ECO 2023

Let Qd = 60 - P and Qs = 2P - 90 describe the demand and supply function for a commodity. Suppose that government imposes a $3 tax per unit sold on producers. What is the tax burden (incidence) of producers?

$1

Let Qd = 60 - P and Qs = 2P - 90 describe the demand and supply function for a commodity. Suppose that government imposes a $3 tax per unit sold on producers. What is the tax burden (incidence) of consumers?

$2

Refer to Figure 4-7. What is the size of the unit tax?

$5

Let Qd = 60 - P and Qs = 2P - 90 describe the demand and supply function for a commodity. What are equilibrium price and quantity?

$50 and 10

Let Qd = 60 - P and Qs = 2P - 90 describe the demand and supply function for a commodity. Suppose that government imposes a $3 tax per unit sold on producers. What is the new market price and quantity?

$52 and 8

If the price of chocolate increases and the quantity demanded decreases, economists would describe this as

A change in quantity demanded

What is the difference between an "increase in demand" and an "increase in quantity demanded"?

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.

What is the difference between an "increase in supply" and an "increase in quantity supplied"?

An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement upwards along a given supply curve in response to a change in price.

Last month, the Tecumseh Corporation supplied 400 units of three-ring binder at $6 per unit. This month, the company supplied the same quantity at $4 per unit. Based on this evidence Tecumseh has experienced

An increase in supply

If a decrease in income results in an increase in the demand for macaroni, then macaroni is

An inferior good

A market is

An institutional arrangement that brings together buyers and sellers

Economists assume that individuals

Are rational and respond to individuals

The law of demand implies that, all else equal

As the price of bagels rises, the quantity of bagels demanded will decrease.

Which of the following is the correct way to describe equilibrium in a market?

At equilibrium quantity demanded equals quantity supplied

In economics, the term ___ means "additional" or "extra".

Marginal

Economists reason that the optimal decision is to continue any activity up to the point where the

Marginal benefit equals the marginal cost

The production possibilities frontier shows the ___ combinations of two products that may be produced in a particular time period with attainable resources

Maximum attainable

In figure 4.1 an effective price floor would be

P3

Figure 3-4 shows how supply and demand might shift in response to specific events. D1 and S1 represent initial demand and supply curves; D2 and S2 represent the shifted demand and supply curves. Which panel best describes what happens in the garment market when the wages of seamstresses rise?

Panel (b)

Figure 3-4 shows how supply and demand might shift in response to specific events. D1 and S1 represent initial demand and supply curves; D2 and S2 represent the shifted demand and supply curves. Which panel best describes what happens in the market for bike helmets if there is a substantial increase in the price of bicycles?

Panel (d)

Which of the following statements is true about scarcity?

Scarcity refers to the situation in which unlimited wants exceed limited resources.

Which country has a comparative advantage in the production of milk?

Tahiti

In January, buyers of gold expect that the price of gold will fall by February. What happens in the gold market in January, holding all else constant?

The demand curve shifts to the left.

If we say that supply has increased, we mean that

The supply curve has shifted to the right.

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?

The two goods are complements

A decrease in the equilibrium price for a product will result

When there is an increase in supply and a decrease in demand for the product

What's Fred's opportunity cost of making a pogo stick?

1/3 unicycle

What's Barney's opportunity cost of making a unicycle?

2 pogo sticks

Which of the following statements is true?

Barney has an absolute advantage in making both products

Which country has a comparative advantage in the production of honey?

Bora Bora

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve. As a result

Both the equilibrium price and quantity of MP3 players will increase

The demand curve for a product shows the quantity that

Buyers are willing and able to purchase at various points