MIC Quiz 1 Bonus

At Trader Joe's, the price of chocolate chip cookies falls. As a result, you would expect to see a(n): increase in the demand for chocolate chip cookies. rise in the quantity demanded of chocolate chip cookies. decrease in the demand for chocolate chip cookies. drop in the quantity demanded of chocolate chip cookies.

decrease in the demand for chocolate chip cookies.

A tax imposed on new SUVs and collected from consumers would cause the: equilibrium quantity supplied to increase relative to the pretax level. supply curve to shift downward by the amount of the tax. demand curve to shift downward by the amount of the tax. supply curve to shift upward by the amount of the tax.

demand curve to shift downward by the amount of the tax.

When there is a shortage of highly skilled workers in a particular region, the: demand for skills education decreases. supply of jobs for highly skilled workers increases. demand for skills education increases. demand for highly skilled workers increases.

demand for skills education increases.

Use the table to answer the question. At what price does this market experience a surplus of 140 units? $11 $9 $13 $15

$13

(Figure: Market for Child Care) The figure shows the market for child care. The original equilibrium price is $10,000. A subsidy is now introduced for parents who pay for child care. After the subsidy is implemented, the amount that sellers receive is $: 1,000. 2,000. 11,000. 9,000.

9,000.

A doctor has worked as a general practitioner for several years, earning an annual salary of $150,000. They are now deciding whether they want to open their own private practice or continue as a team member in the existing office. One-time start-up costs for the practice would be $100,000. If they open their own practice, they will receive a salary of $50,000 from the business annually until the practice is well-established. They anticipate the practice will take two years to become fully established. They paid $200,000 for medical school. They should open their own practice if the future benefits exceed: $500,000. $300,000. $200,000. $400,000.

$300,000.

Why might you underestimate the increase in market quantity demanded when you lower your price? -A price reduction increases the quantity demanded for individuals but not for the entire market. -You may not take into account potential new customers attracted by the lower price. -Some of your current customers may switch to a rival's product, so a drop in price doesn't produce any additional sales. -Lowering the price only increases the quantity demanded for inferior goods.

-You may not take into account potential new customers attracted by the lower price.

Diminishing marginal benefit implies that: -buying an additional unit of item yields a larger benefit than the previous unit purchased. -the benefit of a given decrease in price diminishes as price continues to fall. -buying an additional unit of an item yields a smaller benefit than the previous unit purchased. -consumers do not follow the Rational Rule for Buyers.

-buying an additional unit of an item yields a smaller benefit than the previous unit purchased.

Use the table to answer the question. What is the equilibrium quantity in this market? 160 units 250 units 70 units 200 units

160 units

(Figure: Four sample demands) A recent article published in the Journal of the American Dental Association discussed the impact of the Great Recession of 2007-2009 on the demand for dentistry in the United States. Which graph illustrates the likely impact of the Great recession on this market? Graph D Graph C Graph A Graph B

Graph A

Which factor would cause an INCREASE in the supply of footballs? an increase in the price of footballs an increase in the price of cowhide expectations that the price of footballs will rise a decrease in the price of cowhide

a decrease in the price of cowhide

Which factor is MOST likely to shift the supply curve for milk to the left? an increase in household income, milk being a normal good a decrease in the price of feed given to dairy cows a tax on each gallon of milk produced new dairy farms entering the market

a decrease in the price of feed given to dairy cows

In the market for organic beef, what would cause a price increase? a rise in the prices of grass and organic corn a consensus among doctors that beef is heavy in saturated fat, which causes heart attacks a fall in the price of chicken a trend toward veganism in the United States

a rise in the prices of grass and organic corn

Which factor would cause an INCREASE in the supply of light bulbs? an advance in the technology of producing light bulbs a decrease in the number of firms manufacturing light bulbs an increase in the price of light bulbs expectations that the price of light bulbs will rise

expectations that the price of light bulbs will rise

The Federal Reserve is expected to lower interest rates three to six months from now, creating expectations of a hotter housing market. The number of houses for sale in the market today will likely: not change. fall. become unpredictable. rise.

fall

If quantity supplied does not respond substantially to a relatively large change in price, supply is: inelastic. insensitive to changes in price. negatively sloped. elastic.

inelastic.

The gas stations in your town form a competitive market. In other words, there are _____ gas stations and _____ people with cars in your town. many; few few; many few; few many; many

many; many

You are thinking of going out to dinner at a restaurant with your friends. The meal is expected to cost you $50, you typically leave a 20% tip, and a round-trip Uber ride will cost you $20. You value the restaurant meal at $20, and the time spent with your friends at $30. If you did not go out to the restaurant, you would eat at home using groceries that cost you $10. You should _____ to dinner with your friends because the benefit of doing so is _____ than the cost. not go; less not go; greater go; less go; greater

not go; less

Paint and paintbrushes are complements. A decrease in the price of paintbrushes will cause the demand for: paint to increase. paintbrushes to decrease. both paint and paintbrushes to decrease. paint to decrease.

paint to increase.

