Econ

You own a building that has four possible uses: a cafe, a craft store, a hardware store, and a bookstore. The value of the building in each use is $2,000; $3,000; $4,000; and $5,000, respectively. You decide to open a hardware store. The opportunity cost of using this building for a hardware store is A) $2,000, the value if the building is used as a cafe. B) $3,000, the value if the building is used as a craft store. C) $10,000, the sum of the values if the building is used for a cafe, a craft store, or a bookstore. D) $1,000, the difference in value if the building was used as a bookstore and its actual use.

D) $1,000, the difference in value if the building was used as a bookstore and its actual use.

Refer to Figure 7.1. This corn producer produces 100 bushels of corn and sells each bushel at $5. The cost of producing each bushel is $2. This corn producer's total revenue is ________ and profit is ________. A) $200; $300 B) $300; $200 C) $500; $200 D) $500; $300

D) $500; $300

Refer to Figure 4.3. An example of an effective price ceiling would be government setting the price of pencils at A) $0.40. B) $0.45. C) $0.50. D) $0.55.

A) $0.40.

If you can buy 9 DVDs for $126 or you could buy 10 DVDs for $130, then the marginal cost of the tenth DVD is: A) $4. B) $13. C) $14. D) $130.

A) $4.

Refer to Figure 7.2. The average product of the second worker is ________ lawns mowed. A) 4 B) 5 C) 5.5 D) 11

A) 4

Refer to Table 7.2. Which technology is the most capital intensive? A) A B) B C) C D) D

A) A

Refer to Figure 6.1. Assume Tom's budget constraint is AC. At which point does Tom consume only hot dogs? A) A. B) B. C) E. D) D.

A) A.

Refer to Figure 3.1. Which of the following would be most likely to cause the demand for Dr. Pepper to shift from D0 to D1? A) a decrease in income, assuming that Dr. Pepper is a normal good B) an increase in the price of 7-UP, assuming 7-UP is a substitute for Dr. Pepper C) a decrease in the price of Dr. Pepper D) a reduction in the price of sugar used to make Dr. Pepper

A) a decrease in income, assuming that Dr. Pepper is a normal good

Refer to Figure 3.3. As your income increased, the demand for X shifted from D1 to D2. Good X is A) an inferior good. B) a normal good. C) a luxury good. D) an income-neutral good.

A) an inferior good.

Refer to Figure 3.17. At a price of $30, there is an excess A) demand of 450 sunglasses. B) demand of 750 sunglasses. C) demand of 300 sunglasses. D) supply of 300 sunglasses.

A) demand of 450 sunglasses.

Refer to Table 6.1. Diminishing marginal utility sets in after the ________ soda per day. A) first B) second C) third D) fourth

A) first

Refer to Figure 4.1. If a 10-cent-per-apple tax is levied on imported apples, the United States will A) import 2 million apples per day. B) import 4 million apples per day. C) import 6 million apples per day. D) import 8 million apples per day.

A) import 2 million apples per day.

Economic costs A) include both a normal rate of return on investment and the opportunity cost of each factor of production. B) are equal to the direct costs of hiring all factors of production. C) are the opportunity cost of each factor of production minus any interest charges paid on borrowed funds. D) are equal to total revenue minus accounting profit.

A) include both a normal rate of return on investment and the opportunity cost of each factor of production.

Production inefficiency occurs A) only when an economy produces underneath its production possibility frontier. B) only when an economy produces at the wrong point on the production possibility frontier. C) either when an economy produces underneath the production possibility frontier or when the economy is producing the wrong combination of goods on the production possibility frontier. D) only when the economy produces outside the production possibility frontier.

A) only when an economy produces underneath its production possibility frontier.

As an individual consumes more of a product within a given period of time, it is likely that each additional unit consumed will yield A) successively less satisfaction. B) successively more satisfaction. C) the same amount of satisfaction. D) less satisfaction for a while and then start to add more satisfaction.

A) successively less satisfaction.

