ECON 102 Final Study

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Which of the following statements best describes the concept of consumer surplus?

"I was all ready to pay $300 for a new leather jacket that I had seen in Macy's but I ended up paying only $180 for the same jacket."

Jennifer is willing to sell 2 chairs for $10 each and 2 more for $20 each. Peter is willing to pay $15 for the first chair, $10 for the second chair, $5 for the third chair, and $0 for the fourth chair. What is the maximum buying price of the fourth chair?

$10

In a free market, the market price and quantity in the above figure will adjust to equilibrium values of

$2 per gallon and 30 million gallons.

After how many lectures does diminishing marginal utility set in? Number of Online Lectures - Total Utility - Marginal Utility 1 - 30 - 30 2 - 40 - 10 3 - 28 - -12 4 - 8 - -20

Refer to the Market for Good X above. P0=$5, P1=$20, P2=$10, P*=$13, Q1=20, Q2=30, and Q*=25. The government imposes a price ceiling of Px=$17. What is the quantity demanded?

Where P0 = $10, P1 = $40, P2 = $15, P3 = $20, P4 = $25, P5 = $30, P6 = $35, Q0 = 50, and Q1 = 80. What is the privately optimal exchange price?

Barbara is willing to sell an old couch for no less than $50. Chris offers $30. Should Barbara sell the couch?

No, because the price offered is below her minimum selling price.

Chris is willing to pay $5 for a sandwich. Subway sells sandwiches for $7. Should Chris buy the sandwich?

No, the selling price is higher than his maximum buying price.

Refer to the table below. What is the market-clearing price and market-clearing quantity?

None of the above

If income increases from $20,000 to $25,000 and the quantity of sodas demanded increases from 100 to 150, then soda is a(n):

Normal Good

Which of the following statements is consistent with a decrease in supply?

Prices of raw material inputs have increased.

What is the "iron law of wages"?

The theory that the price of labor is determined by the cost of human subsistence and reproduction

Which of the following is a valid argument against the labor theory of value?

There is no objective way to compare or add the "amount" of labor across different people with different skills

What would happen in the market for bread if its demand increased but the price was NOT allowed to change?

There would be a shortage of bread.

The autarky price of oranges in Orangelandia is $10. The world price of oranges is $5. If Orangelandia imposes a $3 per unit tariff on oranges. What will happen to the Deadweight Loss when the tariff is imposed?

increase

Goods that are produced domestically and then sold in other countries are called

exports.

When the costs of an action are not fully borne by the two parties engaged in a transaction, this is called a(n)

externality

Marginal utility is measured as

extra utility from each additional good consumed.

Positive statements can contain

facts and predictions.

The price at which there the number of units that are for sale equals the number of units that are demanded is called

market- clearing price

The price at which there the number of units that are for sale equals the number of units that are demanded is called

market-clearing price

As the price of a good increases, the change in the quantity demanded can be shown by

moving left along the same demand curve.

The total revenue of a perfectly competitive firm is calculated by

multiplying price by quantity.

In economic terminology, a normal good is a good

for which demand increases when income increases.

If someone complains that she doesn't feel very well because she ate too much pizza, we would conclude that the marginal utility of the last piece of pizza eaten was

negative

If government regulations significantly increase the cost of operating within a particular market, one result is that

new firms are discouraged from entering the market.

Government planning ___________:

none of the above

Which of the following will cause a movement along the demand curve instead of a shift of the demand curve?

none of the above

Typically, an individual takes only one newspaper from the bin because

of the low marginal utility of additional newspapers.

Diseconomies of scale occur

only in the long run.

The saying that "You cannot have your cake and eat it too" illustrates the economic concept of

opportunity cost

The Black Ash Steel Company's plant belches large quantities of noxious fumes and black ash into the air. Residents in the surrounding area have higher medical bills because of Black Ash's pollution. As long as Black Ash is allowed to emit pollution and ignore any externalities, the firm will

overproduce

overproduce.

Refer to the above figure. The market supply and demand curves in a perfectly competitive market intersect at $4. Which of the graphs represent the situation for an individual firm?

panel c

Ceteris paribus, as the price of a good or service increases,

people will buy less of it.

Under the perfectly competitive market structure, the demand curve for an individual firm's products is

perfectly elastic.

"If A occurs then B will follow" is a

positive statement

Other things being equal, the relationship between price and quantity supplied is

positive.

When a law mandates what price sellers and buyers must trade at, that law is defined as a

price control law.

A shortage will occur whenever

price is below the equilibrium price.

If real salaries increase but nominal salaries do not, this means that:

prices have fallen.

The law of demand states that

quantity demanded will vary inversely with the price of the good.

Using trade restrictions to protect special interests such as the U.S. auto industry

raises the prices that U.S. consumers must pay for autos.

When people donate money to a charity, they behave

rationally if the act gives them satisfaction.

The goods and services that can be purchased with a certain amount of money is called its _____ value:

real

Scarcity arises because

resources are finite and are inadequate to meet all human wants and needs.

When an industry's raw material costs increase, other things remaining the same,

the supply curve shifts to the left.

Other things being equal, an increase in wages paid to workers in the steel industry will cause

the supply of steel to decrease.

Suppose you have four choices—go to a movie, read a book, watch television, or go to a concert. You choose to go to a movie. The opportunity cost of the movie is

the value of the activity that you would have selected if you hadn't gone to the movie.

Ethan is trying to build a graph of supply and demand for the market for couches. Theo says that his maximum buying price for a couch is $400, but when Ethan offers Theo a nice couch in perfect condition for $400, Theo does not want to purchase it. This most directly suggests that

there are hidden transaction costs, e.g. picking up the couch or shipping it to Theo's house, that make the couch more expensive than the stated price of $400.

Mercantilists believed that____________:

there is a distinction between the interests of individuals and the public interest

When consumers face an effective price ceiling,

there is a shortage, and the consumers who were willing to pay more out-compete the consumers who were willing to pay less.

When a firm assesses production costs in the short-run,

they have to account for any fixed costs, such as renting land or equipment.

Fashion trends are a nonprice determinant for demand because

they influence people's tastes and preferences in clothing.

If transaction costs exist, how do intermediaries earn revenue?

they reduce transaction costs, increasing the consumer and producer surplus of anyone who uses the intermediary.

