Econ Exam Prep

Lakukan tugas rumah & ujian kamu dengan baik sekarang menggunakan Quizwiz!

$.50 for buyers and $.10 for sellers

On figure Q7.3 the supply curve S1 and the demand curve D indicate initial conditions in the market for gasoline. A $60 per gallon tax on gasoline is levied, which shifts the supply curve from S1 to S2. What is the actual burden of the tax?

a bill that would provide substantial subsides for tobacco growers

Senator represents a state that grows significant amounts of tobacco. Many of his constituents woke for business in this industry but the tobacco firms also make generous contributions to his reelection campaign. according to public choice theory, what bill would senator likely support?

$110

Shannon buys a new CD player for $135, she receives consumer surplus of $25 on her purchase if her willingness to pay is?

members of special interest groups favoring these programs feel strongly about them while most other voters are rationally uninformed about them

Special-interest programs are highly attractive to vote-seeking policies because

An increase in the price of frozen yogurt, a substitute for ice cream

Suppose D1 and S1 indicate the initial conditions in the market for ice cream. What changes would tend to cause the shift from D1 to D2 in the market for ice cream in Figure Q5.2?

There is no change from the situation that exists at the equilibrium prices

Suppose a price floor is established at $20, what is the result? Figure Q6.1

the economy would be considered at full employment

Suppose an economy is operating at its maximum sustainable output rate, neither recession or economic boom are present. what would be true?

there will be a shortage of corn

Suppose the market equilibrium price of corn is $5 per bushel, and the government sets a price ceiling of $4 per bushel. What is the most likely result of this action?

$20

Suppose three people each purchase a cell phone for $80, A was willing to pay $100, B was willing to pay $95 and C was willing to pay $80. What was the consumer surplus for the three individuals

demand for the product is highly elastic and the supply is relatively in elastic

The burden of a tax will fall primarily on sellers when the

trade-offs

The fact that goods and services are scarce entails what?

the value of a good is subjective

The fact that some people love tomatoes while others dislike them illustrates that

voters to have little incentive to become informed about candidates and political issues

The fact that voters perceive their votes as unlikely to actually change the outcome of an election causes

develops a logically consistent theory based on how individual actors (such as voters, politicians, and bureaucrats) respond to incentives

The methodology of public choice analysis

the value of the best opportunity that must be sacrificed in order to take the action

The opportunity cost of an action is

the expectation of individual voters that their vote will not be decisive

The rational-ignorance effect is the result of

decreasing real output an increasing unemployment

The recessionary phase of the business cycle is characterized by

students will not take as good of care of these commonly owned bicycles as they do their own bicycles

The student government associations at several universities have experimented with purchasing bicycles to leave around campus for everyone's use. Anyone who needs the bike can use it, and they are not allowed to lock the bike up or take it home, but rather must leave it on campus for someone else to use. Economic theory would predict that

marginal benefits vs. marginal costs

We make decisions based on expected . . .

as personal benefits (cost) from choosing an option increase, other things constant, a person will be less likely to choose that option

What are incentives?

The change in the opportunity cost, the additional cost incurred in the production of one more additional unit of a good or source

What are marginal costs?

in addition to their initial impact, economic events often generate secondary effects that may be felt only with the passage of time

What are secondary effects?

Lottery (random drawing), Queuing (first-come, first-serve/ lines), Barter (trading), Market-system (monetary/money)

What are some alternate methods to ration scare resources?

1) Opportunity costs 2) Economizing Behavior 3) Incentives 4) Marginal Analysis 5) Uncertainty 6) Secondary Effects 7) Subjective Preferences 8) Predicting

What are the 8 guide posts to economic thinking?

when rates are present difficult for people to accuarelt forecast the years rate of inflation

what is true of high variable rates of inflation?

not part of labor force

without job for 12 months, no longer searching

contain one error; the lower gasoline prices would cause an increase in the quantity demanded of gasoline, not an increase in demand

"A reduction in gasoline prices caused the demand for gasoline to increase. The lower gas prices also led to an increase in demand for large cars, causing their prices to rise." These statements

incorrect; if confuses the elimination of poverty with the elimination of constraint imposed by scarcity

"If income were redistributed in favor of the poor, we would eliminate scarcity" the preceding statement is

$10 per hour (600 + 10 X 6 = 660; 150 + 10 X 51 = 660)

Assume an individual is traveling from Denver to Washington. The price of an airline ticket from Denver to Washington costs $600. A bus ticket costs $150. Traveling by plane takes 6 hours compared with 51 hours by bus. Other things constant, an individual would gain by choosing air travel if, and only if, his time were valued at or more than what?

a larger quantity of cookies will be demanded

Assume the demand curve for cookies is downward sloping, if the price of cookies falls from $1.50 to $1.25 per dozen, what will happen?

