Econ Final EOC

Which of the following is likely to have the largest elasticity of supply?

The producer of vanilla ice cream

How much (if any) does each of the following transactions raise GDP? The same individual purchases $3,000 worth of materials and builds himself a garage, which is worth $10,000. ______________

3000

Which point represents the optimal mix of producing butter and shoes?

One cannot tell

Does GDP include the purchase of a haircut?

yes

Okra was $13.00 per bushel in 2015, and 1.5 million bushels were sold. Okra was $14.00 per bushel in 2016, and 2.0 million bushels were sold. "If in both cases the okra market was in equilibrium, this must be an example of an exception to the law of demand."

False

The suppliers of ____________are more likely to have a tax imposed on their production.

Gasoline

There have been recent talks about increasing spending on highways and roads. What component of GDP would that affect?

Government spending (G)

You are running a small business and are thinking about ways to increase your profits. Assume you are facing an elastic demand. Would you raise or lower your prices?

I do not know because I cannot tell how much costs would change in relationship to revenues.

If a consumer is currently maximizing her satisfaction, what will happen to the marginal utility of a good when its price increases? The marginal utility will __________.

Increase, because the consumer will decrease her consumption of the good.

An increase in the prices of inputs will cause the equilibrium price to ______________ and the equilibrium quantity to ______________.

Increase; decrease

An increase in an effective maximum legal price will do what to prices and quantities actually sold in a market? Prices will __________ and the quantities actually sold will ___________.

Increase; increase

Tesla is building a car battery factory in Nevada to drastically increase their production capacity from where it is now. Since the factory has not opened, Tesla is __________.

Increasing its production possibility frontier

If the income elasticity of a good is 0.8, what do we know about the good?

It is a normal good.

Which of the following is true of an economic model?

Makes simplifying assumptions to provide a simpler version of a complex problem so that it may be studied and understood

An economic model makes it easier to understand complex economic problems by doing which of the following?

Making simplifying assumptions

If a man spends approximately 45% of his income on air travel and his sister only spends about 2% of her income on air travel (and that is the only difference), would the man's demand for air travel be less or more elastic than his sister's?

More

The price elasticity of demand will be _________________ if demand is elastic.

More than one

Compare the following two situations. In the first, gasoline prices alone rise from $2.50 per gallon to $4.00 per gallon. In the second, prices of most goods and services - including gasoline prices -- increase by 4 percent. Which of those situations represents inflation in an economy?

Only the second situation

Which of the following graphs shows the correct change in the production possibilities frontier curve if a new technology is invented that increases the productivity of watch manufacturing?

Option B

China has one of the largest real GDPs in the world. What does that measure not consider when determining the well-being of its citizens?

The number of people in the country

Which of the following best describes how the unemployment rate is calculated?

The number of people looking for a job divided by the number of people who either have a job or are looking for a job.

If a country is importing $1 million worth of goods and exporting $800,000, then net exports are:

-$200,000

How much (if any) does each of the following transactions raise GDP? The same individual goes to the woods, cuts down a tree, and uses the wood to build himself a garage that is worth $10,000. ______________

0

If Bill spends all his money on apples that cost $3 per pound and Bill has $31 to spend, how many pounds can he buy (whole pounds)?

10

What point shows the market as being most allocatively efficient?

100

Looking at the production of handbags and phones once again, if a firm has 6 workers with three workers producing handbags and three workers producing phones, what is the marginal cost of producing one additional phone if a worker changes from handbag production to phone production?

1.25 handbags

If one worker produces 15 cones of ice cream in an hour, two workers produce 25 ice cream cones, and three workers produce 30 ice cream cones in an hour, what is the marginal return of production of the second worker?

10

How much (if any) does each of the following transactions raise GDP? An individual pays a carpenter $10,000 to build a garage. ______________

10000

Suppose that a rise in "Buy American" sentiment in the U.S. reduces the quantity demanded at each price by 500,000 (.5 million) cars per year. What is the new equilibrium price?

12000

Suppose the supply and demand schedules for Japanese cars in the U.S. are as follows: What is the equilibrium price?

14000

Referring to EOC 2.14, if another worker making handbags switches to making phones, by how much will production of handbags fall?

15

What is the marginal utility of the 2nd pound of apples?

15

At what level of output is the marginal cost greater than the marginal benefit?

150

How much (if any) does each of the following transactions raise GDP? The Jones family sells its old house to the Reynolds family for $130,000. The Jones family then buys a newly constructed house from a builder for $175,000. ______________

175000

What is the new equilibrium quantity?

1750000

A company produces flashlights. If they hire one worker that worker will produce 10 flashlights in an hour, if they hire a second worker both workers will produce 16 flashlights in an hour, and if they hire a third worker they will all produce 18 flashlights. What is the marginal benefit of hiring the third worker?

2

What is the marginal benefit of the last worker in the handbag production process with the change put forth in EOC 2.15?

20

What is the equilibrium quantity?

2000000

Unemployment rates remained high for many years after the Great Recession. What was the first year where rates dropped below what they were in 2008?

2015

What is the marginal benefit of taking another worker from the handbag production process to phone production in addition to what was done in EOC 2.14?

5

At which pf the following levels of inflation should the country be concerned?

5%

At what level of output is the market producing too little from a point of view of efficiency?

50

A company produces reuseable water bottles. If they hire one worker that worker will produce 10 water bottles in an hour, if they hire a second worker both workers will produce 16 total water bottles in an hour, and if they hire a third worker they will all produce 18 total water bottles. What is the marginal benefit of hiring the second worker?

6

If Bill spends all his money on bananas that cost $5 per pound and Bill has $31 to spend, how many pounds can he buy (whole pounds)?

