ECON 2106 Tests 1-3

Ugly buildings create a

negative consumption externality, which we deal with by fining people who use their property as garbage dumps

Producer surplus is the ______________ a good or service, in excess of the ______________ of producing it, summed over the quantity produced.

price of; marginal cost

A substitute in production is a good that is ______________ another good, and a complement in production is a good that is ______________ another good.

produced in place of; produced together with

Harry produces 8 balloon rides and 6 boat rides an hour. Harry could not produce more balloon rides without producing fewer boat rides. Harry is ______________ his production possibilities frontier.

producing on

The graph shows the market for dried milk both before and after a subsidy.The government subsidized the production of dried milk by $2 a pound.In the graph, when the $2 a pound subsidy is introduced ______________.

the price falls by less than $2 a pound and the quantity increases

Explain why equalizing the marginal utility per dollar for all goods maximizes utility. (c.) When the last dollar spent on each good gives ______________.

the same marginal utility, then total utility cannot be increased by changing the consumption combination

In perfect competition, firms will be able to earn economic profits in:

the short run only

The elasticity of supply for a given good is strongly influenced by the time frame. For example... The momentary supply of wheat has an elasticity of supply equal to ______________. The short-run supply of wheat has an elasticity of supply equal to ______________. The long-run supply of wheat has an elasticity of supply equal to ______________.

zero; more than zero but less than infinity; infinity

What relationships do a firm's short-run cost curves show? Indicate whether the following statement is true or false. (I.) The marginal cost curve intersects the average fixed cost curve at its minimum. (II.) When marginal cost is less than average total cost, average total cost is decreasing.

False; True

In a day in the life of Jack, the following four things occur. Which is an example of resources being allocated by the command system?

His manager at McDonalds puts him on the drive-through window.

Sara's income is $20 a week. The price of popcorn is $5 a bag, and the price of a smoothie is $4. Calculate the equation for Sara's budget line.

Qp = 4 - 0.8 Qs

Consider a good with a price ceiling that is below the equilibrium price. If supply decreases, what will happen to the price in the market and the quantity exchanged in this market?

The price will stay the same and the quantity will decrease.

Tony and Patty produce skis and snowboards. The tables show their production possibilities. (a.) Is the following statement TRUE or FALSE: Tony has a comparative advantage in producing snowboards.

True

What relationships do a firm's short-run cost curves show? Indicate whether the following statement is true or false. (I.) The marginal cost curve intersects the average variable cost curve at its minimum. (II.) When marginal cost is greater than average variable cost, average variable cost is increasing.

True; True

Choose the correct statement about value.

Value is what we get, and the price is what we pay.

Which of the following statements describes a perfectly inelastic demand?

Walgreens does not find any change in the number of people buying chlorthalidone after a 7 percent rise in its price.

Choose the correct statement.

When marginal product exceeds average product, average product is rising.

The graph shows the demand curve for pizza in an isolated town that has only one pizzeria.Choose the correct statement.

When price is lowered to sell one more unit, the lower price results in a revenue loss and the increased quantity sold results in a revenue gain.

Emily recently bought some fishing equipment for $200 to join her friend on a fishing trip. On the week before the trip, she discovers that she needs a fishing license, which would cost $100. The weather forecast also predicts that it will be rainy and windy on the day of their trip. Should she join her friend on the fishing trip?

Yes, if the benefit/enjoyment of going on the fishing trip exceeds the $100 cost.

Which is an example of resources being allocated by the command system?

Your manager at McDonalds assigns you to the drive-through window

Which of the following definitely leads to a fall in the equilibrium price?

a decrease in the demand combined with an increase in supply

The graph illustrates the market for cotton. Suppose that the cotton growers use a chemical to control insects and waste flows into the town's river. The marginal social cost of producing the cotton is double the marginal private cost. Given the market depicted in the image, what is the socially optimal price and quantity?

a price of $75, and a quantity of 300 units

A good which is nontrivial and non excludable is termed

a public good

which of the following is NOT an investment in human capital?

a student purchases a laptop computer

At a price of $10 in the figure, there is

a surplus of 400 units

The law of diminishing returns says that as the firm uses more of __________, with a given quantity of __________, marginal product of the variable factor eventually diminishes.

a variable factor of production; the fixed factor of production

(b.) The demand for pens is elastic at ______________.

all prices greater than $6 a pen

What does the (positive/negative) sign of the income elasticity tell us about a good?A good with an income elasticity that is negative is ______________.

an inferior good

The figure shows the production possibilities frontier for a firm that produces pet food. Point A is __________ and point B is __________. (A is on PPF, B is outside PPF)

attainable; unattainable

What is the lowest price at which a firm produces an output? Explain why.The lowest price at which a firm will produce is the price at minimum __________because at this price its loss equals __________.

average variable cost; total fixed cost

Explain the relationship between marginal product and average product.When marginal product exceeds average product, __________ product is increasing.When average product exceeds marginal product, __________ product is decreasing.

average; average

The figure shows Phillip's budget line when he has $40 a week to spend on protein bars and movies.Which combinations of protein bars and movies can Phillip afford?Phillip can afford all combinations ______________ the budget line.

both on and inside

The figure shows Simon's budget line when he has $4 a day to spend on chewing gum and bottled water.(a.) Simon can afford all combinations ______________ the budget line.

both on and inside

A budget line is a line that describes limits to consumption possibilities and that depends on a consumer's ______________ and ______________ of goods and services.

budget; prices

A market is an arrangement that brings ______________ together and enables them to get information and do business with each other.

buyers and sellers

The production possibilities frontier is the boundary between the combinations of goods and services that ______________, given the available factors of production and the state of technology.

can be produced and the combinations that cannot be produced

A single-price monopoly

can increase the quantity they sell only by lowering the price

Price discrimination increases a monopoly's economic profit by ______

capturing consumer surplus

If, as the price of pasta decreases, the quantity of pasta sauce that people buy increases, then pasta and pasta sauce are ______________.

complements

What does the (positive/negative) sign of the cross elasticity of demand tell us about the relationship between two goods? (b.) If the cross elasticity of demand for computers with respect to the price of a DVD is negative, then computers and DVDs are ______________.

complements

Explain the key distinction between technological efficiency and economic efficiency.The key distinction between technological efficiency and economic efficiency is that technological efficiency __________ and economic efficiency __________.

concerns the quantity of inputs used in production for a given level of output; concerns the value of the inputs used

As the firm grows in scale from 3,000 to 4,000 units, it is experiencing _____.

constant returns to scale

As Ben approaches his new consumer equilibrium, his marginal utility per dollar for video games

increases

Starting from a point of consumer equilibrium, a rise in income

increases total utility

When a subsidy is paid to potato growers, the market equilibrium quantity of potatoes _______ and market price ______.

increases; falls

(e.) Originally, before specialization, Tony produced 4 snowboards and 8 skis a week, and Patty produced 9 snowboards and 18 skis a week.Now, after specialization, the total number of snowboards produced ______________ by 7, and the total number of skis produced ______________ by 10.

increases; increases

Exit is triggered in a competitive market when existing firms are _______

incurring an economic loss

Given your answer to Q7.31b...(c.) This outcome is ______________ because marginal social cost ______________marginal social benefit.

inefficient; exceeds

Sarah maximizes her total utility when she spends all her available income such that the ______________ utility per dollar is ______________ for all goods.

marginal; equal

Which of the following is an example of a price floor?

The government guarantees that potato farmers will receive at least $50 a ton.

The demand for plums is unit elastic if ______________.

a 5 percent rise in the price of plums results in a 5 percent decrease in the quantity of plums demanded

Given your answer to Q9.23a...(b.) The market structure of the tattoo industry is __________.

an oligopoly

One way to achieve an efficient, socially optimal equilibrium would be to impose a Pigovian tax equal to$ __________.

$300

The graph shows the demand for and supply of rental housing in Townsville. (b.) When a rent ceiling is set at $600 a month, the shortage ofhousing is ______________ units (think carefully about whether a shortage even exists).

0

The figure shows the supply curve of lead.Between points A and B, the elasticity of supply is ______________, so the supply of lead is ______________.

1.8; elastic

The table shows some of Brazil's production possibilities for ethanol and food crops. When the quantity of food produced increases from 1 to 2 tons of Food crops per day, the marginal cost of producing that additional ton of food is ______________barrels of ethanol.

10

The table shows a firm's total cost schedule. What is the firm's total cost if it shuts down temporarily?The firm's total cost if it shuts down temporarily is $ __________.

1000

The graph shows a labor market with an effective minimum wage. Calculate the potential loss from job search, the firms' surplus, the workers' surplus, and the deadweight loss. (a.) The potential loss from job search is $ ______________ million.

4

Using the data in the table, if the firm employs 2 workers, the average product and marginal product of the second worker are

6 and 9 respectively

Andy drinks hot chocolate every week throughout the winter. The curve illustrates Andy's total utility from hot chocolate.Total utility depends on ______________.

the level of consumption

The table gives the supply schedules of the only sellers of hot air balloon rides: Xavier, Yasmin, and Zack.What are the minimum prices that Xavier, Yasmin, and Zack are willing to accept to provide 20 rides? Why?The minimum prices that Xavier, Yasmin, and Zack are willing to accept equal ______________.

the marginal cost of producing the rides

A monopoly that can perfectly price discriminate has a marginal revenue curve that is _____ the demand curve for the good that the monopoly produces. If a monopoly can perfectly price discriminate, it produces _____ deadweight loss.

the same as; no

A perfect price discriminating monopoly produces _______

the same quantity of output as a perfectly competitive market

A bakery can produce either cakes or cookies. If the price of cookies rises, then

the supply curve of cakes shift leftward

With the new way to tap maple trees, farmers could produce 10 times as much maple syrup per acre. Will the new method change the supply of maple syrup or the quantity supplied of maple syrup, other things remaining the same? Explain. When farmers use the new method of tapping maple trees other things remaining the same, ______________.

the supply of maple syrup increases because farmers can produce more maple syrup per acre from their current trees

Why is a firm in perfect competition a price taker? A firm in perfect competition is a price taker because __________.

it produces a tiny proportion of the total output of a particular good and buyers are well informed about the prices of other firms

An indifference curve slopes downward because

it shows that when a person gives up some of good x they must increase their consumption of good y to remain indifferent

Factors of production are grouped into four categories, which are

land, labor, capital, and entrepreneurship

A rational choice is

one that compares costs and benefits and achieves the greatest net benefit for the person making the choice

A healthy person lowers the costs of a government-funded medical system.What type of externality results?This is an example of a ______________ externality.

positive consumption

The graph shows the total product curve for a firm that produces handbags. Marginal returns start to diminish when the firm hires the __________ worker.

sixth

According to the figure, the opportunity cost of producing another computer is

smaller at A (closer to vertical axis)

The greater the elasticity of demand, the ______________ the tax revenue and the ______________ is the deadweight loss.

smaller; greater

The greater the elasticity of supply, the ______________ the tax revenue and the ______________ is the deadweight loss.

smaller; greater

Explain how the marginal product and average product of labor change initially as the labor employed increases and, then, how they change eventually.As the labor employed increases, marginal product of labor initially __________.As the labor employed increases, the average product of labor initially __________.

increases and eventually decreases; increases and eventually decreases

In the market for natural gas, what will likely happen to current natural gas prices and output if the producers expect future prices to decrease? Current supply will _________, and, as a result, current prices will _________.

increase; decrease

The table sets out the demand and supply schedules for roses on a normal weekend.(a.) If the price of a rose is $6, there is a _________ of roses and the price of a rose _________.

shortage; rises

(a.) Economic growth is defined as the ______________.

sustained expansion of production possibilities

What does the supply curve tell us about the producer's minimum supply price? A supply curve ______________.

tells us the lowest price at which someone is willing to sell

The table shows the market for apartments. If a rent ceiling is set at $900 a month, the housing shortage is _______ apartments a month. If a rent ceiling is set at $1,500 a month, the housing shortage is _______ apartments a month.

300; 0

______________ is excludable and ______________ is nonexcludable.

A camera; a concert in a public park

_________ constraint limits a firm's maximum profit because _________.

A market; what a firm can sell and the price it can obtain are constrained by its customers' willingness to pay and by the prices and marketing efforts of other firms.

Which of the following is an example of a price ceiling (or price cap)?

A regulation requires cable service to be provided for no more than $30 a month

______________ is rival and ______________ is nonrival.

A seat on a bus at rush hour; national defense

Which of the following correctly describes how price adjustments eliminate a SHORTAGE?

As the price rises, the quantity demanded decreases while the quantity supplied increases.

The United States can either produce 100 clothing units or 250 computer chips in 1 hour. China can either produce 50 clothing units or 50 computer chips in 1 hour. (c.) Which country possesses a comparative advantage in the production of clothing?

China

A monopoly that perfectly price discriminates is ______

more efficient than a single-price monopoly

Claire and Doug are farmers who produce beef and corn.In a year, Claire can produce 10 tons of beef or 100 bushels of corn.In a year, Doug can produce 10 tons of beef or 80 bushels of corn.To maximize their total output of beef and corn ______________.

Doug specializes in beef and Claire specializes in corn

An increase in supply will do which of the following in a market with an effective price ceiling?

Increase the quantity exchanged in the market

Martha can produce 50 quilts or 200 batches of chocolate chip cookies in a month.Jane can produce 10 quilts or 5 batches of chocolate chip cookies in a month. (a.) _________ has an absolute advantage in both goods.

Martha

Which of the following statements describes an elastic demand?

Mary's quantity demanded of milk decreased by 8 percent when the price of milk rose by 5 percent.

Which of the following statements describe an inelastic demand?

Megan did not buy too many hockey tickets even though their price dropped by 10 percent.

Which of the following items should be considered as the cost of a spring break trip? 1. A non-refundable hotel deposit that you paid last month. 2. Food that will be consumed during the trip that is no more expensive than the food consumed if you did not go.

Neither 1 or 2

Two countries, Orange Rose and Blue Violet, produce only two goods: tea pots and coffee pots.The table gives their production possibilities. __________ has a comparative advantage in tea pots and _________ has a comparative advantage in coffee pots.

Orange Rose; Blue Violet

Consider the PPF for office buildings and housing shown in the figure. Which point in the diagram shows that resources to produce office buildings are housing are being misallocated, unused, or both?

Point F (inside the curve)

The image shows Sue's Surfboards' total product curve.Choose the correct statement.

Points that lie below the TP curve are attainable but they are inefficient.

Distinguish between production efficiency and allocative efficiency. ______________ efficiency occurs when we produce goods and services at the lowest possible cost. ______________ efficiency occurs when goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit.

Production; Allocative

Generally, opportunity costs increase and the production possibilities frontier bows outward. Why?

