ECON 2105 Final

Which of the following would be considered in a cost-benefit analysis to decide if a person should cycle to work or ride the subway? (i) The air pollution that the cyclist has to breathe. (ii) The cost of subway tickets. (iii) The time it takes to cycle to work versus the time it takes to ride the subway to work. (iv) The cost per gallon of gasoline. (i), (ii), (iii) and (iv) (i), (ii) and (iii) (i), (iii) and (iv) (i), (ii), and (iv)

(i), (ii) and (iii)

Which of the following are correct about fixed costs? (i) They do not change with the level of production in the short run. (ii) They include variable costs. (iii) They are present even when the firm is producing zero units. (iv) They are irrelevant to marginal cost. (i), (ii), and (iii) (i), (ii), (iii), and (iv) (ii) and (iv) (i), (iii), and (iv)

(i), (iii), and (iv)

The table contains the monthly demand for soda cans for four students. If these four students make up the entire market, what is the total monthly market demand for soda at $1.50 per can? 99 cans 148 cans 45 cans 125 cans

148 cans

Consider the data in the table. The price of gasoline is $3.99 per gallon at the gas station. If Rexhall Fuel Supplies is a rational seller, how many gallons of gasoline should this seller be willing to sell? 14 million gallons per week 20 million gallons per week 42 million gallons per week 30 million gallons per week

20 million gallons per week

(Figure: Spice King Burgers' Supply Curve) Take a look at Spice King Burgers' supply curve for burgers. How many burgers will they supply at a market price of $1.50 per burger? 300 units 400 units 200 units 500 units

200 units

Which of the following lists only the factors that would cause a decrease in the supply of an item? A fall in input prices; an increase in productivity; a fall in the price of a substitute-in-production. A decrease in the number of sellers in the market; a fall in the price of a complement-in-production; an increase in productivity. A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production. A rise in the price of a substitute-in-production; a rise in the price of a complement-in-production; an expectation that the price of the item will rise in the future.

A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production.

Which of the following scenarios depicts a seller who is following the Rational Rule for Sellers? Andy's Diner finds that the marginal cost of a fish and chips meal is $7 and lists the item for sale at $6.50. Mindy sets up a lemonade stand and calculates the cost of an additional cup of lemonade at 50 cents, and sells it for 25 cents. An auto-rickshaw driver in New Delhi, India, calculates a trip to have a marginal cost of 350 rupees and accepts a ride request for 315 rupees. American Airlines determines the marginal cost of an extra passenger to be $75 and sells a discount seat for $250.

American Airlines determines the marginal cost of an extra passenger to be $75 and sells a discount seat for $250.

A bakery hires a baker who can make 15 cakes per day. The bakery then decides to hire a second baker who will use the kitchen at the same time as the first baker. The bakery finds that the second baker can produce only an additional nine cakes per day. What concept does this scenario illustrate? The marginal principle Diminishing marginal product The cost-benefit principle The opportunity cost principle

Diminishing marginal product

(Figure: Demand for Bus Rides) The city of Vaughan in Ontario, Canada, opened a new subway line that extended the existing subway system between the greater Toronto area and the city of Vaughan. The route previously only had bus service. Which of the following graphs depicts the effect you would expect to see on the demand for bus rides on this route after the introduction of the subway? Graph C Graph A Graph B Graph D

Graph A

(Figure: Market for Coffee) A coffee shop opens next to an existing coffee shop. Which of the following graphs shows the effect of this new coffee shop on the market supply curve for coffee in this area? Graph A Graph B Graph D Graph C

Graph A

(Figure: Market for Printing Paper) Which of the following graphs illustrates what we expect to see in the market for printing paper if the price of printing paper rises? Graph A Graph C Graph B Graph D

Graph C

(Figure: Market for Apple Computers) Dell and Apple are competitors in the computer market. Which graph illustrates the effect of a rise in the price of Dell computers on the demand for Apple computers? Graph A Graph C Graph D Graph B

Graph D

(Figure: Market for Luxury SUVs) Which of the following graphs shows what will happen to the supply curve for luxury SUVs, if economists predict an increase in demand for these vehicles? Graph A Graph B Graph C Graph D

Graph D

What is quantity supplied? It is the amount of an item that a buyer is willing to buy at a particular price. It is a graph that plots the quantities of an item that a seller plans to sell at different prices. It is a graph that plots how much a seller produces at different points in time. It is the amount of an item that a seller is willing to sell at a particular price.

It is the amount of an item that a seller is willing to sell at a particular price.

Which of the following scenarios illustrates the law of demand? A research company finds that the more expensive a particular brand of a designer handbag, the more that consumers are willing to purchase the brand. Francis does not care about the price of coffee at the coffee shop - he must buy two cappuccinos every day, regardless of the price. Kathleen eats more steak when the price is low, and less when the price is high.John likes to drink spring water. At $2 he buys four bottles of water, and at $1.50 he still buys four bottles of water.

Kathleen eats more steak when the price is low, and less when the price is high.

The accompanying table provides data for five different oatmeal cookie sellers. Out of the sellers listed, who all are following the law of supply? Ren only Len, Ren, and Jen Ken and Ben Len, Ken, Ren, and Ben

Len, Ren, and Jen

Which of the following is NOT a factor that can shift supply? The price of a complement-in-production. The expected future price of a product. The price of a substitute-in-production. The market price of a product.

The market price of a product.

