Micro Midterm

The graph shows how supply and demand might shift in response to specific events. Suppose scientists discover that eating passionfruit reduces visible signs of aging. Which panel BEST illustrates how this finding will affect the market for passionfruit?

Supply will stay the same, demand will shift to the right

Use Table: Quantity Supplied and Quantity Demanded in the market for Magazine Subscriptions. The government institutes a price floor, and as a result, too many resources are allocated to the production of the good, Given this, which dollar amount is a possible value of he price floor in this market? a. 20 b. 15 c. 10 d. 5

a. $20

Use Table: The Demand for Potato Chips. If Blair, Serena, and Dan are the only three buyers in the market and the price of a bag of potato chips is $0.60, the total market quantity demanded is ______ bags per month a. 205 b. 140 c. 350 d. 130

a. 205

A local hardware store benefits when a new automobile plant moves to town and hires workers because the: a. new jobs at the plant will increase local incomes, some of which will be spent at the hardware store. b. local circular flow will be smaller with a new plant in town c. presence of a new plant will guarantee that resources are used efficiently d. new plant will eliminate scarcity in the area.

a. new jobs at the plant will increase total incomes, some of which will be spent at the hardware store.

If they bake only muffins, in a single day, Gregory can bake 10 muffins, and Gabriella can bake 5 muffins. If they bake only cookies, in a single day, Gregory can bake 10 cookies, and Gabriella can bake 4 cookies. We know that ______ has an absolute advantage and a comparative advantage in baking ____ a. Gregory; cookies b. Gregory; muffins c. Gabriella; cookies d. Gabriella; muffins

a. Gregory; cookies

A price floor or a price ceiling is an example of: a. price control b. a quota c. a quantity control d. a market equilibrium price

a. a price control

If the price of quinoa rises, we generally expect the: a. demand for quinoa to all b. quantity of quinoa supplied to rise c. supply of quinoa to rise d. quantity of quinoa demanded to rise

a. demand for quinoa to fall

Economic signals: a. guide decision makers in their transactions in the marketplace b. never provide adequate info to consumers c. lead to the creation of property rights d. affect consumers' willingness to pay

a. guide decision makers in their transactions in the marketplace

Inefficient allocations of goods to consumers often result from: a. price ceilings b. price floors c. quota limits d. all of these options

a. price ceilings

If demand is inelastic, the ___ effect dominates the ___ effect, and an ____ in price will cause total revenue to rise. a. price; quantity; increase b. quantity; price; decrease c. quantity; price; increase d. price; quantity; decrease

a. price; quantity; increase

The government of a small town has decided to band public smoking on public sidewalks (following the lead of California). This is an example of the principle that: a. when markets fail achieve efficiency, government intervention can improve society's welfare b. there are gains from trade c. "How Much" is a decision d. one person's spending is another person's income

a. when markets fail achieve efficiency, government intervention can improve society's welfare.

(Table: Production Possibilities Schedule 1) Use Table: Production Possibilities Schedule 1: The opportunity cost of producing the fourth place is ____ trains. a. 2 b. 8 c. 6 d. 4

b. 8

A competitive market is a. a market in which there few buyers and sellers if the same good or service b. a market in which there are many buyers and many sellers of the same good or service c. a market in which there are many buyers and a few sellers of the same good or service. d. a market in which there few buyers and many sellers of the same good or service.

b. a market in which there are many buyers and many sellers of the same good or service

Which factor would cause a supply curve to shift to the LEFT? a. a technological improvement in the production of a good. b. an increase in the price of a good. c. an increase in the number of firms selling a good. d. an increase in the cost of an input used to produce a good.

b. an increase in the price of a good.

The term "opportunity cost" implies that a. no trade offs are possible b. any decision regarding the use of a resource involves choosing between alternatives c. firms do not always exploit opportunities for profit d. individuals may make decisions that entail high costs

b. any decision regarding the use of a resource involves choosing between alternatives

A consumer's willingness to pay for an additional unit of a good depends on the: a. expected additional cost of consuming that unit of the good b. expected additional benefit of consuming that unit of the good c. size of the shortage of the good d. size of the surplus of the good

b. expected additional benefit of consuming that unit of the good.

The demand for mochi, a Japanese ice cream, tends to be relatively elastic because: a. it is only popular in the summer b. for most people, there are many close substitutes for mochi ice cream c. it must be consumed very quickly d. it costs so little

b. for most people, there are many close substitutes for mochi ice cream

Property right are an important feature of an effective market because they: a. prevent harm to the environment from pollution b. give owners of goods and services the right to use and dispose of those goods and services as they choose. c. are the bars for an equitable tax system d. lead to the development of government control over prices

b. give owners of goods and services the right to use and dispose of those goods and services as they choose.

