Econ final
A NBC news article discusses the high prices that many prisons charge inmates to make phone calls. For example, in Kentucky, it costs $5.70 to make a 15-minute phone call. Suppose that phone calls and in-person visits are substitutes and prison visitors frequently purchase snacks from the vending machines in the visitation rooms. Which of the following would we expect to happen to the price and quantity of vending machine snacks if prisons were required to reduce their phone call prices? Note: Assume that a reduction in phone call rates will not result in phone companies reducing their service or lowering phone call quality. A) Price and quantity decrease. B) Price increases. The effect on quantity is ambiguous. C) Price decreases. The effect on quantity is ambiguous. D) Price increases and quantity decreases
A
A field experiment at an all-you-can-eat pizza restaurant shows that a 50% discount on the price of the meal led customers to consume 27.9% less pizza. In other words, when people have to pay a higher price for their meal, they want to "get their money's worth" by eating more pizza. Suppose the regular price of the buffet is $10 and the discounted price is $5. Once a customer has paid for the buffet, what is the marginal cost of eating another slice of pizza? (Assume the only costs are monetary costs.) A) $0 B) $5 C) $10 D) It depends on whether the customer is getting a discount.
A
A politician argues that the United States should temporarily ban the import of battery-powered electric scooters because this is an "infant industry". According to what we learned in class, which of the following counterarguments would we expect an economist to raise: A) This temporary ban might become permanent because the electric scooter manufacturers will never become globally competitive. B) This ban will destroy American jobs in the electric-powered-scooter industry. C) This ban will hurt the wages of manufacturing workers in other countries. D) This ban will increase the price that people in other countries pay for electric scooters
A
A recent TikTok trend involves parents surprising their toddlers by cracking an egg on the child's head. Suppose this convinces parents to buy more eggs in an attempt to gain TikTok viewers. How will this affect the market for eggs? A) Price increases because of an increase in demand. B) Price increases because of an increase in supply. C) Quantity decreases because of a decrease in supply. D) Price decreases because of an increase in demand
A
An article in the New York Times discussed how the weakening of the British pound relative to other currencies has made Scotch whisky "more affordable for buyers outside of Britain".(Scotch whisky is made in Scotland, which is a country that uses the British pound. In EC 202, we discuss how changes in exchange rates affect the prices of exports. For now, just assume that the world price of whisky has gone down.) How will this affect producer surplus and consumer surplus in countries that import whisky from Scotland? A) Consumer surplus rises, producer surplus falls. B) Consumer surplus and producer surplus both rise. C) Consumer surplus and producer surplus both fall. D) Consumer surplus falls, producer surplus rises
A
Artificial Christmas trees have a linear demand curve that slopes down. When the price is $100, they have unit demand elasticity. If price decreases to $75, the absolute value of demand elasticity is: A) Less than 1. B) 1. C) Greater than 1. D) It cannot be determined from the information given
A
It was recently in the news that the U.S. Consumer Product Safety Commission is considering a ban on gas stoves because gas stoves have been shown to pollute the air and cause health problems. Suppose that the ban would only affect new gas stoves -people who own a gas stove today will not be required to get rid of it. How do we think a future ban on gas stoves will affect the demand for gas stoves today? A) Demand will increase. B) Demand will decrease. C) Demand will be unaffected
A
Jim owns an oil well. He thinks that oil prices will decrease next year. How will this affectJim's supply curve today? A) A shift from S1 to S2. B) A shift from S2 to S1. C) Movement from point 1 to point 2. D) Movement from point 2 to point 1
A
Micah can produce bicycles at a marginal cost of $125. Jacqueline values this bicycle at $200. If Jacqueline buys a bicycle from Micah, what is the total economic surplus created? A) $75. B) $125. C) $200. D) It depends on the price that Jacqueline pays
A
