Econ 1 Final - ucsb

PE1 You are thinking of starting a tutoring service. You already have a part-time job on campus that pays $10 per hour. You think you can tutor fellow students for five hours each Saturday at $25 per hour. If you were not tutoring, you could work another five hours at your campus job. How much economic surplus will you generate each week if you start tutoring? a. $125 b. $75 c. None of the answers d. $65 e. $50

b. $75

PE4 According to diminshing marginal utility, which of the following people would gain the lowest marginal benefit from an extra $100 of income? a. Ariana, an actress with an annual household income of $1,500,000 b. Shawna, a single mother of three young children with an annual household income of $19,000 c. Devin, head of a three-person household with an annual household income of $120,000 d. Chin, a single person with an annual household income of $20,000 e. None of the answers

a. Ariana, an actress with an annual household income of $1,500,000

PE2- A tax on buyers causes which of the following? (i) a leftward shift of the demand curve (ii) a decrease in quantity sold (iii) an increase in the price buyers pay a. (i), (ii), and (iii) b. (i) and (iii) c. (ii) and (iii) d. only (i) e. None of the answers

a. (i), (ii), and (iii)

PE2- 15 A quota of 10,000 logs of forest wood per month is placed in the market that is shown in the figure. The equlibrium quantity sold in the market before the implementation of the quota was ___ logs. (look at graph) a. 50 b. 60 c. 30 d. None of the answers e. 100

a. 50

PE2- 8 It is mandatory for Jane to take several pills of a certain medication each day in order to remain healthy. The ,edication has no substitutes and is produced by only one pharmaceutical company. Which of the following demand curves represents Janes demand for medication? (look at graph) a. A b. B c. C d. D e. None of the answers

a. A when there are no substitutes for this medication that she needs, the demand curve is completely vertical due to the fact that the one company can place the product at any price that they so desire.

PE4 Table: Income Distribution in Four Countries provides recent data from the World Bank on the distribution of income in four countries: Percent Income Top Quintile: Bangladesh: 41.4% El Salvador: 46.4% Mexico: 50.1% Costa Rica: 54% Percent Income MIddle Three Quintiles Combined: Bangladesh: 50% El Salvador: 47.7% Mexico: 44.2% Costa Rica: 41.8% Percent Inncome Bottom Quintile: Bangladesh: 8.6% El Salvador: 5.9% Mexico: 5.7% Costa Rica: 4.2%

a. Bangladesh

Bae is willing to pay up to $160 for a particular pair of boots. She is able to buy the boots for $120. The marginal cost of produciing the boots is $70. Which of the following is TRUE regarding the economic surplus associated with her purchase of the boots? a. Consumer surplus is $40, and producer surplus is $50. b. Consumer surplus is $50, and producer surplus is $40. c. Consumer surplus is $90, and producer surplus is $120. d. Consumer surplus and producer surplus are the same. e. None of these answers

a. Consumer surplus is $40, and producer surplus is $50.

PE4 As an employer you can minimize discrimination based on implicit bias when hiring employees if you base your hiring decisions on: a. gut feelings about the likely productivity of individual job applicants. b. carefully structured assessments of individual candidates rather than gut feelings. c. the track records of similar applicants in the past rather than full assessments of individual applicants. d. a conscious effort to hire members of a group that is discriminated against. e. None of the answers

b. carefully structured asssesments of individual job applicants.

As consumers consume more units of an item, the marginal benefit of each additional unit decreases at an increasing rate. This can be seen through: a. demand curves that are flatter at lower quantities and steeper at higher quantities b. demand curves that are steeper at lower quantities and flatter at higher quantities c. demand curves that are vertical d. demand curves that are positively sloped e. None of the answers

b. demand curves that are steeper at lower quantities and flatter at higher quantities.

