Econ Quiz Questions

You just finished a wonderful dinner at your favorite restaurant. The waiter comes over and asks if you'd like ice cream and if so, how many scoops of ice cream. In what order should you apply the four core principles of economics, below, to make a decision? Cost-Benefit Principle: Does the cost of acquiring ice cream outweigh the benefits? Opportunity Cost Principle: What do I give up by choosing to have ice cream? Marginal Principle: Should I have one more scoop of ice cream than I already have? Connectedness Principle: How will my choice to have ice cream affect other decisions?

Marginal, Cost-Benefit, Opportunity Cost, Connectedness/Interdependent

You order a salad for lunch for $8, but you would have been willing to pay up to $10. It cost the restaurant $3 to make one more salad for you to buy. What is the total economic surplus you experience?

$2

You order a salad for lunch for $8, but you would have been willing to pay up to $10. It cost the restaurant $3 to make one more salad for you to buy. What is the economic surplus the restaurant experiences?

$5

You order a salad for lunch for $8, but you would have been willing to pay up to $10. It cost the restaurant $3 to make one more salad for you to buy. What is the total economic surplus resulting from this transaction?

$7

The price of a bus ticket increased from $1 to $2, and the quantity of bus tickets sold decreased from 500,000 to 450,000 per day. What is the price elasticity of demand for bus tickets, using the midpoint formula? -6.33 -10.00 -0.20 -0.16 -0.10

-0.16

Below are examples of variable and fixed costs a producer might have. Identify the short-run fixed cost(s). Computers the producer purchases for her office Cost of monthly oil purchases for manufacturing and heating Cost of raw materials the producer needs to make goods Rent for a building in which products are made

Computers the producer purchases for her office, Rent for a building in which products are made

Your favorite restaurant serves an option of french fries or tortilla chips for sides. Imagine the cost of potatoes rises while the cost of corn tortillas remains the same. What would happen to the restaurant's supply curves for french fries and tortilla chips? French fries curve shifts left, tortilla chips curve stays the same French fries curve shifts left, tortilla chips curve shifts right French fries curve shifts left, tortilla chips curve shifts left French fries curve shifts right, tortilla chips curve stays the same French fries curve shifts right, tortilla chips curve shifts right French fries curve shifts right, tortilla chips curve shifts left

French fries curve shifts left, tortilla chips curve shifts right

n the 1970's, a series of events around the world caused oil prices to rise significantly. Oil is an input for producing gasoline. How did this price change shift the supply of gasoline? Gasoline supply curve shifted right Gasoline supply curve shifted left Gasoline supply curve did not shift

Gasoline supply curve shifted left

Recently, the City of Boston passed a regulation requiring all new housing developments to reserve at least 20% of units for low-income housing. What type of policy is this? Price floor Tax on suppliers Mandate Quota

Mandate

You are deciding how long your vacation should be. Instead of asking "how many days," she should apply the _________ principle and ask "should I take one more day off?"

Marginal

Recently, music-festivals have become popular in cities across America. Larger festivals, such as Austin City Limits or Boston Calling attract more attendees which means they attract more bands which helps them attract more attendees. By contrast, other, less attended festivals fail to attract bands and attendees. Larger music festivals are benefitting from:

Network effects

You attend a university and decide that you value going to your school's football game at $25. A friend offers to sell you a ticket for $30. Will you increase your economic surplus if you buys the ticket?

No

Applying the marginal principle, "how many" questions should iteratively apply the following question instead:

One more?

