Micro Test 1

Which of the following would not make elasticity of demand for a good more elastic?

Less time to decide upon it.

In the market for organic, grass-fed beef, what would cause a price increase?

The prices of grass and corn increase

If oil executives read in the newspaper that massive new oil supplies have been discovered under the Pacific Ocean but will likely only be useful in 10 years, what is likely to happen to the supply of oil today?

The supply of oil will rise today

subsidy

decrease in firms cost, therefore increase in supply; REVERSE EFFECT OF TAX ON CURVE

Consider the supply curve for jeans. An increase in the price of cotton will:

decrease the supply of jeans

Ed < 1

inelastic

If two linear supply curves intersect, then at any given quantity, the curve that is steeper is more:

inelastic

The supply of Vincent Van Gogh paintings is probably:

inelastic

In Europe the minimum wage has led to:

widespread evasion of the minimum wage law in the black market for labor.

Which topic is a microeconomic topic?

The price of an iPad

The economist Bryan Caplan recently found a pair of $10 arch supports that saved him from the pain of major foot surgery. As he stated on his blog (econlog.econlib.org), he would have been willing to pay $100,000 to fix his foot problem, but instead he only paid a few dollars. ------ a. How much consumer surplus did Bryan enjoy from this purchase?

$99,990

Suppose the price of avocados changes by 30% and that causes quantity demanded changes by 75%. What is the (absolute value of) demand elasticity?

2.5, so demand is elastic

Which factor will (most likely) cause the supply curve of soda to shift left?

A $1-tax on soda

When the incomes of many families fall, they decide to drive to their vacation destination instead of flying there. What can be concluded about driving versus air travel?

Air travel is a normal good and driving is an inferior good

________ was found to follow financialization of the real economy

All of the above

The demand for meals at a J&J's Jamaican Restaurant will shift to the left if

Applebees offers a 15% discount to Rutgers students

suppose US gov wants to encourage people...

DEVELOP INCENTIVES

4) Economics is the study of

Choices under scarcity

According to Adam Smith, this type of worker was considered a productive member of society

Factory worker

A pie-baking contest offers the winner a ribbon, a $1,000 check, and the opportunity to be featured in the local newspaper. The contest organizers are using (a) __________ incentive(s)

Financial and social

A college education is an example of

Human capital

Now, Jon is in Japan, trying to get a job as a full-time translator; he wants to translate English TV shows into Japanese and vice versa. He notices that the wage for translators is very low. Who is the "competition" that is pushing the wage down?

Other translators

Incentives always involve ____________.

Rewards and/or penalties

What question would be considered a normative question?

Should obstacle races be regulated to ensure the safety of its participants?

Do taxes usually increase the supply of a good or reduce the supply?

Taxes reduce the supply of the good

What should happen to the "demand for speed" (measured by the average speed on highways) once airbags are included on cars?

The demand for speed increases

When is a pharmaceutical business more likely to hire highly educated, cutting-edge workers and use new, experimental research methods?

When the business expects the price of its new drug to be high

The demand curve for doctor's visits is fairly inelastic; therefore:

a large increase in price causes quantity demanded to decrease by very little.

The live band plays nearby a restaurant and makes it difficult for restaurant patrons to hold a conversation. This is an example of:

a negative externality.

If the equilibrium price for a plain pizza pie is $14, then any price above that would result in

a surplus

If the demand for a good is unit elastic, then

any change in price is matched by an equal and opposite percentage change in quantity, so revenues stay the same.

Suppose the Ethiopian government sets coffee prices at $3 per pound. The market price, however, is $6 per pound. The government's actions will

cause coffee shortages

People are concerned that gas prices will rise in a few days, and their demand today rises. This change in consumer behavior can be attributed to a change in

consumer expectations

The difference between how much a consumer would be willing to pay to consume a good and the amount actually paid to purchase the good is called:

consumer surplus.

Ed > 1

elastic

narrow

elastic

the more substitutes, the more ___ the curve

elastic

Longer time horizon is going to make the curve more ___

elastic (ppl adjust overtime)

% change in Qd / % change in P

elasticity of demand

If we learn today about promising future energy sources, today's price of energy will _______ and today's quantity of energy will __________

fall, rise

If the price elasticity of supply is 0.75, then when the price of Good Y falls by 10%, the quantity supplied of Good Y:

falls by 7.5%.

To be effective, a price floor must be set:

higher than the equilibrium price.

The _____ the opportunity cost of an activity, the _____ a person will do that activity

higher; less

Suppose the United States removes the sugar quotas and the market price of sugar drops. Since sugar is an input in chocolate, we would expect consumer surplus in the chocolate market to:

increase

The technology used in producing laptops has improved dramatically over the past few years. This has led to a(n) _____ in the _____ laptops

increase; supply of

The supply curve for oil is ________ because ________.

inelastic; production costs rise quickly when the quantity supplied increases

__ purchase sizes are going to be more elactic

larger

Brazilian cotton farmers were losing a lot of revenue due to the subsidies the U.S. government paid (and continues to pay) to American cotton farmers. In 2004, through the WTO, Brazil sued the U.S. and won.

lead to cotton surpluses in the United States and lower prices for Brazilian farmers on world markets.

A price ceiling is a(n):

legally established maximum price that can be charged for a good.

Borad category is going to be ___, a specific category ___

less elastic, more elastic

A common method that the government utilizes to limit the quantity of a good transacted is by

licensing the suppliers.

The field of economics that is concerned about the broader issues in the economy, such as inflation, unemployment, and national output of goods and services is called

macroeconomics

The market for Jersey tomotoes is considered to be competitive. This means there are _____ buyers and _____ sellers of corn in New Jersey

many; many

The demand for most goods tends to become ______ over time.

more elastic

Adam smith claimed that individuals are

motivated by self interest

P & R of elastic

move opposite

P & R of inelastic

move together

A community college creates _____ for a community.

positive externalities

When the price is above the equilibrium price, greed (in other words, self-interest) tends to _________

push the price down

elastic curve

quantity demanded changes a lot with change of price

A rise in the price of iPhones resulted in a decrease in the

quantity of i Phones demanded.

P & R of unite elastic

remains the same

Which of the following goods might be expected to have the most inelastic demand curve?

salt

Fish and chips are complements. When the price of fish rises, the demand curve for chips

shifts to the left.

Because of scarcity

we face tradeoffs in nearly every choice we make

The _____ Jersey corn will decrease if fertilizer prices rise

supply of

Which of the following is a quota?

the difference between the demand price and the supply price at the quota limit.

If oil executives read in the newspaper that new solar-power technologies have been discovered but will likely only become useful in 10 years, what is the likely equilibrium impact on the price and quantity of oil today?

the price of oil will decrease, the quantity of oil will increase

When specialization is used

there are greater gains in material goods

Ed = 1

unit elastic

which way does tax shift supply curve

up/left

Opportunity costs exist because

using resources for one activity means that their use elsewhere must be given up (i.e. there is a tradeoff).