Exam 1
Which of the following scenarios illustrates the law of demand?
Kathleen eats more steak when the price is low, and less when the price is high.
(Figure: Market for Lenovo Tablets) Lenovo produces laptops and tablets. What will happen to the supply of Lenovo tablets, if laptops lose popularity and their demand falls?
Not "graph c New supply⬅️ old supply"
The key to using the cost-benefit principle is to think about _____ aspects of a decision.
both financial and nonfinancial
According to the interdependence principle, when faced with a decision, you should ask what
else might my decision affect and what else might affect my decision?
(Figure: Market for Printing Paper) Which of the following graphs illustrates what we expect to see in the market for printing paper if the price of printing paper rises?
Graph c old price⬆️new price
Jane goes to an all-you-can-eat restaurant and makes three trips to the buffet. After finishing food from her third trip, she felt sick and throws up. Which of the following economic explanations best matches Jane's situation?
Jane's marginal benefit from eating the third plate was negative.
At Trader Joe's, the price of chocolate chip cookies falls. As a result, you would expect to see
not "a drop in the quantity demanded of chocolate chip cookies."
Charles McCoy is a manager at a coffee shop, and he has to decide how many workers to hire. One worker can make 25 drinks that sell for $5 on average in one hour. A second worker can make another 20 drinks in one hour. The marginal benefit of each additional worker decreases by five drinks, with each additional hire. Given that workers are paid $15 per hour and have eight-hour shifts, how many employees should Charles hire for each hour?
not "four"
Dependencies between markets reflect the fact that
not "society has limited resources."
If the price of jet fuel rises, the
not "supply of jet fuel decreases."
The marginal cost of an additional worker is
not "the total cost of all workers hired."
If expected future profits in an industry rise
supply will shift right.
Asking "Benefit beat cost?" allows the _____ principle to be boiled down to a simple question.
cost-benefit
Figure: Spice King Burgers' Supply Curve) Take a look at Spice King Burgers' supply curve for burgers. How many burgers is Spice King Burgers willing to supply at a market price of $3.50 per burger?
600 units
The table shows the monthly individual supply schedules for the four firms in the packed-meals market. What is the market supply at $6.75 per meal?
895,000 meals
Which of the following lists only factors that would cause an increase in the supply of an item?
A decrease in input prices; a technological innovation; a fall in the price of a substitute-in-production.
If a seller expects prices to rise in the future
it will stock up today and sell the goods when the price rises.
Which of the following scenarios depicts a rational buyer?
Damien chooses to buy a sandwich for $5 when the marginal benefit of the sandwich to him is $7.
(Figure: Shift in Demand 2) Use the figure to answer the question. Which of the following market changes would lead to a shift of the demand curve from Old demand to New demand?
A report is published noting that the product has adverse health effects.
A hurricane is expected to hit the Carolinas. Why might the prices of batteries, candles, and bottled water rise?
Buyers will flock to purchase these items, and the excess demand will cause prices to rise.
(Figure: Market for Juice) Use the figure to answer the question. You are studying the demand for Minute Maid and Tropicana orange juice. Minute Maid improves the taste of its juice and people start preferring Minute Maid over Tropicana. Which graph depicts the impact of these changes on both Minute Maid and Tropicana?
Graph A shows what happens in the market for Minute Maid, and Graph B shows what happens in the market for Tropicana.
A report is published noting that the product has adverse health effects.
Consumers are now purchasing fewer jars of blueberry jam as compared to other types of jam
An economics conference is scheduled to take place in San Diego. Several thousand attendees from around the world are expected to arrive in San Diego for the conference. Which graph depicts what will happen in the market for hotel rooms in San Diego?
Graph A old demand -> new demand
(Figure: Market for Tourism) A hotel in Cape Cod, Massachusetts, is completely booked during August. However, in September, tourism drops significantly and some hotel rooms remain empty. Which of the graphs depicts this scenario?
Graph A New demand⬅️ old demand
Figure: Peanut Butter and Jelly) In the United States, peanut butter and jelly are considered complementary items. Which graph illustrates the impact of a rise in the price of peanut butter on the jelly market?
Graph A New demand⬅️ old demand
(Figure: Market for Tropicana Juices) 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 New supply⬅️ old supply
A beach resort in Bali builds 24 villas with private pools. They also establish two restaurants using state-of-the-art equipment (such as multipurpose ovens, freezers, and food processors). Meals are prepared using organic, locally sourced vegetables and meat. The hotel also uses water from the town supplier. Based on this scenario, what are the variable costs for the beach resort?
Organic vegetables and water.
Sarah Sandoval is a coffee farmer trying to decide how many tons of coffee to produce. She can sell each ton of coffee for $1,500. The cost of producing her first ton of coffee is $300, and the second ton costs $500. Each additional ton of coffee costs $200 more to produce. How many tons of coffee should Sarah produce, and what is the total cost of her coffee production?
She will produce seven tons at a total cost of $6,300.
Recent evidence suggests exercise promotes longevity and reverses aging. Based on this information, what might happen in the market for exercise-related goods and services?
The demand for exercise machines and/or gyms will increase.
What happens to the equilibrium price and quantity when demand decreases and at the same time supply increases, and the demand shift is relatively smaller than the supply shift?
The equilibrium price falls, and the equilibrium quantity rises.
If there is a technological advance in the production of the Amazon Echo smart speaker, you would expect to see _____ overtime.
a fall in its equilibrium price
In May of 2019, the U.S. raised tariffs (import taxes) on a large variety of Chinese imports. In the U.S. market for these Chinese imports, we would see:
a rise in price.
The aim of a marketing campaign is to
increase the demand for the product.
Nerida Kyle can either commute to work using a bus or purchase a new car. The bus fare each way is $2. Nerida works five days a week for 50 weeks a year. Based solely on the benefit of avoiding the cost of her bus tickets, Nerida should purchase a car if the cost of the car is _____ than _____ per week.
less; $20
In addition to financial costs and benefits, assessing your willingness to pay allows you to convert _______ costs or benefits into their monetary equivalent.
nonfinancial
A meat processing plant produces both steak and ground beef. What effect would rising market prices for steak have on the market for ground beef?
The supply of ground beef will decrease.
As a part of a market research project, you survey six random people to see how much gas per week they would buy at various prices. The data you collect is in the accompanying table. What is the change in the total demand for gasoline in your survey when the price changes from $2 per gallon to $2.50 per gallon?
The total quantity demanded in the market falls by 14 gallons.
There are empty candy shelves at Walmart on the day before Halloween. Which of the following explains this event?
There is a shortage in the candy market.
Juan McDonald is willing to pay $800 for a new iPad. Apple (the producer of iPads) is selling a new iPad for $700. It costs Apple $400 to produce this iPad. A voluntary economic transaction between Juan and Apple _____ occur because ____ would be better off due to the transaction.
will; both Juan and Apple