A simplified representation of a real life situation that is used to better understand real- life situations is called a(n): a. production possibility frontier b. model c. trade off d. assumption

b. model

In New York City, many apartments have maximum allowable rent that landlords can charge per unit. A rent control scheme that sets the maximum allowable rent at a price below the equilibrium rental price would MOST likely be supported by: a. both renters and owners b. people who wish to rent an apartment c. neither renters nor owners. d. people who own rental apartments

b. people who wish to rent an apartment

If the supply curve for a given good is horizontal, then we know that: a. opportunity costs are not important anymore b. producer surplus will be zero c. greater than the opportunity cost of the good. d. consumer surplus will be less than producer surplus

b. producer surplus will be zero

A tax that takes a higher percentage of income as income rises is: a. proportional b. progressive c. regressive d. an ability tax

b. progressive

The circular flow diagram illustrates how firms _____ goods and services and _____ factors of production. a. buy; buy b. sell; buy c. buy; sell d. sell; sell

b. sell; buy

When price rises, quantity demanded falls. The price elasticity of demand measures: a. the responsiveness of an income change to a price change. b. the responsiveness of a quantity change to a price change. c. the percentage fall in price. d. how much the equilibrium price rises.

b. the responsiveness of a quantity change to a price change

Use Figure: Rent Controls in the Market for Apartments in New York City. If the rent ceiling is set at $900: a. some renters will be willing to pay a price as high as $1,200 for available rental units. b. the shortage of rental units will be the distance 2.1 mil-1.9 mil, or 0.2 mil units. c. no one will have to pay a higher actual price than $800, nor will anyone be willing to do so. d. there will be surplus of rental units, but it is impossible to tell how large the surplus is based on the info provided

b. the shortage of rental units will be the distance 2.1 mil-1.9 mil, or 0.2 mil units.

The Adirondack Adventure Center offers whitewater rafting trips down the Black River. It costs the firm $100 to provide the first raft trip on a given day, $120 to provide the second, $140 to provide the third, and $160 to provide the fourth. If the market price of a raft trip was $120 but has now increased to $150, the gain in the producer surplus is equal to: a. $70 b. $20 c. $90 d. $80

c. $90

The state of Massachusetts recently saw an increase in the price of elasticity of 10%, which brought about a fall in the quantity of electricity consumed of 2%. The price elasticity of demand is equal to ___, and demand is described as ____. a. 5; inelastic b. 5; elastic c. 0.2; elastic d. 0.2; inelastic

c. 0.2; elastic

(Figure: The Demand for Winter Gloves) Use Figure: The Demand for Winter Gloves. The price elasticity of demand over the segment BC, computed using the midpoint method is a. 3.33 b. 3 c. 0.33 d. greater than 3.33

c. 0.33

Which statement is positive? Which statement is normative? 1. Government spending on defense was $500 billion is 2019 2. The federal gov should spend more on defense to protect us from our enemies a. 1 is positive, 2 is positive b. 1 is normative, 2 is normative c. 1 is positive, 2 is normative d. 1 is normative, 2 is positive

c. 1 is positive, 2 is normative

Use Figure: Supply of Bananas. A fall in the price of bananas would be represented in the figure as a movement from: a. E to B b. B to A c. A to B d. C to A

c. A to B

Which statement best illustrates the law of demand? a. An increase in food prices encourages more individuals to buy more food as a result of scarcity. b. Tesla produces more cars as prices increase. c. Consumers buy more iPhones because prices have fallen. d. Fewer people visit Disneyland because incomes have fallen

c. Consumers buy more iPhones because prices have fallen

Which factor would result in a movement along a demand curve? a. More people start shopping at Walmart b. Amazon opens more offline store fronts to complement its online component c. Incomes fall in a recession

c. Incomes fall in a recession

There is a trade off between ____ and efficiency in that policies designed to promote equity often come at the cost of ____ efficiency. a. opportunity cost; decreased b. opportunity cost; decreased c. equity; decreased d. equity; increased

c. equity; decreased

The Linear Demand Curve for Gold Balls. If you increase the price of your golf balls from $7 to $8, your revenue will ____, and you notice that your price elasticity of demand is ____. a. increase; elastic b. decrease; elastic c. increase; inelastic d. decrease; inelastic

c. increase; inelastic

Use Table: Martinez Family Household Income and Expenditures. For Martinez, falafels are a(n) _____ good. a. neutral b. inferior c. normal d. positive

c. normal

Use Figure: Demand Curve for Insulin. The figure shows a demand curve that is: a. elastic b. perfectly elastic c. perfectly inelastic d. unit elastic

c. perfectly inelastic

The basic concern of microeconomics is to: a. ensure that the government pursues the public goods during pandemics. b. make sure small businesses thrive. c. study the choices people make, given unlimited wants. d. determine how unlimited resources can be best used to satisfy limited wants.

