Econ 101 Final exam

The figure shows a demand curve. The price elasticity of demand at the midpoint between points A and B equals

30.0

Using the data in the table above, the equilibrium quantity and equilibrium price for a stapler is

70,000 and $6.

Lauren and Katy each bought a new bike lock for $20. Both Lauren and Katy would have paid $25 for the lock. Katy's consumer surplus equaled

$5

For consumers, taco chips and salsa are complements. If the price of salsa rises, what is the effect on the equilibrium price and quantity of taco chips?

The equilibrium price of taco chips falls, and the equilibrium quantity decreases.

The figure above shows the production possibilities frontiers for the United Kingdom and France. If the United Kingdom and France specialize and engage in trade, the United Kingdom will export ____ and France will export ____.

fish; wheat

The figure above shows the production possibilities frontiers for the United Kingdom and France. If the United Kingdom and France specialize and engage in trade, the United Kingdom will produce ____ and France will produce ____.

fish; wheat

If a freeze destroys oranges before they are harvested, the equilibrium price of an orange ____ and the equilibrium quantity ____

rises; decreases

Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel ____, and the equilibrium quantity ____.

rises; decreases

Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result the equilibrium price ____, and the equilibrium quantity ____.

rises; increases

If a 1 percent increase in the price of X increases the quantity demanded of Y by 2 percent, then X and Y are

substitutes and the cross elasticity of demand equals 2.

Suppose the equilibrium price of oranges is $2.00 per pound. If the actual price is above the equilibrium price, a

surplus exists and the price falls to restore equilibrium.

The above table gives the demand and supply schedules for cat food. At a price of $3.00 per pound of cat food, there is a __ of ___ tons of cat food.

surplus; 9

Drivers in Atlanta can choose to use toll lanes on I-75. The toll changes during the day depending on congestion and traffic flow. Toll lane resources are determined using the ____ method.

market price

Computer memory chips are produced on wafers, each wafer having many separate chips that are separated and sold. The above table shows costs for a perfectly competitive producer of computer memory chips. This firm will produce as long as the market price of a wafer is above

$1,300.

Lauren and Katy each bought a new bike lock for $20. Both Lauren and Katy would have paid $25 for the lock. The total consumer surplus for Lauren and Katy taken together equaled

$10

Suppose the price of a DVD rose from $15 to $17 and the quantity demanded decreased from 1,000 per month to 900 per month. Using the midpoint formula, the ____ percent change in price lead to a ____ percent change in the quantity demanded.

12.5; 10.5

If the price of a movie rises 3 percent and, as a result, the quantity demanded of streamed videos increases 6 percent, then the cross elasticity of demand is

2

The table above shows a production possibilities frontier for an economy. Which of the following combinations is unattainable?

200 loaves of bread and 800 books

Suppose the price of a box of cereal rises from $4 to $6. Using the midpoint method, what is the percentage change in price?

40 percent

The above table has the total revenue and total cost schedule for Omar, a perfectly competitive grower of rutabagas. Omar's total profit is maximized when he produces ____ bushels of rutabagas.

5

A country produces only apples and bananas. Moving from point A to point B along its production possibilities frontier, 5 apples are forgone and 4 bananas are gained. What is the opportunity cost of a banana?

5/4 of an apple

Consider this statement: regarding the figure: "If the price falls from $3 to $1 per bottle, quantity demanded changes from 10 to 25 bottles."Which of the following states the same idea?

A change in quantity demanded can be shown as a movement from point A to B.

Based on data in the table above, at the price midway between the two prices, what is the cross elasticity of demand for ice cream and cake?

The cross elasticity is -0.75.

In the above figure, the shift in the supply curve from S to S1 reflects

a decrease in the supply of pizza.

Which of the following shifts the supply curve of rutabagas rightward? (A rutabaga is a potato-like vegetable.)

a fall in the price of fertilizer used to grow rutabagas

The figure above shows the supply curve for a good with

a perfectly elastic supply

If macaroni and cheese is an inferior good, then a decrease in income results in

an increase in the demand for macaroni and cheese.

Which of the following increases the quantity supplied of yoga pants but does NOT increase the supply of yoga pants?

an increase in the price of a yoga pants

In the above figure, the movement from point a to point b reflects

an increase in the price of pizza.

The figure shows the production possibilities frontier for a country. A combination of 2 million gallons of milk and 2 million gallons of ice cream is

attainable and production inefficient.

The figure shows the production possibilities frontier for a country. A combination of 3 million gallons of milk and 3 million gallons of ice cream is

attainable and production inefficient.

If the price of a DVD fallsi. the demand curve for DVDs will shift rightward.ii. the demand curve for DVDs will not shift.iii. there will be a movement along the demand curve for DVDs.

ii and iii

Value and price can be compared by noting that

price is what we must pay and value is what we are willing to pay.