The problem of economic scarcity applies

to economic systems in all nations, regardless of their level of development.

All the costs associated with making, reaching, and enforcing agreements are called

transaction costs

The law of supply implies that the supply curve is

upward sloping.

The amount of calendar time associated with the long run

varies by industry.

When demand is perfectly inelastic, the demand curve is

vertical

The price system features

voluntary exchange that makes both the consumer and producer better off.

The idea that social order requires government planning__________:

was supported by the Mercantilists

According to the exchange of equivalents theory________:

when a trade happens it means both parties value the goods equally

In 1985, Alice paid $20,000 for an option to purchase ten acres of land. By paying the $20,000, she bought the right to buy the land for $100,000 in 1992. When she acquired the option in 1985, the land was worth $120,000. In 1992, it is worth $110,000. Should Alice exercise the option and pay $100,000 for the land?

yes

What does the phrase "internalizing an external cost" mean?

forcing producers to factor into their production costs the cost of the externalities created in the production of their output

A mixed economic system is best described an economy with a mix of

free markets and government control.

The price of good A goes up. As a result, the demand for good B shifts to the left. From this we can infer that:

goods A and B are complements.

According to Adam Smith,

government intervention in markets is not desirable because an invisible hand leads decisions made in pursuit of self-interest to unintentionally promote the social interest.

The law of demand implies that the demand curve

has a negative slope.

Human beings

have unlimited wants.

The autarky price of oranges in Orangelandia is $10. The world price of oranges is $5. If Orangelandia imposes a $3 per unit tariff on oranges, will it import or export oranges?

import

A tariff _____ the price paid by consumers.

increase

. Jennifer is willing to sell 2 chairs for $10 each and 2 more for $20 each. Peter is willing to pay $15 for the first chair, $10 for the second chair, $5 for the third chair, and $0 for the fourth chair. What is the minimum selling price of the third chair?

$20

In a free market economy, the market clearing (equilibrium) price in the above table would adjust to

$3.

Arthur buys a new cell phone for $150. He receives consumer surplus of $150 from the purchase. How much does Arthur value hi

$300

Refer to the table below. Suppose that X=$20, what is the market-clearing price?

$40

Refer to the table below. Suppose that X=$20, what is the market-clearing price? QuantityJennifer's Minimum Selling PricesPeter's Maximum Buying Price1X+$10$502X+$20$403X+$30$304X+$40$205X+$50$10

$40

The figure illustrates the market for bagels. If the number of bagels is cut from 20 to 10 an hour, the deadweight loss is ________.

$5.00 an hour

Paul goes to Sportsmart to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus from the purchase is

$75.

Store "XYZ Electronics" sells 2 types of screens, Plasma and LCD, and a DVD player. It faces the following demand schedule for different prices of Plasma. What is the own-price elasticity of demand for Plasmas as the price increases from $50 to $100? If necessary, round to the nearest two decimal points.

-.3

Illini Union Tech Zone sells two types of tablets, A and B. Suppose that the university gives a 20% refund to each student, which increases the quantity demanded for tablet A by 10%, and decreases the quantity demanded for tablet B by 10%. What is the income elasticity for tablet B? If necessary, round to the nearest two decimal points.

-.5

-0.5

``Red" and ``Cyan" are astronauts on a space ship in peril. Between them, they need to find two Impostors among them (who are not supposed to be on the ship) and protect two Crewmates in order to save the ship. The table below depicts the amount of time it takes them to complete each objective. Using in the information provided above, what is Cyan's opportunity cost for protecting one of the Crewmates? (The opportunity cost of protecting a Crewmate is in units of Impostors found; include only the numerical value in your answer)

.66

In the graph below supply curve is perfectly inelastic. What is the own-price elasticity of supply when we are on the market equilibrium price and price decreases by 15%? If necessary, round to the nearest two decimal points.

Where P0 = $5, PS,0 = $8, PS,1 = $11, P* = $14, PB,1 = $16, PB,0 = $18 P1 = $20, Q0 = 40, Q1 = 80, and Q* = 120. What is the dead weight loss if there are no transaction costs? (Do not include the dollar sign $ in your answer)

The firm uses 3 units of capital (the Fixed Input), and the rent on capital is $200 per unit per day. The firm must hire between 1 to 5 units of labor (the Variable Input), and the cost of labor is $60 per worker per day. Depending on how much labor the firm hires, output (Total Product) is one of the following: q1= 1 q2= 3 q3= 8 q4= 12 q5= 15 What is the Marginal Product when 1 unit of labor is used?

The following table describes the preferences of Robinson Crusoe who just arrived at an isolated island (There is an ordinal ranking in preferences where choice 1 is the highest priority). Now, he needs to take his first action. What is the opportunity cost of finding food? Choice Number Task 1 Find drinking water 2 Find food 3 Build a shelter 4 Explore the island

After how many lectures does diminishing marginal utility set in?

1 (because marginal utility went from 30 to 10)

``Red" and ``Cyan" are astronauts on a space ship in peril. Between them, they need to find two Impostors among them (who are not supposed to be on the ship) and protect two Crewmates in order to save the ship. The table below depicts the amount of time it takes them to complete each objective. Using in the information provided above, what is Cyan's opportunity cost for finding one of the Impostors? (The opportunity cost of finding an Impostor is in units of Crewmates protected; include only the numerical value in your answer

1.5

Consider the domestic market for Good X in Country A, graphed above. P0=$5, P1=$25, P2=$20, P*=$15, Pw=$10, Q1=40, Q*=80, Q2=120. The world market outside country A observes a price Pw for Good X. When international trade is allowed, what is the price of Good X in Country A? (Do not include the dollar sign $ in your answer)

Consider the market for a good X. Suppose that P0=$7, P1=$25, PB=$20 , PA=$10, and equilibrium price P*=$14. If Q0=10 , what are the Gains from Trade of the 10th unit if trade takes place at the equilibrium price? (Do not include a dollar sign $ in your answer)

Consider the market for good X. Suppose that Q1=10, Q*=20, Q2=40, P*= $25. Moreover, assume that P0=$5, P1=$45, P2=$35. If the price is set at Px=$15, what is the quantity supplied?

Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the domestic quantity supplied?

10 units

Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the quantity of imports?

10 units

Consider the domestic market for Good X in Country A, graphed above. P0=$5, P1=$25, P2=$10, P*=$15, Pw=$20, Q1=40, Q*=80, Q2=120. The world market outside country A observes a price Pw for Good X. When international trade is allowed, what is the total consumer surplus? (Do not include the dollar sign $ in your answer)

100

Consider the domestic market for Good X in Country A, graphed above. P0=$5, P1=$25, P2=$20, P*=$15, Pw=$10, Q1=40, Q*=80, Q2=120. The world market outside country A observes a price Pw for Good X. When international trade is allowed, what is the total producer surplus? (Do not include the dollar sign $ in your answer)

100

Consider the market for a good X. Suppose that P1=$20 , P0=$2, and equilibrium price P*=$12. If Q*=20 , what is the Total Producer Surplus if trade takes place at the equilibrium price? (Do not include a dollar sign $ in your answer)

100

Consider the market for good X. Suppose that P0=$10, P1=$23, P2=$13, Q1=100, Q*=150, Q2=200, and P*=$15. If the price is set at Px=$20, how many units are exchanged in this market?

100

Consider the market for good X. Suppose that P0=$10, P1=$23, P2=$13, Q1=100, Q*=150, Q2=200, and P*=$15. If the price is set at Px=$20, what is the quantity demanded?

100

Ethan can write 12 excellent poems per day or solve 100 difficult physics problems per day. Theo can write one excellent poem per day or solve 0.5 difficult physics problems per day. In terms of physics problems, what is Ethan sacrificing by spending a day writing poems?

100

Consider the domestic market for Good X in Country A, graphed above. P0=$5, P1=$25, P2=$10, P*=$15, Pw=$20, Q1=40, Q*=80, Q2=120. The world market outside country A observes a price Pw for Good X. When international trade is allowed, what is the total gains from trade? (Do not include the dollar sign $ in your answer)

1000

Fill the missing value of total utility

120

Refer to the Market for Good X above. P0=$5, P1=$20, P2=$10, P*=$13, Q1=20, Q2=30, and Q*=25. The government imposes a price ceiling of Px=$17. What is the price at which all exchanges take place? (Do not include the dollar sign $ in your answer)

Consider the domestic market for Good X in Country A, graphed above. P0=$5, P1=$25, P2=$10, P*=$15, Pw=$20, Q1=40, Q*=80, Q2=120. The world market outside country A observes a price Pw for Good X. What is the autarky price of Good X for Country A? ("Autarky" refers to the situation where imports and exports are not allowed to occur, i.e. international trade is not allowed.) (Do not include the dollar sign $ in your answer)

Consider the market for a good X. Suppose that P1=$100 , P0=$20, and equilibrium price P*=$50. If Q*=10 , what is the Total Producer Surplus if trade takes place at the equilibrium price? (Do not include a dollar sign $ in your answer)

150

Consider the market for a good X. Suppose that P0=$5, P1=$35, PB=$30 , PA=$15, equilibrium price P*=$25, Q0=75, and Q*=150. What is the Total Producer Surplus if trade takes place at the equilibrium price? (Do not include a dollar sign $ in your answer)

1500

Refer to the Market for Good X above. P0=$2, P1=$10, P2=$8, P*=$7, Q1=300, Q2=600, and Q*=450. The government imposes a price ceiling of Px=$4. What is the Total Consumer Surplus? (Do not include the dollar sign $ in your answer)

1500

Where P0 = $5, PS,0 = $8, PS,1 = $11, P* = $14, PB,1 = $16, PB,0 = $18 P1 = $20, Q0 = 40, Q1 = 80, and Q* = 120. What is the consumer surplus if there is a $5 per unit transaction cost and there is an intermediary? (Do not include the dollar sign $ in your answer)

160

S1, S2, S3 and S4 are UIUC students who just graduated. They each have a poster of Dolly Parton that they are willing to sell. B1, B2, B3 and B4 are new students at UIUC and want to buy Dolly Parton posters for their rooms. The tables below give the minimum selling prices and maximum buying prices for each student. Minimum Selling Prices Maximum Buying Prices S1 X+$10 B1 $9 S2 X+$15 B2 $14 S3 X+$20 B3 $15 S4 X+$25 B4 $26 What is the minimum possible value of X such that all 0 posters are exchanged in this market? Give X as an integer. Note: Do not include the dollar sign.

Consider the market for a good X. Suppose that P1=$20 , P0=$2, and equilibrium price P*=$12. If Q*=20 , what are the Total Gains of Trade if trade takes place at the equilibrium price? (Do not include a dollar sign $ in your answer)

180

Mitch and Cam are neighbors with identical yards. The table below depicts the amount of time it takes them to complete each task. Using the information provided above, how much time does Cam spend (in minutes) on these tasks before specialization and trade?

182

If saliva test were free for the Champaign-Urbana population, how many tests will be demanded? According to the graph below.

1900

Consider the market for a good X. Suppose that P0=$3, P1=$12, PB=$10, PA=$4, and equilibrium price P*=$6. If Q0=20 , what is the Producer Surplus of the 20th unit if trade takes place at the equilibrium price? (Do not include a dollar sign $ in your answer)

How many lectures will maximize this student's utility?

Refer to the above figure. Average total costs are represented by curve

S1, S2, S3 and S4 are UIUC students who just graduated. They each have a poster of Dolly Parton that they are willing to sell. B1, B2, B3 and B4 are new students at UIUC and want to buy Dolly Parton posters for their rooms. The tables below give the minimum selling prices and maximum buying prices for each student. Minimum Selling Prices Maximum Buying Prices S1 $10 B1 $9 S2 $15 B2 $14 S3 $20 B3 $15 S4 $25 B4 $26 How many posters are exchanged at the market-clearing price?

``Red" and ``Cyan" are astronauts on a space ship in peril. Between them, they need to find two Impostors among them (who are not supposed to be on the ship) and protect two Crewmates in order to save the ship. The table below depicts the amount of time it takes them to complete each objective. Using in the information provided above, what is Red's opportunity cost for protecting one of the Crewmates? (The opportunity cost of protecting a Crewmate is in units of Impostors found; include only the numerical value in your answer)

Consider the market for good X. Suppose that P0=$11, P1=$34, P2=$17, Q1= 20, Q*= 30, Q2 = 40, and P*=$25. If the price is set at Px=$30, what is the quantity demanded?

