Micro Final

According to the profit-maximizing principle of marginal analysis, if the marginal benefit is _____ the marginal cost, _____.

less than; an activity should be reduced

The relation between an individual's consumption bundle and her satisfaction is called a _____ function.

utility

A new fast-food restaurant offered a prize--a free meal (valued at $5) each week for a year--to its first 100 customers, and she successfully obtained the prize. The cost to Ramona of obtaining the "free meal a week for a year" prize was:

whatever else she would have done with the 48 hours

Taken collectively, people in nations that engage in international trade are NOT likely to:

be made worse off

(Figure: The Market for Oranges in South Africa) In autarky, the price of oranges in South Africa is P1. When the economy is opened to trade, the price falls to Pw. South Africa will _____ oranges, and the volume of trade will equal _____.

import; Ct-Qt

(Figure and Table: Variable, Fixed, and Total Costs) When 51 bushels of wheat is produced, the average fixed cost is _____, average variable cost is _____, and average total cost is _____.

$7.84; $11.76; $19.60

John's accountant tells him that he made a profit of $43,002 running a pottery studio in Orlando. John's wife, an economist, claims John lost $43,002 running his pottery studio. This means his wife is claiming that he incurred _____ in _____ costs.

$86,004; implicit

Consider a production possibility frontier for Italy. If in 2016 Italy's resources are not being fully utilized, Italy will be somewhere _____ of its production possibility frontier.

inside

An economic model:

is a simplified version of reality used to understand the real-world economic conditions

Marge has spent her entire budget on milk and cookies. The last glass of milk provided Marge with 10 additional utils, and the last cookie provided her with 25 additional utils. The price of a cookie is twice the price of a glass of milk. Assuming that diminishing marginal utility applies to both goods, Marge should consume _____ milk and _____ cookies.

less; more

You can spend $100 on either a new economics textbook or a new tablet computer. If you choose to buy the new economics textbook, the opportunity cost is:

your enjoyment of the new tablet computer

(Table: Competitive Market for Good Z) The equilibrium price and quantity in this market are, respectively:

$10 and 30 units

(Table: Total Cost Data) What is the total variable cost for the bicycle firm when the firm produces 5 bicycles?

$190

(Table: The Utility of Pecan Rolls) The marginal utility for the fifth roll is:

0

Mark and Julie are going to sell brownies and cookies for their third annual fundraiser bake sale. In one day, mark can make 40 brownies or 20 cookies, and Julie can make 15 brownies or 15 cookies. What is Mark's opportunity cost to produce one brownie?

0.5 cookie

(Figure: Omar's Production Possibilities) The opportunity cost for Tom to move from point A on the curve to point B is:

5 coconuts

(Figure: The Demand and Supply of Wheat) What is the equilibrium quantity in this wheat market each period?

6,000 bushels

(Table: Production Possibilities Schedule I) The opportunity cost of producing the fourth unit of consumer goods is _____ of capital goods.

8

(Figure: Omar's Production Possibilities) Which point or points represent(s) a combination of coconuts and fish that is efficient in production?

A and B

(Figure: Budget Lines for Tea and Scones) For months now, Agnes has had $20 per month to spend on tea and scones. The price of each cup of tea and each scone has been $1. Which chart shows what will happen to her budget line if the price of a scone rises to $2?

B

(Figure: The Market for iPhones) Assume that Pa is the autarky price, Pw is the world price, and D and S represent domestic demand and supply, respectively. The loss of producer surplus when the market moves from autarky to free trade equals the area:

B

(Figure: The Market for Laptops) Assume that S and D are the domestic supply and demand curves and the world price is Pw. Identify the area of deadweight loss when a tariff raises the domestic price from the world price to Pt.

D + F

If they spend all night writing computer programs, Laurence can write 10 programs, and Carrie Anne can write 5. If they spend all night making sunglasses, Laurence can make 6 pairs, and Carrie Anne can make 4. We know that:

Laurence's opportunity cost of writing programs is less than Carrie Anne's

(Table: Bongos and Frisbees) Bill and Mickey make bongos and frisbees. Who has the comparative advantage in producing frisbees?

Mickey

(Figure: Shifts in Demand and Supply II) The figure shows how supply and demand might shift in response to specific events. Suppose vast new oilfields are discovered offshore of California and gasoline prices fall. Which panel BEST describes how this will affect the market for sport utility vehicles, a complement in consumption in gasoline?

