Micro Final MSU

(figure: marginal revenue) what is the marginal revenue of the fourth unit in the following example?

$2

Amanda goes to a local café and orders a sandwich. She is willing to pay $10 for it. The price of the sandwich is $4. The cost to the café to produce the sandwich is $1. How much economic surplus does the café receive when Amanda purchases the sandwich?

$3

at what price does this market experience a shortage of 140 units?

$5

Jonathan's income falls by 15%. He decides to cut down his purchases of high-end restaurant meals by 20%. His income elasticity of demand for high-end restaurant meals is:

1.33

Suppose a coffee shop in Des Moines, Iowa, hires workers to personalize coffee mugs for special occasions. the store sells the personalized mugs for $7 each. the marginal revenue product of the store's third worker is $84. the marginal product of the third worker is:

12 coffee mugs

An intern at Rovio Entertainment is sifting through sales data for the Angry Birds game and discovers that when the monthly premium subscription fee was $20, the quantity of memberships demanded was 10 million. When the price rose to $25 per month, the quantity of monthly memberships demanded was 8 million. Using the midpoint formula, the absolute value of the price elasticity of demand is ___, which is ___.

1; neither elastic nor inelastic

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:

7 million phones.

The demand and supply of quinona. A price of $___ will result in a ___.

9; surplus

you are considering buying an electric-powered vehicle (EV). which graph of the EV market illustrates your most likely response if the government funds the construction of 50,000 battery-charging stations across the country?

A

in one hour, Keshia can bake 10 muffins or mix 15 glasses of passionfruit juice. His friend Alicia can bake 10 muffins or mix 10 glasses of passionfruit juice. His other friend, Ewan, can bake 10 muffins or mix 20 glasses of passionfruit juice. Who has the lowest opportunity cost in muffin production?

Alica

Ang can mow a lawn in two hours. Bill takes three hours to mow the same lawn. What can you conclude from the info

Ang has absoute advantage over bill in mowing the lawn.

To address gun violence, your city government taxes guns and ammunition. Guns are a minor revenue source for the sports and outdoors shops that sell guns in your city, but they are an obsession for the small, dedicated community of gun enthusiasts, who collect them. Who will bear the most of the economic burden of the tax?

Buyers. (Buyers are more inelastic)

The cost of attending college has risen significantly in recent years, much to the dismay of prospective college students and their families. IF the government were to set a maximum cost of a four-year college education at $20,000-- a cost that is below the average cost of attending a four-year college-- what would most likely be the result?

Colleges will gave more applicants but would admit fewer students.

Actress Mayim Bialik holds a doctorate in neuroscience from UCLA. Bialik, a former main character on the TV show The Big Bang Theory, earned hundreds of thousands of dollars per episode, and has since become the host of the TV show Jeopardy. Why does Bialik work in television instead of neuroscience?

Her opportunity cost to work as a neuroscientist is high.

What is an example of positive economic statement?

If the government raises taxes, people will have less income available for purchases and saving. (This is a factual statement not an opinion.)

Under current law, you pay 6.2% of your salary into your Social Security account, and your employer also contributes an amount equal to 6.2% of your salary to your Social Security account. What would happen if the law were changed so that your employer contributes an amount equal to 12.4% of your salary to your Social Security account, while you pay nothing?

Little or nothing would change in terms of who bears the economic burden of the Social Security tax.

What is the role of markets?

Markets facilitate gains from trade.

When labor is hired in a competitive market, the value of the marginal revenue product is computed by

P x MPL

If the price in the market is such that the quantity supplied exceeds the quantity demanded, then the:

Price is above the equilibrium price

what statement reflects positive analysis?

Rent-controlled apartments create a black market in the supply of housing. (This is stated as a fact not an opinion.)

why does Apple deign the iPhone in California but assemble the iPhone in China?

The United States has a comparative advantage in iPhone design.

More college professors are adding online homework programs to their classes, and more commercial vendors are offering their own versions of online homework programs. How will these changes affect the market for online homework programs?

The equilibrium quantity will rise, but the impact on price is unclear.

You just moved into your new apartment, which has washer and dryer hookups, but your apartment complex doesn't provide washers and dryers. You don't want to go to a laundromat. You can rent a washer and dryer set from an appliance rental company for $30 per month. Alternatively, you could buy a set for $1,100, which you could sell after one year for $700, or $600 after two years. You plan to stay in this apartment for two years, since it's near your job. Should you buy or rent the set?

You should buy the set because buying earns $220 worth of economic surplus.

Julio enjoys Kit Kat bars, Hershey bars, and Crunch bars about equally. The graph shows Julio's demand for Kit Kat bars. What would result in a shift from Old Demand to New Demand 1?

a fall in the price of Kit Kat bars

the coffee harvest in many countries is unusually good this year. This entails:

a shift to the right of the entire supply curve for coffee beans.

How do a company's accounting profit and economic profit compare in size?

accounting profit is larger than economic profit, if there are implicit costs

shifts in supply:

always lead to increases in the equilibrium quantity.

