Econ 203 Bergan Ole Miss Final
Which of the following statements best describe the concept of consumer surplus?
"I was going to pay $200 for new sunglasses that I had seen at the Oakley store but I ended up paying only $140 for the same sunglasses."
Two economists from Northwestern University estimated the benefit households received from subscribing to broadband Internet service. They found that in the year they analyzed, 47 million consumers paid an average of $36 per month to subscribe to a broadband Internet service, and estimated the value of total consumer surplus for these subscribers was equal to $890.4 million. Based on these numbers, what was the average monthly consumer surplus per subscriber for broadband Internet service?
$18.94
Brett buys a new cell phone for $100. He receives consumer surplus of $80 from the purchase. How much does Brett value his cell phone?
$180
Juanita goes to the hardware Emporium to buy a new circular saw. She is willing to pay $120 for a new saw, but buys one on sale for $85. Juanita's consumer surplus from the purchase is
$35
When the marginal benefit equals that marginal cost of the last unit sold in a competitive market
an economically efficient level of output is produced.
An outward shift of a nation's production possibilities frontier can occur due to
an increase in the labor force.
Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?
consume a combination of goods that lies outside its own production possibilities frontier.
______ dictates the lowest wage that firms may pay for labor.
A minimum wage law
If the quantity of nail polish supplied is represented by the equation Qs=-3+2P then the corresponding price of nail polish is represented by the equation
P=0.5Qs + 1.5
Assume that both the demand curve and the supply curve for DVD players shift to the left but the demand curve shifts more than the supply curve. As a result,
both the equilibrium price and quantity of DVD players will decrease.
The maximum price that a buyer is willing to pay for a good measure his
willingness to pay.
Suppose your expenses for this term are as follows: tuition: $9000, room and board: $1,500, books and other educational supplies: $1,000. Further, during the term, you can only work part-time and earn $3,000 instead of your full-time salary of $8,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college?
$15,000
The equations about describe the demand and supply for Aunt Maud's Premium Hand Lotion. The equilibrium price and quantity for Aunt Maud's lotions are $20 and $30 thousand units. What is the value of consumer surplus?
$450 thousand
The equations above describe the demand and supply for Aunt Maud's thousand units. What is the value of economic surplus in this market?
$600 thousand
Which of the following statements is true?
A decrease in demand causes equilibrium price to fall; the decrease in price then results in a decrease in quantity supplied.
Which of the following statements is true?
A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in quantity demanded.
Even when the demand for one good is high, the price of the good is also affected by supply. The textbook illustrates this by comparing the price of two items that were auctioned on the same day. Which of the following describes the results of the auction?
A letter written by John Wilkes Booth sold for a hight price than a letter written by Lee Harvey Oswald.
_____dictates the lowest wage that firms may pay for labor.
A minimum wage law
If opportunity costs are ____, the production possibilities frontier would be graphed as a negatively sloped straight line.
Constant
The additional tax of $2 per pack of cigarettes being proposed by Senator Pan would have which of the following effects on the market for cigarettes in California?
Consumer surplus will decrease.
_______ is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which the sum of consumer surplus and producer surplus is at a maximum.
Economic efficiency
Which of the following is a consequence of minimum wage laws?
Employers will be reluctant to offer low-skilled workers jobs with training.
Suppose there are two cities that have rent controlled apartments. In one city (Albany) all apartments are subject to rent control; in the other city (Halftrack) one-half of the apartments are rent controlled. Which of the following is most likely to be true?
It will be difficult to find a rent-controlled apartment in Albany or Halftrack; rents for Halftrack apartments not subject to controls will be higher that they would be without rent control.
FICA is a payroll tax imposed on employers and workers that is used to fund Social Security and Medicare. Which of the following statements regarding the tax is true?
Most economists believe the burden of the tax falls almost entirely on workers.
The following equations represent the demand and supply for bird feeders. QD= 35-P QS=-5+3P What is the equilibrium price (P) and quantity (Q- in thousands) for bird feeders?
P=$10; Q=25 thousand
Which of the following statements is not true?
Producer surplus measures the total benefit received by producers from participating in a market.
Let D= demand, S = supply, P = equilibrium price, Q= equilibrium quantity. What happens in the market for solar panels if the government offers tax breaks to encourage manufacturers to produce more solar panels?
S increase, D no change, P decrease, Q increase
Which of the following is result of government price controls?