There are four suppliers in the packed meals market. The quantity of packed meals that each one is willing to supply per week at various prices is provided in the accompanying table. What is the change in the market supply for packed meals when the price falls from $6.25 per meal to $6.00 per meal? The quantity supplied in the market rises by 152,000. The quantity supplied in the market rises by 149,000. The quantity supplied in the market falls by 149,000. The quantity supplied in the market falls by 165,000.

The quantity supplied in the market falls by 149,000.

There are four suppliers in the packed meals market. The quantity of packed meals that each one is willing to supply per week at various prices is provided in the accompanying table. What is the change in the market supply for packed meals when the price rises from $6.25 per meal to $6.50 per meal? The quantity supplied in the market falls by 132,000. The quantity supplied in the market rises by 132,000. The quantity supplied in the market falls by 165,000. The quantity supplied in the market rises by 152,000.

The quantity supplied in the market rises by 152,000.

Why are supply curves typically upward-sloping? They slope upward due to the law of demand. They slope upward because higher prices lead individual businesses to supply a larger quantity and more businesses are willing to supply goods and services. They slope upward because sellers demand more when prices are lower. They slope upward because sellers prefer to sell more when prices are lower.

They slope upward because higher prices lead individual businesses to supply a larger quantity and more businesses are willing to supply goods and services.

(Figure: Graph) Refer to the graph to answer the question. In the graph, the movement from point W to point P represents: an increase in quantity demanded. a decrease in demand. an increase in quantity demanded. an increase in demand.

a decrease in demand.

(Figure: Graph) In the graph, the movement from point J to point K must have been caused by: a rise in the price of the item. a fall in the price of the item. a decrease in the total supply of the item. an increase in the total supply of the item.

a fall in the price of the item.

A normal good is: a good for which higher income causes an increase in demand. a good which is only purchased by high-income consumers. a good for which higher income causes a decrease in demand. a good which is normally purchased by many consumers.

a good for which higher income causes an increase in demand.

Quantity demanded is on the horizontal axis when you plot a demand curve and shows the: amount of a good that a seller is willing to sell at a particular price. amount of a good that a person actually buys at the market price. amount of a good that a person is willing to buy at each price. amount where opportunity cost is equal to the marginal benefit.

amount of a good that a person is willing to buy at each price.

(Figure: Graph) Refer to the graph to answer the question. The movement from point M to point N represents: a decrease in demand. an increase in demand. a decrease in quantity demanded. an increase in quantity demanded.

an increase in quantity demanded.

The Rational Rule for Sellers says that a seller should sell one more unit of an item if the price is: greater than or equal to the marginal benefit. less than the marginal benefit. less than the marginal cost. greater than or equal to the marginal cost.

greater than or equal to the marginal cost.

The interdependence principle: implies that consumers depend on each other to make purchase decisions in the market. is the same as the cost-benefit principle. refers to the marginal benefit of consuming additional units of an item. implies that buyers decisions are affected by many factors other than the price of an item.

implies that buyers decisions are affected by many factors other than the price of an item.

When you get hired for a well-paying job, you will most likely view older used cars as: normal goods. substitute goods. complementary goods. inferior goods.

inferior goods.

Diminishing marginal benefit: is when buying an additional item yields a larger marginal benefit than the previous item. is not important in determining a consumer's purchase decision. is when buying an additional item yields a smaller marginal benefit than the previous item. is when consumers do not follow the rational rule.

is when buying an additional item yields a smaller marginal benefit than the previous item.

A rational buyer will: not consider costs versus benefits when purchasing a product. buy a product until the marginal benefit of consuming the product is less than the price of the product. buy the product only when the marginal benefit of consuming the product is twice as much as the price of the product. keep buying a product until marginal benefit equals price.

keep buying a product until marginal benefit equals price.

A market consists of ten similar suppliers that are making the same supply decisions. To find the market supply of these ten suppliers, you: take one-tenth of the individual supply of each supplier and add it up. take the individual supply of one supplier. find the average quantity produced by the ten suppliers. multiply the individual supply of one of the suppliers by ten.

multiply the individual supply of one of the suppliers by ten.

When you calculate marginal costs, they should include: both the variable and fixed costs. only fixed costs. only variable costs. the market price of the product.

only variable costs.

When plotting a demand curve: quantity supplied is on the vertical axis. price is on the vertical axis. price is on the horizontal axis. quantity demanded is on the vertical axis.

price is on the vertical axis.

An individual demand curve is a graph: that plots the quantity of an item that someone plans to buy, at one single price point. that plots the market price of a product at different points in time. that plots the quantity of an item that someone plans to buy, at each price. that plots the quantity of an item that a seller plans to sell, at each price.

that plots the quantity of an item that someone plans to buy, at each price.

Paint and paintbrushes are complements. If the price of paint rises, we can expect: the quantity demanded of paintbrushes to remain unchanged. the quantity demanded of paint to increase. the demand for paintbrushes to decrease. the demand for paintbrushes to increase.

the demand for paintbrushes to decrease.

When plotting a supply curve: the quantity supplied goes on the vertical axis. the price goes on the horizontal axis. the quantity demanded goes on the vertical axis. the quantity supplied goes on the horizontal axis.

the quantity supplied goes on the horizontal axis.

A downward-sloping demand curve implies: there is a positive relationship between price and quantity demanded. there is no relationship between price and quantity demanded. there is an inverse relationship between price and quantity demanded. buyers are willing to buy less when prices are lower.

there is an inverse relationship between price and quantity demanded.

Variable costs are the costs that: are independent of the amount of output produced. stay fixed with the quantity of output produced. are incurred to build factories and assembly plants. vary with the quantity of output produced.

vary with the quantity of output produced.