ECON Assignment #1

Consider Julia's decision to go to college. If she goes to college, she will spend $70,000 on tuition, $15,000 on room and board, and $4,000 on books. If she does not go to college, she will earn $32,000 working in a store and she will spend $12,000 on room and board. Julia's cost of going to college is

$109,000.

Denise values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $350. Denise's consumer surplus is

$150

Refer to Figure 8-12. Suppose a $6 per-unit tax is placed on this good. The amount of tax revenue collected by the government is

$60,000

Refer to Figure. Which of the following would cause the supply curve to shift from Supply A to Supply B in the market for t-shirts?

a decrease in the price of cotton

​Refer to Figure. Which of following statements is true based upon the conditions in the market?

a surplus will develop when a price floor is imposed at a price of $12.

Anne created a new software program she is willing to sell for $300. She sells her first copy and enjoys a producer surplus of $180. What is the price paid for the software?

$480

Refer to Figure. At equilibrium, total surplus is

$54

Refer to Figure. Using the midpoint method, the price elasticity of demand between point Y and point Z is

0.75

Refer to Figure. Suppose Phil and Miss Kay are the only consumers in the market. If the price is $10, then the market quantity demanded is

4 units

Refer to Figure. Jonathan receives his first paycheck for working as a salesman. To which of the arrows does this transaction directly contribute?

C and D

A barber currently cuts hair for 50 clients per week and earns a profit. He is considering expanding his operation in order to serve more clients. Should he expand?

It depends on the marginal cost of serving more clients and the marginal revenue he will earn from serving more clients.

Assume Diana buys computers in a competitive market. It follows that

None of the above is correct

Refer to Figure. When the price is P1, area A represents

None of the above is correct

Refer to Figure. Which of the following movements would illustrate the effect in the market for graduation photoshoots resulting from a decrease in the number of photographers?

Point C to Point D

Refer to Figure. If the demand curve is D and the supply curve shifts from S' to S, what is the change in producer surplus?

Producer surplus increases by $1,875.

Refer to Figure. Unemployment could cause this economy to produce at which point(s)? (Unemployment implies not all available labor is utilized in the economy)

T

Refer to Figure. Suppose Q1 = 4; Q2 = 7; P1 = $6; P2 = $8; and P3 = $10. Then, when the tax is imposed,

all of the above are correct

Refer to Figure. Both Kendall and Carl work 8 hours per day. Kendall has an absolute advantage in the production of

both goods and Carl has an absolute advantage in the production of neither good

Prices usually reflect

both the value of a good to society and the cost to society of making the good

A legal maximum on the price at which a good can be sold is called a price

ceiling

Equilibrium price must decrease when demand

decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously.

Refer to Figure. In this market for sunscreen, there is a decrease in the price of zinc oxide, an input into sunscreen, and more producers enter the market. The equilibrium price

decreases and the equilibrium quantity increases

An increase in the price of cheese crackers from $2.25 to $2.45 per box causes suppliers of cheese crackers to increase their quantity supplied from 125 boxes per minute to 145 boxes per minute. Using the midpoint method, supply is

elastic, and the price elasticity of supply is 1.74.

A consumer's willingness to pay directly measures

how much a buyer values a good

A rational decision maker takes an action only if the

marginal benefit is greater than the marginal cost.

Refer to Figure. Carly should specialize in the production of

poems

Refer to Figure. At a price of $15, there would be a

shortage of 400 units.

A university's football stadium is never more than half-full during football games. This indicates

the ticket price is above the equilibrium price.

Economics is the study of how society manages its

unlimited wants and limited resources.

A manufacturer produces 1,000 units, regardless of the market price. For this firm, the price elasticity of supply is

zero