Resources are not equally useful in all activities

Dev and Ruth grow strawberries and raspberries.(a.) Dev has a comparative advantage in producing strawberries if ______________.

Ruth's opportunity cost of producing strawberries is greater than Dev's opportunity cost of producing strawberries

Which of the following is an example of entrepreneurship?

Sam Walton created the multinational retail corporation brand Walmart in 1962.

Which of the following statements is an example of perfectly elastic demand?

Sherry is overwhelmed with buyers of her peaches when she lowers their price by a penny a pound compared to other sellers in the farmers' market.

Describe the process that ends further exit.

Some firms exit, supply decreases, and the price rises until in the long run all firms are making normal profit. Market output decreases and the output of each remaining firm increases.

Which of the following are examples of short run and long run decisions?

Starbucks' has hired more labor to meet the increasing demand; Starbucks' has opened another store to meet the increasing demand

Imani owns an ice cream parlor. In an hour she can produce 25 milkshakes or 150 ice cream sundaes.Taylor also owns an ice cream parlor. In an hour he can produce 20 milkshakes or 60 ice cream sundaes. (c.) ________ has a comparative advantage in milkshakes and _________ has an absolute advantage in both goods.

Taylor; Imani

Which of the following is an example of a negative externality?

The new factory in the area has increased children's respiratory ailments.

Which of the following statements by Prisha demonstrates that her buying plans obey the law of demand?

The only thing that's changed is the price of textbooks: they've become more expensive and now I'm not buying as many.

The current equilibrium price of a specific type of automobiles is $23,000. An increase of a price ceiling on automobiles from $20,000 to $25,000 will do what to the amount sold in the market and to the price of automobiles?

The price of automobiles will increase and more will be sold.

If demand is elastic, should a producer raise or lower price if the producer wants to increase total revenues?

The producer should lower prices

Which of the following statements best describes search activity?

Tim spends time looking for jobs and sending applications to firms

The United States can either produce 100 clothing units or 250 computer chips in 1 hour. China can either produce 50 clothing units or 50 computer chips in 1 hour. (b.) Which country possesses an absolute advantage in the production of clothing?

United States

The graph shows Yucatan's PPF for food and sunscreen. Yucatan faces ______________ opportunity cost of food and ______________opportunity cost of sunscreen, which can be seen by the shape of the PPF.

a constant; a constant

The table shows the demand schedule and supply schedule in the market for soda. At the price of $0.60 there is ______________ and the price of soda will ______________.

a shortage of soda; rise to the equilibrium price

The graph shows the market for pizza. Buyers want to pay the lowest possible price, so they are willing to pay more than $12 for a pizza because ______________.

at $12 a pizza they cannot find enough pizzas to buy

A monopoly arises for two key reasons, which are

barriers to entry and no close substitutions

Given the total cost and total revenue curves in the figure, what are the output levels at which the perfect competitor will earn positive economic profits?

between 30,000 and 80,000 bushels

In one week Alice can produce 5 pairs of shoes and 4 bookshelves while Roger can produce 10 pairs of shoes or 6 bookshelves. Alice should specialize in the production of

bookshelves

A manufacturing company has a fixed amount of capital that cannot be increased rapidly. Suppose there is a sudden increase in the price of their product. Their supply curve is _________.

both A & C (inelastic & not very responsive to changes in price)

What is the total revenue test? The total revenue test is a method of estimating the price elasticity of demand by observing the ______________ that results from ______________, when all other influences on the quantity sold remain the same (ceteris paribus).

change in total revenue; a change in the price

An externality is a ______________ that arises from production and that falls on someone other than the producer; or a ______________ that arises from consumption and that falls on someone other than the consumer.

cost or benefit; cost or benefit

A huge noisy crowd that gathers outside the lecture room creates an external ______________.When your neighbor grows beautiful flowers on his apartment deck he creates an external ______________.

cost; benefit

When a fire alarm goes off accidentally in the middle of a lecture it creates an external ______________.When your professor offers a free tutorial after class she creates an external ______________.

cost; benefit

The short-run market supply curve is _________.

horizontal at the shutdown price

An increase in supply and a decrease in demand will:

decrease price and one cannot tell about quantity

What is the principal-agent problem? What are three ways in which firms try to cope with it? (a.) The principal-agent problem is the problem of __________.

devising compensation rules that induce an agent to act in the best interest of a principal

The restaurant Big Lobster sells lobster and fish, as does the restaurant H Salt.(b.) If H Salt and Big Lobster decide to specialize and trade, then the source of the gains from the trade between H Salt and Big Lobster is ______________.

divergent opportunity cost

Indifference curves _______

do not intersect

Any profit-maximizing firm produces where the marginal cost equals the marginal revenue in

each of the above types of markets

As the firm grows in scale from 2,000 to 3,000 units, it is experiencing _____.

economies of scale

Given your answers above...Is the supply of jeans elastic, inelastic, or unit elastic? (c.) The supply of jeans is ______________.

elastic

Rain spoils the strawberry crop, the price of strawberries rises from $4 to $6 a box, and the quantity demanded decreases from 1,000 to 600 boxes a week. (b.) Over this price range, the demand for strawberries is ______________.

elastic

The graph shows the costs of Quick Copy, one of the many copy shops near campus.The short run market price of copying one page is 10 cents.In response to the 10 cents price, firms will __________ the market in the long run.As a result, in the long run, the market price will be __________ cents a page and the equilibrium quantity will be __________ pages an hour.

enter; 6; 60

The smartphone market is in long-run equilibrium. Then the demand for smartphones increases. Describe what happens in the market for smartphones. (b.) Some firms will __________ the market, and the market supply curve will shift __________.

enter; rightward

In the market for potatoes, the marginal social cost _______ marginal social benefit.

exceeds

The night before a history test, you decide to watch television instead of reviewing your notes. You get 70 percent on your test compared with the 80 percent that you normally score. You ______________, and the opportunity cost of your evening watching television was ______________.

faced a tradeoff between a higher test score and an evening watching television; the 10 percent fall in your grade

When resources are allocated to the first in line the allocation method is ______________. When resources are allocated by the order of someone in authority, the allocation method is ______________.

first-come, first-served; command system

The U shape of the average total cost curve arises because of spreading total __________ cost over a larger output and eventually __________ returns.

fixed, diminishing

Land is the __________ that we use to produce goods and services

gifts of nature or natural resources

An indifference curve is a line that shows combinations of _________ among which a ________ is indifferent.

goods; consumer

What are the effects of a minimum wage set below the equilibrium wage? A minimum wage set below the equilibrium wage ___________.

has no effect on the equilibrium wage rate or the quantity of labor employed

In the figure, a price ceiling of $4 would

have no effect

What is the relationship between individual supply and market supply?The market supply curve is the ______________ sum of the individual supply curves. It is formed by adding ______________.

horizontal; the quantities supplied by all the producers at each price

When an economy chooses to produce more plastic bags using recycled plastic, it is answering the _________ question.

how

What decisions must a firm make to maximize profit? To maximize profit, a firm in perfect competition must decide __________.

how to produce at minimum cost, what quantity to produce, and whether to enter or exit a market

Consider a market with an effective price floor. What will happen to the quantity exchanged in the market if demand for the product increases? The quantity exchanged will ______________.

increase

Supply decreases in a market and demand increases. The price in the market will:

increase

The price of smartphones falls. What is the effect on the price and quantity of music-streaming subscriptions? The equilibrium quantity of subscriptions _________ and the equilibrium price _________.

increases; rises

Given the image in part a, the market equilibrium is

inefficient

In perfect competition, each firm

is a price taker

Making a product slightly different from the product of a competing firm _________.

is called product differentiation

Economic profit _______

is equal to total revenue minus both the explicit and implicit costs of production

(c.) The opportunity cost of economic growth ______________.

is fewer consumption goods today

Marginal utility

is the change in total utility that results from a one-unit increase in the quantity of a good consumed.

The supply of apples in the short run will be ______________ than the supply in the long run and ______________ than the supply today.

less elastic; more elastic

Assume a firm faces a market where there are individuals with elastic demands and inelastic demands. What should it do if it wishes to maximize revenues? Assume this firm can engage in price discrimination.

lower prices for those with elastic demand and raise them for those with inelastic demand

Lin's makes fortune cookies. Anyone can make and sell fortune cookies, so there are dozens of producers. All fortune cookies are the same and buyers and sellers know this fact.In what type of market does Lin's operate?What determines the price of fortune cookies? What determines Lin's marginal revenue? (b.) The price of a fortune cookie is determined by __________. Lin's marginal revenue from a fortune cookie equals __________.

market demand and market supply; price

What is a firm's fundamental goal and what happens if the firm doesn't pursue this goal?The fundamental goal of a firm is to __________. If a firm fails in this goal, it is __________.

maximize profit; either eliminated or bought by other firms that do seek to maximize profit

In the market for blankets, the value of the 20th blanket is the ____________.

maximum price that someone is willing to pay for the 20th blanket

Consumer surplus is

measured as the marginal benefit (or value) of a good minus the price paid for it, summed over the quantity bought

The table shows alternative ways of laundering 100 shirts.If the wage rate is $1 and the rental rate of capital is $100, __________ is economically efficient.If the wage rate is $5 and the rental rate of capital is $50, __________ economically efficient.

method D; methods C and D are (C: 20 hours, 4 machines) (D: 50 hours, 1 machine)

Explain why equalizing the marginal utility per dollar for all goods maximizes utility. (a.) If the marginal utility per dollar from hot chocolate exceeds the marginal utility per dollar from video games, buy ______________ hot chocolate and play ______________ video games to maximize total utility.

more; fewer

When you smoke in a restaurant, you are creating a

negative consumption externality

Monopoly is a market in which one firm sells a good or service that has substitutes and ________ blocks the entry of new firms.

no close; a barrier

A common resource is ______________.A public good is ______________.

non excludable and rival; non excludable and nonrival

If it is impossible to prevent someone from benefiting from a good regardless of whether or not the person paid for it, then the good is

nonexcludable

External costs prevent a competitive market from allocating resources efficiently because firms consider ______________ when they make their production decisions.

only the costs that they bear

The marginal cost of producing a good or service is the ____________.

opportunity cost of producing one more unit of it

When a ________ is applied to a labor market, it is called a minimum wage.

price floor

What does the cross elasticity of demand measure? The cross elasticity of demand is a measure of the responsiveness of the demand for a good to a change in the ______________, other things remaining the same (ceteris paribus).

price of a substitute or complement

All points on the PPF are points of ______________ efficiency. When we produce at the point on the PPF that we prefer above all other points we achieve ______________ efficiency.

production; allocative

The table shows the production possibilities for a farmer who grows apples and potatoes. We for sure know that Choice D is ___________.

productively efficient

Both supply and demand increase. What will happen to quantities sold in a market?

quantities will increase

A demand curve shows the relation between the ______________ and ______________ when all other influences on buying plans remain the same.

quantity demanded of a good; its price

Total product is the total __________ of a good produced in a given period.Marginal product is the change in __________ product that results from a one-unit increase in the __________.Average product is the total product divided by the __________.

quantity; total; quantity of labor employed; quantity of a factor of production

If Josie wants to increase her total revenue from her sales of chocolate, and she knows that the demand for chocolate is price inelastic, she should

raise her price because she knows that the percentage decrease in the quantity demanded will be smaller than the percentage increase in price.

Demand is inelastic if a price ______________ increases total revenue.

rise

When your marginal grade exceeds your GPA, your GPA ________

rises

Amy has $20 a week to spend on coffee and cake. The price of coffee is $4 a cup, and the price of cake is $2 a slice. Then Amy's income increases to $24 a week and the prices of coffee and cake remain unchanged. What happens to Amy's budget line when her income increases and the prices of coffee and cake remain unchanged?Amy's new budget line will ______________.

shift outward and have the same slope as the original budget line

If the U.S. has an absolute advantage in the production of software and the production of computers when compared to Mexico, but has a comparative advantage in the production of software, it should produce:

software and let Mexico produce computers

Given your answer to Q7.8a, the tax is ______________.

split between the buyer and the seller

What does the (positive/negative) sign of the cross elasticity of demand tell us about the relationship between two goods? (a.) If the cross elasticity of demand for a T-shirt with respect to the price of a tank top is positive, then T-shirts and tank tops are ______________.

substitutes

If as the price of a sports car increases, then the quantity of sedans that firms plan to sell decreases. Thus, sports cars and sedans are ______________.

substitutes in production

Economics is the social science that studies the choices

that we make as we cope with scarcity

Why does a single-price monopoly produce a smaller output and charge more than the price that would prevail if the market were perfectly competitive? A single-price monopoly produces a smaller output and charges more than the price that would prevail if the market were perfectly competitive because _____.

the demand curve is downward sloping and a single-price monopoly produces the quantity at which marginal revenue equals marginal cost

The expected price of a smartphone next year rises.What is the result of this event?As a result, ______________.

the demand for smartphones today increases

In the market for sunscreen, the supply of sunscreen will decrease if ______________.

the number of sunscreen manufacturers decreases

Complete the following sentence.Microsoft's marginal cost of producing the 100th copy of Microsoft Windows 10 is ______________.

the opportunity cost of producing the 100th copy of Windows 10

A major disadvantage of a proprietorship is that __________.

the owner's entire wealth is at risk

The elasticity of supply is calculated by dividing ______________ by ______________.

the percentage change in the quantity supplied; the percentage change in the price

Firms are institutions that organize ____________ of goods and services

the production

Ricky and Lucy want to open a fitness club and operate it as a partnership. What is a partnership?A partnership is a firm with __________ who have __________ liability.

two or more owners; unlimited

How does an effective price floor in the labor market affect worker surplus as compared to before the price floor?

uncertain

Technological efficiency occurs when the firm produces a given output by ________.

using the least amount of inputs

Every day we make many choices. We can't avoid having to make choices because

we can't afford to do all the things we'd like to do

The graph shows the market for college education.The market equilibrium is indicated in red.The graph also depicts the deadweight loss created when the government leaves education to the private market. If education is provided by private schools that charge full-cost tuition, ______________.

we would produce too few college graduates

A golf club membership is a normal good.If the price of a golf club membership is expected to rise next year, you predict that the demand for golf club memberships ______________ now.

will increase

Dan's Donut company has a total fixed cost of $250 per week. The firm's average variable cost is $5 for 50 donuts. At this level of output, the firm's average total cost equals

$10

Concert goers pay ____ of the tax, sellers pay ____ of the tax, and the government collect ____ of tax revenue

$1; $1; $600

(b.) The equilibrium price is $ ______________ a smoothie.

2

The table shows various methods for producing blue jeans.Which method is technologically inefficient?Method __________ is technologically inefficient.