Refer to the Market for Good X above. P0=$5, P1=$20, P2=$10, P*=$13, Q1=20, Q2=30, and Q*=25. The government imposes a price floor of Px=$17. What is the quantity exchanged?

Consider the market for good X. Suppose that P0=$10, P1=$23, P2=$13, Q1=100, Q*=150, Q2=200, and P*=$15. If the price is set at Px=$20, what is the quantity supplied?

200

Refer to the above table. What are total costs at an output of 2 units?

200

Consider the market for a good X. Suppose that P0=$5, P1=$35, PB=$30 , PA=$15, equilibrium price P*=$25, Q0=75, and Q*=150. What is the Total Gains from Trade if trade takes place at the equilibrium price? (Do not include a dollar sign $ in your answer)

2250

Suppose P0 = $10, P1 = $100, P*= $55 and PW,T = $40. The world price for good X is PW = $30. Moreover, Q1 = 20, Q2 = 30, Q* = 45, Q3 = 60, Q4 = 70. What is the total Consumer Surplus when the country is allowed to trade without a tariff?

2450

Consider the market for a good X. Suppose that P1=$100 , P0=$20, and equilibrium price P*=$50. If Q*=10 , what is the Total Consumer Surplus if trade takes place at the equilibrium price? (Do not include a dollar sign $ in your answer)

250

The graph below shows the supply and demand curves for COVID-19 saliva tests for non-UIUC affiliates (they have to pay up-front for testing). What is the lowest price at which the quantity demanded is equal to zero?

250

Suppose P0 = $10, P1 = $100, P*= $55 and PW,T = $40. The world price for good X is PW = $30. Moreover, Q1 = 20, Q2 = 30, Q* = 45, Q3 = 60, Q4 = 70. What is the total Gains From Trade when the country is allowed to trade without a tariff?

2650

Jennifer has 5 chairs she is willing to sell for the right price. Peter needs chairs for his new house. The table below gives Jennifer's minimum selling price for each chair, and Peter's maximum buying price. How many chairs is Jennifer is going to own after all transactions take place at the market clearing price?

Jennifer has 5 chairs she is willing to sell for the right price. Peter needs chairs for his new house. The table below gives Jennifer's minimum selling price for each chair, and Peter's maximum buying price.How many chairs is Jennifer is going to own after all transactions take place at the market clearing price?

Refer to Table 4.1, which shows Flo's and Rita's individual supply schedules for frozen latte - on - a - stick. Assuming Flo and Rita are the only suppliers in the market, what is the market quantity supplied at a price of $2?

The firm uses 3 units of capital (the Fixed Input), and the rent on capital is $200 per unit per day. The firm must hire between 1 to 5 units of labor (the Variable Input), and the cost of labor is $60 per worker per day. Depending on how much labor the firm hires, output (Total Product) is one of the following: q1= 1 q2= 3 q3= 8 q4= 12 q5= 15 How many units of capital are used when 1 unit of labor is used?

The firm uses 3 units of capital (the Fixed Input), and the rent on capital is $200 per unit per day. The firm must hire between 1 to 5 units of labor (the Variable Input), and the cost of labor is $60 per worker per day. Depending on how much labor the firm hires, output (Total Product) is one of the following: q1= 1 q2= 3 q3= 8 q4= 12 q5= 15 How many units of capital are used when 2 units of labor are used?

Where P0 = $10, P1 = $40, P2 = $15, P3 = $20, P4 = $25, P5 = $30, P6 = $35, Q0 = 50, and Q1 = 80. What is the socially optimal exchange price?

``Red" and ``Cyan" are astronauts on a space ship in peril. Between them, they need to find two Impostors among them (who are not supposed to be on the ship) and protect two Crewmates in order to save the ship. The table below depicts the amount of time it takes them to complete each objective. Using in the information provided above, after specialization, what is Red's gains from trade (in seconds)?

Consider the market for a good X. Suppose that P1=$50 , P0=$10, and equilibrium price P*=$20. If Q*=20 , what is the Total Consumer Surplus if trade takes place at the equilibrium price? (Do not include a dollar sign $ in your answer)

300

Refer to the Market for Good X above. P0=$2, P1=$10, P2=$8, P*=$7, Q1=300, Q2=600, and Q*=450. The government imposes a price ceiling of Px=$4. What is the Total Producer Surplus? (Do not include the dollar sign $ in your answer)

300

Refer to the Market for Good X above. P0=$2, P1=$10, P2=$8, P*=$7, Q1=300, Q2=600, and Q*=450. The government imposes a price ceiling of Px=$4. What is the quantity exchanged?

300

Using the graph below, what is the quantity that clears the market of saliva tests in the Champaign-Urbana area?

3000

Refer to the above table. When output rises from 4 units to 5 units, marginal costs are

Consider the market for good X. Suppose that Q1= 8, Q*= 10, Q2 = 12, P*= $25. Moreover, assume that P0=$15, P1=$35, P2=$23. If the price is set at Px=$27, what is the Total Consumer Surplus? (Do not include a dollar sign $ in your answer)

Where P0 = $5, PS,0 = $8, PS,1 = $11, P* = $14, PB,1 = $16, PB,0 = $18 P1 = $20, Q0 = 40, Q1 = 80, and Q* = 120. What is the consumer surplus if there are no transaction costs? (Do not include the dollar sign $ in your answer)

360

Consider the market for a good X. Suppose that P0=$3, P1=$12, PB=$10, PA=$4, and equilibrium price P*=$6. If Q0=20 , what is the Consumer Surplus of the 20th unit if trade takes place at the equilibrium price? (Do not include a dollar sign $ in your answer)

Jennifer has 5 chairs she is willing to sell for the right price. Peter needs chairs for his new house. The table below gives Jennifer's minimum selling price for each chair, and Peter's maximum buying price. If X=$20, how many chairs does Peter own after all exchanges take place at the market-clearing price?

