Baier Econ FINAL
The most likely reason the government would implement a price _____ is because it feels that the price is too high for ____________.
ceiling, consumers
Gun buyback programs will be less effective if the:
supply of guns is more elastic
Which of the following sellers will achieve their desired result for total revenue?
A florist raises the price of roses before and on Valentine's Day and hopes to raise total revenue. The florist is the only flower shop in town.
Consider the figure Gain in Consumer Surplus from the Sale of Cappuccino Machines. Which areas represent consumer surplus when the price is equal to P2?
A, B, & C
You are considering whether you should go out to dinner at a restaurant with your friend. The meal is expected to cost you $50, you typically leave a 20% tip, and a round-trip Uber ride will cost you $15. You value the restaurant meal at $30 and the time spent with your friend at $50. You should ____ to dinner with your friend because the benefit of doing so is _____ than the cost.
go, greater
Asking "One more?" allows the _____ principle to be analyzed as a simple question. a. cost-benefit
marginal
If a certain item has many substitutes, its demand curve will be: a. perfectly elastic.
relatively flat
For a given increase in the minimum wage, the new minimum wage will have the smallest impact on unemployment when:
the labor demand and the labor supply curve are relatively inelastic.
Suppose Clemson town officials think the students are getting too much caffeine and decide to impose a $1.50 tax on brown sugar lattes. Of the $1.50 tax on lattes, consumers will pay ________ and producers will pay _______.
$0.50, $1.00
Kevin Williamson goes to a local coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $6. The price of the latte is $2. The cost to the coffee shop to produce the latte is $1. How much economic surplus does the coffee shop receive when Kevin purchases the latte?
$1
In the green tea market, depicted below, the pretax equilibrium price is $3, and the pretax equilibrium quantity is 20 cups. A tax, charged on suppliers, is levied on each cup of green tea, shifting the supply curve upward. What is the tax rate?
$1.75
Suppose a $5.00 tax is imposed on the market and the outcome is depicted below. The deadweight loss (DWL) of the tax is __________.
$1250
Tricia normally travels back home to Kalamazoo, Michigan on a Greyhound bus. The normal cost is for the trip from Anderson, SC to Kalamazoo, MI is $200. She is willing to pay as much as $250 to see her family and friends and Greyhound is willing to take to Kalamazoo for $80. Recently, there was a tax that imposed on all bus carriers and this increased the cost of the fair to $280. Tricia decided not to go. The deadweight loss of the tax in this case is
$170
If the market price of coffee is $4, how much producer surplus do suppliers earn?
$22.50
Nerida Kyle is thinking of buying a car to avoid taking Lyft to work. She is using the cost-benefit principle to evaluate this decision and is calculating the costs and benefits to owning the car over the next year. She's gathered the following information to help her make her decision: The car costs $15,000 to purchase, but she can resell it after a year of use for $13,500. She thinks gas will cost her about $1,200 for the year. The annual insurance premium for her car is $800. Maintenance and repairs will cost about $300 for the year. Using Lyft to get to work would cost her $4,000 for the year.
$3,800 for the year
Suppose Clemson town officials think the students are getting too much caffeine and decide to impose a $1.50 tax on brown sugar lattes. According to the table, after the tax consumers will pay ____ for each latte and consume _______.
$3.50, 760
There are 100 consumers, each of whom values a concert ticket at a unique whole number dollar amount between $1 and $100. One customer is willing to pay $1, a second is willing to pay $2, a third is willing to pay $3, and so on. An unlimited number of concert tickets are on sale for $20 each. What is the total consumer surplus in this market?
$3200
A supply curve (i) plots the quantities a seller is willing to sell at different prices. (ii) shows the total cost to the seller. (iii) shows rising marginal costs. (iv) shows rising fixed costs.
(i) and (iii)
This summer gasoline prices in the United States increased by 50%, which brought about a fall in the quantity of gasoline purchased of 10%. The price elasticity of demand is equal to _____, and demand is described as _____.
0.2, inelastic
Assume that the market depicted above is characterized by perfect competition, what are the total gains from trade in equilibrium?
1,000
Prior to the pandemic, China produced about 10 million face masks per day which was roughly half of the world's face mask production. At the time, a box of 50 face masks sold for $10. By March of 2020, China was producing 130 million face masks. The price of a box of 50 masks increased to $60. Assuming that China's production was still producing half of the world's face masks, the elasticity of supply for face masks is
1.2
Butter producers know that the price elasticity of demand for butter is 0.2. If they want to increase sales by 4%, they will have to lower price by:
20%
Uber cuts the price of a ride in Greenville by 15%. Thereafter, the quantity of rides demanded rises by 45%. The absolute value of the price elasticity of demand for Uber rides is ______ and total revenues would _________ after the price cut.
3, increase
If there was no tax on brown sugar lattes, the equilibrium quantity would be
800
The demand curve is inelastic if the absolute value of the elasticity is:
>1
Where S1 is the supply of drugs with no prohibition and S2 is the supply of drugs with prohibition, the area that represents total revenue with drug prohibition is _____, and the area that represents total revenue with no prohibition is _____.
?
What statement is correct?
A change in quantity demanded is a movement along the demand curve, and a change in demand is a shift of the demand curve.
Which of these statements are TRUE? I. In the long run, rent control laws create incentives to turn apartments into hotels, condos, or parking garages. II. Apartment owners are less likely to do routine maintenance when the government controls apartment rents. III. Rent controlled apartments are more likely to result in potential tenants being discriminated against by race, gender, sex and/or marital status.
ALL are true
In the market for pharmaceuticals, the issue of "drug loss" illustrates which of the following ideas?