D (4 inputs of labor, 3 inputs of capital)

Consider the above table, which shows five possible choices of output combinations for Dave's restaurant. If we put Pizza on the X axis and Salad on the Y axis, describe the shape of the Production Possibility Frontier.

Downward sloping and bowed outward away from origin

A company is producing 5,000 pairs of shoes per day. At this level of production, if they were to produce one more pair of shoes, it would cost them $20. What is the best description of the $20?

It is a marginal cost.

(b.) Given your answer in Q5.15a... If you were making the pricing decision at Universal Music would you cut the price, raise the price, or leave the price unchanged?

Raise the price to increase total revenue

"As more people buy computers, the demand for Internet service will increase and the price of Internet service will decrease. The fall in the price of Internet service will decrease the supply of Internet service." This statement is ______________ because ______________.

false; an increase in demand for Internet service does not decrease the price of Internet service, and a decrease in the price of Internet service does not decrease the supply of Internet service

Total fixed cost is the cost of the _________. Specifically, the cost of ________, ________, and ________.

firm's fixed factors of production; land, capital, entrepreneurship

The benefit of something is the ___________. Benefit is determined by preferences - by what a person ____________ and the intensity of those feelings.

gain or pleasure it brings; likes and dislikes

An increase in the demand for smartphones and an increase in the supply of smartphones occur together. What is the effect on the price and quantity of smartphones? (a.) An increase in the demand for smartphones together with an increase in the supply of smartphones ________ create a surplus or a shortage of smartphones at the original price. The equilibrium price of smartphones _________.

might; might fall; rise or not change

Concerned about the political fallout from rising gas prices, the U.S. government decides to impose a price ceiling on gasoline of $4.00 a gallon.If the equilibrium price of gasoline to $3.00 a gallon, ________. The market for gasoline is __________.

neither a surplus nor a shortage of gasoline emerges and a black market does not emerge; efficient

Fundamental economic problems basically arise from

our wants exceeding our scarce resources

Your decision to attend summer school is rational if

your benefit form the summer school course is greater than its cost

Liz loves to eat popcorn. Still, the more she eats, the less she wants each additional bite. Liz is exhibiting

diminishing marginal utility

When Sam increases smoothie production from 4 gallons to 5 gallons, his total cost of production increases from $32.50 to $36.85. Calculate Sam's marginal cost of producing smoothies.

$4.35

The table gives some data on the supply of roses in a small town. When the price rises from $15 a dozen to $25 a dozen, the elasticity of supply is ______________.

0.80

In 2003, when music downloading first took off, Universal Music slashed the average price of a CD from $21 to $15. The company expected the price cut to boost the quantity of CDs sold by 30 percent, other things remaining the same. (a.) Universal Music's estimate of the price elasticity of demand for CDs was ______________.

0.9

Tony and Patty produce skis and snowboards. The tables show their production possibilities. (b.) Is the following statement TRUE or FALSE: Tony has a comparative advantage in producing skis.

False

Which of the following is an example of price-discrimination?

IMAX charges $6 per movie ticket for children younger than 8, and $8.50 per movie ticket for adults.

Which definition of 'scarcity' is most accurate

It describes the fact that our wants are greater than our abilities to satisfy them, so we must make choices about how to allocate resources

The fact that people with higher incomes get to consume more goods and services, and higher-end goods and services addresses the _________ question.

for whom

The market supply curve is the ______________ sum of the individual supply curves. It is formed by adding the ______________.

horizontal; quantities supplied by all the producers at each price

The "law of demand" is illustrated by

an increase in the quantity demanded when the price falls

Sales of Spam are rising as consumers realize that Spam and other lower-cost foods can be substituted for costlier cuts of meat as a way of controlling their already stretched food budgets. Is Spam a normal good or an inferior good? Explain.Spam is ______________ good because ______________.

an inferior; as the income available to buy meat decreases, consumers buy more spam

According to marginal utility theory, a rise in income will

increase a consumer's total utility

(a.) If the price of a printer falls from $80 to $40, while all other influences on buying plans are unchanged, the quantity of printers demanded ______________.

increases

An increase in the demand for smartphones and an increase in the supply of smartphones occur together. What is the effect on the price and quantity of smartphones? (b.) The equilibrium quantity of smartphones __________.

increases

Under perfect price discrimination, economic profit ______ relative to a single-price monopolist setting.

increases

An increase in the expected future price of a good

increases current demand

Why does the PPF bow outward and what does that imply about the relationship between opportunity cost and the quantity produced? The PPF bows outward because as we move from point A to point B to point C , the opportunity cost of producing a jacket ______________.

increases. Resources are not equally productive in all activities

When Mohesha receives an increase in her pay check from $1,800 a month to $2,200 a month, she increases the quantity of hot chocolate that she buys from 19 cups a month to 21 cups a month. Mohesha's demand for hot chocolate is income ______________. For Mohesha, hot chocolate is ______________ good.

inelastic; a normal

A profit-maximizing monopoly never produces an output in the _____ range of its _____ curve.

inelastic; demand

U.S. drivers are ranked as the least sensitive to changes in the price of gasoline. For example, if the price rose from $3 to $4 per gallon and stayed there for a year U.S. purchases of gasoline would fall only about 5 percent. (b.) Does the measurement from part (a.) indicate that the demand for gasoline is elastic, unit elastic, or inelastic? The price elasticity of demand for gasoline is ______________, and a rise in the price of gasoline ______________ total revenue from gasoline sales.

inelastic; increases

Honolulu number 3 in the world for the most unaffordable housing market in urban locations, behind Los Angeles and San Diego and is deemed "severely unaffordable." With significant constraints on the supply of land for residential development, housing inflation has resulted. The supply of housing in Honolulu is ______________. The ______________ elastic the supply of housing, the greater the rise in the price of housing when demand increases.

inelastic; less

The short run is a time period during which

at least one factor of production is fixed

Economic efficiency occurs when the firm produces a given output _______

at the least cost

In the figure, as output increases, the distance between curves B and C decreases because

average fixed cost decreases as output increases

The average total cost curves for plants A, B, C, and D are shown in the figure. The plant size that is the most economically efficient

depends on the desired level of output

Sue's Surfboards rents a factory. If the rent rises by $200 a week and other things remain the same, how do Sue's Surfboards' short-run average cost curves and marginal cost curve change? (a.) If other things remain the same, the average fixed cost curve __________ and the average variable cost curve __________.

shifts upward; does not change

Sue's Surfboards rents a factory. If the rent rises by $200 a week and other things remain the same, how do Sue's Surfboards' short-run average cost curves and marginal cost curve change? (b.) If other things remain the same, the average total cost curve __________, and the marginal cost curve __________.

shifts upward; does not change

If total fixed cost increases, then the average total cost curve __________ and the marginal cost curve __________.

shifts upward; does not shift

Suppose that the demand for shoes is elastic, but the supply is inelastic. In the market for belts, the demand and the supply of belts are elastic. Assume that everything else is the same and that the increase in costs reduces quantities supplied in each case by the same amount at each price. In which market will a change in the costs of inputs have the greatest effect on the price?

shoes

If the price of a video rental is below its equilibrium price, there will be a _________ of video rentals and the price will ________.

shortage; rise

The graph shows the market for pizza. If the price of a pizza is $12, a ______________ exists and the price ______________.

shortage; rises

The greater the elasticity of supply, the ______________ is the amount of the tax paid by sellers and the ______________ the decrease in the quantity bought.

smaller; greater

What is the principal-agent problem? What are three ways in which firms try to cope with it? (b.) Three ways of attempting to cope with the principal-agent problem are __________.

ownership, incentive pay, and long-term contracts

Why is the equilibrium price the best deal available for both buyers and sellers?The equilibrium price is the best deal available for both buyers and sellers because buyers ______________ and sellers ______________.

pay the highest price they are willing to pay; receive the lowest price at which they are willing to sell

The graph shows the demand for and supply of potato chips. The blue and curves show the original equilibrium. shows the effect of a virus that destroys potato crops and decreases the quantity of potato chips produced by 40 million bags a week at each price. The virus decreases the ______________.

supply of potato chips and decreases the quantity of potato chips demanded

The table shows the ORIGINAL demand and supply schedules for milk.Now suppose good weather increases the quantity supplied by 135 cartons a day at each price. (a.) Given this change, at the original equilibrium price there is now a _______ of milk. The price of milk will _______and the quantity of cartons demanded will ________as the market moves to its new equilibrium.

surplus; fall; increase

(b.) Now a rise in the price of gym memberships decreases the quantity demanded of running shoes by 200 pairs a week at each price.At the original equilibrium price, a ______________ occurs. As the market adjusts to the new equilibrium, the price of a pair of running shoes _________.

surplus; falls

The table sets out the demand and supply schedules for roses on a normal weekend.(b.) If the price of a rose is $9, there is a ___________ of roses and the price of a rose __________.

surplus; falls

The figure shows Morgan's marginal benefit curve for ice cream. If the price of ice cream is $3 per gallon, then the gallon that gives Morgan exactly zero consumer surplus is

the 8th gallon

When the marginal product of labor exceeds the average product of labor,

the average product of labor is increasing

You can stay in school or you can quit school and get a full-time job. You have an incentive to stay in school if ______________.

the benefit from staying in school is greater than the cost of staying in school

The AFC curve has this shape because

when output increases, the firm spreads its total fixed cost over a larger output

The free-rider problem is the absence of an incentive for

people to pay for what they consume

The price elasticity of demand is calculated by dividing the ______________ by the ______________.

percentage change in the quantity demanded; percentage change in the price

Why does a consumer spend the entire budget? A consumer spends the entire budget because ______________.

more consumption brings more utility, and thus only those choices that exhaust income can maximize utility

Explain why equalizing the marginal utility per dollar for all goods maximizes utility. (b.) If the marginal utility per dollar from video games exceeds the marginal utility per dollar from hot chocolate, play ______________ video games and buy ______________ hot chocolate to maximize total utility.

more; less

Monday Island produces only tomatoes and pineapples. The marginal cost of a tomato is the number of pineapples that ______________ to get one more ______________.

must be forgone; tomato

The market depicted below has an externality present. To correct the _________ externality, a quota should be set to __________.

negative production; 40 goats

Provide examples of externalities.A paper mill dumping its waste chemicals into a river is an example of a ______________ externality.Building a light display on your front yard in December is an example of a ______________ externality.

negative production; positive consumption

Sales of Spam are rising as consumers realize that Spam and other lower-cost foods can be substituted for costlier cuts of meat as a way of controlling their already stretched food budgets. Would the income elasticity of demand for Spam be negative or positive? Explain. The income elasticity of demand for Spam is ______________ because as income falls, the quantity of Spam demanded ______________.

negative; increases

Lin's makes fortune cookies. Anyone can make and sell fortune cookies, so there are dozens of producers. All fortune cookies are the same and buyers and sellers know this fact. In what type of market does Lin's operate?What determines the price of fortune cookies? What determines Lin's marginal revenue? (a.) Lin's fortune cookies operates in a __________ market.

perfectly competitive

The figure shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the total surplus?

$12,000

The figure shows the market for coffee beans. When the efficient quantity of coffee beans are produced, the total producer surplus is

$20 million (bottom half of triangle)

Consider the budget line in the figure. If the price of a movie is $8.75, and the price of a book is $21, then what must this consumer's income be?

$210

A university purchased a plot of land for $1 million last year. The land could be used for a shopping mall and the mall developers are willing to pay $2 million for the plot of land. It would cost the university $3 million to build a dorm on the land. The benefit of the dorm must be at least ________ for the decision to build the dorm to make sense.

$3 million

If the government regulates the market depicted below with a production quota set at 10 units per year, then the price of this good will be

$4 per unit

The figure shows the market for transportation services, which produces an external cost due to the air pollution that is created. Suppose that the government decides to introduce a pollution tax. What is the tax per vehicle mile that will achieve the efficient outcome?

$6

Greg, a landscaper, is planning on opening his own landscaping company. He currently earns $40,000 per year working for his uncle but he will need to quit that job. He hires one employee at an annual wage of $20,000. Greg plans to use $20,000 in savings to pay for equipment he needs, and the market value of the equipment at the end of the year is $15,000. The current interest rate on savings is 5 percent. Greg also buys $5,000 of services from other firms. Greg predicts that the revenue from the new landscaping company is $100,000 a year. What is total opportunity cost incurred by Greg in running his own business?

$71,000

An incentive is

a reward that encourages an action or a penalty that discourages an action

The principle of decreasing marginal benefit implies that the

additional benefit from obtaining one more of a good or service decreases as more is consumed

Economic growth is shown on the production possibilities frontier (PPF) as

an outward shift of the PPF

The figure below depicts the market for fruit snacks. In the figure, which transition reflects a decrease in the price of a complement for fruit snacks?

from point a to point d (middle point of center line to point on right line)

If there is a negative externality associated with the production of a good, then the unregulated competitive market produces

more than the socially efficient quantity, since the external costs are not accounted for in the supply-equals-demand equilibrium

A country that must decrease production of one good in order to increase production of another

must be producing on its production possibilities frontier

The price elasticity of demand depends on

neither the units used to measure price nor the units used to measure quantity

The figure shows the market for pizza before and after a tax is introduced. The tax on pizza is _______ per pizza, buyers pay _______ of tax per pizza, and the government's tax revenue is ______.

$3.00; $2.00; $150 thousand

The table above represents the daily demand and supply schedules for tacos at the corner taco cart. Two things change simultaneously: A decrease in the price of falafels decreases the quantity demanded by five tacos per day at every price, and a tax on tacos decreases the quantity supplied by 15 tacos at every price. The new equilibrium price and quantity will be:

$3.25 and 283 tacos.

The table shows the firm's total product schedule.Sue's Surfboards hires each worker at $500 a week.Its total fixed cost is $1000 a week. When output is 160 surfboards a week, average fixed cost is _______ a surfboard and average variable cost is ________ a surfboard.

$6.25; $12.5

The table gives the demand and supply schedules for college meals. The equilibrium price is _______ a meal and the equilibrium quantity of meals is __________ meals a week.

$6; 2,500

The table sets out the demand and supply schedules for roses on a normal weekend.(c.) What is the market equilibrium?At the market equilibrium, the price of a rose is ______________ and ______________ roses per week are bought and sold.

$7; 100

The table gives the supply schedules of the only sellers of hot air balloon rides: Xavier, Yasmin, and Zack. The minimum price that Xavier is willing to accept to provide 20 rides is ___________ per ride. The minimum price that Yasmin is willing to accept to provide 20 rides is ___________ per ride. The minimum price that Zack is willing to accept to provide 20 rides is ___________ per ride.

$80; $90; $100

If a sales tax of $2 a ticket is imposed on sellers of concert tickets, what price does a concert-goer pay for a ticket and how many tickets are bought? With a $2 tax per ticket, concert-goers pay ____ a ticket and buy ____ tickets.