Consider the market for good X. Suppose that P0=$11, P1=$34, P2=$17, Q1= 20, Q*= 30, Q2 = 40, and P*=$25. If the price is set at Px=$30, what is the quantity supplied?

Jennifer has 5 chairs she is willing to sell for the right price. Peter needs chairs for his new house. The table below gives Jennifer's minimum selling price for each chair, and Peter's maximum buying price. If X=$20, what is the market-clearing price? Note: Do not include the dollar sign.

``Red" and ``Cyan" are astronauts on a space ship in peril. Between them, they need to find two Impostors among them (who are not supposed to be on the ship) and protect two Crewmates in order to save the ship. The table below depicts the amount of time it takes them to complete each objective. Using in the information provided above, after specialization, what is Cyan's gains from trade (in seconds)?

Consider the domestic market for Good X in Country A, graphed above. P0=$5, P1=$25, P2=$10, P*=$15, Pw=$20, Q1=40, Q*=80, Q2=120. The world market outside country A observes a price Pw for Good X. What is the total producer surplus when Country A is in autarky? ("Autarky" refers to the situation where imports and exports are not allowed to occur, i.e. international trade is not allowed.) (Do not include the dollar sign $ in your answer)

400

Consider the domestic market for Good X in Country A, graphed above. P0=$5, P1=$25, P2=$20, P*=$15, Pw=$10, Q1=40, Q*=80, Q2=120. The world market outside country A observes a price Pw for Good X. What is the total producer surplus when Country A is in autarky? ("Autarky" refers to the situation where imports and exports are not allowed to occur, i.e. international trade is not allowed.) (Do not include the dollar sign $ in your answer)

400

Consider the market for a good X. Suppose that P1=$100 , P0=$20, and P*=$50. If Q*=10 , what are the Total Gains from Trade? (Do not include a dollar sign $ in your answer)

400

Consider the market for a good X. Suppose that P1=$31 , P0=$4, and equilibrium price P*=$20. If Q*= 50, what is the Total Producer Surplus if trade takes place at the equilibrium price? (Do not include a dollar sign $ in your answer)

400

Where P0 = $5, PS,0 = $8, PS,1 = $11, P* = $14, PB,1 = $16, PB,0 = $18 P1 = $20, Q0 = 40, Q1 = 80, and Q* = 120. What is the revenue earned by the intermediary if there is a $5 per unit transaction cost and there is an intermediary? (Do not include the dollar sign $ in your answer)

400

Fill the missing value of marginal utility (chicken wings)

Trina's Tropical Fish Store sells angelfish for $2 each and goldfish for $10 each. What is the opportunity cost of buying a goldfish?

5 angelfish

Consider the market for good X. Suppose that Q1=10, Q*=20, Q2=30, P*= $25. Moreover, assume that P0=$5, P1=$45, P2=$35. If the price is set at Px=$15, what is the Total Producer Surplus? (Do not include a dollar sign $ in your answer)

Suppose P0 = $10, P1 = $100, P*= $55 and PW,T = $40. The world price for good X is PW = $30. Moreover, Q1 = 20, Q2 = 30, Q* = 45, Q3 = 60, Q4 = 70. What is the autarky price?

Where P0 = $5, PS,0 = $8, PS,1 = $11, P* = $14, PB,1 = $16, PB,0 = $18 P1 = $20, Q0 = 40, Q1 = 80, and Q* = 120. What is the producer surplus if there is a $10 per unit transaction cost and there is no intermediary? (Do not include the dollar sign $ in your answer)

Given the market data for good X in the above table, an equilibrium quantity is established at

60 units.

Refer to the Market for Good X above. P0=$2, P1=$10, P2=$8, P*=$7, Q1=300, Q2=600, and Q*=450. The government imposes a price ceiling of Px=$4. What is the quantity demanded?

600

Consider the market for a good X. Suppose that P1=$31 , P0=$4, and equilibrium price P*=$20. If Q*= 50, what are the Total Gains of Trade if trade takes place at the equilibrium price? (Do not include a dollar sign $ in your answer)

675

Consider the market for a good X. Suppose that P0=$8, P1=$25, PB=$22 , PA=$10, and equilibrium price P*=$15. If Q0=100, what is the Consumer Surplus of the 100th unit if trade takes place at the equilibrium price? (Do not include a dollar sign $ in your answer)

Consider the domestic market for Good X in Country A, graphed above. P0=$5, P1=$25, P2=$10, P*=$15, Pw=$20, Q1=40, Q*=80, Q2=120. The world market outside country A observes a price Pw for Good X. What is the autarky quantity of Good X for Country A? ("Autarky" refers to the situation where imports and exports are not allowed to occur, i.e. international trade is not allowed.)

Consider the market for a good X. Suppose that P1=$20 , P0=$2, and equilibrium price P*=$12. If Q*=20 , what is the Total Consumer Surplus if trade takes place at the equilibrium price? (Do not include a dollar sign $ in your answer)

Where P0 = $10, P1 = $40, P2 = $15, P3 = $20, P4 = $25, P5 = $30, P6 = $35, Q0 = 50, and Q1 = 80. What is the privately optimal quantity exchanged?

Consider the domestic market for Good X in Country A, graphed above. P0=$5, P1=$25, P2=$10, P*=$15, Pw=$20, Q1=40, Q*=80, Q2=120. The world market outside country A observes a price Pw for Good X. What is the total gains from trade when Country A is in autarky? ("Autarky" refers to the situation where imports and exports are not allowed to occur, i.e. international trade is not allowed.) (Do not include the dollar sign $ in your answer)

800

Consider a chemical plant that discharges toxic fumes over a nearby community. To reduce the emissions of toxic fumes the firm can install pollution abatement devices. Figure 5-8 shows the marginal benefit and the marginal cost from reducing the toxic fumes emissions. Refer to Figure 5-8. What is the economically efficient level of pollution reduction?

9 million tons

Refer to Figure 5-8. What is the economically efficient level of pollution reduction?

9 million tons

Where P0 = $5, PS,0 = $8, PS,1 = $11, P* = $14, PB,1 = $16, PB,0 = $18 P1 = $20, Q0 = 40, Q1 = 80, and Q* = 120. What is the gains from trade if there are no transaction costs? (Do not include the dollar sign $ in your answer)

900

Refer to the above figure. Which panel best demonstrates the demand curve?

