Econ Final Review

Jack owns a pumpkin patch and has been selling pumpkins for $10. As Halloween approaches, he worries about having too many unsold pumpkins, so he lowers the price by 20%. If the price elasticity for pumpkins is 1.5, how many more pumpkins will Jack sell?

30% more

At an amusement park, Sue achieves an enjoyment value of 10 on her first roller coaster ride and an enjoyment value of 6 on her second ride. Her marginal benefit from her second ride is:

6

Jessica lists her faulty treadmill for sale on Craigslist but does not disclose the problems with it. If Blake buys the treadmill believing that its problem-free, this is an example of market failure due to:

asymmetric information

Income redistribution efforts such as progressive taxation and transfer payments will typically ____ income inequality, which means that the Gini coefficient will _____.

decrease; fall

Students who never miss class and study hard generally earn higher grades than those who do not. This is an example of:

incentives

Unions tend to _____ wage differentials between a union and non-union sector by ____ entry into union-sector jobs.

increase; restricting

In the following game table, a dominant strategy exists for which player(s)?

only Corbin

When choosing to pursue college full-time, the costs that must be taken into account in a benefit-cost analysis include:

tuition and forgone earnings during the time in college

If an asset pays $300 per year forever, what is this asset worth in terms of present value if the interest rate is 6%?

$5,000

If the total variable cost of producing three wickets is $30, while the average fixed cost of producing three wickets is $25, then the total cost of producing three wickets is:

$105

Which of the following price floors for milk would not cause a surplus in the market if the equilibrium price for milk is $3.60?

$3.50

In the market for surfboards in the graph, with a $100 tariff per imported surfboard, the government collects a total of ____ in tariff revenues.

$4,000

A monopoly firm exhibits all of the following characteristics EXCEPT:

a marginal revenue curve that equals price at all quantities

Which of these is a characteristic of a natural monopoly?

high economies of scale

Which of these describes a labor market in which most of a small town's workers are employed by one large company?

monopsony

Which statement is a CORRECT description of the law of demand?

As prices of a good fall, the quantity demanded of that good rises.

Suppose your bank opens up a dozen more branches throughout the city, making it much easier to find an ATM. What happens to the demand and supply curves for this network as it expands?

Demand and supply both shift right

Based on the figure, combination _____ is preferred to combination _____.

E; B

At the end of the term, Vicky wants to sell her economics textbook for at least $25, otherwise she would keep it. George is looking to buy a textbook because he's taking the class next term, and he is willing to pay at most $60. If Vicky agrees to sell the textbook to George for $45:

George's consumer surplus is $15 and Vicky's producer surplus is $20

Which statement is not a common argument against free trade?

It causes prices of imported goods to rise

Which statement describes a public good?

It is nontrivial in consumption and nonexcludable

In this game table, is the Nash equilibrium a Prisoner's Dilemma?

No, it is not because at least one firm has achieved its highest possible payoff.

The market price of pomegranates is $2, and JoAnne sells 25 pomegranates at the local farmer's market. The total revenue is ____ and the marginal revenue is ______.

$50.00; $2.00

Dan's Car Wash produces $150,000 in revenues and incurs $120,000 in labor wages, materials, rent, and other explicit costs. Moreover, Dan gave up a $40,000-a-year job as a hotel valet to start his car wash business. Dan's economic profit is ______, and he _____ earning a normal profit.

-$10,000; is not

Based on this table, the opportunity cost of one kilogram of coffee in Kenya is:

0.33 kilograms of cocoa

If a farmer can grow 100 tubs of grapefruit or 250 tubs of oranges per acre of land, what is the opportunity cost of growing one orange?

0.4 of a grapefruit

In the figure, the opportunity cost of one ton of steel in terms of aluminum is:

0.5 tons

Suppose that the price of African safaris fell from $4,000 to $3,200 per person, and, as a result, tour operators reduced the number of trips offered by 25%. Using the midpoint method, the price elasticity of supply for African safaris is ______.

1.13

Suppose the price of a bag of jelly beans rises from $1.60 to $2.00, with the result that sales of jelly beans falls from 120 bags to 80 bags a day. Using the midpoint method, what is the elasticity of demand for jelly beans?

1.80

Suppose that the five residents of a small village have the following incomes: $10,000; $20,000; $30,000; $40,000; $50,000. The proportion of total income earned by the lowest two quintiles is _____ and the proportion earned by the highest two quintiles is _____.