$8; 300

A firm is deciding whether or not to complete the building of a new office. Given the following data, what is the relevant cost of building an office building? I. $10 million has been spent to date. II. The partially completed building and land can be sold for $4 million. III. Additional labor and material necessary to complete the office building costs $5 million.

$9 million

The image below shows the cost curves of a firm in a perfectly competitive market, facing an initial market price of $12. If the market price suddenly decrease from $12 to $8, what is the new quantity this firm will produce? What is the total revenue, total costs, and total economic loss associated with this level of production? (b.) Given your answer to Q10.39a, the firm's total revenue will be _______, their total costs will be _______, and their economic loss will be _______.

$960; $1560; $600

Which consumption bundle may potentially maximizes Simon's utility?

(2 water, 4 gum)

The slope of Sara's budget line is ________

-0.8

Sue's Surfboards can operate with one plant or two plants.The graph shows the average total cost curve, ATC1 for one plant and the average total cost curve, ATC2 for two plants.To produce 180 surfboards a week, is it is efficient to operate withone or two plants?To produce 160 surfboards a week, is it is efficient to operate withone or two plants? To produce 180 surfboards a week, it is efficient to operate with __________.To produce 160 surfboards a week, it is efficient to operate with __________.

1 plant; 1 plant

The graph shows Brazil's PPF for ethanol and food crops. If Brazil increases production of ethanol from 40 barrels per day to 54 barrels per day, the opportunity cost of the additional 14 barrels of ethanol is ______________of food crops.

1 ton

The table shows Yucatan's production possibilities. The opportunity cost of 1 gallon of sunscreen is ______________ pounds of food.

2.0

When Judy's income increased from $600 to $640 a week, she increased her demand for concert tickets by 15 percent and decreased her demand for bus rides by 5 percent.Calculate Judy's income elasticity of demand for concert tickets. (a.) Judy's income elasticity of demand for concert tickets is ______________.

2.33

In the figure, the marginal cost of the fifth computer is

20 televisions (vertical axis)

The table shows the Gabrielle's total utility from manicures.What is the marginal utility she receives from her fourth manicure? (c.) The marginal utility from her fourth manicure is ______________ utils.

28

The table shows the utility that Jason receives from DVDs and spy novels.If the price of a DVD is $20 and the price of a spy novel is $10, and Jason has $60 to spend on these two goods, how many of each does he buy if he is maximizing utility? Jason buys _______ DVDs and _______ spy novels.

2; 2

The table sets out the supply schedule of jeans.Calculate the elasticity of supply when the average price is $125 a pair. (b.) The elasticity of supply when the average price is $125 a pair is ______________.

3.57

In the graph, Sue's AFC curve is ________. The AVC curve is _______. The ATC curve is _______. The MC curve is ______.

4; 3; 2; 1 (1-4 moving down the right side of graph)

The top table shows the market demand schedule for DVDs and the bottom table shows the cost structure of each firm. The market for DVDs is perfectly competitive.In long-run equilibrium, the number of firms in the market is __________ and the market price of a DVD is __________.

50; $10

Nancy bought a laptop for $1,260 on Thanksgiving 2012 and she plans to sell it for $750 on Thanksgiving 2013. Her economic depreciation for the laptop is $ __________.

510

The graph shows the market for tulips before and after a tax is imposed on tulip suppliers. The original equilibrium is indicated at point 1, and the post-tax equilibrium is identified at point 2. Use the image to answer the following question. (a.) The size of the tax is $______________

6

The table gives the original, pre-tax demand and supply schedules for chocolate brownies. If sellers are taxed 20 cents a brownie, what is the price of a brownie and who pays the tax? The new price of a brownie paid by buyers is ______ cents.

70

The table shows four methods of producing 10 computer desks a day. If the cost of a worker is $100 a day and the cost of capital is $100 a day, which of the following methods are economically efficient? If the cost of a worker is $100 a day and the cost of capital is $100 a day, economical efficiency occurs with method __________.

A (1 worker, 3 units of capital)

Which of the following statements is an example of elasticity of supply?

A 10 percent fall in the price of turkey with no other change decreases quantity supplied by 12 percent.

Which of the following statements is correct?

A change in demand means a shift in the demand curve, while change in the quantity demanded means a movement along the demand curve.

Choose the statement that is correct.

A technologically inefficient method is never economically efficient.

Tina employs 4 people in her pizza store, where she produces 12 pizzas an hour. Her total fixed cost, total variable cost, and total costs of pizza production per hour are $15, $19.40, and $34.40 respectively. Calculate Tina's average fixed cost, average variable cost and average total cost.

$1.25; $1.62; $2.87

The table shows the firm's total product schedule.Sue's Surfboards hires each worker at $500 a week.Its total fixed cost is $1000 a week. When the Sue's output is 120 surfboards a week, the firm's total fixed cost is ________, total variable cost is __________, and total cost is _________.

$1000; $1500; $2500

The top table shows the market demand schedule for paper in a perfectly competitive market.Each firm has the costs shown in the bottom table.(b.) In the long run, the equilibrium price is __________ a box and market output is __________ boxes a week.

$10; 200,000

The table gives the demand and supply schedules for sandwiches. The maximum price that consumers are willing to pay for the 100th sandwich an hour is _________. The minimum price that consumers are willing to pay for the 100th sandwich an hour is _________. If 200 sandwiches per hour are available, the total surplus is ______.

$4; $2; $400

Using the graph from Q11.12a, over what price range is the demand for water​ elastic?The demand for water from Minnie's is elastic between the prices of _____ a bottle.

$5 and $10

When the price of a loaf of garlic bread increases by 4 percent, the quantity of lasagna demanded decreases by 2 percent. Calculate the cross elasticity of demand for lasagna with respect to the price of a loaf of garlic bread. (a.) The cross elasticity of demand for lasagna with respect to the price of a loaf of garlic bread is ______________.

-0.5

When Judy's income increased from $600 to $640 a week, she increased her demand for concert tickets by 15 percent and decreased her demand for bus rides by 5 percent.Calculate Judy's income elasticity of demand for bus rides. (b.) Judy's income elasticity of demand for bus rides is ______________.

-0.78

The graph illustrates the demand for Sandi's hand-made greeting cards.Assume Sandi's pricing strategy is that of a single-price monopolist. (b.) What is Sandi's marginal revenue when production increases from 4 cards to 5 cards?

-8

U.S. drivers are ranked as the least sensitive to changes in the price of gasoline. For example, if the price rose from $3 to $4 per gallon and stayed there for a year, then U.S. purchases of gasoline would fall only about 5 percent. (a.) The price elasticity of demand for gasoline is ______________.

0.175

In one hour, Saanvi can produce 50 caps or 10 jackets, and Tessa can produce 70 caps or 7 jackets. (a.) Saanvi's opportunity cost of producing a cap is ______________ jackets and Tessa's opportunity cost of producing a cap is ______________ jackets.

0.2, 0.1

When the price of a gallon of gasoline increases by 5 percent and the price of a bus ride remains unchanged, the quantity of bus rides demanded increases by 10 percent. The cross elasticity of demand of bus rides with respect to gasoline is ______________.

2.0

A 8 percent rise in the price of orange juice decreases the quantity of orange juice demanded by 12 percent and increases the quantity of apple juice demanded by 20 percent. (b.) The cross elasticity of demand for apple juice with respect to the price of orange juice is ______________.

2.5

The table gives the supply schedules for jet-ski rides by the only suppliers: Rick, Sam, and Tom.What is the marginal social cost of producing 45 rides a day?The marginal social cost of producing 45 rides a day is $ ______________.

20

The total utility obtained from three packs of potato chips is 36 utils, and the total utility obtained from two packs is 32 utils. The marginal utility from the third pack is ______________ unit(s).

4

Jake has a budget of $10 per week to spend on song downloads and cookies. The table shows his marginal utility from each good.If the price of a song is $1 and the price of a cookie is $2, how does Jake allocate his $10 between songs and cookies? Jake buys ________ songs and _______ cookies to maximize his utility.

6; 2

Sarah, Kirk, and Jean are the only producers of cheesecakes in an isolated village. The table shows their weekly supply of cheesecakes.When the price of a cheesecake is $7.50, what is the quantity of cheesecakes supplied by the market in a week? The quantity supplied by the market is ______________ cheesecakes a week.

7

Demand is unit elastic if a price ___________ leaves total revenue unchanged

cut or rise

Two countries, Alpha and Beta, have identical production possibilities frontiers. If Alpha produces at point A and Beta produces at point B, then ____________.

Alpha consumes more than Beta today, but it will grow slower than Beta

In one hour, Saanvi can produce 50 caps or 10 jackets and Tessa can produce 70 caps or 7 jackets. (c.) If Saanvi and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 7 caps, ______________.

Both Saanvi and Tessa gain

The restaurant Big Lobster sells lobster and fish, as does the restaurant H Salt.(a.) If Big Lobster's opportunity cost of preparing lobster exceeds H Salt'sopportunity cost of preparing lobster, then ______________.

H salt has a comparative advantage in preparing lobster

Describe the process that ends further entry.

New firms enter, supply increases, and the price falls until in the long run all firms are making normal profit. Market output increases and the output of each individual firm decreases.

If, as Adrienne's income decreases, her demand for vacations decreases , then for Adrienne , vacations are ______________.

a normal good

A good with an income elasticity greater than one is ______________. A good with an income elasticity that is positive and less than 1 is ______________.

a normal good that is income elastic; a normal good that is income inelastic

Demand for a luxury is generally more ______________ than demand for a necessity because a luxury has ______________ substitutes.

elastic; more

A choice on the margin is a choice that is made by comparing all the relevant ______________ systematically and ______________.Marginal cost is the ______________ that arises from a one unit ______________ in an activity.Marginal benefit is the ______________ that arises from a one unit ______________ in an activity.

alternatives; incrementally; opportunity cost; increase; benefit; increase

A price floor holds prices above the equilibrium price. If nothing else changes, there will:

always be a surplus

Marginal private cost is the cost of producing ______________ of a good or service that is borne by the ______________ of that good or service.Marginal external cost is the cost of producing ______________ of a good or service that falls on people other than the ______________.

an additional unit; producer; an additional unit; producer

The graph shows the demand for and supply of potato chips. The blue and curves show the original equilibrium. shows the effect of a new dip that increases the quantity of potato chips that people want to buy by 60 million bags per week at each price. The effect of the new dip on the market for potato chips is ______________.

an increase in demand and an increase in the quantity of potato chips supplied

What is an indifference curve and how does a preference map show preferences?An indifference curve shows ______________.A preference map shows that a person prefers combinations ______________.

combinations of goods among which a consumer is indifferent; on higher indifference curves to combinations on lower indifference curves

Why do people specialize and trade? With specialization and trade, people can ______________.

consume at a point outside their PPF

Given the following data, what should the firm do? Current production = 1,000 Current price = $10 Marginal cost = $10 Total costs = $15,000 Fixed cost = $6,000

continue to produce in the short run, but exit in the long run

Given the following facts, what should the firm do in the short run? In the long run?Fixed costs are $50,000. Total costs are $90,000. Total revenues are $45,000.

continue to produce in the short run; leave the industry in the long run

The graph shows the market for cotton.A small town is surrounded by a large cotton farm. The cotton grower sprays the plants with chemicals to control insects and the chemical waste flows into the river passing through the town.Complete the sentence.A Pigovian tax ______________.

creates an efficient outcome when it is set equal to the marginal external cost

In January 2010, the price of gasoline was $2.70 a gallon. By spring 2010, the price had increased to $3.00 a gallon. Assume that there were no changes in average income, population, or any other influence on buying plans. Given the law of demand, you would expect the rise in the price of gasoline to ______________ the quantity of gasoline demanded and ______________ the demand for gasoline.

decrease; not change

The key assumption about marginal utility is that marginal utility ______________.

decreases as consumption increases

When an effective production quota is applied in the market for rice, the quantity produced _______ and the price _______.

decreases; rises

The graph shows the demand curve for coal. The government imposes a sales tax on sellers of coal. It turns out that the buyers end up paying the entire tax.The more ______________ the supply, ______________.

elastic; the larger is the amount of the tax paid by buyers

The income elasticity of demand is a measure of the responsiveness of the demand for a good or service to a change in ______________, other things remaining the same.

income

Ski trips and ski jackets are complements.If the price of a ski trip decreases , how does the demand for ski jackets change?If the price of a ski trip decreases, the demand for ski jackets will ______________.

increase , and the demand curve for ski jackets will shift rightward

As the average income in China continues to increase, explain how the following will change: (a) The demand for beef (b) The demand for rice. As the average income in China continues to increase, we would expect the demand for beef to ______________ and the demand for rice to ______________.

increase if beef is a normal good; decrease if rice is an inferior good

Roses and chocolates are substitutes.Russell spends all of his income on roses and chocolates and he is in consumer equilibrium.The price of roses falls. (b.) In response to the price change, Russell ______________ roses and ______________ chocolate.

increases his quantity demanded of; decreases his demand for

(c.) As the market adjusts to its new equilibrium, the quantity demanded _________, and the quantity supplied _________.

increases; decreases

The graph shows the supply curve for a vital-for-life drug (i.e. the drug is essential). As such, the demand curve for this drug is perfectly inelastic. Now imagine the government imposes a tax on this drug. Use what you know about taxes and elasticity to correctly complete the sentence. The more ______________ the demand, ______________. Thus, in this market buyers would pay _____________.

inelastic; the larger is the amount of the tax paid by buyers; the whole tax

The graph shows the market for office space in a crowded city center. Suppose the government imposed a sales tax on city center office space, and the sellers end up paying the entire tax. Given this information, correct complete the sentence below. The more ______________ the supply, ______________.

inelastic; the larger is the amount of the tax paid by sellers

Consider the apartment rental market. What is a rent ceiling and what are its effects if it is set above or below the equilibrium rent? (b.) A rent ceiling set above the equilibrium rent ______________.

is ineffective

What are the items that make economists' measure of cost differ from an accountant's measure of cost? Consider how the following, which are part of a firm's opportunity cost of production, are treated by accountants.Economic depreciation __________ in an accountant's measure of cost. Interest forgone __________ in an accountant's measure of cost.

is not included; is not included

Total utility ______________.

is the total happiness that a person gets from the consumption of all the different goods and services

The graph shows Brazil's PPF. Complete the following sentences. Brazil faces a tradeoff on its PPF because if it increases the quantity of food produced ______________.

it decreases the quantity of ethanol that it produces

Resource use is efficient when ___________

it is not possible to make someone better off without making someone else worse off

