Final Micros Study Guide pt. 1 (Mod 1-4)

The marginal cost for the 27th million gallon of milk is

$1.00.

In this market, the equilibrium price is _______ and equilibrium quantity is _______.

$1.50 per gallon; 28 million gallons

The table below represents the demand for bottles of sunscreen at Daytona Beach on a sunny June day. If the price of a bottle of sunscreen is $34, what will be the quantity demanded?

3,600

If there were 100 sellers in the market, each with a supply schedule identical to seller 2 in the table above, then the weekly quantity of hamburgers supplied in the market at a price of $5 would be

500

If there were 300 sellers in the market, each with a supply schedule identical to seller 1 in the table above, then the weekly quantity of hamburgers supplied in the market at a price of $2 would be

600

Which of the following scenarios would likely shift the supply curve for potatoes to the right (increase in supply)?

A new harvester enables farmers to bring in ripe potatoes twice as fast as they did before.

The tools and machines used to produce a good or service are what type of market resource?

Capital

If the price of Pepsi decreases, all else held constant, then we'd expect to see a consequent shift of the demand curve for

Coke to the left.

An increase in income increases the quantity demanded by 10% at every price. Which of the following columns represents the new monthly quantity demanded for cars (in thousands of cars)?

Column C

Consider each of the following scenarios and determine whether it is an example of the income effect, the substitution effect, or diminishing marginal utility. a. Sasha likes to treat herself to a small latte each afternoon. On Wednesdays, when the coffee shop decreases the price of lattes, Sasha buys a large latte instead. b. The price of chicken nuggets rises from $3 to $3.50 for a box of six. The price of hamburgers stays the same. Mateo used to eat chicken nuggets three times a week. All else equal, he now eats them twice a week. c. Jack offers Victoria a plate of a dozen chicken wings. Victoria enjoys the first wing the best, the second wing a little bit less, and by the seventh wing, she has had enough and chooses not to eat the remaining five wings.

Income effect Correct Substitution effect Correct Diminishing marginal utility

How would a decrease in price of Blu-Ray movies affect the demand for Blu-Ray players?

Increase the demand

If 30 million gallons of milk are being produced, then we know marginal benefit

is less than marginal cost

Farmers withholding some of their current corn harvest from the market because they anticipate a higher price of corn in the near future would cause a

leftward shift in the current supply of corn.

When studying human behavior, economists assume rational self-interest. This means that people

make decisions based on some desired outcome.

An "increase in the quantity supplied" suggests a

movement up and to the right along the supply curve.

Managers at a local home improvement store see that new home sales in their area have increased. They order more refrigerators for their store. They likely do this because they assume that

new homes and refrigerators are complements

In analyzing human decision and action, economists assume that

people's behavior reflects rational self-interest.

Which one of the following is not assumed to be constant when the supply curve for a product is drawn?

price of the product

The opportunity cost to a consumer who smokes cigarettes consists of the

product that the consumer could have bought instead of cigarettes.

The demand schedule for a product shows the relationship between how much of the product buyers are willing and able to buy and the

product's price.

All else being equal, if the price of a product decreases, we would expect

quantity supplied to decrease.

In deciding whether to study for an economics quiz or go to a movie, one is confronted by the idea(s) of

scarcity and opportunity costs.

An increase in the supply of music downloads indicates that more music downloads will be

supplied, even if prices of music downloads stayed the same.

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

supply curve has shifted to the left.

Which of the following would most likely increase the demand for gasoline?

the expectation by consumers that gasoline prices will be higher in the future

The opportunity cost of an action is always equal to:

the next-best alternative for the resources used to undertake the action

Juan likes both hot dogs and burritos. All else equal, when the price of hot dogs rises, he buys more burritos. This can best be explained by:

the substitution effect

When economists speak of "demand" in a particular market, they refer to

the whole demand curve or schedule.

In order to derive the market supply curve from individual supply curves, we add up the

various quantities that individual sellers are willing and able to supply at different prices.

Which of the following scenarios is an example of a person interacting outside of a market?

Melissa votes for her favorite performer at a local talent show.