Opportunity cost is A) that which we forgo, or give up, when we make a choice or a decision. B) a cost that cannot be avoided, regardless of what is done in the future. C) the additional cost of producing an additional unit of output. D) the additional cost of buying an additional unit of a product.

A) that which we forgo, or give up, when we make a choice or a decision.

Consumer surplus is A) the difference between the maximum a person is willing to pay and current market price. B) the difference between current market price and full costs of production for the firm. C) the difference between the maximum a person is willing to pay and full costs of productions for the firm. D) current market price.

A) the difference between the maximum a person is willing to pay and current market price.

If the government imposes a maximum price that is above the equilibrium price, A) this maximum price will have no economic impact. B) quantity demanded will be less than quantity supplied. C) demand will be greater than supply. D) the available supply will have to be rationed with a nonprice rationing mechanism.

A) this maximum price will have no economic impact.

If the substitution effect of a wage change outweighs the income effect of a wage change, the labor-supply curve is A) upward sloping. B) horizontal. C) vertical. D) backward bending.

A) upward sloping.

Refer to Figure 3.8. Assume that there are only two people in the market for baseball caps: Alex and Ryan. Along the market demand curve for baseball caps, at a price of ________, quantity demanded would be ________. A) $10; 7 B) $10; 11 C) $8; 12 D) $8; 13

B) $10; 11

Refer to Figure 3.11. Assume hamburgers are a normal good. An increase in income will cause a movement from A) Point A to Point B. B) Point G to Point F. C) D1 to D2. D) S1 to S2.

C) D1 to D2.

You have decided that you want to attend a costume party as Iron Man. You estimate that it will cost $40 to assemble your costume. After spending $40 on the costume, you realize that the additional pieces you need will cost you $25 more. The marginal cost of completing the costume is A) $15. B) $25. C) $40. D) $65.

B) $25.

If the quantity of peanut butter demanded increases by 4% when the price of jelly decreases by 2%, the cross-price elasticity of demand between peanut butter and jelly is A) -4. B) -2. C) -0.5. D) 2.

B) -2.

Refer to Table 6.1. If the price of a soda is $2, the price of a hamburger is $6, and George has $14 of income, George's utility maximizing combination of sodas and hamburgers per day is A) 1 soda and 2 hamburgers. B) 4 sodas and 1 hamburger. C) 3 sodas and 1.5 hamburgers. D) indeterminate from this information.

B) 4 sodas and 1 hamburger.

Refer to Figure 7.2. The marginal product of the second worker is ________ lawns mowed. A) 3 B) 5 C) 8 D) 11

B) 5

Assume the total product of two workers is 130 and the total product of three workers is 150. The average product of three workers is ________, and the marginal product of the third worker is ________. A) 40; 10 B) 50; 20 C) 13.33; 6.67 D) 120; 100

B) 50; 20

In figure 4.6 at equilibrium, consumer surplus is area A) A. B) A+B+C. C) G. D) E+F+G.

B) A+B+C.

In figure 4.6 if price is P1, consumer surplus is area A) A. B) A+B+E. C) G. D) B+C+E+F+G.

B) A+B+E.

In figure 4.6 if price is P1, the deadweight loss due to under production is area A) A+C. B) C+F C) E+G. D) F+G.

B) C+F.

Refer to Figure 6.3. Molly's budget constraint is AC. It would swivel to AD if the price of A) DVDs increased. B) DVDs decreased. C) CDs increased. D) CDs decreased.

B) DVDs decreased.

The law of diminishing marginal utility refers to A) a consumer's decrease in total satisfaction as she consumes more units of a good. B) a consumer's decrease in additional satisfaction as she consumes more and more units of a good. C) the idea that total utility is negative. D) the idea that marginal utility is negative.

B) a consumer's decrease in additional satisfaction as she consumes more and more units of a good.

Refer to Figure 3.16. The supply curve for hula hoops shifts from S0 to S1. This could be caused by A) an decrease in the price of hula hoops. B) a decrease in the number of firms selling hula hoops. C) a decrease in the demand for hula hoops. D) either B or C.

