Unit 1- Challenge 2

Jeremy would be willing to pay $8 for a soda at a football game. The price of the sodas is $5, and the vendors sell 1,000 sodas during each game.What is Jeremy's consumer surplus? a.)$3 b.)$13 c.)$5 d.)$8

a.)$3

Why does a supply curve slope upward? a.)Because as prices increase, producers are willing and able to supply more. b.)Because as prices increase, the opportunity cost of producing goods decreases. c.)Because costs of production eventually decrease. d.)Because there is an inverse relationship between price and quantity supplied.

a.)Because as prices increase, producers are willing and able to supply more.

The workers at Anovis can either produce 20 beanie hats or two backpacks in one hour. The workers at NorthCoast Clothing can either produce 10 beanie hats, or five backpacks, in one hour. Which of the following is true for the above scenario? a.)NorthCoast Clothing has a comparative advantage in backpack production. b.)Anovis has a comparative advantage in both backpack and beanie hat production. c.)NorthCoast Clothing has a comparative advantage in both backpack and beanie hat production. d.)Anovis has a comparative advantage in backpack production.

a.)NorthCoast Clothing has a comparative advantage in backpack production.

The state university closed access to the nearby wooded trails five months ago because it was deemed unsafe. Ever since then, not as many runners have been purchasing trail shoes, leaving many available in the shoe store. As a result of the trail closing, which of the following occurred? a.)Shift in demand b.)Movement along the demand curve c.)Producer surplus d.)Consumer surplus

a.)Shift in demand

A movement along the supply curve for coffee would occur when __________. a.)the price of coffee decreases b.)a new technology for harvesting coffee beans develops c.)coffee workers' wages are cut in half d.)the cost of growing coffee beans increases

a.)the price of coffee decreases

Each worker at Palona can produce 10 pairs of pants in an hour, while the workers at Lakeshore Clothing produce eight pairs of pants in one hour. Which of the following best describes the situation between the two competing companies? a.)Two-Factor Model b.)Absolute advantage c.)Lower average cost d.)Comparative advantage

b.)Absolute advantage

Country A can produce either 10 computers or 30 bushels of apples. Country B can produce either 8 computers or 16 bushels of apples. Which of the following is true based on the information above? a.)Country B has the absolute advantage in the production of both computers and apples. b.)Country A has the absolute advantage in the production of both computers and apples. c.)Country A has the absolute advantage in the production of only apples. d.)Country B has the absolute advantage in the production of only computers.

b.)Country A has the absolute advantage in the production of both computers and apples.

Which of the following is an example of consumer surplus? a.)Tomas was willing to sell his original artwork for $200, but someone offered to buy it for $250. b.)Minnie paid $20 for a pair of sunglasses, even though she was willing to pay up to $40 for them. c.)Cid sold his movie collection for $30, although he wanted $50 for it. d.)Katie wanted to pay $70 for concert tickets, but purchased them last minute for $130.

b.)Minnie paid $20 for a pair of sunglasses, even though she was willing to pay up to $40 for them.

Which of the following statements about price and demand is FALSE? a.)The graph of the demand curve slopes downward, indicating that quantity falls as price increases. b.)The Law of Demand states that if price increases, the quantity produced will increase. c.)The relationship between price and quantity demanded is considered to be inverse. d.)Consumers are willing to buy more of a good if the price of the good falls.

b.)The Law of Demand states that if price increases, the quantity produced will increase.

Which of the following is an example of movement along a supply curve? a.)A firm produces more jeans because of the latest technological advancements in the production of jeans. b.)Wages of auto workers rises, so a car company produces fewer cars. c.)A firm produces more potato chips because the price has increased. d.)The cost of ink has increased, so a firm produces fewer posters.

c.)A firm produces more potato chips because the price has increased.

A specific pair of orange shoes were the trademark shoe of a famous runner and used to be so popular that a store would sell out as soon as the shoes came in. However, the famous runner got caught in a doping scheme and now no one wants to buy these shoes at all. Which answer best describes in economic terms what happened with the orange shoes? a.)The situation created an increase in supply, causing movement along the supply curve. b.)There was an increase in the quantity demanded. c.)A variable unrelated to the price of the shoe caused a shift in demand. d.)The price changed, causing movement along the demand curve.

c.)A variable unrelated to the price of the shoe caused a shift in demand.

Which choice below is a reason why a demand curve is downward sloping? a.)As price increases, producers will supply more of a good. b.)Changes in income can cause the demand curve to shift. c.)As price increases, consumers will purchase less of a product. d.)For certain goods, demand increases as the price increases.

c.)As price increases, consumers will purchase less of a product.

