Macro Final - Clayton
3) Suppose the government places a $5 per-unit tax on this good. The producer surplus after this tax is
a. $15
77. Alexis is a lawyer. She bills her clients $100 an hour for her services. She can also mow her lawn in 30 minutes. She can hire someone to mow her lawn who takes an hour. Of the following prices, which is the highest Alexis would pay someone to mow her lawn?
a. $49
91. Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is
a. $8.
26. Using the midpoint method, what is the price elasticity of demand between $0 and $3?
a. 0.11
18. In January the price of widgets was $1.00, and Wendy's Widgets produced 80 widgets. In February the price of widgets was $1.50, and Wendy's Widgets produced 110 widgets. In March the price of widgets was $2.00, and Wendy's Widgets produced 140 widgets. The price elasticity of supply of Wendy's Widgets was about
a. 0.79 when the price increased from $1.00 to $1.50 and 0.84 when the price increased from $1.50 to $2.00.
10. Refer to Table 24-3. If 2013 is the base year, then the CPI for 2012 was
a. 75.3.
8) The market for soybeans in Canada consists solely of domestic buyers of soybeans and domestic sellers of soybeans if
a. Canada forbids international trade in soybeans.
20. Refer to Figure 6-22. As the figure is drawn, who sends the tax payment to the government?
a. The sellers send the tax payment.
43. A price ceiling is
a. a legal maximum on the price at which a good can be sold.
65. Elasticity is
a. a measure of how much buyers and sellers respond to changes in market conditions.
46. When the government attempts to improve equality in an economy the result is often
a. a reduction in efficiency.
79. Which of the following is the primary cause of inflation?
a. an increase in the quantity of money
11. Brad has a comparative advantage in the production of
a. beef and Theresa has a comparative advantage in the production of wheat.
89. The price elasticity of demand for a good measures the willingness of
a. consumers to buy less of the good as price rises.
31. The discovery of a new hybrid wheat would increase the supply of wheat. As a result, wheat farmers would realize an increase in total revenue if the
a. demand for wheat is elastic.
25. midpoint method if price falls from $200 to $150
a. elastic
87. If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would
a. increase by less than $1,000.
34. Refer to Figure 5-17. If, holding the supply curve fixed, there were an increase in demand that caused the equilibrium price to increase from $6 to $7, then sellers' total revenue would
a. increase.
32. Refer to Figure 6-1. The price ceiling shown in panel (a)
a. is not binding.
53. The mainstream view among economists is that
a. society faces a tradeoff between unemployment and inflation, but only in the short run.
Among the following countries, which one has the highest level of real GDP per person but the lowest growth rate of real GDP per person over a very long period of time?
a. the United Kingdom
57. If something happens to alter the quantity demanded at any given price, then
a. the demand curve shifts.
76. Most economists view the United States' experience with trade as
an ongoing experiment that confirms the virtues of free trade.
56. Refer to Figure 6-23. The effective price received by sellers after the tax is imposed is
b. $3.
30. Consider Mandy's decision to go to college. If she goes to college, she will spend $20,000 on tuition, $10,000 on room and board, and $2,000 on books. If she does not go to college, she will earn $18,000 working in a store and spend $8,000 on room and board. Mandy's cost of going to college is
b. $42,000.
80. If the tax on a good is increased from $1 per unit to $4 per unit, the deadweight loss from the tax increases by a factor of
b. 16
74. Refer to Table 3-3. Assume that England and France each has 40 labor hours available. If each country divides its time equally between the production of cheese and wine, then total production is
b. 24 units of cheese and 15 units of wine
13) What is Theresa's opportunity cost of producing one bushel of wheat? a. 5/6 pound of beef
b. 3/5 pound of beef
81. Suppose a gardener produces both tomatoes and squash in his garden. If the opportunity cost of one bushel of squash
b. 5/2 bushels of squash.
14. Suppose that Jane enjoys Diet Coke so much that she consumes one can every day. Although she enjoys gourmet cheese, she consumes it sporadically. If the price of Diet Coke rises, Jane decreases her consumption by only a very small amount. But if the price of gourmet cheese rises, Jane decreases her consumption by a lot. These examples illustrate the importance of
b. a necessity versus a luxury in determining the price elasticity of demand.