The price of cotton clothing falls. As a result

the quantity demanded of cotton clothing increases

The figure shows the production possibilities frontier for a country. A combination of 4 million gallons of milk and 4 million gallons of ice cream is

unattainable.

To maximize its profit, in the short run a perfectly competitive firm decides

what quantity of output to produce.

Resource use is allocative efficient

when we produce goods and services that we value most highly.

The above figure shows a perfectly competitive firm. If the market price is $15 per unit, the firm

will stay open to produce and will incur an economic loss.

The above figure shows a perfectly competitive firm. If the market price is more than $20 per unit, the firm

will stay open to produce and will make an economic profit.

The above figure shows a perfectly competitive firm. If the market price is $20 per unit, the firm

will stay open to produce and will make zero economic profit.

In the figure above, at the market price of $15, the consumer surplus equals

$10,000

Ticket prices to a Kanye West concert increase from $40 to $60. As a result, ticket sales decrease from 50,000 to 40,000. Total revenue changes from ____ and demand is ____.

$2 million to $2.4 million; inelastic

Hester owns an ice cream shop. It costs her $2 per cone to make 10 ice cream cones. If she sells 10 cones for $4 each, her producer surplus on the 10 cones is equal to

$20

The figure above shows that for the 10,000th ticket, marginal benefit equals ____ and consumer surplus equals ____.

$40; zero

The figure shows the t-shirt market. For the 20,000th t-shirt, the marginal cost of producing the shirt is ____ and the producer surplus is ____.

$4; $1

The figure above represents the competitive market for slices of key lime pie. When the price is $3, the total consumer surplus equals

$60

The figure shows the t-shirt market. What is the total surplus when the market is in equilibrium?

$60,000

The figure above shows that for the 8,000th ticket, the marginal benefit is ____ and the consumer surplus is ____.A) $60; $20B) $40; $60C) $70; $40D) $150,000; $40

$60; $20

The above figure shows a perfectly competitive firm. If the market price is $40, the firm incurs an economic profit/loss equal to:

$680

The figure above represents the competitive market for slices of key lime pie. When the price is $3, the total producer surplus equals

$90

The above figure shows a perfectly competitive firm. If the market price is $15, the firm incurs an economic profit/loss equal to:

-$165

The above table has the total revenue and total cost schedule for Omar, a perfectly competitive grower of rutabagas. When Omar produces 2 bushels of rutabagas, his total profit equals

-$8

Pepsi and pizza are complements. If a 2 percent change in the price of a Pepsi leads to a 4 percent change in the demand for pizza, the cross elasticity of demand equals

-2

Tacos and pizza are substitutes. If a 2 percent change in the price of a taco leads to a 4 percent change in the demand for pizza, the cross elasticity of demand equals

-2

On a production possibilities frontier, 500 pounds of apples and 1,200 pounds of bananas can be produced while at another point on the same frontier, 300 pounds of apples and 1,300 pounds of bananas can be produced. Between these points, what is the opportunity cost of producing a pound of apples?

0.5 of a pound of bananas

The figure above shows the production possibilities frontiers for the United Kingdom and France. What is the opportunity cost of one bushel of wheat for the United Kingdom?

1 pound of fish

Use the figure above to answer this question. If the firm is maximizing profit, it will produce ____ units and make an economic profit of ____.

1,200; $3,600

The figure above shows the production possibilities frontier for a country. The opportunity cost of a gallon of milk between combination point A and B is

1/3 of a gallon of ice cream for a gallon of milk.

The figure above shows the production possibilities frontiers for the United Kingdom and France. What is the opportunity cost of one bushel of wheat in France?

1/4 of a pound of fish

As technology advances

PPF shifts outward

To achieve gains from trade, a country

Specializes in the producing a good in which it has a lower opportunity cost.

The figure above shows the production possibilities frontiers for the United Kingdom and France. The United Kingdom has an absolute advantage in ____.

Fish

Huey and Steve can grow potatoes or tomatoes. The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week. Based on the table, which of the following statements is correct?

Huey has an absolute advantage in both potatoes and tomatoes.

In terms of a nation's production possibilities frontier, what impact does international trade have?

International trade allows the nation to consume at a point outside its production possibilities frontier.

Is it fair to allocate kidneys on a first come, first served basis? Is it efficient to allocate kidneys on a first come first served basis?

It is fair, but probably not efficient

Is it fair to allocate kidneys according to who has the greatest chance of survival? Is it efficient to allocate kidneys this way?

