Micro exam 1

Rent controls are a typical example of a price ceiling. Please select all likely consequences of rent controls when the price ceiling is binding. more subletting of apartments black markets inefficient allocation of apartments reductions in apartment quality

more subletting of apartments black markets inefficient allocation of apartments reductions in apartment quality

What is the biggest problem facing Command Economies (socialism)?

Coordination and incentives to direct output

the hypothetical country of crabby island has imposed a production quota of 4000 crabs per month. use line segment in the graph to show this production quota then answer question use line segement to show a production quota of 4000 crabs per month What is the price of crab after the introduction of the quota?

$7 move production quota line to 4000

82. If a 35%35% price increase for Product A causes a 10%10% decrease in its quantity demanded, but no change in the quantity demanded for Product B, what is the cross-price elasticity of these goods? Round your answer to one decimal place. What is the relationship between these goods?complements no relationship substitutes

0.0 no relationship

The U.S. government has subsidized ethanol production since 1978. With the advent of affordable electric cars, policymakers are considering whether to allow the subsidy to expire. The accompanying graph represents the market for ethanol. Move the supply and/or demand curves to show how reducing the subsidy will affect the ethanol market. Market for EthanolPrice. equilibrium price= equilibrium quantity=

=increases =decreases graph idk

98. Look at the figure The Gasoline Market. The pretax equilibrium price is $3, and the equilibrium quantity before tax is 20,000 gallons. An excise tax has been levied on each gallon of gasoline supplied by producers, shifting the supply curve upward. The total tax revenue collected by the government is equal to:

26,250

83. For each scenario, calculate the cross-price elasticity between the two goods and identify how the goods are related. Please use the midpoint method when applicable, and specify answers to one decimal place. A 20%20% price increase for Product A causes a 10%10% decrease in its quantity demanded, but no change in the quantity demanded for Product B. cross price elasticity between A and B= Relationship between A and B= Product C increases in price from $1$1 a pound to $2$2 a pound. This causes the quantity demanded for Product D to increase from 2727 units to 8181 units. cross-price elasticity between C and D: Relationship between C and D= When the price of Product E decreases 2%2%, this causes its quantity demanded to increase by 14%14% and the quantity demanded for Product F to increase 17% cross-price elasticity between E and F: Relationship between E and F=

0 no relationship 1.5 substitutes -8.5 complements

88. Suppose a $1 excise or commodity tax is placed on the purchasers of cans of soda. Use the graph to illustrate the impact this tax would have on the soda market and answer the questions. Be certain to shift the entire curve, endpoint to endpoint.

IDK

Classify each of the scenarios as an "either-or" decision or a "how much" decision. (marginal decision) 1. marvin arrives at his favorite buffet to eat Chinese food. sometimes he overeats and leaves the buffet with a stomach ache 2. bella is accepted to four graduate school programs. where should she go to school? 3. after graduation from law school frank is offered one job in chicago and another in new york. where should frank work. 4. jake needs to stay awake while he studies for his midterm tomorrow. what quantity of coffee should jake drink?

1. marginal decision 2. either or 3. either or 4. marginal

Move the point, E, in the accompanying graph to reflect equilibrium in the competitive market for corn and answer the following questions. Calculate consumer surplus (CS). CS= PS=

12500 7500

87. Consider two markets: the market for cat food and the market for dog food. The initial equilibrium for both markets is the same, the equilibrium price is $6.50$6.50, and the equilibrium quantity is 23.023.0. When the price is $11.75$11.75, the quantity supplied of cat food is 55.055.0 and the quantity supplied of dog food is 107.0107.0. For simplicity of analysis, the demand for both goods is the same. Using the midpoint formula, calculate the elasticity of supply for dog food. Please round to two decimal places. Supply in the market for cat food is

2.25 less elastic

Assume that in order to help hay farmers, the government imposes a price floor on hay of $14 per bale and the price floor stays in place for the long run. Use the graph to show the price floor, then answer the questions. What is the surplus from this long‑run price floor? In the long run, the surplus caused by a price floor on hay is likely to decrease because the demand curve will become more inelastic. increase because the demand curve will become more inelastic. decrease because farmers will devote more of their land to other crops. increase because farmers will increase the amount of land used to grow hay.