If a central bank wants to counter the change in the price level caused by an adverse supply shock, it could change the money supply to shift
b. aggregate demand left.
If purchasing-power parity holds, a dollar will buy
b. as many goods in foreign countries as it does in the United States.
9) If a shortage exists in a market, then we know that the actual price is
b. below the equilibrium price, and quantity demanded is greater than quantity supplied.
19. When a country allows trade and becomes an importer of a good,
b. consumer surplus increases and producer surplus decreases.
52. A tax on the sellers of coffee mugs
b. decreases the size of the coffee mug market.
50. A variety of fuels can be used to generate electricity. Considering only the availability of the fuel and not the cost of converting it into electricity, which of the following fuels is most scarce?
b. fossil fuel
70. The "invisible hand" refers to
b. how the decisions of households and firms lead to desirable market outcomes.
86. The tax burden will fall most heavily on buyers of the good when the demand curve
b. is relatively steep, and the supply curve is relatively flat.
The theory of efficiency wages explains why
b. it may be in the best interest of firms to offer wages that are above the equilibrium level.
A person can benefit from specialization and trade by obtaining a good at a price that is
b. lower than his or her opportunity cost of that good.
The investment component of GDP measures spending on
b. residential construction, business equipment, business structures, and changes in inventory. During recessions it declines by a relatively large amount.
21. The phenomenon of scarcity stems from the fact that
b. resources are limited.
40. Refer to figure 9-26. The figure shows that
b. the U.S. will export baseballs when the market opens to international trade.
58. The primary determinant of a country's standard of living is
b. the country's ability to produce goods and services.
A change in the tax laws that increases the supply of loanable funds will have a smaller effect on investment when
b. the demand for loanable funds is more inelastic and the supply of loanable funds is more elastic.
A German company wants to buy dollars to purchase U.S. bonds. In the open-economy macroeconomic model of the U.S., this transaction would be accounted for in
b. the supply of currency in the foreign exchange market, and the demand for loanable funds.
72. Which of the following is likely to have the most price inelastic demand?
b. toothpaste
Suppose prices of personal computers fall significantly and consumers respond by buying more personal computers. The consumer price index
b. understates this price decrease due to the substitution bias.
9. Refer to Table 24-3. The cost of the basket in 2012 was
b.$116.
35. Refer to Figure 9-22. Suppose the government imposes a tariff of $20 per unit. With trade and a tariff, total surplus is
c. $114,000
12. What is Brad's opportunity cost of producing one bushel of wheat?
c. 5/6 pound of beef
24. The original tax can be represented by the vertical distance AB. Suppose the government is deciding whether to lower the tax to CD or raise it to FG. Which of the following statements is correct?
c. Compared to the original tax, the larger tax will decrease tax revenue and increase deadweight loss.
64. Which of the Ten Principles of Economics does welfare economics explain more fully?
c. Markets are usually a good way to organize economic activity.
19. Which of the following shifts the long-run Phillips curve left?
c. a decrease in the minimum wage rate, but not an increase in the inflation rate
Other things the same,as the price level falls
c. a dollar buys more domestic goods.
15. A basic principle of economics is that a country's standard of living depends on its
c. ability to produce goods and services.
83. Refer to Table 3-40. Germany should specialize in the production of
c. cars and import boats.
90. A $5 tax levied on the buyers of pants will cause the
c. demand curve for pants to shift down by $5.
75. People who provide you with goods and services
c. do so because they get something in return.
10. The unique point at which the supply and demand curves intersect is called a. coincidence.
c. equilibrium.
68. In the circular-flow diagram, which of the following items flows from firms to households through the markets for goods and services?
c. goods and services
51. The most common data for testing economic theories come from
c. historical episodes of economic change.
When the price level falls, people want to
c. hold less money and the quantity of aggregate goods and services demanded increases.
When a bank loans out $1,000, the money supply
c. increases
A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is a. highly responsive to changes in income.
c. inelastic.
. Gross domestic product includes all
c. legal final goods and services, but it excludes illegal final goods and services.
In 2015, U.S. net exports were
c. negative and about 3 percent the size of GDP.
55. If soybean farmers know that the demand for soybeans is inelastic, in order to increase their total revenues they should
c. reduce the number of acres they plant to decrease their output.