It not fair, but probably is efficient

The above figure shows a perfectly competitive firm. If the market price is $5, the firm incurs an economic profit/loss equal to:

It will shutdown in the short run and incur a loss equal to it's fixed costs.

In order for Ireland to grow more potatoes, wool production must decrease. This situation is an example ofA) producing at a point that lies beyond the PPF.B) zero opportunity cost.C) opportunity benefit.D) a free lunch.

a tradeoff.

The figure above shows the t-shirt market. Market failure will occur in the t-shirt market if the quantity produced equals

both A and B are correct.

The figure shows a demand curve. The price elasticity of demand at point C = 1.00.If the price increases from $20 to $25, total revenue will

decrease because demand is elastic.

The figure shows a demand curve. The price elasticity at point C equals 1.00.Suppose the price falls from $10 to $5. As a result, total revenue will

decrease because demand is inelastic.

Consumers regard Dell computers and Apple computers as substitutes. If the price of a Dell computer decreases, the

demand for Apple computers decreases.

If the price of a six-pack of Pepsi falls from $4 to $3 and the quantity purchased increases 80 percent, then demand is

elastic

If the price of corn increases by 20 percent and the quantity supplied of corn increases by 30 percent, then supply is

elastic and the elasticity of supply equals 1.5.

If firms in a perfectly competitive market are incurring economic losses, then as time passes firms ____ and the market ____.

exit; supply curve shifts leftward

The above figure shows a perfectly competitive firm. If the market price is $40, we expect the following to happen in the long run:

firms enter and the market price declines

The above figure shows a perfectly competitive firm. If the market price is $5, we expect the following to happen in the long run:

firms exit and the market price increases

Walmart has a limited number of "Black Friday" (the day-after Thanksgiving Day) special items on sale at prices well below their typical price. Walmart opens at 10 PM on Thanksgiving. Walmart is using a ____ allocation method for these items.

first-come, first-served

Scarcity exists because

human wants exceed the resources available to satisfy them.

Which of the following is correct?i. All linear demand curves have a constant slope and a constant price elasticity of demand.ii. The price elasticity of demand changes while moving along a downward-sloping linear demand curve.iii. The magnitude of the slope of all linear demand curves is equal to the price elasticity of demand.

ii only

If the percentage change in the price of a good exceeds the percentage change in the quantity supplied, then the supply is

inelastic

A city must decide to pay for its workers pension plan. If the city puts the decision up for a vote by citizens, resource use will be determined by a ____ method.

majority rule

The tollway authority must decide the efficient allocation of resources to build toll roads. To determine the efficient allocation of resources, the tollway authority must compare

marginal cost to marginal benefit.

The figure above shows the competitive market for slices of key lime pie. If the production is 40 slices per day, someone is willing to buy another slice of pie for

more than it costs to produce the slice.

Consider a demand curve for apples. "A change in the price of apples leads to a ____ the demand curve for apples because ____.

movement along; all other factors influencing buying plans are held constant

The income elasticity of demand for electricity is 1.90. Suppose the economy improves and incomes are expected to increase by 10 percent. This means that

power companies can expect to sell 19 percent more electricity.

The table below shows the market for frozen yogurt and the three people who make up the market.If the price is $6 per serving, ____ each week.

the market demand is 3 servings

Kiwis and strawberries are substitutes for consumers. An increase in the price of a kiwi coupled with an increase in the number of strawberry growers ________ the equilibrium price of a pound of strawberries and ________ the equilibrium quantity of strawberries.

probably changes, but more information is needed to determine if it rises or falls; increases

Kiwis and strawberries are substitutes for consumers. An increase in the price of a kiwi coupled with an increase in the number of strawberry growers, the equilibrium price of a pound of strawberries ____ and the equilibrium quantity of strawberries ___.

probably changes, but more information is needed to determine if it rises or falls; increases

The above figure illustrates a perfectly competitive firm. If the market price is $40 a unit, to maximize its profit (or minimize its loss) the firm should

produce 40 units

The table above shows the production possibilities for an economy. When the economy produces a combination of 900 books and 50 loaves of bread

production efficiency is not achieved.

Tickets to a Beyonce concert increase from $90 to $110. As a result, tickets sales fall from 100,000 to 80,000. Using the midpoint formula, the percentage change in _______which means that the elasticity of demand is ________.

quantity demanded is greater than the percent change in price; elastic

A perfectly competitive firm

sells a product that has perfect substitutes.

The above figure illustrates a perfectly competitive firm. If the market price is $10 a unit, to maximize its profit (or minimize its loss) the firm should

shut down.

The "quantity demanded" of any good or service is ____ during a specified time period and at a specified price.

the amount people are willing and able to buy

The figure above represents the competitive market for slices of key lime pie. When the price equals $3

the efficient quantity of slices is being produced.