Microeconomics Exam #1

Refer to figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will the market price be?

$18

Suppose a 4 percent increase in price results in a 2 percent increase in the quantity demanded of a good. Calculate the price elasticity of demand and characterize the product.

0.5; the product is inelastic

If 50 units are sold at a price of $20 and 80 units are sold at a price of $15, what is the absolute value of the price elasticity of demand? Use the midpoint formula.

1.62

Refer to figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the domestic quantity supplied?

10 units

The price elasticity of demand for Stork ice cream is 4. Suppose you're told that following a price increase, quantity demanded fell by 10 percent. What was the percent change in price that brought about the change in quantity demanded?

2.5 percent

Refer to figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the quantity demanded?

20 units

Refer to figure 3-4. At a price of $10, how many units will be sold?

200 units

The price elasticity of demand of teenage labor services is approximately 1.36. Suppose the minimum wage rises from $7.25 per hour to $8.75. Using the midpoint formula, what is the approximate change in the quantity of teenage labor demanded?

28.1 percent

Refer to table 3-1. The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia) and the rest of the market. At a price of $5, the quantity demanded in the market would be

63 lbs

What is the difference between an "increase in demand" and an "increase in quantity demanded"?

An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve

Assume that China has a comparative advantage in producing corn and exports corn to Japan. We can conclude that

China has a lower opportunity cost of producing corn relative to Japan.

Refer to figure 6-6. As price falls from PA to PB, the quantity demanded increases most along D1; therefore,

D1 is more elastic than D2 or D3.

Which of the following statements is true?

Each country as a whole is made better off as a result of international trade, but individuals within each country may be made worse off.

Refer to figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for women's clothing. Which panel best describes what happens in this market when the wages of seamstresses rise?

Panel (b)

Refer to figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for used clothing, an inferior good. Which panel best describes what happens in this market as a result of a decrease in income?

Panel (c)

Refer to figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets. Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?

Panel (d)

Refer to table 9-2. Select the statement that accurately interprets the data in the table. (who has the comparative advantage)

Sarita has a comparative advantage in baking cakes.

Refer to table 9-2. Select the statement that accurately interprets the data in the table.

Sarita's opportunity cost for baking cakes is less than Gabriel's.

A movement along the demand curve for toothpaste would be caused by

a change in the price of toothpaste

Last year, the Pottery Palace supplied 8,000 ceramic pots at $40 each. This year, the company supplied the same quantity of ceramic pots at $55 each. Based on this evidence, The Pottery Palace has experienced

a decrease in supply

A tariff is

a limit placed on the quantity of goods that can be imported into a country.

A decrease in the price of GPS systems will result in

a smaller quantity of GPS systems supplied

If an increase in income leads to a decrease in the demand for popcorn, then popcorn is

an inferior good

Economists assume that individuals

are rational and respond to incentives

Whenever a buyer and a seller agree to trade,

both must believe they will be made better off

The United States is a leading exporter of wheat. What explains the comparative advantage of the United States in wheat production?

climate and soil conditions in the United States are well-suited for wheat production

If the cross-price elasticity of demand for computers and software is negative, this means the two goods are

complements

If, for a given percentage increase in price, quantity demanded increases by a proportionately larger percentage, then demand is

elastic

Opera Estate Girls' School is considering increasing its tuition to raise revenue. If the school believes that raising tuition will increase revenue it is assuming that the demand for attending the school is

inelastic

Jenna runs a small boutique in Capitola. She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more. On the basis of this information, what can you conclude about her price elasticity of demand for wool hand warmers?

it is perfectly elastic

The demand by all the consumers of a given good or service is the ____________ for the good or service

market demand

If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded, then the demand for golf balls is

relatively elastic

In economics, choices must be made because we live in a world of

scarcity

The market for smartwatches has begun to grow, due in part to the success of the Apple Watch. Following the successful launch of the Apple Watch in 2015, companies such as Samsung, Sony, and LG have all developed products to compete with the Apple Watch. The smartwatches introduced to compete with the Apple Watch would be considered

substitutes for the Apple Watch

Studies have shown links between calcium consumption and a reduction in osteoporosis. How does this affect the market for calcium?

the calcium demand curve shifts to the right because of a change in tastes in favor of calcium

If the demand for steak is unit elastic, then

the percentage change in quantity demanded is equal to the percentage change in price

In October 2005, the U.S. Fish and Wildlife Service banned the importation of beluga caviar, the most prized of caviars, from the Caspian Sea. What happened in the market for caviar in the United States?

the supply curve shifted to the left

In February, market analysts predict that the price of titanium will rise in March. What happens in the titanium market in February, holding everything else constant?

the supply curve shifts to the left

Refer to figure 3-4. If the price is $10

there would be a shortage of 600 units.

If a firm lowered the price of the product it sells and found that total revenue did not change, then the demand for its product is

unit elastic