6

The following table provides the different output levels that workers could produce. For example, if three workers are making handbags and two workers are making phones, 45 handbags and 30 phones will be made. A company has 6 workers. If 3 workers are making handbags and 3 workers are making phones, what is the marginal benefit of phones if one worker is taken from handbag production and placed into phone production?

8

What was the peak yearly unemployment rate around the Great Recession:

9.6%

An increase in an inelastic demand will cause (a greater or lesser or same) change in the equilibrium quantity than the same increase in an elastic demand.

A greater

Which of the following statements about the effects of rent control is true?

A maximum price will cause a shortage of a good to be produced only it the maximum price is below the equilibrium price.

Were inflation levels leading up to and into the first full year of the Great Recession below or above the typically targeted rate of around 2%?

Above

When parents say, "My child is very intelligent, but he just doesn't try. My child would rather play video games than study." The child is _______.

Allocatively efficient, but not technically efficient

If population increases in a city with effective rent controls (and nothing else changes), which of the following describes what will happen in the market for rental housing?

An increase in demand, but no change in quantity supplied.

Since 1950, the labor force participation rate of women with young children has been increasing dramatically. In accordance with this trend, one would predict that there has been _______________.

An increase in the demand for child care services

What was the average annual increase in real GDP from the Great Recession to 2016?

Between 1.6 and 2.6%

Which of the following goods would be the most likely to be subject to a government-imposed tax?

Bottles of alcohol, such as whiskey and gin

A government may impose a price ceiling if which of the following is true?

Consumers can persuade legislators that lower prices are needed

Continuing from 4.27, what would be the next two steps that follow after the shortage?

Consumers will pay a higher price and producers will be able to raise their price while still selling all of their inventory.

In the recent past, the government has attempted to stimulate the economy by sending tax refunds to individual people so that they will buy more products. What component of GDP is the government attempting to increase?

Consumption

Assume that tastes change so that tennis is no longer as desirable to play as it is now. What would happen to the market for tennis balls?

Demand decreases, the equilibrium quantity is smaller, and the price is lower.

If the country enters a period of prosperity, resulting in consumer incomes increasing by 4% and the income elasticity of a good is 0.8, what will happen to the demand for that good as a result?

Demand will increase by 3.2%

Increasing marginal cost is a direct result of __________.

Diminishing marginal returns

If (1) the cost of manufacturing computers decreases and (2) at the same time the quality improves, making computers more useful for households, which of the following is most likely to happen?

Equilibrium price may increase or decrease; equilibrium quantity will increase

Continuing from 4.28, how will this new equilibrium compare to the initial equilibrium?

Equilibrium price will be higher and equilibrium quantity will be lower.

Which point represents an economy that is not utilizing all of its resources for production?

Point A

Which point represents a level of production in the economy that is not possible?

Point B

An example of price controls given in your text concerns minimum wage increases. On a supply and demand diagram (with wages on the vertical axis and number of workers on the horizontal), would minimum wage be considered a price ceiling or a price floor?

Price floor

Which answer best describe the annual growth rates during the Great Recession?

Real GDP growth rates dipped below 0.

If the unemployment rate in the United States is 4% (or around full employment), what is likely happening to real GDP?

Real GDP is growing at expected rates.

Of the measures discussed in this chapter, which is the best measure of the average individual's well-being.

Real GDP per capita

The figure below shows two production possibilities curves that do what?

Reveal that firm B has an increasing marginal cost of production and firm A does not

What would be the initial change in the market for beer if a city suddenly restricted the number of bar licenses they permitted? (Note: A bar requires a licenses to operate.)

Supply would decrease and there would be a shortage

A pizza parlor can make 100 pizzas in an evening. They make 40 pepperoni pizzas and 60 extra cheese pizzas. 100 people order pizza, but 50 people would like a pepperoni pizza and 50 would like an extra cheese pizza. This pizza parlor is what?

Technically efficient, but not allocatively efficient nor economically efficient

Who is likely to be in favor of a price ceiling on a good?

The consumers of the good who can still purchase it after the ceiling is imposed

The Bureau of Labor Statistics (BLS) reports unemployment rate numbers each month. Their preliminary reports for February of 2017 said that over 200,000 jobs had been added and the unemployment rate had dropped to 4.7%. What does this report signal about the economy?

The economy is improving.

As a larger number of students are assigned to groups to work on a project, which of the following is true?

The less each additional student will contribute to the project

Consider the following production possibilities frontier. If the economy is currently at point A and producing missiles or automobiles are the only choices, which of the following statements is true?

The opportunity cost of producing 50 additional automobiles is zero missiles

Why is the purchase of a share of stock not included in GDP?

The purchase of a share of stock does not correspond to the production of a good or service.

When price decreases, quantity increases. Price elasticity of demand measures how much ___________.

The quantity increases when price decreases

Which definition is the best one for GDP?

The sum of all final goods and services produced in a country in a given year.

Over the past year, major American automotive companies have switched some of their production from smaller, more fuel efficient cars to trucks and SUVs. Pick the best response as to why they switched production.

Workers became more efficient in producing trucks, so the marginal cost of producing smaller cars increased The price of trucks and SUVs increased, so marginal cost of continuing to produce smaller cars was too great.

Which points represent a production level that could be economically efficient?

b and c

Inflation measure is ______________, while deflation measure is ______________.

he increase in price of a typical bundle of goods / the decrease in price of a typical bundle of goods.

If the economy is producing at a point inside the production possibilities frontier, which of the following must be true?

more of both goods can be produced

Assume that as your income increases, your consumption of burgers decreases. We can assume that your income elasticity of demand for burgers is what?

negative