B) a decrease in the number of firms selling hula hoops.

If the price of chili increases, there will be ________ of chili cheese fries. A) an increase in the supply B) a decrease in the supply C) an increase in the quantity supplied D) a decrease in the quantity supplied

B) a decrease in the supply

Refer to Figure 3.13. The market is initially in equilibrium at Point A. If supply shifts from S1 to S2 and the price of cheeseburgers remains constant at $5.00, there will be A) an excess supply of 6 cheeseburgers. B) an excess demand of 6 cheeseburgers. C) an excess supply of 3 cheeseburgers. D) an excess demand of 4 cheeseburgers.

B) an excess demand of 6 cheeseburgers.

Refer to Figure 3.19. When the economy moves from Point A to Point B, there has been A) an increase in demand and an increase in supply. B) an increase in demand and an increase in quantity supplied. C) an increase in quantity demanded and an increase in quantity supplied. D) an increase in quantity demanded and an increase in supply.

B) an increase in demand and an increase in quantity supplied.

A firm produces 5 units of output from the last dollar it spends on labor and 10 units from the last dollar spent on capital. The firm should A) employ more labor and less capital. B) employ more capital and less labor. C) employ more capital and labor. D) employ less capital and labor.

B) employ more capital and less labor.

Refer to Figure 7.5. Diminishing marginal returns set in after the ________ worker is hired. A) first B) fifth C) eighth D) sixteenth

B) fifth

Refer to Figure 3.4. If consumer income falls, the demand for tuna fish sandwiches shifts from D0 to D1. This implies that tuna fish sandwiches are a(n) A) normal good. B) inferior good. C) substitute good. D) complementary good.

B) inferior good.

The more time that elapses, the A) less price elastic is the demand for the product. B) more price elastic is the demand for the product. C) greater the income elasticity of demand for a product. D) smaller the income elasticity of demand for the product.

B) more price elastic is the demand for the product.

If the unemployment rate increases from 10% to 14%, the economy will A) move closer to a point on the ppf. B) move away from the ppf toward the origin. C) remain on the ppf. D) remain on the origin.

B) move away from the ppf toward the origin.

There is great concern over the fact that millions of Americans do not have health insurance. A study of the costs and benefits of implementing a national health-insurance program is an example of A) laissez-faire economics. B) positive economics. C) labor economics. D) normative economics.

B) positive economics.

Suppose the demand for books goes down when the price of video games goes down. We can say that these two goods are A) complements. B) substitutes. C) unrelated goods. D) perfect substitutes

B) substitutes.

Producer surplus is A) the difference between the maximum a person is willing to pay and current market price. B) the difference between current market price and full costs of production for the firm. C) the difference between willingness to sell and full costs of productions for the firm. D) current market price.

B) the difference between current market price and full costs of production for the firm.

Refer to Figure 3.11. Assume hamburgers and hot dogs are substitutes. A decrease in the price of hot dogs will cause a movement from A) Point A to Point B. B) Point F to Point G. C) D2 to D1. D) D1 to D2.

C) D2 to D1.

Refer to Figure 2.1. Macroland is currently operating at Point A. The best explanation for this is that A) the economy has very poor technology. B) the economy's resources are being used inefficiently. C) the economy has very few resources. D) the economy operates as an efficient market.

B) the economy's resources are being used inefficiently.

In the long run, A) a firm can shut down, but it cannot exit the industry. B) there are no fixed factors of production. C) a firm can vary all inputs, but it cannot change the mix of inputs it uses. D) all firms must make economic profits.

B) there are no fixed factors of production.

If your tuition is $5,000 this semester, your books cost $600, you can only work 20 rather than 40 hours per week during the 15 weeks you are taking classes and you make $15 per hour, and your room and board is $3000 this semester (same as if not attending college), then your opportunity cost of attending college this semester is A) $5,600. B) $5,900. C) $10,100. D) $11,600.

C) $10,100.