PE4 When did the labor share of national income start falling? Which yea ris the most correct answer? a. 2009 b. 2012 c. 2002 d. none of the answers e. all of the answers (except d)

c. 2002

PE2- 6 What is the equilibrium price in this market? (look at graph) a. $60 b. $45 c. None of the answers d. $35 e. $50

e. $50

Which of the following individuals is LEAST likely to lose their job if the economy is doing poorly? a. Francesca, who works as a computer repair technician b. Mercy, who works as a server in a high-end restaurant c. Kamau, who works at a designer handbag store d. Maruichi, who works as a manager at a fast-food restaurant e. None of the answers

d. Maruichi, who works as a manager at a fast-food restaurant

According to Dani Rodrik which of the following occupations is advantaged by increased trade? a. Engineer b. Accountant c. Manager d. None of the answers e. All of these answers (except none of these answers)

e. All of the answers (except none of the answers)

PE1- 11 Refer to the graph to answer the question. The movement from point S to point T is caused by: a. None of the answers b. an increase in the price of the item c. a decrease in the demand for the item d. an increase in the demand for the item e. a decrease in the price of the item

e. a decrease in the price in the item movement down on the demand line is caused by decrease in price of an item while a shift would mean the demand was decreased for the item.

PE1- 1 Stevia is a natural sweetener that is used as a substitute for sugar. Which of the following graphs shows the effect on supply of bakery desserts made with stevia when the price of stevia rises? (look at graph) a. None of the answers b. Graph A c. Graph B d. Graph C e. Graph D

e. graph D

PE4- In a monosony labor market: a. employees bargain with power through a union. b. employees have an advantage, due to their human capital. c. the employer is forced to pay a higher wage d. the employer uses an attractive benefit package to attract good employees e. none of the above

e. none of the above. monospony labor market: Firm using its power as a major buyer of labor to pay lower wages.

PE1-10 The table shows the monthly individual demand schedules of four students for soda. What is the change in the total market demand for soda when the price changes from $1.50 per can to $2 per can? (look at graph) a. The total quantity demanded in the market falls by 23 cans b. The total quantity demanded in the market rises by 26 cans c. The total quantity demanded in the market falls by 18 cans d. The total quantity demanded in the market rises by 23 cans e. None of the answers

a. The total quantity demanded in the market falls by 23 cans.

PE1 Which of the following lists only factors that would cause an increase in the supply of an item? a. A decrease in input prices; a technological innovation; a fall in the price of a substitute- in-production b. A rise in the price of a substitute-in-production; an increase in the price of a complement- in-production; an expectation that the price of the item will increase in the future c. A decrease in the number of sellers in the market; a fall in the price of a complement-in- production; a technological setback d. An increase in input prices; a decrease in the number of sellers in the market; an increase in the price of a substitute-in-production e. None of the answers

a. a decrease in input prices; a technological innovation; a fall in the price of a substitute-in-production.

PE3 Who has comparitive advantage in sorting and folding a load of laundry? The table lists the minutes that it will take four persons to wash a car and to sort and fold a load of laundry. a. Asad b. Junko c. Jason d. Jen e. All of these answers

a. asad

PE4 Damon's wage rises. The substitution effect would cause him to ______his work hours, and the income effect would cause him to ______his work hours. a. increase; decrease b. increase; increase c. decrease; decrease d. decrease; increase e. None of the answers

a. increase; decrease

PE4 If a company incurs expenses to start providing childcare at work so that employees can have lunch with their preschool children, the company's demand curve for labor will shift to the: a. left because employees are more expensive to the firm. b. right because employees are more expensive to the firm. c. left because workers will be more loyal. d. right because workers will be more loyal. e. None of the answers

a. left because employees are more expensive to the firm

PE4 Your landscaping company uses labor and shovels. The price of shovels falls, and this _____ your demand for labor because labor and shovels are _____. a. raises;complements b. raises; substitutes c. lowers; complements d. lowers; substitutes e. none of the answers

a. raises; complements

Diminishing marginal product leads to: a. Rising marginal costs for a seller b. Decreased profitability for a seller c. Increased supply of the item in the market d. Lower opportunity costs of producing the item e. None of the answers

a. rising marginal costs for a seller law of diminshing margining product: the marginal product of an input declines as you use more of that input

PE2-10 A minimum wage of $18 is introduced. The implementation of the minimum wage leads to a ___ of ___ workers. (look at graph) a. surplus; 12,000 b. shortage; 6,000 c. none of the answers d. surplus; 10,000 e. shortage; 24,000

a. surplus; 12,000

PE4 An efficiency wage improved efficiency when: a. the increase in worker effort and reduced turnover cover the cost of the higher wage. b. it is structured so that only the most productive workers receive a higher wage. c. capital costs are reduced enough to cover wage costs. d. improved technology accompanies the worker training. e. None of the answers

a. the increase in worker effort and reduced turnover cover the cost of the higher wage