Panel A

(Figure: Shifts in Demand and Supply II) The graph shows how supply and demand might shift in response to specific events. Suppose scientists discover that eating pomegranates causes aging. Which panel BEST describes how this will affect the market for pomegranates?

Panel B

(Figure: Shifts in Demand and Supply II) The figure shows how supply and demand might shift in response to specific events. Suppose the technology for producing ethanol fuel improves. Which panel BEST describes how this will affect the market for ethanol?

Panel D

What is the difference between a shortage and a scarcity?

Scarcity will almost always exist, but a shortage will exist only if the price is kept below the equilibrium level.

Suppose you manage a corner grocery store. If peanut butter is an inferior good, what do you suppose would happen to the price and quantity sold of peanut butter as incomes fell during a recession?

The price and quantity would both increase.

(Figure: The Market for Roses) Assume that Pa is that autarky price and Pw is the world price. Consumer surplus with international trade would be area:

W + X + Z

If chicken and beef are substitutes, then a fall in the price of chicken will bring about:

a decrease in the demand for beef

Which factor is NOT a determinant of supply?

consumer tastes

Economists generally believe that a country should specialize in the production of a good or service if the:

country can produce while forgoing fewer alternative products than any other country

(Figure: Consumer and Capital Goods) The movement from curve 1 to curve 2 indicates:

economic growth

A factor of production whose quantity CANNOT be changed in the short run is a(n) _____ factor of production.

fixed

A consumer's spending is restricted because of:

his or her budget constraint

Jim is being paid $7.25 an hour to work at a restaurant. In the circular flow, this is an example of a:

household selling a resource in the factor market

The market for corn is Kansas is considered to be competitive. This means there are _____ buyers and _____ sellers of corn in Kansas.

many; many

A "how much" decision is BEST made by comparing the _____ of an action to the _____ of that action.

marginal benefits; marginal costs

The _____ curve shows the additional cost of producing each additional unit of output.

marginal cost

When milk consumption decreased, a survey firm wanted to know what was going on, so they interviewed people and found that people thought that rising milk prices were making it hard to justify their milk purchases. This suggests that what is going on is a:

movement along the demand curve for milk

The _____ apples will decrease when apple prices rise.

quantity demanded of

If a country imposes a tariff on imported shoes; we expect the domestic price of shoes to _____, domestic consumption to _____, and domestic production to _____.

rise; fall; rise

(Table: The Market for Chocolate-Covered Peanuts) If the price of chocolate-covered peanuts is $0.50, there is a:

shortage of 70 bags per month

Which question BEST describes a "how much" decision?

should I buy a third hot dog?

The _____ tomatoes will decrease if fertilizer prices rise.

supply of

(Figure: The Demand and Supply of Wheat) If a price of $10 temporarily exists in this market, a _____ of _____ bushels per period will result.

surplus; 8,000

China which is labor-abundant, has a comparative advantage in clothing production, which is labor-intensive. Which model explains this pattern of comparative advantage?

the Heckscher-Ohlin model

In one hour, the United States can produce 25 tons of steel or 250 automobiles. In one hour, Japan can produce 30 tons of steel or 275 automobiles. This information implies that:

the United States has a comparative advantage in the production of automobiles.

(Table: Wheat and Aluminum) The United States and Germany can produce both wheat and aluminum. The table shows the maximum annual output combinations of wheat and aluminum that can be produced. Based on the table:

the United States has a comparative advantage in wheat and an absolute advantage in wheat.

At the optimal consumption bundle:

the marginal utility per dollar spent is equalized across all goods consumed

A production possibility frontier that is a straight line sloping down from left to right suggests that:

the opportunity costs of the products are constant

It is a certain that the equilibrium price will fall when:

the supply curve shifts to the right and the demand curve shifts to the left.

Market equilibrium occurs when:

there is no incentive for prices to change in the market, quantity demanded equals quantity supplied, and the market clears.

Although freshwater is very abundant in most places, it is scarce because:

there is not enough of it to meet all needs

(Table: Long-Run Total Cost) This soybean grower receives constant returns to scale over the _____ and _____ bushels.

third; fourth

Profit is the difference between _____ and _____.

total revenues; total costs