Microeconomics Exam 1
An equilibrium in a market occurs
when the quantity supplied equals the quantity demanded
When you participate in a market transaction.
you and your trading partner both give something of value to the other
It is a beautiful afternoon, and you are considering taking a leisurely stroll through the park. Your alternativesto walking are streaming a movie that you value at $5, taking a nap that you value at $7, or reading a new bookthat you value at $12. What is the opportunity cost to you of taking the stroll through the park?
$12
A supply schedule shows how:
d. much of a good or service would be supplied at different prices
(Figure: Graph 2) In the graph, the movement from point M to point G represents a(n):
decrease in supply
Fast food is a(n):
inferior good
In a typical week, Cheyenne buys four lattes at Starbucks. If the price of lattes doubles, what is the MOSTlikely number of lattes she will buy?
two
You find that the marginal benefit of eating one more yogurt is greater than the price of the yogurt. You therefore:
will be better off if you eat one more yogurt
The cost of your favorite coffee is $5 per cup at the coffee shop. The marginal cost of each cup you drink is_____. The first cup of coffee you drink gives you a marginal benefit of $8. The marginal benefit from thesecond cup is $6, $4 from the third, $2 from the fourth, and $0 from the fifth. You should drink _____ cups ofcoffee.
$5; two
The market for peanut butter, a perfectly competitive good, consists of 15 producers who each produce thesame amount of peanut butter. If the price of peanut butter is $100, and the total quantity of peanut buttersupplied is 150 units, how many units of peanut butter does each producer supply?
10
At the local grocery store, blueberry jam is less expensive than it was last month. Which statement canexplain why blueberry jam costs less now?
Consumers are purchasing less blueberry jam and more of other types of jam
(Figure: Four Markets) Use the figure to answer the question Canadians who live in border towns sometimes cross the border into the United States to buy goods andservices sold there. You find the Canadian dollar has strengthened against the U.S. dollar, meaning that it takesfewer Canadian dollars to buy a U.S. dollar. What would happen to the Canadian demand for designer goodssold in the United States? Choose the graph that depicts your answer
Graph A
Although your college bookstore charges everyone the same price for a t-shirt, different students buy verydifferent quantities. Which is NOT a plausible general explanation for this?
Students need sizes the bookstore does not keep in stock
In March 2019, airlines around the world grounded their Boeing 737 Max aircraft after two of them crashed.What would we expect to happen in the market for this aircraft?
The demand for Boeing 737 Max aircraft would decrease.
The table contains the monthly demand for soda for four students. If these four students make up the entiremarket, what is the change in the total monthly market demand for soda when the price changes from $3 per canto $2.50 per can?
The total quantity demanded in the market rises by 36 cans
Which of these scenarios helps explain the law of supply?
When regional lumber prices rise, the general managers of local lumber supply stores order more lumber to sell to buyers, so the quantity of lumber produced by lumber mills rises
(Figure: Shifts in Demand and Supply III) Use Figure: Shifts in Demand and Supply III. The figure showshow supply and demand might shift in response to specific events. Suppose the technology used to producesurfboards improves. Which panel BEST illustrates how this innovation will affect the market for sunscreen, acomplement in consumption of surfboards?a. a
a
Which of these is NOT a factor that can shift supply?
a change in the price of the product
Ivan has inherited his grandmother's 1963 Chevrolet Corvette, which he values at $50,000. He decides that hemight be willing to sell it, so he posts it on Craigslist for $55,000. Samantha is interested and willing to pay upto $72,000 for such a car. A voluntary economic exchange _____ between Ivan and Samantha because _____positive economic surplus from the transaction.
occurs; both Ivan and Samantha receive
Asking "Or what?" allows the _____ principle to be analyzed as a simple question.
opportunity cost
(Figure: Graph 1) In the graph, an increase in the price of the item will cause the movement from:
point F to point E
Figure: Graph) Refer to the graph to answer the question. A decrease in the price of an item will cause themovement from:
point Q to point P
The relationship between price expectations and current demand is:
positive; when future prices are expected to rise, current demand rises
When you plot a demand curve:
price is measured on the vertical axis
You are considering two different pairs of eyeglasses available from the online retailer Warby Parker. Theyare similar in quality, and each costs $95 (including prescription lenses), which is well within your price range.You have eliminated all other frames that are available, so the choice is between these two. Which demandfactor will be MOST important in making your decision
preferences
If the price in the market is such that the quantity supplied exceeds the quantity demanded, then the
price is above the equilibrium price
You are on the marketing team for Kraft. Knowing that most people base their decisions on how things aredescribed, your team must determine the best language to entice people to buy Kraft cheese. Your team ischoosing between describing the package content as containing "5% fat" or as "95% fat-free." What is the termfor why most people would react differently to the two phrases?
framing effect
Salt is a by-product of the desalination of water used for public drinking and for agriculture. An increase inthe popularity of vegetable-based diets will lead to a(n)
increase in the supply of salt
Over the past few years, the technology associated with producing flat-screen televisions has improved. Thishas led to a(n) _____ in the _____ flat-screen televisions.
increase; supply of
The principle that your best choice depends on your other choices, the choices others make, developments inother markets, and expectations about the future is known as the _____ principle.
interdependence
A choice made using the marginal principle:
is a choice regarding whether to do a little more or a little less of an activity.
Grapes are among California's top agricultural commodities. Labor is an input to grape production. Workerssupply labor, and the wage they receive in exchange is the price of labor. An influx of migrant workers intoCalifornia would, holding other things constant, cause a _____ the labor supply curve in the grape industry anda _____ in the price of grapes
rightward shift of; fall
Just after the price of canned tuna fish fell, Isabelle got a raise. She wound up buying less canned tuna. Howcan we explain this?
For Isabelle, canned tuna is an inferior good, and the leftward shift of her demand curve more than offset the movement down and to the right along her demand curve
You are shopping online, and you place an item in your virtual cart. Two days later, you return to the virtual cart to check out and find that the item is now more expensive. Assuming that the market is competitive, what could explain the price increase?
There is a shortage of the item
In the accompanying diagrams, the first graph shows the individual supply curve of the Blue Wave CarWash, a representative business in the perfectly competitive car washing market in Los Angeles. The secondgraph shows three possible market supply curves When CLEAN (the Community Labor Environmental Action Network), a car wash workers' union, successfullynegotiates with Blue Wave and other car washes in southern California for a higher wage, Blue Wave'smarginal cost rises from MC1 to MC2. If the original market supply is curve is S 1, the quantity of car washingservices supplied may plausibly end up at point
a
Dental services are:
a normal good
Rising marginal costs imply:
an upward-sloping supply curve.
Figure: Shifts in Demand and Supply II) Alonah attends a private college. Which graph of the private-college market BEST illustrates her likely response if Congress were to use taxes to make public highereducational institutions tuition-free?
b
(Figure: Shifts in Demand and Supply) Use Figure: Shifts in Demand and Supply. The figure shows howsupply and demand might shift in response to specific events. Suppose there is a freak snowstorm in Florida thatdestroys one-quarter of the orange crop. Which panel BEST illustrates how this event will affect the market forvitamin C tablets, which are a substitute in consumption for oranges?
c
In a recession, you would expect sales of high-end artisan cheese imported from Switzerland to _____,whereas sales of large producers like Cabot and Land O Lakes would likely _____
fall;rise