MACRO MIDTERM 1 (hw questions)

is elasticity constant along a linear demand curve

no!!!!

If a out put is efficient where is it located? inefficient? unattainable?

on curve, inside curve, outside curve

Suppose Van and Amy are the only consumers of ice cream. At $1, Van's quantitity demanded is 8 cones and Amy's is 16 cones. what is the market demand?

24 cones.

Before you started applying for college, a job recruiter offered you a full-time cashier position at a doctor's office, earning an after-tax salary of $21,000 per year. However, you turn down this offer and attend your first year of college. The additional monetary cost of college to you, including tuition, supplies, and additional housing expenses, is $32,000. You decide to go to college, because.... A) you value a year of college at $32,000 B) you value a year of college less than $32,000 C) you value a year of college at $21,000 D) you value a year of college at more than $53,000

D

before a tax, what does not exist?

government revenue and deadweight loss

Suppose Jake is planning to sell his house. he already spent $10,000 on various home repairs and call sell for $10,000. He has the option of spending an addition $15,000 to improve his kitchen, where then he would be able to sell his house for 120,000. Should he repair or no?

he should repair.

when you produce more of one item on ppt curve, Because she can now make more trucks per hour, the opportunity cost of producing the item is ___ than it was previously.

higher

1. A good without any close substitutes is likely to have relatively ____ demand, since consumers cannot easily switch to a substitute good if the price of the good rises. 2. A good's price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the same, which one has the most elastic demand? Yacht Chemotherapy for cancer patients 3. most elastic, in between, least? boot cut jeans pants clothing 4. ompared to the short-run demand for oil, the demand for oil in the long run will tend to be ____ elastic.

inelastic, yacht jeans: most elastic pants: in between clothing: least elastic more

The burden of the tax falls more heavily on the ___ elastic side of the marke

less

taxing a good with a relatively ___ elastic demand generates larger tax revenue and smaller deadweight loss.

less

Categorize each of these statements as either positive or normative. 1) Lung cancer kills millions of people each year. 2) Too many people smoke 3) If the government were to increase taxes on cigarettes, fewer people would smoke. 4) The government should increase taxes on cigarettes.

positive, normative, positive, normative

movement along or shift in supply curve? An increase in the number of producers A change in expectations about the future price of wine A decrease in the price of wine

shift shift along

Rent controls force landlords to price apartments below the equilibrium price level. An immediate effect is a ___

shortage

a price below equilibrium causes an ___ pressure on prices and a price above equilibrium causes a ___ pressure on prices.

upward, downward

suppose the price of jeans decreases from $100 to $80 and the quantity demanded goes from 6 to 8 a year. what is the price elasticity of supply? is it elastic, inelastic, or unitary?

1.2857, elastic

Suppose that during the past year, the price of a laptop computer fell from $2,950 to $2,450. During the same time period, consumer sales increased from 430,000 to 619,000 laptops. using midpoint method.. elasticity is?

1.95

Emma owns 100 acre farm with land suitable for growing corn or soybeans. She can either produce 30 corn/acre or 15 soybeans/acre(thousand). Suppose she is initially producing 1800 corn and and 600 soybeans. what is the opportunity cost of producing an additional 600 beans?

1200 corn bushes is the opportunity cost, because 1200 soybeans takes up 80 acres and 600 corn takes up 20 acres. 1800-600=1200.

Suppose Dave works 8 hours/day and that in one hour can mow 1 lawn or trim 5 bushes. what is the opportunity cost of moving 4 lawns?

20 bushes. Mowing 4 lawns takes four hours. So in those four hours he could have trim 5(4)=20 bushes.

suppose the price of jeans decreases from 100 to 80 and god producer of jeans decreases the quantity supplied from 200 to 100 jeans. what is the price elasticity of supply? is it elastic, inelastic or unitary?

3, elastic

Brian and Crystal are the only suppliers of pizza slices in a particular market. At $1, Brian supplies 0 slices and Crystal supplies 4 slices. what is market supply?