According to the figure, if there is no international trade, the equilibrium quantity (in thousands) in this market is: (look at PE3 for graph) a. 50 b. 60 c. 500 d. 600 e. None of these answers

b. 60

PE2- 5. You are studying the demand for Minute Maid and Tropicana orange juice. Minute Maid improves the taste of its juice and people start preferring Minute Maid over Tropicana. Which graph depicts the impact of these changed on both Minute Maid and Tropicana? a. Graph A shows what happens in the market for Minute Maid, and Graph D shows what happens in the market for Tropicana. b. Graph A shows what happens in the market for Minute Maid, and Graph B shows what happens in the market for Tropicana. c. Graph B shows what happens in the market for Minute Maid, and Graph A shows what happens in the market for Tropicana. d. Graph B shows what happens in the market for Minute Maid, and Graph D shows what happens in the market for Tropicana. e. None of the answers.

b. Graph A shows what happens in the market for Minute Maid, and Graph B shows what happens in the market for Tropicana.

If you look at income tax (only the tax on income) which of the following is true in the United States? a. The poorest 10% of the population pay a lot more than the wealthiest 10% b. The poorest 10% of the population pay a lot less than the wealthiest 10% c. The poorest 10% of the population pay about the same amount as the wealthiest 10% d. None of the answers e. All of the answers

b. The poorest 10% of the population pay a lot less than the wealthiest 10%.

PE4 If Bella uses the Rational Rule for Workers, she will keep choosing more work and less leisure until the: a. value of her production equals her wage b. marginal benefit of one more hour of leisure is equal to the wage c. marginal cost of her work equals the value of her production d. marginal benefit of one more hour of leisure is equal to the value of her production e. none of the answers

b. marginal benefit of one more hour of leisure is equal to the wage

PE4 When a minimum wage is imposed in a monopsony labor market, the ____ may not reduce the ____. a. minimum wage; number of employers b. minimum wage; number of jobs c. number of employers; minimum wage d. number of employers; product price e. None of the answers

b. minimum wage; number of jobs

The highest price that Dara would be willing to pay for a particular vase is: a. Her consumer surplus on the vase. b. The marginal benefit she would receive from the vase. c. The most economically efficient price for the vase. d. The most equitable price for the vase. e. None of these answers

b. the marginal benefit she owuld recieve from the vase

PE2 All of the following were mentioned by Dr. McGlasson as factors that have an influence on the elasticity of demand for a product EXCEPT: a. whether the product is a luxury or a necessity b. whether the product is a normal or an inferior good c. whether there are substitutes to the productd. d. how much of the consumer's budget is allocated to the product e. how much time is available to purchase the product

b. whether the product is a normal or inferior good elasticity: a measure of responsiveness elasticity of demand: how responsive buyers are to a price change of a product normal good: you buy more as your income increases inferior good: higher income means you buy less of it (eg. ramen)

PE3- 15 In 2012, Marco Rubio argued that he would be in favor of getting rid of quotas on sugar imports (a trade barrier) only if the United States got something in return from Brazil. Rubio's argument is not economically sound (consistent with economic theory) for which of the following reasons? a. Consumers in the United States would be hurt by the higher price of sugar if the quota was removed. b. U.S. producers that use sugar as an input (for example, Lifesavers) would benefit from a higher price of sugar. c. A proportion of the gains to trade received by Brazil would be used to import U.S. goods and services. d. The United States cannot benefit from trade with a country that is less productive. e. None of these answers

c. A higher proportion of the gains to trade recieved by Brazil would be used to import U.S. goods and services. quota: a maximum quantity of a good that could be bought or sold.

Barlow and rusia own a nail salon. A manicure takes Barlow 60 minutes to complete and takes Rusia 45 minutes to complete. Completing a pedicure tales Barlow 45 minutes and takes Rusia 30 minutes. Who has a comparitive advantage in manicures? a. Barlow because he is faster. b. Russia because she is faster. c. Barlow because he has a lower opportunity cost. d. Russia because she has a lower opportunity cost. e. None of these answers

c. Barlow because he has a lower opportunity cost explanation: Because Barlow could do 1.3 pedicures instead of a manicure and Rusia can do 1.5, so her opportunity cost is higher, so Barlow would have the comparative advantage.

