Microeconomics quiz questions

Sellers pay how much of the tax per unit?

$1

A price floor set at

$16 will be binding and will result in a surplus of 6 units

If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus

$2,500

Communist countries worked under the premise that

Central planners were in the best position to determine the allocation of scarce resources in the economy

Which of the following is likely to have the most price inelastic demand?

College tuition for a junior or senior

Last year, shelley bought 6 pairs of designer jeans when her income was $40,000. This year, her income is $50,000, and she purchased 10 pairs of designer jeans. Holding other factors constant, it follows that Shelley

Considers designer jeans to be a normal good

If the price decreases in the region of the demand curve between points A and B, we can expect total revenue to

Increase

A rightward shift of a demand curve is called a

Increase in demand

Using the midpoint method, if the price falls from $60 to $40, the absolute value of the price elasticity of demand is

1

Using the midpoint method, what is the price elasticity of supply between $16 and $40

1.0

Suppose the price elasticity of supply for candles is 0.3 in the short run and 1.2 in the long run. If an increase in the demand for candles causes the price of candles to increase by 36%, then the quantity supplied of candles will increase by about

10.8% in the short run and 43.2% in the long run

If these are the only two sellers in the market, then the market quantity supplied at a price of $4 is

14 units

The US Congress first instituted a minimum wage in

1938

In the United States the overall level of prices more than doubled during the

1970

Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the govnmt policy should have reduced smoking by

80%

Which of the following could result in a movement from point A to point B

A change in income

Which of the following would not shift the demand curve for mp3 players

A decrease in the price of mp3 players

Which of the following would cause the supply curve to shift from Supply A to Supply C in the market for tennis racquets?

A decrease in the price of tennis racquet strings

When demand is elastic, an increase in price will cause

A decrease in total revenue

Suppose that Jane enjoys diet cokeso much that she consumes one can every day. Although she enjoys gourmet cheese, she consumes it sporadically. If the price of Diet coke rises, Jane decreases her consumption by a lot.. Theese examples illustrate the importance of

A necessity versus a luxury in determining the price elasticity of demand

Which of the following price controls would cause a surplus of 20 units of the good

A price floor set at $7

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective

A smaller quantity of the good is bought and sold

A price floor will be binding only if it is set

Above the equilibrium price

Government policies can change the costs and benefits that people face. Those policies have the potential to

All of the above are correct : alter behavior, alter desicions at the margin, produce results that policy makers did not intend

Which of the following statements is correct

All of the above: demand for flat screen computer monitors is more elastic than the demand for monitors in general,, demand for grandfather clocks is more elastic than the demand for clocks in general, demand for cardboard is more elastic over a long period of time than over a short period of time

On a bowed production possibilities frontier, as you move down along the curve

All of the above: opportunity cost increases, the available production technology does not change, more of one good must be given up to recieve one unit of the other good

Which of the following would cause the demand curve to shift from Demand A to Demand B in the market for oranges in the United states

An announcement by the FDA that oranges prevent heart disease

The movement from D' to D could be caused by

An increase in the price of a complement

Suppose a tax of $5 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Between $10 and $14

When the "invisible hand" guides economic activity prices of products reflect

Both the values that society places on those products and the costs to society of producing those products

Which of the following is likely to have the most price inelastic demand?

Box seats at a major league baseball

Suppose D1 represents the demand curve for gasoline in both the short run and long run, S1 represents the supply curve for gasoline in the short run, and S2 represents the supply curve for gasoline in the long run. After the imposition of the $2

Buyers an seller bear an equal burden of the tax in both the short run and long run

Which of the following statements best relates the figure to the events that occured in the US in the 1970s

Buyers of gasoline paid a price of P1 before 1973; they paid a price of P2 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at the price.

