ECO2023 HAMMOCK EXAM

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

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...

((new-old)/old)*100 = (48-60)=-12/20= -.2*100 = -20%

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

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 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

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? a) The burden of the tax will fall mostly on consumers. b) The burden of the tax will fall mostly on producers. c) The burden of the tax will fall equally on consumers and producers. d) The burden of the tax will be zero.

B. the burden of tax will fall mostly on producers

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)

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

The carpet supply curve shifts to the left

22) 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.

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.

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.

In equilibrium...a) total surplus is maximized. b) quantity supplied equals quantity demanded. c) supply intersects demand. d) all of the above

d) all of the above

Suppose your company has $1 million in explicit costs, and could rent out its buildings to earn a revenue of $0.5 million. Its equipment could be rented out for another $0.25 million. What is your economic cost? a) $1 million b) $1.25 million c) $1.5 million d) $1.75 million

d.) 1.75 million

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

has the lowest opportunity cost of production

The value of the best thing you give up is...

opportunity cost

Suppose that 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

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

Producer Surplus is...

the area above the supply curve and below the price

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

the demand for shows will shift to the left

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 2 episodes of your favorite show on netlfix

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

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? a) 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. b) Albert's opportunity cost of studying enough to improve his grade on his economics exam by 1 point is 2 points on his physics exam, and he has a comparative advantage in economics. c) You have an absolute advantage in studying for physics. d) You can both benefit by specializing according to comparative advantage and trading points.

A.) 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.

Suppose you are going to a movie. You're excited to go to this; you would have paid up to $30 to go to this movie, though you actually paid $12. For simplicity, assume you are going alone. Yes, it's sad, but you have unusual taste in movies, so no one wants to join you. While you are driving to the theater, you get a call from a friend, who excitedly tells you that your favorite musical artist is performing a surprise show at a local tavern. If you turn around right now, you can make it before the music starts. It will cost you $12 to get into the tavern. You would be willing to pay up to $120 to see this artist. What is the economically rational thing to do? In case it matters to you, you've already paid for your movie ticket, and can't get your money back. You can't scalp your tickets. a) Go to the movie. b) Go to the musical performance. c) Watch part of the movie, then leave and see part of the musical performance. d) Skip them both and go home.

B.) Go to the musical performance

You are operating a house painting business (because you got so good at it from painting your own house). You currently have yourself and two other employees, and you can paint a total of 2 rooms per day. Adding a fourth worker will allow you to paint an additional 0.5 rooms per day. What does adding the fourth worker do to your average product? a) Average product rises. b) Average product stays the same. c) Average product falls. d) Average product falls, then rises.

C. average product falls

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

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 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

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

The quantity supplied will fall

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

Equilibrium is efficient because...

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

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? a) The price rises and quantity is indeterminate. b) The price is indeterminate and quantity falls. c) The price is indeterminate and quantity rises. d) Price rises and quantity falls.

b) The price is indeterminate and quantity falls.

You are repainting your house, and currently can paint one room each day. You call a friend in , and now you can paint 1.5 rooms per day. The marginal product of your friend is...

c) 0.5 rooms per day.

Of the following goods, which is likely to have the most elastic demand? a) candy b) heroine c) antiretroviral drugs for treating HIV d) gasoline

candy

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

chicken sandwiches are a normal good