ECONS 102 EXAM

(Table: Supply of Matcha Tea) Use Table: Supply of Matcha Tea. If the price of matcha tea is $0.75 per cup, the total quantity of matcha tea supplied will be _____ cups per day.

60-10= 50

(Figure: The Market for Notebooks) Use Figure: The Market for Notebooks. Assume that S and D are the domestic supply and demand curves and that the world price is PW. Identify the area of consumer surplus when a tariff raises the domestic price from the world price to PT.

A + B

(Figure: The Domestic Market for Apple Computers) Use Figure: The Domestic Market for Apple Computers. Assume that PA is the autarky price and that PW is the world price. Total surplus before international trade is equal to the area:

A + B + C.

(Figure: Savannah's Production Possibilities) Use Figure: Savannah's Production Possibilities. Which point or points represent(s) a combination of bananas and pineapples that is efficient in production?

A and B

(Figure: Equilibrium in the Market for Mechanical Pencils) Consider the figure Equilibrium in the Market for Mechanical Pencils. At the equilibrium price, this market's total producer and consumer surplus equals area:

AIF.

(Figure: Four Markets for Apple TV Rentals) Use Figure: Four Markets for Apple TV Assume that D1 or S1 is the original curve and that D2 or S2 is the new curve. Which graph illustrates what would occur if the cost of producing Apple TV rentals increased?

B

Romulus and Remus each consume 2 loaves of bread at the current price. If Romulus values each loaf of bread less than Remus values each loaf of bread, then:

Remus's consumer surplus is greater than Romulus's.

Which statement is a reason why governments may impose or maintain price controls?

Some consumers and producers benefit from price controls.

(Figure: The Market for Grapes in California) Use Figure: The Market for Grapes in California. In autarky, the price of grapes in California is PA. When the economy is opened to trade, the price falls to PW, and producer surplus will _____ to area _____.

fall; Q

Economic signals:

guide decision makers in their transactions in the marketplace.

In building an economic model, economists:

simplify reality to highlight important relationships between variables.

Suppose the demand equation is given by P = 100 - 2Q and the supply equation is given by P = 20 + 2Q. If a quantity restriction is set at Q = 10, what is the quota rent for producers?

$40

If you pay a price exactly equal to your willingness to pay, then your consumer surplus is:

$0

(Figure: Rent Controls in the Market for Apartments in New York City) Use Figure: Rent Controls in the Market for Apartments in New York City. If a rent ceiling were set at $800, renters would be willing to pay a price at least as high as:

$1,200 for 1.8 million units.

(Table: Consumer Surplus and Opera Tickets) Use Table: Consumer Surplus and Opera Tickets. The table shows Columbia University students' willingness to pay to see Verdi's Aida at the Metropolitan Opera House. Assume that each student wants to buy one ticket. If the price of a ticket to see Aida is $50, and there is no other market for tickets, total consumer surplus for the five students is:

$105

(Table: Movie Downloads) Two consumers, Ariel and Abbie, like to download movies to their iPhones. The table Movie Downloads shows their willingness to pay for each downloaded movie. If an individual movie can be downloaded for $1, what is the total consumer surplus received by these consumers?

$11

(Figure: Monthly Supply of Lattes) The figure Monthly Supply of Lattes represents the monthly supply of lattes at a local cafe. At $3 per latte, the cafe produces 120 lattes per month. The producer surplus received by this bakery is equal to:

$180

(Figure: The Market for Audiobooks) Use Figure: The Market for Audiobooks. A price floor of $15 would result in deadweight loss of:

$20

The New York Philharmonic wants to make sure that its concerts are affordable for all residents of and visitors to New York City and therefore prices all of its tickets at $75. However, outside Lincoln Center, people can sell the same tickets for $250 or more. The true cost to the concertgoer of a ticket to the symphony is at least:

$250.

(Figure: Demand and Supply of Sugar) Use Figure: Demand and Supply of Sugar. Given the initial equilibrium of S1 and D, any price below _____ will exert pressure for the price to _____

$25; rise

(Figure: The Domestic Supply and Demand for Recreational Vehicles (RVs) in the United States) Use Figure: The Domestic Supply and Demand for Recreational Vehicles (RVs) in the United States. Suppose the world price equals $50,000, and there is free trade. Calculate the loss of consumer surplus.