The population of black rhinos has increased

Beginning in the early 1990s, private landowners in Zimbabwe have started fencing in large areas of land that contain black rhinos, which were on the very of extinction. These private owners charge a fee for a stay at the lodges on the property (eco-tourism) and also sell hunting safaris and photo safaris. As a result,

scarcity

Economic choice and competitive behavior are the result of

how individuals make choices because of scarcity

Economics is primarily the study of

scarcity

Every economy must ration goods in some way because of

the deadweight loss accompanying the tax

Figure Q7.2 shows the market for a good before and after a tax is imposed. What does the triangular area C represent?

Georgia has a comparative advantage in producing peaches

Florida producers specialize oranges and Georgia producers specialize in peaches. Given freedom of movement for both goods and services, it would be reasonable to conclude that ?

counterproductive because it takes resources away from the creation of wealth in the private user

From the stand point of society as a whole, rent seeking is

reduce the number of mutually beneficial exchanges that occur

High transaction costs will tend to

Levitt and Dubner found evidence of improved teacher material comprehension because the program required them to also learn

How did incentives provided by No Child Left Behind policies, including financial bonuses to teachers impact teacher behavior in Chicago as measured by Dubner and Levitt?

the supply of textbooks would decrease causing the price of textbook to rise

How would the increase in the price of paper influence the market for college textbooks?

the supply curve for peaches would shift to the left, and price of peach falls

If Georgia experiences a late frost that damages the peach crop, we should expect that

Harry received $5,000 of producer surplus from the transaction

If Harry paid $25,000 to sell his crop of tomatoes even though he would have been willing to have sold them for as little as $20,000 this indicates that

Matt must have valued the baseball card more than the two candy bars, and Andy must have valued the two candy bars more than the baseball card

If Matt trades two candy bars to Andy in exchange for one baseball card, then what must be true?

their prices would decrease, there would be a reduction in tainted or poor quality drugs, and there would be less violence occurring in the drug transactions

If drugs such as marijuana and cocaine were legalized, it would be likely that

not very sensitive to the price of the good

If the supply of a good is relatively inelastic, this means the quantity supplied of the good is

transaction cost

In economics, the term that refers to the time, effort, and other resources needed to search out, negotiate and consummate an exchange is ?

$6.00

In figure Q7.1 the price paid by buyers after tax is imposed is

an upward shift of the demand curve of jeans for $25

A $25 government subsidy paid directly to buyers of jeans will result in

frictional

A PHD in economics turned down many job offers, bc she hopes eventually to teach at one of the top 10 universities in her field. the type of unemployment is called

Capitalism

A form of economic organization that relies primarily on private ownership of productive assets, freedom, exchange and market prices to allocate goods is often called

Socialism

A system of economic organization in which the ownership and control of productive capital assets rests with the state and in which resources are allocated through central planning and political decision making is called

$75

A ticket to a concert costs $45. You have the ticket and can resell it for $75. Your opportunity cost of actually attending the concert is what?

legalization of abortion

According to Levitt and Dubner what was the largest contributing factor to the reduction in US crime rates in the 1990s?

opportunity cost

According to the law of comparative advantage, a particular task is performed most efficiently by the individual with the lowest ?

consumers buy less

According to the law of demand, as the price of a good rises what will happen?

1) Opportunity costs; the use of scarce resources to produce a good or service is always costly 2) Economizing Behavior; individuals choose purposefully, therefore they will economize 3) Incentives Matter; people respond to incentives 4) Marginal Analysis; economic reasoning focuses on the impact of marginal changes 5) Uncertainty; since information is scarce, uncertainty is a fact of life 6) Secondary Effects; in addition to their initial impact, economic events often generate secondary effects that may be felt only with the passage of time 7) Subjective; the value of a good is subjective and varies with individual preference 8) Predicting; the test of an economic theory is its ability to predict and explain events in the real world

What are the 8 guideposts to economic thinking?

marginal values

What are the values that matter?

the sacrifice of other goods and services we value

What are trade-offs?

additional or extra

What does marginal mean?

the maximum price people would be willing to pay for that unit

What does the height of an individual's demand curve indicate?

If the product price increases, quantity of demand will decrease

What does the law of demand specifically imply?

substitutes

What exists for all scarce goods?

The availability of substitutes

What explains the negative relationship in the law of demand?

individuals choose purposefully, therefore they will economize

What is Economizing Behavior?

an additional satisfaction or utility that a person receives from consuming an additional unit of a good or service. The maximum a person is willing to pay to consume that additional unit of good or service

What is Marginal Benefit?

a natural outgrowth of the need to ration scarce goods

What is competition?