Some people win and some people lose.
Technological advancements have led to lower prices and an increase in the sale of color laser printers. How does this affect the market for laser printer ink cartridges?
The demand curve for laser printer ink cartridges shifts to the right.
When Toyota introduced its 2010 Prius, it announced that the average retail price of the 2010 model would be lower than the average retail price was for the equivalent 2009 model. Which of the following would explain the price differential?
The demand for the Prius had decreased, and the supply of the Prius had increased.
Which of the following has occurred as the millennial generation has come of age?
The demand for traditional fast food has decreased in the U.S. market.
Suppose a positive technological change in the production of disease-resistant corn caused the price of corn to fall. Holding everything else constant, how would this affect the market for wheat (a substitute for corn)?
The demand for wheat would decrease and the equilibrium price for wheat would decrease.
Several studies have shown promising links between green tea consumption and cancer prevention. How does this affect the market for green tea?
The green tea demanded curve shifts to the right because of a change in tastes in favor of green tea.
"Because Coke and Pepsi are substitutes, a decrease in the price of Pepsi will cause the demand for Coke to decrease. This initial shift in demand for Coke results in a lower price for Coke; this lower price will cause the demand curve for Coke to shift to the left." Which of the following correctly comments on this statement?
The statement is false because a change in the price of Coke would not change the demand for Coke.
Prices of smartphones (assume that this is a normal good) have fallen in recent years. Over this same period, the price of the components used to produce smartphones has also fallen and consumer income has risen. Which of the following best explains the falling prices of smartphones?
The supply curve for smartphones has shifted to the right more than the demanded curve has shifted to the right
Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. Should Lionel continue to offer the shrub-trimming service?
Yes, his marginal benefit is greater than his marginal cost.
When ________ in a market, the total net benefit to society is maximized.
a competitive equilibrium is achieved.
When ______in a market, the total net benefit to society is maximized.
a competitive equilibrium is achieved.
Which of the following would cause both the equilibrium price and equilibrium quantity of oysters (assume that oysters are a normal good) to decrease?
a decrease in consumer income.
Which of the following would shift the supply curve for energy drinks to the left?
a decrease in the number of firms that produce energy drinks.
Which of the following would shift the supply curve for smartphones to the right?
a decrease in the price of an input used to produce smartphones.
Farmers can plant either corn or soybeans in their fields. Which of the following would cause the supply of soybeans to increase?
a decrease in the price of corn.
If the price of beef jerky rises, the substitute effect due to the price change will cause
a decrease in the quantity of beef jerky demanded.
Holding everything else constant, an increase in the price of raisins will result in
a decrease in the quantity of raisins demanded.
If the government implements a price ceiling on insulin, this will have all the following effects on the market for insulin except
a more efficient equilibrium.
A decrease in the price of pork will result in
a smaller quantity of pork supplied.
An efficient tax is
a tax that imposes a small excess burden relative to the tax revenue that it raises.
If society decides it wants more of one good and _____, then it has to give up some of another good and incur some opportunity costs.
all resources are fully utilized.
If the price of prime rib falls, the income effect due to the price change will cause
an increase in quantity of prime rib demanded.
Last month, the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit. This month, the company supplied the same quantity of binders at $4 per unit. Based on this evidence, Tecumseh has experienced
an increase in supply.
Which of the following would cause an increase in the supply of cheese?
an increase in the number of firms that produce cheese.
If the price of pork rinds falls, the substitution effect due to the price change will cause
an increase in the quantity of pork rinds demanded.
If a decrease in income leads to an increase in the demand for macaroni, then macaroni is
an inferior good.
A guild is
an organization of producers that limits the amount of a good produced.
At a product's equilibrium price
any buyer who is willing and able to pay the price will find a seller for the product.
Economists _____ that price controls are desirable.
are reluctant to state
A black market is a market where buying and selling take place
at prices that violate government price regulations.
Assume that the demand curve for DVD players shifts to the left and the supply curve for DVD players shifts to the right, but the supply curve shifts more than the demand curve. As a result
both equilibrium price and quantity of DVD players will decrease.
Tax incidence is the actual division of the
burden of the tax between buyers and sellers in a market.
In the desire to have a celebrity's image protected to prevent it from being used in ways he would not approve, a celebrity's estate
can rely on U.S. laws that protect intellectual property right to prevent the unauthorized use of his image.
