econ practice quiz

What factors into the opportunity cost for a decision?

- benefits from the best foregone alternative - actual financial cost of the decision - time spent due to the decision

Which of the following is the best definition of the opportunity cost of a decision?

Benefits from the best foregone alternative.

You eat M&Ms every day. When you go to the store to buy some, you find that M&Ms are more expensive than they were last month. Which of the following could explain why M&Ms are more expensive?

The supply of cacao beans, used to produce chocolate, has fallen around the world.

You're shopping online, and you place an item in your virtual cart. Two days later, you return to the virtual cart to check out and find that the item is now more expensive. Assuming that the market is competitive, what could explain the price increase?

There is a shortage of the item.

Suppose that you have a pumpkin stall at a farmer's market, and the Halloween season arrives. You know that your customers will want to buy many pumpkins to decorate their houses and make pumpkin pies. Which of the following is a likely result of this scenario?

You can charge a higher price per pumpkin.

Graphically, shortages will always occur:

at prices below the equilibrium price.

Diane Jacobs is a student studying economics and currently working on her class schedule for next semester. She considers the fact that more and more data is available every day and that data interpretation skills are learned by taking additional economics courses in her course selection. This acknowledgment highlights the dependencies that exist:

between markets.

The PS+ subscriptions allow PS4 owners to play their games online, receive new games monthly to download at no charge, and receive additional special discounts on other items. Therefore, the PS4 and PS+ subscriptions are

complements

A leftward shift in the graph is an

decrease in demand, because the quantity demanded is lower at each and every price

When there is a shortage of highly skilled workers in a particular region, the:

demand for skills education increases.

An equilibrium price is:

determined by the intersection of the demand and supply curves.

As a result of technological innovation, automated water pumps are being installed on the farms of Kenyan tomato farmers. As a result of the increased use of automated water pumps, the equilibrium price of tomatoes will:

fall, due to a rise in supply.

When there is a shortage of highly skilled workers in a particular region:

highly skilled workers can negotiate higher salaries.

in consumption. Decreasing the price of the PS4 will __________ the demand for PS+ subscriptions. Sony expects that revenue from recurring PS+ subscriptions will be larger than the loss in revenue from PS4 sales.

increase

a rightward shift in the graph is an

increase in demand

For most consumers, dental services are

normal good

For most consumers, the newest iPhone is

normal good

The interdependence principle states that your best choice today depends on all of the following EXCEPT

past decisions you have made.

A shortage occurs when:

quantity demanded exceeds quantity supplied.

to find the market supply on a table, add each row

refer to question 27 on the practice quiz

People have limited resources.

scarcity

Delta signs a new labor contract that increases the wages paid employees.

supply moves to the left

The price of jet fuel falls.

the line falls to the right

If a store runs a sale on a product to clear out its stock, we can conclude that:

there was a surplus of the product in the store.

Everything you do requires giving up something (time, money, etc.).

tradeoffs

An equilibrium in a market occurs:

when the quantity supplied equals the quantity demanded.

For most consumers, a 10-year-old used car is

inferior good

The United Kingdom plans to end the use of gas-powered and diesel-powered cars by the year 2040. At the same time, car manufacturers, such as General Motors and Nissan, are increasing the number of electric car models they produce. Based on this information, which of the following statements is/are correct?(i) If the supply of new electric cars is greater than the demand for new electric cars, then the price of electric cars will fall in the future.(ii) The demand for gasoline will fall in the future.(iii) The demand for electricity will rise in the future.(iv) The demand for diesel will rise in the future.

(i), (ii), and (iii)

Consider your current uses of tap water. Think about some of the ways that you use water that are beyond what is necessary to sustain life. a. If the price of tap water triples, what are some likely changes that you will make to your consumption of tap water?

- decrease the length of your showers - turn water off while brushing your teeth

John works eight hours per day. Today he has to decide whether to work overtime and stay one more hour in the office, or go back home and spend that hour studying for his economics exam. His company pays him $80 per day if he works eight hours, and $100 per day if he works nine hours. Assuming that, if John studies one more hour, his exam score increases from 75 to 80, what is John's rational decision?

John decides to work overtime only if he values getting a five point increase on his exam score less than $20.

You have a part time job that pays $8 per hour. Your manager has asked you to work four extra hours on Friday night, but you already have plans for dinner and a movie with a friend on Friday night. Under what conditions will you choose to work on Friday night? Consider the economic way of thinking in answering this question; also assume that you are rational (even if you do not think you are rational) and can afford dinner and a movie.

You value the extra pay more than the Friday night activities (in terms of marginal benefits, marginal costs, and your utility).

A seller at a farmer's market wants $10 for a bag of 10 apples. You think his price is too high, so you counter with an offer of $6 for the bag. The seller then offers you a much smaller bag of five apples for $6. You bargain again, and the seller lets you buy the 10 apples for $8. This scenario is an example of:

a market in action.

During the 1990s, Dell Computer Company adopted a lean production process, a manufacturing process that reduces inefficiencies without reducing production. As a result, Dell became one of the largest PC manufacturers in the world. Consider what impact the adoption of lean production techniques likely had on Dell's supply curve for PCs. Show the impact in the graph below by shifting the supply curve or moving the point along the curve.

supply shifts to the right of the graph

Innovation of new software allows Delta to more efficiently allocate its aircraft.

the line goes to the right

Jerome is working as an IT consultant. His individual labor supply curve is given in the accompanying graph. Jerome decides to enroll in college and will begin taking classes next semester. Make the appropriate change to the graph to show the most likely effect on Jerome's labor supply curve of his decision to attend college. If Jerome's decision to attend college results in a change in supply, shift the supply curve appropriately, but leave the wage line unchanged. If Jerome's decision to attend college results in a change in quantity supplied, adjust the wage line appropriately, but leave the supply curve unchanged.

the line on the right moves to the left

The batteries in Samsung smartphones begin to spontaneously combust.

the line on the right moves to the left on the graph

Apple increases the price of the newest iPhone by 10%.

the line stays to the right of the original line