ECON 2220 principles of microeconomics mindtap quizes

Refer to Figure 8-6. When the government imposes the tax in this market, tax revenue is

$3,000

If the price elasticity of demand for a good is 2.0, then a 10 percent increase in price results in a

20 percent decrease in the quantity demanded.

Refer to Table 3-18. If the production possibilities frontier is bowed outward, then "?" could be

375

Refer to Figure 8-8. After the tax goes into effect, consumer surplus is the area

A

Refer to Figure 8-5. The tax causes a reduction in consumer surplus that is represented by area

B+C

Which of the following is an illustration of the market for original paintings by deceased artist Vincent Van Gogh?

C (downward sloping Demand curve) (Supply line vertical)

Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for golf balls of an increase in green fees?

Point C to Point B

Refer to Figure 8-16. Panel (a) and Panel (b) each illustrate a $2 tax placed on a market. In comparison to Panel (b), Panel (a) illustrates which of the following statements?

When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic.

Refer to Figure 4-8. Suppose the figure shows the market demand for coffee. Suppose the price of tea, a substitute good, increases. Which of the following changes would occur?

a shift from D2 to D1

The Surgeon General announces that eating chocolate increases tooth decay. As a result, the equilibrium price of chocolate

decreases, and producer surplus decreases.

You have just been hired as a business consultant to determine what pricing policy would be appropriate to increase the total revenue of a bakery. The first step you would take would be to

determine the price elasticity of demand for the bakery's products.

Suppose the government imposes a tax on cheese. The deadweight loss from this tax will likely be greater in the

eighth year after it is imposed than in the first year after it is imposed because demand and supply will be less elastic in the first year than in the eighth year.

With careful planning, we can usually get something that we like without having to give up something else that we like.

false

Refer to Table 3-25. Miguel has an absolute advantage in the production of

neither good and a comparative advantage in the production of toasters.

An example of a perfectly competitive market would be the

soybean market

The supply of a good or service is determined by

those who sell the good or service.

Refer to Table 7-7. You have four essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You offer to sell the tickets for $325. How many tickets do you sell, and what is the total consumer surplus in the market?

three tickets; $275

A price floor is a legal minimum on the price at which a good or service can be sold.

true

A shortage is the same as an excess demand.

true

In a market, the price of any good adjusts until quantity demanded equals quantity supplied.

true

Refer to Figure 4-18. At what price would there be an excess demand of 200 units of the good?

$20

Refer to Figure 7-17. If the supply curve is S and the demand curve is D, what is total producer surplus at the equilibrium price?

$405

"Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." This relationship between price and quantity demanded

-applies to most goods in the economy. -is represented by a downward-sloping demand curve. -is referred to as the law of demand. All of the above are correct.

Refer to Figure 7-24. If 6 units of the good are produced and sold, then

-efficiency is achieved in this market. -the marginal value to buyers equals the marginal cost to sellers. -the sum of consumer surplus and producer surplus is maximized. All of the above are correct.

The price elasticity of demand for bread

-is computed as the percentage change in quantity demanded of bread divided by the percentage change in price of bread -depends, in part, on the availability of close substitutes for bread. -reflects the many economic, social, and psychological forces that influence consumers' tastes for bread. All of the above are correct.

Refer to Table 3-23. The opportunity cost of 1 pound of tomatoes for the farmer is

1/2 pound of pork

If the price elasticity of demand for a good is 1.2, then a 3 percent decrease in price results in a

3.6 percent increase in the quantity demanded.

Refer to Figure 4-20. If price is $25, then quantity demanded and quantity supplied, respectively, are

500 units and 800 units.

The impact of the minimum wage depends on the skill and experience of the worker.

true

When the market price is above the equilibrium price, suppliers are unable to sell all they want to sell.

true

When two variables have a positive correlation,

when the x-variable increases, the y-variable increases.

If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would happen to the equilibrium price and quantity of lattés if the price of muffins falls?

Both the equilibrium price and quantity would increase.

