economics exam one

if the number of tomato growers in the market increases, the supply

of tomatoes increase

in the graph, calculate the value of consumer surplus in this market

$50

driving your car in a large city during rush hour causes externalities because

it adds to road congestion and pollution

if the demand for iPhones rises as income increase, the the iPhone is a(n) ______ good

normal

Greece has a comparative advantage in:

skirts only

suppose the country of Florin can produce either 400 or 200 daggers. what is the opportunity cost of one dress in terms of daggers?

1/2 dagger

if Germany decided to produce only skirts, then what is Germanys opportunity cost?

1/2 of a sweater

if the price of shoes is $40 per pair, the quantity supplied will be ____ pairs of shoes

20

an increase in the price of milk will cause a decrease in the demand for milk

false

the U.S. has an absolute advantage in making short sleeve cotton golf shirts. Why do Indonesia and Bangladesh make these shirts and export them to the U.S.

Indonesia and Bangladesh have a lower opportunity cost of producing the shirts than the US

which statement illustrates the law of demand

Lindsey offers to buy more sticks of gum at $1 than at $2

market failure due to asymmetric information is illustrated in which situation

a company does not list all a products ingredients on the label. customers buy the product unaware that it contains harmful ingredients

if specialization and trade lead to a win win in which both countries gain, why is there often opposition to trade agreements and globalization

a country may lose its competitive edge in some goods due to the other countrys having a comparative advantage in the goods being traded

which event will not cause the supply curve for kayaks to shift to the left

a decrease in the price of a kayak

which factor would NOT cause the demand curve for herbal tea to shift to the right

a decrease in the price of herbal tea

suppose that a major hurricane hits Florida, causing widespread damage to homes and businesses. If the legislature imposed price controls in order to keep reconstruction costs reasonable, which of these is the most likely result

a shortage of building materials

getting a flu shot reduces the chances of spreading the illness to ones classmates and friends. why, then, is this considered a market failure due to external benefits

because the number of people who obtain flu shots is less than the socially optimal quantity

an increase in the price of milk will will cause an increase in the supply of ice cream

false

in the demand curve shown, an increase in price from $1-$2 will:

cause quantity demanded to fall from 20 units to 30 units

there are new reports about the adverse affects of driving on the environment. in response, consumers decrease the frequency they drive their automobiles. this is a ___

change in demand

the price of t-shirts increases. in response, consumers purchase fewer t-shirts. this is a ___

change in quantity demanded

the price of cupcakes increases. in response, producers of cupcakes offer more for sale. this is a ___

change in quantity supplied

there is migration into a community of workers with factory production skills. in response, the local factory increases its production of machinery parts. this is a __

change in supply

which good is typically considered a public good

clean air

suppose that a customers willingness to pay for a product is $5, and the sellers willingness to sell is $2. if the negotiated price is $3

consumer surplus is greater than producer surplus

the demand for gasoline is rising. which statement describes a possible cause?

consumers expect prices to rise in the near future

which response is expected in the milk market if the price of chocolate chip cookies declines?

demand increases; quantity exchanged increases; and price increases

if your friend offers to drive you to the store so you don't have to drive your own car, then your opportunity cost of going to the store is zero

false

which of these would not yield an external cost

helping an elderly person across the street

the fundamental reason why supply curves slope upward is

increasing costs

bus tickets are often considered ____ goods because ____

inferior; as income rises, demand for bus tickets fall

consider the market for hamburgers. which of the following will cause lower prices and a greater quantity of hamburgers exchanged

prices decline for hamburger buns, lettuce, tomato, and cheese

the development of solar panels for home installation has improved due to technological advances and subsides. these factors shift the supply curve to the ____ and result in the equilibrium price of solar panel installations to ____

right; fall

in the. market for online tutoring, there is an increase in the supply of online tutors during finals week, but there is an even larger increase in the demand for online tutors. these events will cause the equilibrium price of online tutoring to ____ and the equilibrium quantity to ____

rise; fall

suppose that a major drought causes a 30% reduction in the peanut harvest. if there is no change in demand, this event would cause a ____ at the original equilibrium price, and the equilibrium price will therefore ____ and the equilibrium quantity will ____

shortage; risel fall

which pair most likely includes substitute goods

soft drinks and lemonade

wheat is the main input in the production of flour. if the price of wheat increases, all else equal, we would expect the

supply of flour to decrease

the graph represents the market for water park admissions. if the price of admissions is set at $50, this would result in a ____ of ____units

surplus; 200

Germany has a comparative advantage in producing:

sweaters only

if bagels and doughnuts are substitute goods, then which scenario is likely to occur the price of bagels is reduced

the demand curve for doughnuts will shift to the left

suppose you observed that the price of gasoline has increased even as car owners have increased the amount of gasoline that they buy. you surmise that

the demand for gasoline has increased

a shortage would result from either a decrease in supply or an increase in demand

true

allocative efficiency occurs when the mix of goods and services produced is the most desired by society

true

an increase in the price of milk will cause a decrease in the demand for breakfast cereal

true

everyone has a comparative advantage in something, but not everyone has an absolute advantage in something

true

holding other things constant means identifying other relevant factors and fixing their value at a specified or constant level

true

if markets are left by the government, then at the market equilibrium price the sum of consumer surplus and producer. surplus is maximized

true

one of the problems of a minimum wage is that it can create a surplus of workers

true

consider the demand for olive oil. what would happen to the demand for olive oil if a study confirming its beneficial health effects is published at the same time that an investigative report finds that much of the olive oil imported into the country is actually sunflower oil that has been dyed

we would expect demand to shift in each direction, but the final position will depend on which event has the bigger impact on demand

which statement is not correct

when the prices are above market equilibrium, the sum of consumer and producer surplus increases