Econ 302 study plan ch 4

If the total or social surplus in a market is $500, and there is no government intervention, but the producer surplus is $200, consumer surplus is ________. $250

300

Advances in tax software such as TurboTax influenced the income tax preparer market in the following way:

The demand for income tax preparers (the person who calculates and prepares your income tax return) fell and as a result, there are fewer tax preparer jobs.

After earthquakes hit the California coast and damaged tens of thousands of cars, there was a growing demand and need for automotive repair, glass replacement, dent repair and repainting. In the labor market for car repair, the demand would be represented by ________, while supply would be represented by ________.

automotive body shops and glass repair and replacement companies; automotive workers

Many people have larger amounts of debt in America than before, and people have become hesitant to take loans out for new cars. All other things being equal, what would car dealership do with their financing in this new market environment?

Dealership financing would increase the supply of car loans and decrease the equilibrium price (interest rate) to make their car loans more attractive for people.

How does a price floor set above the equilibrium price affect quantity demanded and quantity supplied?

It results in a greater quantity supplied than the quantity demanded, otherwise known as excess supply.

Paul has two tickets to the next Texan game while Bella has two tickets to the next Rockets game. Bella values the Rockets tickets at $200 while she values the Texans tickets at $250. Paul values the Rockets tickets at $250 and the Texans tickets at $150. Allocative efficiency can be improved for Paul and Bella if

Paul buys Rockets tickets from Bella and Bella buys Texan tickets from Paul at a price agreeable to both.

If Kay is willing to pay $25,000 for a truck and finds the model he wants for $22,500, Kay has

a counsumer surplus of 2500

An increase in consumer surplus is caused by

a price ceiling.

Gas companies lobby their government for guaranteed prices in order to undertake massive pipeline infrastructure investments. The government then sets minimum gas prices for the next 10 years. This is an example of

a price floor on gas prices

Country A has great expertise in the production of planes and produces a large quantity of planes while country B has expertise in the production of automobiles and produces large quantities of cars. When the two countries trade planes for automobiles

both countries benefit bc they both gain access to products w/ higher value to them and lower cost

Country A has great expertise in the production of planes and produces a large quantity of planes while country B has expertise in the production of automobiles and produces large quantities of cars. If Country A values the last plane produced at $3 million while country B values that plane at $4 million, then

country a should try to sell the plane to country b for more than 4 million

In a market with an upward sloping supply curve and a downward sloping demand curve, a price floor ________.

creates deadweight loss

If the government increases the minimum wage, the social surplus would

decrease

Online mortgage companies have been growing in numbers and size. If all other things are equal, as a result of this growth, traditional banks have had to

decrease the interest on their mortgage loans as the demand for traditional mortgage loans decreased.

A price floor attempts to keep prices ________.

higher than the equilibrium price.

As the information technology advances and consumers buy products requiring more and more technology, the wages of people with high level programming and other technical skills would

increase as the demand for high tech skills increases.

When binding price ceilings are introduced, the market price mechanism is unable to bring the market to equilibrium and alternative methods of distributing goods in short supply have to be used such as 'first come first served'. This method is:

less efficient bc the high cost of time spent in line and searching for the products

Requiring that all employees get a minimum wage of $8.00 is an example of a

price floor

A price floor is inefficient because

resources are over allocated to produce an item at a quantity greater than what consumers are demanding

Assume that banks currently pay 2% interest on money that customers deposit in savings accounts. Suppose more individuals decide to put money into savings accounts. As the overall amount of money held in savings accounts increases, in financial markets

the supply of savings increases.

Individuals and countries will continue to trade airplanes for cars until

the value of each additional airplane and car is equal for both countries or individuals.

The main reason price ceilings are set is so that consumer prices

will be lower