44. An import quota
c. reduces the welfare of domestic consumers.
47. Which of the following words and phrases best captures the notion of equality?
c. sameness
69. Externalities are
c. side effects passed on to a party other than the buyers and sellers in the market.
15. Refer to Figure 9-2. The world price for calculators represents
c. the demand for calculators from the rest of the world.
16. In which of the following cases can we be certain that a natural resource has become scarcer?
c. the demand for the resource has increased and the supply has decreased.
27. Which of the following is not a reason people choose to depend on others for goods and services?
c. to allow people to produce outside their production possibilities frontiers
17. Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. Without trade, Freedonia produces and consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and consumes 10 units of corn and 30 units of wheat. Suppose that trade is then initiated between the two countries, and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. Freedonia will now be able to consume a maximum of
d. 30 units of corn and 30 units of wheat.
63. Why was OPEC unable to maintain high oil prices in the long run?
d. Demand and supply are both elastic in the long run compared to the short run.
48. Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.75. Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?
d. a 13.33 percent increase in the price of the good
2. Which of the following results in higher inflation and higher unemployment in the short run?
d. an adverse supply shock such as an increase in the price of oil
67. Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person. Which country can benefit?
d. both
29. Iceland should export
d. coolers and import radios.
73. The property of society getting the most it can from its scarce resources is called
d. efficiency
45. Which of the following is likely to have the most price inelastic demand?
d. milk
22. Last year, Joan bought 50 pounds of hamburger when her household's income was $40,000. This year, her household income was only $30,000 and Joan bought 60 pounds of hamburger. All else constant, Joan's income elasticity of demand for hamburger is
d. negative, so Joan considers hamburger to be an inferior good.
54. Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by L+M+Y represents
d. producer surplus before the tax.
39. The price elasticity of supply measures how responsive
d. sellers are to a change in price.
Assume a central bank follows a rule that requires it to take steps to keep the price level constant. If the price level fell because of a decrease in aggregate demand and an increase in aggregate supply that kept output unchanged, then
d. the central bank would have to increase the money supply which would increase output.
37. A rational decisionmaker takes an action if and only if
d. the marginal benefit of the action exceeds the marginal cost of the action.
42. Refer to Figure 9-24. Suppose the government imposes a tariff of $10 per unit. With trade and a tariff, total surplus
d.$950.
84. The federal government is concerned about obesity in the United States. Congress is considering two plans. One will ban the production and sale of "junk food." The other will increase nutrition-education programs and include substantial advertising campaigns to encourage healthy eating habits. The junk-food ban program
will reduce the quantity of junk food sold and raise the price. The education program will reduce the quantity of junk food sold and lower the price.
7) As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on, the
C. tax revenue increases at first, but it eventually peaks and then decreases.
6) If the government imposes a $3 tax in a market, the equilibrium price will rise by $3.
False
41. DeShawn has spent $600 purchasing and repairing an old fishing boat, which he expects to sell for $900 once the repairs are complete. DeShawn discovers that, in addition to the $600 he has already spent, he needs to make an additional repair, which will cost another $400, in order to make the boat worth $900 to potential buyers. He can sell the boat as it is now for $400. What should he do?
It does not matter which action he takes; the outcome is the same either way.
16) When a country allows international trade and becomes an importer of a good, domestic producers of the good are better off, and domestic consumers of the good are worse off.
b. False
59. A tax on insulin is likely to cause a very large deadweight loss to society.
b. False
1) the vertical distance between points A and C represents a tax in the market. The per unit burden of the tax buyers is
b. P3-P2
5) Assume, for the good in question, two specific points on the demand curve are (Q = 1,000, P = $40) and (Q = 1,500, P = $30). Then which of the following scenarios is possible?
b. The vertical intercept of the demand curve is the point (Q = 0, P = $60).
62. If the price elasticity of supply is 1.5, and a price increase led to a 1.8% increase in quantity supplied, then the price increase is about
d. 1.20%.
60. Refer to Figure 5-1. Between point A and point B, price elasticity of demand is equal to
d. 1.5
33. Which of the following can policy do?
d. All of the above are correct.
88. Which of these activities will most likely impose an external cost?
d. Bridget drives her car after having too much alcohol to drink.