Michigan State University decides fine everyone who leaves an electric scooter on a walkway 20 dollars. One day, you are in a hurry to get to class and don't have time to park your scooter where it goes. So, you leave your scooter on the walkway, knowing that you will get fined 20dollars. Which of the following is most likely to be true: A) The benefit you got from being to class on time was greater than $20B) Your willingness to pay to get to class on time was less than $20C) You acted irrationally and didn't follow the cost-benefit principle
A
Supply slopes up because A) Marginal costs are increasing. B) Marginal benefits are decreasing. C) Demand slopes down. D) Price and quantity are inversely related
A
Suppose Michigan passes a law which will outlaw the sale of gasoline-powered cars starting in 2025. Note that, even after the ban goes into effect, existing gasoline-powered cars can still be driven in the state. How will that affect the demand for gasoline-powered cars today? A) Demand will increase. B) Demand will decrease. C) Demand will be unaffected
A
Suppose a new technology is invented that allows for beer to be produced at a lower marginal cost. This could be illustrated by A) A shift from S1 to S2. B) A shift from S2 to S1. C) Movement from point 1 to point 2. D) Movement from point 2 to point 1
A
Suppose the price of roses increases. Assume that roses and oranges tend to have similar growing climates, and that farmland that currently grows one of them can easily grow the other crop instead. Which of the following responses is likely? (Note: that we are looking for what happens after the price changes, not for what caused the price change) A) The price of oranges increases. B) Quantity of roses demanded increases. C) The quantity of oranges sold increases
A
Suppose the school district finds that high school attendance drops dramatically. They are willing to increase the amount of their gas cards, but doing so is expensive. They are willing to pay any amount as long as it increases attendance, but they don't want to waste money on gas cards if they don't increase attendance. So, they increase the amount of money on the gas cards by a few dollars per week. As long as attendance keeps increasing, they will continue increasing the amount on the gas cards. Once the attendance stops increasing, they will stop increasing the amount. This is an example of the: A) Marginal principle. B) Interdependence principle. C) Opportunity cost principle
A
The Rational Rule says that, if something is worth doing, keep doing it until: A) Marginal benefits are equal to marginal costs. B) Marginal benefits are greater than marginal costs. C) The opportunity cost is zero. D) Your willingness to pay is zero
A
The price of a chicken wrap at Conrad's goes from $10 to $12. Following this change, consumption goes from 100 units to 70 units. What is the elasticity of demand? A) -1.5. B) -0.15. C) -0.67. D) -0.5
A
Use the following information to answer the next two questions: Kim and Clara are working on a group homework assignment. The homework consists of a set of programming questions and a set of questions on graphing models. Kim can finish a programming question in about 20 minutes and a graphing question in about 30 minutes. Clara can finish a programming question in about 25minutes and a graphing question in about 50 minutes. Assume that Kim and Clara produce the same quality answers.4) What is Clara's opportunity cost of completing a programming question? A) 0.5 graphing questions. B) 2 graphing questions. C) 30 minutes. D) 1.25 programming questions
A
West Virginia is located on mountains that contain large amounts of coal. Thus, West Virginia provides the United States with a comparative advantage in coal production due to A) Relatively abundant inputs. B) Specialized skills. C) Mass production
A
When you hang out with your friends, you often accidentally grab the wrong cellphone because you all have the same model of iPhone and black phone cases. You decide that you want to purchase a different colored cell phone case to prevent this from happening. This means that you consider a specific color of cell phone case to be a ________. A) Congestion good. B) Network good. C) Normal good. D) Substitute for a cell phone
A
Which of the following is an example of a shortage? A) It is illegal to sell cigarettes for more than $8 per pack. This leads to long lines outside stores that sell cigarettes. B) A tax on beer increases the price and reduces consumption. C) There are not many Super Bowl tickets available, and lots of people want to go. As a result,Super Bowl tickets are very expensive. D) A subsidy on electric cars increases the demand for electric cars
A
Which of the following is an example of positive economics? A) A 5% increase in tuition would result in 15% fewer low-income students attending MSU. B) The state of Michigan should increase government funding for public universities. C) It is unfair for minimum-wage employees to make less money in a year than some executives make in a day.