Refer to Scenario 7.1. During the year your economic costs were A) $40,000. B) $60,000. C) $100,000. D) $130,000.

C) $100,000.

Refer to Figure 3.17. The market for sunglasses is in equilibrium at a price of ________ and a quantity of ________ sunglasses. A) $30; 300 B) $30; 600 C) $60; 450 D) $90; 300

C) $60; 450

Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hamburger is $4.00. Tom's monthly income is A) $20. B) $60. C) $80. D) $100.

C) $80.

If income increases by 10% and, in response, the quantity of housing demanded increases by 7%, then the income elasticity of demand for housing is A) -1. B) -0.7. C) 0.7. D) 1.43.

C) 0.7.

Refer to Figure 6.8. The total utility of the three movies is ________ and the marginal utility of the third movie is ________. A) 15; 0 B) 25; 10 C) 28; 3 D) 0; 0

C) 28; 3

Refer to Table 2.1. For Mark, the opportunity cost of writing one TV commercial is A) 1/3 of a poem. B) 2 poems. C) 3 poems. D) 8 poems.

C) 3 poems.

Refer to Table 2.1. For Krystal, the opportunity cost of writing one TV commercial is A) 1/4 of a poem. B) 2 poems. C) 4 poems. D) 6 poems.

C) 4 poems.

Refer to Figure 4.1. At the world price of 30 cents per apple the United States imports ________ million apples per day. A) 2 B) 4 C) 6 D) 10

C) 6

Refer to Figure 3.2. Which of the following would be most likely to cause the demand for macaroni and cheese to shift from D1 to D0? A) an increase in the price of macaroni and cheese B) an increase in the price of flour used to make macaroni and cheese C) an increase in income, assuming macaroni and cheese is a normal good D) an increase in the quantity demanded for macaroni and cheese

C) an increase in income, assuming macaroni and cheese is a normal good

A decrease in demand for cameras would likely be caused by A) an increase in the price of a substitute good. B) an increase in the price of cameras. C) an increase in the price of a complementary good. D) a decrease in the price of cameras.

C) an increase in the price of a complementary good.

The "law of demand" implies that A) as prices fall, demand increases. B) as prices rise, demand increases. C) as prices fall, quantity demanded increases. D) as prices rise, quantity demanded increases.

C) as prices fall, quantity demanded increases.

The total of consumer plus producer surplus is greatest A) when consumer surplus is maximized. B) when producer surplus is maximized. C) at the market equilibrium. D) all of the above

C) at the market equilibrium.

Costs of production are determined A) only by the technologies that are available. B) only by the input prices that are available. C) by the technologies that are available and by input prices. D) by the technologies that are available and by the demand for the output.

C) by the technologies that are available and by input prices.

In input or factor markets, A) consumers purchase products. B) firms supply goods. C) households supply resources. D) households demand goods.

C) households supply resources.

Which of the following is held constant along the demand curve? A) price of the good B) quantity C) income D) both A and B

C) income

A society can produce two goods: donuts and beer. The society's production possibility frontier is negatively sloped and "bowed outward" from the origin. As this society moves down its production possibility frontier, producing more and more units of donuts, the opportunity cost of producing beer A) decreases. B) remains constant. C) increases. D) could decrease or increase depending on the technology.

C) increases.

Suppose that you purchased a ticket to a jazz festival for $100 from an online ticket broker. Once you arrived at the festival, you discovered that parking costs you an additional $15. In this situation, the additional $15 you pay for parking is an example of A) an economic loss. B) opportunity cost. C) marginal cost. D) an inefficient cost.

C) marginal cost.

Suppose you are deciding whether to spend your tax rebate check on a new iPod player or a new digital camera. You are dealing with the concept of A) equity. B) comparative advantage. C) opportunity costs. D) the fallacy of composition.

C) opportunity costs.

Refer to Figure 2.5. The economy is currently at Point A. The opportunity cost of moving from Point A to Point B is the A) 90 LCD televisions that must be forgone to produce 20 additional plasma televisions. B) 30 LCD televisions that must be forgone to produce 60 additional plasma televisions. C) 120 LCD televisions that must be forgone to produce 40 additional plasma televisions. D) 30 LCD televisions that must be forgone to produce 20 additional plasma televisions.

