ECON
Suppose Gil can write a poem in 1 hour, Holly can write a poem in 2 hours, and Ivan can write a poem in 3 hours. Each person spends 12 hours per day writing poems and requires a wage of $10 per hour to do so. How much producer surplus will there be per day if the market price for a poem is $50?
$740
Suppose that when good K is free, sellers will not supply any, but the quantity supplied rises by 10 units for every $5 increase in the price. If the quantity demanded of good K is fixed at 75 units, the equilibrium price in this market will be:
37.50
The financial crisis of 2007-2010 had a huge impact on the U.S. housing market, causing the number of uninhabited houses to be far greater than the number of people able and willing to buy a house. What probably happened in the housing market?
Housing prices fell.
Fred participates in a supply and demand experiment in his managerial economics course. What can he expect the laboratory experiment to reveal about the supply and demand model?
It successfully predicts real-life behavior.
If income __________, leading to ____________in the demand for Ramen noodles, then Ramen noodles must be _________.
increased; a decrease; inferior
The absolute value of the elasticity of demand for a "necessity" good with few close substitutes is:
less than 1
Producer surplus is the difference between the _____ price and the minimum price at which a producer would be willing to sell a particular quantity.
market
If the demand for oil decreased:
market price would fall.
The maximum price a consumer is willing to pay for something reveals the amount of value that the consumer gets from it.
maximum price
The demand for _____ goods increases as income increases, while the demand for inferior goods decreases as income increases.
normal
Unexploited gains from trade exist at:
quantities below the equilibrium.
A shortage occurs when the _____ is greater than the quantity supplied.
quantity demanded
If the supply of oil decreased in the United States, then:
quantity demanded would decrease in the United States.
The supply curve is a function that shows the _____ at various prices.
quantity supplied
If the demand for oil increased:
quantity supplied would increase.
An increase in supply is a:
shift in the supply curve to the right.
A good with few substitutes, such as insulin, has a(n) _____demand curve.
steep
A slave redemption effort (wherein a charitable organization raises money and uses that money to buy and free slaves in places like the Sudan) will cause an initial increase in the number of people captured into slavery if the:
supply curve for slaves is upward-sloping.
When the free market maximizes the total gains from trade, there are no:
unexploited gains from trade or wasted resources.
Which factor decreases demand?
an increase in the price of complements
Which will cause a decrease in demand?
an increase in the price of complements
If the price of a good's complement rises, _____ for the good whose price did not change will decrease.
demand
The _____ is a function that shows the quantity demanded at various prices.
demand curve
When the market price rises, we can expect consumer surplus to:
fall
A shortage occurs when the quantity demanded is _____ the quantity supplied.
greater than
Jan is a buyer in Vernon Smith's classroom experiment of the market model. Which does she know?
her own willingness to buy
In the late 1990s, Beanie Babies became very popular collectible toys. Many buyers spent a great deal of time visiting multiple retail locations to find specific Beanie Babies that retailers had a very hard time keeping in stock. What probably describes the eBay prices for Beanie Babies during that time?
The eBay prices were higher than the retail prices because the retail prices led to shortages of Beanie Babies.
What would happen if the supply of oil decreased?
The market price would rise.
An increase in demand along a fixed supply curve will result in:
a higher equilibrium price.
How much oil does the Department of Energy's Energy Information Service (EIS) predict the ANWR will produce, as a percentage of worldwide oil production?
a little less than 1 percent
Total producer surplus is measured by the area _____ and below the price.
above the supply curve