A
Which of the following will be true if the price is $5? A) Quantity supplied will be greater than 12. B) Quantity supplied will be less than 5. C) The supply curve will shift to the right. D) The supply curve will shift to the left
A
Who would likely have a more elastic demand for cigarettes: children who are considering smoking cigarettes, who tend to not have very much money, or adults who smoke cigarettes, who are likely addicted to smoking? A) Children. B) Adults
A
You are binge watching Riverdale on Netflix and have one episode left in the season. Which of the following would be describe the marginal benefit of watching that last episode? A) The enjoyment you get from watching the last episodeB) The total enjoyment you received from the first seasonC) The hour that you could have spent studying economics (your best possible alternative use of the time, of course)
A
You are interested in learning whether increasing sales taxes affect the revenues of fast food restaurants in East Lansing. This would be best described as: A) MicroeconomicsB) Macroeconomics
A
After the researchers conducted this part of the experiment, they did another analysis. They surveyed the customers after they ate and asked them to rate the taste of the pizza. Based on what we have learned about diminishing marginal benefits, who would we expect to give the pizza a higher rating? A) Customers who paid the higher price, because the pizza is worth more to them. B) Customers who paid the lower price, because they didn't eat as many slices and therefore avoided the slices that gave a lower marginal utility
B
Apple juice and apple sauce are substitutes in production. How would an increase in the price of apple juice affect the supply curve for apple sauce? A) A shift from S1 to S2. B) A shift from S2 to S1. C) Movement from point 1 to point 2. D) Movement from point 2 to point 1
B
As of fall 2022, Lansing School District is no longer providing school bus services to high school students. Instead, they are providing students with city bus passes and gasoline gift cards. The school district is concerned that removing bus services could affect school attendance. This is an example of the: A) Marginal principle. B) Interdependence principle. C) Sunk cost fallacy
B
Drug dealing is potentially a very profitable business, largely because the prices of illegal drugs are often very high. Successful drug dealers can become extremely wealthy. The potential for great wealth can lure teenagers into the drug trade. Additionally, if illegal drugs were not so expensive, drug dealers would not find it worthwhile to go to great lengths to smuggle drugs into the United States. Suppose we want to reduce the street price of illegal drugs. What would be the best way to do this? (Hint: Think about how each of the options would shift the supply and/or demand curves for illegal drugs) A) Increase the criminal penalties on individuals caught selling drugs. B) Increase the criminal penalties on individuals caught buying drugs
B
Emily has an income elasticity of demand of 0.25 for luxury clothes. Initially, Emily is spending $1,000 per year on luxury clothes. If Emily's income goes from $100,000 to$140,000, how much will she now spend on luxury clothes? (Note: it is not necessary to know the price of the luxury goods she is buying. It is sufficient to know that, whatever the price is before her income change, the price is the same after her income change. So, if she was buying pants that cost $100 before her income change, she is still buying pants that cost $100after her income change - she's just buying more of them.) A) $900. B) $1,100. C) $1,400. D) $2,600
B
If Starbucks is able to reduce the time it takes to make complicated drinks (and therefore reduce the amount of time people have to spend in line), how would that directly affect demand? A) Decrease demand. B) Increase demand. C) Increase quantity demanded. D) Decrease quantity demanded
B
Imagine there is a significant technological advancement in the production of electric cars, making them cheaper to produce. What is the likely impact on the equilibrium price and quantity of electric cars in the market? A) The equilibrium price will increase, and the equilibrium quantity will decrease. B) The equilibrium price will decrease, and the equilibrium quantity will increase. C) Both the equilibrium price and quantity will increase. D) Both the equilibrium price and quantity will decrease.
B
In April of 2022, a prison employee helped an inmate escape from a prison inAlabama. Indiana. While they were on the run, they rented a hotel room at a low-cost motel in Evansville, Indiana where they stayed for 14 days. The room where they stayed became infamous and attracted many travelers. By May of 2022, there was a waiting list for the hotel room. Which of the following is true about the demand curve for this hotel room: A) Demand shifted left. B) Demand shifted right. C) Movement down and to the right on the demand curve. D) Movement up and to the left on the demand curve
B
In class, we discussed possible reasons why small increases in the minimum wage do not seem to have significant effects on employment rates. One explanation we discussed is that the demand for labor may be A) Elastic. B) Inelastic. C) Unit elastic
B
In lecture, we said that to find the opportunity cost of an action, ask yourself: A) "One more?". B) "Or what?". C) "How many?". D) "What are the benefits?"