Which event would shift the supply curve for Ben and jerry's ice cream to the left?

an increase in the price of the cream, an ingredient in ice cream.

Certain activities, such as bee pollination or nature preservation, generate external benefits that will likely be carried out at levels that ___ those that would efficient.

are less than

a characteristic of monopolistic competition that is not present in any other market structure is that there:

are many sellers, and each produces its own version of the product

You're a cashier at a local grocery store. You notice many customers buying kiwifruit, but you've never tried kiwifruit yourself. When the price of kiwifruit suddenly drops, you notice that your regular kiwi-buying customers buy more kiwifruit than usual and that other shoppers start buying kiwifruit for the first time. You also decide to try it yourself, so you too buy some kiwifruit. Which statement BEST summarizes what is happening?

as the price of kiwifruit falls, the market quantity demanded rises.

You have a comparative advantage if you can complete a task:

at a lower opportunity cost than anyone else.

Mario is willing to sell an extra unit of his product if price is:

at least as high as marginal private cost.

total revenue divided by quantity is called ____ or ____

average revenue; price

Demand and Supply of SUGAR. A factor that may have shifted the supply curve from S1 to S2 is:

better technology in the production of sugar.

The supply of sweetened beverages is more elastic than the demand. If the government imposes a tax on sweetend beverages at a rate of $.20 per 20-ounce soda, paid by sellers, the economic burden of the tax on buyers would be:

between $.10 and $.20 per soda. (more inelastic)

if the cross-price elasticity of demand between cheese and yogurt is positive, then:

cheese and yogurt are substitutes

Collectively, people in nations that engage in international trade are likely to:

consume more than they could consume in ht absence of trade.

In 2018, the state of Kentucky raised the tax on cigarettes by 50 cents per pack. Holding other things constant, the effect of this tax would be to ___ in Kentucky.

decrease the smoking of cigarettes

if rice is an inferior good, when income rises, the equilibrium price will ___, and the equilibrium quantity will ___.

decrease; decrease

The market price of cruise ship vacations has increased recently. Some economists suggest that the price increased because of an increase in the number of retirees. In other words, they believe that:

demand increased

what type of business would likely do relatively well in a recession?

discount clothing stores

suppose major streaming services like netflix, hulu, amazon prime, disney+, and others collude to charge subscribers a common, higher, munimum price per month. why might this agreement not be honored by one of the partners?

each party to the collusive agreement has an incentive to lower its price and take customers away from the others

____ attract(s) new sellers into a market

existing sellers in the market earning economic profits

the marginal product of labor is the:

extra output produced from hiring an extra worker

as output rises, average fixed costs:

fall

demand for a particular fast-food chain inside an airport is less elastic than outside of the airport because:

fewer choices mean more elastic demand.

a cost that does NOT depend on the quantity of output produced is:

fixed

the two main types of implicit opportunity costs are:

forgone wages and forgone interest

China is relatively labor-abundant compared with European Union member nations. Therefore, China has a comparative advantage in _____ compared with European Union member nations.

goods that are labor-intensive in production

if a group of buyers is price sensitive, then the:

group's demand is inelastic

when new sellers enter a market, existing sellers will:

have less market power

a person has a comparative advantage if they:

have the lowest opportunity cost of producing a particular good compared with another person.

assume that there is free entry and exit in the coffee shop market. how profitable can mario expect his coffee shop to be in the long run?

he can expect it to earn zero economic profits

a japanese-made automobile purchased by a U.S. citizen is a U.S. ___, and a U.S.-made automobile purchased by a Japanese citizen is a U.S. ___.

import; export

when people focus on their comparative advantage and then trade for other things, they:

improve their standard of living or increase their leisure time.

over the past few years, the tech associated with producing flat-screen televisions has improved. This has led to a(n) ___ in the ___ flat-screen televisions.

increase; supply of

Suppose that, upon changing jobs, you experience an increase in income (otherwise, why change jobs?). If, as a result, you decide to purchase more sushi and fewer hamburgers, then hamburgers for you are a(n) _____ good.

inferior

In 2018, the unemployment rate in the United States went as low as 3.7%, as measured by the Bureau of Labor Statistics. This historically low level of unemployment occurred simultaneously with a large trade deficit. This provides evidence against which of the following arguments against international trade?

international trade may lead to job loss.

how is the economic surplus generated by a decision calculated?

it is the total benefits minus total costs arising from the decision.