The market for smartwatches is becoming very competitive. The increase in competition in this market is an example of how the market responds to
changes in consumer tastes.
Studies have shown that smoking cigarettes can cause heart disease. Assume this is true, and favorable weather has increased the tobacco harvest in North Carolina. In the market for cigarettes, these two developments would
decrease demand and increase supply, resulting in a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of cigarettes.
A change in which variable will change the market demand for a product?
expected future prices.
In economics, tangible merchandise is referred to as
goods.
In cities with rent controls, the actual rents paid can be ________ than the legal maximum. One explanation for this is because there is a ________ of apartments, tenants are ________.
higher, shortage; often willing to pay rents higher than the law allows
Suppose that when the price of ice cream increases, Liza decreases her purchase of hot fudge. To Liza,
ice cream and hot fudge are complements.
A(n)_____ is represented by a rightward shift if the demand curve while a(n) _______ is represented by a movement along a given demand curve.
increase in demand, increase in quantity demanded
If smartwatches are considered substitutes for smartphones, the increase in the price of smartwatches would, all else equal,
increase the demand for smartphones.
The law of demand implies, holding everything else constant, that as the price of yogurt
increases, the quantity of yogurt demanded will decrease.
The area above the market supply curve and below the market price
is equal to the total amount of producer surplus in a market.
Because minimum wage is a price floor
it will create a deadweight loss.
Economic surplus is maximized in a competitive market when
marginal benefit equals marginal cost.
The additional cost to a firm of producing one more unit of a good or service is the
marginal cost
Economists assume that
optimal decisions are made at the margin.
Suppose that when the price of pickles decreases, Teddy increases his purchase of ketchup. To Teddy,
pickles and ketchup are complements.
At market equilibrium
quantity demanded equals quantity supplied.
A critical function of the government in facilitating the operation of a market economy is
setting up and enforcing private property rights.
All else equal, an increase in the price of complementary products for the Apple Watch, such as Sensoria's wearable technology, would
shift the demand curve for the Apple Watch to the left.
In the circular flow model, households
spend earnings from resource sales on goods and services in the product market.
If you are considering buying either an Apple Watch or a Samsung Gear S2, and you choose the Samsung only because the price is lower, the you consider
the Apple Watch and the Samsung Gear S2 to be substitutes.
In January, buyers of gold expect that the price of gold will fall in February. What happens in the gold market in January, holding everything else constant?
the demand curve shifts to the left.
If the price of smartphones was to increase, then
the demand for smartphone apps would decrease.
The sum of consumer surplus and producer surplus is equal to
the economic surplus.
If a firm expects that the price of its product will be lower in the future than it is today
the firm has an incentive to increase supply now and decrease supply in the future.
Consumer surplus in a market for a product would be equal to the area under the demand curve if
the market price was zero.
A tax is imposed on employers and workers that are used to fund Social Security and Medicare. This tax is sometimes referred to as
the payroll tax.
A demand curve shows the relationship between
the price if a product and the quantity of the product demanded.
A firm has an incentive to decrease supply now and increase supply in the future if it expects that
the price of its products will be higher in the future than it is today.
Select the phrase that correctly completes the following statement. "A decrease in the expected future price caused an increase in the supply of smartphones. As a result
the price of smartphones decreased and the quantity of smartphones to decrease."
Suppliers will be willing to supply a product in all of the following situations except when
the price received is less than the additional cost of producing the product.
Suppose a drought resulted in a major reduction in the California lettuce crop. In the market for lettuce,
the supply curve shifted to the left resulting in an increase in the equilibrium price.
In July, market analysis predict that the price of gold will rise in August. What happens in the gold market in July, holding everything else constant?
the supply curve shifts to the left.
If the United States lifts the embargo on Cuban products, what will happen in the U.S. market for Cuban cigars?
the supply curve will shift to the right.
If in the market for bananas the supply curve has shifted to the right, then
the supply of bananas increased.
Suppose the demand curve for a product is downward sloping and the supply curve is upward sloping. If a unit tax is imposed in the market for this product,
the tax burden will be shared by buyers and sellers.
Each point on a demand curve shows
the willingness of consumers to purchase a product at different prices.
Scarcity refers to the situation in which
unlimited wants exceed limited resources
An increase in the equilibrium price for a product will result
when there is a decrease in supply and an increase in demand for the product.