The difference between total willingness to pay and the total amount actually paid

What is consumer surplus?

gaining a specific benefit at the least possible cost

What is economizing?

economic reasoning, focuses on the impact of marginal changes

What is marginal analysis?

If you get the same satisfaction from a chicken sandwich and a salad, you should purchase the one that costs the least

What is most consistent with economizing behavior?

the highest value alternative that must be sacrificed

What is opportunity cost?

it would imply that all our desires for a good have been fully satisfied

What is the absence of scarcity?

goods that perform similar functions

What is the availability of substitutes?

The inverse relationship between the price of a good and the quantity consumers are willing to purchase

What is the law of demand?

As the rate of consumption increases, the marginal utility derived from consuming additional units of a good will decline

What is the law of diminishing marginal unity?

The price of orange juice will fall, and quantity purchased will fall

What is the most likely effect of lower apple juice prices on the price and quantity of orange juice, a substitute product?

If the price of steak were $2 per lb, producers would want to supply less steak than consumers would want to buy. If the price of steak were $4 per lb, producers would want to supply more steak than consumers would want to buy, If the price of steak were $3 per lb, producers would want to supply the same amount of steak that consumers would want to buy

What is true regarding the market for steak shown in Figure Q5.1 ?

higher prices (sacrifices)

What leads people to seek substitutes?

Resource owners will conserve vital resources for the future, particularly if they expect the resource to increase in value

What will most likely occur under a system of clearly defined and enforced private property rights?

lower prices of grains used to feed cattle

What would most likely increase the supply of beef?

quantity supplied will exceed quantity demanded, so there will be a surplus

When a price floor is above the equilibrium price,

the supply curve has shifted left

When economists say the supply of a product has decreased, they mean

non-price factors become more important in the rationing of the good

When government imposes price controls in a market,

a reduced availability of these badly needed products

When several hurricanes in Florida hit in 2004, a number of local governments imposed price controls that prevented sellers from raising their prices for badly needed products like plywood and generators. In the areas where the controls were imposed, they resulted in

non-price factors, such as discrimination or waiting in line, will play a greater role in the allocation of the good

When shortages of a good is present due to a price ceiling

20 cents

While waiting in line to buy two tacos at 75 cents each, and a medium drink for 80 cents, Jordan notices that the restaurant has a value meal containing three tacos and a medium drink all for $2.50. For Jordan the marginal cost of purchasing the third taco would be what?

structural unemployment

unemployed due to decrease in demand for workers with certain knowledge

the market would be in equilibrium

With a price ceiling above the equilibrium price,

both the buyer and the seller will expect to be made better off

With voluntary exchange

making a rational personal choice if knowing these things gives him little personal benefit

despite being a college graduate Jack can not name any representatives of congress and he has no idea what issues are being debated and voted on currently. According to public choice analysis Jack is,

price increases, quantity decreases

if there were an increase in the tax imposed on beer suppliers, what would be the effect on equilibrium price and quantity of beer?

rent seeking

in 2006, AARP spent over 70million on lobbying-related expenses in an attempt to get policies enacted that would benefit retirees. In economics the term used to describe this activity would be

economy is characterized by dynamic change and imperfect information

natural rate of unemployment is not zero because

quantity demanded exceeds quantity supplied but price can not rise to remove the shortage

rent controls with imposed prices below market clearing tend to cause persistent imbalances in the market for housing because

primarily the consumers

suppose that the federal government levies a 50 cent tax on gasoline and that the demand for gasoline is highly inelastic while the supply is highly elastic. Under these circumstances, the burden of the tax would fall on

the demand for the product is highly inelastic and supply is relatively elastic

the benefit of a subsidy will go primarily to the buyers when

demand for the product is highly inelastic and the supply is relatively elastic

the burden of a tax will fall directly on the buyers when

incentives matter- when an option becomes less costly, people will be more likely to choose it

the economic way of thinking stresses that

the use of resources to meet one desire means that those resources can no longer be used to meet another desire

the expression "there's no such thing as free lunch" means

is the highest-valued alternative that must be given up as the result of choosing the option

the opportunity costs of an option


Set pelajaran terkait

PSY301 Chapter 14: People Are Different

View Set

Paper 1 Case Study #2: South Africa

View Set

Pellico Ch. 10: Nursing Management: Patients With Chest and Lower Respiratory Tract Disorders

View Set

AP Psychology Module 25 Launchpad

View Set

Lesson 1 Gas Exchange Adaptive Quizzing

View Set

EDGE Nutrition 7th grade Health - match each term with the correct definition.

View Set