Econ 150-micro(test one)

You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field. Assume the ticket has no resale value. Willie Nelson is performing on the same night, and his concert is your next-best alternative activity. Tickets to see Willie Nelson cost $40. On any given day, you would be willing to pay up to $50 to see and hear Willie Nelson perform. Assume there are no other costs of seeing either event. Based on this information, at a minimum, how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game?

$10

Which of the following observations would be consistent with the imposition of a binding price floor on a market?

A smaller quantity of the good is bought and sold after the price floor becomes effective. !_\/__________f !/_\________

The distinction between the efficiency and equality can be described as follows:

Efficiency refers to maximizing to the size of the pie; equality refers to distributing the pie fairly among members of society

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn, then

Iowa has a comparative advantage in the production of corn

Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes?

The demand curve for saddle shoes will shift right, which will create a shortage at the current price. That will increase price, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity.

if an economy is producing efficiently, then....

There is no way to produce more of one good without producing less of another good

Which of these statements best represents the law of supply?

When the price of a good decreases, sellers produce less of the good.

Which of the following changes would not shift the supply curve for a good or service?

a change in the price of the good or service

Which of the following would not shift the demand curve for mp3 players?

a decrease in the price of mp3 players Asks for shift->what are shifters vs movements?

equilibrium (based on chart from Q13)

a situation where at a given price the quantity demanded and supplied are the same!! Whoop!!

When we move along a given demand curve,

all nonprice determinants of demand are held constant. [so the price was the thing being changed!!] change in quantity demanded (price changes)

In economics, capital refers to

buildings and machines used in the production process what are the other two factors of production?

When the price of bubble gum is $0.50, the quantity demanded is 400 packs per day. When the price falls to $0.40, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for bubble gum is

elastic

the greater the price elasticity of demand, the....

greater the responsiveness of quantity demanded to a change in price

If he devotes all of his available resources to cantaloupe production, a farmer can produce 120 cantaloupes. If he sacrifices 1.5 watermelons for each cantaloupe that he produces, it follows that

his opportunity cost of one watermelon is 2/3 of a cantaloupe

Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that the price of bananas has increased. How would this price increase affect your demand for vanilla pudding?

it would decrease

When a surplus exists in a market, sellers...

lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated.

suppose that when income rises, the demand curve for computer shifts to the right. In this case, we know computers are...

normal goods

For Susie, a 7 percent increase in income results in a 12 percent increase in the quantity demanded of pizza. For Susie, the income elasticity of demand for pizza is

positive, and pizza is a normal good. NORMAL GOOD: a good for which demand increases when income increases

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

scarcity

If the quantity supplied responds only slightly to changes in price, then...

supply is said to be inelastic

suppose demand is perfectly elastic, and the supply of the good in question decreases. As a result...

the equilibrium quantity decreases, and the equilibrium price is unchanged

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,

the quantity demanded of physicals increases and the quantity supplied decreases