In developing countries, direct cash transfers, where study participants are given cash to spend freely, are used to measure economic behavior. Many Tanzanian citizens purchase rice, a normal good, for dinner. If the citizens are given cash as a result of a direct cash transfer program, the income effect tells us they will likely: Purchase less rice Stop purchasing rice Continue their current habits Purchase more rice

Purchase more rice

Candy producers have read that analysts expect the price per pound of candy to increase in the next few months. What will they decide to do with their supply of candy this month? Supply more candy this month, in anticipation of the price change Supply the same amount of candy this month, regardless of the price change Supply less candy this month, in anticipation of the price change

Supply less candy this month, in anticipation of the price change

The price elasticity of demand is: How much the price changes in response to a change in income The percent change in quantity divided by the percent change in price How much the price changes in response to a change in the quantity demanded

The percent change in quantity divided by the percent change in price

Recently, 3D printing has redefined the model manufacturing industry. This new technology allows industrial designers to print 3D models of their inventions in minutes, for far less money than traditional model manufacturing methods. 3D printing technology has shifted the supply curve for model manufacturing: Not at all To the left To the right

To the right

A local diner sells smoothies for $3 a glass. Their marginal cost for producing smoothies is $2 a glass. Assuming the diner won't change their prices, at what point should the diner stop producing smoothies? The diner should have already stopped selling smoothies When the marginal cost of providing smoothies rises above $3 a glass When the cost of providing smoothies falls below $2 a glass

When the marginal cost of providing smoothies rises above $3 a glass

When the price of backpacks decreased from $30 to $25 each, the quantity demanded increased from 1 million to 1.5 million backpacks. Calculate the price elasticity of demand using the midpoint formula. -3.00 -2.20 -0.45 -1.67 -0.33

-2.20

Select all of the following that are results of congestion effects- -Because of the long line at Starbucks, people bring their own coffee to work -A salmonella outbreak at a popular restaurant causes people to stop eating lunch at restaurant locations across the country -In the 1990's professionals began to use Microsoft software because many of their colleagues were using Microsoft software -People begin to bike instead of drive due to crowded roadways

Because of the long line at Starbucks, people bring their own coffee to work, People begin to bike instead of drive due to crowded roadways

In 2015, the UK government enacted a price floor for milk. Many people complain about this policy, saying it is economically inefficient. What could be some of the effects of a binding price floor on milk? The UK government brings in additional revenue due to the subsidy Because of the price floor, many farmers will choose to produce milk rather than other dairy products Inefficient dairy farmers will remain in the market At the guaranteed price, farmers will make more milk than consumers demand, and a surplus will result Farmers begin to exit the market because of the guaranteed price

Because of the price floor, many farmers will choose to produce milk rather than other dairy products Inefficient dairy farmers will remain in the market At the guaranteed price, farmers will make more milk than consumers demand, and a surplus will result

When the demand curve shifts to the left and the supply curve remains the same, what happens to the equilibrium price and quantity? Price decreases and quantity increases Both price and quantity decrease Price increases and quantity decreases Both price and quantity increase

Both price and quantity decrease

Which are signs of disequillibrium? Select all that apply. Buyers are waiting in long lines to purchase a product At a given price, buyers demand the same quantity that sellers provide Sellers have a surplus and start to lower prices Buyers begin to sell their purchased product on a black market for a higher price

Buyers are waiting in long lines to purchase a product Sellers have a surplus and start to lower prices Buyers begin to sell their purchased product on a black market for a higher price

Imagine you are doing your economics homework early. Your decision to spend time on your homework right now makes you tired and it becomes harder to focus on the class you planned to study for later tonight. Which aspect(s) of the connectedness principle does this illustrate? Check all that apply. -Connections over time -Connections between your own choices -Connections between markets -Connections between your choices and the choices of others

Connections over time, Connections between your own choices

Like many students, your friends eat a steady supply of Ramen noodles, an inferior good. Your friends also enjoys meals from nearby restaurants, a normal good, but only eat there sparingly due to the cost. However, one of your friends recently acquired a job as a part-time grader. The income effect tells us this friend will: Eat more Ramen, eat at restaurants less frequently Eat less ramen, eat at restaurants more frequently Eat more Ramen, eat at restaurants more frequently Eat less Ramen, eat at restaurants less frequently

Eat less ramen, eat at restaurants more frequently

A flatter demand curve means price elasticity of demand is more: Inelastic Elastic

