Micro Exam 2

2.0 Nancy 6 Tom 9 Kevin 12 Sasha 15 Erica 18 Biyu 21 If you have 3 (essentially) identical tickets that you sell to the group in an auction, assuming that each person can only buy one ticket, which of the following is closest to the selling price for each ticket?

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Nancy 6 Tom 9 Kevin 12 Sasha 15 Erica 18 Biyu 21 If you have 2 (essentially) identical tickets that you sell to the group in an auction, assuming that each person can only buy one ticket, which of the following is closest to the selling price for each ticket?

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If the government charged a fee of $80 per unit of pollution, how many units of pollution would the firms eliminate altogether? a. 8 b. 9 c. 10 d. 11

a. 8 add the ones under 80

If the production possibilities frontier shown is for 32 hours of production, then how long does it take Peru to make one pound of cashews? a. 2/15 hour b. 1/3 hour c. 3 hours d. 7.5 hours

a. 2/15 hour

Nancy 6 Tom 9 Kevin 12 Sasha 15 Erica 18 Biyu 21 If you have a ticket that you sell to the group in an auction, who will buy the ticket? a. Kevin b. Sasha c. Erica d. Biyu

a. Biyu highest bidder

Erin would be willing to pay as much as $100 per week to have her house cleaned. Ernesto's opportunity cost of cleaning Erin's house is $70 per week. Assume Erin is required to pay a tax of $40 when she hires someone to clean her house for a week. Which of the following is correct? a. Erin will now clean her own house. b. Ernesto will continue to clean Erin's house, but his producer surplus will decline. c. Total economic welfare (consumer surplus plus producer surplus plus tax revenue) will increase. d. Erin will continue to hire Ernesto to clean her house, but her consumer surplus will decline.

a. Erin will now clean her own house.

Who among the following is a free rider? a. Mike listens to National Public Radio but does not contribute to any fundraising efforts. b. Greg takes the commuter rail to work, but he purchases the discounted monthly passes rather than buying tickets each day. c. Peter sends his five children to a private school rather than to the public school in his neighborhood. d. Bobby goes to Marsha's house to watch a basketball game on the local commercial television channel.

a. Mike listens to National Public Radio but does not contribute to any fundraising efforts.

Graph (a) and Graph (b) each illustrate a $4 tax placed on a market. In comparison to Graph (a), Graph (b) illustrates which of the following statements?

a. When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic.

Cost is a measure of the a. seller's willingness to sell. b. seller's producer surplus. c. producer shortage. d. seller's willingness to buy.

a. seller's willingness to sell.

If Tanek and Barb each divide their time equally between the production of tacos and burritos, then total production is a. 200 tacos and 150 burritos. b. 400 tacos and 250 burritos. c. 400 tacos and 300 burritos. d. 800 tacos and 500 burritos.

b. 400 tacos and 250 burritos.

A benevolent social planner would prefer a. a $24 price to any other price. b. 70 units to any other quantity of output. c. a subsidy of $30 per unit to a subsidy of $27 per unit. d. a tax of $27 per unit to a subsidy of $27 per unit.

b. 70 units to any other quantity of output.

If Tanek must work 0.2 hour to produce each taco, then his production possibilities frontier is based on how many hours of work? a. 40 hours b. 80 hours c. 400 hours d. 2000 hours

b. 80 hours

If a country is exporting a good, this is because the country has an absolute advantage in the production of that good. a. True b. False

b. False

Assume, for India, that the domestic price of copper without international trade is lower than the world price of copper. This suggests that, in the production of copper, a. India has a comparative advantage over other countries and India will import copper. b. India has a comparative advantage over other countries and India will export copper. c. other countries have a comparative advantage over India and India will import copper. d. other countries have a comparative advantage over India and India will export copper.

b. India has a comparative advantage over other countries and India will export copper.

Suppose that coal producers create a negative externality equal to $5 per ton of coal. What is the relationship between the equilibrium quantity of coal and the socially optimal quantity of coal? a. They are equal. b. The equilibrium quantity is greater than the socially optimal quantity. c. The equilibrium quantity is less than the socially optimal quantity. d. There is not enough information to answer the question.

b. The equilibrium quantity is greater than the socially optimal quantity.

Trade can make everybody better off because it a. increases cooperation among nations. b. allows people to specialize according to comparative advantage. c. requires some workers in an economy to be retrained. d. reduces competition among domestic companies.

b. allows people to specialize according to comparative advantage.

Each unit of plastics that is produced results in an external a. cost of $6. b. cost of $8. c. benefit of $6. d. benefit of $8.

b. cost of $8.