B
Jackson likes listening to loud rock music in his apartment. Quinton lives below Jackson and doesn't like the noise. According to the apartment building rules, Quinton can demand thatJackson stop playing the music. Jackson gets $100 in enjoyment from listening to loud music, and Quinton gets $50 in enjoyment from not having to hear loud music. According to the Coase theorem, which of the following is an optimal way of dealing with the situation? A) Jackson pays Quinton $150 for the right to play loud music. B) Jackson pays Quinton $70 for the right to play loud music. C) Quinton pays Jackson $60 to stop playing loud music. D) No money changes hands and Jackson stops playing loud music
B
Jane enjoys streaming The Office, but she finds that, because she has seen every episode several times, she gets bored of them quickly. In fact, in a given binge-watch session, she enjoys each episode less than the one before it. Jane uses her parent's logins for streaming services, so it doesn't cost her any money to watch the episodes. For Jane, watching The Office on has _____marginal benefits and _____ marginal costs. (Assume the only costs are monetary costs.) A) Decreasing; Increasing B) Decreasing: Constant C) Constant; Increasing D) Increasing; Decreasing
B
Liam works as a baker. If he spends all day making bread, he can make 6 loaves of bread. If he spends all day baking cakes, he can bake 2 cakes. What is Liam's opportunity cost of a loaf of bread? A) The price he sells the loaf of bread for. B) 1/3 of a cake. C) 2 cakes. D) 6 loaves of bread
B
Maria is deciding how big of a house to build. She gets decreasing marginal benefits from house size (so, the marginal benefit of the first square foot is greater than the marginal benefit of the second square foot and so on). The builder charges $150 per square foot. Maria decides to build a 1,900 square foot house. What if, instead, the builder offered a discount, where the first 1,000 square feet were half price ($75 per square foot)?How big of a house would Maria choose to build: A) Less than 1,900 square feet. B) Still 1,900 square feet. C) More than 1,900 square feet
B
Miguel's demand for ice cream slopes down. This is because: A) Miguel hates ice cream. B) He has decreasing marginal benefits from ice cream. C) He has constant marginal benefits from ice cream. D) If ice cream is too expensive, he will never eat ice cream
B
People who support a higher minimum wage typically argue that a modest increase to the minimum wage will not have a significant impact on the number of employees that firms choose to hire. In other words, they believe that: A) Labor demand is elastic. B) Labor demand is inelastic. C) Labor supply is elastic. D) Labor supply is inelastic
B
Sam went to a restaurant that had a special where tacos cost $3 each. Sam bought and ate seven tacos. Afterwards, he regretted his decision and decided that next time he would only buy five tacos. Which of the following is most likely to be true: A) Sam's marginal benefit from the seventh taco was negative. B) Sam's marginal benefit from the sixth taco was less than $3. C) Sam's marginal benefit from the seventh taco was zero. D) Sam's marginal benefit from the fifth taco was less than $3
B
Suppose demand is linear and downward-sloping, but not perfectly inelastic, and suppose that supply is perfectly inelastic. Initially, the price is $12. A tax of $1 per unit is placed on buyers. What is the pre-tax price charged by suppliers? (Note: you can think of this tax as a$1 increase in the marginal cost of producing the product) A) $10. B) $11. C) $13. D) $24
B
Suppose the marginal cost of producing a bushel of corn is always $5, no matter what quantity is produced. Initially, the market is in equilibrium. How will the equilibrium price and quantity be affected if there is an increase in demand? (Hint: remember that the marginal cost curve is the supply curve) A) Price and quantity increase. B) Price is unchanged. Quantity increases. C) Price increases. The effect on quantity is ambiguous. D) The effect on price is ambiguous. Quantity increases
B
The United Autoworkers Union is currently negotiating a new labor contract with GeneralMotors, Ford, and Chrysler that will determine how much the automakers pay for their hourly labor. Suppose the resulting contract leads to an increase in worker wages. How will this affect the supply curve for automobiles? A) An increase in supply. B) A decrease in supply. C) An increase in quantity supplied. D) A decrease in quantity supplied
B