Elastic

Chelsea manages a cookie factory and currently has 10 employees to run the cookie manufacturing machines. She recently decided to hire one more worker; however, she noticed the 11th worker didn't increase the number of cookies produced as much as the 10th worker. This is an example of: Increasing opportunity cost of time Network effects Diminishing returns

Diminishing returns

You usually take the bus to work and drives your car on weekends. However, due to falling oil prices, the marginal cost of driving to work on weekdays has fallen below the marginal cost of taking the bus on weekdays. The substitution effect tells us you should now: -Maintain your current habits -Continue to take the bus to work but drive less on weekends -Drive to work on weekdays and continue to drive on weekends -Take the bus to work and take the bus on weekends

Drive to work on weekdays and continue to drive on weekends

Your friend Kelly is celebrating the first anniversary of founding a successful business. She would like to measure her success in terms of economic profit. When calculating economic profit, which of the following should she subtract as the opportunity costs of her entrepreneurship? -Her monthly health insurance costs - Her foregone wages -Her foregone investment income -Her annual rent for the storefront

Her foregone wages, Her foregone investment income

You spent $5 on a cover charge to get into a concert only to find out that your friends went elsewhere. You would rather be with your friends, but you can't get the $5 cover back. You're weighing the costs and benefits of leaving the concert to join your friends. In making your decision, which options should NOT be included? -How much it cost to travel to your current location -How much you value time spent with your friends -The cost of the taxi ride to meet your friends -How much you like the food options at your current location -Cover charges at the place where your friends are -How much you value the time spent with your friends -The cost of the cover charge you've already paid

How much it cost to travel to your current location, The cost of the cover charge you've already paid

Which of the following would cause a shift in the supply curve in the specified market? In the market for tablets: A few schools enact a new policy requiring all students to purchase tablets. In the market for cookies: The price of flour and sugar increases. In the market for solar panels: Researchers find a way to manufacture solar panels more efficiently. In the market for bus tickets: The price of bus tickets increases due to a new city policy.

In the market for cookies: The price of flour and sugar increases. In the market for solar panels: Researchers find a way to manufacture solar panels more efficiently.

Which of the following are true about an individual's demand curve? -It's also a rational individual's marginal benefit curve -It's upward sloping -It describes a quantity demanded at each price -It's a set of plans

It's also a rational individual's marginal benefit curve, It describes a quantity demanded at each price, It's a set of plans

After the 2008 financial crisis, many consumers were displeased with GM for accepting bailout funds from the US government. This consumer displeasure is likely to shift the demand curve for GM vehicles:

Left

Last year, studies found that young adults were more likely to live with their parents rather than their partners for the first time in 130 years. In response, the White House is considering a policy to boost demand for housing. Which policies would help achieve this goal? Disregard for now any negative economic or political consequences. Price floors on housing located in neighborhoods that attract young adults A tax increase on young adults seeking to move away from a parent's home Mandate for each young adult or young couple to purchase one house before the age of 30 A quota on the number of housing units that can be occupied by young adults in certain neighborhoods Subsidies for young adults planning to buy their first home Price ceilings on housing located in neighborhoods that attract young adults

Mandate for each young adult or young couple to purchase one house before the age of 30 Subsidies for young adults planning to buy their first home Price ceilings on housing located in neighborhoods that attract young adults

Your individual demand curve is also your individual:

Marginal benefit curve

An individual supply curve is a supplier's: Correct! Marginal cost curve Marginal benefit curve

Marginal cost curve

New York City Mayor Bill de Blasio is considering implementing a soda tax. If we know the market demand for soda is relatively more inelastic than supply, who will bear more of the economic burden of the soda tax? Buyers and sellers will share the economic burden equally People who buy soda People who sell soda

People who buy soda

When the supply curve shifts to the right and the demand curve remains the same, what happens to the equilibrium price and quantity? Price decreases and quantity increases Price increases and quantity decreases Both price and quantity decrease Both price and quantity increase