A minimum wage creates an inefficient allocation of labor resources because at the quantity of employment ___________

marginal social benefit exceeds marginal social cost

Suppose that the price of a sundae falls but all other influences on buyers' plans remain the same.If the price of a sundae falls , a ______________ the demand curve occurs.If any factor that influences buying plans other than the price changes, then a ______________ the demand curve occurs.

movement down along; shift of

Ski trips and ski jackets are complements. The cross elasticity of demand for ski trips with respect to the price of a ski jacket must be ______________.

negative

The four types of externality are

negative production, negative consumption, positive production, positive consumption

An increase in the cost of producing leather boots, combined with a change in tastes away from leather boots to running shoes, will cause which of the following changes in prices of leather boots?

one cannot tell

What externalities arise from beautiful and ugly buildings and how do we deal with them? (a.) Beautiful buildings create a ______________.

positive consumption externality, which we deal with by having competitions that encourage beautiful design and landscaping

A firm does research and development which can also be applied in the manufacturing processes of other firms. What kind of externality results?The resulting externality is an example of a ______________.

positive production externality

Any consumption bundle on indifference curve I2 is ____________ to all consumption bundles on indifference curve I1. Any consumption bundle on indifference curve I3 is ____________ to all consumption bundles on indifference curve I1.

preferred; less preferred

In perfect competition, a firm maximizes its economic profit if it produces the output at which __________.

price equals marginal cost

A decrease in income and producers' expect future prices to increase. If the good is a normal good, which of the following is correct? One cannot tell about ______________.

price, but quantity will decrease

A supply curve shows the relationship between the ______________ and ______________ when all other influences on selling plans remain the same.

quantity supplied of a good; its price

If there is a shortage, then the price will ______________ to its equilibrium, which ______________.

rise; decreases the quantity demanded and increases the quantity supplied

A firm producing where price equals marginal cost that has variable costs equaling $60 million; fixed costs equaling $40 million; and revenues equaling $50 million should:

shut down now and leave the industry in the long run

The graph shows the market for pillows in which the government has imposed a sales tax of $6 per pillow on sellers. Point 1 marks the pre-tax equilibrium price and quantity. Point 2 marks the post-tax equilibrium quantity, and the post-tax price paid by buyers, while point 3 marks the post-tax price received by sellers.Use the image to answer the following question. The tax is ______________.

split evenly between sellers and buyers

What are the two measures of concentration? Explain how each measure is calculated. (b.) The Herfindahl-Hirschman Index is the __________ of the percentage market share of each firm summed across the largest __________ firms (or summed across all the firms if there are fewer than __________) in a market.

square; 50; 50

Which of the following statements are positive? 1. We should save the rainforests 2. The greatest number of accidents are caused by drunk drivers 3. Most iPods are purchased by teenagers 4. Every house should have a pet

statements 2 and 3 are positive statements

Technological change is ______________ new goods and of ______________ of producing goods and services.

the development of; better ways

The shape of the ATC curve arises because of

the influence of two opposing forces--spreading total fixed cost over a larger output and eventually diminishing returns

The graph shows Brazil's PPF for ethanol and food crops. The opportunity cost of producing an additional ton of food crops is equal to ______________.

the inverse of the opportunity cost of producing an additional barrel of ethanol

The magnitude of the slope of the indifference curve is

the marginal rate of substitution

What is price discrimination and how is it used to increase a monopoly's profit? Price discrimination is ___________

the practice of selling different units of a good or service for different prices according to the consumers' willingness to pay

Define the price elasticity of demand.The price elasticity of demand is a units-free measure of the responsiveness of ______________.

the quantity demanded of a good to a change in its price when all other influences on buying plans remain the same

If the quantity of dental services demanded increases by 10 percent when the price of dental services falls by 10 percent, is the demand for dental services inelastic, elastic, or unit elastic?The demand for dental services is ______________.

unit elastic

All of the following are incentives for you to take a class in summer school except

you prefer summer outdoor activities to winter outdoor activities

Wilbur's Water Spring is a monopoly selling bottled water. The graph shows the marginal revenue and marginal cost curves and the demand curve for Wilbur's water. If Wilbur's can perfectly price discriminate, the consumer surplus is ______.

$0

The table shows the ORIGINAL demand and supply schedules for milk.Now suppose good weather increases the quantity supplied by 135 cartons a day at each price. (b.) The NEW equilibrium price is $ __________a carton and theNEW equilibrium quantity is __________ carton a day

$1.60; 525

Over the summer, you decide to take summer school, which precludes you from working at your usual summer job that earns you $7000 over the summer. Your summer school tuition is $2000, textbooks are $400, and room and board is $3500. The opportunity cost of attending summer school is. _____.

$12900

You plan to travel in Europe this summer. If you do, you won't be able to take your usual summer job that pays $10,000 for the summer, and you won't be able to live at home for free. The cost of transportation is $1,000 , visas cost $300 , and living expenses are $1,700. What is the opportunity cost of your plan to travel in Europe? Your opportunity cost is what you would have purchased with $ ______________ if you did not go to Europe.

$13000

Mario's Pizza is the only pizza place in Sorrento City. Mario's Pizza is a perfect price discriminator. The graph shows the market demand curve for pizza in Sorrento City. What is the marginal revenue from the 20th pizza sold in an hour? The marginal revenue from the 20th pizza sold in an hour is _____.

$15

The image below shows the cost curves of a firm in a perfectly competitive market, facing an initial market price of $12. If the market price suddenly increase from $12 to $16, what is the new quantity this firm will produce? What is the total revenue this firm will make if market price increases to $16? What is the profit this firm will make if market price increases to $16? (b.) If the market price increases to $16, then the firm's total revenue will be

$2,400

Eric , a medical student, buys four cups of coffee a day, which costs him $8.00.He decides to buy one more cup each day and his expenditure on coffee increases to $10.00.The marginal cost to Eric of a cup of coffee is ______________.

$2.00

The table gives the cost of producing T-shirts. The total fixed cost is ________ and the marginal cost of increasing production from 10 to 12 T-shirts is ________.

$20, $8

The deadweight loss is ___. The tax revenue is ____.

$200; $1200

Bob's Books is the only bookstore in town. The graph shows the demand curve for books and Bob's Books' marginal revenue curve and marginal cost curve. How does Bob's Books maximize its profit as a single-price monopolist? Bob's Books maximizes its profit by charging _____ a book and selling _____ books a year.

$22; 16,000

The market equilibrium occurs at a price of ________ a ton and a quantity of ________ tons a week.

$250; 8,000

How does a single-price monopoly determine the price it will charge its customers? (b.) Grannie's is the only cake bakery on Coastal Island. The graph shows Grannie's demand curve, marginal revenue curve, and marginal cost curve. Grannie's profit-maximizing price is _____ a cake and its profit-maximizing output is _____ cakes a week.

$28; 12

The graph shows the market for books.The market for books initially has no taxes and is in competitive equilibrium.Then a tax of $4 a book is imposed on the buyers of books.What is the tax paid by sellers on a book and what is the tax paid by buyers on a book?The tax paid by the seller is ______________ a book and the tax paid by the buyer is ______________ a book.

$2; $2

The table gives the cost of producing shirts. When 5 shirts are produced, the average fixed cost is ________ and the average variable cost is ________.

$2; $6.40

The image below shows the cost curves of a firm in a perfectly competitive market, facing an initial market price of $12. If the market price suddenly increase from $12 to $16, what is the new quantity this firm will produce? What is the total revenue this firm will make if market price increases to $16? What is the profit this firm will make if market price increases to $16? (c.) If the market price increases to $16, then the firm's profit will be

$300

The graph shows the market for books. The market for books initially has no taxes and is in competitive equilibrium. Then a tax of $6 a book is imposed on the sellers of books. What is the tax paid by sellers on a book and what is the tax paid by buyers on a book? The tax paid by the seller is ______________ a book and the tax paid by the buyer is ______________ a book.

$3; $3

Alice purchased two nonrefundable tickets to see a rap artist for $100. Because of recent publicity and the release of a new album, she can sell the tickets on eBay for a total of $400. If she and her boyfriend go to the concert, they will give up going to a party with their friends. Their cost of going to the concert is the enjoyment of party plus:

$400

The graph shows the demand for and supply of rental housing in Townsville. The equilibrium rent is _______ a month and the equilibrium quantity of rental housing is ______ units.

$450; 20,000

The graph shows the market for tulips before and after a tax is imposed on tulip suppliers. The original equilibrium is indicated at point 1, and the post-tax equilibrium is identified at point 2. Buyers pay _______ of the tax, and sellers pay _______ of the tax.

$4; $2

The graph shows Minnie's demand curve and marginal revenue curve. Minnie's total revenue is maximized at a price of ______ a bottle.

$5

Tina's marginal utility from a notebook is 42 units. At a price of $8 per notebook, what is the marginal utility per dollar from a notebook?

$5.25

The table shows the firm's total product schedule.Sue's Surfboards hires each worker at $500 a week.Its total fixed cost is $1000 a week. When output is 30 surfboards a week, average total cost is ______ a surfboard and when output increases from 0 to 30 surfboards a week marginal cost is _______ a surfboard.

$50; $16.67

The table gives the supply schedules for jet-ski rides by the only suppliers: Rick, Sam, and Tom. The price of a ride is $17.50. Rick's producer surplus is ________. Sam's producer surplus is ________. Tom's producer surplus is ________.

$56.25; $25; $6.25

Over the summer, you decide to attend a music camp. The tuition for music camp is $2000. The cost of books and music equipment is $300. Instead of music camp, you could have worked at a local coffee shop and earned $4000 over the summer. What is the true cost of choosing to attend music camp?

$6300

Barbara owns a truck stop on the prairies, miles from anywhere. The graph shows her marginal revenue and marginal cost curves and the demand curve she faces.How many fewer meals does Barbara serve than she would if the market were perfectly competitive? The deadweight loss that results from the behavior of the monopoly is _______ per year.

$64,000

The table gives the demand and supply schedules for college meals. If the college put a price ceiling on meals at $7 a meal, the price students pay for a meal is _______ and they buy _______ meals a week.

$6; 2,500

The table shows the original, pre-tax demand and supply schedules for tickets to a concert in the park. With no tax on concert tickets, the price is ____ a ticket and ____ concert tickets are bought (i.e. find the original equilibrium).

$7; 400

(a.) The table shows the demand and supply schedules for running shoes. The equilibrium price of a pair of running shoes is $ ________ and the equilibrium quantity is ________ pairs a week.

$90.00; 700

The graph shows the market for lawnmowers when a tax is imposed on sellers. Calculate the amount of consumer surplus, producer surplus, deadweight loss, and tax revenue after the imposition of the tax. Consumer surplus is ____. Producer surplus is ____.

$900; $900

Define the type of barrier to market entry: (Scenario A.) When economies of scale enable one firm to supply the entire market at the lowest possible cost, the firm is benefitting from a _____. (Scenario B.) JK Rowling's copyright on the Harry Potter series of books is an example of _____.

(A.) natural barrier; (B.) legal barrier

The graph shows a labor market with an effective minimum wage.Calculate the potential loss from job search, the firms' surplus, the workers' surplus, and the deadweight loss. (b.) The firms' surplus is $ ______________ million

0.5

The graph shows a labor market with an effective minimum wage.Calculate the potential loss from job search, the firms' surplus, the workers' surplus, and the deadweight loss. (c.) The workers' surplus is $ ______________ million

0.5

The table shows Yucatan's production possibilities. The opportunity cost of 1 pound of food is ______________ gallons of sunscreen.

0.5

Suppose a rise in the price of peaches from $5.50 to $6.50 per bushel decreases the quantity demanded from 12,500 to 11,500 bushels. The price elasticity of demand is (in absolute value)

0.50

Rain spoils the strawberry crop, the price of strawberries rises from $4 to $6 a box, and the quantity demanded decreases from 1,000 to 600 boxes a week. (a.) Over the price range of $4 to $6 , the price elasticity of demand is ______________.

1.25

The table shows the market for chocolate bars. A tax of $0.20 per chocolate bar is imposed on sellers. What is the new price of a chocolate bar?

1.3

The figure shows the demand for pens. (a.) The elasticity of demand when the price rises from $6 to $8 a pen is ______________.

1.4

A 8 percent rise in the price of orange juice decreases the quantity of orange juice demanded by 12 percent and increases the quantity of apple juice demanded by 20 percent. (a.) The price elasticity of demand for orange juice is ______________.-Answer to 1 decimal place and do NOT include the negative sign

1.5

The table shows the total product schedule for a firm that produces jeans.When the firm produces 80 pairs of jeans, what is the average product of labor? When the firm produces 80 pairs of jeans, the average product of labor is _______pairs of jeans per worker.

10

If a rent ceiling is set at $300 a month, what quantity of housing will ultimately be rented?The quantity of housing rented under a $300 rent ceiling is ______________ units.-Remember that the quantity given on the x-axis is in thousands of units

10,000

One year ago, Jack and Jill set up a vinegar-bottling firm (called JJVB).Use the question facts to calculate JJVB's opportunity cost of production during its first year of operation.JJVB's opportunity cost of production during its first year of operation is $ __________. 1. Jack and Jill put $60,000 of their own money from their savings account into the firm. 2. There is a 6% interest rate for all money in their savings account. 3. They bought equipment for $50,000. 4. The market value of the equipment at the end of the year was $45,000. 5. They hired one employee at an annual wage of $25,000. 6. They bought $5,000 of services from other firms. 7. Jack gave up his previous job at which he earned $50,000. 8. Jill kept her old job which paid $25 an hour, but gave up 10 hours of leisure each week for 50 weeks to work for JJVB.

101100

Given your answer to part a... Buyers pay ____ cents of the tax, and sellers pay ____ cents of the 20 cent tax.

10; 10

The image below shows the cost curves of a firm in a perfectly competitive market, facing an initial market price of $12. If the market price suddenly decrease from $12 to $8, what is the new quantity this firm will produce? What is the total revenue, total costs, and total economic loss associated with this level of production? (a.) If the market price decreases to $8, then the firm will produce _______.

120 units

The graph shows the market for kumquats.Point 1 marks the original equilibrium price and quantity.The government then decides to subsidize kumquat producers $20 a basket.Point 2 marks the new, post-subsidy equilibrium price and quantity.Point 3 marks the marginal cost at the new equilibrium quantity.Use the image to answer the following question. The total subsidy paid by the government to all kumquat farmers is $ ______________ million.

1200

Max enjoys windsurfing and snorkeling. The table shows the total utility he gets from each activity. Max has $35 a day to spend on windsurfing and snorkeling and he can spend as much time as he likes doing them. The price of renting equipment for windsurfing is $10 an hour and for snorkeling is $5 an hour. Calculate Max's marginal utility per dollar form windsurfing for the following 'hours per day' 1st hour: ________ 2nd hour: ________ 3rd hour: ________

12; 10; 8

The graph shows Brazil's PPF for ethanol and food crops. If Brazil increases production of food crops from 2 tons per day to 3 tons per day, the opportunity cost of the additional ton of food crops is ______________ barrels of ethanol.