c. study the choices people make, given unlimited wants

If people demand more Netflix subscriptions when the price of Hulu subscriptions falls, then Netflix and Hulu are: a. not related b. inferior goods c. substitutes d. complements

c. substitutes

If ratatouille and Hungarian goulash are substitutes, a decrease in the price of Hungarian goulash will cause: a. the demand for ratatouille to increase b. the demand for Hungarian goulash to increase and the demand for ratatouille to decrease c. the demand for ratatouille to decrease. d. the demand for Hungarian goulash to increase

c. the demand for ratatouille to decrease

Which tax reflects the ability to pay principle?: a. the payroll tax b. the Social Security tax c. the federal income tax d. a sales tax on food

c. the federal income tax

Suppose the government imposes $23 excise tax on the sale of running shoes by charging suppliers $23 for each pair sold. If the demand curve is downward-sloping and the supply curve is upward sloping: a. the price of running shoes will increase by $23 b. consumers of running shoes will bear the entire burden of the tax c. the price of running shoes will increase by less than $23 d. the price of running shoes will decrease by $23

c. the price of running shoes will increase by less than $23

(Figure: Dreamliners and Small Jets) Use Figure: Dreamliners and Small Jets. The combination of Dreamliners and small jets at point H.

cannot be attained, given the level of technology and the facts of production available

Suppose the legislature of New Hampshire decides to implement a state income tax. If personal income up to and including $25000 is not taxed, income of $25,001 to $50,000 is taxed at 10%, and income over $50000 is taxed 25%, a family earning $60000 in income will pay _____ in personal taxes a. $11,250 b. 16000 c. 8000 d. 5000

d. $5000

(Figure: The Demand and Supply of Quinoa) Use Figure: The Demand and Supply of Quinoa. If there is an increase in demand of 2000 bushels per period at each price, the equilibrium price and quantity will be ____ and ____ bushels per period, respectively. a. $5; 5000 b. $7; 7000 c. $8; 8000 d. $6; 7000

d. $6; 7000

If the price of profiteroles decreases from $1.10 to $0.90 and the quantity demanded of profiteroles increases fro 190 pastries to 210 pastries, then the price elasticity of demand, computed using the midpoint method, is: a. 2 b. 0 c. 1 d. 0.5

d. 0.5

Suppose Oliver and Felix each have a different skill set in producing two goods, cloth, and corn. Each can produce both goods simultaneously. In general, Oliver is better at producing cloth, and Felix is better at producing corn, Which principle of economics applies best to this scenario? a. Oliver and Felix could switch the goods in which they specialize b. Resources are scarce c. Oliver and Felix have no incentive to specialize d. Oliver and Felix both be made better off through specialization and trade.

d. Oliver and Felix both be made better through specialization and trade.

(Table: Corn and Steel) Use Table: Corn and Steel. The United and Germany can produce both corn and steel. The table shows, in tonnage, the maximum annual output combinations of corn and steel that two countries can produce. Which choice represents a possible trade based on specialization and comparative advantage? a. Germany would trade 2 tons of steel to the United States for 0.5 ton of corn. b. Germany would trade 2 tons of corn to the United States for 1 ton of steel. c. The United States would trade 1 ton of Corn to Germany for 1 ton of steel. d. The United States would trade 1 ton of corn to Germany for 1.5 tons of steel.

d. The U.S. would trade 1 ton of corn to Germany for 1.5 tons of steel

If the government levies on excise tax in a market whose demand curve is perfectly inelastic, the burden of the tax will fall completely on the ___, and the deadweight loss will equal ____. a. consumers, tax revenue b. producers; the tax revenue c. producers; zero d. consumers; zero

d. consumers; zero

Consumers' willingness to pay for a good is used to derive the ____for that good. a. producer surplus b. consumer preference c. supply curve d. demand curve

d. demand curve

When the price of big screen television decreases, the: a. supply decreases b. quantity supplied increases c. supply increases d. quantity supplied decreases

d. quantity supplied decreases

The "other things equal" assumption means that: a. all participants in the. model start out with the same amount of money b. the buyer alone is responsible for checking the quality and sustainability of goods before the purchase c. utility is constant across similar consumers d. relevant variables other than those examined do not change

d. relevant variables other than those examined do not change

The provision of parking passes for people with disabilities often requires that there be more than enough parking spaces for disabled individuals. As a result, many parking spaces are vacant when they could be used by individuals without special passes. This scenario illustrates the: a. power of the market to produce equilibrium outcomes b. trade off between efficiency and specialization c. ability of markets to produce efficient and equitable outcomes d. trade off between efficiency and equity

d. trade off between efficiency and equity

Quotas do all of these except: a. increase the quantity of the goods in the market b. create deadweight loss c. incentivize people to engage in illegal activities. d. bring about inefficient market outcomes

increase the quantity of goods in the market