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

Buyers of milk, recognizing the the price ceiling is good for them, have pressured policy makers into imposing the price cieling

Price controls

Can generate inequities of their own

The outer loop of the circular-flow diagram represents the flows of dollars in the economy. Which of the following does not appear on the outer loop

Capital

When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

DGH

If the market price is $3.80

David's consumer surplus is $4.70 and total consumer surplus for the five individuals is $9.50

A leftward shift of a demand curve is called a

Decrease in demand

The equilibrium quantity will

Decrease in the milk market and increase in the beef market

A tax on the buyers of cereal will increase the price of cereal paid by buyers

Decrease the effetive price of cereal recieved by sellers and decrease the equilibrium quantity of cereal

In a particular country in 1998, the average worker needed to work 40 hours to produce 100 units of output. In the same country in 2008, the average worker needed to work 36 hours to produce 72 units of output. In that country, the productivity of the average worker

Decreased between 1998 and 2008 so we would expect the standard of living to have decreased accordingly

A tax on buyers will shift the

Demand curve downward by the amount of the tax

The discovery of a new hybrid wheat would increase the supply of wheat. As a result, wheat farmers would realize an increase in total revenue if the

Demand for wheat is elastic

Which of the following is NOT correct

Economics has its own language and its own way of thinking, bu few other fields of study doB

Economists sometimes give conflicting advice because

Economists have different values and scientific judgment

When a certain price control is imposed on the market, the resulting quantity of the good that is actually bought and sold is such that buyers are willing and able to pay a maximum of P1 dollars per unit for that quantity and Sellers are willing and able to accept a minimum of P2 dollars per unit for that quantity. If p1-p2= $3, then the price control is

Either a price ceiling of $2 or a price floor of $5

If a paper factory does NOT bear the entire cost of the pollution it emits, it will

Emit too much pollution

Suppose the point labeled B is the " halfway point" on the demand curve and it corresponds to a price of $5. Then, between prices of $4.99 and $5.01, the price elasticity of demand is

Equal to 1

The unique point at which the supply and demand curves intersect is called

Equilibrium

At a price $20, there would be an

Excess demand, The law of supply and demand predicts that the price will rise from $20 to a higher price

If households are buyers in the markets represented by Box C of this circular-flow diagram, then

Firms are sellers in the markets represented by Box C

Devin works as an attorney for a corporation and is paid a salary in exchange for the legal services he performs. Juan owns office buildings and rents his buildings to companies in exchange for rent payments. If Devin'g income is represented by a flow of dollars from Box D to Box B of this circular- flow diagram, then Juan's income is represented by a flow of dollars

From Box B to Box D

Which of the following is NOT an example of a market

In the US, a sick person cannot legally purchase a kidney

A tax levied on the sellers of blueberries

Increases sellers cost, reduces profit and shifts the supply curve up

For prices below $5, demand is price

Inelastic and raising price will increase total revenue

Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor. This redistribution of weath

Is more equal but less efficient for society

The market demand curve

Is the sum of all individual demand curves

The imposition of a binding price floor on a market causes quantity demanded to be

Less than quantity supplied

If the price of the product is $15, then who would be willing to purchase the product?

Lori, Audrey, and Zach

When a surplus exists in a market, sellers

Lower price, which increases quantity demanded and decreases quantity supplied until the surplus is eliminated

You know an economist has crossed the line from policy adviser to scientist when he or she

Makes positive statements

In the circular-flow diagram, which of the following is not a factor of prodction

Money

If the government imposes a price ceiling of $12 on this market, then there will be

No shortage

Suppose an increase in the price of rubber coincides with an advance in the technology of tire production. As a result of theses two events, the demand for tires

None of the above is necessarily correct: decreases, and the supply of tires increases, is unaffected and the supply of tires decreases, is unaffected, and the supply of tires increases

Which of the following is NOT correct

Normative statementss can be judged using data alone

Maureen's college raises the cost of room and board per semester. This increase raises Maureen's opportunity cost of attending college

Only if the amount she would have to pay for room and board if she didnt attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost reduces Maureen's incentive to attend college

In a competitive market, each seller has limited control over the price of his product because

