marginal costs where goods are provided to all consumers equitably when only consumers determine what should be produced when only firms determine what should be produced

the marginal benefits = marginal costs

A consumer's willingness to pay for popcorn may be represented by The popcorn supply curve. The popcorn demand curve. The popcorn Marginal External Cost curve. The popcorn Marginal Social Cost curve.

the popcorn demand curve

If, at the current price, there is a shortage of a good, sellers are producing more than buyers wish to buy. the market must be in equilibrium. the price is below the equilibrium price. quantity demanded equals quantity supplied.

the price is below the equilibrium price

When quantity demanded has increased at every price, it might be because the number of buyers in the market has decreased. income has increased and this good is an inferior good. the consumer prefers another good more than this good. the price of a substitute good has increased.

the price of a substitute good had increased

One result of a drought in the midwest could be an increase in farm machinery prices. the price of diesel fuel used in farming. migrant farm workers' wages. the price of frosted shredded wheat.

the price of frosted shredded wheat

Which of the following would NOT be a determinant of demand? the price of related goods income tastes the prices of the inputs used to produce the good

the prices of the inputs used to produce the good

Profit is estimated as average revenue - marginal costs total revenue - total costs total revenue - average costs total costs - total revenue.

total revenue- total costs