7 decrease because the demand curve will become more inelastic. move price floor to 14 on graph

Determine how the equilibrium price and equilibrium quantity in the market for coffee changes if the price of tea, a substitute for coffee, decreases, and due to better weather, the price of coffee beans also decreases. equilibrium price= equilibrium quantity=

=decreases =may increase, decrease or stay the same

Categorize each scenario as describing a movement along a demand curve or a shift of the demand curve. a. College students reduce how much detergent they use for each load of laundry in response to higher detergent prices. b. College students rush and buy discount furniture to take advantage of an unexpected price drop. c. College students purchase many more energy drinks during finals week than during the rest of the semester. d. Students eat out more often as the federal government increases how much grant money it provides students.

a. movement b. movement c. shift d. shift

The table contains the willingness to pay for five students in the market for a new tablet. The accopmanying graph visualizes this information. StudentWillingness to Pay Francisco$200 Lily$300 Amanda$400 Julio$100 Anthony$500 Which students will purchase a tablet if the price of a tablet is $450? Identify which portion of the demand curve represents Anthony.

anthony a

81. automobiles and electricity orange juice and grapefruit juice coffee and creamer mcdonalds and five guys burgers mystery good a and mystery good b

complements substitute complements substitutes substitues

The accompanying diagram represents the market for violins. Suppose that a new technology allows beginner-level violin producers to make violins at a substantially lower (marginal) cost while retaining the same quality. a. Use the graph to illustrate the effect that this will have on the supply and demand of beginner-level violins and then answer the following three questions. b. How much does this new technology increase consumer surplus? c. How much does this new technology increase producer surplus? d. How much does this new technology increase total (or social) surplus?

CS=1050 PS=1050 TS=2100

Stone and brick are substitutes in home construction. Consider the market for bricks depicted in the graph. Suppose the price of stone increases due to new regulations for the stone quarrying industry. Illustrate the impact this will have on the market for bricks. equilibrium price= equilibrium price=

increases increases make graph equilibrium increase?

Recently, a series of studies have demonstrated the considerable beneficial health effects of food and drink derived from the amaranth plant. This has affected consumer tastes for amaranth flour, pods, root, etc. At the same time, particularly favorable weather has resulted in a bumper crop of amaranth plants. Show the impact of these changes by properly shifting the appropriate curve or curves in the graph.

move supply to the right IDK

78. When Lauren's salary decreases from $44,000 to $30,000, she decides to reduce the number of outfits she purchases each year from 20 to 19. Use the midpoint method to calculate Lauren's income elasticity of demand for new outfits. Please round the answer to the nearest hundredth. The income elasticity of demand for new outfits is New outfits are

0.09 a normal good with income inelastic demand

Match the institution with the role it plays in the coordination of resources in decentralized economies. 1.Brings buyers and sellers together to carry out mutually beneficial exchanges 2.established rules for ownership or resources and creates incentives for innovation 3.organizes resources in order to produce goods and services 4.allows for the exchange of goods and services using a common unit as a measure of value that is generally accepted as payment. firms, markets, money, property rights,

1. markets 2.property rights 3.firms 4.money

77. The cross‑price elasticity of Sassy Cola and Crinkly Cola is 0.60.6 , where the percentage change in quantity is for Sassy Cola and the percentage change in price is measured for Crinkly Cola. If the price of Crinkly Cola increases by 4.0%4.0%, what will the percentage change in the quantity demanded of Sassy Cola (%ΔQD) be? Enter the response to one decimal place and enter a negative number if the quantity demanded decreases. %change QDfor sassy cola= The cross‑price elasticity of hamsters and hamster food is −0.3−0.3 , where the percentage change in quantity is for hamsters and the percentage change in price is measured for hamster food. Calculate the percentage that the quantity demanded of hamsters will change if the price of hamster food decreases by 12%12% . Enter the response to one decimal place and enter a negative number if the quantity demanded decreases. %change QD for hamsters=

2.4 3.6

84. Consider two markets: the market for coffee and the market for hot cocoa. The initial equilibrium for both markets is the same, 𝑃=$6.50,P=$6.50, and 𝑄=25 units.Q=25 units. When the price is $9.75,$9.75, the quantity supplied of coffee is 6161 units and the quantity supplied of hot cocoa is 103 units.103 units. For simplicity of analysis, the demand for both goods is the same. What is the elasticity of supply for hot cocoa? Please round to two decimal places. Supply in the market for coffee is more elastic than supply in the market for hot cocoa. There is not enough information to tell which has a higher elasticity. less elastic than supply in the market for hot cocoa. the same elasticity as supply in the market for hot cocoa.