The college admissions scandal in 2019 exposed the fact that celebrities were paying professional test-takers to take their children's SATs for them. As a result, both the parents who paid for these services and the people who were paid to take the SATs were severely punished. The threat of being exposed and punished is expected to deter parents from paying someone to take their child's SAT and deter people from being willing to take someone else'sSATs for money. As a result, in the market for illicit-professional-SAT-test-taking, the expected effect on price and quantity are: A) Price increases, quantity decreases. B) The effect on price is ambiguous, quantity decreases. C) Price decreases, the effect on quantity is ambiguous. D) Price increases, quantity increases
B
The cross-price elasticity of peanut butter and jelly is -0.5. If the price of jelly increases by20%, what happens to the quantity of peanut butter sold? A) Increase by 10%. B) Decrease by 10%. C) Does not change. D) Decrease by 40%
B
The main reason why you cannot have everything you want is that: A) Taxes are too highB) Resources are limitedC) Opportunity costs are equal to zero
B
The shutdowns caused by the COVID-19 pandemic led to many restaurants to shut down.This is a good example of: A) An increase in market supply. B) A decrease in market supply. C) An increase in quantity supplied. D) A decrease in quantity supplied
B
This actually does not fit with what we have learned about rational decision making and how people make decisions on the margins. Why? A) The customers are not accounting for the opportunity cost of eating pizza instead of another meal B) The marginal cost of a slice of pizza is zero for all customers, so all customers(whether or not they are receiving a discount) should consume until the point where the marginal benefit of the last slice of pizza is zero. This means that the price paid should not affect consumption C) The marginal cost of a slice of pizza is greater for customers paying the higher price. This means that marginal benefit will equal marginal cost at a lower quantity, so consumers paying a higher price should eat less pizza. D) All-you-can-eat pizza restaurants have bad pizza, and rational people would never go to that type of restaurant
B
Use the following information to answer the next two questions: Raphael owns a company that sells wedding cakes. The marginal cost of making one cake is $30, the marginal cost of the second cake is $45, and the marginal cost of the third cake is $65.4) If Raphael sells three cakes for $70 each, what is producer surplus? A) $30. B) $70. C) $140. D) $210. E) It depends on how much the consumer values the cakes
B
When a good is taxed, consumers see this as a price increase. Because demand slopes down, consumers respond to this tax increase by reducing their consumption. Note that this reduced consumption limits the effectiveness of the tax, because when the good is not consumed, no taxes are collected on it. For example, a very high tax on Coca-Cola would actually raise very little revenue for the government, because people would just switch toPepsi to avoid paying the high price for taxed Coca-Cola. All else equal, which would raise more money: A) A sales tax on a good with elastic demand. B) A sales tax on a good with inelastic demand
B
When will people search harder for substitutes for oil? A) When the price of oil is low. B) When the price of oil is high. C) People are not incentivized to search for substitutes for oil
B
Which of the following is likely to make demand for a normal good more inelastic? A) A low-priced substitute for the good is introduced. B) An increase in income. C) A new tax makes the good more expensive
B
Which of the following statements is true?A) If price increases from $2 to $3, the supply curve will shift to the right. B) If price increases from $2 to $3, the quantity supplied will increase, but the supply curve will not move. C) The eighth unit supplied has a marginal cost of $0
B
Which of the following statements regarding globalization is not true:A) The United States is one of many countries that has had an increase in international trade over the past few decades. B) Globalization has increased the wages of workers in the United States without a college degree and helped to reduce income inequality. C) Globalization increases the variety of goods available to consumers. D) Wages are mostly determined by productivity
B
You are deciding what to order at Starbucks. A coffee costs $4 and a cappuccino costs $5. You value a coffee at $5 and a cappuccino at $8. You only want to order one drink. After you buy your preferred drink, what is your consumer surplus? A) $1. B) $3. C) $5. D) $8
B
You are the fifteenth caller for a contest at your favorite radio station and win your choice of three concert tickets: Post Malone, Taylor Swift, and the Jonas Brothers. You choose PostMalone, because that is your favorite performer. Your second choice would have been the JonasBrothers. What is the opportunity cost of the concert tickets? A) Zero, because they were freeB) The Jonas Brothers ticketsC) The Jonas Brothers tickets and the Taylor Swift tickets