Price decreases and quantity increases

When demand increases and supply decreases, what happens to the equilibrium price and quantity? Price increases and quantity could increase, decrease, or stay the same Both price and quantity increase Both price and quantity decrease Quantity increases and price could increase, decrease, or stay the same

Price increases and quantity could increase, decrease, or stay the same

Select all of the factors below that could shift a market supply curve: Buyers' income Prices of other outputs a producer could make instead A change in producer productivity, and technology improvements Buyers' expectations Producers' expectations A change in the producer's cost of inputs The number and type of sellers in the market

Prices of other outputs a producer could make instead A change in producer productivity, and technology improvements Producers' expectations A change in the producer's cost of inputs The number and type of sellers in the market

Part 1 of 2: Many parents depend on childcare providers while they are at work. Suppliers of childcare have relatively elastic supply compared to the inelastic, but not perfectly inelastic, demand of parents. If the supply of childcare shifts left due to increasing input costs, what will happen to the quantity of childcare supplied? Quantity of childcare supplied will decrease Quantity of childcare supplied will increase Quantity of childcare supplied will stay the same

Quantity of childcare supplied will decrease

In early spring, many people are busy planning summer airline travel. However, a rise in landing fees that takes effect next year has led people to expect the price of all airline tickets to rise by 10%. This shifts the current demand curve for airline tickets:

Right

Recently, Millennials became the largest demographic group in the US. Their increasing disposable income is likely to shift the demand curve for Kendrick Lamar's and Beyonce's music (we assume most Millennials enjoy Beyonce and Kendrick Lamar):

Right

Recently, governments have an increased preference for data-based policy design. This change in preference is likely to shift the demand curve for the number of data savvy professionals:

Right

Supply curves slope upward because marginal costs increase as quantity produced increases. Select the reasons marginal costs increase with increasing production. Rising input prices Diminishing returns Rational Rule for Buyers Decreasing marginal costs

Rising input prices Diminishing returns

For 1-ply toilet paper (an inferior good), an increase in an individual's income would:

Shift their demand curve left

Your family goes on vacation to a nearby town every year, where ice cream sells for $2 for a single scoop. Five years ago, there were only two ice cream shops in town, but this year you notice there are seven. What has happened to the supply curve in the ice cream market? Shifted left No change Shifted right

Shifted right

Select all that apply. Market equilibrium is where: The quantity supplied exceeds the quantity demanded The quantity demanded equals the quantity supplied Buyers and sellers have no incentive to change quantity The quantity demanded exceeds the quantity supplied The supply and demand curves cross

The quantity demanded equals the quantity supplied Buyers and sellers have no incentive to change quantity The supply and demand curves cross

Which of the following are true of a perfectly competitive market? Select all that apply. Goods differ from one another There are many buyers and sellers of the same good No individual buyer or seller is large enough to shift the market price on their own Every good is identical Individual buyers and sellers can affect the market price

There are many buyers and sellers of the same good No individual buyer or seller is large enough to shift the market price on their own Every good is identical

Part 2 of 2: Many parents depend on childcare providers while they are at work. Suppliers of childcare have relatively elastic supply compared to the inelastic, but not perfectly inelastic, demand of parents. If the supply of childcare shifts left due to increasing input costs, what will happen to the total revenue of childcare suppliers? Total revenue will decrease Total revenue will stay the same Total revenue will increase

Total revenue will increase

Downward-sloping demand means individuals experience diminishing marginal benefits as quantity consumed increases (for most things).

True

The local grocery store is considering replacing all their cashiers with self-checkout machines. An elite cashier can process 40 customers an hour while a self-checkout machine can process 50 customers an hour. The cost per hour of a cashier-operated checkout line is $10 and the cost of a self-checkout machine per hour is $12. If the grocery store only uses bang-for-buck reasoning and wants to maximize the number of customers processed per dollar spent, what should it do? Use self-checkout machines Use cashiers Use an equal amount of both cashiers and self-checkout machines

Use self-checkout machines