$41,250 million

(Table: Producer Surplus and Opera Tickets) Use Table: Producer Surplus and Opera Tickets. The table shows Columbia University students' opportunity cost of selling a ticket to Verdi's Aida at the Metropolitan Opera House. Assume that each student has one ticket to sell. If the price of a ticket to see Aida is $75, then David's producer surplus is:

$50

(Figure: The Market for Beyond Meat Hamburgers) Consider the figure The Market for Beyond Meat Hamburgers. The maximum total surplus in this market is _____, which occurs at a price of _____.

$600; $1.50

(Table: Producer Surplus and Theater Tickets) The table Producer Surplus and Theater Tickets shows each student's opportunity cost of selling a ticket to Hamilton on Broadway. Assume that each student has one ticket to sell. If the price of a ticket to Hamilton is $55, the total producer surplus for the five students is:

$84

(Scenario: The Production of Computers and Cell Phones in Canada and the United States) Use Scenario: The Production of Computers and Cell Phones in Canada and the United States. The table describes the production of two goods, computers and cell phones, in Canada and the United States. Each country has a linear production possibility frontier with respect to its production of the two goods. The numbers in each column represent the total number of units each country could produce if it used all of its resources to produce the good. The opportunity cost of producing one cell phone in Canada is _____ computer(s).

0.5

(Table: The Production Possibilities for Large Tractors and Petroleum) Use Table: The Production Possibilities for Large Tractors and Petroleum. Both the United States and Venezuela will gain from trade if one tractor trades for _____ barrels of oil.

1,500

(Figure: The Production Possibilities for Taiwan and Japan) Use Figure: The Production Possibilities for Taiwan and Japan. Both nations will gain from trade when 1 pair of rain boots trades for _____ microchip(s).

1.5

The market for peanut butter, a perfectly competitive good, consists of 15 producers who each produce the same amount of peanut butter. If the price of peanut butter is $100, and the total quantity of peanut butter supplied is 150 units, how many units of peanut butter does each producer supply?

10

(Figure: Apple cider and Soybeans) Use Figure: Apple cider and Soybeans. The opportunity cost of moving from producing ONLY soybeans to producing at point D is _____ tons of soybeans.

3

(Figure: Gain in Consumer Surplus in the Market for Herbal Tea) Consider the figure Gain in Consumer Surplus in the Market for Herbal Tea. Identify the area or areas that represent the gain in consumer surplus to consumers already participating in the market when the price of herbal tea falls from P1 to P2?

B

(Figure: Speedboats and Pomegranates I) Use Figure: Speedboats and Pomegranates I. The figure shows the production possibility frontiers for two countries that produce only pomegranates and speedboats. The axes of the two graphs are measured in equivalent units. The United States is operating at point M, and Belarus is operating at point N. The opportunity cost of producing an additional ton of pomegranates would be greater in:

Belarus

(Figure: Shifts in Demand and Supply) Use Figure: Shifts in Demand and Supply. The figure shows how supply and demand might shift in response to specific events. Suppose there is a freak snowstorm in Florida that destroys one-quarter of the orange crop. Which panel BEST illustrates how this event will affect the market for vitamin C tablets, which are a substitute in consumption for oranges?

C

(Figure: Shifts in Demand and Supply II) Use Figure: Shifts in Demand and Supply II. The figure shows how supply and demand might shift in response to specific events. Suppose the technology used to produce batteries for electric cars improves. Which panel BEST illustrates how this development will affect the market for electric vehicles?

D

(Figure: Supply of Bananas) Use Figure: Supply of Bananas. A fall in the prices of inputs (e.g., labor, fertilizer, and fuel) used to produce and transport bananas could be represented in the figure as a movement from:

E to B.

(Table: Willingness to Pay for Cashews) Using the table Willingness to Pay for Cashews, if the price of a bag of cashews is $9, who will purchase a bag?

Gregory only

According to the ______ theory, a country has a comparative advantage in a good whose production is intensive in the factors that are abundantly available in that country.