B
A recent article estimated the effect that the Australian wildfires would have on milk production and prices. The article estimates that global milk exports will decrease 0.6% as a result of the fires. The article assumes that the own-price demand elasticity of milk is -0.2.However, the article does not explain that its basis for this assumption. Suppose this assumption is wrong, and the demand elasticity is actually -0.1. Suppose the original price of milk was $2.00 per gallon. What would the post-wildfire price be? A) $1.88. B) $2.06. C) $2.12. D) $2.24
C
A tax on buyers shifts the _______ curve to the _______: A) Supply; left. B) Supply; right. C) Demand; left. D) Demand; right
C
According to what we learned in class, prices in the stock market are a good example of how A) A price is a signal. B) A price is an incentive. C) A price aggregates information
C
Adam, Brian, and Carlos are all planning to purchase gasoline. Adam is on a road trip with friends, driving through the Montana wilderness, and his gas tank is almost empty. Brian has a girlfriend who lives in another state and has been planning to drive to visit her on her birthday for months. Carlos uses gasoline to drive to his favorite restaurant, but there is also a bus that he could take. Whose demand for gasoline is probably the most elastic? A) Adam. B) Brian. C) Carlos
C
After Johnny finished law school and got a job at a law firm, he stopped mowing his own lawn and started paying a lawn service to do it. According to what we learned in this unit, what is the best explanation for this? A) Johnny has a comparative advantage at mowing his lawn. B) Johnny has an absolute advantage at mowing his lawn. C) Johnny's opportunity cost of mowing his lawn went up, because the wage he earns from his job went up. D) Johnny's opportunity cost of mowing his lawn went up, because he can now afford to pay someone to mow his lawn
C
Apple juice and apple sauce are substitutes in production. How would an increase in the price of apple juice affect the supply curve for apple juice? A) A shift from S1 to S2. B) A shift from S2 to S1. C) Movement from point 1 to point 2. D) Movement from point 2 to point 1
C
As Bitcoin mining became more popular, many people realized that high-end graphics cards were not just good for gaming - they were also well-suited to do the calculations required forBitcoin mining. As a result, the price of high-end graphics cards went up. Which of these is a good explanation of the signal that price increase sends to suppliers of high-end graphics cards A) "The marginal cost of making graphics cards is very high". B) "Instead of buying a graphics card for your computer, just buy a PlayStation 5". C) "Mining Bitcoin can be very profitable, so consumers get a lot of benefits from high-end graphics cards. You should make more of them!". D) "The demand for graphics cards is low, so you should stop making so many of them"
C
Assume that Domino's pizza is a normal good and that pizza and chicken wings are substitutes. Which of the following would cause an increase in demand for Domino'sPizza among MSU students? A) Dominos lowers their prices. B) Students' average incomes decrease. C) The price of fried chicken increases. D) Pizza Hut spends a lot of money sponsoring various MSU athletic events
C
Blake is considering vaping. One of his friends just quit vaping and has offered Blake hisJuul for free, but only if Blake is going to use it himself. If Blake does start vaping, he will spend$20 per week on Juul pods. Additionally, Blake's girlfriend will break up with him if he starts vaping.What is the opportunity cost of vaping for Blake? A) $20 per weekB) Zero, because he got the Juul for freeC) $20 per week and his girlfriend
C
Buyers bear a smaller incidence of the tax when: A) The tax is higher. B) Supply is more elastic than demand. C) Demand is more elastic than supply. D) Demand is perfectly inelastic
C
If the price elasticity of demand for a product is equal to -0.6, then a 10 percent decreasein price will increase quantity demanded by A) 16.83%. B) 0.6%. C) 6%. D) 0.06%.
C
Initially, there are 5 buyers in a market and 10 sellers. Each buyer wants to purchase one good, and each seller has one good to sell. The price of the good is $120. What do we expect to happen? A) Some buyers will offer to pay more than $120. B) There will be a long-lasting shortage. C) Some sellers will offer to sell for a price below $120. D) There will be a long-lasting surplus
C
Jason and Gary are roommates trying to divide chores. Jason has a comparative advantage at a chore if he can complete the chore A) Using fewer inputs than Gary. B) In less time than Gary. C) At a lower opportunity cost than Gary. D) At a higher opportunity cost than Gary