PE3 Which of the following is not an example of a corrective tax or subsidy used to address and externality problem? a. The government charges Ku's company a tax equal to the difference between the marginal social cost and the marginal private cost of emissions. b. The government discourages the production of paper products in a suburban community by imposing a unit tax on the production of such products, limiting paper companies' emissions of carcinogenic toxins. c. Marlo's customers have been bothered by the noisy, midday deliveries at the business next door. She arranges to cover part of the delivery costs in order to have the neighbor's deliveries arrive early in the morning rather than at midday. d. The government covers part of the cost of a particular immunization. e. None of these answers

c. Marlo's customers have been bothered by the noisy, midday deliveries at the business next door. She arranges to cover part of the delivery cost in order to have the neighbors deliveries arrive early in the morning rather than at midday.

PE4 According to Edward Lazear, which of the following best describes the impact of increased immigration on the wages of the host country according to economic research? a. Large b. Moderate c. Negligibled. d. None of the answerse. e. All of the answers (except none of the answers)

c. Negligible ( so small you can ignore it)

PE2 What happens to the equilibrium price and quantity when demand decreases and at the same time supply increases, and the demand shift is relatively small than the supply shift. a. The equilibrium price rises, and the equilibrium quantity falls. b. Both the equilibrium price and quantity will rise. c. The equilibrium price falls, and the equilibrium quantity rises. d. Both the equilibrium price and quantity will fall. e. None of the answers.

c. The equilibrium price falls, and the equilibrium quantity rises.

Which of the following illustrates a positive externality? a. Martin's company experiences an increase in profits due to his cost-cutting initiatives. b. Artem loses sleep when an airport is built near his home, and planes fly overhead. c. The value of Maria's house rises when the city builds a park nearby, enhancing her view. d. Ella can buy a shirt at half price because someone else returned it. e. None of these answers

c. The value of Maria's house rises when the city builds a park nearby, enahancing her view. positive externality: an activity who's side effects benefit bystanders.

Which of the following pieces of advice is consistent with the principle of comparative advantage? a. If someone else is faster than you at a task, trade with them, so they do it for you. b. Focus on what you do best. c. Focus on what you are relatively good at doing, even if you are not the best at it. d. Relative preferences are key to understanding who should do what. e. None of these answers

c. focus on what you are relatively good at doing, even if you are not the best at it.

PE3 Countries benefit from trade by exporting goods in which their opportunity costs are relatively ___ and importing goods in which their opportunity costs are relatively ___. a. low; low b. high; high c. low; high d. high; low e. Not enough information to answer this question

c. low; high

Consider your decision to attend clas seach day or skip it. Which of the four core principles of economics applies to the notion that by attending class you are not doing the next best activity you would prefer to do, such as napping or going to the gym. a. None of the answers b. Cost-benefit principle c. Opportunity cost principle d. Marginal principle e. Interdependence principle

c. opportunity cost principle

In Equality and Efficiency: The Big Trade Off, Okun argues that redistributing income from the rich to the poor does what? a. Improves efficiency b. Combats discrimination c. Takes its toll of economic growth d. None of the answers e. All of these answers (except none of these answers)

c. takes its toll of economic growth

PE2 Suppose the percent change in the quantity demanded for water for any price change is zero. The demand curve for water is ____, and the price elasticity of demand is perfectly ____. a. vertical; perfectly elastic b. none of the answers c. vertical; perfectly inelastic d. horizontal; perfectly elastic e. horizontal; perfectly inelastic

c. vertical; perfectly inelastic

PE4 Which of the following is NOT a correct rationale about why income redistribution program do not always reduce efficiency? a. Fewer resources may need to be devoted to dealing with crime when incomes are more equal. b. Less concentrated political power may exist when incomes are more equal. c. When incomes are more equal, work incentive grows. d. Worker productivity grows when educational opportunities are widespread. e. None of the answers

c. when incomes are more equal, work incentive grows.

