Econ mideterm

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

-2

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

0.7

Jane has $600 a week to spend on clothing and food. The price of clothing is $30 and the price of food is $20. The clothing and food pairs in Jane's choice set include ________ units of clothing and ________ units of food.

20; 30

Refer to Figure 6.8. The total utility of the three movies is ________ and the marginal utility of the third movie is ________.

28; 3

Refer to Table 2.1. For Mark, the opportunity cost of writing one TV commercial is

3 poems

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

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

Refer to Figure 7.2. The average product of the second worker is ________ lawns mowed.

4

Refer to Table 2.1. For Krystal, the opportunity cost of writing one TV commercial is

4 poems

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?

D

Refer to Figure 3.19. When the economy moves from Point A to Point B, there has been

an increase in demand and an increase in quantity supplied.

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?

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

A decrease in demand for cameras would likely be caused by

an increase in the price of a complementary good

Refer to Figure 3.3. As your income increased, the demand for X shifted from D1 to D2. Good X is

an inferior good

The "law of demand" implies that

as prices fall, quantity demanded increases.

The total of consumer plus producer surplus is greatest

at the market equilibrium.

If the marginal product of labor is less than the average product of labor, then the

average product must be decreasing and marginal product must be decreasing.

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 ________.

elastic; decrease

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

employ more capital and less labor.

Refer to Figure 7.5. Diminishing marginal returns set in after the ________ worker is hired.

fifth

Refer to Table 6.1. Diminishing marginal utility sets in after the ________ soda per day.

first

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)

inferior good.

Production inefficiency occurs

only when an economy produces underneath its production possibility frontier.

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

opportunity cost

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

positive economics

Consumer surplus is

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

Refer to Figure 2.1. Macroland is currently operating at Point A. The best explanation for this is that

the economy's resources are being used inefficiently

In the long run,

there are no fixed factors of production.

If the government imposes a maximum price that is above the equilibrium price,

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

upward sloping.

Refer to Figure 4.3. An example of an effective price ceiling would be government setting the price of pencils at

$0.40.

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

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

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

$10,100

Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hamburger is $5.00. Tom's monthly income is

$100

Refer to Scenario 7.1. During the year your economic costs were

$100,000

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 ________.

$10; 11

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

$25

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

$4

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 ________.

$500; $300

Refer to Figure 3.17. The market for sunglasses is in equilibrium at a price of ________ and a quantity of ________ sunglasses.

$60; 450

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

4 sodas and 1 hamburger.

Refer to Figure 7.2. The marginal product of the second worker is ________ lawns mowed.

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 ________.

50; 20

Refer to Figure 4.1. At the world price of 30 cents per apple the United States imports ________ million apples per day.

6

Refer to Figure 6.1. Assume Tom's budget constraint is AC. At which point does Tom consume only hot dogs?

A

Refer to Table 7.2. Which technology is the most capital intensive?

A

In figure 4.6 at equilibrium, consumer surplus is area

A+B+C.

In figure 4.6 if price is P1, consumer surplus is area

A+B+E.

In figure 4.6 if price is P1, the deadweight loss due to under production is area

C+F

Refer to Figure 3.11. Assume hamburgers are a normal good. An increase in income will cause a movement from

D1 to D2.

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

D2 to D1.

Refer to Figure 6.3. Molly's budget constraint is AC. It would swivel to AB if the price of

DVDs increased.

In figure 4.6 at equilibrium, producer surplus is area

E+F+G.

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?

Given the numerous alternatives, consumers' demand for fast food is relatively elastic and the tax will likely work to discourage fast food consumption; The tax on fast food will likely increase the demand for home cooked meals.

Refer to Table 2.1. Which of the following statements is true?

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 change in the price of CDs

The law of diminishing marginal utility refers to

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

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

Refer to Figure 3.16. The supply curve for hula hoops shifts from S0 to S1. This could be caused by

a decrease in the number of firms selling hula hoops.

If the price of chili increases, there will be ________ of chili cheese fries.

a decrease in the supply

The production possibility frontier is a graph that shows

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

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

an excess demand of 6 cheeseburgers.

Refer to Figure 3.17. At a price of $30, there is an excess *

demand of 450 sunglasses.

Costs of production are determined

by the technologies that are available and by input prices

In input or factor markets,

households supply resources.

Refer to Figure 4.1. If a 10-cent-per-apple tax is levied on imported apples, the United States will

import 2 million apples per day.

Economic costs

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

Which of the following is held constant along the demand curve?

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

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

marginal cost

We can state the utility-maximizing rule in words in the following way: A person maximizes utility when she equalizes the ________ across products

marginal utility per dollar spent

The more time that elapses, the

more price elastic is the demand for the product.

If the unemployment rate increases from 10% to 14%, the economy will

move away from the ppf toward the origin.

Refer to Figure 3.18. The current price of a bag of pretzels is $1.10. You accurately predict that in this market,

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

specialized resources

Suppose the demand for books goes down when the price of video games goes down. We can say that these two goods are

substitutes.

As an individual consumes more of a product within a given period of time, it is likely that each additional unit consumed will yield

successively less satisfaction.

Opportunity cost is

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

Which of the following is NOT an opportunity cost of attending college?

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

Producer surplus is

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