C
Jeff enjoys drinking Charged Lemonades from Panera. His demand curve forCharged Lemonades is shown below. Charged Lemonades cost $4 each. Then, Panera begins to offer membership to the Panera Sip Club, a very exclusive club which you can only join if you meet a specific set of requirements. Well, actually only one requirement:you have to give Panera $12 per month. As a member, Jeff gets unlimited ChargedLemonades for free. How many Charged Lemonades will Jeff drink now that he is a member of the Panera Sip Club? A) 2. B) 6. C) 8. D) As many as he can possibly get
C
Straw is an agricultural byproduct consisting of the dry stalks of cereal plants after the grain and chaff have been removed. It makes up about half of the yield of cereal crops such as barley, oats, rice, rye and wheat. It has a number of different uses, including fuel, livestock bedding and fodder, thatching and basket making .How would the supply of straw be affected by an increase in the price of wheat? A) Movement up and to the right on the supply curve. B) Movement down and to the left on the supply curve. C) Supply increases. D) Supply decreases
C
Subaru Corp.'s chief executive said he didn't see much evidence Americans want electric vehicles or plug-in hybrids and expressed frustration at navigating between environmental regulations and consumer demand.Tokyo-based Subaru relies on the U.S. for two-thirds of its global sales, and has already had a tough experience trying to sell a vehicle that can be charged at home. In 2018,[Subaru] introduced a plug-in hybrid version of the Crosstrek. It said just 300 units of the model were selling each month on average. In this area, Mr. Nakamura said, "We think the U.S. market is really difficult."Based on this information, what do we expect to happen to the plug-in hybrid Crosstrek: A) There will be a persistent (long-lasting) surplus. B) There will be a persistent (long-lasting) shortage. C) Equilibrium price will decrease. D) Equilibrium price will increase
C
Suppose that light bulbs have unit-elastic demand. Initially, the price is $2 and the quantity demanded is 30. Price decreases to $1. What is the new quantity demanded? A) 30. B) 31. C) 45. D) 60
C
Suppose the market for coffee experiences an increase in demand due to a new scientific study claiming health benefits of coffee consumption. What is likely to happen to the equilibrium price and quantity of coffee in the market? A) The equilibrium price will decrease, and the equilibrium quantity will increase. B) The equilibrium price will increase, and the equilibrium quantity will decrease. C) The equilibrium price and quantity will both increase. D) The equilibrium price and quantity will both decrease.
C
The main role of markets is: A) Facilitating consumption. B) Preventing waste. C) Reallocating resources to better uses. D) Providing jobs
C
The market for orange juice is initially in equilibrium. Then two things happen: first, the orange juice industry starts a successful ad campaign that convinces consumers that orange juice is healthy. Second, there is a drought which destroys most of this year's orange crop. What is the effect on price and quantity? A) The effect on price is ambiguous. Quantity decreases. B) Price increases. Quantity increases. C) Price increases. The effect on quantity is ambiguous. D) Price decreases. Quantity decreases
C
The price of potato chips is surprisingly high this year. This will serve as a: A) Incentive for buyers to purchase more potato chips. B) Signal that sellers should stop growing potatoes and switch to a different vegetable. C) Signal that sellers should grow more potatoes
C
To keep the local professional football team from leaving, the city of San Diego proposed a tax on hotel rooms that would be used to fund a new football stadium. Many people are opposed to using tax revenues to fund sports stadiums. The mayor argued that, because the tax would be paid by out-of-town visitors, the new stadium would be "free" for residents. Which of the following statements is most accurate? A) The mayor is correct B) The mayor is forgetting about the opportunity cost of having a football team instead of having another sports team C) The mayor is forgetting about the opportunity cost of spending the tax revenue on a new stadium instead of on something else D) The mayor is forgetting about the marginal benefits residents receive from the football stadium
C
When the price of a product increases from 100 to 105, quantity sold decreases from 500to 495. Demand is: A) Elastic. B) Unit elastic. C) Inelastic. D) Fantastic
C
Which of the below items probably has the most inelastic demand curve?A) Luxury cars. B) Honey Nut Cheerios. C) Soap. D) A ticket to see Barbie at your local movie theater this Friday at 7:00 p.m.
