macro EXAM 1 review
Suppose the market equilibrium price is $200. The government decides to implement a price floor of $100. Is this price floor binding?
not enough info
The PPF to the right shows two products produced by a society (dreamliners and small jets). Which of the points represents a combination that is feasible but not efficient?
point C
The question "Does a higher minimum wage cause higher rates of unemployment?" is an example of a ________ question, whereas the question "should there be an increase in taxes?" is an example of a ________ question.
positive, normative
Suppose the equilibrium price in a market is $10. The government sets a minimum price in the market of $8. This price of $8 is an example of a(n):
price floor
When a government mandates the maximum price for a good, misallocation of resources occurs because:
some consumers spend a lot of time and resources finding a good.
Suppose Futurebook Co.'s willingness-to-sell for an e-reader is $50 and the firm has $57 of producer surplus. What is the market price of the tablet?
$107
Suppose the price of a tablet is $200. Alaya is willing to pay $200, Brit is willing to pay $210, and Jonah is willing to pay $300. How much consumer surplus is there in this market?
$110
Suppose you decide to take a day off work to go to a concert. On average, you earn $70 per day at your job. You estimate that you will spend $20 on gas to go to the concert, $10 on food, and $50 for your ticket. What is the opportunity cost of going to the concert?
$150
Suppose the Michelle buys a cappuccino. from Paul's cafe and bakery for $4.75. Michelle was willing to pay up to $6.75 for the cappuccino, and Paul's cafe and bakery was willing to accept $0.75 for the coffee. Michelle's consumer surplus would be ______. And Paul's Cafe and bakery's producer surplus would be ______.
$2, $4
This law states that as the price increases, the quantity demanded decreases.
law of demand
Suppose Kendra sells cheesecakes for $10 each and would be willing to sell cheesecakes for $8 each. If Austin buys five and he is willing to pay $80 in total, how much is his total consumer surplus?
$30
For each of the goods, classify them according to whether they are rivalrous. non rivalrous, excludable, or non excludable. Rivalrous is also referred to as rival in consumption. 1) sports team t-shirt _______. 2) the air we breath __________. 3) atlantic bluefin tuna in the Mediterranean Sea ________. 4) A toll in normal traffic ________.
1) rivalrous and excludable 2) nonrivalrous and non excludable 3) rivalrous and non excludable 4) nonrivalrous and excludable
Flour, which can be used to make many products, is used to make waffles and muffins because of the high demand for each product. AND Herb Farmer decides to use his flour and sugar to make three cakes and three loaves of bread, which his customers have demanded. Are examples of
Allocative effiecieny
Which of the following explains the rightward shift of the PPF curve?
Both B and C are correct
Herb Farmer makes two cakes and two loaves of bread, but uses enough flour to make three cakes and four loaves of bread. AND Herb Farmer decides to use his ingredients to make cakes, but his customers prefer donuts. These examples are
Not efficient
which of the following shows a more realistic PPF for an economy?
PPF (B)
Due to the recent corona virus pandemic, many airlines have been offering generous price discounts to attract customers. Which key principle of economics are airlines using?
People respond to incentives, both good and bad.
To produce one more bagel, the output of donuts must fall. AND If Herb Farmer wants to produce one more cake, he needs to give up two loaves of bread. These are examples of
Productive efficiency
Which of the following is NOT a factor of production? Land, Labor, Profits, Entrepreneurial ability
Profits
Suppose that the local grocery store raises the price of peanut butter. Which of the following would be likely to occur as a result?
The quantity demanded of peanut butter will decrease and the demand for jelly will shift to the left.
According to the table, which country has a comparative advantage in large jets? What about small jets?
US, Brazil
which country has an absolute advantage int he production of large jets? What about small jets?
US, US
Which of the following would explain the leftward shift of the demand curve for phones, a normal good?
a decrease in consumer income
Which of the following could cause an increase in consumer surplus?
a decrease in price due to a reduction in sales tax
The quantity demanded for office chairs has decreased due to an increase in price. How would this change in quantity demanded be represented on the demand curve?
a movement from one point on the demand curve to a higher point on the curve
The quantity of gaming apps that producers will offer for sale increases as the price of gaming apps increases. How would this change in quantity supplied be represented on the supply curve?
a movement from one point on the line to a higher point on the line
The quantity supplied for sugar increased due to a change in price. How would this change in quantity supplied be represented on the supply curve?