Refer to the above figure. Moving from point A to point B indicates

A decrease in quantity supplied.

Which of the following will NOT cause a shift in the supply of gasoline?

A decrease in the price of gasoline

According to the above table, at a price of $2 per unit, which of the following would exist?

A shortage of 400 units

What area represents the increase in producer surplus when the market price rises from P1 to P2?

A+B

Which of the following observations would refute an intrinsic theory of value?

After DVDs and DVD players became commonplace, the price of VHS tapes decreased significantly

You are analyzing the demand for good X. Which of the following will result in a shift to the right of the demand curve for X?

An increase in the price of a good that is a substitute for X

The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one of the tickets is $18

Basil will receive $2 of consumer surplus from buying one ticket.

Of the following, which is the least likely to be an example of substitute goods?

Beer and pretzels

Which of the following describes the labor theory of value?

Both A and C

When there is a shortage,I. there is a tendency for price to increase.II. there is an excess quantity demanded.

Both I and II

Bonnie and Clyde are next-door neighbors. Both have identical yards with identical pools, The table below shows the amount of time it takes them to complete their yard work. Bonnie Clyde Rake the yard 40 minutes 30 minutes Clean the pool 180 minutes 120 minutes Who has the absolute advantage in Cleaning the pool?

Clyde

Which of the following is TRUE about comparative advantage?

Comparative advantage explains trade within nations and among nations.

Suppose we have two goods, cigarettes and lighters. If the price of cigarettes increases by 10% then the quantity demanded of lighters decreases by 20%. Lighters are a ______ for cigarettes.

Complement

The autarky price of oranges in Orangelandia is $10. The world price of oranges is $5. If Orangelandia imposes a $1 per unit tariff on oranges. What will happen to the Consumer Surplus when the tariff is imposed?

Decrease

Refer to Figure 3-3. The figure above shows the supply and demand curves for two markets: the market for original Picasso paintings and the market for designer jeans. Which graph most likely represents which market?

Graph B represents the market for original Picasso paintings and Graph A represents the market for designer jeans.

The figure above shows the supply and demand curves for two markets: the market for original Picasso paintings and the market for designer jeans. Which graph most likely represents which market?

Graph B represents the market for original Picasso paintings and Graph A represents the market for designer jeans.

The above figure shows four different markets with changes in either the supply curve or the demand curve (where subscript 1 indicates the demand or supply curve before the change and subscript 2 indicates the demand or supply curve after the change). Which graph best illustrates the market for non-dairy coffee creamer after severe weather destroys a large portion of the coffee crop? (Non-dairy coffee creamer and coffee are complements.)

Graph D

If, as an entrepreneur, I am earning accounting profits of $60,000 per year and the opportunity cost of my time is $50,000,

I am earning economic profits of $10,000.

If, as an entrepreneur, I am earning accounting profits of $50,000 per year and the opportunity cost of my time is $60,000,

I should close my business.

In the recent years, prices of basic food commodities such as corn, rice, and wheat have increased sharply. A recent article in the Wall Street Journal states that Chinese authorities are concerned that escalating prices will cause inflation and be followed by civil unrest. (Source: Wall Street Journal, February 20, 2011)If the Chinese government sets a price ceiling below the equilibrium price, the result will beI. an increase in the quantity demanded.II. a decrease in the quantity supplied.III. a shortage.

I, II, and III

Which of the following would cause a shift to the right of the supply curve for gasoline?I. A large increase in the price of public transportation. II. A large decrease in the price of automobiles. III. A large reduction in the costs of producing gasoline.

III only

Referring to the diagram, which of the following statements is INCORRECT?

If the individual firm raises its price, it will capture all sales in the market.

If income decreases from $25,000 to $20,000 and the quantity of sodas demanded increases from 240 to 250, then soda is a(n):

Inferior good

If income increases from $20,000 to $25,000 and the quantity of frozen meatballs demanded decreases from 150 to 100, then frozen meatball is a(n):

Inferior good

John has an economics test tomorrow. He must study and has planned the rest of his day so that he can fit some study time in. He has decided to go to the gym and then study for several hours. Which of the following statements is true?

John's decision on how to allocate his time is consistent with the rationality assumption since the decision is intended to make him better off.

If Kami can produce 40 tablets or 30 radios during a month's time, while Sally can produce 10 tablets or 20 radios, then it is correct to state that

Kami has a comparative advantage in producing tablets

Mitch and Cam are neighbors with identical yards. The table below depicts the amount of time it takes them to complete each task. Using the information provided above, who has a comparative advantage in raking the yard?

Mitch

Mitch and Cam are neighbors with identical yards. The table below depicts the amount of time it takes them to complete each task. Using the information provided above, who has an absolute advantage in trimming the hedges?

Mitch

Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and causes substantial environmental damage. Figure 5-9 illustrates the situation in the toilet paper market. Refer to Figure 5-9. The efficient output is

Refer to Figure 5-9. The private profit-maximizing output level is

``Red" and ``Cyan" are astronauts on a space ship in peril. Between them, they need to find two Impostors among them (who are not supposed to be on the ship) and protect two Crewmates in order to save the ship. The table below depicts the amount of time it takes them to complete each objective. Using in the information provided above, who has a comparative advantage in finding one of the Impostors?

Red

``Red" and ``Cyan" are astronauts on a space ship in peril. Between them, they need to find two Impostors among them (who are not supposed to be on the ship) and protect two Crewmates in order to save the ship. The table below depicts the amount of time it takes them to complete each objective. Using in the information provided above, who has an absolute advantage in protecting one of the Crewmates?

Red

What does the author argue is the proper role of "society's legal apparatus" in economic activity?

Removing obstacles to creative activity

Which of the following statements is FALSE?

Rent controls are examples of price floors.

The town of Valentine imposes an effective price ceiling on the price of cigars. Which of the following is true about the townspeople of Valentine?

Some cigar consumers will benefit, while others will be harmed by the effective price ceiling.

What is the author's concluding argument?

That the freedom to spontaneously cooperate is superior to central planning

Which of the following statements is a positive economic statement?

The President's budget included an increase in unemployment insurance payments.

