Micro Exam 1
When graphing the supply curve, we focus on the relationship between _____ and quantity supplied while other variables _____.
price changes; remain constant
Sunk costs are costs that are incurred
regardless of which decision is made
Imani collects Air Jordan sneakers. Sometimes, Imani will sell lower quality Jordans, or easier to find models, on collectors' websites in order to purchase a more rare pair. Imani is participating in a(n):
secondary market.
When applying the opportunity cost principle, what should you do if you are able to think of more than one alternative
select the best alternative
As a worker in the labor market, what role do you play?
seller
When the price is below equilibrium, a:
shortage leads to price increases.
Sunk Cost or Not a Sunk Cost: the cost of last year's renovation of the old stadium
sunk cost
Sunk Cost or Not a Sunk Cost: the cost of the previous stadium
sunk cost
Amancio is going into his fourth year of school when he is offered a prestigious position at a software company. Instead of applying the opportunity cost principle to see if he should quit school and take the job, he decides to stay in school, because he has already spent so much time and money on furthering his education. Amancio's hasty decision has been negatively affected by:
sunk costs
Sunk costs are costs that
are incurred in the past and cannot be reversed
Alan is a college student living alone in a campus apartment. He finished cooking dinner when his friends text him to join them at the dining hall on campus for dinner. He now has to decide whether to eat the dinner he prepared or walk to campus to meet his friends at the dining hall. Alan should consider all the following costs when making this decision EXCEPT the
time he spent cooking the dinner
The supply curve must be _____ because the marginal cost curve is _____.
upward-sloping; upward-sloping
It is a rainy day, and you are considering taking an uber one mile to meet some friends. You have decided you are willing to pay $20 to avoid getting wet from the rain. The trip would normally cost $8 but there is a three times subcharge due to the weather. You should _______ because the benefit of you taking the uber is _______ than the cost
walk; less
Roshan is unsure about whether she should work more hours, so she gradually increases the hours that she works each week. When should she stop working more hours? * think the marginal benefit
when an hour of her time is more valuable to her than her hourly pay
When people follow the cost-benefit principle, every decision they make will
yield larger benefits than costs
If an oil refinery can supply 2 million gallons per week when the price is $3 per gallon, what will be the market quantity supply for 10 refineries having the same supply decisions?
20 million gallons
You have paid $100 for student season tickets to the football games at your university. It is halfway through the season, and the team has not won any games. You are considering whether you will attend any future games this season. All of the following are costs or benefits you should consider when making this decision EXCEPT the ____
$100 you spent on the season tickets
Over the summer, you decide to take summer school, which precludes you from working at your usual summer job that earns you $7000 over the summer. Your summer school tuition is $2000, textbooks are $400, and room and board is $3500. The opportunity cost of attending summer school: _______
$12900
If a buyer's willingness to pay for an item is $12, and the buyer purchases the item for $7, what is the buyer's economic surplus?
$5
Why is it that water is so cheap when it's essential to life?
Because although the benefit is great, the cost of production is low.
Dr. Larson is a professor at a state university. He is known for being tough but fair in his grading, and rarely gives out A's on his assignments. Considering that Dr. Larson is on the supply side and his students are on the demand side, why is it so difficult to attain an A?
Demand is high, so price is high.
Krishan goes to a local bank to make a deposit in his savings account. While there, he considers the principles of economics that he has been learning at the university. He concludes that in this situation he is a supplier of credit. How is this so?
He is supplying the bank with his savings, which the bank will in turn lend out to other borrowers.
What is the main difference between market and planned economies?
In market economies, individuals make their own production decisions, and in planned economies, these decisions are made by a central power.
Which of these is correct about the market for red delicious apples?
It is perfectly competitive, because an identical good is being sold.
To maximize your economic surplus, you should apply the Rational Rule for Buyers by continuing to buy until _____.
Price = Marginal benefit
There is a decrease in supply followed by a decrease in demand. What effect will this have on price and quantity?
Quantity will decrease, but the change to price is unknown.
Suppose you are a manager at a local coffee shop. You notice that every day by 8 A.M. you are entirely sold out of bagels, but have at least 20 people ask for bagels later in the day. Which of these decisions would result in the BEST outcome for your shop?
Raise the price of bagels.
If the equilibrium price is $20 for a flu shot, what will happen if pharmacies try to sell it at $100 per flu shot when nothing else has changed in the market?
There will be a surplus.
You just moved into your new apartment, which has washer and dryer hookups, but your apartment complex doesn't provide washers and dryers. You don't want to go to a laundromat. You can rent a washer and dryer set from an applicate rental company for $30 per month. Alternatively, you could buy a s et for $1,100 which you could sell after one year for $700, or $600 after two years. You plan to stay in this apartment for two years, since it's near your job. Should you buy or rent the set?