14

Byron plays softball two nights a week and his current grade in economics is 80 percent.He decides to play softball for three nights each week and his economics grade falls to 65 percent.The marginal cost to Byron of playing softball one more night each week is ______________.

15 percentage points

The table shows Gabrielle's total utility from manicures. What is Gabrielle's total utility when she buys 4 manicures. When Gabrielle buys 4 manicures, the total utility that she receives is _____ utils.

150

The image below shows the cost curves of a firm in a perfectly competitive market, facing an initial market price of $12. If the market price suddenly increase from $12 to $16, what is the new quantity this firm will produce? What is the total revenue this firm will make if market price increases to $16? What is the profit this firm will make if market price increases to $16? (a.) If the market price increases to $16, then the firm will produce _______.

150 units

The table gives the demand and supply of teenage labor. If a minimum wage of $5 an hour is set for teenagers, the teenagers work _______ hours a month and _______ hours a month are unemployed.

1500; 0

When income increases by 4 percent and all prices remain the same, the quantity of smartphones demanded increases by 8 percent.The income elasticity of demand of smartphones is ______________. If your answer is negative, include a minus sign. If your answer is positive, do NOT include a plus sign.

2.0

Suppose that the price of a cashmere sweater is $100 and Jean's marginal benefit from a cashmere sweater is $300. If Jean buys 1 cashmere sweater, what is her consumer surplus? Jean's consumer surplus is $ ______________.

200

The graph shows the marginal cost, average total cost, and marginal revenue curves for Dave's Donuts. How many donuts does Dave's produce? What is the size of its economic profit or loss? Dave's produces ________ donuts an hour and _________ of _________ an hour.

20; incurs an economic loss; $20

There are five firms in a market and the market shares of the firms are 30 percent, 25 percent, 20 percent, 15 percent, and 10 percent. What is the Herfindahl-Hirschman Index for this market?The Herfindahl-Hirschman Index for this market is __________.

2250

Imani owns an ice cream parlor. In an hour she can produce 25 milkshakes or 150 ice cream sundaes.Taylor also owns an ice cream parlor. In an hour he can produce 20 milkshakes or 60 ice cream sundaes. (b.) Now calculate Taylor' s opportunity cost of producing a milkshake.Taylor' s opportunity cost of producing 1 milkshake is __________ ice cream sundaes.

3

The figure shows Jessica' s PPF. Jessica currently produces 15 bags of chips and no mints. If Jessica decides to produce 1 bag of mints, her opportunity cost of the bag of mints is ______________ of chips.

3 bags

The table sets out the supply schedule of jeans.Calculate the elasticity of supply when the price rises from $125 to $135 a pair. (a.) The elasticity of supply when the price rises from $125 to $135 a pair is ______________.

3.25

U.S. coal production in 2016 is 17 percent down on that of 2015. Almost all coal use in the United States is for electricity generation and the price of coal for power plants fell from $2.27 per million Btu in 2015 to $2.17 per million Btu in 2016. The price elasticity of supply of coal is ______________.

3.8

The graph shows the marginal cost, average total cost, and marginal revenue curves for Lou's Lattes. How many lattes does Lou's produce? What is Lou's economic profit or economic loss? Lou's produces ______ lattes an hour

30

The market for vases is perfectly competitive.The price of a vase is $30. When the firm increases the number of vases it produces from 4 to 5, its marginal revenue is $______.

30

The table shows the cost structure of a firm selling granola bars in a perfectly competitive market. What is the quantity at the firm's shutdown point?The firm's shutdown point occurs at a quantity of __________ boxes of granola bars a week.

300

The graph shows the demand curve for a nursing education.The marginal cost of this education is $4,000 a year and the marginal external benefit is $3,000 per student per year.If the government offers students vouchers, what is the value of the voucher that will achieve the efficient number of students?The value of the voucher that achieves the efficient number of students is $ ______________ per student.

3000

The table shows Jennifer's marginal utility from tea and shortbread.Jennifer has $10.00 to spend each day on tea and shortbread.The price of tea is $2.00 a cup and the price of shortbread is $1.00 a piece.When Jennifer maximizes her total utility, how many pieces of shortbread does she buy each day and what is her marginal utility per dollar from shortbread? Jennifer's marginal utility per dollar on shortbread is ________

38

The table shows Lily's marginal utilities from chicken and fish.Lily has $27 to spend each week on chicken and fish. Chicken costs $3 a serving and fish costs $9 a serving. Lily will consume __________servings of chicken and __________ servings of fish each week.

3; 2

Wilbur's Water Spring is a monopoly selling bottled water. The graph shows the marginal revenue and marginal cost curves and the demand curve for Wilbur's water. If Wilbur's acts as a single-price monopolist, it produces ______ cases of water a day. If Wilbur's can perfectly price discriminate, it produces ______ cases of water a day, the price of the last case of water sold is ______.

3; 6; $1.50

Pam has $10 a day to spend on bottled water and ice cream.The price of a bottle of water is $2.00 and the price of an ice cream cone is $1.00.Assume Pam spends all of her budget. If Pam decides to buy 2 ice cream cones, then how many bottles of water must she buy? She buys __________ bottles of water.

4

The graph illustrates the demand for Sandi's hand-made greeting cards.Assume Sandi's pricing strategy is that of a single-price monopolist. (a.) What is Sandi's marginal revenue when production increases from 1 cards to 2 cards?

4

The graph shows a labor market with an effective minimum wage. Calculate the potential loss from job search, the firms' surplus, the workers' surplus, and the deadweight loss. (d.) The deadweight loss is $ ______________ million.

4

The table describes the market for pesticide, which is a market with a negative externality.When a factory produces pesticide, it dumps waste into a lake. A trout farm uses the lake.If the market is unregulated, what is the quantity of pesticide produced? (b.) If the market is unregulated, the quantity of pesticide produced is ______________ tons a week.

4

(b.) The figure shows the demand curve for printers. If the price of a printer falls from $80 to $40, ceteris paribus, then the quantity of printers demanded changes from _______ to ________.

4 million; 12 million

Barbara owns a truck stop on the prairies, miles from anywhere. The graph shows her marginal revenue and marginal cost curves and the demand curve she faces.How many fewer meals does Barbara serve than she would if the market were perfectly competitive? Barbara serves ______ fewer meals a week than she would if the market were perfectly competitive.

40

It's been two weeks since you ate a burger. You'd be willing to pay $15 to buy a burger. Fortunately, it only costs $10. What is your consumer surplus?

5

The table shows the total product schedule of a firm that uses 1 sewing machine.The firm rents the sewing machine for $15 a day and pays its workers $30 a day.When the firm increases production from 11 to 17 pairs of jeans a day, what is marginal cost? The marginal cost when the firm increases production from 11 to 17 pairs of jeans a day is $ __________.

5

The table shows Yucatan's production possibilities. If Yucatan produces 200 pounds of food per month, it must produce ______________ galIons of sunscreen to achieve production efficiency.

50

Imani owns an ice cream parlor. In an hour she can produce 25 milkshakes or 150 ice cream sundaes.Taylor also owns an ice cream parlor. In an hour he can produce 20 milkshakes or 60 ice cream sundaes. (a.) Calculate Imani' s opportunity cost of producing a milkshake.Imani' s opportunity cost of producing 1 milkshake is _________ ice cream sundaes.

6

The table shows Jennifer's marginal utility from tea and shortbread. Jennifer has $10.00 to spend each day on tea and shortbread. The price of tea is $2.00 a cup and the price of shortbread is $1.00 a piece. When Jennifer maximizes her total utility, how many pieces of shortbread does she buy each day and what is her marginal utility per dollar from shortbread? When Jennifer maximizes her total utility, she buys ________ pieces of shortbread each day.

6

Sara and Zoe are the only people in an economy. The following data tells you about their purchases of soda. Sara bought 3 bottles when the price is $3 a bottle, 4 bottles when the price is $2 a bottle, and 5 bottles when the price was $1 a bottle. Zoe bought no soda when the price was $3 a bottle, 2 bottles when the price is $2 a bottle, and 3 bottles when the price was $1 a bottle. Which statement correctly describes a quantity of soda demand point in the soda market?

6 bottles are demanded when the price is $2 a bottle

The table shows sales of the firms in the tattoo industry. Calculate the four-firm concentration ratio.(a.) The four-firm concentration ratio is __________ percent.

64.84

A Personal Care Study conducted by TABS Analytics shows that Walmart has a 19.4 percent share of the $40 billion personal care market, while grocery stores Kroger and Public each have a 16.6 percent share, and Target, 12.8 percent.Source: drugstorenews.com, March 23, 2017 (a.) The four-firm concentration ratio is __________ percent. Answer to 1 decimal place.

65.4

Now, if buyers are taxed 20 cents a brownie, what is the price of a brownie and who pays the tax? The price of a brownie paid by buyers is ____ cents. Buyers pay ____ cents of the tax and sellers pay ____ cents of the tax.

70; 10; 10

The table gives the total product schedule for Flora's Flower Shoppe. If Flora's increases the number of workers hired from 2 to 3, what is the marginal product of labor? If Flora's increases the number of workers hired from 3 to 4, what is the marginal product of labor? If Flora's increases the number of workers hired from 2 to 3, the marginal product of labor is ______bouquets.If Flora's increases the number of workers hired from 3 to 4, the marginal product of labor is ______ bouquets.

70; 40

The table gives the demand and supply schedules for smoothies. What is the equilibrium price of a smoothie and the equilibrium quantity of smoothies per day? The equilibrium quantity of smoothies is ______________ a day.

75

The table sets out the ORIGINAL demand and supply schedules for roses on a normal weekend.Next weekend is Mother's Day. Rose sellers know that it is Mother's Day next weekend and they expect the price to be higher next weekend, so this week they withhold 60 roses from the market at each and every price. What is the price of a rose this weekend? The price of a rose this weekend is $ ______________.

8

The graph shows the demand and cost conditions facing Adam's Angling Suppliers, a monopoly purveyor of fishing flies in the local mountains. If Adam's Angling Suppliers acted competitively (rather than monopolistically), it would increase the quantity it produced by _____.

8 flies a day

(d.) The NEW equilibrium price is $ __________ a pair. Morgan's Note: Recall from part (b.), there was a decrease in the quantity demanded of running shoes by 200 pairs a week at each price.

80

Assume a linear demand curve. The demand curve intersects the price axis at $10. The price of the good is $2 and the quantity sold is 20. Calculate the consumer surplus.

80

Max enjoys windsurfing and snorkeling. The table shows the total utility he gets from each activity. Max has $35 a day to spend on windsurfing and snorkeling and he can spend as much time as he likes doing them. The price of renting equipment for windsurfing is $10 an hour and for snorkeling is $5 an hour. Calculate Max's marginal utility per dollar from snorkeling for the following 'hours per day' 1st hour: __________ 2nd hour: __________ 3rd hour: _________

8; 6; 2.4

The table shows alternative ways of laundering 100 shirts.If the wage rate is $50 and the rental rate of capital is $5, method __________ is economically efficient.

A (1 hour, 10 machines)

Choose the statement that is correct.

A firm practices price discrimination when it sells different units of the same good or service for different prices.

Identify which of the following statements is FALSE?

A good with a straight line, downward sloping demand curve has a demand whose elasticity is constant.

The table shows alternative ways of laundering 100 shirts. Which methods are technologically efficient?

All methods (1 hour labor, 10 machines; 5 hours, 8 machines; 20 hours, 4 machines; 50 hours, 1 machine)

Aqua Springs makes the following four statements about bottled spring water. Which statement best describes the firm's quantity supplied in the bottled water market?

At a price of $1 bottle, we plan to sell 2,000 bottles per day

Jeb makes the following four statements about peanuts. Which statement best describes his quantity demanded in the peanut market?

At a price of $1 per pack, I plan to buy 2 packs of peanuts per week.

Which of the following statements illustrates a rent ceiling?

Bluestone Properties is permitted to charge a rent of $2,350 for 2-bedroom apartments that would rent for $2,500 in an unregulated market.

The table gives techniques that Fatz Confectionary can use to produce 2,000 pounds of candy. Which technique will never be economically efficient?

B (90 capital, 20 labor)

The table shows various methods of producing blue jeans.If labor costs $10 a unit and capital costs $100 a unit, which method is economically efficient?If labor costs $10 a unit and capital costs $100 a unit, method __________ is economically efficient.

C (3 units of labor, 3 units of capital)

Which of the following is correct about specialization and trade?

Countries should specialize in and export the goods in which they have comparative advantages.

The table shows the total utility that Ellen and John get from apple pies.Given this information, which of the following statements is true?

Ellen and John have identical marginal utilities

Which of the following illustrates diminishing marginal returns?

Hiring more workers decreases the productivity of each additional worker

Consider the market for chicken. Which of the following statements describes a change in the quantity supplied and which describes a change in supply? I. Farms are selling less chicken because the price of turkey has increased. II. Farms are selling less chicken because the price of chicken has fallen. III. Farms are selling more chicken because the price of chicken has risen. IV. Farms are selling more chicken because the cost of chicken feed has fallen.

I and IV are changes in supply and II and III are changes in the quantity supplied.

Which of the following statements about the market for chicken describes a change in the quantity demanded and which describes a change in demand? I. People are buying less chicken because the price of beef has fallen. II. People are buying less chicken because the price of chicken has increased. III. People are buying more chicken because the price of chicken has fallen. IV. The cost of chicken feed has increased.

I is a change in demand and II and III are changes in the quantity demanded.

Which of the following statements is about a normal good, which is about an inferior good, which is about both, and which is about neither? I. With incomes falling in the recession, people are buying more chicken. II. People are buying more beef now that incomes have increased. III. People are buying more chicken because the price of chicken has fallen. IV. With higher incomes people are switching from chicken to beef.

I is inferior, II is normal, III is neither, and IV is both

Which of the following is an example of product differentiation?

I prefer Nike shoes while my friend prefers Puma shoes.

Which of the following illustrates a tradeoff?

I will study for my exam instead of going to the movie tonight.

For Jay, the opportunity cost of 1 cake is 12 cookies. For Rosa, the opportunity cost of 1 cake is 8 cookies. Given the information above, select all statements about terms of trade that are TRUE:

If Jay and Rosa each specialize in producing the good in which they have a comparative advantage and trade 1 cake for 10 cookies then both will be better off. If Jay and Rosa each specialize in producing the good in which they have a comparative advantage and trade 1 cake for 8 cookies then Rosa will be neither better off nor worse off. If Jay and Rosa each specialize in producing the good in which they have a comparative advantage and trade 1 cake for 14 cookies then Rosa would be better off but Jay would be worse off so the trade would not take place.