4 supplies

Suppose that the U.S. government decides to charge beer consumers a tax. Before the tax, 35,000 cases of beer were sold every week at a price of $6 per case. After the tax, 29,000 cases of beer are sold every week; consumers pay $9 per case (including the tax), and producers receive $3 per case. The amount of the tax on a case of beer is ___ per case. Of this amount, the burden that falls on consumers is ___per case, and the burden that falls on producers is ___ per case.

6, 3, 3 per unit tax= price consumers pay-price producers receive (9-6) because consumers pay $3 more than before, 6+3=9 and sellers receive $ less than before, 3

Carlos is a hard-working college senior. One Thursday, he decides to work nonstop until he has answered 250 practice problems for his math course. He starts work at 8:00 AM and uses a table to keep track of his progress throughout the day. He notices that as he gets tired, it takes him longer to solve each problem. Time Total Problems Answered 8 AM. 0 9 100 10 175 11. 225 12. 250 The marginal, or additional, gain from Carlos's second hour of work, from 9:00 AM to 10:00 AM, is ___ problems. he marginal gain from Carlos's fourth hour of work, from 11:00 AM to noon, is ___ problems. 2. Later, the teaching assistant in Carlos's math course gives him some advice. "Based on past experience," the teaching assistant says, "working on 37.5 problems raises a student's exam score by about the same amount as reading the textbook for 1 hour." For simplicity, assume students always cover the same number of pages during each hour they spend reading. Given this information, in order to use his 4 hours of study time to get the best exam score possible, how many hours should he have spent working on problems, and how many should he have spent reading? A)0 hours working on problems, 4 hours reading B) 1 hour working on problems, 3 hours reading C) 2 hours working on problems, 2 hours reading D) 3 hours working on problems, 1 hour reading

75, 25, D- he should do problems when he can do more than 37.5, if he can't he should read.

Juanita is training for a triathlon, a timed race that combines swimming, biking, and running. Consider the following sentence: Juanita has only 20 hours this week that she can devote to training. Each hour she spends swimming is an hour that she can't spend biking or running. Which basic principle of individual choice do these statements best illustrate? A) People face trade-offs. B) Juanita has an incentive to spend more time on swimming than on biking or running. C) People usually exploit opportunities to make themselves better off. D) Juanita can use time most efficiently by spending the same amounts of time on swimming, biking, and running.

A

Which of the following is true regarding this circular flow diagram? A) Because it does not take into account the role of government, the circular-flow diagram is useless for the purposes of modeling how dollars and resources move throughout an economy. B) Because, in reality, the economy is very large, the simplicity of the circular-flow diagram makes it useless for the purposes of modeling how dollars and resources move throughout an economy. C) While simple, the circular-flow diagram can still be useful for the purposes of modeling how dollars and resources move throughout an economy. D)Because it does not take into account international trade, the circular-flow diagram is useless for the purposes of modeling how dollars and resources move throughout an economy.

C

Efficiency/Equality: When economic benefits are distributed uniformly across society? When a society gets the most it can from its scarce resources? If the United States government lowers the income taxes on the wealthiest Americans, while decreasing welfare payments to the poorest Americans, the result will likely bean ____ in efficiency and a ___ in equality in the United States.

Equality Efficiency increase, decrease

Which of the following factors played the biggest role in the slow growth of average incomes in the United States during the 1970s and 1980s? a)Slow growth in productivity b) Increased competition from India c) Disinflation of the dollar d) Increased competition from Japan

a,

Janet has opened a new startup company in web design. Within the first month of business, the startup agrees to maintain an accounting firm's website in exchange for someone at the firm doing the startup's tax returns. Which of the following principles of economic interaction best describes this scenario? A) All costs are opportunity costs. B) Markets allocate goods effectively. C) When markets do not achieve efficiency, government intervention can improve overall welfare. D) Trade can make everyone better off.

d, when tasks re divided among people who can provide them at lowest cost, specialization occurs

