ECO 2023 Exam 1 Tophat Q&A's

The price of internet access rises from $50 per month to $70 per month. The quantity of streaming service subscriptions falls from 200 million to 175 million. What is the Arc Cross-Price Elasticity of Demand?

-0.4

Your height is 60 inches, but you lose your shins in a tragic gardening accident. As a result, your new height is 48 inches. The percent change in your height is...

-20%

Suppose I buy a nice dinner for $15. I was willing to pay $25 for it, and the restaurant would have been willing to sell it for as little as $11. What is the total gain to both sides?

14

If the opportunity cost of watching one episode of your favorite show on Netflix is the $5 you would have earned from working for half an hour, then the opportunity cost of working for an hour is... watching ______ episodes of your favorite show on Netflix.

2

If you are willing to pay $40 for Top Hat access, but a guy in an alley sells you a black market access code for $20, your consumer surplus is...

20

In your spare time you drive for Uber. You pick up a passenger and take her to Madison Social, for which you are paid $15. You would have been willing to drive her there for $9. Your producer surplus is...

6

Suppose the market for coffee is in equilibrium. An FDA report is released documenting a variety of significant health benefits of drinking coffee every day. What happens in the market for coffee (the drink—not the bean)?

Demand shifts to the right, price rises, quantity rises.

Suppose the market for smartphones is in equilibrium. A new battery technology is invented which makes phones last a week without needing to be recharged. What happens in the market for smartphones?

Demand shifts to the right, price rises, quantity rises.

Which of the following goods (or services) is likely to have inelastic supply?

Higher education, which requires instructors with a PhD (which usually take 4 to 6 years to complete)

The value of the best thing you give up to get something is...

Opportunity cost

Producer Surplus is...

The area above the supply curve and below the price.

A $1 per pound tax is imposed on cucumbers. The own-price elasticity of demand for cucumbers is 1.5, and the elasticity of supply for cucumbers is 0.7. Which of the following is correct?

The burden of the tax will fall mostly on producers.

A tornado destroys several carpet factories in North Georgia. Which of the following occurs?

The carpet supply curve shifts to the left.

Consumer Surplus is...

The difference between what consumers are willing to pay and what they actually pay.

Your income rises by 10%, and the quantity of raisins that you purchase falls by 5%. Which of the following is correct?

The income elasticity of demand for raisins is -0.5, and raisins are an inferior good.

A new program to teach computer science more effectively graduates its first class of computer scientists, resulting in a significant increase in the number of programmers and software engineers available. Which of the following will occur?

The supply of software will shift to the right.

Suppose the equilibrium price of toilets is $250. The government imposes a $600 minimum price for each toilet. Which of the following is not likely to occur?

Toilet manufacturers produce the lowest-quality toilets possible, while also complying with regulations.

Equilibrium is efficient because...

Total surplus is maximized. Marginal benefit equals marginal cost. Every unit that is produced has a benefit to consumers greater than (or equal to) the cost of its production.

Suppose the government imposes a maximum annual tuition on bachelor's degree-granting institutions of $2,000 per year. Which of the following is not likely to occur?

Universities will compete for students more intensely, resulting in more and larger scholarships.

A country with a comparative advantage in producing a good...

has the lowest opportunity cost of production.

Suppose the price of tomato sauce is $4 per jar, but then rises to $7 per jar. The Law of Demand states that...

quantity demanded will fall.

Consider the supply curve for sour cream. If the price of sour cream falls, then...

the quantity supplied will fall.

In equilibrium...

total surplus is maximized. quantity supplied equals quantity demanded. supply intersects demand.

Suppose the market for potato chips is in equilibrium, and then two things happen at the same time: The price of potatoes (which are used to make potato chips ) goes up, and a big sporting and social event occurs. Eating lots of potato chips is traditional at this big sporting event. Which of the following is correct?

Price rises, quantity is indeterminate.

Qualcomm and Crucial are two companies making computing components: memory and processors. According to their production possibilities frontiers above, which of the following is correct?

Qualcomm has a comparative advantage in Processors, and Crucial has a comparative advantage in memory.

The graph below depicts a tax placed on a good or service. Which of the answers below is correct?

A is tax revenue, B is consumer surplus, C is producer surplus, and E is deadweight loss.

If the price of chicken feed (which is fed to chickens) goes up, which of the following will happen in the market for chicken sandwiches?

Supply will shift to the left, and price will rise.

The opportunity cost for you to prepare a decent meal is one hour of work, which would earn you $10. The opportunity cost for Chef Enzo to prepare a decent meal is five minutes of work, which would earn him $2. Which of the following terms of trade would benefit you and Chef Enzo?

Chef Enzo prepares a meal for you for $8.

If the surgeon general announces that wearing shoes is bad for your posture, which of the following will occur?

Demand for shoes will shift to the left.

Suppose it is 2,500 B.C.E. and the market for wheat in Egypt is in equilibrium. Two things then happen at the same time. First, the Nile fails to flood that year, so it does not deliver vital nutrients to the land around the river. Second, the Pharaoh imposes a tax of one senyu per bushel on wheat, to be paid by consumers. Which of the following is correct?

The price is indeterminate and quantity falls.

Suppose the administration of FSU decides to fire all advisors and administrators, leaving only faculty, cleaning staff, and support staff, and by doing so it manages to cut costs significantly. The price of one year's tuition at FSU falls from $6,500 to $4,000. Which of the following will occur, ceteris paribus?

The quantity of students who choose to attend FSU will rise.

For every hour you spend studying for your economics exam, you will improve your grade by 3 points. For every hour you spend studying for your Physics exam, you will improve your grade by 4 points. For every hour your friend Albert spends studying for his economics exam, his grade will improve by 8 points. For every hour he spends studying for his physics exam, his grade will improve by 16 points. Which of the following is correct?

Your opportunity cost of studying enough to improve your grade on your economics exam by 1 point is 1 1/3 points on your physics exam, and you have a comparative advantage in economics.

Of the following goods, which is likely to have the most elastic demand?

candy

If a person's income goes up, and that person buys more chicken sandwiches, then we can conclude that for this person...

chicken sandwiches are a normal good.