a movement from one point on the line to a higher point on the line
The increased demand for corn for ethanol production has resulted in record-high corn prices. As a result, more farmers have planted acreage in corn. The effect on the supply of corn would be shown as:
a new curve to the right of the original supply curve
A shortage exists when _____ is set below the equilibrium price for a good.
a price ceiling
public television is an example of
a public good
Suppose the government enacts a price ceiling below the equilibrium price. We can conclude the this will cause:
a shortage
The max amount of a product that buyers are willing and able to purchase over some time period at various prices, ceteris paribus, is:
demand
producer surplus is shown graphically as the area
above the supply curve and below the market price
Which of the following would explain the rightward shift of the supply curve?
advancement in production technology
If she is a morning person and loves the smell of donuts, she will view the donut shop as
an external benefit
Which of the following would explain the leftward shift of the supply curve?
an increase in resource prices
Which of the following would explain the rightward shift of the demand curve for phones, a normal good?
an increase int he number of buyers
Jodi wants to sell her motorcycle, and Greg is looking for a used motorcycle to buy. Greg takes it for a test drive. Jodi knows that the clutch is going out on her motorcycle, the filter is leaking, and the tires will need to be replaces soon. If she does not disclose this information to greg and he cannot tell from his test drive, this is an example of
asymmetric information
Teri takes her puppy to the vet. After he examines the puppy, the vet tells Teri that her puppy needs a series of shots. Teri agrees to the shots since the vet knows way more about animal health than she does. This is an example of
asymmetric information
A _____ is set below the equilibrium price for a good.
binding price ceiling
When the price of one good rises, the demand for another good falls. The two goods are ______ goods.
complementary
Generally, as the price of movies increases, the demand for popcorn decreases. Movies and popcorn are an example of:
complimentary goods
What does the blue area, above the equilibrium price, and below the demand curve represent?
consumer surplus
when price increases what happens to consumer surplus?
consumer surplus will decrease because some buyers will stop buying the good
If she likes to stay up late and loves listening to all kinds of music, she will view the bands practicing as an
external benefit
If her roommate hates loud music and the smell of donuts makes her sick, she will reject both apartments due to what she sees as an
external cost
if the supply of a good increases and the demand stays the same, price will
fall
Markets can reach the socially desirable outcome under which of these conditions?
information is widely available
the supply and demand for a particular good both increase. What will happen to the price if the increase in demand exceeds the increase in supply?
it will rise
This law states that as price increases, the quantity supplied increases.
law of supply
Inflation, unemployment, and national output of goods and services are three principle components of this category of economics.
macroeconomics
Lack of competition is one of the four reasons for:
market failure
Producer surplus is the difference between willingness-to-sell and:
market price
A change in price that decreases the quantity demanded of a good will cause a
movement upward along the demand curve
Suppose a firm decides to move its production overseas to take advantage of lower labor costs. This is an example of:
production efficiency
which of the following is a nonexclusive good?
public television
market equilibrium quantity exists where:
quantity supplied and quantity demanded are equal.
Which of the following is an example of a price ceiling?
rent-controlled apartments in New York City during World War II
economics attempt to address the problem of having too many wants but too few resources to achieve them all. This important concept is called.
scarcity
John likes going to concerts, however, ticket prices have been rising lately. As a result, John starts going to more movies and less concerts. Concerts and movies are:
substitute goods
If the price is $8, is there a surplus or a shortage? of how many units?
surplus of 20 units
consumer surplus is shown graphically as
the area under the demand curve and above the market price
producer surplus is the difference between
the market price and the minimum price a seller is willing to accept
consumer surplus is equal to the difference between
the max price a buyer is willing to pay and the market price
In 2010, frost badly damaged the tomato crop in Florida. The crop loss caused tomato prices to increase. According to the law of demand, what will happen to the quantity demanded for tomatoes based on this price change?
the quantity demanded will decrease
More sellers of a product would cause the supply curve for the product to shift:
the to right
markets work most efficiently when:
there are many buyers and sellers
When firms have to pay higher taxes for the production of a good, the supply curve for that good shifts:
to the left
Suppose the equilibrium price for bicycle tires is $42 but the market price rises to $67. Jerry is a seller in this market. All of Jerry's customers are not willing to pay this higher price. What has happened to total surplus in this market?
total surplus decreases
Julie decides to buy a sandwich from publix for lunch. Julie ends up paying $5 for the sandwich however, given how hungry she is, she would pay $10. In this case, the $10 is Julie's _______.
willingness-to-pay
which of the following would be considered to be the cut-off between a consumer buying a car and doing without the car?
willingness-to-pay
