Econ Final Exam

why are supply curves typically upward-sloping?

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

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 d (old demand right arrow to new demand)

Markets allocate goods to those with the:

highest marginal benefit

Refer to the graph. Suppose that a binding price ceiling of $25 is removed. The actual number of items sold in this market will:

increase from 40 to 50

Market failure occurs when market forces lead to:

inefficient outcome

When you get hired for a well-paying job, you will most likely view older used cars as

inferior goods

Pedro attends a university that provides antivirus software to all students, faculty, and staff for their personal computers as well as all university-owned computers. Why would the university pay for the protection of the personal computers of students, faculty, and staff?

it reduces the number of viruses on university-owned computers by reducing the probability that viruses will spread through files transferred from personal computers to university-owned computers and systems

The most efficient outcome in a set of options is the one with the:

largest economic cost

A company is the only one producing its type of product. The company's owner is able to set price at the most profitable level. This company is in what type of market?

monopoly

Marginal social cost equals marginal _____ cost plus marginal _____ cost.

private; external

When negative externalities occur as a result of a product market's activity, the market will _____ than is desirable.

produce more

If a firm produces a product that has easily available variable inputs, its supply curve will be:

relatively flat

A new study discovers the health benefits of eating fish regularly. At the same time, some consumers decide to become vegetarians. What is the effect of these events on the equilibrium price and quantity in the fish market?

the change in both the equilibrium price and the quantity is ambiguous

Refer to the figure which shows the market for electrical components. Which of the following statements is correct?

the economic burden of this tax is greater on the buyer

The law of demand refers to

the inverse relationship between price and quantity demanded

Economic surplus measures the value of a decision's:

total benefits minus total costs

A Korean-made washing machine purchased by a Chinese citizen is an example of a Korean _____, and a Chinese-made washing machine purchased by a Korean citizen is an example of a Korean _____.

export, import

The deadweight loss in an inefficient market is calculated by first identifying the:

actually quantity produced and sold

Efficient outcomes in markets are NOT dependent on:

advanced technology

A characteristic of perfect competition that is not present in any other market structure is that there

are many sellers that produce identical products

In the long run, a company can remain profitable only if:

barriers to entry are present

The term "gains from trade" means the

benefits that come from reallocating resources, goods, and services to better uses

According to the figure, if there is international trade in this market, and the world price of televisions is $500:

domestic consumers will import 30,000 units

A characteristic of monopolistic competition that is not present in any other market structure is that there

many sellers that each produce its own version of the product

If income rises by 20% and the quantity demanded of an item falls by 20%, the income elasticity of demand for this item is:

-1

The figure shows the market for avocados. If the seller changes the price per avocado from $1.50 to $1.75, the change in total revenue is:

12,750

What is Junko's opportunity cost for washing a car?

2.4 loud of laundry will not be sorted

According to the figure, if there is international trade in this market, and the world price of engines is $1,000, domestic consumers will purchase _____ units from domestic producers and _____ units from foreign producers.

400;0

A quota of 25 units is placed on the market that is shown in the figure. The equilibrium quantity sold in the market before the implementation of the quota was _____ units.

50

In the graph of the soft drink market shown here, the original equilibrium price is $2.50 per bottle. A tax is then placed on the sellers of soft drinks. The incidence of the tax on the buyer is ____ % and the incidence of the tax on the seller is _____ %.

50,50

Why does the demand curve slope downward?

It slopes downward due to the law of demand

The table provides data on how long it takes Maia and Juanita to mow the lawn and weed the flower beds. Who has a comparative advantage in weeding the flower beds?

Maia because she has a lower opportunity cost

A tax designed to induce people to take account of the negative externalities that they cause is referred to as _____ tax.

a corrective

Which of the following lists only factors that would cause a decrease in the demand for a good?

a decrease in popularity of a good, a rise in income (if the good is inferior); a fall in the price of a substitute

In the graph, the movement from point E to point F represents

a decrease in quantity supplied

Efficient production occurs when:

a given level of output is produced at the lowest possible cost

The graph depicts the market for furniture made from sustainable, man-made forests. The government wants to encourage buyers to buy such furniture and imposes a price ceiling of $250. What occurs as a result of the price ceiling?

a shortage of 400,000 pieces of furniture

A negative externality is:

a side effect of an activity when the side effect harms bystanders

In an oligopolistic market, the impact on a seller of the _____ is greater than in other types of market structures.

actions of other market sellers

Use the graph for the watermelon market to answer the question.

five

When an individual's best choice may depend on what other people choose and other people's best choices may depend on what the individual chooses, then _____ is the science that is useful to help the decision makers analyze their options.

game theory

Producers of hand-made leather wallets have made manufacturing changes that have improved quality but reduced efficiency. Which graph shows this change in the market?

graph c

Tropicana produces both orange juice and lemonade. What will happen to the supply of Tropicana orange juice when the price of lemonade rises in the market and the price of orange juice stays the same?

graph c (left arrow pointing from old supply to new supply)

The figure shows four different supply curves for four products: A, B, C and D. Which one of the supply curves probably belongs to a seller who has a large stock of product available for sale?

product d diagonal line from left to right

Graphically, the equilibrium quantity can be identified as the:

quantity corresponding to the intersection of the demand and supply curves

an equilibrium price is price where the

quantity supplied equals the quantity demanded

Two products have a cross-price elasticity of demand of 1.5. Based on this value of cross-price elasticity, which of the following products are they most likely to be?

two competing brands of soft drinks

When market power is a significant force in a product market, the market tends to _____ compared to a market where there is no market power.

underproduce

The percent change in insulin demanded for any price change is zero. The demand curve for insulin is_________, and the price elasticity of demand is _____

vertical; perfectly inelastic

Which of the following is an example of a negative externality?

when Fazio parks his big truck at the grocery store, people in the cars on each side of his parking space have a hard time opening their car doors.