Most people consider toothpaste to be a necessity. The income elasticity of demand for toothpaste is likely to be _____ and _____. negative; below −1 negative; close to 0 positive; close to 0 positive; above 1

positive; close to 0

(Figure: Supply Curves) The figure shows four different supply curves for four products. Which of the products has a perfectly elastic supply curve? product C product A product B product D

product B

If a firm produces a product that has easily available variable inputs, its supply curve will be: perfectly inelastic. perfectly elastic. relatively steep. relatively flat.

relatively flat.

(Table: The Market for Salt and Vinegar Chips) Use Table: The Market for Salt and Vinegar Chips for this problem. If the price of salt and vinegar chips is $0.60, the price will: not change. rise to $0.70. fall to $0.30. fall to $0.50.

rise to $0.70.

Which good is MOST likely to have a vertical supply curve? prescription drugs olive oil sculptures by Michelangelo pepper

sculptures by Michelangelo

Demand curves slope downward due to: the positive relationship between price and quantity demanded. the law of demand. buyers' perceptions that a fall in price means a fall in quality. stores lowering their prices. ​

the law of demand.

A shift of the demand curve for fried chicken would NOT result from a change in: the popularity of fried chicken. the price of hot dogs. the price of fried chicken. income.

the price of fried chicken.

Two products have a cross-price elasticity of demand of 1.5. Based on this value of cross-price elasticity, which products are they most likely to be? a brand of tea and a brand of sugar two competing brands of soft drinks a brand of hot dog and a brand of hot dog bun a brand of juice and a brand of computer

two competing brands of soft drinks

Nissan manufactures sedans and pickup trucks. As one of Nissan's economists, you're in charge of ensuring efficient management of costs. At one manufacturing plant, if Nissan devotes all of its resources to manufacturing sedans, it can produce 480,000 sedans per year. If Nissan devotes all of its resources to manufacturing trucks, it can produce 240,000 trucks per year. What is Nissan's opportunity cost of producing one truck at this manufacturing plant? half truck two trucks two sedans half sedan

two sedans

Which of these can a government use to change the quantity traded in a market? (i) quotas (ii) binding price floors (iii) binding price ceilings (iv) taxes only (iv) (ii) and (iii) (i) and (iv) (i), (ii), (iii), and (iv)

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

As Edwin's annual income increased from $40,000 to $50,000, his purchases of tickets to see LA Kings hockey games increased from two to four per year. Using the midpoint method, you find his income elasticity of demand for LA Kings hockey tickets to be _____, and hockey tickets are a(n) _____ good. -3; inferior +0.67; normal -0.33; inferior +3; normal

+3; normal

If a product has a large network effect, it will lead to: -a small number of consumers using the product and a decreased demand for the product. -a large congestion effect. -greater marginal benefits from using the product and increased demand for the product. -smaller marginal benefits from using the product.

-greater marginal benefits from using the product and increased demand for the product.

The price elasticity of supply for a good is 2 if a _____ in price leads to a 4% decrease in the quantity supplied. 4% decrease 4% increase 2% increase 2% decrease

2% decrease

(Figure: Tablets and Phones) Samsung Electronics uses its resources to produce tablet computers and cell phones. When Samsung reallocates its resources to produce 3.75 million tablets instead of 2 million tablets, the opportunity cost is: 1.75 million phones. 1.75 million tablets. 7 million phones. 7 million tablets.

7 million tablets.

(Figure: The Demand and Supply of Quinoa) Use Figure: The Demand and Supply of Quinoa. If there is an increase in demand of 2,000 bushels per period at each price, the equilibrium price and quantity will be $_____ and _____ bushels per period, respectively. 5; 5,000 6; 7,000 7; 7,000 8; 8,000

7; 7,000

What happens to the equilibrium price and quantity when demand decreases and simultaneously supply increases, and the demand shift is smaller than the supply shift? Both the equilibrium price and quantity rise. The equilibrium price rises, and the equilibrium quantity falls. The equilibrium price falls, and the equilibrium quantity rises. Both the equilibrium price and quantity fall.

Both the equilibrium price and quantity fall.

For normal goods: an income tax cut will lead to a rise in demand. changes in consumer income do not affect consumption. an income tax cut will lead to a fall in demand. most consumers will purchase the good regardless of changes in income.

an income tax cut will lead to a rise in demand.