Suppose the state of Florida passes a law that increases the tax on alcoholic beverages. As a result, resi-dents in Florida start purchasing their alcohol in surrounding states. Which of the following principles does this best illustrate?

People respond to incentives

According to a recent study of Italian bus drivers, drivers who are paid by the number of passengers they transport have higher productivity than drivers who are paid by the hour. This result is an example of which principle of economics?

People respond to incentives.

Which of the following exemplifies a microeconomic question?

Will a new type of electronic reader or tablet increase the number of buyers?

Which statement best illustrates the concept of diminishing marginal utility?

A typical consumer will receive less satisfaction from consuming the third slice of pizza for lunch than from the second slice.

Which of the following can policy do?

All are correct; alter incentives, change opportunity costs, alter trade-offs

Which of the following can best be characterized as a subject of macroeconomics?

An examination of monetary policy

Which of the following illustrates a macroeconomic question?

Are increasing wage demands by workers contributing to price inflation?

Which of the following statements is true about supply?

As price increases, producers are willing and able to put more of the good on the market for sale.

Identify which of the following scenarios is likely to shift the demand for wheat bread to the right.

The population of Arizona grows by 20%. A drought in Kansas makes people believe that the price of wheat bread will increase in a couple of months. As people become more health conscious, they discover the benefits of whole wheat as a part of their diet.

Which of the following will not cause a change in the demand for product A?

a change in the price of A

Which of the following would cause a rightward shift of the supply curve for cell-phone services?

a decrease in the wages of workers employed by cell-phone companies

One basic difference between "land" and "capital" resources is that land is

a gift of nature, while capital is manufactured

Use the table below to complete the question. This table represents the demand for peaches in Hoboken, a town in New Jersey. a. Graph the information presented in the table. b. If the market price for peaches is $8 per pound, what is the quantity of peaches demanded in Hoboken?

a. (20,4)(14,14)(8,26)(2,38) b.26 pounds

a. The first unit (from A to B)? b. The third unit (C to D)? c. The fifth unit (E to F)? d. The seventh unit (G to H)? e. Are these opportunity costs increasing, constant or decreasing as we produce more consumer goods? f. As more capital goods are produced, what happens to the opportunity cost in terms of consumer goods (moving in the opposite direction)? g. If the opportunity costs were constant for the entire PPC, what shape would the curve have?

a. 0.2 units of capital goods b. 0.8 units of capital goods c. 1.4 units of capital goods d. 2.1 units of capital goods e. increasing f. It increases g. Straight

a. Fill in the new market supply schedule in the "New Market Quantity of Computers Supplied" column. b. At a price of $425 per laptop computer, the entry of NF Computers will increase the quantity of computers supplied by ______ computers, resulting in a total market quantity of ______ computers.

a. 1,075, 969, 863, 754, 645, 536, 427, 318 b. 54,754

a. Suppose there is a decrease in the cost of renting land that allows lettuce growers to produce 50 more heads of lettuce at each price. Find the new quantities supplied at each price, and then complete the new supply schedule in the table. b. At a price of $1.50 per head of lettuce, the original quantity supplied was 80 heads of lettuce and the new quantity supplied is ____ heads of lettuce.

a. 250, 210, 170, 130, 90, 50 b. 130

Lucinda collects Kewpie dolls, and can afford to buy up to six dolls. The table below describes the marginal benefit Lucinda gets for each additional doll she adds to her collection. a. If the price of Kewpie dolls is $6.00 per doll, how many dolls would Lucinda buy if she is rational? b. If the price of Kewpie dolls rose to $9.00 per doll, how many dolls would Lucinda buy if she is rational?

a. 4 Dolls b. 3 Dolls

Emmanuel enjoys growing zucchini in his garden and then selling his produce at the local farmers' market. The table below shows his marginal benefit and marginal cost for each hour he spends in his garden per week. The figure below plots the marginal benefit and marginal cost points. a. Given the information above, what is Emmanuel's optimal amount of time spent gardening each week? b. If Emmanuel were to spend 2 hours each week gardening: c. If Emmanuel were to spend 6 hours each week gardening:

a. 4 hours b.the marginal benefit would exceed the marginal cost by $12. c.the marginal cost would exceed the marginal benefit by $12.

a. Suppose there is a decrease in the cost of renting land that allows lettuce growers to produce 50 more heads of lettuce at each price. Find the new quantities supplied at each price, and then complete the new supply schedule in the table. b. Graph the initial supply and new supply of lettuce on the graph below. At a price of $1.50 per head of lettuce, the original quantity supplied was 200 200 Correct heads of lettuce and the new quantity supplied is

a. 550 , 450, 350, 250, 150, 50 b. c. 250 heads of lettuce.