Heckscher-Ohlin

If the price of a good exceeds the competitive equilibrium price, then:

If the price of a good exceeds the competitive equilibrium price, then:

In the market for fresh coffee, a normal good, which of the following will shift the demand curve to the right?

Incomes rise.

Mexico exports clothing to the United States, and the United States exports heavy equipment to Mexico. Proponents of the Heckscher-Ohlin model would explain this pattern of trade by noting that:

Mexico has a relatively large endowment of factors of production used in making clothing, while the United States has a relatively large endowment of factors of production used in making heavy equipment.

(Figure: The Market for Chocolate) Use Figure: The Market for Chocolate. Equilibrium occurs at a price of _____, with the equilibrium quantity equal to _____.

P2; Q3

(Figure: Producer Surplus in the Market for Baseballs) Consider the figure Producer Surplus in the Market for Baseballs. At a price of P2, the producer surplus equals the area:

P2M0

(Table: Production Possibilities for the United States and Brazil) Use Table: Production Possibilities for the United States and Brazil. _____ has/have a comparative advantage in producing automobiles.

The United States

Which of the following is NOT a key element of the supply and demand model?

The way in which disequilibrium of supply and demand causes the supply curve or demand curve to shift to restore equilibrium.

(Figure: The Market for Apple Computers in the United States) Use Figure: The Market for Apple Computers in the United States. Assume that PA is the autarky price and PW is the world price. Consumer surplus without international trade would be area

W + X.

The _____ oversees international trade agreements.

World Trade Organization

(Figure: The Market for Roses) Use Figure: The Market for Roses. Assume that PA is the autarky price and PW is the world price. Producer surplus with international trade would be area:

Y

(Figure: The Markets for Pineapples in Brazil) Use Figure: The Market for Pineapples in Brazil. If Brazil trades based on comparative advantage, and the world price is D, then Brazil has _____ in the production of pineapples.

a comparative advantage

Which of the following factors is key to a well-functioning market?

a right of individuals and firms to use and dispose of their private property as they see fit

If the opportunity cost of producing either of two goods is constant, the production possibility frontier is:

a straight line.

Which factor would cause a supply curve to shift to the LEFT?

an increase in the cost of an input used to produce a good

A technological improvement has been developed in the production of mangos. At the same time, scientists have discovered that mangos have significant health benefits. This will result in:

an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of mangos.

(Figure: Computers and Speedboats II) Use Figure: Computers and Speedboats II. The downward slope of the production possibility frontier implies that resources:

are scarce

Producers may seek to sell a good below the mandated price if the government imposes a:

binding price floor.

(Table: Pineapple and Banana Production Possibilities) Use Table: Pineapple and Banana Production Possibilities. The table shows the maximum number of pineapples or bananas that Laura and Lindsay can produce when each produces only one good. The table implies that Laura has an absolute advantage in the production of:

both bananas and pineapples.

If an economy produces the desired mix of goods from its available resources, this mix of goods is:

both productively and allocatively efficient.

The economy with the LOWEST opportunity cost of producing a particular good is said to have a(n):

comparative advantage.

An economic model is tested by

comparing forecasts the model makes to actual outcomes.

If resources are allocated efficiently,

consumer and producer surplus are maximized.

Ariana bought a new pair of shoes at Nordstrom. When she walked out of the store, she thought, "I got such a great deal; I would have paid $40 more for these shoes!" This BEST represents the concept of:

consumer surplus.

(Figure: Market Demand for Oranges) Consider the figure Market Demand for Oranges. The amount by which the total benefits of oranges to consumers exceed consumers' total expenditures on oranges is called _____. If the price of oranges is B, this quantity is depicted by the area _____.

consumer surplus; BCD

(Figure: Price Control in the Market for Gasoline) Use Figure: Price Control in the Market for Gasoline. Dramatic increases in the price of gasoline have led the government to impose a price ceiling. One effective price ceiling would be the price indicated at point _____, creating a _____ equal to the difference between points _____.