You and your friends are on your way to watch a football game. You all spent $70 each on tickets to the game. On the way to the game, you lose your ticket. You now need to decide whether or not to purchase another $70 ticket. Which of the following best describes that decision?

Is the football game worth paying $70 to attend?

Choose the statement that is incorrect in regards to rational choice.

It is never a rational choice to decide to enter the labor force immediately following high school.

the most Brad would be willing to pay to take a snowboard vacation over spring break is $3,000. He purchases a plane ticket, a room, and a snowboard pass for a total of $2,500. Suppose a friend says "Sell me the travel, room, and lift tickets. I will pay you $3,500." Which of the following best describes the situation?

It is not rational for Brad to go snowboarding as the true cost has risen to $3,500 plus the value of what he would have done with his time.

Martha can produce 50 quilts or 200 batches of chocolate chip cookies in a month.Jane can produce 10 quilts or 5 batches of chocolate chip cookies in a month. (b.) __________ has a comparative advantage in quilts. _________ has a comparative advantage in cookies.

Jane; Martha

A city passes a law that automobile prices may not increase. The auto market is currently in equilibrium. What will happen in that market if costs of producing autos increase?

Less than the allocatively efficient amount will be produced.

When opportunity cost is constant at all levels of output, the production possibilities frontier is:

Linear and downward sloping

Which of the following illustrates economies of scale, diseconomies of scale, and constant returns to scale? Liza's average total cost changes from $4.50 to $2.20 when she increases production from 7 to 9 units. Sam's average total cost changes from $1.30 to $2.80 when he increases production from 5 to 8 units. Tina's average total cost remains at $3 when she increases production from 12 to 13 units.

Liza faces economies of scale; Sam faces diseconomies of scale; Tina faces constant returns to scale

Choose the correct equation.

MSC = MC + Marginal external cost

The graph shows Marjorie's total utility curve for apple pies.Which of the following statements is true?

Marjorie's marginal utility from pies gets smaller as she consumes more pies

(d.) Originally Tony produces 4 snowboards and 8 skis a week, and Patty produces 9 snowboards and 18 skis a week.If Tony and Patty now specialize and trade, _________ specializes in skis and produces _________.

Patty; 36 skis

In an hour, Simon can catch 4 pounds of pickerel or pick 8 pounds of apples.In an hour, Fred can catch 4 pounds of pickerel or pick 20 pounds of apples. (b.) So ______________ has a comparative advantage in producing ______________.

Simon; pickerel

In one hour, Saanvi can produce 50 caps or 10 jackets and Tessa can produce 70 caps or 7 jackets. (b.) ______________ has a comparative advantage in producing caps.

Tessa

Which of the following statements is a normative macroeconomic statement?

The US government should increase unemployment benefits.

A government is considering whether to tax each firm in a competitive market directly on each unit of output or to charge the same tax on each of its consumers for each unit of output. What will happen?

The after-tax equilibrium quantities will be the same in both cases.

If buyers and sellers both expect future prices to increase, what will happen to the current equilibrium price?

The current equilibrium price will increase.

Julia has four options for spring break. All involve visiting friends in either California, Colorado, Florida, or New Mexico. Her favorite option is New Mexico. Her second favorite is California. If the costs of travel are all the same, what is the cost of choosing New Mexico?

The enjoyment of visiting friends in California.

Paper bags are an input into McDonald's drive-thru meal production. All else equal, if the price of paper bags decreases, which of the following is true?

The equilibrium price of McDonald's meals decreases, and the equilibrium quantity increases.

Suppose that income increases and at the same time the prices of inputs used in making a good decrease. The good is an inferior good. What to happen in the market for the good?

The equilibrium price will decrease, but the quantity may increase or decrease.

All else equal, if a firm increases the price of its good by 5% and it sells 10% fewer units, which of the following is true?

The firm's product has an elastic demand and its revenue decreases

When you chose to buy the third cookie instead of the fourth slice of pizza which of the following is necessarily CORRECT?

The marginal utility per dollar from the fourth slice of pizza is less than the marginal utility per dollar from the third cookie.

A market for gas has an equilibrium price of $2.00 per gallon. There is also currently a price ceiling of $2.75. A decrease in the price ceiling from $2.75 to $1.75 will do what to the quantity sold in the market and to the price of gas?

The price of gas will decrease and fewer units of gas will be sold.

The image below depict's Lisa's budget line. If Lisa has $150 a month to spend on these two goods, given the budget line depicted below what must the price of the hockey game be? The price of a concert ticket?

The price of hockey game must be $50, while the price of a concert ticket must be $75

Suppose that the supply of new apartments is elastic, while the supply of new homes is inelastic. Compare the results of a decrease in demand in both markets.

The price of new apartments will change by less than the price of new houses. The quantity of new apartments will change by more than the number of new houses.

Which of the following is the opportunity cost of attending a ball game?

The things you would have bought with what you spent on the ticket and bus fare getting to the game plus the things you would alternatively have done with your time.

Which of the following is an example of absolute advantage?

Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task.

(c.) Originally Tony produces 4 snowboards and 8 skis a week, and Patty produces 9 snowboards and 18 skis a week.If Tony and Patty now specialize and trade, _________specializes in snowboards and produces _________.

Tony; 20 snowboards

The graph illustrates Acme, Inc.'s short-run total cost curves.Choose the statement that is correct.

Total variable cost and total cost both increase as output increases

Imani owns an ice cream parlor. In an hour, she can produce 25 milkshakes or 150 ice cream sundaes.Taylor also owns an ice cream parlor. In an hour, he can produce 20 milkshakes or 60 ice cream sundaes. (d). If Imani and Taylor each specialize in producing the good in which they have a comparative advantage, then which of the following terms of trade will result in both Imani and Taylor being better off?

Trade 1 milkshake for 4 sundaes Trade 1 milkshake for 5 sundaes

(c.) Is the following statement TRUE or FALSE: The change in the price of a printer illustrates the law of demand in action.

True

Brent would love to go to India. In fact, he would be willing to pay as much $5,000 to go, but only has to pay $3,000. Knowing what we know, the best description of his opportunity cost of going to India would be which of the following?

What he could buy with $3,000 and what he would do with his time instead of going.

Choose the statement that is correct

When a price is regulated and there is a shortage, search activity increases.

A decrease in the market demand for a product combined with a rise in prices of inputs will cause which of the following in the short run?

a decrease in market quantity

Distinguish between the short run and the long run. In the short run, ________. In the long run, __________

a firm's plant is fixed; a firm can change its plant

Total variable cost is the cost of the _________. Specifically, the cost of _________.

a firm's variable factor of production; labor

Consider the apartment rental market. What is a rent ceiling and what are its effects if it is set above or b the equilibrium rent? (a.) A rent ceiling is ______________.

a government regulation that makes it illegal to charge a rent higher than a specified level

A market demand curve is constructed by

a horizontal summation of each individual demand curve

The table shows the utility that Jason receives from DVDs and spy novels.What two conditions are met when a consumer is maximizing utility? (a.) When Jason is maximizing his total utility he spends ______________.

all of his available income and equalizes his marginal utility per dollar for all goods

In the figure, imposing a tax on the sellers of the product results in a division in which

all of the tax is paid by the buyers

Total cost is the cost of _______ by a firm

all the factors of production used

A consumer equilibrium is a situation in which a consumer has allocated ______________ of her income in a way that ______________.

all; maximizes her total utility

A monopoly can make positive economic profit in the long run because _____.

barriers to entry prevent other firms from entering the market and sharing the profit

A diminishing marginal rate of substitution is a general tendency for a person to _________

be willing to give up less of good y to get one more unit of good x, while at the same time remaining indifferent as the quantity of x increases

We need methods of allocating scarce resources

because resources are scarce and it is not possible to fulfill everyone's wants

The marginal benefit of a good or service is the ____________.

benefit received from consuming one more unit of it.

Tax incidence is the division of the burden of tax between __________

buyers and sellers

(b.) What generates economic growth?Economic growth comes from ______________.

capital accumulation and technological advance

Why does a firm in perfect competition produce the quantity at which marginal cost equals price? A firm produces the quantity at which marginal cost equals price because when marginal cost is greater than price, the firm __________.

can increase economic profit by producing 1 less unit of output

The graph shows Brazil's PPF. Complete the following sentences. Brazil's PPF illustrates scarcity because Brazil ______________. If Brazil produces 40 barrels of ethanol a day, it must produce ______________ tons of food a day to achieve production efficiency.

cannot attain the points outside the PPF; 3

Given your answer to Q5.23a...(b.) Garlic bread and lasagna are ______________.

complements

A substitute is a good that is ______________ another good, and a complement is a good that is ______________ another good.

consumed in place of; consumed together with

Perfect price discrimination is the price discrimination that extracts the entire _____ surplus by charging the _____ price that _____ are willing to pay for each unit.

consumer; highest; consumers

Demand is elastic if a price ______________ increases total revenue.

cut

Consider Drew, who consumes only oranges and bananas. Drew is currently in consumer equilibrium. For Drew, oranges and bananas are substitutes. Suppose the price of orange suddenly increases. This increase in the price of oranges will immediately ___________ the marginal utility per dollar for oranges. Drew adjusts his consumption of oranges and bananas in response to this price change. As Drew adjusts to his new consumer equilibrium, his marginal utility per dollar for oranges ____________.

decrease: increases

Diminishing marginal utility is the general tendency for marginal utility to ______________ as the quantity of a good consumed ______________.

decrease; increases

Minnie will not produce a quantity at which the market demand for water is inelastic because when demand is inelastic she can _____ the quantity produced, which _____.

decrease; increases total revenue decreases total cost, and increases economic profit

When the price of tomatoes rises from $3 per pound to $4 per pound, the quantity of tomatoes sold decreases from 15 pounds to 10 pounds. Total revenue______________, and using the total revenue test, we can determine that the demand for tomatoes is ______________.

decreases from $45 to $40; elastic

When the price of a good falls and the prices of other goods and a consumer's income remain the same, explain what happens to the consumption of the good whose price has fallen and to the consumption of other goods. The price of a movie falls.(b.) To adjust to the new consumer equilibrium, Ben ______________ the number of video games he plays.As Ben approaches his new consumer equilibrium, his marginal utility per dollar for movies ______________.

decreases; decreases

The figure shows the production possibilities frontier for a firm that produces pet food. Complete the following sentences. This PPF ___________ illustrate scarcity because __________.

does; the firm cannot produce points outside the frontier and as the firm moves along the PPF, it cannot produce more dog biscuits without producing less cat food

Miles graduates from college and his income increases by $30,000 a year. Nothing else changes.Miles decreases the quantity of donuts and potato chips that he buys and increases the quantity of bottled water that he buys.For Miles, ______________.

donuts and potato chips are inferior goods

U.S. coal production in 2016 is 17 percent down on that of 2015. Almost all coal use in the United States is for electricity generation and the price of coal for power plants fell from $2.27 per million Btu in 2015 to $2.17 per million Btu in 2016. Is the supply of coal elastic or inelastic?The supply of coal is ______________.

elastic

When Yvonne' s income increases by 3 percent, her demand for tickets to professional football games increases by 6 percent. Yvonne' s demand for tickets is income ______________. For Yvonne , football tickets are ______________ good.

elastic; a normal

The graph shows the supply curve of soda. Suppose the government has imposed a sales tax of $2 per case on soda, and the sellers end up paying the entire tax. Given this information, correct complete the sentence below. The more ______________ the demand, ______________.

elastic; the larger is the amount of the tax paid by sellers

An accountant calculates a firm's cost and profit to __________. An economist calculates a firm's cost and profit to __________.

ensure that the firm pays the correct amount of income tax and to show its investors how their funds are being used; enable them to understand and predict the firm's decisions

Ricky is in a consumer equilibrium.Given the prices of goods, Ricky has allocated all his income such that his marginal utility per dollar is ______________ for ______________ goods.

equal; all

When an effective production quota is applied in the market for rice, the marginal social benefit _______ marginal social cost.

exceeds

Distinguish among public goods, private goods, common resources, and natural monopoly goods. (a.)A private good is ______________.A natural monopoly good is ______________.

excludable and rival; excludable and nonrival

The market for portable CD players is in long-run equilibrium.Then the demand for portable CD players decreases.Describe what happens in the market for portable CD players. As a result, firms will __________ the market, and the market supply curve will shift __________.

exit; leftward

If there is a surplus, then the price will ______________ to its equilibrium, which ______________.

fall; increases the quantity demanded and decreases the quantity supplied

In the figure, as quantity of gloves increases from 0 units, to 1000 units, to 2000 units to 3000 units, the deadweight loss

falls

As more of a good is consumed, its marginal utility _______ and its total utility _______

falls; rises

In an oligopoly, ____________.

firms might produce almost identical products or they might produce differentiated products

Two countries, A and B , originally have identical production possibilities represented by the blue PPF 0. However, these two countries make different choices regarding which bundle to produce. Country A chooses a production bundle with 50 units of consumption goods, and 30 units of Capital goods (see point A). Country B chooses a bundle with only 30 units of consumption goods, and 50 units of Capital goods (see point B). The pink PPF A and PPF B lines show each country's PPF after 1 year.Clearly, the production possibilities of country B grew faster than those of country A.The graphical scenario illustrates that the opportunity cost of economic growth is ______________.

forgone current consumption

Rent seeking is the lobbying for special treatment from the _____ to _____ or to divert consumer surplus or producer surplus away from others.

government; create economic profit

Roses and chocolates are substitutes.Russell spends all of his income on roses and chocolates and he is currently in consumer equilibrium.The price of roses falls.(a.) The marginal utility per dollar on roses is currently ______________ than the marginal utility per dollar on chocolates.

greater

The marginal rate of substitution is

greater the steeper is the indifference curve at a given point

Complete the following statements. The opportunity cost of producing a tub of ice cream is ______________ at point A than at point B. The opportunity cost of producing a pound of butter is ______________ at point B than at point A.

greater; greater

How does the elasticity of demand influence the incidence of a tax, the tax revenue, and the deadweight loss? (a.) The greater the elasticity of demand, the ______________ is the amount of the tax paid by sellers and the ______________ is the decrease in the equilibrium quantity.

greater; greater

Capital accumulation is the ______________, including ______________ capital.

growth of capital resources; human

Dev and Ruth grow strawberries and raspberries.(b.) If Dev also has an absolute advantage in growing strawberries and raspberries , he will _________.

have a comparative advantage in one activity but not both

What is the law of demand?The law of demand states that, other things remaining the same, the ______________ the price of a good, the ______________.

higher; smaller is the quantity demanded

Which of the following is an example of a black market transaction? Annie rents an apartment

in a rent controlled city by paying $1,000 for an extra set of keys.