Other sellers are offering similar products

Which of the following movements would illustrate the effect in the market for golf balls of an increase in green fees

Point C to Point B

Which of the following is NOT a rationing mechanism used by landlords in cities with rent control

Price

Assume the section of the demand curve from B to C corresponds to prices between $0 and $15. Then, when the price changes between $7 and $9

Quantity demanded changes proportionately less that the price

Suppose the equilibrium price of a physical examination by a doctor is $200 and the gov imposes a price ceiling of $150 per physical. As a result of the price ceiling, the

Quantity demanded of physicals increases, and the quantity supplied of physicals decreases

The price of elasticity of demand measures how much

Quantity demanded responds to a change in price

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms

Quantity will rise, and the effect on price is ambiguous

The overriding reason why households and societies face many decisions is that

Resources are scarce

Which scenario describes the market for oil in he short run in comparison to the long run

Scenario D desctibes the short run, whereas scenario A describes the long run

The quantity supplied of a good is the amount that

Sellers are willing and able to sell

The relatively low inflation experienced in the United States in the 1990s is attributable to

Slow growth of the quantity of money in the U.S. in the 1990s

When a binding price ceiling is imposed on a market to benefit buyers

Some buyers will not be able to buy any amount of the good

A tax on sellers will shift the

Supply curve upward by the amount of the tax

If sellers do not adjust their quantities supplied at all in response to a change in price,

Supply is perfectly inelastic

As a result of a successful attempt by government to cut the economic pie into more equal slices

The pie gets smaller and there will be less pie overall

Which of the following cause a movement upward and to the right along the supply curve for mangos

The price of mango rises

If the price elasticity of supply is zero, then

The quantity supplie is the same, regardless of priceC

Producer surplus directly measures

The well being of sellers

For a particular good, a 5 percent increase in price causes a 15 percent decrease in quantity demanded. Which of the following statements iis most likely applicable to this good

There are many substitutes for this good

Max and Maddy charge people to park on their lawn while attending a nearby craft fair. At the current price of $10, seven people park on their lawn. If they raise the price to $15, they know that only five people will want to park on their lawn. Whether they have seven or five cars parked on their lawn doesn not affect their costs. From this information it follows that

They would do better charging $15 than $10

Using the midpoint method, if the price falls from $60 to $40, the price elasticity of demand is

Unit elastic

A binding price floor will reduce a firms total revenue

When demand is elastic

England can benefit from trade

With any nation

In addition to advising the president, one duty of the Council of Economic Advisors is to

Write the annual Economic Report of the President

You have responsibility for economic policy in the country of Feedonia. Recently, the neighboring country of Sylvania has cut off all exports of oranges to Freedonia. Harpo, who is one of your advisors, suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges. Chico, another advisors argues that without a binding price floor, a shortage will certainly develop. Zeppo, a third advisor, says that the best way to avoid a shortage of oranges it to take no action at all. Which of your three advisors is most is most likely to have studied economics

Zeppo

Suppose a tax of $2 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

between $3 and $5

Catherine buys and sells real estate. Two weeks ago, she paid $300,000 for a house on Pine Street intending to spend $50,000 on repairs and then sell the house for $400,000. Last week, the city government announced a plan to build a new landfill on pine street just down the street from the house Catherine purchased. As a result of the city's announced plan, Catherine is weighing two alternatives: She can go ahead wih the $50,o0 in repairs and then sell the house for $290,000 or she can forgo the repairs and sell the house as it is for $250,000. She should

forgo the repairs and sell the house as it is for $250,000

The invisible hand's ability to coordinate the decisions of the firms and households in the economy can be hindered by

government actions that distort prices

If car manufacturers begin using new labor-saving technology on their assembly lines, we would not expect

individual car manufacturers to move up and to the right along their individual supply curves

A nonbinding price floor

iv only- is set at a price below the equilibrium price

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

less than $.50

The minimum wage does not apply to

unpaid internships

All else equal, the premature deaths of thousands of turkeys would cause a move from

x to y