Because of the violent nature of the sport, professional American football players are at risk of suffering concussions (or brain injuries) during the violent collisions that occur between players during the game. Violent collisions involving hits to the head are particularly risky. Suppose the commissioner of the National Football League (NFL) institutes a rule requiring players to wear a new, lighter helmet that is designed to reduce head trauma during collisions between players on the field. While the new helmets _____ the probability of a concussion resulting from each individual collision, at the same time the new helmets could also give football players an incentive to play more ____ , which could potentially ______ the amount of violent collisions and thus the number of concussions suffered by NFL players, all else equal.

decrease, reckless, increase

Your coworker Jacques is really concerned about a project that he has just been assigned. He is in charge of analyzing and determining conditions in the market for televisions from an extensive sales report. If Jacques's boss is interested in a graphical representation of the relationship between the price and quantity of televisions demanded, you would advise your coworker to construct a ___ using the data provided. However, if Jacques's boss is more interested in the detailed numbers used to construct this visual representation, you would instead advise your coworker that a would be more appropriate.

demand curve, demand schedule

Charles and Dina are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the rest. Charles: 12 corn. 3 rye Dina: 15 corn acre. 5 rye 1. ___ has an absolute advantage in the production of corn, and ____ has an absolute advantage in the production of rye. 2. Charles's opportunity cost of producing 1 bushel of rye is ___ bushels of corn, whereas Dina's opportunity cost of producing 1 bushel of rye is __ bushels of corn. Because Charles has a _____ opportunity cost of producing rye than Dina, Dina has a comparative advantage in the production of rye, and ___ has a comparative advantage in the production of corn.

dina, Charles, 4, 3, higher, Charles

Based on this circular flow diagram, households earn income when ___ purchase ___ in factor markets. 1. Suppose Teresa earns $550 per week working as a programmer for PC Pros. She uses $8 to have breakfast at Dinah's Diner. Dinah's Diner pays Sam $300 per week to work as a short-order cook. Sam uses $225 to purchase software from PC Pros. 2. Identify whether each of the following events occurs in the factor market (factors of production) or product market: 1) Sam spends $225 to purchase software from PC Pros. 2) Teresa earns $550 per week working for PC Pros. 3) Sam earns $300 per week working for Dinah's Diner. 3. Which of the elements of this scenario represent a flow from a firm to a household? This could be a flow of dollars, inputs, or outputs. Check all that apply. A)The $300 per week Sam earns working for Dinah's Diner B) The breakfast Teresa receives C) The $225 Sam spends to purchase software from PC Pros D) Teresa's labor

firms, factors 1: product market 2) factor market 3: factor market A and B

In a perfectly competitive market, all producers sell ____ goods or services. Additionally, there are ___ buyers and sellers. Because of these two characteristics, both buyers and sellers in perfectly competitive markets are price ___ . True or False: The market for tomatoes does not exhibit the two primary characteristics that define perfectly competitive markets.

identical, many, takers false

Suppose that, in an attempt to combat severe unemployment, the government decides to increase the amount of money in circulation in the economy. This monetary policy ___ the economy's demand for goods and services, leading to ____ product prices. In the short run, the change in prices induces firms to produce ___ goods and services. This, in turn, leads to a ___ level of unemployment. In other words, the economy faces a trade-off between inflation and unemployment: Higher inflation leads to ___ unemployment.

increase, higher, more, lower, lower

as the tax per bottle increases, deadweight loss ___ by a greater and greater amount

increases

Suppose Japan produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier for corn, an agricultural good, and construction vehicles, a capital good. What happens to PPF curve when an immigration law results in fewer workers entering the country?

it moves inward (Down), because less labor is abilale for the production of corn and vehicles.