Refer to the above figure. It represents supply and demand for The Black Ash Steel Company's output. The firm's plant belches large quantities of smelly fumes and black ash into the air. Residents in the surrounding area have higher medical bills as a result. If the firm is forced to pay the full social cost of its production, what will occur?

The company's supply curve will shift from S B to S A.

In a market system, how are the price signals established?

The forces underlying supply and demand interact to determine a market clearing price.

A restaurant manager notices that they have not 1, not 2, but 3 chefs. Because the chefs outnumber the cooking surfaces, the restaurant manager needs to hire an additional manager who keeps track of who is using which stove and prevents chefs from getting in each others' ways. Furthermore, now that there are two managers, the restaurant needs a third executive manager to organize responsibilities between these two managers. What issue is this restaurant running into?

The restaurant is experiencing diseconomies of scale.

Which of the following is an example of a positive statement?

When the price of an item increases, people respond by reducing their consumption of the item.

The town of Valentine imposes an effective price ceiling on cigars. Arthur Morgan points out that there will be Dead Weight Loss from this. What is he referring to?

With the price set below the market-clearing price, there will be a cigar shortage, with some willing consumers and producers unable to make trades at a higher price.

Suppose Chris has a vase for sale. His minimum selling price is $100. Barbara is looking for a vase for her living room. Her maximum buying price is X. Which of the following is correct?

X must be at least $100 for trade to take place.

Yes

An excess quantity supplied can be corrected by

a fall in price.

The threat of a large fine for failure to pay income taxes is an example of

a negative incentive to get all people to pay taxes.

The social costs of an activity are greater than the private costs of the activity when

a person does not pay all costs associated with a particular resource-using activity.

Based on the table below, at what world price would the country import the good?

a price below $8

Normative economics involves

a statement of "what should be."

A price floor set above a market equilibrium price causes

a surplus

In the above figure, what would result if the price was $40?

a surplus

Refer to the above figure. Other things being equal, when the government imposes a price floor at P 2, then we would expect

a surplus will occur

A situation in which for one party to gain, another must lose is called__________:

a zero-sum game

Tennis is____________:

a zero-sum game

If Vice President Smith is a better typist than his assistant, he is said to have a(n) ________ advantage in typing over his assistant.

absolute

One major assumption of economics is that people

act as if they systematically pursue self-interest.

The term marginal means

additional

When economists refer to people making decisions at the margin, they mean that we compare ________ benefits with ________ costs.

additional; additional

Marginal utility is the ________ satisfaction gained by consuming ________ of a good.

additional; one more unit

The term ceteris paribus means

all other things remaining constant or equal.

Suppose a market were currently at equilibrium. A rightward shift of the demand curve would cause

an increase in both price and quantity.

Suppose the demand curve for a good shifts rightward, causing the equilibrium price to increase. This increase in the price of the good results in

an increase in quantity supplied.

Suppose that goods X and Y are substitutes and the price of good Y falls. We would then expect

an increase in the quantity demanded of good Y and a decrease in the demand for good X.

An increase in demand and an increase in supply will lead to

an unambiguous increase in quantity, but the effect on price is indeterminate.

In every economic system, choices must be made because resources

are limited, but human desires and wants are unlimited.

It is possible for the United States to compete against cheap foreign labor because expensive domestic workers

are more productive

In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, economist Adam Smith argued that individuals

are motivated by self-interest.

A price ceiling is a price control law prohibiting trades from taking place

at a price above the set maximum

A price ceiling is a price control law prohibiting trades from taking place

at a price above the set maximum.

The marginal utility of the first cup of coffee that Tom drinks in the morning is worth $2.00. The marginal utility of the 9th cup of coffee he drinks is positive while the marginal utility of the 10th cup of coffee he drinks in the morning is worth $0. This implies that at a price of $0, Tom would drink

at most 10 cups of coffee per morning.

Economists argue that if avocado growers in Mexico can produce avocadoes cheaper than avocado growers in the United States, this will not reduce total jobs available in the United States. The logic underlying this argument is that

avocado growers in the United States will switch to specializing in a crop in which they hold the comparative advantage.

A price floor is a price control law prohibiting trades from taking place at a price

below the set minimum.

A seller will not sell _______ her _______.

below; minimum selling price

Trade is a _________: zero-sum game positive-sum game mutually beneficial exchange both B and C are correct

both B and C are correct

In general, who will benefit as the result of a tariff?I. Domestic producersII. Domestic consumersIII. The domestic government

both I and III

Fred and Ann both decide to see the same movie when they are given free movie tickets. We know that

both bear an opportunity cost since they could have done other things instead of see the movie.

"Wants" as an economic concept includes

both material and nonmaterial desires.

Accounting profits are total revenues minus

explicit costs.

The signals in markets are determined

by supply and demand.

A person has a comparative advantage in an activity whenever she

can perform the activity at a lower opportunity cost than another person can

An economy in which a central authority draws up a plan that establishes what will be produced and when, sets production goals, and makes rules for distribution is a

command economy

If the cross price elasticity of demand between two goods is negative, then the two goods are

complements

Suppose that when the price of root beer rises 10%, the quantity of pizza demanded falls 20%. This would mean that pizza and root beer are

complements, with a cross price elasticity of -2.0.

the difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called

consumer surplus

Deadweight loss is the decrease in ________ from producing an inefficient amount of a product.

consumer surplus and producer surplus

If resources are used efficiently, then ________.

consumer surplus plus producer surplus is maximized

The decision about what goods and services will be produced made in a market economy is made by

consumers and firms choosing which goods and services to buy or produce.

Consider the following economic agents: a. the government b. consumers c. producers Who, in a market economy, decides what goods and services will be produced with the scarce resources available in that economy?

consumers and producers

a tariff hurts

consumers who pay more for the imported good.

If there is a shortage in a free market, then

consumers will offer to pay a higher price for the good, and the price will rise toward the equilibrium level.

The decrease in consumer surplus and producer surplus that results from an inefficient level of production is called the

deadweight loss.

decrease

The autarky price of oranges in Orangelandia is $10. The world price of oranges is $5. If Orangelandia imposes a $1 per unit tariff on oranges. What will happen to the Gains From Trade when the tariff is imposed?

decrease

A tariff _____ quantity consumed.

decreases

As a firm increases the level of output that it produces, short-run average fixed cost

decreases

As a firm increases the level of output that it produces, short-run average fixed cost

decreases.