Which of the following is the best example of the Law of Supply? a.)The price of Christmas trees goes up in December. b.)Due to an increase in the price of coffee, more tea is sold. c.)As the price of scooters increases, firms produce more scooters. d.)As the price of apples increases, consumers buy more oranges.

c.)As the price of scooters increases, firms produce more scooters.

Which of the following would cause an increase in the supply of steak? a.)Increase in the price of fish b.)Increase in transportation costs to supermarkets c.)Decrease in the price of feed for cattle d.)Mad Cow disease

c.)Decrease in the price of feed for cattle

Which of the following is true of capital-intensive and labor-intensive goods? a.)Labor-intensive techniques are best used to produce when capital is inexpensive. b.)Technological advancements can move production to be more labor-intensive. c.)Capital and labor cannot be complements to each other. d.)Capital and labor can be substitutes for each other.

d.)Capital and labor can be substitutes for each other.

Which of the following would NOT be an example of ceteris paribus as it relates to the Law of Demand? a.)As the price of beef increases, buyers purchase less beef. b.)As the price per gallon of gasoline decreases, people purchase more gasoline. c.)As the cost of tuition goes up, the quantity demanded of four-year degrees decreases. d.)Due to the threat of a hurricane, the demand for generators increases.

d.)Due to the threat of a hurricane, the demand for generators increases.

Which of the following statements about price and supply is FALSE? a.)Quantity rises when the price rises. b.)The graph of the supply curve slopes upwards. c.)If the price of a good falls, the producer is willing to supply less. d.)The Law of Supply states that consumers will buy less if the price increases.

d.)The Law of Supply states that consumers will buy less if the price increases.

Which of the following is an example of being labor intensive? a.)Electricity b.)Cell phone service c.)A plane ticket from New York to Dubai d.)The wiring for a custom-built house

d.)The wiring for a custom-built house

Which of the following is an example of movement along a demand curve? a.)Consumers are buying more t-shirts because their incomes have increased. b.)The price of burgers has increased, so consumers are buying more hot dogs. c.)Consumers are buying less coffee because tea is cheaper. d.)Tomatoes have become more expensive, so consumers are buying fewer tomatoes.

d.)Tomatoes have become more expensive, so consumers are buying fewer tomatoes.

Becky has recently started running and needs new running shoes. While shopping at the shoe store, she sees a pair that costs $300 and asks the owner if these are the best running shoes." Actually, the quality is not any better than this $150 pair," replies the owner. "What you're really paying for is just the brand name." Given what the owner has said, the more expensive shoes in question are examples of _________ goods. a.)Giffen b.)inferior c.)luxury d.)Veblen

d.)Veblen

Due to his recent increase in income, Peter is going to buy a quality pair of winter gloves from a specialty shop rather than a bargain set from a discount shop. The bargain gloves are now considered a(n) __________ good. a.)Veblen b.)normal c.)luxury d.)inferior

d.)inferior

Anderson's Running manufactures a hydration belt, which includes two water bottles. These belts are in high demand with runners because of the unique fit of the belt. Anderson's Running produces the hydration belt at its factory, but it purchased the water bottles in bulk from another supplier. In this scenario, the water bottles are an example of __________ goods and the hydration belt is an example of __________ goods. a.)final; intermediate b.)intermediate; substitute c.)final; substitute d.)intermediate; final

d.)intermediate; final

Laura has started working more hours at her part-time job, giving her a higher income. She decided to purchase a higher-quality purse to replace her older bag that she currently carries. Laura visits the boutique near her job the following day.Keeping Laura's situation in mind—her recent increase in income and her desire for a higher-quality purse—the type of goods that describe the purses that are sold at the boutique are called _________ goods. a.)complement b.)inferior c.)Giffen d.)luxury

d.)luxury

Thompson's Shoe Emporium can produce and ship 200 pairs of rain boots by the end of the week at a cost of $80 per pair. Shoe Locker agreed to the cost and placed an order for the shipment. Although they sold the units to Shoe Locker at $80 per pair, Thompson's Shoe Emporium was willing to produce the shoes at a price as low as $50 per pair .The difference between the amount that Shoe Locker paid for the shoes ($80) and the lowest amount that Thompson's Shoe Emporium would have agreed to receive for the shoes ($50) is known as the __________. a.)deadweight loss b.)consumer surplus c.)profit maximization d.)producer surplus

d.)producer surplus