Loggers are much ____ likely to supply wood to the market if property rights are not enforced. For each situation, say what type of market failure it is: 1) A single grocery store is the only source of food in a small town, giving the store the ability to influence the price of food. 2) A manufacturing plant dumps chemical waste into a nearby river, poisoning the water supply for a small town downstream.

less, market power, externality

Determine whether each of the following topics would more likely be studied in microeconomics or macroeconomics. 1) The effect of government regulation on a monopolist's production decisions 2) The effects of the Internet on the pricing of used cars 3) The effects of government tax policy on long-term economic growth

micro, micro, macro

CS, PS, Neither? I sold a used textbook for $38 on eBay last week. This week, someone offered me $58 for it.I sold a watch for $58, even though I was willing to go as low as $52 in order to sell it. Even though I was willing to pay up to $115 for a used laptop, I bought a used laptop for only $108.

neither producer surplus consumer surplus

Juanita is deciding whether to buy a suit that she wants, as well as where to buy it. Three stores carry the same suit, but it is more convenient for Juanita to get to some stores than others. Juanita makes $16 an hour at work. She has to take time off work to purchase her suit, so each hour away from work costs her $16 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling. 3 stores: Local department store: travel time each way: 15 min $ 103 across town: 30 min $89 diff city: 60 min $63 Find opportunity cost of time and total cost of each store (dollars. Where should she buy her suit from?

opportunity costs: Local: $16 across time: $24 neighboring city: $40 cost: local:119 across town: 113 neighboring city: 103 She should go to neighboring city, it costs less!

price floor/ceiling and binding or not binding? Equilibrium price is $5 /burger. The government has instituted a legal minimum price of $3 each for hamburgers. The government prohibits fast-food restaurants from selling hamburgers for more than $3 each. Due to new regulations, fast-food restaurants that would like to pay better wages in order to hire more workers are prohibited from doing so

price floor, non binding price ceiling, binding price ceiling, binding

Movement along or shift in demand curve for cereal? A decrease in the price of oatmeal (a substitute for cereal) A decrease in the price of cereal A change in tastes of consumers that makes them desire more cereal

shift (Demand for cereal is gonna go down because people will want to buy more oatmeal since its cheaper) along shift a shift in the demand curve involves a NON MONEY FACTOR. a shift along the demand curve involves a change in price

Consider the market for pens. Suppose that a new educational study has proven that the practice of writing, erasing, and rewriting improves students' ability to process information, leading parents to steer away from pen use in favor of pencils. Moreover, the price of ink, an important input in pen production, has increased considerably. What happens to the supply and demand curves? true or false? When both the demand and supply curves shift, you can always determine the effect on price and quantity without knowing the magnitude of the shifts.

supply and demand curves shift left. false

Suppose the equilibrium is $50 and 250 keyboards. At $60, the the quantity supplied is 375 and the quantity demanded is 125. is there a shortage or surplus? what is it? upward or downward pressure on prices? At $40, the quantity supplies is 125 and the quantity demanded is 375. is there a shortage or surplus? what is it? upward or downward pressure on prices?

surplus, 250, downward shortage, 250, upward

The following graph shows the market for hot dogs in Detroit, where there are over 1,000 hot dog stands at any given moment. Suppose Detroit experiences an unexpected flood of tourists due to a major conference. what is the effect on the market for hot dogs? tax cut that increases the income of Detroit residents... if hot dogs are a normal good, this will cause the demand for hot dogs to...

the demand is going up, supply stays the same increase (shift to right) (remember unless its state about the supply, do NOT assume anything! only go off the information it gives you)

Supply schedule: Price of Juice: Quantity of Juice Supplied: 0.50 750 0.75 1000 1.00 1,500 what does this confirm?

the law of supply, as the price increases the supply of that item increases

The following graph shows the market for pizzas in San Diego, where there are over 1,000 pizza restaurants at any given moment. Suppose the price of grated cheese, a major ingredient in pizzas, suddenly increases. Show the effect of this change on the market for pizzas by shifting one or both of the curves on the following graph, holding all else constant.

the supply is going to decrease (shift to the left),, the increase in producing an item will cause people to produce less. the demand curve will not do anything.