You should buy the set because buying earns $220 worth of economic surplus
Higher marginal costs mean that firms will no longer be profitable to produce:
as large a quantity at any given price.
When firms expect a lower price of a good next year, they would _____ their storage of their goods this year and _____ their supply of the goods next year.
decrease; increase
Malik is a local politician running for governor in his state. What role does Malik play in the market for votes?
demander
Natasha starts a small software company but finds it difficult to hire good software developers since she has a very large competitor half a mile away. This is BEST explained by which of these interdependencies?
dependencies between people or businesses
Fixed costs are those costs that:
don't vary when you change the quantity of output you produce.
If your firm sells a product in a market with a_____ sellers or _____ buyer(s), it's likely that your firm can have an important influence on the price.
few; a few
In an individual supply curve we focus on the relationship, where _____ lead(s) to an increase in the _____.
higher prices; quantity supplied
When firms expect a higher price of a good next year, they would _____ their storage of their goods this year and _____ their supply of the goods next year.
increase; increase
The input costs of a good decrease. What does this do to supply?
increases supply
Zaina owns a retail store with 15 employees. Because she is not sure whether a 16th employee would improve her economic surplus, she hires another employee and notices that her total costs have increased by $1800, and her total revenue has increased by $2,500. Which of these would be the best course of action for Zaina?
keep the 16th employee and experiment by hiring one additional employee at a time
Jenna owns a bakery and has two employees. Because she is not sure whether she should hire a third worker, she would like to try hiring this worker and monitor her business. After hiring the third worker, Jenna then notices that her total costs have increased by $2,500, and her total revenue has increased by $3,350. What decision should Jenna make?
keep the third worker and experiment by hiring a fourth worker
A decrease in supply shifts the supply curve to the _____, leading to a _____ quantity supplied at each and every price.
left; lower
Following the rational rule, the maximum economic surplus occurs when
marginal benefits equal marginal costs
When your suppliers increase the prices of your inputs, they increase your _____, and this will shift your supply curve to the _____.
marginal costs; left
When your suppliers decrease the prices of your inputs, they decrease your _____, and this will shift your supply curve to the _____.
marginal costs; right
When new businesses enter the market, the supply from these businesses needs to be added to the _____. That means they increase the total quantity supplied at each price, shifting the supply curve to the _____.
market supply; right
Sunk Cost or Not a Sunk Cost: the cost of destroying the old stadium to make room for the new one
not a sunk cost
Sunk Cost or Not a Sunk Cost: the cost of labor for building the new stadium
not a sunk cost
What term best describes the marginal principle
one more unit how many
If prices and quantity move in opposite directions, then the _____ curve has definitely shifted.
supply
your _____ is also your marginal cost curve, and so anything that will change your marginal costs will shift your _____.
supply curve; supply curve
The Rational Rule for Sellers is important but does NOT:
tell sellers how to set the price against the competitors.
The marginal cost of an additional worker is
the additional cost of hiring one more worker
You are weighing the cost of a cup of coffee against the satisfaction you will obtain from the coffee. Which economic principle are you taking into account?
the cost-benefit principle
The quantity supplied and demanded in equilibrium is:
the equilibrium quantity.
Mariah is a farmer in the market for rice which is a perfectly competitive market that implies which of these?
the inability of any seller to change the price of the product
The supply curve is upward-sloping because:
the marginal cost curve is upward-sloping.
Nasser owns a business that produces t-shirts, but he is struggling with the dilemma of how many shirts to produce, so he begins by asking himself if he should produce one more shirt. Which economic principle is exemplified by this situation?
the marginal principle
Which of the four core principles of economics can be used to simplify the question, "How many more products should be produced?" into the question, "Should one more product be produced?"
the marginal principle
You have decided that you will buy tacos, but you are still trying to decide how many tacos you should buy. Which economic principle are you taking into account?
the marginal principle
The way the question below is phrased implies that which of the core principles of economics is being applied? Should I go back to school or continue to work at my current job?
the opportunity cost principle
Mariah is a farmer in the market for rice, what decision should she make in the perfectly competitive market in the short-run?
the profit-maximizing level of output
Rose's parents have booked a family trip to Aspen, Colorado, during her spring break. Rose's friends recently decided to drive to Destin, Florida, for spring break. Rose needs to decide whether to join her parents in Aspen or drive to the beach with her friends. The opportunity costs of joining her friends on the trip to Destin include each of these EXCEPT
the ski lift ticket her parents have already purchased for her
Your willingness to pay for a pair of jeans is $50. According to the cost-benefit principle, when should you avoid buying a pair of jeans and instead opt to keep your money?
when the price of the jeans exceeds $50