PE2- 13 Consider the market for furniture made from sustainable, man-made forests that is shown in the figure. The government wants to encourage buyers to buy such furniture and places a price ceiling of $250 on the market. After the implementation of the price ceiling, the market quantity sold falls by _____ thousand units. (look at graph) a. 400 b. 300 c. None of the answers d. 200 e. 500

d. 200

PE3- 13. The graph shows the marginal social benefit, demand, and supply curves in the mikshake market. Market forces would yield a quantity of ____ and a price of ____ in the milkshake market. (look at the graph) a. 12; $1 b. 16; $4 c. 12; $3 d. 8; $2 e. None of these answers

d. 8;$2 (read more on marginal social benefit!!)

2. Marie Johnston is a manager at an electronics store and has to decide how many workers to hire. If she hires one workerr, her revenue is $800 per day. If she hires another worker, she can make another $600 per day. The marginal benefit of hiring another worker decreases by $200 with each additional hire. Assuming that workers are paid $20 per hour and work 8 hours, how many employees should Marie hire, and what will be the total revenue of her store? a. She will hire two workers and the revenue of the store will be $1,400 b. None of the answers c. She will hire three workers and the revenue of the store will be $1,800 d. She will hire four workers and the revenue of the store will be $2,000 e. She will hire five workers and the revenue of the store will be $2,000

d. She will hire 4 workers and the total revenur of her store will be $2,000.

If Canadian consumers expect the value of the Canadian dollar to rise against the US dollar, what impact would we expect this to have on Canadians' demand for American made products? a. The demand for American-made items would fall b. None of the answers c. The demand for American-made items would not change d. The demand for American-made items would rise e. The demand for American-made items would double

d. The demand for American-made items would rise.

PE1- 13 As a part of a market research project, you survey six food trucks across the city to gather data on how many meals they would plan to sale at various prices. The data you collect is in the accompanying table. What is the change in the total supply of meals in your survey when the price falls from $7 per meal to $6 per meal? a. The quantity supplied rises by 165 b. The quantity supplied falls by 155 c. The quantity supplied rises by 155 d. The quantity supplied falls by 145 e. None of the answers

d. The quantity supplied falls by 145.

Rose Riley's parents have booked and paid for a family trip to Aspen, Colorado, during her spring break. Rose's friends recently decided to drive to Destin, Florida, for spring break. Rose needs to decide whether to join her parents in Aspen or drive to the beach with her friends. The opportunity costs of joining her friends on the trip to Destin include each of the following EXCEPT a. Her parents' anger if she skips the family trip to Aspen b. Her contribution to gas money for the drive to Destin c. The hotel costs she will split with her friends in Destin d. The ski lift ticket her parents have already purchased for her e. None of the answers

d. The ski lift tickets her parents have already purchased for her.

PE4 When there is a high level of intergenerational mobility among the poor in a nation: a. most of the individuals who are poor remain poor. b. most of the poor have incomes that are barely below the poverty line. c. the age distribution among the poor is the same as the age distribution in the total population. d. children of poor parents do not remain in poverty when they are adults. e. None of the answers

d. children of poor parents do not remain in poverty when they are adults.

PE2 If demand is ____, a higher price yields ___ total revenue. a. inelastic; lower b. inelastic; no change in c. elastic; higher d. elastic; lower e. none of the answers

d. elastic; lower

Shifts in supply: a. always lead to increases in equilibrium price. b. lead to price and quantity to move in the same direction. c. always lead to increases in equilibrium quantity. d. lead to price and quantity to move in opposite directions. e. none of the answers

d. lead to price and quantity to move in opposite directions

PE4- focusing on young workers, according to Marianne Bertrand, the wage gap between men and women is largely explained by which of the following? a. employment differences b. educational differences c. differences in physical strength d. non of the answers e. all of the answers (except d)

d. none of the answers Marianne Bertrand on wage gap:

When the market produces and sells nine teddy bear, the deadweight loss is represented by: (look at graph) a. Rectangle between prices $6.50 and $2 and quantities of zero to 5. b. Rectangle between prices of $6.50 and $2 and quantities of 5 and 9. c. Area between the demand and supply curves to the left of a quantity of 5. d. Area between the demand and supply curves between quantities of 5 and 9. e. None of these answers

e. none of the answers deadweight loss: measures how far economic surplus falls below the efficient outcome= economic surplus at efficient outcome- actual economic surplus