The table below represents the quantity of rice demanded for selected countries a. Fill in the market quantity of rice demanded (column "Market") for each given price. b. What is the quantity of rice demanded in the market (in millions of metric tons) if the market price is $400 per metric ton?

a. 7, 10.5, 14, 17.5, 21 b. 14 Correct million metric tons

a. What is the quantity of bouquets supplied if the market price is $20? b. Suppose the market price rises from $20 per bouquet to $25 per bouquet

a. 80 bouquets of flowers b. The quantity of bouquets supplied will increase by 20 bouquets.

If the price is $15 per bottle, how many bottles of sunscreen are demanded and supplied? b. What is the equilibrium price and quantity in the market for sunscreen?

a. Qd = 5,000 bottles Qs = 2,500 bottles In this case, there would be upward pressure on the price. b. P = $ 20 Q = 4,000 bottles

a. If a producer tries to sell oranges at a price of $0.80 per pound, what will be the quantity demanded and quantity supplied at this price? b. Determine whether there is a surplus or a shortage at a price of $0.80 per pound, and determine the size of the surplus or shortage.

a. Qd = 80 80 Correct pounds of oranges Qs = 110 110 Correct pounds of oranges b. At this price, there will be a surplus Correct of 30 Correct pounds of oranges.

a. In the table, complete the column labeled "Market." b. How many pounds of peaches will be supplied to the market when the price is $4 per pound?

a.58,000,51,000, 44,000, 37,000, 30,000 b.37,000 Correct pounds

a. Fill in the "Post-Subsidy" column in the table after the subsidy takes effect. b. Graph the pre-subsidy and post-subsidy supply curves for the milk market. c. At a market price of $2 per gallon, the pre-subsidy quantity supplied was 6.00 6.00 Correct thousand gallons and the quantity supplied after the subsidy is

a.9.60, 8.40, 7.20, 6.00, 4.80 b. c. 7.20 Correct thousand gallons.

a. What are the initial equilibrium price and quantity in the bicycle market? b. What are the new equilibrium price and quantity in the market? c. Because of the increased number of bicycle lanes in rural Indiana, the equilibrium price of bicycles _________ and the equilibrium quantity of bicycles _________.

a.P = $ 275 275 Correct Q = 850 850 Correct bicycles b. P = $ 300 300 Correct Q = 900 900 Correct bicycles c. increases by $25; increases by 50 bicycles

The assertion that "there is no free lunch" means that

all production has an opportunity cost.

Because of the significant snow fall in the plains this year, the supply of fertilizer to Washington State's apple farmers substantially decreased. As a result, the price of fertilizer has increased in Washington State. This statement indicates the

amount of apples that will be available at various prices will decline.

The figure above shows three supply curves for wheat. Which of the following would cause the quantity of wheat supplied to increase from point a to point b?

an increase in the price of wheat

a. Graph the demand curve for bathing suits. b. Due to an influx of tourists, the quantity of bathing suits demanded increases by 15 bathing suits at every price. Complete the column in the table below.

b. 75, 85, 95, 105, 115, 125, 135

b. What are the initial equilibrium price and quantity in the steel market? c. What are the new equilibrium price and quantity in the market?

b. P = $ 600 per ton Q = 1.6 million tons of steel c. P = $ 610 per ton Q = 1.5 million tons of steel

When economists say that the demand for a product has decreased, they mean that

consumers are now willing and able to buy less of this product at each possible price.

An increase in the demand for music downloads indicates that more music downloads are

demanded even if prices of music downloads stay the same.

Which of the following goods would most likely be an inferior good?

generic detergent