3.05 less elastic than supply in the market for hot cocoa.

58. Alaskan king crab is one of the most prized shellfish. Suppose that, to protect their numbers, the Alaskan government allows only 15 million pounds of crab to be caught during the fishing season so that the Alaskan king crab population remains at an environmentally sustainable level. The graph includes the supply and demand curves for Alaskan king crab. (LOOK AT GRAPH ON QUIZ) Before the government imposes its regulations, what is the price of crab? What is the demand price after the quota? What is the quota rent for Alaskan king crab?

3.50 4.00 1

92. Use the information in the table to answer the questions about the tax system in the country of Lilliput. Calculate the income tax rate for each person and enter it as a percent. LOOK AT QUIZ joeys tax= chandlers tax= monicas tax= Is this a progressive, regressive, or proportional tax system? proportional regressive progressive Suppose the government of Lilliput voted to decrease taxes on the top earners and increase it on the lowest earners. How would this new tax system be classified? more regressive more proportional more progressive

30 20 25

Four college friends all lost their computers in a dorm theft after Drew forgot to lock the door. Now they are each considering buying a netbook. The table contains the maximum prices each would be willing to pay. The lowest price they can find is $150. StudentWillingness to pay Felix$500 Lauren$400 Drew$300 Oscar$100 On the graph, move the price line from $0 to the market price for netbooks. Then highlight each person's consumer surplus (CS) by moving the line segments assigned to each buyer. Place one segment at the top of the consumer surplus region for that person, and the other segment at the bottom. If a buyer does not have a consumer surplus at all, leave that person's line segments where they are. What is the total consumer surplus?

750

The graph shows the market for pizza cutters. Assuming $5 to be the equilibrium price for this market, please shade in consumer surplus (CS), producer surplus (PS), and total surplus (TS). Assume Fiona is willing to pay $8 for a pizza cutter. Tim also wants one, but is only willing to pay $6 for one. At a pizza baker's convention, Fiona buys the last pizza cutter at the market price just before Tim can buy it. Tim contacts the convention organizers and complains about missing out on the last pizza cutter. The organizers refund Fiona for the pizza cutter and allow Tim to buy it at the market price. What happens as a result of the organizers refunding Fiona, taking the pizza cutter from her, and letting Tim buy it at the market price? Consumer surplus decreases. Producer surplus increases. Producer surplus decreases. Consumer surplus increases.

consumer surplus decreases

Suppose the accompanying graph depicts a market for one pound bags of candy. Place the line labeled Excess Demand at a price that would generate an excess demand (shortage). Then, determine the size of the excess demand.

excess demand= 4

80. For each scenario, calculate the income elasticity of demand, determine whether the good is inferior or normal, and classify the good's income elasticity. When calculating the income elasticity of demand, use the midpoint formula. Round your answers to the nearest hundredth. Sylvia's annual salary increases from $100,000 to $109,500, and she decides to increase the number of vacations she takes per year from three to four. Calculate her income elasticity of demand for vacations. income elasticity= vacations are a - Blake eats two bags of generic potato chips each day, and does not purchase any name-brand chips. Blake's hourly wage increases from $7$7 to $15$15, and he decides to eat one name-brand bag and one generic-brand bag each day. Calculate Blake's income elasticity of demand for generic potato chips. income elasticity= generic potato chips are a -

f normal good f inferior good

71. Consider the statements regarding elasticity. Over longer periods of time, demand tends to be more elastic. perfectly inelastic. less elastic. With fewer substitutes, demand tends to be more elastic. perfectly inelastic .less elastic. Demand for an item that uses a large portion of your budget tends to be perfectly inelastic. more elastic. less elastic. Demand for a luxury item tends to be less elastic. perfectly inelastic. more elastic.

more elastic. less elastic. more elastic more elastic