ECON Exam 1 Review Questions

$85

A friend comes up to you and offers you a free ticket to a Dodgers game that night, and you decide to attend the game. The game takes five hours and costs you $25 for transportation. If you had not attended the game, you would have worked at your part-time job for $12 an hour. What is the cost to you of attending the game?

increase; good that the labor produces

A labor demand curve may shift to the right because of a(n) _____ in the demand of the _____.

increase; indeterminate change

An increase in demand and an increase in supply will lead to a(n) _____ in the equilibrium quantity and a(n) _____ in the equilibrium price.

Five

Charles McCoy is a manager at a coffee shop, and he has to decide how many workers to hire. One worker can make 20 drinks that sell for $4 on average in one hour. A second worker can make another 16 drinks in one hour. The marginal benefit of each additional worker decreases by four drinks, with each additional hire. Given that workers are paid $15 per hour and have eight-hour shifts, how many employees should Charles hire for each hour?

society has limited resources.

Dependencies between various people's choices reflect the fact that

hire more labor

Dylan, a cotton farmer operating in a perfectly competitive market, pays his workers $8 an hour. At his current level of labor use, the marginal product of an additional hour of labor is three bushels of cotton. The market price of cotton is $2.75. To maximize his profits, Dylan should:

the value of the next best alternative given up to acquire the good.

The opportunity cost of a good is:

rightward shift of the demand curve

(Figure: Butter and Jam) Some people like to eat jam and butter sandwiches, and for them, these two foods are complementary goods. For these people, which of the graphs illustrates the impact of a fall in the price of butter on the jam market?

decrease, decrease

(Figure: Competitive Equilibrium in the Labor Market) Use Figure: Competitive Equilibrium in the Labor Market. In the figure, a decrease in the productivity of labor will, all else equal, lead to a(n) _____ in the equilibrium quantity of labor and a(n) _____ in the equilibrium price of labor.

a shift to the right of the entire supply curve for coffee beans.

An increase in the supply of coffee beans means:

leftward shift of the demand curve for ramen noodles

If ramen noodles are an inferior good, then an increase in income will lead to a:

the salaries of qualified architects to fall.

Suppose there is a surplus of qualified architects in the United States. Over time, we would expect:

demand for cell phone service is elastic in this price range.

Telefon, a wireless communications company, tested the effect of a reduction in the price of its monthly service. Telefon lowered its rate from $36 to $30 per month and found that the number of users tripled. This means that the:

rise

The income elasticity of demand for pears has been estimated as 2.46. If income grows by 12%, all other things equal, demand will:

a decrease in the cost of materials used to produce footballs

Which factor would cause an INCREASE in the supply of footballs?