d; shortage; i and h

(Table: Kombucha Market) There are two consumers, Archie and Mandeep, in the market for kombucha. Their willingness to pay for each kombucha is shown in the table Kombucha Market. There are two producers of kombucha, Carla and Davina, and their costs are also shown. The equilibrium price of kombucha is $8, and the equilibrium quantity is 5. If Carla sells one more kombucha, and Davina sells one less kombucha than in equilibrium, total surplus will _____ by _____.

decrease; $4

The United States can produce whiskey domestically, but it can also export whiskey if the world price is higher than the domestic price. If the United States exports whiskey, consumer surplus will _____, producer surplus will _____, and total surplus will ________.

decrease; increase; increase

The law of demand states that, other things equal, as the price:

decreases, the quantity demanded will increase.

Excess supply occurs when the:

equilibrium price is below the current price.

The market for yoghurt is initially in equilibrium. Yoghurt producers successfully advertise to encourage yoghurt consumption. At the same time, yoghurt producers exit the market. Standard demand and supply analysis tells us that the:

equilibrium price of yoghurt will rise, but we can't determine how the equilibrium quantity will be affected.

(Figure: Demand for Bananas) Use Figure: Demand for Bananas. If bananas are a normal good, an increase in the incomes of consumers could be represented as a:

shift from D1 to D2.

(Figure: The Market for Tea in India) Use Figure: The Market for Tea in India. In autarky, the price is PA. When the economy is opened to trade, the price rises to PW. India will _____ tea, and the volume of trade will equal _____.

export; QT - CT

(Table: Production of Zucchini and Eggplant in Nutley Township) Use Table: Production of Zucchini and Eggplant in Nutley Township. The table shows the production possibility frontier for Nutley Township. Suppose Nutley Township produces 5 bushels of zucchini and 50 bushels of eggplant; this combination is:

feasible but inefficient.

(Table: Firm's Willingness) The table Firm's Willingness explains the relation between the number of tax returns a firm is willing to produce and the lowest price it is willing to accept to prepare those tax returns. If the price of tax returns is $15, how many tax returns will the firm produce, and what will the producer surplus be?

five; $33

China is relatively labor-abundant compared with European Union member nations. Therefore, China has a comparative advantage in _____ compared with European Union member nations.

goods that are labor-intensive in production

If the United States imposes an import quota on Portuguese port, the result in the short run is likely to be _____ profits for American wine producers and _____ profits for Portuguese port producers.

higher; lower

The Chicago Tribune recently reported that the price of new cars, a normal good, has increased and that the quantity of new cars sold has risen. The new price and quantity could have been caused by a(n):

increase in buyers' incomes.

(Figure: Cell Phones and Automobiles) Use Figure: Cell Phones and Automobiles. The movement from PPF1 to PPF2 indicates a(n):

increase in the economy's ability to produce automobiles and cell phones.

Assume that Brazil imposes an import quota on Nike running shoes from the United States. Relative to the equilibrium world price that would exist in the absence of import quotas, the equilibrium price of Nike shoes in Brazil will most likely _____, and the equilibrium price of shoes in the United States will most likely _____.

increase; decrease

A binding price floor leads to:

inefficiency, because the number of transactions is below the equilibrium quantity.

(Table: Trade-off of Hours Worked and Hours Played) Use Table: Trade-off of Hours Worked and Hours Played. An individual sleeps 8 hours per day and divides the remaining time between working and having fun (work time and play time). The table shows the combinations of work and play time that can be produced in the 16 waking hours of each day. Suppose the individual works 4 hours and plays 10 hours. This point is:

inside the production possibility frontier.

Trade can be beneficial to an economy because:

it enables more goods and services to be obtained at a lower opportunity cost.

(Figure: Consumer and Producer Surplus in the Market for Sandals) Consider the figure Consumer and Producer Surplus in the Market for Sandals. If the price is held below the equilibrium level, the producer surplus will be _____ if the market were in equilibrium, and the total surplus will be _____ if the market were in equilibrium.

less than; less than

(Figure: The Production Possibilities for Taiwan and Japan) Use Figure: The Production Possibilities for Taiwan and Japan. Japan has an absolute advantage in producing:

microchips.