Chad is willing to pay $5.00 to get his first cup of morning latté; he is willing to pay $4.50 for a second cup. He buys his first cup from a vendor selling latté for $3.75 per cup. He returns to that vendor later in the morning to find that the vendor has increased her price to $3.90 per cup. Chad buys a second cup. Which of the following statements is correct?

Chad's willingness to pay for his second cup of latté was smaller than his willingness to pay for his first cup of latté.

Refer to Figure 4-25. All else equal, sellers expecting the price of paper to decrease next month when many college students leave campuses for the summer would cause a current move from

SA to SB

A production point is said to be efficient if there is no way for the economy to produce more of one good without producing less of another.

True

If the price elasticity of demand for a good is 0.8, then a 12 percent increase in the quantity demanded must be the result of

a 15 percent decrease in the price.

Which of the following events would cause both the equilibrium price and equilibrium quantity of number two grade potatoes to increase if number two grade potatoes are an inferior good?

a decrease in consumer income

Refer to Figure 4-27. Panel (c) shows which of the following?

an increase in quantity demanded and an increase in supply

Inflation is defined as

an increase in the overall level of prices in the economy.

Which of the following might cause the demand curve for an inferior good to shift to the left?

an increase in the price of a complement

Refer to Table 3-5. Which of the following represents Aruba's production possibilities frontier when 100 labor hours are available?

c. 30 radios, 50 coolers

An increase in the price of a good will

decrease quantity demanded.

A decrease in the price of a complement will shift the demand curve for a good to the left.

false

A tax on buyers increases the size of a market.

false

If wages for accountants rose, then accountants' leisure time would have a lower opportunity cost.

false

Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $6.

false

When a good is taxed, the tax revenue collected by the government equals the decrease in the welfare of buyers and sellers caused by the tax.

false

When the market price is above the equilibrium price, the quantity of the good demanded exceeds the quantity supplied.

false

While the production possibilities frontier is a useful model, it cannot be used to illustrate economic growth.

false

A consumer's willingness to pay directly measures

how much a buyer values a good

For a competitive market,

if a seller charges more than the going price, buyers will go elsewhere to make their purchases.

If sellers respond to very small changes in price by adjusting their quantity supplied by extremely large amounts, the price elasticity of supply approaches

infinity, and the supply curve is horizontal.

Factors of production are

inputs into the production process.

The tax burden will fall most heavily on sellers of the good when the demand curve

is relatively flat, and the supply curve is relatively steep.

The less freedom young mothers have to work outside the home, the

less elastic the supply of labor will be.

Which of the following is likely to have the most price inelastic demand?

milk

For which pairs of goods is the cross-price elasticity most likely to be negative?

peanut butter and jelly

Refer to Figure 4-7. If the demand curve for Good X shifts from Db to Da, then

people are willing to buy less of Good X than before at each possible price.

The term price takers refers to buyers and sellers in

perfectly competitive markets.

The quantity supplied of a good is the amount that

sellers are willing and able to sell.

Refer to Table 4-13. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose the following: • x = 2. • The current price of a sandwich is $3.00. • The market quantity supplied of sandwiches is 4. • The slope of the supply curve is 2.

shortage of 6 sandwiches, and the equilibrium price of a sandwich is $5.00.

Suppose there are only two people in the world. Each person's production possibilities frontier also represents his or her consumption possibilities when

they choose not to trade with one another.

A yard sale is an example of a market.

true

Advocates of the minimum wage admit that it has some adverse effects, but they believe that these effects are small and that a higher minimum wage makes the poor better off.

true

An increase in the price of cotton will increase the equilibrium price and decrease the equilibrium quantity in the market for cotton t-shirts.

true

An individual deciding how to allocate her limited time is dealing with both scarcity and trade-offs.

true

Market failure refers to a situation in which the market does not allocate resources efficiently.

true

Points inside the production possibilities frontier represent inefficient levels of production.

true

Sellers respond to a surplus by cutting their prices.

true