Because of the higher cost of testing a drug, fewer drugs are made, and more lives are lost.
Consider the figure Gain in Producer Surplus from the Sale of Cappuccino Machines. Which areas represent producer surplus when the price is equal to P2?
D, E, & F
Which of the following scenarios does not illustrate the law of demand?
Freya buys more doughnuts when the price of doughnuts is higher.
If the economy heads into a recession and consumer income falls, which graph shows the effect of an economic slowdown on the market for holiday cruises?
Graph A
Which variable does NOT shift the demand curve?
None of the above; they all shift the demand curve.
The COVID-19 pandemic caused many consumers to be quarantined in their homes. The supply and demand model would predict which of the following events in the market for home entertainment equipment for online retailers?
The demand for home entertainment equipment sold by online retailers would increase, resulting in a higher equilibrium price and a higher equilibrium quantity.
Which of the following statements is true about cigarette taxes:
The elasticity of cigarette supply in all states is very large, so cigarette manufactures receive about the same after-tax price in all states.
Coke and Pepsi are substitute soft drinks. Which of the following would cause the demand curve for Pepsi to shift to the left?
The price of Coke decreases.
A meat processing plant produces both steak and ground beef. What effect would rising market prices for steak have on the market for ground beef?
The supply of ground beef will decrease.
A senator has recently stated, "It is time to put people before profits; that is why I am sponsoring legislation that requires businesses to purchase health insurance for their workers." Given that the demand for labor is relatively more elastic than the supply of labor, what will be the result of the legislation?
Workers will pay for most of the employer-provided health insurance in the form of lower wages.
A product with a network effect is
a social media tool such as WhatsApp.
Suppose that the absolute value of the elasticity of demand for soft drinks (soda) is two and the elasticity of supply of soda is four. If there is a $1.00 tax imposed on all soda drinks, how much of the tax is paid by the sellers?
a. $1.00 b. $0.75 c. $0.67 d. $0.50 e. $0.33
The price elasticity of demand for an item is impacted by:
a. whether or not the item is a necessity. b. the time available to adjust to price changes. c. the number of available substitutes. d. the share of one's budget (income) that is allocated to the product.
When a tax is imposed on sellers, the supply curve shifts upward, so that the vertical distance between the original supply curve and the new supply curve that incorporates the tax equals the:
amount of tax paid per unit
Weather forecasters predict that Hurricane Ian will strike Clemson this weekend. Which would occur today based on the expected storm?
an increase in people's willingness to pay for rain jackets and ponchos.
Suppose the demand curve for monthly subscriptions to Netflix has shifted to the right. What could have caused this?
an increase in the incomes of consumers
The demand curve for Hershey's Kisses, a particular brand of chocolate candy, will _____ the demand curve for chocolate candy as a general category.
be more elastic than
Spaghetti and salad are related goods. Holding everything else constant, if the price of spaghetti decreases and the demand for salad increases, spaghetti and salad are probably:
complements
Which of the following would be considered in a cost-benefit analysis to decide if a person should cycle to work or ride the subway? (i) The air pollution that the cyclist has to breathe.(ii) The cost of subway tickets. (iii) The time it takes to cycle to work versus the time it takes to ride the subway to work.(iv) The cost per gallon of gasoline.
d. (i), (ii) and (iii)
If supply is upward sloping, a decrease in demand with no change in supply will lead to a(n) _____ in equilibrium quantity and a(n) _____ in equilibrium price.
decrease; decrease
Many companies pay their factory employees based on piece rates—the more they produce, the more they get paid. This practice highlights the role of:
incentives
(Figure: Tax on Gasoline) Use Figure: Tax on Gasoline. If a tax on gasoline of $1.10 per gallon is imposed, the price paid by consumers will:
increase by $0.50
If price increases from $10 to $20, total revenue will:
increase by $800, so the demand curve must be inelastic.
In a market characterized by perfect competition in which, at a price of $10, quantity supplied is 40 units and quantity demanded is 50 units. Equilibrium price in this market:
is greater than $10.
In markets characterized by perfect competition, surpluses lead to:
lower prices
Holding all else constant, if people eat out more at expensive restaurants when they earn more, then expensive restaurant meals are
normal goods
When demand and supply have their normal shapes (slopes), which of the following statements are true regarding a commodity taxes: I. The burden of the tax is typically incurred by the party that has to write the check to the government. II. The price consumers pay will increase by the size of the tax. III. Compared to case when the market for the good was not taxed, producer and consumer surplus is less. IV. Some of producer surplus and consumer surplus is transferred to the government as tax revenues.
only III & IV
Which principle tells you that the true cost of something is the next best alternative you have to give up to get it?
opportunity cost
Suppose the absolute value of the price elasticity of demand for Lexus SUVs is 6.25 and the price elasticity of supply for Lexus SUVs is 0.50. If congress implements a luxury tax on luxury SUVs, who will pay more of the tax?
producers of the SUVs pay more
The price paid by buyers minus the price received by sellers equals the:
tax whether it is imposed on the buyers or on the sellers.
A ________ creates a situation in which the price paid by buyers is ______ price received by sellers.
tax, exceeds
To economists, the term "consumer surplus" means:
the consumer's gain from trading.
Recently, more substitutes for milk have entered the market. We can expect that:
the demand curve for milk has become more elastic.
As the Federal Reserve Bank has changed their policy stance and have worked to increase short-term interest rates, longer term rates like mortgage rates have also increased. We would expect the higher mortgage rates to have what impact on the housing market.
the higher mortgage rates will shift the demand for housing back, decrease housing prices, and reduce the equilibrium quantity supplied.
Scarcity
when there site enough to satisfy all our wants