(Figure: The Production Possibility Frontiers for Kansas and Wisconsin) Use Figure: The Production Possibility Frontiers for Kansas and Wisconsin. Wisconsin has an absolute advantage in producing:

milk only

When Coca Cola consumption recently decreased, the Coca Cola Company hired a survey firm to determine what was going on. The firm interviewed consumers, who said that rising Coke prices were discouraging them from purchasing Coke. This implies a:

movement along the demand curve for Coca Cola.

When a market is in equilibrium, and there is no outside intervention to change the equilibrium price:

no mutually beneficial trades are missed.

(Figure: Production Possibility Frontier for Trains and Planes) Use Figure: Production Possibility Frontier for Trains and Planes. Which rate of production per period is NOT efficient?

no trains and 18 planes

Suppose that the price of rare earth metals is increasing (this is one of the main components of most smartphones). As a consequence, people expect the price of smartphones to rise next year. Therefore, people will MOST likely:

observe higher prices for smartphones this year.

The typical supply curve illustrates that:

other things equal, as price rises, the quantity supplied of the good rises.

(Figure: The Supply of Apple TV Rentals) Use Figure: The Supply of Apple TV Rentals. An increase in the price of online movies sold by movie producers to rental outlets like Amazon and Apple TV would result in the change illustrated by the move from:

p to q in panel B.

When a market begins to engage in international trade:

producers in the exporting industry may be better off.

Advocates of trade barriers suggest that trade restrictions are needed for national security, job creation, and to:

protect new producers until they become more established.

(Figure: Demand and Supply of Sugar) Use Figure: Demand and Supply of Sugar. What might cause the supply curve to shift from S2 back to the initial supply curve S1?

restrictions on sugar cane exports by Brazil

Government intervention in the form of a binding price floor or a binding price ceiling will:

result in either excess supply or excess demand.

(Figure: The Market for Grapes in California) Use Figure: The Market for Grapes in California. When the government imposes a tariff on imported grapes, the price of grapes in California rises from PW to PT, and the domestic producer surplus _____ to _____.

rises; G + C

If the market for tickets to the Superbowl is in equilibrium but owners of tickets who would have sold their tickets are not allowed to sell, while fans who would not sell their tickets are required to sell, total surplus would:

stay the same.

The total producer surplus in the California cheese market is the:

sum of the individual producer surpluses in this market.

To achieve gains from trade, a trading nation should specialize in the production of goods:

that it can produce while forgoing the production of fewer alternative products than any other country.

(Scenario: The United States and Germany) Use Scenario: The United States and Germany. Given this information, the country that has the absolute advantage in barley is _____, and the country that has the absolute advantage in aluminum is _____. Scenario: The United States and Germany Two countries, the United States and Germany, produce two goods, barley (B) and aluminum (A). Each has a linear production possibility frontier in both goods. If the United States spends all of its available resources to produce barley, it can produce 500 tons of barley and no aluminum. If it uses all of its resources to produce aluminum, it can produce 250 tons of aluminum and no barley. If Germany spends all of its available resources producing barley, it can produce 400 tons of barley, and if it spends all of its resources on the production of aluminum, it can produce 400 tons of aluminum.

the United States; Germany

Recent research suggests that certain refillable plastic water bottles may leech cancer-causing particles into the containers with repeated usage. As a result of this research being made public, one would expect:

the demand for such containers to decrease.

The production possibility frontier is bowed out because:

the resources that are available are not equally suited for all types of production.

(Table: Comparative Advantage I) Use Table: Comparative Advantage I. Japan has a comparative advantage in the production of: Table: Comparative Advantage I Japan and Norway produce only two goods, tuna and computers, and this table shows the maximum amount that each nation can produce of the two goods.

tuna only.

Assume a positively sloped supply curve and a negatively sloped demand curve. If a frost destroys much of the lemon crop, the total surplus in the lemon market:

will decrease.

Along a straight-line downward-sloping demand curve, a decrease in the market price of a good:

will increase consumer surplus.

Suppose you pay $14 to see George Clooney in his next movie and that Mr. Clooney receives $40 million for appearing in it. This means that:

you and George Clooney benefit from this transaction.