The production of the 400th gallon of gasoline entails an a. external cost of $0.11. b. external cost of $0.29. c. external benefit of $0.11. d. external benefit of $0.29.

b. external cost of $0.29. social minus private cost

At a price of $2.00, total surplus is a. larger than it would be at the equilibrium price. b. smaller than it would be at the equilibrium price. c. the same as it would be at the equilibrium price. d. There is insufficient information to make this determination.

b. smaller than it would be at the equilibrium price.

The table represents a market in which a. there is no externality. b. there is a positive externality. c. there is a negative externality. d. The answer cannot be determined from inspection of the table.

b. there is a positive externality. the external "benifit"

With trade, total surplus in the Ugandan coffee market amounts to a. $90.00. b. $350.00. c. $440.00. d. $412.50.

c. $440.00. C+B+F+A+D+H<--most important

If Tanek and Barb both spend all of their time producing burritos, then total production is a. 0 tacos and 400 burritos. b. 400 tacos and 250 burritos. c. 0 tacos and 500 burritos. d. 800 tacos and 500 burritos.

c. 0 tacos and 500 burritos.

c r Cuba 12 6 Denmark 24 3 Cuba and Denmark would not be able to gain from trade if Denmark's opportunity cost of one radio changed to a. 0 coolers. b. 1 cooler. c. 2 coolers. d. Cuba and Denmark can always gain from trade regardless of their opportunity costs.

c. 2 coolers.

Which of the following represents Aruba's production possibilities frontier when 100 labor hours are available?

c. 20 radio 50 cooler

The loss of consumer surplus as a result of the tax is a. $3. b. $2. c. $4.5. d. $1.

c. 4.5 big triangle minus small triangle above the midline

Calvin 150 Sam 135 Andrew 115 Sasha 100 If the price of the product is $110, then who would be willing to purchase the product? a. Calvin b. Calvin and Sam c. Calvin, Sam, Andrew d. Calvin, Sam, Andrew, and Sasha

c. Calvin, Sam, Andrew anyone above 110

When trade in coffee is allowed, consumer surplus in Uganda a. increases by the area B + F. b. increases by the area A + D. c. decreases by the area B + F. d. decreases by the area F + H.

c. decreases by the area B + F. goes to just c

Suppose the world price of cardboard is $139. Then, if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard, a. producers better off / consumers better off. b. producers worse off/ consumers better off. c. producers better off / consumers worse off. d. producers worse off/ consumers worse off.

c. domestic producers of cardboard become better off and domestic consumers of cardboard become worse off. better/worse

The parable called the Tragedy of the Commons applies to goods and services such as a. police protection and cable TV. b. tornado sirens and medical research. c. grazing land and fishing. d. antipoverty programs and national defense.

c. grazing land and fishing.

The government's benefit from a tax can be measured by a. consumer surplus. b. producer surplus. c. tax revenue. d. consumer surplus plus producer surplus.

c. tax revenue.

The table represents a market in which a. there is no externality. b. there is a positive externality. c. there is a negative externality. d. The answer cannot be determined from inspection of the table.

c. there is a negative externality. the external "cost"

Mike and Laura sell lemonade on the corner for $3.20 per cup. It costs them $0.20 to make each cup. On a certain day, their producer surplus is $60. How many cups did Mike and Laura sell? a. 10 b. 60 c. 4 d. 20

d. 20 3.20-.20=3 60/3=20

Blankets Coats 4 60 8 ? 12 20 If the production possibilities frontier is bowed outward, then how many coats are produced when 8 blankets are produced? a. 5 b. 10 c. 30 d. 50

d. 50

The socially optimal quantity of output is a. 40 units, buyer of 40th equal to cost by seller 40th unit. b. 40 units, value society 40th equal cost seller 40th unit. c. 70 units, value buyer 70th equal cost seller 70th unit. d. 70 units, value society 70th equal cost seller 70th unit.

d. 70 units, value society 70th equal cost seller 70th unit.

Suppose Peru decides to increase its production of emeralds by 3. What is the opportunity cost of this decision? a. 30 rubies b. 15 rubies c. 45 rubies d. 90 rubies

d. 90 rubies

When the price rises from P1 to P2, which area represents the increase in producer surplus due to new producers entering the market? a. BCG b. ACH c. AHGB d. DGH

d. DGH extra triangle added by the increase in Price

The phenomenon of free riding is most closely associated with which type of good? a. Private goods b. Club goods c. Inferior goods d. Public goods

d. Public goods

A tax affects a. buyers only. b. sellers only. c. buyers and sellers only. d. buyers, sellers, and the government.

d. buyers, sellers, and the government.

If the government decides to build a new community center, the first step would be to conduct a study to determine the value of the project. The study is called a a. budget analysis. b. project analysis. c. reimbursement analysis. d. cost-benefit analysis.

d. cost-benefit analysis.

Goods that are excludable include both a. club goods and public goods. b. public goods and common resources. c. common resources and private goods. d. private goods and club goods.

d. private goods and club goods.