(Figure: Shifts in Demand and Supply IV) Use Figure: Shifts in Demand and Supply IV. The figure shows how supply and demand might shift in response to specific events. Suppose that a large amount of people move to Denver such that the population increases by 20%. Which panel BEST illustrates how this event will affect the market for houses in Denver? a c d b

c

The price elasticity of demand for snowboarding lessons at Jay Peak resort in Vermont is greater than 1. This means that the demand for snowboarding lessons is _____. elastic perfectly elastic inelastic neither elastic nor inelastic.

elastic

(Figure: Art Museum Entry) Katya enjoys going to temporary exhibits at the art museum. Her individual demand curve is displayed in the graph. Her marginal benefit is currently $6. If a change in the entry fee results in her visiting the museum six times per year, what happens to Katya's marginal benefit from visiting the art museum? -It rises, since she will save money when she reduces her visits, and she can spend that money on other goods and services. -It rises because her quantity demanded falls. -It falls because she would prefer to visit ten times per year. -It falls because her quantity demanded falls.

-It rises, since she will save money when she reduces her visits, and she can spend that money on other goods and services. GUESSED

You are studying the international market for coffee. The world production of coffee beans increases, and at the same time, consumers worldwide start favoring tea over coffee. What is the effect on the equilibrium price and the equilibrium quantity in the coffee market? -The equilibrium price falls, and the change in the equilibrium quantity is ambiguous. -The equilibrium quantity falls, and the change in the equilibrium price is ambiguous. -The equilibrium price rises, and the equilibrium quantity falls. -The equilibrium price falls, and the equilibrium quantity rises.

-The equilibrium price falls, and the change in the equilibrium quantity is ambiguous.

A HomeGoods store is located next to a Wal-Mart neighborhood market. HomeGoods primarily sells linens and small kitchen gadgets. The Wal-Mart neighborhood market primarily sells produce. Which store do you anticipate has the larger price elasticity of supply for its items? -Wal-Mart market, because people purchase groceries more often than linens -HomeGoods, because demand for Wal-Mart produce is more elastic than other grocers -Wal-Mart market, due to the ability to more easily hire retail workers than HomeGoods -HomeGoods, due to the ability to stock relatively large amounts of inventory

-Wal-Mart market, because people purchase groceries more often than linens GUESSED

Which of these statements is correct? -With a price regulation, the new price will be the regulated price, but with a quota, the new price will be whatever buyers are willing to pay for the limited quantity available. -When a tax is levied on a product, the new price that buyers pay will always be the old price plus the tax. -When a quota is placed on a market, the new price will be regulated by the government. -With a price regulation, the new price will be whatever buyers are willing to pay for the amount being sold.

-With a price regulation, the new price will be the regulated price, but with a quota, the new price will be whatever buyers are willing to pay for the limited quantity available.

(Table: Martinez Family Household Income and Expenditures) Use Table: Martinez Family Household Income and Expenditures. The Martinez's income elasticity of demand for falafels, computed using the midpoint method, is: approximately -0.7. approximately 0.7. 0. -1.4.

0

The table shows incomplete values for various people's quantities of lemonade demanded, along with the market totals. When the price is $3, what is Habib's quantity demanded? 1 9 0 12

0

The price of a dozen eggs falls from $2.50 to $1.50. In response to the price change, quantity demanded for eggs increases by 30%. Based on the midpoint method, the absolute value of the price elasticity of demand for eggs is _____, and the price elasticity of demand is _____. 1.67; inelastic 0.6; inelastic 0.6; elastic 1.67; elastic

0.6; inelastic

Kathleen is binge-watching her favorite show on Netflix. She is trying to decide how many more episodes to watch. Kathleen should continue watching episodes until the marginal: benefit of watching another episode is positive. benefit of watching another episode is equal to the marginal cost. benefit of watching another episode exceeds the marginal cost. cost of watching another episode is positive.

benefit of watching another episode exceeds the marginal cost.

The Rational Rule summarizes the marginal principle. It says that if something is worth doing, keep doing it until your marginal: costs are less than your marginal benefits. benefits are zero. benefits exceed your marginal costs. benefits equal your marginal costs.

benefits equal your marginal costs.

(Figure: Shifts in Demand and Supply) Use Figure: Shifts in Demand and Supply. The figure shows how supply and demand might shift in response to specific events. Suppose scientists discover that eating more broccoli helps prevent aging. Which panel BEST illustrates how this finding would affect the market for broccoli? a b c d

c

Price takers: set the market price. charge the prevailing price and cannot affect the market price. produce only agricultural products. control the prices of their own products.

charge the prevailing price and cannot affect the market price.

Which pair of goods is MOST likely to have a cross-price elasticity of demand that is greater than zero? cars and tires pineapples and honeydew melons bacon and eggs skates and skating rinks

pineapples and honeydew melons