20%; 60%

The following shows the costs associated with the number of pets groomed by Janee's Mobile Pet Grooming Service. What is the value of X?

66

Tracey sells 100 gourmet cupcakes per day for $2 each. She is considering raising her price to $2.50 per cupcake in order to increase her revenues. If the price elasticity of demand for Tracey's cupcakes is 2, would she increase her revenues?

No; revenues would fall because she would sell far fewer cupcakes

Which question would be considered a normative questions?

Should obstacle races be regulated to ensure the safety of its participants?

If the average total cost is $10 and the price is $8 at the profit-maximizing quantity, what will happen in the long run in a perfectly competitive market?

Some firms will exit the market, pushing the market price higher.

Using the productivity rates for Spain and Portugal, which statement is TRUE?

Spain has a comparative advantage in olives.

In the diagram, what change must have occurred to rotate the budget line as shown?

The price of orchids fell.

One of the most important ingredients in bubble tea is the tapioca pearls that are added to the tea. If the price of tapioca flour increases, what will happen to the supply of bubble tea, all else being equal?

The supply of bubble tea will decrease.

What statement would describe a network effect?

Your workout partner cancels her gym membership, so you end up doing so as well.

Which of these would NOT be considered a factor of production?

a bank loan used to start a new business

In the graph, if a price ceiling is set at $4, which of the following would result?

a shortage of 20 units

Helping a friend struggling to pass a math class despite it taking valuable time away from your own studies is an example of:

altruism

All of these are consequences of global warming EXCEPT:

an increase in the natural carbon absorption system

The word "monopolistic" in the label "monopolistic competition" refers to the fact that:

each firm produces a unique version of the product

Which characteristic does NOT describe an oligopoly?

economic profits being zero in the long run

In a perfectly competitive industry, short-run economic profits will lead firms to _____ the market, causing market price to _____.

enter; decrease

If the snowboard industry is dominated by four large firms, each with 20% of market share, and 2 small firms, each with 10% of market share, which is the four-firm concentration ratio and what is the Herfindahl-Hirschman Index (HHI)?

four-firm concentration ratio = 80; HHI = 1,800

(Figure) The area between which two points on the production possibilities frontier could represent an improvement in productive efficiency?

from D to B

In the table, as Samuel's consumption of ice cream cones increases,

his total utility increases, but his marginal utility decreases

Which change in the labor market has led to more women entering the workforce?

improved telecommuting technologies

Amy decides to open a bakery that will specialize in delicious gourmet brownies. Her explicit costs would include all of these EXCEPT the:

interest earnings Amy forgoes from selling her savings bonds to finance her store

The main advantage of issuing stock to raise financial capital is:

limited liability of risk

In which industry or sector are unions most prominent?

manufacturing sector

Compared to a competitive industry, a monopolist is likely to achieve _____ producer surplus while generating _____ deadweight loss.

more; more

Your grandma finally buys an iPad only after being convinced of the benefits of using it to communicate with the rest of her family who already have iPads. Her demand for an iPad would be represented:

on the downward-sloping portion of the network demand curve

A firm in a perfectly competitive industry would exhibit which characteristic? I. An ability to produce as much output as the firm desires at the market price II. No economic profits in the short run but possible economic profits in the long run

only I

A hotel room at a ski resort might be priced at $319 per night during the months of December to March but priced at $199 per night the rest of the year. This type of pricing is called:

peak-load pricing

When an economy uses the most efficient means of farming to grow as much corn as possible, this economy has achieved:

production efficiency but not necessarily allocative efficiency

If, due to externalities, marginal social costs exceed marginal private costs at a particular quantity in the production of a good, then:

production of the good is greater than the socially efficient amount

An important tradeoff that entrepreneurs face in their decision making is _____ versus _____.

profit; risk

Suppose that a major drought causes a 30% reduction in the peanut harvest. If there is no change in demand, this event would cause a ____ at the original equilibrium price, and the equilibrium price will therefore ____ and the equilibrium quantity will _____.

shortage; rise; fall

What type of government policy is generally used when a positive externality is present?

subsidies

The graph represents the market for water park admissions. If the price of admission is set at $50, this would result in a ____ of _____ units.

surplus; 200