Price ceilings impose costs on society because they:

lead to a smaller quantity offered in the market

a basic logic that applies to all strategic interactions is that:

making a good choice requires that you anticipate what others will do

If you live in a ___ economy, you would expect prices to move ___, whereas if you lived in a ___ economy, that is not likely.

market; toward equilibrium, planned

Helena works in a factory that makes plastic phone cases. The four main tasks are mixing, molding, curing, and polishing. Of all the workers, she is the fastest mixer, has the lowest opportunity cost for molding, is the most careful in curing, and enjoys polishing the most. IF her manager makes assignments in a way that maximizes output, then Helena will be assigned to:

molding

Minglewood hall often hosts loud concerts that play late into the night. Minglewood provides an annual allotment of free concert tickets to residents who live in the houses directly behind the venue to account for the ___ of the disturbance.

negative externality

if the income elasticity of demand for a good is ___, the good is said to be ___.

negative; inferior

Over the years, state and local government have separated smoking and nonsmoking sections in restaurants or banned smoking in public areas completely. Governments implements rules against smoking because smoking generates a ___ externality, as many smokers dont consider the ____ cost of their habit.

negative; marginal external

the BP and Sunoco stations are the only two providers of gasoline in the small town of davenport. the two gas stations decide to cooperate to raise the local price of gasoline. total profits of the two businesses are highest when ____ cheat(s) on the agreement, and the BP's profits are highest when ____

neither firm; BP cheats, but Sunoco does not

which statement regarding a nash equilibrium is TRUE?

no player can do better by unilaterally changing his or her choice

Daisy is a milk farmer in a perfectly competitive market where there are many milk farmers. The market price of milk is $0.15 per gallon, which is also the marginal cost per gallon of milk. If Daisy charges $0.25 per gallon, she will

not sell any milk

the options for rideshare transportation in your city are uber and lyft. the market structure is:

oligopoly

how does output for a seller who has market power compare to output for a seller who does not have market power, assuming both follow the rational rule for sellers?

output is higher for the seller without market power than the one with market power

in a perfectly competitive labor market, employers:

pay the market wage

many hotel cdhains offer discounts to AAA members. this is an example of ____ that is ____ in the United States.

price discrimination; legal

Price minus marginal cost equals the:

producer surplus of a unit sold

The world supply curve for a product slopes upward because, as the world price of the product increases:

producers want to sell a larger quantity.

Avery goes to the local supermarket to purchase one package of collard greens. she often pays$2.0 for a package, but she finds they are on sale for $1.50 each. According to the law of demand, shoppers like Avery will:

purchase more collard greens than they normally would.

Scarcity occurs in everyday life because:

resources are limited

For consumers, hot dogs and hamburgers are substitutes. A rise in the price of hot dogs causes a _____ in the equilibrium price of hamburgers and a _____ in the equilibrium quantity of hamburgers.

rise; rise

a market is a:

setting that brings together potential buyers and sellers.

if the price of bananas is greater than the marginal cost of bananas, then:

society's well-being can be improvised if production increases.

Both Disney-owned hotels and resorts and, in the surrounding area, independent hotels, motels, resorts, and private home rentals. The independent accommodations are:

substitutes for Disney-owned accommodations but complements to Disney's parks.

Henderson Lumber is a lumber mill that produces both boards used in construction and sawdust, a byproduct of the board production, used in agriculture. When the housing market collapses, causing house prices along with the prices of boards used to build houses to fall, Henderson Lumber's ____will likely___.

supply of sawdust; decrease

quantity demanded is the amount of a good:

that a person is willing to buy at a particular price.

if the government were to impose a tax on movie downloads, the MOST likely effect would be:

that consumers would pat a higher price, and producers would sell fewer movie downloads than before the tax.

carl owns one of the 30 lawn mowing businesses in his city. what will happen to his business if there are new entrants into his city's lawn mowing market?

the demand for carl's services will fall

What is the relationship between a company's market power and the price that the company can charge for its product?

the greater the market power, the higher the price the company can charge without losing many customers

a reservation price is:

the highest price that a customer is willing to pay for a product

the opportunity cost of something is:

the next best alternative given up to acquire it.

Two items are complements. A decrease in the price of one item will cause the demand for:

the other item to increase

How will a fall in the price of diesel fuel impact the supply of long-haul truck transportation services?

the supply of truck transportation services will increase.

to maximize profits when hiring employees, continue to hire workers until:

the wage equals the marginal revenue product

if the wage rate falls, firms will find that:

they move downward and to the right along the labor demand curve

When economic efficiency increase, the ___, and the benefits ___ be spread across all people.

total gains exceed the costs; may or may not

The price of coffee at a local coffee shop is $3. Cheryl is willing to pay $6 for her first cup of coffee each day. The marginal benefit to her of each additional cup of coffee falls by $2. How many cups of coffee should Cheryl purchase?

two

While buying refreshments for an upcoming party, you notice that a six-pack of Americana Beer costs $4 and a six-pack of Bavarian Beer costs $8. You buy the six-pack of Bavarian Beer, although you wonder if maybe two six-packs of Americana Beer would have been a better choice. The opportunity cost of the Bavarian Beer is:

two six-packs of American Beer

Because demand curves are usually downward sloping, the price elasticity of demand is:

usually negative

in a product market, why would a company owner prefer to face fewer competitors than more?

with fewer competitors, companies have more market power

alena manages a small theme park. she hires one more custodian at $450 per week, making her park cleaner and more attractive. as a result of this improvement, ticket sales rise by 40 tickets per week. tickets sell for $12. use the rational rule for employers to determine if hiring the extra custodian was a good move

yes, it was a good move because it added more to revenue than to cost