D) 30 LCD televisions that must be forgone to produce 20 additional plasma televisions.

Jane has $500 a week to spend on clothing and food. The price of clothing is $25 and the price of food is $10. The clothing and food pairs in Jane's choice set include ________ units of clothing and ________ units of food. A) 50; 50 B) 20; 50 C) 15; 25 D) 8; 30

D) 8; 30

In order to discourage consumers from eating unhealthy fast food, the government is considering placing a tax on all fast food sales. Which of the following statements is true? A) Given the numerous alternatives, consumers' demand for fast food is relatively elastic and the tax will likely work to discourage fast food consumption. B) The tax on fast food will likely raise considerable revenue but will be unlikely to reduce the consumption of fast food by consumers. C) The tax on fast food will likely increase the demand for home cooked meals. D) Both A and C are true.

D) Both A and C are true.

If the marginal product of labor is less than the average product of labor, then the A) marginal product must be increasing. B) average product must be decreasing. C) marginal product must be decreasing. D) Both B and C

D) Both B and C

Refer to Table 7.2. If the hourly wage rate is $10 and the hourly price of capital is $50, which production technology should be selected? A) A B) B C) C D) D

D) D

In figure 4.6 at equilibrium, producer surplus is area A) A. B) A+B+C. C) G. D) E+F+G.

D) E+F+G.

Refer to Table 2.1. Which of the following statements is true? A) Krystal has a comparative advantage in both writing TV commercials and writing poems. B) Mark has a comparative advantage in both writing TV commercials and writing poems. C) Krystal has a comparative advantage in writing TV commercials, and Mark has a comparative advantage in writing poems. D) Mark has a comparative advantage in writing TV commercials, and Krystal has a comparative advantage in writing poems.

D) Mark has a comparative advantage in writing TV commercials, and Krystal has a comparative advantage in writing poems.

Which of the following will NOT cause a shift in the demand curve for compact discs? A) a change in income B) a change in wealth C) a change in the price of downloadable online music D) a change in the price of compact discs

D) a change in the price of compact discs

The production possibility frontier is a graph that shows A) all the combinations of goods and services that are consumed over time if all of society's resources are used efficiently. B) the amount of goods and services consumed at various average price levels. C) the rate at which an economy's output will grow over time if all resources are used efficiently. D) all the combinations of goods and services that can be produced if all of society's resources are used efficiently.

D) all the combinations of goods and services that can be produced if all of society's resources are used efficiently.

When the price of coffee increases 5%, quantity demanded decreases 10%. The price elasticity of demand for coffee is ________ and total revenue from coffee sales will ________. A) inelastic; increase B) inelastic; decrease C) elastic; increase D) elastic; decrease

D) elastic; decrease

We can state the utility-maximizing rule in words in the following way: A person maximizes utility when she equalizes the ________ across products. A) total utility B) total utility per dollar spent C) marginal utility D) marginal utility per dollar spent

D) marginal utility per dollar spent

Refer to Figure 3.18. The current price of a bag of pretzels is $1.10. You accurately predict that in this market, A) price tends to remain constant, and quantity supplied increases. B) price, quantity demanded, and quantity supplied decrease. C) price and quantity demanded increase, and quantity supplied decreases. D) price and quantity supplied decrease, and quantity demanded increases.

D) price and quantity supplied decrease, and quantity demanded increases.

Refer to Figure 2.1. Macroland's production possibility frontier is bowed out from the origin due to A) decreasing opportunity costs. B) trade. C) unemployment. D) specialized resources.

D) specialized resources.

Which of the following is NOT an opportunity cost of attending college? A) the tuition you pay B) the income you could have earned if you didn't attend college C) the alternative uses of the time you spend studying D) the cost of the food that you consume while you are attending college

D) the cost of the food that you consume while you are attending college