The table gives the total product schedule for Flora's Flower Shoppe.If Flora's increases the number of workers hired from 2 to 3, what happens to the average product of labor? If Flora's increases the number of workers hired from 3 to 4, what happens to the average product labor? If Flora's increases the number of workers hired from 2 to 3, average product of labor __________.If Flora's increases the number of workers hired from 3 to 4, average product labor __________.

increases; decreases

What happens to the quantity of smartphones supplied and the supply of smartphones if the price of a smartphone rises? A rise in the price of a smartphone ______________ the quantity supplied and ______________ supply.

increases; does not change

If marginal cost exceeds average total cost and output increases, average total cost __________ and average variable cost __________.

increases; increases

When the price of a good falls and the prices of other goods and a consumer's income remain the same, explain what happens to the consumption of the good whose price has fallen and to the consumption of other goods. Consider Ben, who consumes only movies and video games and is currently in consumer equilibrium. For Ben, movies and video games are substitutes.(a.) The price of a movie falls which ______________ the marginal utility per dollar from movies.To adjust to the new consumer equilibrium, Ben ______________ the number of movies he sees.

increases; increases

Initially the consumer is maximizing utility. Then the price of one good falls.The marginal utility per dollar from that good immediately ______________. The consumer responds to the fall in the price and ______________.

increases; the quantity demanded of that good increases

The shape of the AVC curve arises because of

increasing returns initially and eventually diminishing returns

Shawn drinks tea and hot chocolate throughout the winter. For Shawn, tea and hot chocolate are substitutes.When the price of a mug of hot chocolate falls, Shawn responds by ______________, which ______________ his marginal utility per dollar from hot chocolate.

increasing the quantity of hot chocolate he buys; decreases

Most production processes experience __________ marginal returns initially, but all production processes eventually reach a point of __________ marginal returns.

increasing; diminishing

With a sales tax of $2 a ticket, is the market for concert tickets efficient? Explain why or why not:(d.) With the $2 tax, the market for concert tickets is ______________ because ______________.

inefficient; the quantity bought and sold is less than the efficient quantity and a deadweight loss arises

Is a firm technologically efficient if it uses the latest technology? Why or why not? A firm that uses the latest technology __________ technologically efficient because __________.

is not necessarily; the firm might not use the least amount of inputs to produce a given output

Human capital ____________ that people obtain from education, on-the-job training, and work experience. ____________ that have been produced in the past and that businesses now use to produce goods and services is capital.

is the knowledge and skill; Tools, instruments, machines, buildings, and other items

When a firm is producing a given output at the least possible cost, __________.

it is operating on its long-run average cost curve

Monopolistic competition is a market in which a __________ number of firms compete by making similar but slightly __________ products.

large; different

Betty makes twice as much money as her brother Evan. Both siblings equally love going to football games. Suppose the ticket price of NFL games rises from $600 to $1000. Betty decreases the number of games she attends by 40%. Evan's price elasticity of demand (in absolute value) for NFL games will for sure be ________

larger than 0.8

Suppose in the short run the market demand for picture frames decreases causing the price to fall to $25 per frame. In the long run, the market supply curve will shift ________ until the price of a picture frame is __________. The new long run market equilibrium quantity will be __________ relative to the original market equilibrium quantity before market demand decreased?

left; $30; lower

Nikita and Greg both need gas to fuel their respective cars. There are RaceTrak gas stations in both Nikita and Greg's towns. However, in Nikita's town there are additional gas station companies aside from RaceTrak, while Greg's town only has RaceTrak gas stations. All else equal, the price of RaceTrak gas rises by 20%, and Nikita decreases his gas purchase from RaceTrak by 30%. Greg is less responsive to the change in RaceTrak gas price because he has fewer substitutes available. We can conclude that Greg's price elasticity of demand for RaceTrak gas is likely...

less than 1.5

An indifference curve is bowed toward the origin because the more of good x that you consume the __________

less you are willing to give up of good y to get more of good x and remain indifferent

A change in demand will cause the equilibrium price to change by ______________and the equilibrium quantity to change by ______________ with an elastic supply than if supply were inelastic.

less; more

A change in supply will cause the equilibrium price to change by ______________and the equilibrium quantity to change by ______________ with an elastic demand than if demand were inelastic.

less; more

In an hour, Simon can catch 4 pounds of pickerel or pick 8 pounds of apples.In an hour, Fred can catch 4 pounds of pickerel or pick 20 pounds of apples. (a.) The opportunity cost of catching a pound of pickerel is ______________ for Simon than for Fred, and the opportunity cost of picking a pound of apples is ______________ for Simon than for Fred.

lower; higher

The graph shows the market for dried milk.Point 1 marks the original equilibrium price and quantity.Then the Milk Marketing Board places an effective production quota on dried milk (indicated by the vertical Quota line). Point 2 indicates the new price of milk and the quantity of milk produced.Use the image to answer the following question. An effective production quota ______________.

lowers the marginal cost of production

The table gives the supply schedules for jet-ski rides by the only suppliers: Rick, Sam, and Tom.Which owner has the largest producer surplus when the price of a ride is $17.50? The owner with the largest producer surplus is the owner with the ______________.

lowest marginal cost

Long-run average cost curve is a curve that shows the __________ average total cost at which it is __________ to produce each output when the firm has had sufficient time to change both its plant size and labor employed.

lowest; possible

When resources are allocated in the way that the most voters choose, the allocation method is ______________.When resources are allocated on the basis of individual attributes, the allocation method is ______________.

majority rule; personal characteristics

The smartphone market is in long-run equilibrium. Then the demand for smartphones increases. Describe what happens in the market for smartphones. (a.) In the short run, firms will __________.

make an economic profit

The graph shows the marginal cost, average total cost, and marginal revenue curves for Lou's Lattes. How many lattes does Lou's produce? What is Lou's economic profit or economic loss? If Lou produces the quantity specified above, then Lou ________ of __________ an hour.

makes an economic profit; $30

The top table shows the market demand schedule for paper in a perfectly competitive market.Each firm has the costs shown in the bottom table. (a.) In long run equilibrium, each firm __________.

makes zero economic profit

Entry is triggered in a competitive market when existing firms are ________.

making an economic profit

The market for pizza is perfectly competitive and has 1,000 firms. Each firm is identical. Describe each firm in long-run equilibrium.In long-run equilibrium, each firm is __________.

making zero economic profit

Perfect competition is a market in which there are __________ firms, each selling __________ product; many buyers; __________ to the entry of new firms into the industry; no advantage to established firms; and buyers and sellers __________about prices.

many; identical; no barriers; are well informed

Consumer surplus is the _______________ of a good in excess of _______________, summed over the quantity bought.

marginal benefit; the price paid for it

In the figure, if 4 million computers are produced per year then the ________ should be produced to achieve the allocatively efficient use of resources

marginal cost of a computer exceeds the marginal benefits of a computer, so fewer computers

The market structure in which a large number of firms compete by making similar but slightly different products is called

monopolistic competition

Consider the apartment rental market. What is a rent ceiling and what are its effects if it is set above or below the equilibrium rent? (c.) A rent ceiling ______________.

set below the equilibrium rent constrains the market forces

The table below shows the production combinations on a country's production possibilities frontier. A movement from _______ involves the greatest opportunity cost of increasing the production of good Y

point B to point A

Rice and noodles are substitutes. The cross elasticity of demand for rice with respect to the price of noodles must be ______________.

positive

How does a single-price monopoly determine the price it will charge its customers? (a.) A single-price monopoly _____.

produces the quantity at which marginal revenue equals marginal cost, MR=MC, and charges the highest price consumers will pay for that quantity from the demand curve

The table gives the demand schedule for hotel rooms. (a.) If the price falls from $400 to $250 a night, total revenue ______________. If the price falls from $250 to $200 a night, total revenue ______________.

remains the same; remains the same

What are the two measures of concentration? Explain how each measure is calculated. (a.) The four-firm concentration ratio is the percentage of the value of __________accounted for by the four largest firms in an industry.

sales

A firm's opportunity cost of production includes _________.

the cost of using resources bought in the market, owned by the firm, and supplied by the firm's owner

A benefit from your decision to attend summer school is _______ and a cost of your decision is ________.

the credit you earn; the tuition fee you pay

When a firm practices perfect price discrimination _________.

the demand curve becomes the marginal revenue curve

What are the influences on buying plans that change demand, and do these influences increase or decrease demand? When an event occurs that changes the demand for coffee makers, ______________ if demand increases and ______________ if demand decreases.

the demand curve shifts rightward; the demand curve shifts leftward

Sam's Surfboards is the sole renter of surfboards on Big Wave Island.If marginal revenue is positive at the actual number of surfboard rentals made each hour, then _____.

the demand for surfboard rentals is elastic

In the sleeping bag market, the marginal cost of the 30th sleeping bag is

the minimum price that producers must receive to induce them to sell the 30th sleeping bag

Why is the price at which the quantity demanded equals the quantity supplied the equilibrium price?The price at which the quantity demanded equals the quantity supplied is the equilibrium price because ______________.

the plans of producers and consumers are in balance and there is no influence on the price to change

Elasticity of supply measures the responsiveness of the quantity supplied to a change in ______________, when all other influences on selling plans remain the same.

the price of a good

If a consumer's income increases and if all goods are normal goods, explain how the quantity bought of each good changes.If a consumer's income increases and if all goods are normal goods, ______________.

the quantity bought of each good increases because the consumer maximizes utility by spending all available income and marginal utility per dollar, which decreases as more is consumed, must be equal for all goods

The equilibrium price is the price at which __________ and the equilibrium quantity is the __________.

the quantity demanded equals the quantity supplied; the quantity bought and sold at the equilibrium price

If firms in a perfectly competitive industry are presently earning zero economic profit, then

there is no incentive for either entry or exit

The figure illustrates the labor market for fast food restaurants in a small city in Peru. What would be the effects of a minimum wage imposed at $5.50 per hour?

unemployment equal to 400 hours

When a minimum wage is set above the equilibrium wage rate, __________.

unemployment increases

The table gives the demand schedule for hotel rooms.(b.) Given your answer to Q5.12a, the demand for hotel rooms is ______________because ______________.

unit elastic; a price cut leaves total revenue unchanged. Total revenue never reaches a maximum

The _________ that people devote to produce goods and services is labor

work time and work effort

Microsoft raises the price of personal computers (PCs) by 10 percent. As a result, the quantity of Microsoft Office software demanded at the current price decreases from 9,000 to 5,000 units. What is the cross elasticity of demand for Microsoft Office software with respect to the price of Microsoft PCs?

-5.71

Abdalla's preferences are shown in the figure. Abdalla is just as happy to have _______ as he is to have ________.

2 comic books and 12 cookies; 4 comic books and 8 cookies

Ranya spends $10 a week on pizza and Pepsi. The price of pizza is $2 a slice and the price of a Pepsi is $2. The table shows Ranya's total utility from pizza and Pepsi. Ranya maximizes her total utility by buying

2 slices of pizza, and 3 Pepsis

At one point along a PPF, 50 tons of coffee and 100 tons of bananas are produced. At another point along the same PPF, 30 tons of coffee and 140 tons of bananas are produced. The opportunity cost of 1 ton of coffee between these points is

2 tons of bananas

The table shows Mariana's marginal utility from consuming various quantities of chocolate chip cookies and cake. The price of cookies is $2 per pound, the price of cake is $2 per slice. Mariana has $12 to spend on cookies and cake. To maximize her utility, Mariana will consume _______ her cookies and _______ of cake.

3 pounds; 3 slices

In the figure, if the price is $16 per unit, how many units will a profit maximizing perfectly competitive firm produce? At this quantity, is the firm experiencing positive, negative or zero economic profit?

35; positive economic profit

The figure shows the marginal social benefit (MSB), marginal private cost (MC) and marginal social cost (MSC) of producing steel. If the market is currently at the competitive, supply-equals-demand equilibrium point, then what government policy might move the market to a point of social efficiency?

The government could impose of quota at 2 tons of steel per week.

By specialization and trade, two individuals can

consume at a point beyond their individual production possibilities frontiers

Katie finds that the marginal utility from a movie is 30 and the marginal utility from a book is 10. The price of a movie is $15 and the price of a book is $10. In order to increase her utility, Katie should

consume more movies and fewer books

Ham and eggs are complements in consumption. If the price of ham rises, the demand for eggs will

decrease and the demand for curve for eggs will shift leftward

Domino's Pizza estimates that their customers' price elasticity of demand is -0.8. If Domino's raises the price of pizza by 15 percent, then the quantity demanded will

decrease by 12 percent

A consumer's indifference curve diagram has apples on the vertical axis and grapes on the horizontal axis. As the consumption of grapes increases, the marginal rate of substitution _________ and the indifference curve becomes _________.

decreases; flatter

The cost of producing aspirin increases simultaneously as doctors find that one aspirin per day reduces the risk of heart attacks. The supply of aspirin ________ and the demand for aspirin ________ so that the equilibrium price of aspirin _________.

decreases; increases; rises

The figure shows the market for paint. The government imposes the sales tax shown in the figure on sellers. Consumers in the paint market would pay a larger part of this tax than what is shown in the figure if

demand were more inelastic

the factors of production are

land, labor, entrepreneurship, and capital

In a perfectly competitive industry, a permanent decrease in demand initially brings a lower price, economic

loss, and exit from the industry

The chocolate industry consists of 11 firms (shown in the table below). The total industry sales are $1,999 million. The table shows sales of each firms in the chocolate industry. What type of market is this?

oligopoly

If the price of a good increases from $3 to $4, and the quantity demand remains unchanged, then the demand is

perfectly inelastic

Sticky Cakes is a bakery. A decrease in the wage rate that Sticky Cakes pays its workers

shifts both its MC curve and its ATC curve downward

Consider the perfectly competitive firm in the figure. What will the firm choose to do in the short-run and why?

stay in business because the firm's economic losses are minimized

Sara buys only cookies and chocolate, and spends all of her income on the two items. At her current consumer equilibrium, Sara buys 12 cookies and 10 chocolate bars. Suppose the price of cookies suddenly falls. Sara adjusts to her new consumer equilibrium, where she now buys 14 cookies and 11 chocolate bars. According to marginal utility theory,

the income effect must have been bigger than the substitution effect since we observe Sara buying more chocolate

Which of the following influences people's buying plans and does not shift the demand curve?

the price of a good

The table shows some data that describe Tom's T-Shirts' total product when Tom's has 1 sewing machine. Diminishing marginal returns begin when the _______ is hired.

third worker

The opportunity cost of moving from point a to point b in the figure below is ________

zero (inside curve to on curve)