Demands differ from wants because

demands reflect a decision about which wants to satisfy and a plan to buy the good, while wants are unlimited and involve no specific plan to acquire the good.

As successive equal increases in a variable factor of production are added to fixed factors of production, there will be a point beyond which the extra product that can be attributed to each additional unit of the variable factor of production will decline. This is known as the law of

diminishing marginal product.

If the government wanted to create a housing shortage, they could impose an

effective housing price ceiling.

There are 50 buyers and 50 sellers currently at an auction, all of whom are looking to buy or sell 1 hat, respectively. The auctioneer announces a rule on what range of prices is allowed, and this rule causes 20 additional buyers to show up, and causes 30 sellers to leave. This rule was most likely an

effective price ceiling.

The longer the time frame involved, the more likely it is that the demand will be relatively

elastic

In a market-based economy, the government:

enforces property rights

Accounting profits are total revenues minus

explicit costs

A tariff placed on a foreign good will

increase the price of a competing domestic good.

An improvement in technology in the production of computers would

increase the supply of computers.

A per-unit government subsidy to producers of a good tends to

increase the supply of the good.

specialization and the division of labor typically result in

increased output

A tariff _____ Producer Surplus.

increases

A tariff _____ the price paid by consumers.

increases

A tariff _____ the quantity sold by domestic sellers.

increases

The concept of marginality is important in economics because

individuals make decisions at the margin.

The government imposes a law requiring that buyers and sellers trade at a minimum of $6 per unit. The equilibrium price before this intervention is $8 per unit. This law is an example of an

ineffective price floor.

A theory or a model

is a simplified, abstract view of reality.

The marginal revenue curve of a perfectly competitive firm

is also the demand curve faced by the firm.

A perfectly competitive firm is selling 300 units of output at $4 each. At this output level, total fixed cost is $100 and total variable cost is $500. The firm

is earning a profit, but not necessarily the maximum profit.

Refer to Figure 6.10. The current price of a turkey sandwich is $6. If Kyle is currently buying five turkey sandwiches a week, he ________ maximizing utility because the marginal utility ________ than its price.

is not; gained from the fifth sandwich is greater

is not; gained from the fifth sandwich is greater (point inside triangle)

Refer to Figure 6.10. The current price of a turkey sandwich is $6. If Kyle is currently buying nine turkey sandwiches a week, he ________ maximizing utility because the marginal utility ________ than its price.

is not; gained from the ninth sandwich is less

is not; gained from the ninth sandwich is less (point outside traingle)

Voluntary exchange

is trading so that the consumer and producers are better off.

In economic analysis, people's resources are

limited and their wants are unlimited.

Under perfect competition, a firm that sets its price slightly above the market price would

lose all of its customers

The difference between the ________ and the ________ from the sale of a product is called producer surplus.

lowest price a firm would have been willing to accept; price it actually receives

The extra benefit resulting from a small increase in an activity is called the:

marginal benefit

Which is always true at a firm's profit-maximizing rate of production?

marginal rev = marginal cost

A rational individual will never consume a unit of a good if its

marginal utility is negative.

To protect the cod fishery off the northeast coast of the U.S., the federal government may limit the amount of fish that each boat can catch in the fishery. The result of this public policy is to:

shift the cod supply curve to the left.

In general, any ceteris paribus determinant of supply that is favorable to production will

shift the supply curve to the right.

For every choice a person makes it can be assumed that

some opportunity cost was involved.

International trade between two nations increases the standard of living of both nations due to

specialization and gains from comparative advantage.

Due to the recent increase in the price of natural gas, the quantity of coal demanded by electric power generation plants has increased. Based on this information, coal and natural gas are:

substitutes.

The battery packs used in electric and hybrid automobiles are one of the largest cost components for manufacturing these cars. As the price of these batteries decline, we expect that the:

supply curve for electric and hybrid autos will shift rightward.

Suppose biochemists discover an enzyme that can double the amount of ethanol that may be derived from a given amount of biomass. Based on this technological development, we expect the:

supply curve for ethanol to shift rightward.

An elastic response in the quantity of a good demanded would be caused by

the availability of many substitutes.

When nations specialize in their areas of comparative advantage and then trade with the rest of the world, the result is that

the average standard of living in the world will go up.

In a laissez-faire economy, ________ what gets produced, how it is produced, and who gets it.

the behavior of buyers and sellers determines

The price elasticity of demand measures

the consumers' sensitivity to a price change.

The figure above represents the market for pecans. Assume that this is a competitive market. If 4,000 pounds of pecans are sold

the deadweight loss is equal to $12,000.

You rent a DVD of The Dark Knight Rises. The rental is for seven days and you watch the movie on the first day. You tell a friend about the film and your friend asks to come over and watch the movie with you before it is due back. What is your opportunity cost if you decide to watch the movie a second time instead of going to a football game?

the football game you forego by watching the movie again

The opportunity cost of attending college might best be described as

the highest-valued alternative use of the student's time and money.

Olga buys a bag of potato chips every day after her economics class. The first potato chip always tastes wonderful. The second does not taste quite as good as the first. The third does not taste quite as good as the second. Olga is experiencing

the law of diminishing marginal utility.

Refer to Figure 6.10. Kyle would increase his consumption of turkey sandwiches from 7 to 9 per week if their price fell from $6 to $4. This illustrates the idea of

the law of diminishing marginal utility.

The principle that "as more of a good is consumed, its extra benefit declines" is known as

the law of diminishing marginal utility.

Other things being equal, an increase in the price of a good leads to an increase in the amount produced. This is known as

the law of supply.

If a firm is experiencing diseconomies of scale, then

the long-run average cost curve is rising as output expands.

In the above figure, when the price of Good B increases, the result can be shown by

the movement along D 0 from P 1 to P 2.

Refer to the above figure. A surplus will exist when

the price equals $10.

The signaling aspect of the market system refer to

the price of the good to the consumer and producer.

Other things being constant, the only way to move along a given supply curve for a product is for

the product's relative price to change.

The opportunity cost of capital is

the rate of return that could be earned by the owner's capital were it used elsewhere.

ECON 102 Final Study

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