C
Which represents an increase in quantity supplied? A) A shift from S1 to S2. B) A shift from S2 to S1. C) Movement from point 1 to point 2. D) Movement from point 2 to point 1
C
Each hour that Ray studies will improve his score by 5 percentage points. Ray has decided he is indifferent between a 5-percentage point increase and 300 points of XP.(So, he would rather have a 5-percentage point increase than 299 points of XP, but he would rather have a 301 points of XP than a 5-percentage point increase.) How shouldRay spend his next 4 hours? A) Spend 4 hours studying. B) Spend 1 hour playing Valorant and 3 hours studying. C) Spend 2 hours playing Valorant and 2 hours studying. D) Spend 3 hours playing Valorant and 1 hour studying
C and D
A recent article in the Wall Street Journal called "The Grown-Ups Who Can't Quit Uncrustables" discusses adults who like to eat Uncrustables (a pre-made peanut butter and jelly sandwich that is purchased frozen and thawed before eating). Suppose adults who had never heard of Uncrustables read this article and decide to start eating them for lunch. How would this affect demand? A) Increase in quantity demanded. B) A decrease in demand due to shifts in income. C) An increase in demand due to network effects. D) An increase in demand due to an increase in the number of buyers
D
Brian orders dinner over DoorDash. He decides to try a new restaurant and orders a steak for $45. He has one bite and decides that he hates it. If he had known how bad the steak would be, his willingness to pay for it would have been three dollars. Brian is considering throwing the steak away and ordering a pizza instead. If he does, the pizza will cost $10. Assume that he cannot save any of the food he orders - he either eats it for this meal or throws it away. Which of the following is true: A) Brian should only order the pizza if his willingness to pay for it is at least $55. B) Brian should only order the pizza if his willingness to pay for it is at least $45. C) Brian should only order the pizza if his willingness to pay for it is at least $10. D) Brian should only order the pizza if his willingness to pay for it is at least $13
D
Initially, the price of a bicycle is $100 and 200 units are sold. The price increases by x dollars. Price elasticity of demand is -2. How many units are sold? A) 2x. B) 400x. C) 100-2x. D) 200-4x
D
Jan has determined that her "Serenity by Jan" candles have an elasticity of demand of -1.35. Which of the following is true? A) Increasing price would increase revenues. B) A 10% decrease in price would result in a 35% decrease in quantity sold. C) A 10% decrease in price would result in a 35% increase in quantity sold. D) Decreasing price would increase revenues
D
Suppose golden retrievers create positive externalities because they are cute and people like seeing them at the park. Which of the following is true? A) The social supply curve is to the left of the private supply curve. B) The social supply curve is to the right of the private supply curve. C) The social demand curve is to the left of the private demand curve. D) The social demand curve is to the right of the private demand curve
D
Suppose the price of roses increases. Assume that roses and chocolates are substitutes.Which of the following responses is likely? (Note: that we are looking for what happens after the price changes, not for what caused the price change) A) Quantity of chocolates decreases. B) Quantity of roses sold increases. C) Price of chocolates decreases. D) Quantity of chocolates increases
D
The cross-price demand elasticity of good X and good Y is equal to zero. The price of good X goes up. Which of the following statements accurately describes what happens: A) Consumption of good Y goes up, because the goods are complements. B) Consumption of good Y goes up, because the goods are substitutes. C) Consumption of good Y goes down, because the goods are complements. D) Consumption of good Y is unchanged
D
The equilibrium apartment rental rate is $1000 per month. If a price ceiling is set at $800, we expect the outcome to be ______. If a price ceiling is set at $1200, we expect the outcome to be_____. A) Equilibrium; equilibrium. B) A shortage; a surplus. C) Equilibrium; a shortage. D) A shortage; equilibrium
D
The price of beer falls. As a result, Pabst sells less beer. This could be illustrated by A) A shift from S1 to S2. B) A shift from S2 to S1. C) Movement from point 1 to point 2. D) Movement from point 2 to point 1
D
The price of movie tickets is $15, and Sophie buys 10 movie tickets per year.Which of the following is most likely to be true: A) Sophie's total willingness to pay for 10 movie tickets is $150. B) If the price of movie tickets went up to $16, Sophie would not buy any movie tickets. C) Sophie's marginal benefit from the tenth movie ticket is $0. D) If Sophie bought an eleventh movie ticket, the marginal benefit of that ticket would be greater than zero
D
Which of the following is definitely an example of someone not acting in their self-interest? A) A drug addict using heroinB) A criminal robbing a bankC) A person buying an expensive carD) None of the above; each of these could be an instance where someone is acting rationally and in their own best interest.
D
Which of the following statements regarding globalization is not true:A) Globalization has been driven by falling trade costs. B) Globalization has increased the wages of college-educated workers. C) The U.S. tends to import low-skill-intensive goods. D) Due to globalization, the U.S. is negatively affected when there is economic growth in other countries
D
Which of the following would make the supply curve for frozen pizzas more elastic: A) New regulations make it difficult for new companies to enter the frozen pizza industry. B) Mozzarella cheese becomes expensive and hard to find. C) An earthquake destroys a factory that made lots of frozen pizzas. D) Pizza companies develop a new technology that makes it easier to store pizzas in a warehouse for months without it affecting the taste of the pizza
D
_________ should do the programming questions and ___________ should do the graphing questions A) Kim; Kim. B) Clara; Clara. C) Kim; Clara. D) Clara; Kim
D
If Raphael sells the cakes for $70 each, what is total economic surplus? A) $30. B) $70. C) $140. D) $210. E) It depends on how much the consumer values the cakes
E
